    [House Report 111-137]
    [From the U.S. Government Publishing Office]

    111th Congress                                            Rept. 111-137
                            HOUSE OF REPRESENTATIVES
     1st Session                                                     Part 1

    ======================================================================

                 AMERICAN CLEAN ENERGY AND SECURITY ACT OF 2009

                                    _______

                      June 5, 2009.--Ordered to be printed

                                    _______

     Mr. Waxman, from the Committee on Energy and Commerce, submitted the
                                   following

                                  R E P O R T

                                 together with

                         MINORITY AND ADDITIONAL VIEWS

                            [To accompany H.R. 2454]

          [Including cost estimate of the Congressional Budget Office]

      The Committee on Energy and Commerce, to whom was referred
    the bill (H.R. 2454) to create clean energy jobs, achieve
    energy independence, reduce global warming pollution and
    transition to a clean energy economy, having considered the
    same, report favorably thereon with an amendment and recommend
    that the bill as amended do pass.

                                    CONTENTS

                                                                       Page
    Purpose and Summary..............................................   277
    Background and Need for Legislation..............................   278
    Legislative History..............................................   318
    Committee Consideration..........................................   320
    Committee Votes..................................................   320
    Application of Law to the Legislative Branch.....................   357
    Statement of Oversight Findings and Recommendations of the
      Committee......................................................   357
    Statement of General Performance Goals and Objectives............   357
    Constitutional Authority Statement...............................   357
    Advisory Committee Statement.....................................   357
    Federal Mandates Statement.......................................   357
    Earmarks and Tax and Tariff Benefits.............................   358
    Committee Cost Estimate..........................................   358
    New Budget Authority, Entitlement Authority, and Tax Expenditures   358
    Congressional Budget Office Cost Estimate........................   358
    Section-By-Section...............................................   393
    Explanation of Amendments........................................   426
    Changes in Existing Law Made by the Bill, as Reported............   435
    Minority and Additional Views....................................   725
      The amendment is as follows:
      Strike all after the enacting clause and insert the
    following:

    SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

      (a) Short Title.--This Act may be cited as the ``American Clean
    Energy and Security Act of 2009''.
      (b) Table of Contents.--The table of contents for this Act is as
    follows:

    Sec. 1. Short title; table of contents.
    Sec. 2. Definitions.
    Sec. 3. International participation.

                             TITLE I--CLEAN ENERGY

       Subtitle A--Combined Efficiency and Renewable Electricity Standard

    Sec. 101. Combined efficiency and renewable electricity standard.
    Sec. 102. Clarifying State authority to adopt renewable energy
    incentives.

                  Subtitle B--Carbon Capture and Sequestration

    Sec. 111. National strategy.
    Sec. 112. Regulations for geologic sequestration sites.
            ``Sec. 813. Geologic sequestration sites.
    Sec. 113. Studies and reports.
    Sec. 114. Carbon capture and sequestration demonstration and early
    deployment program.
    Sec. 115. Commercial deployment of carbon capture and sequestration
    technologies.
            ``Sec. 786. Commercial deployment of carbon capture and
                            sequestration technologies.
    Sec. 116. Performance standards for coal-fueled power plants.
            ``Sec. 812. Performance standards for new coal-fired power
                            plants.

                        Subtitle C--Clean Transportation

    Sec. 121. Electric vehicle infrastructure.
    Sec. 122. Large-scale vehicle electrification program.
    Sec. 123. Plug-in electric drive vehicle manufacturing.
    Sec. 124. Investment in clean vehicles.
    Sec. 125. Advanced technology vehicle manufacturing incentive loans.
    Sec. 126. Amendment to renewable fuels standard.
    Sec. 127. Open fuel standard.
    Sec. 128. Temporary Vehicle Trade-in Program.
    Sec. 129. Diesel emissions reduction.
    Sec. 130. Loan guarantees for projects to construct renewable fuel
    pipelines.

         Subtitle D--State Energy and Environment Development Accounts

    Sec. 131. Establishment of SEED Accounts.
    Sec. 132. Support of State renewable energy and energy efficiency
    programs.

                       Subtitle E--Smart Grid Advancement

    Sec. 141. Definitions.
    Sec. 142.  Assessment of Smart Grid cost effectiveness in products.
    Sec. 143. Inclusions of Smart Grid capability on appliance ENERGY GUIDE
    labels.
    Sec. 144. Smart Grid peak demand reduction goals.
    Sec. 145.  Reauthorization of energy efficiency public information
    program to include Smart Grid information.
    Sec. 146. Inclusion of Smart Grid features in appliance rebate program.

                       Subtitle F--Transmission Planning

    Sec. 151. Transmission planning.
    Sec. 152. Net metering for Federal agencies.
    Sec. 153. Support for qualified advanced electric transmission
    manufacturing plants, qualified high efficiency transmission property,
    and qualified advanced electric transmission property.

                Subtitle G--Technical Corrections to Energy Laws

    Sec. 161. Technical corrections to Energy Independence and Security Act
    of 2007.
    Sec. 162. Technical corrections to Energy Policy Act of 2005.

                   Subtitle H--Energy and Efficiency Centers

    Sec. 171. Clean Energy Innovation Centers.
    Sec. 172. Building Assessment Centers.
    Sec. 173. Centers for Energy and Environmental Knowledge and Outreach.

                 Subtitle I--Nuclear and Advanced Technologies

    Sec. 181. Revisions to loan guarantee program authority.
    Sec. 182. Purpose.
    Sec. 183. Definitions.
    Sec. 184. Clean Energy Investment Fund.
    Sec. 185. Energy technology deployment goals.
    Sec. 186. Clean Energy Deployment Administration.
    Sec. 187. Direct support.
    Sec. 188. Federal credit authority.
    Sec. 189. General provisions.

                           Subtitle J--Miscellaneous

    Sec. 191. Study of ocean renewable energy and transmission planning and
    siting.
    Sec. 192. Clean technology business competition grant program.
    Sec. 193. National Bioenergy Partnership.
    Sec. 194. Office of Consumer Advocacy.

                          TITLE II--ENERGY EFFICIENCY

                Subtitle A--Building Energy Efficiency Programs

    Sec. 201. Greater energy efficiency in building codes.
    Sec. 202. Building retrofit program.
    Sec. 203. Energy efficient manufactured homes.
    Sec. 204. Building energy performance labeling program.
    Sec. 205. Tree planting programs.
    Sec. 206. Energy efficiency for data center buildings.

         Subtitle B--Lighting and Appliance Energy Efficiency Programs

    Sec. 211. Lighting efficiency standards.
    Sec. 212. Other appliance efficiency standards.
    Sec. 213. Appliance efficiency determinations and procedures.
    Sec. 214. Best-in-Class Appliances Deployment Program.
    Sec. 215. WaterSense.
    Sec. 216. Federal procurement of water efficient products.
    Sec. 217. Water efficient product rebate programs.
    Sec. 218. Certified stoves program.
    Sec. 219. Energy Star standards.

                     Subtitle C--Transportation Efficiency

    Sec. 221. Emissions standards.

                            ``Part B--Mobile Sources

            ``Sec. 821. Greenhouse gas emission standards for mobile
                            sources.
    Sec. 222. Greenhouse gas emissions reductions through transportation
    efficiency.

                        ``Part D--Planning Requirements

            ``Sec. 841. Greenhouse gas emissions reductions through
                            transportation efficiency.
    Sec. 223. SmartWay transportation efficiency program.
            ``Sec. 822. SmartWay transportation efficiency program.
    Sec. 224. State vehicle fleets.

               Subtitle D--Industrial Energy Efficiency Programs

    Sec. 241. Industrial plant energy efficiency standards.
    Sec. 242. Electric and thermal waste energy recovery award program.
    Sec. 243. Clarifying election of waste heat recovery financial
    incentives.
    Sec. 244. Motor market assessment and commercial awareness program.
    Sec. 245. Motor efficiency rebate program.

       Subtitle E--Improvements in Energy Savings Performance Contracting

    Sec. 251. Energy savings performance contracts.

                        Subtitle F--Public Institutions

    Sec. 261. Public institutions.
    Sec. 262. Community energy efficiency flexibility.
    Sec. 263. Small community joint participation.
    Sec. 264. Low income community energy efficiency program.

                           Subtitle G--Miscellaneous

    Sec. 271. Energy efficient information and communications technologies.
    Sec. 272. National energy efficiency goals.
    Sec. 273. Affiliated island energy independence team.
    Sec. 274. Product carbon disclosure program.

                  TITLE III--REDUCING GLOBAL WARMING POLLUTION

    Sec. 301. Short title.

                 Subtitle A--Reducing Global Warming Pollution

    Sec. 311. Reducing global warming pollution.

            ``TITLE VII--GLOBAL WARMING POLLUTION REDUCTION PROGRAM

         ``Part A--Global Warming Pollution Reduction Goals and Targets

            ``Sec. 701. Findings and purpose.
            ``Sec. 702. Economy-wide reduction goals.
            ``Sec. 703. Reduction targets for specified sources.
            ``Sec. 704. Supplemental pollution reductions.
            ``Sec. 705. Review and program recommendations.
            ``Sec. 706. National Academy review.
            ``Sec. 707. Presidential response and recommendations.

           ``Part B--Designation and Registration of Greenhouse Gases

            ``Sec. 711. Designation of greenhouse gases.
            ``Sec. 712. Carbon dioxide equivalent value of greenhouse
                            gases.
            ``Sec. 713. Greenhouse gas registry.

                            ``Part C--Program Rules

            ``Sec. 721. Emission allowances.
            ``Sec. 722. Prohibition of excess emissions.
            ``Sec. 723. Penalty for noncompliance.
            ``Sec. 724. Trading.
            ``Sec. 725. Banking and borrowing.
            ``Sec. 726. Strategic reserve.
            ``Sec. 727. Permits.
            ``Sec. 728. International emission allowances.

                               ``Part D--Offsets

            ``Sec. 731. Offsets Integrity Advisory Board.
            ``Sec. 732. Establishment of offsets program.
            ``Sec. 733. Eligible project types.
            ``Sec. 734. Requirements for offset projects.
            ``Sec. 735. Approval of offset projects.
            ``Sec. 736. Verification of offset projects.
            ``Sec. 737. Issuance of offset credits.
            ``Sec. 738. Audits.
            ``Sec. 739. Program review and revision.
            ``Sec. 740. Early offset supply.
            ``Sec. 741. Environmental considerations.
            ``Sec. 742. Trading.
            ``Sec. 743. International offset credits.

     ``Part E--Supplemental Emissions Reductions From Reduced Deforestation

            ``Sec. 751. Definitions.
            ``Sec. 752. Findings.
            ``Sec. 753. Supplemental emissions reductions through reduced
                            deforestation.
            ``Sec. 754. Requirements for international deforestation
                            reduction program.
            ``Sec. 755. Reports and reviews.
            ``Sec. 756. Legal effect of part.
    Sec. 312. Definitions.
            ``Sec. 700. Definitions.

                     Subtitle B--Disposition of Allowances

    Sec. 321. Disposition of allowances for global warming pollution
    reduction program.

                      ``Part H--Disposition of Allowances

            ``Sec. 781. Allocation of allowances for supplemental
                            reductions.
            ``Sec. 782. Allocation of emission allowances.
            ``Sec. 783. Electricity consumers.
            ``Sec. 784. Natural gas consumers.
            ``Sec. 785. Home heating oil and propane consumers.
            ``Sec. 787. Allocations to refineries.
            ``Sec. 788. [SECTION RESERVED].
            ``Sec. 789. Climate change consumer refunds.
            ``Sec. 790. Exchange for State-issued allowances.
            ``Sec. 791. Auction procedures.
            ``Sec. 792. Auctioning allowances for other entities.
            ``Sec. 793. Establishment of funds.
            ``Sec. 794. Oversight of allocations.

                Subtitle C--Additional Greenhouse Gas Standards

    Sec. 331. Greenhouse gas standards.

               ``TITLE VIII--ADDITIONAL GREENHOUSE GAS STANDARDS

            ``Sec. 801. Definitions.

                     ``Part A--Stationary Source Standards

            ``Sec. 811. Standards of performance.

                    ``Part C--Exemptions From Other Programs

            ``Sec. 831. Criteria pollutants.
            ``Sec. 832. International air pollution.
            ``Sec. 833. Hazardous air pollutants.
            ``Sec. 834. New source review.
            ``Sec. 835. Title V permits.
    Sec. 332. HFC Regulation.
    Sec. 333. Black carbon.

                             ``Part E--Black Carbon

            ``Sec. 851. Black carbon.
    Sec. 334. States.
    Sec. 335. State programs.

                            ``Part F--Miscellaneous

            ``Sec. 861. State programs.
            ``Sec. 862. Grants for support of air pollution control
                            programs.
    Sec. 336. Enforcement.
    Sec. 337. Conforming amendments.
    Sec. 338. Davis-Bacon compliance.

                      Subtitle D--Carbon Market Assurance

    Sec. 341. Carbon market assurance.

                    Subtitle E--Additional Market Assurance

    Sec. 351. Regulation of certain transactions in derivatives involving
    energy commodities.
    Sec. 352. No effect on authority of the Federal Energy Regulatory
    Commission.
    Sec. 353. Inspector General of the Commodity Futures Trading
    Commission.
    Sec. 354. Settlement and clearing through registered derivatives
    clearing organizations.
    Sec. 355. Limitation on eligibility to purchase a credit default swap.
    Sec. 356. Transaction fees.
    Sec. 357. No effect on authority of the Federal Trade Commission.
    Sec. 358. Regulation of carbon derivatives markets.
    Sec. 359. Cease-and-desist authority.

               TITLE IV--TRANSITIONING TO A CLEAN ENERGY ECONOMY

          Subtitle A--Ensuring Real Reductions in Industrial Emissions

    Sec. 401. Ensuring real reductions in industrial emissions.

           ``Part F--Ensuring Real Reductions in Industrial Emissions

            ``Sec. 761. Purposes.
            ``Sec. 762. International negotiations.
            ``Sec. 763. Definitions.

                 ``subpart 1--emission allowance rebate program

            ``Sec. 764. Eligible industrial sectors.
            ``Sec. 765. Distribution of emission allowance rebates.

              ``subpart 2--international reserve allowance program

            ``Sec. 766. International reserve allowance program.

                    ``subpart 3--presidential determination

            ``Sec. 767. Presidential reports and determinations.

                  Subtitle B--Green Jobs and Worker Transition

                               Part 1--Green Jobs

    Sec. 421. Clean energy curriculum development grants.
    Sec. 422. Increased funding for energy worker training program.

              Part 2--Climate Change Worker Adjustment Assistance

    Sec. 425. Petitions, eligibility requirements, and determinations.
    Sec. 426. Program benefits.
    Sec. 427. General provisions.

                        Subtitle C--Consumer Assistance

    Sec. 431. Energy tax credit.
    Sec. 432. Energy refund program for low-income consumers.

                     Subtitle D--Exporting Clean Technology

    Sec. 441. Findings and purposes.
    Sec. 442. Definitions.
    Sec. 443. Governance.
    Sec. 444. Determination of eligible countries.
    Sec. 445. Qualifying activities.
    Sec. 446. Assistance.

                     Subtitle E--Adapting to Climate Change

                          Part 1--Domestic Adaptation

             subpart a--national climate change adaptation program

    Sec. 451. National Climate Change Adaptation Program.
    Sec. 452. Climate services.
    Sec. 453. State programs to build resilience to climate change impacts.

                  subpart b--public health and climate change

    Sec. 461. Sense of Congress on public health and climate change.
    Sec. 462. Relationship to other laws.
    Sec. 463. National strategic action plan.
    Sec. 464. Advisory board.
    Sec. 465. Reports.
    Sec. 466. Definitions.
    Sec. 467. Climate Change Health Protection and Promotion Fund.

                     subpart c--natural resource adaptation

    Sec. 471. Purposes.
    Sec. 472. Natural resources climate change adaptation policy.
    Sec. 473. Definitions.
    Sec. 474. Council on Environmental Quality.
    Sec. 475. Natural Resources Climate Change Adaptation Panel.
    Sec. 476. Natural Resources Climate Change Adaptation Strategy.
    Sec. 477. Natural resources adaptation science and information.
    Sec. 478. Federal natural resource agency adaptation plans.
    Sec. 479. State natural resources adaptation plans.
    Sec. 480. Natural Resources Climate Change Adaptation Fund.
    Sec. 481. National Wildlife Habitat and Corridors Information Program.
    Sec. 482. Additional provisions regarding Indian tribes.

            Part 2--International Climate Change Adaptation Program

    Sec. 491. Findings and purposes.
    Sec. 492. Definitions.
    Sec. 493. International Climate Change Adaptation Program.
    Sec. 494. Distribution of allowances.
    Sec. 495. Bilateral assistance.

    SEC. 2. DEFINITIONS.

      For purposes of this Act:
              (1) Administrator.--The term ``Administrator'' means the
            Administrator of the Environmental Protection Agency.
              (2) State.--The term ``State'' has the meaning given that
            term in section 302 of the Clean Air Act.

    SEC. 3. INTERNATIONAL PARTICIPATION.

      The Administrator, in consultation with the Department of State and
    the United States Trade Representative, shall annually prepare and
    certify a report to the Congress regarding whether China and India have
    adopted greenhouse gas emissions standards at least as strict as those
    standards required under this Act. If the Administrator determines that
    China and India have not adopted greenhouse gas emissions standards at
    least as stringent as those set forth in this Act, the Administrator
    shall notify each Member of Congress of his determination, and shall
    release his determination to the media.

                             TITLE I--CLEAN ENERGY

       Subtitle A--Combined Efficiency and Renewable Electricity Standard

    SEC. 101. COMBINED EFFICIENCY AND RENEWABLE ELECTRICITY STANDARD.

      (a) In General.--Title VI of the Public Utility Regulatory Policies
    Act of 1978 (16 U.S.C. 2601 and following) is amended by adding at the
    end the following:

    ``SEC. 610. COMBINED EFFICIENCY AND RENEWABLE ELECTRICITY STANDARD.

      ``(a) Definitions.--For purposes of this section:
              ``(1) CHP savings.--The term `CHP savings' means--
                      ``(A) CHP system savings from a combined heat and
                    power system that commences operation after the date of
                    enactment of this section; and
                      ``(B) the increase in CHP system savings from, at any
                    time after the date of the enactment of this section,
                    upgrading, replacing, expanding, or increasing the
                    utilization of a combined heat and power system that
                    commenced operation on or before the date of enactment
                    of this section.
              ``(2) CHP system savings.--The term `CHP system savings'
            means the electric output, and the electricity saved due to the
            mechanical output, of a combined heat and power system,
            adjusted to reflect any increase in fuel consumption by that
            system as compared to the fuel that would have been required to
            produce an equivalent useful thermal energy output in a
            separate thermal-only system.
              ``(3) Combined heat and power system.--The term `combined
            heat and power system' means a system that uses the same energy
            source both for the generation of electrical or mechanical
            power and the production of steam or another form of useful
            thermal energy, provided that--
                      ``(A) the system meets such requirements relating to
                    efficiency and other operating characteristics as the
                    Commission may promulgate by regulation; and
                      ``(B) the net sales of electricity by the facility to
                    customers not consuming the thermal output from that
                    facility will not exceed 50 percent of total annual
                    electric generation by the facility.
              ``(4) Customer facility savings.--The term `customer facility
            savings' means a reduction in end-use electricity consumption
            (including recycled energy savings) at a facility of an end-use
            consumer of electricity served by a retail electric supplier,
            as compared to--
                      ``(A) in the case of a new facility, consumption at a
                    reference facility of average efficiency;
                      ``(B) in the case of an existing facility,
                    consumption at such facility during a base period,
                    except as provided in subparagraphs (C) and (D);
                      ``(C) in the case of new equipment that replaces
                    existing equipment with remaining useful life, the
                    projected consumption of the existing equipment for the
                    remaining useful life of such equipment, and
                    thereafter, consumption of new equipment of average
                    efficiency of the same equipment type; and
                      ``(D) in the case of new equipment that replaces
                    existing equipment at the end of the useful life of the
                    existing equipment, consumption by new equipment of
                    average efficiency of the same equipment type.
              ``(5) Distributed renewable generation facility.--The term
            `distributed renewable generation facility' means a facility
            that--
                      ``(A) generates renewable electricity;
                      ``(B) primarily serves 1 or more electricity
                    consumers at or near the facility site; and
                      ``(C) is no greater than--
                              ``(i) 2 megawatts in capacity; or
                              ``(ii) 4 megawatts in capacity, in the case
                            of a facility that is placed in service after
                            the date of enactment of this section and
                            generates electricity from a renewable energy
                            resource other than by means of combustion.
              ``(6) Electricity savings.--The term `electricity savings'
            means reductions in electricity consumption, relative to
            business-as-usual projections, achieved through measures
            implemented after the date of enactment of this section,
            limited to--
                      ``(A) customer facility savings of electricity,
                    adjusted to reflect any associated increase in fuel
                    consumption at the facility;
                      ``(B) reductions in distribution system losses of
                    electricity achieved by a retail electricity
                    distributor, as compared to losses attributable to new
                    or replacement distribution system equipment of average
                    efficiency;
                      ``(C) CHP savings; and
                      ``(D) fuel cell savings.
              ``(7) Federal land.--The term `Federal land' means land owned
            by the United States, other than land held in trust for an
            Indian or Indian tribe.
              ``(8) Federal renewable electricity credit.--The term
            `Federal renewable electricity credit' means a credit,
            representing one megawatt hour of renewable electricity, issued
            pursuant to subsection (e).
              ``(9) Fuel cell.--The term `fuel cell' means a device that
            directly converts the chemical energy of a fuel and an oxidant
            into electricity by electrochemical processes occurring at
            separate electrodes in the device.
              ``(10) Fuel cell savings.--The term `fuel cell savings' means
            the electricity saved by a fuel cell that is installed after
            the date of enactment of this section, or by upgrading a fuel
            cell that commenced operation on or before the date of
            enactment of this section, as a result of the greater
            efficiency with which the fuel cell transforms fuel into
            electricity as compared with sources of electricity delivered
            through the grid, provided that--
                      ``(A) the fuel cell meets such requirements relating
                    to efficiency and other operating characteristics as
                    the Commission may promulgate by regulation; and
                      ``(B) the net sales of electricity from the fuel cell
                    to customers not consuming the thermal output from the
                    fuel cell, if any, do not exceed 50 percent of the
                    total annual electricity generation by the fuel cell.
              ``(11) High conservation priority land.--The term `high
            conservation priority land' means land that is not Federal land
            and is--
                      ``(A) globally or State ranked as critically
                    imperiled or imperiled under a State Natural Heritage
                    Program; or
                      ``(B) old-growth or late-successional forest, as
                    identified by the office of the relevant State Forester
                    or relevant State agency with regulatory jurisdiction
                    over forestry activities.
              ``(12) Other qualifying energy resource.--The term `other
            qualifying energy resource' means any of the following:
                      ``(A) Landfill gas.
                      ``(B) Wastewater treatment gas.
                      ``(C) Coal mine methane used to generate electricity
                    at or near the mine mouth.
                      ``(D) Qualified waste-to-energy.
              ``(13) Qualified hydropower.--The term `qualified hydropower'
            means--
                      ``(A) energy produced from increased efficiency
                    achieved, or additions of capacity made, on or after
                    January 1, 1992, at a hydroelectric facility that was
                    placed in service before that date and does not include
                    additional energy generated as a result of operational
                    changes not directly associated with efficiency
                    improvements or capacity additions; or
                      ``(B) energy produced from generating capacity added
                    to a dam on or after January 1, 1992, provided that the
                    Commission certifies that--
                              ``(i) the dam was placed in service before
                            the date of the enactment of this section and
                            was operated for flood control, navigation, or
                            water supply purposes and was not producing
                            hydroelectric power prior to the addition of
                            such capacity;
                              ``(ii) the hydroelectric project installed on
                            the dam is licensed (or is exempt from
                            licensing) by the Commission and is in
                            compliance with the terms and conditions of the
                            license or exemption, and with other applicable
                            legal requirements for the protection of
                            environmental quality, including applicable
                            fish passage requirements; and
                              ``(iii) the hydroelectric project installed
                            on the dam is operated so that the water
                            surface elevation at any given location and
                            time that would have occurred in the absence of
                            the hydroelectric project is maintained,
                            subject to any license or exemption
                            requirements that require changes in water
                            surface elevation for the purpose of improving
                            the environmental quality of the affected
                            waterway.
              ``(14) Qualified waste-to-energy.--The term `qualified waste-
            to-energy' means energy from the combustion of municipal solid
            waste or construction, demolition, or disaster debris, or from
            the gasification or pyrolization of such waste or debris and
            the combustion of the resulting gas at the same facility,
            provided that--
                      ``(A) such term shall include only the energy derived
                    from the non-fossil biogenic portion of such waste or
                    debris;
                      ``(B) the Commission determines, with the concurrence
                    of the Administrator of the Environmental Protection
                    Agency, that the total lifecycle greenhouse gas
                    emissions attributable to the generation of electricity
                    from such waste or debris are lower than those
                    attributable to the likely alternative method of
                    disposing of such waste or debris; and
                      ``(C) the owner or operator of the facility
                    generating electricity from such energy provides to the
                    Commission, on an annual basis--
                              ``(i) a certification that the facility is in
                            compliance with all applicable State and
                            Federal environmental permits;
                              ``(ii) in the case of a facility that
                            commenced operation before the date of
                            enactment of this section, a certification that
                            the facility meets emissions standards
                            promulgated under sections 112 or 129 of the
                            Clean Air Act (42 U.S.C. 7412 or 7429) that
                            apply as of the date of enactment of this
                            section to new facilities within the relevant
                            source category; and
                              ``(iii) in the case of the combustion,
                            pyrolization, or gasification of municipal
                            solid waste, a certification that each local
                            government unit from which such waste
                            originates operates, participates in the
                            operation of, contracts for, or otherwise
                            provides for, recycling services for its
                            residents.
              ``(15) Recycled energy savings.--The term `recycled energy
            savings' means a reduction in electricity consumption that
            results from a modification of an industrial or commercial
            system that commenced operation before the date of enactment of
            this section, in order to recapture electrical, mechanical, or
            thermal energy that would otherwise be wasted.
              ``(16) Renewable biomass.--The term `renewable biomass' means
            any of the following:
                      ``(A) Plant material, including waste material,
                    harvested or collected from actively managed
                    agricultural land that was in cultivation, cleared, or
                    fallow and nonforested on January 1, 2009.
                      ``(B) Plant material, including waste material,
                    harvested or collected from pastureland that was
                    nonforested on January 1, 2009.
                      ``(C) Nonhazardous vegetative matter derived from
                    waste, including separated yard waste, landscape right-
                    of-way trimmings, construction and demolition debris or
                    food waste (but not municipal solid waste, recyclable
                    waste paper, painted, treated or pressurized wood, or
                    wood contaminated with plastic or metals).
                      ``(D) Animal waste or animal byproducts, including
                    products of animal waste digesters.
                      ``(E) Algae.
                      ``(F) Trees, brush, slash, residues, or any other
                    vegetative matter removed from within 600 feet of any
                    building, campground, or route designated for
                    evacuation by a public official with responsibility for
                    emergency preparedness, or from within 300 feet of a
                    paved road, electric transmission line, utility tower,
                    or water supply line.
                      ``(G) Residues from or byproducts of milled logs.
                      ``(H) Any of the following removed from forested land
                    that is not Federal and is not high conservation
                    priority land:
                              ``(i) Trees, brush, slash, residues,
                            interplanted energy crops, or any other
                            vegetative matter removed from an actively
                            managed tree plantation established--
                                      ``(I) prior to January 1, 2009; or
                                      ``(II) on land that, as of January 1,
                                    2009, was cultivated or fallow and non-
                                    forested.
                              ``(ii) Trees, logging residue, thinnings,
                            cull trees, pulpwood, and brush removed from
                            naturally-regenerated forests or other non-
                            plantation forests, including for the purposes
                            of hazardous fuel reduction or preventative
                            treatment for reducing or containing insect or
                            disease infestation.
                              ``(iii) Logging residue, thinnings, cull
                            trees, pulpwood, brush and species that are
                            non-native and noxious, from stands that were
                            planted and managed after January 1, 2009, to
                            restore or maintain native forest types.
                              ``(iv) Dead or severely damaged trees removed
                            within 5 years of fire, blowdown, or other
                            natural disaster, and badly infested trees.
                      ``(I) Materials, pre-commercial thinnings, or removed
                    invasive species from National Forest System land and
                    public lands (as defined in section 103 of the Federal
                    Land Policy and Management Act of 1976 (43 U.S.C.
                    1702)), including those that are byproducts of
                    preventive treatments (such as trees, wood, brush,
                    thinnings, chips, and slash), that are removed as part
                    of a federally recognized timber sale, or that are
                    removed to reduce hazardous fuels, to reduce or contain
                    disease or insect infestation, or to restore ecosystem
                    health, and that are--
                              ``(i) not from components of the National
                            Wilderness Preservation System, Wilderness
                            Study Areas, Inventoried Roadless Areas, old
                            growth or mature forest stands, components of
                            the National Landscape Conservation System,
                            National Monuments, National Conservation
                            Areas, Designated Primitive Areas, or Wild and
                            Scenic Rivers corridors;
                              ``(ii) harvested in environmentally
                            sustainable quantities, as determined by the
                            appropriate Federal land manager; and
                              ``(iii) harvested in accordance with Federal
                            and State law and applicable land management
                            plans.
              ``(17) Renewable electricity.--The term `renewable
            electricity' means electricity generated (including by means of
            a fuel cell) from a renewable energy resource or other
            qualifying energy resources.
              ``(18) Renewable energy resource.--The term `renewable energy
            resource' means each of the following:
                      ``(A) Wind energy.
                      ``(B) Solar energy.
                      ``(C) Geothermal energy.
                      ``(D) Renewable biomass.
                      ``(E) Biogas derived exclusively from renewable
                    biomass.
                      ``(F) Biofuels derived exclusively from renewable
                    biomass.
                      ``(G) Qualified hydropower.
                      ``(H) Marine and hydrokinetic renewable energy, as
                    that term is defined in section 632 of the Energy
                    Independence and Security Act of 2007 (42 U.S.C.
                    17211).
              ``(19) Retail electric supplier.--
                      ``(A) In general.--The term `retail electric
                    supplier' means, for any given year, an electric
                    utility that sold not less than 4,000,000 megawatt
                    hours of electric energy to electric consumers for
                    purposes other than resale during the preceding
                    calendar year.
                      ``(B) Inclusions and limitations.--For purposes of
                    determining whether an electric utility qualifies as a
                    retail electric supplier under subparagraph (A)--
                              ``(i) the sales of any affiliate of an
                            electric utility to electric consumers, other
                            than sales to the affiliate's lessees or
                            tenants, for purposes other than resale shall
                            be considered to be sales of such electric
                            utility; and
                              ``(ii) sales by any electric utility to an
                            affiliate, lessee, or tenant of such electric
                            utility shall not be treated as sales to
                            electric consumers.
                      ``(C) Affiliate.--For purposes of this paragraph, the
                    term `affiliate' when used in relation to a person,
                    means another person that directly or indirectly owns
                    or controls, is owned or controlled by, or is under
                    common ownership or control with, such person, as
                    determined under regulations promulgated by the
                    Commission.
              ``(20) Retail electric supplier's base amount.--The term
            `retail electric supplier's base amount' means the total amount
            of electric energy sold by the retail electric supplier,
            expressed in megawatt hours, to electric customers for purposes
            other than resale during the relevant calendar year,
            excluding--
                      ``(A) electricity generated by a hydroelectric
                    facility that is not qualified hydropower;
                      ``(B) electricity generated by a nuclear generating
                    unit placed in service after the date of enactment of
                    this section; and
                      ``(C) the proportion of electricity generated by a
                    fossil-fueled generating unit that is equal to the
                    proportion of greenhouse gases produced by such unit
                    that are captured and geologically sequestered.
              ``(21) Retire and retirement.--The terms `retire' and
            `retirement' with respect to a Federal renewable electricity
            credit, means to disqualify such credit for any subsequent use
            under this section, regardless of whether the use is a sale,
            transfer, exchange, or submission in satisfaction of a
            compliance obligation.
              ``(22) Third-party efficiency provider.--The term `third-
            party efficiency provider' means any retailer, building owner,
            energy service company, financial institution or other
            commercial, industrial or nonprofit entity that is capable of
            providing electricity savings in accordance with the
            requirements of this section.
              ``(23) Total annual electricity savings.--The term `total
            annual electricity savings' means electricity savings during a
            specified calendar year from measures that were placed into
            service since the date of the enactment of this section, taking
            into account verified measure lifetimes or verified annual
            savings attrition rates, as determined in accordance with such
            regulations as the Commission may promulgate and measured in
            megawatt hours.
      ``(b) Annual Compliance Obligation.--
              ``(1) In general.--For each of calendar years 2012 through
            2039, not later than March 31 of the following calendar year,
            each retail electric supplier shall submit to the Commission an
            amount of Federal renewable electricity credits and
            demonstrated total annual electricity savings that, in the
            aggregate, is equal to such retail electric supplier's annual
            combined target as set forth in subsection (d), except as
            otherwise provided in subsection (g).
              ``(2) Demonstration of savings.--For purposes of this
            subsection, submission of demonstrated total annual electricity
            savings means submission of a report that demonstrates, in
            accordance with the requirements of subsection (f), the total
            annual electricity savings achieved by the retail electric
            supplier within the relevant compliance year.
              ``(3) Renewable electricity credits portion.--Except as
            provided in paragraph (4), each retail electric supplier must
            submit Federal renewable electricity credits equal to at least
            three quarters of the retail electric supplier's annual
            combined target.
              ``(4) State petition.--
                      ``(A) In general.--Upon written request from the
                    Governor of any State (including, for purposes of this
                    paragraph, the Mayor of the District of Columbia), the
                    Commission shall increase, to not more than two fifths,
                    the proportion of the annual combined targets of retail
                    electric suppliers located within such State that may
                    be met through submission of demonstrated total annual
                    electricity savings, provided that such increase shall
                    be effective only with regard to the portion of a
                    retail electric supplier's annual combined target that
                    is attributable to electricity sales within such State.
                      ``(B) Contents.--A Governor's request under this
                    paragraph shall include an explanation of the
                    Governor's rationale for determining, after
                    consultation with the relevant State regulatory
                    authority and other retail electricity ratemaking
                    authorities within the State, to make such request. The
                    request shall specify the maximum proportion of annual
                    combined targets (not more than two fifths) that can be
                    met through demonstrated total annual electricity
                    savings, and the period for which such proportion shall
                    be effective.
                      ``(C) Revision.--The Governor of any State may, after
                    consultation with the relevant State regulatory
                    authority and other retail electricity ratemaking
                    authorities within the State, submit a written request
                    for revocation or revision of a previous request
                    submitted under this paragraph. The Commission shall
                    grant such request, provided that--
                              ``(i) any revocation or revision shall not
                            apply to the combined annual target for any
                            year that is any earlier than 2 calendar years
                            after the calendar year in which such request
                            is submitted, so as to provide retail electric
                            suppliers with adequate notice of such change;
                            and
                              ``(ii) any revision shall meet the
                            requirements of subparagraph (A).
      ``(c) Establishment of Program.--Not later than 1 year after the date
    of enactment of this section, the Commission shall promulgate
    regulations to implement and enforce the requirements of this section.
    In promulgating such regulations, the Commission shall, to the extent
    practicable--
              ``(1) preserve the integrity, and incorporate best practices,
            of existing State renewable electricity and energy efficiency
            programs;
              ``(2) rely upon existing and emerging State or regional
            tracking systems that issue and track non-Federal renewable
            electricity credits; and
              ``(3) cooperate with the States to facilitate coordination
            between State and Federal renewable electricity and energy
            efficiency programs and to minimize administrative burdens and
            costs to retail electric suppliers.
      ``(d) Annual Compliance Requirement.--
              ``(1) Annual combined targets.--For each of calendar years
            2012 through 2039, a retail electric supplier's annual combined
            target shall be the product of--
                      ``(A) the required annual percentage for such year,
                    as set forth in paragraph (2); and
                      ``(B) the retail electric supplier's base amount for
                    such year.
              ``(2) Required annual percentage.--For each of calendar years
            2012 through 2039, the required annual percentage shall be as
            follows:

                ``Calendar year                 Required annual percentage

    2012...................................  6.0
    2013...................................  6.0
    2014...................................  9.5
    2015...................................  9.5
    2016...................................  13.0
    2017...................................  13.0
    2018...................................  16.5
    2019...................................  16.5
    2020...................................  20.0
    2021 through 2039......................  20.0

      ``(e) Federal Renewable Electricity Credits.--
              ``(1) In general.--The regulations promulgated under this
            section shall include provisions governing the issuance,
            tracking, and verification of Federal renewable electricity
            credits. Except as provided in paragraphs (2), (3), and (4) of
            this subsection, the Commission shall issue to each generator
            of renewable electricity, 1 Federal renewable electricity
            credit for each megawatt hour of renewable electricity
            generated by such generator after December 31, 2011. The
            Commission shall assign a unique serial number to each Federal
            renewable electricity credit.
              ``(2) Generation from certain state renewable electricity
            programs.--Where renewable electricity is generated with the
            support of payments from a retail electric supplier pursuant to
            a State renewable electricity program (whether through State
            alternative compliance payments or through payments to a State
            renewable electricity procurement fund or entity), the
            Commission shall issue Federal renewable electricity credits to
            such retail electric supplier for the proportion of the
            relevant renewable electricity generation that is attributable
            to the retail electric supplier's payments, as determined
            pursuant to regulations issued by the Commission. For any
            remaining portion of the relevant renewable electricity
            generation, the Commission shall issue Federal renewable
            electricity credits to the generator, as provided in paragraph
            (1), except that in no event shall more than 1 Federal
            renewable electricity credit be issued for the same megawatt
            hour of electricity. In determining how Federal renewable
            electricity credits will be apportioned among retail electric
            suppliers and generators in such circumstances, the Commission
            shall consider information and guidance furnished by the
            relevant State or States.
              ``(3) Certain power sales contracts.--When a generator has
            sold renewable electricity to a retail electric supplier under
            a contract for power from a facility placed in service before
            the date of enactment of this section, and the contract does
            not provide for the determination of ownership of the Federal
            renewable electricity credits associated with such generation,
            the Commission shall issue such Federal renewable electricity
            credits to the retail electric supplier for the duration of the
            contract.
              ``(4) Credit multiplier for distributed renewable
            generation.--
                      ``(A) In general.--Except as provided in subparagraph
                    (B), the Commission shall issue 3 Federal renewable
                    electricity credits for each megawatt hour of renewable
                    electricity generated by a distributed renewable
                    generation facility.
                      ``(B) Adjustment.--Except as provided in subparagraph
                    (C), not later than January 1, 2014, and not less
                    frequently than every 4 years thereafter, the
                    Commission shall review the effect of this paragraph
                    and shall, as necessary, reduce the number of Federal
                    renewable electricity credits per megawatt hour issued
                    under this paragraph for any given energy source or
                    technology, but not below 1, to ensure that such number
                    is no higher than the Commission determines is
                    necessary to make distributed renewable generation
                    facilities using such source or technology cost
                    competitive with other sources of renewable electricity
                    generation.
                      ``(C) Facilities placed in service after enactment.--
                    For any distributed renewable generation facility
                    placed in service after the date of enactment of this
                    section, subparagraph (B) shall not apply for the first
                    10 years after the date on which the facility is placed
                    in service. For each year during such 10-year period,
                    the Commission shall issue to the facility the same
                    number of Federal renewable electricity credits per
                    megawatt hour as are issued to that facility in the
                    year in which such facility is placed in service. After
                    such 10-year period, the Commission shall issue Federal
                    renewable electricity credits to the facility in
                    accordance with the current multiplier as determined
                    pursuant to subparagraph (B).
              ``(5) Credits based on qualified hydropower.--For purposes of
            this subsection, the number of Federal renewable electricity
            credits issued for qualified hydropower shall be calculated--
                      ``(A) based solely on the increase in average annual
                    generation directly resulting from the efficiency
                    improvements or capacity additions described in
                    subsection (a)(13)(A); and
                      ``(B) using the same water flow information used to
                    determine a historic average annual generation baseline
                    for the hydroelectric facility, as certified by the
                    Commission.
              ``(6) Generation from mixed renewable and nonrenewable
            resources.--If electricity is generated using both a renewable
            energy resource or other qualifying energy resource and an
            energy source that is not a renewable energy resource or other
            qualifying energy resource (as, for example, in the case of co-
            firing of renewable biomass and fossil fuel), the Commission
            shall issue Federal renewable electricity credits based on the
            proportion of the electricity that is attributable to the
            renewable energy resource or other qualifying energy resource.
              ``(7) Prohibition against double-counting.--Except as
            provided in paragraph (4) of this subsection, the Commission
            shall ensure that no more than 1 Federal renewable electricity
            credit will be issued for any megawatt hour of renewable
            electricity and that no Federal renewable electricity credit
            will be used more than once for compliance with this section.
              ``(8) Trading.--The lawful holder of a Federal renewable
            electricity credit may sell, exchange, transfer, submit for
            compliance in accordance with subsection (b), or submit such
            credit for retirement by the Commission.
              ``(9) Banking.--A Federal renewable electricity credit may be
            submitted in satisfaction of the compliance obligation set
            forth in subsection (b) for the compliance year in which the
            credit was issued or for any of the 3 immediately subsequent
            compliance years. The Commission shall retire any Federal
            renewable electricity credit that has not been retired by April
            2 of the calendar year that is 3 years after the calendar year
            in which the credit was issued.
              ``(10) Retirement.--The Commission shall retire a Federal
            renewable electricity credit immediately upon submission by the
            lawful holder of such credit, whether in satisfaction of a
            compliance obligation under subsection (b) or on some other
            basis.
      ``(f) Electricity Savings.--
              ``(1) Standards for measurement of savings.--As part of the
            regulations promulgated under this section, the Commission
            shall prescribe standards and protocols for defining and
            measuring electricity savings and total annual electricity
            savings that can be counted towards the compliance obligation
            set forth in subsection (b). Such protocols and standards
            shall, at minimum--
                      ``(A) specify the types of energy efficiency and
                    energy conservation measures that can be counted;
                      ``(B) require that energy consumption estimates for
                    customer facilities or portions of facilities in the
                    applicable base and current years be adjusted, as
                    appropriate, to account for changes in weather, level
                    of production, and building area;
                      ``(C) account for the useful life of measures;
                      ``(D) include deemed savings values for specific,
                    commonly used measures;
                      ``(E) allow for savings from a program to be
                    estimated based on extrapolation from a representative
                    sample of participating customers;
                      ``(F) include procedures for counting CHP savings,
                    recycled energy savings, and fuel cell savings;
                      ``(G) include procedures for counting electricity
                    savings achieved by solar water heating and solar light
                    pipe technology that has the capability to provide
                    measureable data on the amount of megawatt-hours
                    displaced;
                      ``(H) avoid double-counting of savings used for
                    compliance with this section, including savings that
                    are transferred pursuant to paragraph (3);
                      ``(I) ensure that, except as provided in subparagraph
                    (K), the retail electric supplier claiming the savings
                    played a significant role in achieving the savings
                    (including through the activities of a designated agent
                    of the supplier or through the purchase of transferred
                    savings);
                      ``(J) include savings from programs administered by a
                    retail electric supplier (or a retail electricity
                    distributor that is not a retail electric supplier)
                    that are funded by State, Federal, or other sources;
                      ``(K) in any State in which the State regulatory
                    authority has designated 1 or more entities to
                    administer electric ratepayer-funded efficiency
                    programs approved by such State regulatory authority,
                    provide that electricity savings achieved through such
                    programs shall be distributed equitably among retail
                    electric suppliers in accordance with the direction of
                    the relevant State regulatory authority; and
                      ``(L) exclude savings achieved as a result of
                    compliance with mandatory appliance and equipment
                    efficiency standards or building codes.
              ``(2) Standards for third-party verification of savings.--The
            regulations promulgated under this section shall establish
            procedures and standards requiring third-party verification of
            all reported electricity savings, including requirements for
            accreditation of third-party verifiers to ensure that such
            verifiers are professionally qualified and have no conflicts of
            interest.
              ``(3) Transfers of savings.--
                      ``(A) Bilateral contracts for savings transfers.--
                    Subject to the limitations of this paragraph, a retail
                    electric supplier may use electricity savings
                    transferred, pursuant to a bilateral contract, from
                    another retail electric supplier, an owner of an
                    electric distribution facility that is not a retail
                    electric supplier, a State, or a third-party efficiency
                    provider to meet the applicable compliance obligation
                    under subsection (b).
                      ``(B) Requirements.--Electricity savings transferred
                    and used for compliance pursuant to this paragraph
                    shall be--
                              ``(i) measured and verified in accordance
                            with the procedures specified under this
                            subsection;
                              ``(ii) reported in accordance with paragraph
                            (4) of this subsection; and
                              ``(iii) achieved within the same State as is
                            served by the retail electric supplier.
                      ``(C) Regulatory approval.--Nothing in this paragraph
                    shall limit or affect the authority of a State
                    regulatory authority to require a retail electric
                    supplier that is regulated by such authority to obtain
                    such authority's authorization or approval of a
                    contract for transfer of savings under this paragraph.
              ``(4) Reporting savings.--
                      ``(A) Requirements.--The regulations promulgated
                    under this section shall establish requirements
                    governing the submission of reports to demonstrate, in
                    accordance with the protocols and standards for
                    measurement and third-party verification established
                    under this subsection, the total annual electricity
                    savings achieved by a retail electric supplier within
                    the relevant year.
                      ``(B) Review and approval.--The Commission shall
                    review each report submitted to the Commission by a
                    retail electric supplier and shall exclude any
                    electricity savings that have not been adequately
                    demonstrated in accordance with the requirements of
                    this subsection.
              ``(5) State administration.--
                      ``(A) Delegation of authority.--Upon receipt of an
                    application from the Governor of a State (including,
                    for purposes of this subsection, the Mayor of the
                    District of Columbia), the Commission may delegate to
                    the State the authority to review and verify reported
                    electricity savings for purposes of determining
                    demonstrated total annual electricity savings that may
                    be counted towards a retail electric supplier's
                    compliance obligation under subsection (b). The
                    Commission shall make a substantive determination
                    approving or disapproving a State application under
                    this subparagraph, after notice and comment, within 180
                    days of receipt of a complete application.
                      ``(B) Alternative measurement and verification
                    procedures and standards.--As part of an application
                    submitted under subparagraph (A), a State may request
                    to use alternative measurement and verification
                    procedures and standards to those specified in
                    paragraphs (1) and (2), provided the State demonstrates
                    that such alternative procedures and standards provide
                    a level of accuracy of measurement and verification at
                    least equivalent to the Federal procedures and
                    standards promulgated under paragraphs (1) and (2).
                      ``(C) Review of state implementation.--The Commission
                    shall, not less frequently than once every 4 years,
                    review each State's implementation of delegated
                    authority under this paragraph to ensure conformance
                    with the requirements of this section. The Commission
                    may, at any time, revoke the delegation of authority
                    under this section upon a finding that the State is not
                    implementing its delegated responsibilities in
                    conformity with this paragraph. As a condition of
                    maintaining its delegated authority under this
                    paragraph, the Commission may require a State to submit
                    a revised application under subparagraph (A) if the
                    Commission has--
                              ``(i) promulgated new or substantially
                            revised measurement and verification procedures
                            and standards under this subsection; or
                              ``(ii) otherwise substantially revised the
                            program established under this section.
      ``(g) Alternative Compliance Payments.--
              ``(1) In general.--A retail electric supplier may satisfy the
            requirements of subsection (b) in whole or in part by
            submitting in accordance with this subsection, in lieu of each
            Federal renewable electricity credit or megawatt hour of
            demonstrated total annual electricity savings that would
            otherwise be due, a payment equal to $25, adjusted for
            inflation on January 1 of each year following calendar year
            2009, in accordance with such regulations as the Commission may
            promulgate.
              ``(2) Payment to state funds.--Except as otherwise provided
            in this paragraph, payments made under this subsection shall be
            made directly to the State or States in which the retail
            electric supplier is located, in proportion to the portion of
            the retail electric supplier's base amount that is sold within
            each relevant State, provided that such payments are deposited
            directly into a fund in the State treasury established for this
            purpose and that the State uses such funds in accordance with
            paragraphs (3) and (4). If the Commission determines at any
            time that a State is in substantial noncompliance with
            paragraph (3) or (4), the Commission shall direct that any
            future alternative compliance payments that would otherwise be
            paid to such State under this subsection shall instead be paid
            to the Commission and deposited in the United States Treasury.
              ``(3) State use of funds.--As a condition of continued
            receipt of alternative compliance payments pursuant to this
            subsection, a State shall use such payments exclusively for the
            purposes of--
                      ``(A) deploying technologies that generate
                    electricity from renewable energy resources; or
                      ``(B) implementing cost-effective energy efficiency
                    programs to achieve electricity savings.
              ``(4) Reporting.--As a condition of continued receipt of
            alternative compliance payments pursuant to this subsection, a
            State shall, within 12 months of receipt of any such payments
            and at 12-month intervals thereafter until such payments are
            expended, provide a report to the Commission, in accordance
            with such regulations as the Commission may prescribe, giving a
            full accounting of the use of such payments, including a
            detailed description of the activities funded thereby.
      ``(h) Information Collection.--The Commission may require any retail
    electric supplier, renewable electricity generator, or such other
    entities as the Commission deems appropriate, to provide any
    information the Commission determines appropriate to carry out this
    section. Failure to submit such information or submission of false or
    misleading information under this subsection shall be a violation of
    this section.
      ``(i) Enforcement and Judicial Review.--
              ``(1) Failure to submit credits or demonstrate savings.--If
            any person fails to comply with the requirements of subsection
            (b) or (g), such person shall be liable to pay to the
            Commission a civil penalty equal to the product of--
                      ``(A) double the alternative compliance payment
                    calculated under subsection (g)(1), and
                      ``(B) the aggregate quantity of Federal renewable
                    electricity credits, total annual electricity savings,
                    or equivalent alternative compliance payments that the
                    person failed to submit in violation of the
                    requirements of subsections (b) and (g).
              ``(2) Enforcement.--The Commission shall assess a civil
            penalty under paragraph (1) in accordance with the procedures
            described in section 31(d) of the Federal Power Act (16 U.S.C.
            823b(d)).
              ``(3) Violation of requirement of regulations or orders.--Any
            person who violates, or fails or refuses to comply with, any
            requirement of a regulation promulgated or order issued under
            this section shall be subject to a civil penalty under section
            316A(b) of the Federal Power Act (16 U.S.C. 825o-1). Such
            penalty shall be assessed by the Commission in the same manner
            as in the case of a violation referred to in section 316A(b) of
            such Act.
      ``(j) Judicial Review.--Any person aggrieved by a final action taken
    by the Commission under this section, other than the assessment of a
    civil penalty under subsection (i), may use the procedures for review
    described in section 313 of the Federal Power Act (16 U.S.C. 825l). For
    purposes of this paragraph, references to an order in section 313 of
    such Act shall be deemed to refer also to all other final actions of
    the Commission under this section other than the assessment of a civil
    penalty under subsection (i).
      ``(k) Savings Provisions.--Nothing in this section shall--
              ``(1) diminish or qualify any authority of a State or
            political subdivision of a State to--
                      ``(A) adopt or enforce any law or regulation
                    respecting renewable electricity or energy efficiency,
                    including any law or regulation establishing
                    requirements more stringent than those established by
                    this section, provided that no such law or regulation
                    may relieve any person of any requirement otherwise
                    applicable under this section; or
                      ``(B) regulate the acquisition and disposition of
                    Federal renewable electricity credits by retail
                    electric suppliers within the jurisdiction of such
                    State or political subdivision, including the authority
                    to require such retail electric supplier to acquire and
                    submit to the Secretary for retirement Federal
                    renewable electricity credits in excess of those
                    submitted under this section; or
              ``(2) affect the application of, or the responsibility for
            compliance with, any other provision of law or regulation,
            including environmental and licensing requirements.
      ``(l) Sunset.--This section expires on December 31, 2040.''.
      (b) Conforming Amendment.--The table of contents set forth in section
    1(b) of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C.
    2601 and following) is amended by inserting after the item relating to
    section 609 the following:

    ``Sec. 610. Combined efficiency and renewable electricity standard.''.

    SEC. 102. CLARIFYING STATE AUTHORITY TO ADOPT RENEWABLE ENERGY
                        INCENTIVES.

       Section 210 of the Public Utility Regulatory Policies Act of 1978 is
    amended by adding at the end thereof:
      ``(o) Clarification of State Authority to Adopt Renewable Energy
    Incentives.--Notwithstanding any other provision of this Act or the
    Federal Power Act, a State legislature or regulatory authority may set
    the rates for a sale of electric energy by a facility generating
    electric energy from renewable energy sources pursuant to a State-
    approved production incentive program under which the facility
    voluntarily sells electric energy. For purposes of this subsection,
    `State-approved production incentive program' means a requirement
    imposed pursuant to State law, or by a State regulatory authority
    acting within its authority under State law, that an electric utility
    purchase renewable energy (as defined in section 609 of this Act) at a
    specified rate.''.

                  Subtitle B--Carbon Capture and Sequestration

    SEC. 111. NATIONAL STRATEGY.

      (a) In General.--Not later than 1 year after the date of enactment of
    this Act, the Administrator, in consultation with the Secretary of
    Energy and the heads of such other relevant Federal agencies as the
    President may designate, shall submit to Congress a report setting
    forth a unified and comprehensive strategy to address the key legal,
    regulatory and other barriers to the commercial-scale deployment of
    carbon capture and sequestration.
      (b) Barriers.-- The report under this section shall--
              (1) identify those regulatory, legal, and other gaps and
            barriers that could be addressed by a Federal agency using
            existing statutory authority, those, if any, that require
            Federal legislation, and those that would be best addressed at
            the State or regional level;
              (2) identify regulatory implementation challenges, including
            those related to approval of State programs and delegation of
            authority for permitting; and
              (3) recommend rulemakings, Federal legislation, or other
            actions that should be taken to further evaluate and address
            such barriers.

    SEC. 112. REGULATIONS FOR GEOLOGIC SEQUESTRATION SITES.

      (a) Coordinated Certification and Permitting Process.--Title VIII of
    the Clean Air Act, as added by section 331 of this Act, is amended by
    adding after section 812 (as added by section 116 of this Act) the
    following:

    ``SEC. 813. GEOLOGIC SEQUESTRATION SITES.

      ``(a) Coordinated Process.--The Administrator shall establish a
    coordinated approach to certifying and permitting geologic
    sequestration, taking into consideration all relevant statutory
    authorities. In establishing such approach, the Administrator shall--
              ``(1) take into account, and reduce redundancy with, the
            requirements of section 1421 of the Safe Drinking Water Act (42
            U.S.C. 300h), as amended by section 112(b) of the American
            Clean Energy and Security Act of 2009, including the rulemaking
            for geologic sequestration wells described at 73 Fed. Reg.
            43491-541 (July 25, 2008); and
              ``(2) to the extent practicable, reduce the burden on
            certified entities and implementing authorities.
      ``(b) Regulations.--Not later than 2 years after the date of
    enactment of this title, the Administrator shall promulgate regulations
    to protect human health and the environment by minimizing the risk of
    escape to the atmosphere of carbon dioxide injected for purposes of
    geologic sequestration.
      ``(c) Requirements.--The regulations under subsection (b) shall
    include--
              ``(1) a process to obtain certification for geologic
            sequestration under this section; and
              ``(2) requirements for--
                      ``(A) monitoring, record keeping, and reporting for
                    emissions associated with injection into, and escape
                    from, geologic sequestration sites, taking into account
                    any requirements or protocols developed under section
                    713;
                      ``(B) public participation in the certification
                    process that maximizes transparency;
                      ``(C) the sharing of data between States, Indian
                    tribes, and the Environmental Protection Agency; and
                      ``(D) other elements or safeguards necessary to
                    achieve the purpose set forth in subsection (b).
      ``(d) Report.--Not later than 2 years after the promulgation of
    regulations under subsection (b), and at 3-year intervals thereafter,
    the Administrator shall deliver to the Committee on Energy and Commerce
    of the House of Representatives and the Committee on Environment and
    Public Works of the Senate a report on geologic sequestration in the
    United States, and, to the extent relevant, other countries in North
    America. Such report shall include--
              ``(1) data regarding injection, emissions to the atmosphere,
            if any, and performance of active and closed geologic
            sequestration sites, including those where enhanced hydrocarbon
            recovery operations occur;
              ``(2) an evaluation of the performance of relevant Federal
            environmental regulations and programs in ensuring
            environmentally protective geologic sequestration practices;
              ``(3) recommendations on how such programs and regulations
            should be improved or made more effective; and
              ``(4) other relevant information.''.
      (b) Safe Drinking Water Act Standards.--Section 1421 of the Safe
    Drinking Water Act (42 U.S.C. 300h) is amended by inserting after
    subsection (d) the following:
      ``(e) Carbon Dioxide Geologic Sequestration Wells.--
              ``(1) In general.--Not later than 1 year after the date of
            enactment of this subsection, the Administrator shall
            promulgate regulations under subsection (a) for carbon dioxide
            geologic sequestration wells.
              ``(2) Financial responsibility.--The regulations referred to
            in paragraph (1) shall include requirements for maintaining
            evidence of financial responsibility, including financial
            responsibility for emergency and remedial response, well
            plugging, site closure, and post-injection site care. Financial
            responsibility may be established for carbon dioxide geologic
            sequestration wells in accordance with regulations promulgated
            by the Administrator by any one, or any combination, of the
            following: insurance, guarantee, trust, standby trust, surety
            bond, letter of credit, qualification as a self-insurer, or any
            other method satisfactory to the Administrator.''.

    SEC. 113. STUDIES AND REPORTS.

      (a) Study of Legal Framework for Geologic Sequestration Sites.--
              (1) Establishment of task force.--As soon as practicable, but
            not later than 6 months after the date of enactment of this
            Act, the Administrator shall establish a task force to be
            composed of an equal number of subject matter experts,
            nongovernmental organizations with expertise in environmental
            policy, academic experts with expertise in environmental law,
            State officials with environmental expertise, representatives
            of State Attorneys General, and members of the private sector,
            to conduct a study of--
                      (A) existing Federal environmental statutes, State
                    environmental statutes, and State common law that apply
                    to geologic sequestration sites for carbon dioxide,
                    including the ability of such laws to serve as risk
                    management tools;
                      (B) the existing statutory framework, including
                    Federal and State laws, that apply to harm and damage
                    to the environment or public health at closed sites
                    where carbon dioxide injection has been used for
                    enhanced hydrocarbon recovery;
                      (C) the statutory framework, environmental health and
                    safety considerations, implementation issues, and
                    financial implications of potential models for Federal,
                    State, or private sector assumption of liabilities and
                    financial responsibilities with respect to closed
                    geologic sequestration sites;
                      (D) private sector mechanisms, including insurance
                    and bonding, that may be available to manage
                    environmental, health and safety risk from closed
                    geologic sequestration sites; and
                      (E) the subsurface mineral rights, water rights, or
                    property rights issues associated with geologic
                    sequestration of carbon dioxide.
              (2) Report.--Not later than 18 months after the date of
            enactment of this Act, the task force established under
            paragraph (1) shall submit to Congress a report describing the
            results of the study conducted under that paragraph including
            any consensus recommendations of the task force.
      (b) Environmental Statutes.--
              (1) Study.--The Administrator shall conduct a study examining
            how, and under what circumstances, the environmental statutes
            for which the Environmental Protection Agency has
            responsibility would apply to carbon dioxide injection and
            geologic sequestration activities.
              (2) Report.--Not later than 1 year after the date of
            enactment of this Act, the Administrator shall submit to
            Congress a report describing the results of the study conducted
            under paragraph (1).

    SEC. 114. CARBON CAPTURE AND SEQUESTRATION DEMONSTRATION AND EARLY
                        DEPLOYMENT PROGRAM.

      (a) Definitions.--For purposes of this section:
              (1) Secretary.--The term ``Secretary'' means the Secretary of
            Energy.
              (2) Distribution utility.--The term ``distribution utility''
            means an entity that distributes electricity directly to retail
            consumers under a legal, regulatory, or contractual obligation
            to do so.
              (3) Electric utility.--The term ``electric utility'' has the
            meaning provided by section 3(22) of the Federal Power Act (16
            U.S.C. 796(22)).
              (4) Fossil fuel-based electricity.--The term ``fossil fuel-
            based electricity'' means electricity that is produced from the
            combustion of fossil fuels.
              (5) Fossil fuel.--The term ``fossil fuel'' means coal,
            petroleum, natural gas or any derivative of coal, petroleum, or
            natural gas.
              (6) Corporation.--The term ``Corporation'' means the Carbon
            Storage Research Corporation established in accordance with
            this section.
              (7) Qualified industry organization.--The term ``qualified
            industry organization'' means the Edison Electric Institute,
            the American Public Power Association, the National Rural
            Electric Cooperative Association, a successor organization of
            such organizations, or a group of owners or operators of
            distribution utilities delivering fossil fuel-based electricity
            who collectively represent at least 20 percent of the volume of
            fossil fuel-based electricity delivered by distribution
            utilities to consumers in the United States.
              (8) Retail consumer.--The term ``retail consumer'' means an
            end-user of electricity.
      (b) Carbon Storage Research Corporation.--
              (1) Establishment.--
                      (A) Referendum.--Qualified industry organizations may
                    conduct, at their own expense, a referendum among the
                    owners or operators of distribution utilities
                    delivering fossil fuel-based electricity for the
                    creation of a Carbon Storage Research Corporation. Such
                    referendum shall be conducted by an independent
                    auditing firm agreed to by the qualified industry
                    organizations. Voting rights in such referendum shall
                    be based on the quantity of fossil fuel-based
                    electricity delivered to consumers in the previous
                    calendar year or other representative period as
                    determined by the Secretary pursuant to subsection (f).
                    Upon approval of those persons representing two-thirds
                    of the total quantity of fossil fuel-based electricity
                    delivered to retail consumers, the Corporation shall be
                    established unless opposed by the State regulatory
                    authorities pursuant to subparagraph (B). All
                    distribution utilities voting in the referendum shall
                    certify to the independent auditing firm the quantity
                    of fossil fuel-based electricity represented by their
                    vote.
                      (B) State regulatory authorities.--Upon its own
                    motion or the petition of a qualified industry
                    organization, each State regulatory authority shall
                    consider its support or opposition to the creation of
                    the Corporation under subparagraph (A). State
                    regulatory authorities may notify the independent
                    auditing firm referred to in subparagraph (A) of their
                    views on the creation of the Corporation within 180
                    days after the date of enactment of this Act. If 40
                    percent or more of the State regulatory authorities
                    submit to the independent auditing firm written notices
                    of opposition, the Corporation shall not be established
                    notwithstanding the approval of the qualified industry
                    organizations as provided in subparagraph (A).
              (2) Termination.--The Corporation shall be authorized to
            collect assessments and conduct operations pursuant to this
            section for a 10-year period from the date 6 months after the
            date of enactment of this Act. After such 10-year period, the
            Corporation is no longer authorized to collect assessments and
            shall be dissolved on the date 15 years after such date of
            enactment, unless the period is extended by an Act of Congress.
              (3) Governance.--The Corporation shall operate as a division
            or affiliate of the Electric Power Research Institute (referred
            to in this section as ``EPRI'') and be managed by a Board of
            not more than 15 voting members responsible for its operations,
            including compliance with this section. EPRI, in consultation
            with the Edison Electric Institute, the American Public Power
            Association and the National Rural Electric Cooperative
            Association shall appoint the Board members under clauses (i),
            (ii), and (iii) of subparagraph (A) from among candidates
            recommended by those organizations. At least a majority of the
            Board members appointed by EPRI shall be representatives of
            distribution utilities subject to assessments under subsection
            (d).
                      (A) Members.--The Board shall include at least one
                    representative of each of the following:
                              (i) Investor-owned utilities.
                              (ii) Utilities owned by a State agency or a
                            municipality.
                              (iii) Rural electric cooperatives.
                              (iv) Fossil fuel producers.
                              (v) Nonprofit environmental organizations.
                              (vi) Independent generators or wholesale
                            power providers.
                              (vii) Consumer groups.
                      (B) Nonvoting members.--The Board shall also include
                    as additional nonvoting Members the Secretary of Energy
                    or his designee and 2 representatives of State
                    regulatory authorities as defined in section 3(17) of
                    the Public Utility Regulatory Policies Act of 1978 (16
                    U.S.C. 2602(17)), each designated by the National
                    Association of State Regulatory Utility Commissioners
                    from States that are not within the same transmission
                    interconnection.
              (4) Compensation.--Corporation Board members shall receive no
            compensation for their services, nor shall Corporation Board
            members be reimbursed for expenses relating to their service.
              (5) Terms.--Corporation Board members shall serve terms of 4
            years and may serve not more than 2 full consecutive terms.
            Members filling unexpired terms may serve not more than a total
            of 8 consecutive years. Former members of the Corporation Board
            may be reappointed to the Corporation Board if they have not
            been members for a period of 2 years. Initial appointments to
            the Corporation Board shall be for terms of 1, 2, 3, and 4
            years, staggered to provide for the selection of 3 members each
            year.
              (6) Status of corporation.--The Corporation shall not be
            considered to be an agency, department, or instrumentality of
            the United States, and no officer or director or employee of
            the Corporation shall be considered to be an officer or
            employee of the United States Government, for purposes of title
            5 or title 31 of the United States Code, or for any other
            purpose, and no funds of the Corporation shall be treated as
            public money for purposes of chapter 33 of title 31, United
            States Code, or for any other purpose.
      (c) Functions and Administration of the Corporation.--
              (1) In general.--The Corporation shall establish and
            administer a program to accelerate the commercial availability
            of carbon dioxide capture and storage technologies and methods,
            including technologies which capture and store, or capture and
            convert, carbon dioxide. Under such program competitively
            awarded grants, contracts, and financial assistance shall be
            provided and entered into with eligible entities. Except as
            provided in paragraph (8), the Corporation shall use all funds
            derived from assessments under subsection (d) to issue grants
            and contracts to eligible entities.
              (2) Purpose.--The purposes of the grants, contracts, and
            assistance under this subsection shall be to support
            commercial-scale demonstrations of carbon capture or storage
            technology projects capable of advancing the technologies to
            commercial readiness. Such projects should encompass a range of
            different coal and other fossil fuel varieties, be
            geographically diverse, involve diverse storage media, and
            employ capture or storage, or capture and conversion,
            technologies potentially suitable either for new or for
            retrofit applications. The Corporation shall seek, to the
            extent feasible, to support at least 5 commercial-scale
            demonstration projects integrating carbon capture and
            sequestration or conversion technologies.
              (3) Eligible entities.--Entities eligible for grants,
            contracts or assistance under this subsection may include
            distribution utilities, electric utilities and other private
            entities, academic institutions, national laboratories, Federal
            research agencies, State research agencies, nonprofit
            organizations, or consortiums of 2 or more entities. Pilot-
            scale and similar small-scale projects are not eligible for
            support by the Corporation. Owners or developers of projects
            supported by the Corporation shall, where appropriate, share in
            the costs of such projects.
              (4) Grants for early movers.--Fifty percent of the funds
            raised under this section shall be provided in the form of
            grants to electric utilities that had, prior to the award of
            any grant under this section, committed resources to deploy a
            large scale electricity generation unit with integrated carbon
            capture and sequestration or conversion applied to a
            substantial portion of the unit's carbon dioxide emissions.
            Grant funds shall be provided to defray costs incurred by such
            electricity utilities for at least 5 such electricity
            generation units.
              (5) Administration.--The members of the Board of Directors of
            the Corporation shall elect a Chairman and other officers as
            necessary, may establish committees and subcommittees of the
            Corporation, and shall adopt rules and bylaws for the conduct
            of business and the implementation of this section. The Board
            shall appoint an Executive Director and professional support
            staff who may be employees of the Electric Power Research
            Institute (EPRI). After consultation with the Technical
            Advisory Committee established under subsection (j), the
            Secretary, and the Director of the National Energy Technology
            Laboratory to obtain advice and recommendations on plans,
            programs, and project selection criteria, the Board shall
            establish priorities for grants, contracts, and assistance;
            publish requests for proposals for grants, contracts, and
            assistance; and award grants, contracts, and assistance
            competitively, on the basis of merit, after the establishment
            of procedures that provide for scientific peer review by the
            Technical Advisory Committee. The Board shall give preference
            to applications that reflect the best overall value and
            prospect for achieving the purposes of the section, such as
            those which demonstrate an integrated approach for capture and
            storage or capture and conversion technologies. The Board
            members shall not participate in making grants or awards to
            entities with whom they are affiliated.
              (6) Uses of grants, contracts, and assistance.--A grant,
            contract, or other assistance provided under this subsection
            may be used to purchase carbon dioxide when needed to conduct
            tests of carbon dioxide storage sites, in the case of
            established projects that are storing carbon dioxide emissions,
            or for other purposes consistent with the purposes of this
            section. The Corporation shall make publicly available at no
            cost information learned as a result of projects which it
            supports financially.
              (7) Intellectual property.--The Board shall establish
            policies regarding the ownership of intellectual property
            developed as a result of Corporation grants and other forms of
            technology support. Such policies shall encourage individual
            ingenuity and invention.
              (8) Administrative expenses.--Up to 5 percent of the funds
            collected in any fiscal year under subsection (d) may be used
            for the administrative expenses of operating the Corporation
            (not including costs incurred in the determination and
            collection of the assessments pursuant to subsection (d)).
              (9) Programs and budget.--Before August 1 each year, the
            Corporation, after consulting with the Technical Advisory
            Committee and the Secretary and the Director of the
            Department's National Energy Technology Laboratory and other
            interested parties to obtain advice and recommendations, shall
            publish for public review and comment its proposed plans,
            programs, project selection criteria, and projects to be funded
            by the Corporation for the next calendar year. The Corporation
            shall also publish for public review and comment a budget plan
            for the next calendar year, including the probable costs of all
            programs, projects, and contracts and a recommended rate of
            assessment sufficient to cover such costs. The Secretary may
            recommend programs and activities the Secretary considers
            appropriate. The Corporation shall include in the first
            publication it issues under this paragraph a strategic plan or
            roadmap for the achievement of the purposes of the Corporation,
            as set forth in paragraph (2).
              (10) Records; audits.--The Corporation shall keep minutes,
            books, and records that clearly reflect all of the acts and
            transactions of the Corporation and make public such
            information. The books of the Corporation shall be audited by a
            certified public accountant at least once each fiscal year and
            at such other times as the Corporation may designate. Copies of
            each audit shall be provided to the Congress, all Corporation
            board members, all qualified industry organizations, each State
            regulatory authority and, upon request, to other members of the
            industry. If the audit determines that the Corporation's
            practices fail to meet generally accepted accounting principles
            the assessment collection authority of the Corporation under
            subsection (d) shall be suspended until a certified public
            accountant renders a subsequent opinion that the failure has
            been corrected. The Corporation shall make its books and
            records available for review by the Secretary or the
            Comptroller General of the United States.
              (11) Public access.--The Corporation Board's meetings shall
            be open to the public and shall occur after at least 30 days
            advance public notice. Meetings of the Board of Directors may
            be closed to the public where the agenda of such meetings
            includes only confidential matters pertaining to project
            selection, the award of grants or contracts, personnel matters,
            or the receipt of legal advice. The minutes of all meetings of
            the Corporation shall be made available to and readily
            accessible by the public.
              (12) Annual report.--Each year the Corporation shall prepare
            and make publicly available a report which includes an
            identification and description of all programs and projects
            undertaken by the Corporation during the previous year. The
            report shall also detail the allocation or planned allocation
            of Corporation resources for each such program and project. The
            Corporation shall provide its annual report to the Congress,
            the Secretary, each State regulatory authority, and upon
            request to the public. The Secretary shall, not less than 60
            days after receiving such report, provide to the President and
            Congress a report assessing the progress of the Corporation in
            meeting the objectives of this section.
      (d) Assessments.--
              (1) Amount.--(A) In all calendar years following its
            establishment, the Corporation shall collect an assessment on
            distribution utilities for all fossil fuel-based electricity
            delivered directly to retail consumers (as determined under
            subsection (f)). The assessments shall reflect the relative
            carbon dioxide emission rates of different fossil fuel-based
            electricity, and initially shall be not less than the following
            amounts for coal, natural gas, and oil:

    Fuel type                               Rate of assessment per kilowatt
                                             hour
      Coal................................  $0.00043
      Natural Gas.........................  $0.00022
      Oil.................................  $0.00032.

              (B) The Corporation is authorized to adjust the assessments
            on fossil fuel-based electricity to reflect changes in the
            expected quantities of such electricity from different fuel
            types, such that the assessments generate not less than $1.0
            billion and not more than $1.1 billion annually. The
            Corporation is authorized to supplement assessments through
            additional financial commitments.
              (2) Investment of funds.--Pending disbursement pursuant to a
            program, plan, or project, the Corporation may invest funds
            collected through assessments under this subsection, and any
            other funds received by the Corporation, only in obligations of
            the United States or any agency thereof, in general obligations
            of any State or any political subdivision thereof, in any
            interest-bearing account or certificate of deposit of a bank
            that is a member of the Federal Reserve System, or in
            obligations fully guaranteed as to principal and interest by
            the United States.
              (3) Reversion of unused funds.--If the Corporation does not
            disburse, dedicate or assign 75 percent or more of the
            available proceeds of the assessed fees in any calendar year 7
            or more years following its establishment, due to an absence of
            qualified projects or similar circumstances, it shall reimburse
            the remaining undedicated or unassigned balance of such fees,
            less administrative and other expenses authorized by this
            section, to the distribution utilities upon which such fees
            were assessed, in proportion to their collected assessments.
      (e)  ERCOT.--
              (1) Assessment, collection, and remittance.--(A)
            Notwithstanding any other provision of this section, within
            ERCOT, the assessment provided for in subsection (d) shall be--
                      (i) levied directly on qualified scheduling entities,
                    or their successor entities;
                      (ii) charged consistent with other charges imposed on
                    qualified scheduling entities as a fee on energy used
                    by the load-serving entities; and
                      (iii) collected and remitted by ERCOT to the
                    Corporation in the amounts and in the same manner as
                    set forth in subsection (d).
              (B) The assessment amounts referred to in subparagraph (A)
            shall be--
                      (i) determined by the amount and types of fossil
                    fuel-based electricity delivered directly to all retail
                    customers in the prior calendar year beginning with the
                    year ending immediately prior to the period described
                    in subsection (b)(2); and
                      (ii) take into account the number of renewable energy
                    credits retired by the load-serving entities
                    represented by a qualified scheduling entity within the
                    prior calendar year.
              (2) Administration expenses.--Up to 1 percent of the funds
            collected in any fiscal year by ERCOT under the provisions of
            this subsection may be used for the administrative expenses
            incurred in the determination, collection and remittance of the
            assessments to the Corporation.
              (3) Audit.--ERCOT shall provide a copy of its annual audit
            pertaining to the administration of the provisions of this
            subsection to the Corporation.
              (4) Definitions.--For the purposes of this subsection:
                      (A) The term ``ERCOT'' means the Electric Reliability
                    Council of Texas.
                      (B) The term ``load-serving entities'' has the
                    meaning adopted by ERCOT Protocols and in effect on the
                    date of enactment of this Act.
                      (C) The term ``qualified scheduling entities'' has
                    the meaning adopted by ERCOT Protocols and in effect on
                    the date of enactment of this Act.
                      (D) The term ``renewable energy credit'' has the
                    meaning as promulgated and adopted by the Public
                    Utility Commission of Texas pursuant to section
                    39.904(b) of the Public Utility Regulatory Act of 1999,
                    and in effect on the date of enactment of this Act.
      (f) Determination of Fossil Fuel-Based Electricity Deliveries.--
              (1) Findings.--The Congress finds that:
                      (A) The assessments under subsection (d) are to be
                    collected based on the amount of fossil fuel-based
                    electricity delivered by each distribution utility.
                      (B) Since many distribution utilities purchase all or
                    part of their retail consumer's electricity needs from
                    other entities, it may not be practical to determine
                    the precise fuel mix for the power sold by each
                    individual distribution utility.
                      (C) It may be necessary to use average data, often on
                    a regional basis with reference to Regional
                    Transmission Organization (``RTO'') or NERC regions, to
                    make the determinations necessary for making
                    assessments.
              (2) DOE proposed rule.--The Secretary, acting in close
            consultation with the Energy Information Administration, shall
            issue for notice and comment a proposed rule to determine the
            level of fossil fuel electricity delivered to retail customers
            by each distribution utility in the United States during the
            most recent calendar year or other period determined to be most
            appropriate. Such proposed rule shall balance the need to be
            efficient, reasonably precise, and timely, taking into account
            the nature and cost of data currently available and the nature
            of markets and regulation in effect in various regions of the
            country. Different methodologies may be applied in different
            regions if appropriate to obtain the best balance of such
            factors.
              (3) Final rule.--Within 6 months after the date of enactment
            of this Act, and after opportunity for comment, the Secretary
            shall issue a final rule under this subsection for determining
            the level and type of fossil fuel-based electricity delivered
            to retail customers by each distribution utility in the United
            States during the appropriate period. In issuing such rule, the
            Secretary may consider opportunities and costs to develop new
            data sources in the future and issue recommendations for the
            Energy Information Administration or other entities to collect
            such data. After notice and opportunity for comment the
            Secretary may, by rule, subsequently update and modify the
            methodology for making such determinations.
              (4) Annual determinations.--Pursuant to the final rule issued
            under paragraph (3), the Secretary shall make annual
            determinations of the amounts and types for each such utility
            and publish such determinations in the Federal Register. Such
            determinations shall be used to conduct the referendum under
            subsection (b) and by the Corporation in applying any
            assessment under this subsection.
              (5) Rehearing and judicial review.--The owner or operator of
            any distribution utility that believes that the Secretary has
            misapplied the methodology in the final rule in determining the
            amount and types of fossil fuel electricity delivered by such
            distribution utility may seek rehearing of such determination
            within 30 days of publication of the determination in the
            Federal Register. The Secretary shall decide such rehearing
            petitions within 30 days. The Secretary's determinations
            following rehearing shall be final and subject to judicial
            review in the United States Court of Appeals for the District
            of Columbia.
      (g) Compliance With Corporation Assessments.--The Corporation may
    bring an action in the appropriate court of the United States to compel
    compliance with an assessment levied by the Corporation under this
    section. A successful action for compliance under this subsection may
    also require payment by the defendant of the costs incurred by the
    Corporation in bringing such action.
      (h) Midcourse Review.--Not later than 5 years following establishment
    of the Corporation, the Comptroller General of the United States shall
    prepare an analysis, and report to Congress, assessing the
    Corporation's activities, including project selection and methods of
    disbursement of assessed fees, impacts on the prospects for
    commercialization of carbon capture and storage technologies, adequacy
    of funding, and administration of funds. The report shall also make
    such recommendations as may be appropriate in each of these areas. The
    Corporation shall reimburse the Government Accountability Office for
    the costs associated with performing this midcourse review.
      (i) Recovery of Costs.--
              (1) In general.--A distribution utility whose transmission,
            delivery, or sales of electric energy are subject to any form
            of rate regulation shall not be denied the opportunity to
            recover the full amount of the prudently incurred costs
            associated with complying with this section, consistent with
            applicable State or Federal law.
              (2) Ratepayer rebates.--Regulatory authorities that approve
            cost recovery pursuant to paragraph (1) may order rebates to
            ratepayers to the extent that distribution utilities are
            reimbursed undedicated or unassigned balances pursuant to
            subsection (d)(3).
      (j) Technical Advisory Committee.--
              (1) Establishment.--There is established an advisory
            committee, to be known as the ``Technical Advisory Committee''.
              (2) Membership.--The Technical Advisory Committee shall be
            comprised of not less than 7 members appointed by the Board
            from among academic institutions, national laboratories,
            independent research institutions, and other qualified
            institutions. No member of the Committee shall be affiliated
            with EPRI or with any organization having members serving on
            the Board. At least one member of the Committee shall be
            appointed from among officers or employees of the Department of
            Energy recommended to the Board by the Secretary of Energy.
              (3) Chairperson and vice chairperson.--The Board shall
            designate one member of the Technical Advisory Committee to
            serve as Chairperson of the Committee and one to serve as Vice
            Chairperson of the Committee.
              (4) Compensation.--The Board shall provide compensation to
            members of the Technical Advisory Committee for travel and
            other incidental expenses and such other compensation as the
            Board determines to be necessary.
              (5) Purpose.--The Technical Advisory Committee shall provide
            independent assessments and technical evaluations, as well as
            make non-binding recommendations to the Board, concerning
            Corporation activities, including but not limited to the
            following:
                      (A) Reviewing and evaluating the Corporation's plans
                    and budgets described in subsection (c)(9), as well as
                    any other appropriate areas, which could include
                    approaches to prioritizing technologies,
                    appropriateness of engineering techniques, monitoring
                    and verification technologies for storage, geological
                    site selection, and cost control measures.
                      (B) Making annual non-binding recommendations to the
                    Board concerning any of the matters referred to in
                    subparagraph (A), as well as what types of investments,
                    scientific research, or engineering practices would
                    best further the goals of the Corporation.
              (6) Public availability.--All reports, evaluations, and other
            materials of the Technical Advisory Committee shall be made
            available to the public by the Board, without charge, at time
            of receipt by the Board.
      (k) Lobbying Restrictions.--No funds collected by the Corporation
    shall be used in any manner for influencing legislation or elections,
    except that the Corporation may recommend to the Secretary and the
    Congress changes in this section or other statutes that would further
    the purposes of this section.
      (l) Davis-Bacon Compliance.--The Corporation shall ensure that
    entities receiving grants, contracts, or other financial support from
    the Corporation for the project activities authorized by this section
    are in compliance with the Davis-Bacon Act (40 U.S.C. 276a-276a-5).

    SEC. 115. COMMERCIAL DEPLOYMENT OF CARBON CAPTURE AND SEQUESTRATION
                        TECHNOLOGIES.

      Part H of title VII of the Clean Air Act (as added by section 321 of
    this Act) is amended by adding the following new section after section
    785:

    ``SEC. 786. COMMERCIAL DEPLOYMENT OF CARBON CAPTURE AND SEQUESTRATION
                        TECHNOLOGIES.

      ``(a) Regulations.--Not later than 2 years after the date of
    enactment of this title, the Administrator shall promulgate regulations
    providing for the distribution of emission allowances allocated
    pursuant to section 782(f), pursuant to the requirements of this
    section, to support the commercial deployment of carbon capture and
    sequestration technologies in both electric power generation and
    industrial operations.
      ``(b) Eligibility Criteria.--To be eligible to receive emission
    allowances under this section, the owner or operator of a project
    must--
              ``(1) implement carbon capture and sequestration technology--
                      ``(A) at an electric generating unit that--
                              ``(i) has a nameplate capacity of 200
                            megawatts or more;
                              ``(ii) in the case of a retrofit application,
                            applies the carbon capture and sequestration
                            technology to the flue gas from at least 200
                            megawatts of the total nameplate generating
                            capacity of the unit, provided that clause (i)
                            shall apply without exception;
                              ``(iii) derives at least 50 percent of its
                            annual fuel input from coal, petroleum coke, or
                            any combination of these 2 fuels; and
                              ``(iv) upon implementation of capture and
                            sequestration technology, will achieve an
                            emission limit that is at least a 50 percent
                            reduction in emissions of the carbon dioxide
                            produced by--
                                      ``(I) the unit, measured on an annual
                                    basis, determined in accordance with
                                    section 812(b)(2); or
                                      ``(II) in the case of retrofit
                                    applications under clause (ii), the
                                    treated portion of flue gas from the
                                    unit, measured on an annual basis,
                                    determined in accordance with section
                                    812(b)(2); or
                      ``(B) at an industrial source that--
                              ``(i) absent carbon capture and
                            sequestration, would emit greater than 50,000
                            tons per year of carbon dioxide;
                              ``(ii) upon implementation, will achieve an
                            emission limit that is at least a 50 percent
                            reduction in emissions of the carbon dioxide
                            produced by the emission point, measured on an
                            annual basis, determined in accordance with
                            section 812(b)(2); and
                              ``(iii) does not produce a liquid
                            transportation fuel from a solid fossil-based
                            feedstock;
              ``(2) geologically sequester carbon dioxide at a site that
            meets all applicable permitting and certification requirements
            for geologic sequestration, or, pursuant to such requirements
            as the Administrator may prescribe by regulation, convert
            captured carbon dioxide to a stable form that will safely and
            permanently sequester such carbon dioxide;
              ``(3) meet all other applicable State and Federal permitting
            requirements; and
              ``(4) be located in the United States.
      ``(c) Phase I Distribution to Electric Generating Units.--
              ``(1) Application.--This subsection shall apply only to
            projects at the first 6 gigawatts of electric generating units,
            measured in cumulative generating capacity of such units.
              ``(2) Distribution.--The Administrator shall distribute
            emission allowances allocated under section 782(f) to the owner
            or operator of each eligible project at an electric generating
            unit in a quantity equal to the quotient obtained by dividing--
                      ``(A) the product obtained by multiplying--
                              ``(i) the number of metric tons of carbon
                            dioxide emissions avoided through capture and
                            sequestration of emissions by the project, as
                            determined pursuant to such methodology as the
                            Administrator shall prescribe by regulation;
                            and
                              ``(ii) a bonus allowance value, pursuant to
                            paragraph (3); by
                      ``(B) the average fair market value of an emission
                    allowance during the preceding year.
              ``(3) Bonus allowance values.--
                      ``(A) For a generating unit achieving the capture and
                    sequestration of 85 percent or more of the carbon
                    dioxide that otherwise would be emitted by such unit,
                    the bonus allowance value shall be $90.
                      ``(B) The Administrator shall by regulation establish
                    a bonus allowance value for each rate of lower capture
                    and sequestration achieved by a generating unit, from a
                    minimum of $50 per ton for a 50 percent rate and
                    varying directly with increasing rates of capture and
                    sequestration up to $90 per ton for an 85 percent rate.
                      ``(C) For a generating unit that achieves the capture
                    and sequestration of at least 50 percent of the carbon
                    dioxide that otherwise would be emitted by such unit by
                    not later than January 1, 2017, the otherwise
                    applicable bonus allowance value under this paragraph
                    shall be increased by $10, provided that the owner of
                    such unit notifies the Administrator of its intent to
                    achieve such rate of capture and sequestration by not
                    later than January 1, 2012.
                      ``(D) For a carbon capture and sequestration project
                    sequestering in a geological formation for purposes of
                    enhanced hydrocarbon recovery, the Administrator shall,
                    by regulation, reduce the applicable bonus allowance
                    value under this paragraph to reflect the lower net
                    cost of the project when compared to sequestration into
                    geological formations solely for purposes of
                    sequestration.
                      ``(E) All monetary values in this section shall be
                    adjusted annually for inflation.
      ``(d) Phase II Distribution to Electric Generating Units.--
              ``(1) Application.--This subsection shall apply only to the
            distribution of emission allowances to carbon capture and
            sequestration projects at electric generating units after the
            capacity threshold identified in subsection (c)(1) is reached.
              ``(2) Regulations.--Not later than 2 years prior to the date
            on which the capacity threshold identified in subsection (c)(1)
            is projected to be reached, the Administrator shall promulgate
            regulations to govern the distribution of emission allowances
            to the owners or operators of eligible projects under this
            subsection.
              ``(3) Reverse auctions.--
                      ``(A) In general.--Except as provided in paragraph
                    (4), the regulations promulgated under paragraph (2)
                    shall provide for the distribution of emission
                    allowances to the owners or operators of eligible
                    projects under this subsection through reverse
                    auctions, which shall be held no less frequently than
                    once each calendar year. The Administrator may
                    establish a separate auction for each of no more than 5
                    different project categories, defined on the basis of
                    coal type, capture technology, geological formation
                    type, new unit versus retrofit application, such other
                    factors as the Administrator may prescribe, or any
                    combination thereof. The Administrator may establish
                    appropriate minimum rates of capture and sequestration
                    in implementing this paragraph.
                      ``(B) Auction process.--At each reverse auction--
                              ``(i) the Administrator shall solicit bids
                            from eligible projects;
                              ``(ii) eligible projects participating in the
                            auction shall submit a bid including the
                            desired level of carbon dioxide sequestration
                            incentive per ton and the estimated quantity of
                            carbon dioxide that the project will
                            permanently sequester over 10 years; and
                              ``(iii) the Administrator shall select bids,
                            within each auction, for the sequestration
                            amount submitted, beginning with the eligible
                            project submitting the bid for the lowest level
                            of sequestration incentive on a per ton basis
                            and meeting such other requirements as the
                            Administrator may specify, until the amount of
                            funds available for the reverse auction is
                            committed.
                      ``(C) Form of distribution.--The Administrator shall
                    provide deployment incentives to the owners or
                    operators of eligible projects selected through a
                    reverse auction under this paragraph pursuant to a
                    formula equivalent to that described in subsection
                    (c)(2), except that the incentive level that is bid by
                    the entity shall be substituted for the bonus allowance
                    value.
              ``(4) Alternative distribution method.--
                      ``(A) In general.--If the Administrator determines
                    that reverse auctions would not provide for efficient
                    and cost-effective commercial deployment of carbon
                    capture and sequestration technologies, the
                    Administrator may instead, through regulations
                    promulgated under paragraph (2) or (5), prescribe a
                    schedule for the award of bonus allowances to the
                    owners or operators of eligible projects under this
                    subsection, in accordance with the requirements of this
                    paragraph.
                      ``(B) Multiple tranches.--The Administrator shall
                    divide emission allowances available for distribution
                    to the owners or operators of eligible projects into a
                    series of tranches, each supporting the deployment of a
                    specified quantity of cumulative electric generating
                    capacity utilizing carbon capture and sequestration
                    technology, each of which shall not be greater than 6
                    gigawatts.
                      ``(C) Method of distribution.--The Administrator
                    shall distribute emission allowances within each
                    tranche, on a first-come, first-served basis--
                              ``(i) based on the date of full-scale
                            operation of capture and sequestration
                            technology; and
                              ``(ii) pursuant to a formula, similar to that
                            set forth in subsection (c)(2) (except that the
                            Administrator shall prescribe bonus allowance
                            values different than those set forth in
                            subsection (c)(2)), establishing the number of
                            allowances to be distributed per ton of carbon
                            dioxide sequestered by the project.
                      ``(D) Requirements.--For each tranche established
                    pursuant to subparagraph (A), the Administrator shall
                    establish a schedule for distributing emission
                    allowances that--
                              ``(i) is based on a sliding scale that
                            provides higher bonus allowance values for
                            projects achieving higher rates of capture and
                            sequestration;
                              ``(ii) for each capture and sequestration
                            rate, establishes a bonus allowance value that
                            is lower than that established for such rate in
                            the previous tranche (or, in the case of the
                            first tranche, than that established for such
                            rate under subsection (c)(3)); and
                              ``(iii) may establish different bonus
                            allowance levels for no more than 5 different
                            project categories, defined by coal type,
                            capture technology, geological formation type,
                            new unit versus retrofit application, such
                            other factors as the Administrator may
                            prescribe, or any combination thereof.
                      ``(E) Criteria for establishing bonus allowance
                    values.--In setting bonus allowance values under this
                    paragraph, the Administrator shall seek to cover no
                    more than the reasonable incremental capital and
                    operating costs of a project that are attributable to
                    implementation of carbon capture, transportation, and
                    sequestration technologies, taking into account--
                              ``(i) the reduced cost of compliance with
                            section 722 of this Act;
                              ``(ii) the reduced cost associated with
                            sequestering in a geological formation for
                            purposes of enhanced hydrocarbon recovery when
                            compared to sequestration into geological
                            formations solely for purposes of
                            sequestration;
                              ``(iii) the relevant factors defining the
                            project category; and
                              ``(iv) such other factors as the
                            Administrator determines are appropriate.
              ``(5) Revision of regulations.--The Administrator shall
            review, and as appropriate revise, the applicable regulations
            under this subsection no less frequently than every 8 years.
      ``(e) Limits for Certain Electric Generating Units.--
              ``(1) Definitions.--For purposes of this subsection, the
            terms `covered EGU' and `initially permitted' shall have the
            meaning given those terms in section 812 of this Act.
              ``(2) Covered egus initially permitted from 2009 through
            2014.--For a covered EGU that is initially permitted on or
            after January 1, 2009, and before January 1, 2015, the
            Administrator shall reduce the quantity of emission allowances
            that the owner or operator of such covered EGU would otherwise
            be eligible to receive under this section as follows:
                      ``(A) In the case of a unit commencing operation on
                    or before January 1, 2019, if the date in clause
                    (ii)(I) is earlier than the date in clause (ii)(II), by
                    the product of--
                              ``(i) 20 percent; and
                              ``(ii) the number of years, if any, that have
                            elapsed between--
                                      ``(I) the earlier of January 1, 2020,
                                    or the date that is 5 years after the
                                    commencement of operation of such
                                    covered EGU; and
                                      ``(II) the first year that such
                                    covered EGU achieves (and thereafter
                                    maintains) an emission limit that is at
                                    least a 50 percent reduction in
                                    emissions of the carbon dioxide
                                    produced by the unit, measured on an
                                    annual basis, as determined in
                                    accordance with section 812(b)(2).
                      ``(B) In the case of a unit commencing operation
                    after January 1, 2019, by the product of--
                              ``(i) 20 percent; and
                              ``(ii) the number of years between--
                                      ``(I) the commencement of operation
                                    of such covered EGU; and
                                      ``(II) the first year that such
                                    covered EGU achieves (and thereafter
                                    maintains) an emission limit that is at
                                    least a 50 percent reduction in
                                    emissions of the carbon dioxide
                                    produced by the unit, measured on an
                                    annual basis, as determined in
                                    accordance with section 812(b)(2).
              ``(3) Covered egus initially permitted from 2015 through
            2019.--The owner or operator of a covered EGU that is initially
            permitted on or after January 1, 2015, and before January 1,
            2020, shall be ineligible to receive emission allowances
            pursuant to this section if such unit, upon commencement of
            operations (and thereafter), does not achieve and maintain an
            emission limit that is at least a 50 percent reduction in
            emissions of the carbon dioxide produced by the unit, measured
            on an annual basis, as determined in accordance with section
            812(b)(2).
      ``(f) Industrial Sources.--
              ``(1) Allowances.--The Administrator may distribute not more
            than 15 percent of the allowances allocated under section
            782(a) for any vintage year to the owners or operators of
            eligible industrial sources to support the commercial-scale
            deployment of carbon capture and sequestration technologies at
            such sources.
              ``(2) Distribution.--The Administrator shall, by regulation,
            prescribe requirements for the distribution of emission
            allowances to the owners or operators of industrial sources
            under this subsection, based on a bonus allowance formula that
            awards allowances to qualifying projects on the basis of tons
            of carbon dioxide captured and permanently sequestered. The
            Administrator may provide for the distribution of emission
            allowances pursuant to--
                      ``(A) a reverse auction method, similar to that
                    described under subsection (d)(3), including the use of
                    separate auctions for different project categories; or
                      ``(B) an incentive schedule, similar to that
                    described under subsection (d)(4), which shall ensure
                    that incentives are set so as to satisfy the
                    requirement described in subsection (d)(4)(E).
              ``(3) Revision of regulations.--The Administrator shall
            review, and as appropriate revise, the applicable regulations
            under this subsection no less frequently than every 8 years.
      ``(g) Limitations.--Allowances may be distributed under this section
    only for tons of carbon dioxide emissions that have already been
    captured and sequestered. A qualifying project may receive annual
    emission allowances under this section only for the first 10 years of
    operation. No greater than 72 gigawatts of total cumulative generating
    capacity (including industrial applications, measured by such
    equivalent metric as the Administrator may designate) may receive
    emission allowances under this section. Upon reaching the limit
    described in the preceding sentence, any emission allowances that are
    allocated for carbon capture and sequestration deployment under section
    782(f) and are not yet obligated under this section shall be treated as
    allowances not designated for distribution for purposes of section
    782(r).
      ``(h) Exhaustion of Account and Annual Roll-Over of Surplus
    Allowances.--
              ``(1) In distributing bonus allowances under this subsection,
            the Administrator shall ensure that qualifying projects
            receiving allowances receive distributions for 10 years.
              ``(2) If the Administrator determines that the allowances
            allocated under section 782(f) with a vintage year that matches
            the year of distribution will be exhausted once the estimated
            full 10-year distributions will be provided to current eligible
            participants, the Administrator shall provide to new eligible
            projects allowances from vintage years after the year of the
            distribution.
      ``(i) Retrofit Applications.--(1) In calculating bonus allowance
    values for retrofit applications eligible under subsections
    (b)(1)(A)(ii) and (b)(1)(A)(iv)(II), the Administrator shall apply the
    required capture rates with respect to the treated portion of flue gas
    from the unit.
      ``(2) No additional projects shall be eligible for allowances under
    subsections (b)(1)(A)(ii) and (b)(1)(A)(iv)(II) as of such time as the
    Administrator reports, pursuant to section 812(d), that carbon capture
    and sequestration retrofit projects at electric generating units that
    are eligible for allowances under this section have been applied, in
    the aggregate, to the flue gas generated by 1 gigawatt of total
    cumulative generating capacity.
      ``(j) Davis-Bacon Compliance.--All laborers and mechanics employed on
    projects funded directly by or assisted in whole or in part by this
    section through the use of bonus allowances shall be paid wages at
    rates not less than those prevailing on projects of a character similar
    in the locality as determined by the Secretary of Labor in accordance
    with subchapter IV, chapter 31, part A of subtitle II of title 40,
    United States Code. With respect to the labor standards specified in
    this section, the Secretary of Labor shall have the authority and
    functions set forth in Reorganization Plan Numbered 14 of 1950 (64
    Stat. 1267; 5 U.S.C. App.) and section 3145 of title 40, United States
    Code.''.

    SEC. 116. PERFORMANCE STANDARDS FOR COAL-FUELED POWER PLANTS.

      (a) In General.--Title VIII of the Clean Air Act (as added by section
    331 of this Act) is amended by adding the following new section after
    section 811:

    ``SEC. 812. PERFORMANCE STANDARDS FOR NEW COAL-FIRED POWER PLANTS.

      ``(a) Definitions.--For purposes of this section:
              ``(1) Covered egu.--The term `covered EGU' means a utility
            unit that is required to have a permit under section 503(a) and
            is authorized under state or federal law to derive at least 30
            percent of its annual heat input from coal, petroleum coke, or
            any combination of these fuels.
              ``(2) Initially permitted.--The term `initially permitted'
            means that the owner or operator has received a Clean Air Act
            preconstruction approval or permit, for the covered EGU as a
            new (not a modified) source, but administrative review or
            appeal of such approval or permit has not been exhausted. A
            subsequent modification of any such approval or permits,
            ongoing administrative or court review, appeals, or challenges,
            or the existence or tolling of any time to pursue further
            review, appeals, or challenges shall not affect the date on
            which a covered EGU is considered to be initially permitted
            under this paragraph.
      ``(b) Standards.--(1) A covered EGU that is initially permitted on or
    after January 1, 2020, shall achieve an emission limit that is a 65
    percent reduction in emissions of the carbon dioxide  produced by the
    unit, as measured on an annual basis, or meet such more stringent
    standard as the Administrator may establish pursuant to subsection (c).
      ``(2) A covered EGU that is initially permitted after January 1,
    2009, and before January 1, 2020, shall, by the applicable compliance
    date established under this paragraph, achieve an emission limit that
    is a 50 percent reduction in emissions of the carbon dioxide produced
    by the  unit, as measured on an annual basis. Compliance with the
    requirement set forth in this paragraph shall be required by the
    earliest of the following:
              ``(A) Four years after the date the Administrator has
            published pursuant to subsection (d) a report that there are in
            commercial operation in the United States electric generating
            units or other stationary sources equipped with carbon capture
            and sequestration technology that, in the aggregate--
                      ``(i) have a total of at least 4 gigawatts of
                    nameplate generating capacity of which--
                              ``(I) at least 3 gigawatts must be electric
                            generating units; and
                              ``(II) up to 1 gigawatt may be industrial
                            applications, for which capture and
                            sequestration of 3 million tons of carbon
                            dioxide per year on an aggregate annualized
                            basis shall be considered equivalent to 1
                            gigawatt;
                      ``(ii) include at least 2 electric generating units,
                    each with a nameplate generating capacity of 250
                    megawatts or greater, that capture, inject, and
                    sequester carbon dioxide into geologic formations other
                    than oil and gas fields; and
                      ``(iii) are capturing and sequestering in the
                    aggregate at least 12 million tons of carbon dioxide
                    per year, calculated on an aggregate annualized basis.
              ``(B) January 1, 2025.
      ``(3) If the deadline for compliance with paragraph (2) is January 1,
    2025, the Administrator may extend the deadline for compliance by a
    covered EGU by up to 18 months if the Administrator makes a
    determination, based on a showing by the owner or operator of the unit,
    that it will be technically infeasible for the unit to meet the
    standard by the deadline. The owner or operator must submit a request
    for such an extension by no later than January 1, 2022, and the
    Administrator shall provide for public notice and comment on the
    extension request.
      ``(c) Review and Revision of Standards.--Not later than 2025 and at
    5-year intervals thereafter, the Administrator shall review the
    standards for new covered EGUs under this section and shall, by rule,
    reduce the maximum carbon dioxide emission rate for new covered EGUs to
    a rate which reflects the degree of emission limitation achievable
    through the application of the best system of emission reduction which
    (taking into account the cost of achieving such reduction and any
    nonair quality health and environmental impact and energy requirements)
    the Administrator determines has been adequately demonstrated.
      ``(d)  Reports.--Not later than the date 18 months after the date of
    enactment of this title and semiannually thereafter, the Administrator
    shall publish a report on the nameplate capacity of units (determined
    pursuant to subsection (b)(2)(A)) in commercial operation in the United
    States equipped with carbon capture and sequestration technology,
    including the information described in subsection (b)(2)(A) (including
    the cumulative generating capacity to which carbon capture and
    sequestration retrofit projects meeting the criteria described in
    section 786(b)(1)(A)(ii) and (b)(1)(A)(iv)(II) has been applied and the
    quantities of carbon dioxide captured and sequestered by such
    projects).
      ``(e) Regulations.--Not later than 2 years after the date of
    enactment of this title, the Administrator shall promulgate regulations
    to carry out the requirements of this section.''.

                        Subtitle C--Clean Transportation

    SEC. 121. ELECTRIC VEHICLE INFRASTRUCTURE.

      (a) Amendment of PURPA.--Section 111(d) of the Public Utility
    Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) is amended by
    adding at the end the following:
              ``(20) Plug-in electric drive vehicle infrastructure.--
                      ``(A) Utility plan for infrastructure.--Each electric
                    utility shall develop a plan to support the use of
                    plug-in electric drive vehicles, including heavy-duty
                    hybrid electric vehicles. The plan may provide for
                    deployment of electrical charging stations in public or
                    private locations, including street parking, parking
                    garages, parking lots, homes, gas stations, and highway
                    rest stops. Any such plan may also include--
                              ``(i) battery exchange, fast charging
                            infrastructure and other services;
                              ``(ii) triggers for infrastructure deployment
                            based upon market penetration of plug-in
                            electric drive vehicles; and
                              ``(iii) such other elements as the State
                            determines necessary to support plug-in
                            electric drive vehicles.
                    Each plan under this paragraph shall provide for the
                    deployment of the charging infrastructure or other
                    infrastructure necessary to adequately support the use
                    of plug-in electric drive vehicles.
                      ``(B) Support requirements.--Each State regulatory
                    authority (in the case of each electric utility for
                    which it has ratemaking authority) and each utility (in
                    the case of a nonregulated utility) shall--
                              ``(i) require that charging infrastructure
                            deployed is interoperable with products of all
                            auto manufacturers to the extent possible; and
                              ``(ii) consider adopting minimum requirements
                            for deployment of electrical charging
                            infrastructure and other appropriate
                            requirements necessary to support the use of
                            plug-in electric drive vehicles.
                      ``(C) Cost recovery.--Each State regulatory authority
                    (in the case of each electric utility for which it has
                    ratemaking authority) and each utility (in the case of
                    a nonregulated utility) shall consider whether, and to
                    what extent, to allow cost recovery for plans and
                    implementation of plans.
                      ``(D) Smart grid integration.--The State regulatory
                    authority (in the case of each electric utility for
                    which it has ratemaking authority) and each utility (in
                    the case of a nonregulated utility) shall, in
                    accordance with regulations issued by the Federal
                    Energy Regulatory Commission pursuant to section
                    1305(d) of the Energy Independence and Security Act of
                    2007--
                              ``(i) establish any appropriate protocols and
                            standards for integrating plug-in electric
                            drive vehicles into an electrical distribution
                            system, including Smart Grid systems and
                            devices as described in title XIII of the
                            Energy Independence and Security Act of 2007;
                              ``(ii) include, to the extent feasible, the
                            ability for each plug-in electric drive vehicle
                            to be identified individually and to be
                            associated with its owner's electric utility
                            account, regardless of the location that the
                            vehicle is plugged in, for purposes of
                            appropriate billing for any electricity
                            required to charge the vehicle's batteries as
                            well as any crediting for electricity provided
                            to the electric utility from the vehicle's
                            batteries; and
                              ``(iii) review the determination made in
                            response to section 1252 of the Energy Policy
                            Act of 2005 in light of this section, including
                            whether time-of-use pricing should be employed
                            to enable the use of plug-in electric drive
                            vehicles to contribute to meeting peak-load and
                            ancillary service power needs.''.
      (b) Compliance.--
              (1) Time limitations.--Section 112(b) of the Public Utility
            Regulatory Policies Act of 1978 (16 U.S.C. 2622(b)) is amended
            by adding the following at the end thereof:
      ``(7)(A) Not later than 3 years after the date of enactment of this
    paragraph, each State regulatory authority (with respect to each
    electric utility for which it has ratemaking authority) and each
    nonregulated utility shall commence the consideration referred to in
    section 111, or set a hearing date for consideration, with respect to
    the standard established by paragraph (20) of section 111(d).
      ``(B) Not later than 4 years after the date of enactment of the this
    paragraph, each State regulatory authority (with respect to each
    electric utility for which it has ratemaking authority), and each
    nonregulated electric utility, shall complete the consideration, and
    shall make the determination, referred to in section 111 with respect
    to the standard established by paragraph (20) of section 111(d).''.
              (2) Failure to comply.--Section 112(c) of the Public Utility
            Regulatory Policies Act of 1978 (16 U.S.C. 2622(c)) is amended
            by adding the following at the end: ``In the case of the
            standards established by paragraph (20) of section 111(d), the
            reference contained in this subsection to the date of enactment
            of this Act shall be deemed to be a reference to the date of
            enactment of such paragraph.''.
              (3) Prior state actions.--Section 112(d) of the Public
            Utility Regulatory Policies Act of 1978 (16 U.S.C. 2622(d)) is
            amended by striking ``(19)'' and inserting ``(20)'' before ``of
            section 111(d)''.

    SEC. 122. LARGE-SCALE VEHICLE ELECTRIFICATION PROGRAM.

      (a) Deployment Program.--The Secretary of Energy shall establish a
    program to deploy and integrate plug-in electric drive vehicles into
    the electricity grid in multiple regions. In carrying out the program,
    the Secretary may provide financial assistance described under
    subsection (d), consistent with the goals under subsection (b). The
    Secretary shall select regions based upon applications for assistance
    received pursuant to subsection (c).
      (b) Goals.--The goals of the program established pursuant to
    subsection (a) shall be--
              (1) to demonstrate the viability of a vehicle-based
            transportation system that is not overly dependent on petroleum
            as a fuel and contributes to lower carbon emissions than a
            system based on conventional vehicles;
              (2) to facilitate the integration of advanced vehicle
            technologies into electricity distribution areas to improve
            system performance and reliability;
              (3) to demonstrate the potential benefits of coordinated
            investments in vehicle electrification on personal mobility and
            a regional grid;
              (4) to demonstrate protocols and standards that facilitate
            vehicle integration into the grid; and
              (5) to investigate differences in each region and regulatory
            environment regarding best practices in implementing vehicle
            electrification.
      (c) Applications.--Any State, Indian tribe, or local government (or
    group of State, Indian tribe, or local governments) may apply to the
    Secretary of Energy for financial assistance in furthering the regional
    deployment and integration into the electricity grid of plug-in
    electric drive vehicles. Such applications may be jointly sponsored by
    electric utilities, automobile manufacturers, technology providers, car
    sharing companies or organizations, or other persons or entities.
      (d) Use of Funds.--Pursuant to applications received under subsection
    (c), the Secretary may make financial assistance available to any
    applicant or joint sponsor of the application to be used for any of the
    following:
              (1) Assisting persons located in the regional deployment
            area, including fleet owners, in the purchase of new plug-in
            electric drive vehicles by offsetting in whole or in part the
            incremental cost of such vehicles above the cost of comparable
            conventionally fueled vehicles.
              (2) Supporting the use of plug-in electric drive vehicles by
            funding projects for the deployment of any of the following:
                      (A) Electrical charging infrastructure for plug-in
                    electric drive vehicles, including battery exchange,
                    fast charging infrastructure, and other services, in
                    public or private locations, including street parking,
                    parking garages, parking lots, homes, gas stations, and
                    highway rest stops.
                      (B) Smart Grid equipment and infrastructure, as
                    described in title XIII of the Energy Independence and
                    Security Act of 2007, to facilitate the charging and
                    integration of plug-in electric drive vehicles.
              (3) Such other projects as the Secretary determines
            appropriate to support the large-scale deployment of plug-in
            electric drive vehicles in regional deployment areas.
      (e) Program Requirements.--The Secretary, in consultation with the
    Administrator and the Secretary of Transportation, shall determine
    design elements and requirements of the program established pursuant to
    subsection (a), including--
              (1) the type of financial mechanism with which to provide
            financial assistance;
              (2) criteria for evaluating applications submitted under
            subsection (c), including the anticipated ability to promote
            deployment and market penetration of vehicles that are less
            dependent on petroleum as a fuel source; and
              (3) reporting requirements for entities that receive
            financial assistance under this section, including a
            comprehensive set of performance data characterizing the
            results of the deployment program.
      (f) Information Clearinghouse.--The Secretary shall, as part of the
    program established pursuant to subsection (a), collect and make
    available to the public information regarding the cost, performance,
    and other technical data regarding the deployment and integration of
    plug-in electric drive vehicles.
      (g) Authorization.--There are authorized to be appropriated to carry
    out this section such sums as may be necessary.

    SEC. 123. PLUG-IN ELECTRIC DRIVE VEHICLE MANUFACTURING.

      (a) Vehicle Manufacturing Assistance Program.--The Secretary of
    Energy shall establish a program to provide financial assistance to
    automobile manufacturers to facilitate the manufacture of plug-in
    electric drive vehicles, as defined in section 131(a)(5) of the Energy
    Independence and Security Act of 2007, that are developed and produced
    in the United States.
      (b) Financial Assistance.--The Secretary of Energy may provide
    financial assistance to an automobile manufacturer under the program
    established pursuant to subsection (a) for--
              (1) the reconstruction or retooling of facilities for the
            manufacture of plug-in electric drive vehicles that are
            developed and produced in the United States; and
              (2) if appropriate, the purchase of domestically produced
            vehicle batteries to be used in the manufacture of vehicles
            manufactured pursuant to paragraph (1).
      (c) Coordination With Regional Deployment.--The Secretary may provide
    financial assistance under subsection (b) in conjunction with the award
    of financial assistance under the large scale vehicle electrification
    program established pursuant to section 122 of this Act.
      (d) Program Requirements.--The Secretary shall determine design
    elements and requirements of the program established pursuant to
    subsection (a), including--
              (1) the type of financial mechanism with which to provide
            financial assistance;
              (2) criteria, in addition to the criteria described under
            subsection (e), for evaluating applications for financial
            assistance; and
              (3) reporting requirements for automobile manufacturers that
            receive financial assistance under this section.
      (e) Criteria.--In selecting recipients of financial assistance from
    among applicant automobile manufacturers, the Secretary shall give
    preference to proposals that--
              (1) are most likely to be successful; and
              (2) are located in local markets that have the greatest need
            for the facility.
      (f) Reports.--The Secretary shall annually submit to Congress a
    report on the program established pursuant to this section.
      (g) Authorization of Appropriations.--There are authorized to be
    appropriated such sums as are necessary to carry out this section.

    SEC. 124. INVESTMENT IN CLEAN VEHICLES.

      (a) Definitions.--In this section:
              (1) Advanced technology vehicles and qualifying components.--
            The terms ``advanced technology vehicles'' and ``qualifying
            components'' shall have the definition of such terms in section
            136 of the Energy Independence and Security Act of 2007, except
            that for purposes of this section, the average base year as
            described in such section 136(a)(1)(C) shall be the following:
                      (A) In each of the years 2012 through 2016, model
                    year 2009.
                      (B) In 2017, the Administrator shall, notwithstanding
                    such section 136(a)(1)(C), determine an appropriate
                    baseline based on technological and economic
                    feasibility.
              (2) Plug-in electric drive vehicle.--The term ``plug-in
            electric drive vehicle'' shall have the definition of such term
            in section 131 of the Energy Independence and Security Act of
            2007.
      (b) Distribution of Allowances.--The Administrator shall, in
    accordance with this section, distribute emission allowances allocated
    pursuant to section 782(i) of the Clean Air Act not later than
    September 30 of 2012 and each calendar year thereafter through 2025.
      (c) Plug-in Electric Drive Vehicle Manufacturing and Deployment.--
              (1) In general.--The Administrator shall, at the direction of
            the Secretary of Energy, provide emission allowances allocated
            pursuant to section 782(i) to applicants, joint sponsors and
            automobile manufacturers pursuant to sections 122 and 123 of
            this Act.
              (2) Annual amount.--In each of the years 2012 through 2017,
            one-quarter of the portion of the emission allowances allocated
            pursuant to section 782(i) of the Clean Air Act shall be
            available to carry out paragraph (1) such that--
                      (A) one-eighth of the portion shall be available to
                    carry out section 122; and,
                      (B) one-eighth of the portion shall be available to
                    carry out section 123.
              (3) Preference.--In directing the provision of emission
            allowances under this subsection to carry out section 122, the
            Secretary shall give preference to applications under section
            122(c) that are jointly sponsored by one or more automobile
            manufacturers.
              (4) Multi-year commitments.--The Administrator shall commit
            to providing emission allowances to an applicant, joint
            sponsor, or automobile manufacturer for up to five consecutive
            years if--
                      (A) an application under section 122 or 123 of this
                    Act requests a multi-year commitment;
                      (B) such application meets the criteria for support
                    established by the Secretary of Energy under sections
                    122 or 123 of this Act;
                      (C) the Administrator confirms to the Secretary that
                    emission allowances will be available for a multi-year
                    commitment;
                      (D) the Secretary of Energy determines that a multi-
                    year commitment for such application will advance the
                    goals of section 122 or 123; and
                      (E) the Secretary of Energy directs the Administrator
                    to make a multi-year commitment.
              (5) Insufficient applications.--If, in any year, emission
            allowances available under paragraph (2) cannot be provided
            because of insufficient numbers of submitted applications that
            meet the criteria for support established by the Secretary of
            Energy under sections 122 or 123 of this Act, the remaining
            emission allowances shall be distributed according to
            subsection (d).
      (d) Advanced Technology Vehicles.--
              (1) In general.--The Administrator shall, at the direction of
            the Secretary of Energy, provide any emission allowances
            allocated pursuant to section 782(i) of the Clean Air Act that
            are not provided under subsection (c) to automobile
            manufacturers and component suppliers to pay not more than 30
            percent of the cost of--
                      (A) reequipping, expanding, or establishing a
                    manufacturing facility in the United States to
                    produce--
                              (i) qualifying advanced technology vehicles;
                            or
                              (ii) qualifying components; and
                      (B) engineering integration performed in the United
                    States of qualifying vehicles and qualifying
                    components.
              (2) Preference.--In directing the provision of emission
            allowances under this subsection during the years 2012 through
            2017, the Secretary shall give preference to applications for
            projects that save the maximum number of gallons of fuel.

    SEC. 125. ADVANCED TECHNOLOGY VEHICLE MANUFACTURING INCENTIVE LOANS.

      Section 136(d)(1) of the Energy Independence and Security Act of 2007
    (42 U.S.C. 17013(d)(1)) is amended by striking ``$25,000,000,000'' and
    inserting ``$50,000,000,000''.

    SEC. 126. AMENDMENT TO RENEWABLE FUELS STANDARD.

      (a) Definition of Renewable Biomass.--Section 211(o)(1)(I) of the
    Clean Air Act (42 U.S.C. 7545(o)) is amended to read as follows:
                      ``(I) Renewable biomass.--The term `renewable
                    biomass' means any of the following:
                              ``(i) Plant material, including waste
                            material, harvested or collected from actively
                            managed agricultural land that was in
                            cultivation, cleared, or fallow and nonforested
                            on January 1, 2009.
                              ``(ii) Plant material, including waste
                            material, harvested or collected from
                            pastureland that was nonforested on January 1,
                            2009.
                              ``(iii) Nonhazardous vegetative matter
                            derived from waste, including separated yard
                            waste, landscape right-of-way trimmings,
                            construction and demolition debris or food
                            waste (but not recyclable waste paper, painted,
                            treated or pressurized wood, or wood
                            contaminated with plastic or metals).
                              ``(iv) Animal waste or animal byproducts,
                            including products of animal waste digesters.
                              ``(v) Algae.
                              ``(vi) Trees, brush, slash, residues, or any
                            other vegetative matter removed from within 600
                            feet of any building, campground, or route
                            designated for evacuation by a public official
                            with responsibility for emergency preparedness,
                            or from within 300 feet of a paved road,
                            electric transmission line, utility tower, or
                            water supply line.
                              ``(vii) Residues from or byproducts of milled
                            logs.
                              ``(viii) Any of the following removed from
                            forested land that is not Federal and is not
                            high conservation priority land:
                                      ``(I) Trees, brush, slash, residues,
                                    interplanted energy crops, or any other
                                    vegetative matter removed from an
                                    actively managed tree plantation
                                    established--
                                              ``(aa) prior to January 1,
                                            2009; or
                                              ``(bb) on land that, as of
                                            January 1, 2009, was cultivated
                                            or fallow and non-forested.
                                      ``(II) Trees, logging residue,
                                    thinnings, cull trees, pulpwood, and
                                    brush removed from naturally-
                                    regenerated forests or other non-
                                    plantation forests, including for the
                                    purposes of hazardous fuel reduction or
                                    preventative treatment for reducing or
                                    containing insect or disease
                                    infestation.
                                      ``(III) Logging residue, thinnings,
                                    cull trees, pulpwood, brush and species
                                    that are non-native and noxious, from
                                    stands that were planted and managed
                                    after January 1, 2009, to restore or
                                    maintain native forest types.
                                      ``(IV) Dead or severely damaged trees
                                    removed within 5 years of fire,
                                    blowdown, or other natural disaster,
                                    and badly infested trees.
                              ``(ix) Materials, pre-commercial thinnings,
                            or removed invasive species from National
                            Forest System land and public lands (as defined
                            in section 103 of the Federal Land Policy and
                            Management Act of 1976 (43 U.S.C. 1702)),
                            including those that are byproducts of
                            preventive treatments (such as trees, wood,
                            brush, thinnings, chips, and slash), that are
                            removed as part of a federally recognized
                            timber sale, or that are removed to reduce
                            hazardous fuels, to reduce or contain disease
                            or insect infestation, or to restore ecosystem
                            health, and that are--
                                      ``(I) not from components of the
                                    National Wilderness Preservation
                                    System, Wilderness Study Areas,
                                    Inventoried Roadless Areas, old growth
                                    or mature forest stands, components of
                                    the National Landscape Conservation
                                    System, National Monuments, National
                                    Conservation Areas, Designated
                                    Primitive Areas, or Wild and Scenic
                                    Rivers corridors;
                                      ``(II) harvested in environmentally
                                    sustainable quantities, as determined
                                    by the appropriate Federal land
                                    manager; and
                                      ``(III) harvested in accordance with
                                    Federal and State law and applicable
                                    land management plans.''.
      (b) Definition of High Conservation Priority Land.--Section 211(o)(1)
    of the Clean Air Act (42 U.S.C. 7545(o)) is amended by inserting the
    following at the end thereof:
                      ``(M) High conservation priority land.--The term
                    `high conservation priority land' means land that is
                    not Federal land and is--
                              ``(i) globally or State ranked as critically
                            imperiled or imperiled under a State Natural
                            Heritage Program; or
                              ``(ii) old-growth or late-successional
                            forest, as identified by the office of the
                            State Forester or relevant State agency with
                            regulatory jurisdiction over forestry
                            activities.''.

    SEC. 127. OPEN FUEL STANDARD.

      (a) Findings.--The Congress finds that--
              (1) the status of oil as a strategic commodity, which derives
            from its domination of the transportation sector, presents a
            clear and present danger to the United States;
              (2) in a prior era, when salt was a strategic commodity, salt
            mines conferred national power and wars were fought over the
            control of such mines;
              (3) technology, in the form of electricity and refrigeration,
            decisively ended salt's monopoly of meat preservation and
            greatly reduced its strategic importance;
              (4) fuel competition and consumer choice would similarly
            serve to end oil's monopoly in the transportation sector and
            strip oil of its strategic status;
              (5) the current closed fuel market has allowed a cartel of
            petroleum exporting countries to inflate fuel prices,
            effectively imposing a harmful tax on the economy of the United
            States;
              (6) much of the inflated petroleum revenues the oil cartel
            earns at the expense of the people of the United States are
            used for purposes antithetical to the interests of the United
            States and its allies;
              (7) alcohol fuels, including ethanol and methanol, could
            potentially provide significant supplies of additional fuels
            that could be produced in the United States and in many other
            countries in the Western Hemisphere that are friendly to the
            United States;
              (8) alcohol fuels can only play a major role in securing the
            energy independence of the United States if a substantial
            portion of vehicles in the United States are capable of
            operating on such fuels;
              (9) it is not in the best interest of United States consumers
            or the United States Government to be constrained to depend
            solely upon petroleum resources for vehicle fuels if alcohol
            fuels are potentially available;
              (10) existing technology, in the form of flexible fuel
            vehicles, allows internal combustion engine cars and trucks to
            be produced at little or no additional cost, which are capable
            of operating on conventional gasoline, alcohol fuels, or any
            combination of such fuels, as availability or cost advantage
            dictates, providing a platform on which fuels can compete;
              (11) the necessary distribution system for such alcohol fuels
            will not be developed in the United States until a substantial
            fraction of the vehicles in the United States are capable of
            operating on such fuels;
              (12) the establishment of such a vehicle fleet and
            distribution system would provide a large market that would
            mobilize private resources to substantially advance the
            technology and expand the production of alcohol fuels in the
            United States and abroad;
              (13) the United States has an urgent national security
            interest to develop alcohol fuels technology, production, and
            distribution systems as rapidly as possible;
              (14) new cars sold in the United States that are equipped
            with an internal combustion engine should allow for fuel
            competition by being flexible fuel vehicles, and new diesel
            cars should be capable of operating on biodiesel; and
              (15) such an open fuel standard would help to protect the
            United States economy from high and volatile oil prices and
            from the threats caused by global instability, terrorism, and
            natural disaster.
      (b) Open Fuel Standard for Transportation.--(1) Chapter 329 of title
    49, United States Code, is amended by adding at the end the following:

    ``Sec. 32920. Open fuel standard for transportation

      ``(a) Definitions.--In this section:
              ``(1) E85.--The term `E85' means a fuel mixture containing 85
            percent ethanol and 15 percent gasoline by volume.
              ``(2) Flexible fuel automobile.--The term `flexible fuel
            automobile' means an automobile that has been warranted by its
            manufacturer to operate on gasoline, E85, and M85.
              ``(3) Fuel choice-enabling automobile.--The term `fuel
            choice-enabling automobile' means--
                      ``(A) a flexible fuel automobile; or
                      ``(B) an automobile that has been warranted by its
                    manufacturer to operate on biodiesel.
              ``(4) Light-duty automobile.--The term `light-duty
            automobile' means--
                      ``(A) a passenger automobile; or
                      ``(B) a non-passenger automobile.
              ``(5) Light-duty automobile manufacturer's annual covered
            inventory.--The term `light-duty automobile manufacturer's
            annual covered inventory' means the number of light-duty
            automobiles powered by an internal combustion engine that a
            manufacturer, during a given calendar year, manufactures in the
            United States or imports from outside of the United States for
            sale in the United States.
              ``(6) M85.--The term `M85' means a fuel mixture containing 85
            percent methanol and 15 percent gasoline by volume.
      ``(b) Open Fuel Standard for Transportation.--
              ``(1) In general.--The Secretary may promulgate regulations
            to require each light-duty automobile manufacturer's annual
            covered inventory to be comprised of a minimum percentage of
            fuel-choice enabling automobiles, with sufficient lead time, if
            the Secretary, in coordination with the Secretary of Energy and
            the Administrator of the Environmental Protection Agency,
            determines such requirement is a cost-effective way to achieve
            the Nation's energy independence and environmental objectives.
            The cost-effective determination shall consider the future
            availability of both alternative fuel supply and infrastructure
            to deliver the alternative fuel to the fuel-choice enabling
            vehicles.
              ``(2) Temporary exemption from requirements.--
                      ``(A) Application.--A manufacturer may request an
                    exemption from the requirement described in paragraph
                    (1) by submitting an application to the Secretary, at
                    such time, in such manner, and containing such
                    information as the Secretary may require by regulation.
                    Each such application shall specify the models, lines,
                    and types of automobiles affected.
                      ``(B) Evaluation.--After evaluating an application
                    received from a manufacturer, the Secretary may at any
                    time, under such terms and conditions, and to such
                    extent as the Secretary considers appropriate,
                    temporarily exempt, or renew the exemption of, a light-
                    duty automobile from the requirement described in
                    paragraph (1) if the Secretary determines that
                    unavoidable events not under the control of the
                    manufacturer prevent the manufacturer of such
                    automobile from meeting its required production volume
                    of fuel choice-enabling automobiles, including--
                              ``(i) a disruption in the supply of any
                            component required for compliance with the
                            regulations;
                              ``(ii) a disruption in the use and
                            installation by the manufacturer of such
                            component; or
                              ``(iii) application to plug-in electric drive
                            vehicles causing such vehicles to fail to meet
                            State air quality requirements.
                      ``(C) Consolidation.--The Secretary may consolidate
                    applications received from multiple manufacturers under
                    subparagraph (A) if they are of a similar nature.
                      ``(D) Conditions.--Any exemption granted under
                    subparagraph (B) shall be conditioned upon the
                    manufacturer's commitment to recall the exempted
                    automobiles for installation of the omitted components
                    within a reasonable time proposed by the manufacturer
                    and approved by the Secretary after such components
                    become available in sufficient quantities to satisfy
                    both anticipated production and recall volume
                    requirements.
                      ``(E) Notice.--The Secretary shall publish in the
                    Federal Register--
                              ``(i) notice of each application received
                            from a manufacturer;
                              ``(ii) notice of each decision to grant or
                            deny a temporary exemption; and
                              ``(iii) the reasons for granting or denying
                            such exemptions.''.
      (2) The table of contents in chapter 329 of such title is amended
    adding at the end the following:

    ``32920. Open fuel standard for transportation.''.

    SEC. 128. TEMPORARY VEHICLE TRADE-IN PROGRAM.

      (a) Establishment.--There is established in the National Highway
    Traffic Safety Administration a program to be known as the ``Cash for
    Clunkers Temporary Vehicle Trade-in Program'' through which the
    Secretary, in accordance with this section and the regulations
    promulgated under subsection (d), shall--
              (1) authorize the issuance of an electronic voucher, subject
            to the specifications set forth in subsection (c), to offset
            the purchase price or lease price for a qualifying lease of a
            new fuel efficient automobile upon the surrender of an eligible
            trade-in vehicle to a dealer participating in the Program;
              (2) certify dealers for participation in the Program and
            require that all certified dealers--
                      (A) accept vouchers as provided in this section as
                    partial payment or down payment for the purchase or
                    qualifying lease of any new fuel efficient automobile
                    offered for sale or lease by that dealer; and
                      (B) in accordance with subsection (c)(2), dispose of
                    each eligible trade-in vehicle surrendered to the
                    dealer under the Program;
              (3) in consultation with the Secretary of the Treasury, make
            payments to dealers for vouchers accepted by such dealers prior
            to April 1, 2010, in accordance with the regulations issued
            under subsection (d);
              (4) in consultation with the Secretary of the Treasury,
            provide for the payment of rebates to persons who qualify for a
            rebate under subsection (c)(3); and
              (5) in consultation with the Secretary of the Treasury and
            the Inspector General of the Department of Transportation,
            establish and provide for the enforcement of measures to
            prevent and penalize fraud under the Program.
      (b) Qualifications for and Value of Vouchers.--A voucher issued under
    the Program shall have a value that may be applied to offset the
    purchase price or lease price for a qualifying lease of a new fuel
    efficient automobile as follows:
              (1) $3,500 value.--The voucher may be used to offset the
            purchase price or lease price of the new fuel efficient
            automobile by $3,500 if--
                      (A) the new fuel efficient automobile is a passenger
                    automobile and the combined fuel economy value of such
                    automobile is at least 4 miles per gallon higher than
                    the combined fuel economy value of the eligible trade-
                    in vehicle;
                      (B) the new fuel efficient automobile is a category 1
                    truck and the combined fuel economy value of such truck
                    is at least 2 miles per gallon higher than the combined
                    fuel economy value of the eligible trade-in vehicle;
                      (C) the new fuel efficient automobile is a category 2
                    truck that has a combined fuel economy value of at
                    least 15 miles per gallon and--
                              (i) the eligible trade-in vehicle is a
                            category 2 truck and the combined fuel economy
                            value of the new fuel efficient automobile is
                            at least 1 mile per gallon higher than the
                            combined fuel economy value of the eligible
                            trade-in vehicle; or
                              (ii) the eligible trade-in vehicle is a
                            category 3 truck of model year 2001 or earlier;
                            or
                      (D) the new fuel efficient automobile is a category 3
                    truck and the eligible trade-in vehicle is a category 3
                    truck of model year of 2001 or earlier and is of
                    similar size or larger than the new fuel efficient
                    automobile as determined in a manner prescribed by the
                    Secretary.
              (2) $4,500 value.--The voucher may be used to offset the
            purchase price or lease price of the new fuel efficient
            automobile by $4,500 if--
                      (A) the new fuel efficient automobile is a passenger
                    automobile and the combined fuel economy value of such
                    automobile is at least 10 miles per gallon higher than
                    the combined fuel economy value of the eligible trade-
                    in vehicle;
                      (B) the new fuel efficient automobile is a category 1
                    truck and the combined fuel economy value of such truck
                    is at least 5 miles per gallon higher than the combined
                    fuel economy value of the eligible trade-in vehicle; or
                      (C) the new fuel efficient automobile is a category 2
                    truck that has a combined fuel economy value of at
                    least 15 miles per gallon and the combined fuel economy
                    value of such truck is at least 2 miles per gallon
                    higher than the combined fuel economy value of the
                    eligible trade-in vehicle and the eligible trade-in
                    vehicle is a category 2 truck.
      (c) Program Specifications.--
              (1) Limitations.--
                      (A) General period of eligibility.--A voucher issued
                    under the Program shall be used only for the purchase
                    or qualifying lease of new fuel efficient automobiles
                    that occur between March 30, 2009, and March 31, 2010.
                      (B) Number of vouchers per person and per trade-in
                    vehicle.--Not more than 1 voucher may be issued for a
                    single person and not more than 1 voucher may be issued
                    for the joint registered owners of a single eligible
                    trade-in vehicle.
                      (C) No combination of vouchers.--Only 1 voucher
                    issued under the Program may be applied toward the
                    purchase or qualifying lease of a single new fuel
                    efficient automobile.
                      (D) Cap on funds for category 3 trucks.--Not more
                    than 7.5 percent of the total funds made available for
                    the Program shall be used for vouchers for the purchase
                    or qualifying lease of category 3 trucks.
                      (E) Combination with other incentives permitted.--The
                    availability or use of a Federal, State, or local
                    incentive or a State-issued voucher for the purchase or
                    lease of a new fuel efficient automobile shall not
                    limit the value or issuance of a voucher under the
                    Program to any person otherwise eligible to receive
                    such a voucher.
                      (F) No additional fees.--A dealer participating in
                    the program may not charge a person purchasing or
                    leasing a new fuel efficient automobile any additional
                    fees associated with the use of a voucher under the
                    Program.
                      (G) Number and amount.--The total number and value of
                    vouchers issued under the Program may not exceed the
                    amounts appropriated for such purpose.
              (2) Disposition of eligible trade-in vehicles.--
                      (A) In general.--For each eligible trade-in vehicle,
                    the title of which is transferred to a dealer under the
                    Program, the dealer shall certify to the Secretary, in
                    such manner as the Secretary shall prescribe by rule,
                    that the vehicle, including the engine and drive
                    train--
                              (i) will be crushed or shredded within such
                            period and in such manner as the Secretary
                            prescribes, or will be transferred to an entity
                            that will ensure that the vehicle will be
                            crushed or shredded within such period and in
                            such manner as the Secretary prescribes; and
                              (ii) has not been, and will not be, sold,
                            leased, exchanged, or otherwise disposed of for
                            use as an automobile in the United States or in
                            any other country, or has been or will be
                            transferred, in such manner as the Secretary
                            prescribes, to an entity that will ensure that
                            the vehicle has not been, and will not be,
                            sold, leased, exchanged, or otherwise disposed
                            of for use as an automobile in the United
                            States or in any other country.
                      (B) Savings provision.--Nothing in subparagraph (A)
                    may be construed to preclude a person who dismantles or
                    disposes of the vehicle from--
                              (i) selling any parts of the disposed vehicle
                            other than the engine block and drive train
                            (unless the engine or drive train has been
                            crushed or shredded); or
                              (ii) retaining the proceeds from such sale.
                      (C) Coordination.--The Secretary shall coordinate
                    with the Attorney General to ensure that the National
                    Motor Vehicle Title Information System and other
                    publicly accessible and commercially available systems
                    are appropriately updated to reflect the crushing or
                    shredding of vehicles under this section and
                    appropriate re-classification of the vehicles' titles.
              (3) Eligible purchases or leases prior to date of
            enactment.--A person who purchased or leased a new fuel
            efficient vehicle after March 30, 2009, and before the date of
            enactment of this section is eligible for a cash rebate
            equivalent to the amount described in subsection (b)(1) if the
            person provides proof satisfactory to the Secretary that--
                      (A) the person was the registered owner of an
                    eligible trade-in vehicle; and
                      (B) such vehicle has been disposed of in accordance
                    with clauses (i) and (ii) of paragraph (2)(A).
      (d) Regulations.--Notwithstanding the requirements of section 553 of
    title 5, United States Code, the Secretary shall promulgate final
    regulations to implement the Program not later than 30 days after the
    date of the enactment of this section. Such regulations shall--
              (1) provide for a means of certifying dealers for
            participation in the program;
              (2) establish procedures for the reimbursement of dealers
            participating in the Program to be made through electronic
            transfer of funds for both the amount of the vouchers and any
            reasonable administrative costs incurred by the dealer as soon
            as practicable but no longer than 10 days after the submission
            of a voucher for the new fuel efficient automobile to the
            Secretary;
              (3) prohibit a dealer from using the voucher to offset any
            other rebate or discount offered by that dealer or the
            manufacturer of the new fuel efficient automobile;
              (4) require dealers to disclose to the person trading in an
            eligible trade in vehicle the best estimate of the scrappage
            value of such vehicle and to permit the dealer to retain $50 of
            any amounts paid to the dealer for scrappage of the automobile
            as payment for any administrative costs to the dealer
            associated with participation in the Program;
              (5) establish a process by which persons who qualify for a
            rebate under subsection (c)(3) may apply for such rebate;
              (6) consistent with subsection (c)(2), establish requirements
            and procedures for the disposal of eligible trade-in vehicles
            and provide such information as may be necessary to entities
            engaged in such disposal to ensure that such vehicles are
            disposed of in accordance with such requirements and
            procedures, including--
                      (A) requirements for the removal and appropriate
                    disposition of refrigerants, antifreeze, lead products,
                    mercury switches, and such other toxic or hazardous
                    vehicle components prior to the crushing or shredding
                    of an eligible trade-in vehicle, in accordance with
                    rules established by the Secretary in consultation with
                    the Administrator, and in accordance with other
                    applicable Federal or State requirements; and
                      (B) a mechanism for dealers to certify to the
                    Secretary that eligible trade-in vehicles are disposed
                    of, or transferred to an entity that will ensure that
                    the vehicle is disposed of, in accordance with such
                    requirements and procedures and to submit the vehicle
                    identification numbers of the vehicles disposed of and
                    the new fuel efficient automobile purchased with each
                    voucher;
              (7) consistent with subsection (c)(2), establish requirements
            and procedures for the disposal of eligible trade-in vehicles
            and provide such information as may be necessary to entities
            engaged in such disposal to ensure that such vehicles are
            disposed of in accordance with such requirements and
            procedures; and
              (8) provide for the enforcement of the penalties described in
            subsection (e).
      (e) Anti-Fraud Provisions.--
              (1) Violation.--It shall be unlawful for any person to
            violate any provision under this section or any regulations
            issued pursuant to subsection (d).
              (2) Penalties.--Any person who commits a violation described
            in paragraph (1) shall be liable to the United States
            Government for a civil penalty of not more than $25,000 for
            each violation.
      (f) Information to Consumers and Dealers.--Not later than 30 days
    after the date of enactment of this section, and promptly upon the
    update of any relevant information, the Secretary shall make available
    on an Internet website and through other means determined by the
    Secretary information about the Program, including--
              (1) how to determine if a vehicle is an eligible trade-in
            vehicle;
              (2) how to participate in the Program, including how to
            determine participating dealers; and
              (3) a comprehensive list, by make and model, of new fuel
            efficient automobiles meeting the requirements of the Program.
    Once such information is available, the Secretary shall conduct a
    public awareness campaign to inform consumers about the Program and
    where to obtain additional information.
      (g) Recordkeeping and Report.--
              (1) Database.--The Secretary shall maintain a database of the
            vehicle identification numbers of all new fuel efficient
            vehicles purchased or leased and all eligible trade-in vehicles
            disposed of under the Program.
              (2) Report.--Not later than June 30, 2010, the Secretary
            shall submit a report to the Committee on Energy and Commerce
            of the House of Representatives and the Committee on Commerce,
            Science, and Transportation of the Senate describing the
            efficacy of the Program, including--
                      (A) a description of program results, including--
                              (i) the total number and amount of vouchers
                            issued for purchase or lease of new fuel
                            efficient automobiles by manufacturer
                            (including aggregate information concerning the
                            make, model, model year) and category of
                            automobile;
                              (ii) aggregate information regarding the
                            make, model, model year, and manufacturing
                            location of vehicles traded in under the
                            Program; and
                              (iii) the location of sale or lease;
                      (B) an estimate of the overall increase in fuel
                    efficiency in terms of miles per gallon, total annual
                    oil savings, and total annual greenhouse gas
                    reductions, as a result of the Program; and
                      (C) an estimate of the overall economic and
                    employment effects of the Program.
      (h) Definitions.--As used in this section--
              (1) the term ``passenger automobile'' means a passenger
            automobile, as defined in section 32901(a)(18) of title 49,
            United States Code, that has a combined fuel economy value of
            at least 22 miles per gallon;
              (2) the term ``category 1 truck'' means a nonpassenger
            automobile, as defined in section 32901(a)(17) of title 49,
            United States Code, that has a combined fuel economy value of
            at least 18 miles per gallon, except that such term does not
            include a category 2 truck;
              (3) the term ``category 2 truck'' means a large van or a
            large pickup, as categorized by the Secretary using the method
            used by the Environmental Protection Agency and described in
            the report entitled ``Light-Duty Automotive Technology and Fuel
            Economy Trends: 1975 through 2008'';
              (4) the term ``category 3 truck'' means a work truck, as
            defined in section 32901(a)(19) of title 49, United States
            Code;
              (5) the term ``combined fuel economy value'' means--
                      (A) with respect to a new fuel efficient automobile,
                    the number, expressed in miles per gallon, centered
                    below the words ``Combined Fuel Economy'' on the label
                    required to be affixed or caused to be affixed on a new
                    automobile pursuant to subpart D of part 600 of title
                    40 Code of Federal Regulations;
                      (B) with respect to an eligible trade-in vehicle, the
                    equivalent of the number described in subparagraph (A),
                    and posted under the words ``Estimated New EPA MPG''
                    and above the word ``Combined'' for vehicles of model
                    year 1984 through 2007, or posted under the words ``New
                    EPA MPG'' and above the word ``Combined'' for vehicles
                    of model year 2008 or later on the fueleconomy.gov
                    website of the Environmental Protection Agency for the
                    make, model, and year of such vehicle; or
                      (C) with respect to an eligible trade-in vehicle
                    manufactured between model years 1978 through 1984, the
                    equivalent of the number described in subparagraph (A)
                    as determined by the Secretary (and posted on the
                    website of the National Highway Traffic Safety
                    Administration) using data maintained by the
                    Environmental Protection Agency for the make, model,
                    and year of such vehicle;
              (6) the term ``dealer'' means a person licensed by a State
            who engages in the sale of new automobiles to ultimate
            purchasers;
              (7) the term ``eligible trade-in vehicle'' means an
            automobile or a work truck (as such terms are defined in
            section 32901(a) of title 49, United States Code) that, at the
            time it is presented for trade-in under this section--
                      (A) is in drivable condition;
                      (B) has been continuously insured consistent with the
                    applicable State law and registered to the same owner
                    for a period of not less than 1 year immediately prior
                    to such trade-in; and
                      (C) has a combined fuel economy value of 18 miles per
                    gallon or less;
              (8) the term ``new fuel efficient automobile'' means an
            automobile described in paragraph (1), (2), (3), or (4)--
                      (A) the equitable or legal title of which has not
                    been transferred to any person other than the ultimate
                    purchaser;
                      (B) that carries a manufacturer's suggested retail
                    price of $45,000 or less;
                      (C) that--
                              (i) for new fuel efficient automobiles
                            weighing up to 8,500 pounds, is certified to
                            applicable standards under section 86.1811-04
                            of title 40, Code of Federal Regulations; or
                              (ii) for category 3 trucks, is certified to
                            the applicable vehicle or engine standards
                            under section 86.1816-08, 86-007-11, or 86.008-
                            10 of title 40, Code of Federal Regulations;
                            and
                      (D) that has the combined fuel economy value of--
                              (i) 22 miles per gallon for a passenger
                            automobile;
                              (ii) 18 miles per gallon for a category 1
                            truck; and
                              (iii) 15 miles per gallon for a category 2
                            truck;
              (9) the term ``Program'' means the Cash for Clunkers
            Temporary Vehicle Trade-in Program established by this section;
              (10) the term ``qualifying lease'' means a lease of an
            automobile for a period of not less than 5 years;
              (11) the term ``scrappage value'' means the amount received
            by the dealer for a vehicle upon transferring title of such
            vehicle to the person responsible for ensuring the dismantling
            and destroying the vehicle;
              (12) the term ``Secretary'' means the Secretary of
            Transportation acting through the National Highway Traffic
            Safety Administration;
              (13) the term ``ultimate purchaser'' means, with respect to
            any new automobile, the first person who in good faith
            purchases such automobile for purposes other than resale; and
              (14) the term ``vehicle identification number'' means the 17
            character number used by the automobile industry to identify
            individual automobiles.
      (i) Authorization of Appropriations.--There is authorized to be
    appropriated to the Secretary $4,000,000,000 to carry out this section.

    SEC. 129. DIESEL EMISSIONS REDUCTION.

      Subtitle G of title VII of the Energy Policy Act of 2005 (42 U.S.C.
    16131 et seq.) is amended--
              (1) in the matter preceding clause (i) in section 791(3)(B),
            by inserting ``in any State'' after ``nonprofit organization or
            institution'';
              (2) in section 791(9), by striking ``The term `State'
            includes the District of Columbia.'' and inserting ``The term
            `State' includes the District of Columbia, American Samoa,
            Guam, the Commonwealth of the Northern Mariana Islands, Puerto
            Rico, and the Virgin Islands.''; and
              (3) in section 793(c)--
                      (A) in paragraph (2)(A), by striking ``51 States''
                    and inserting ``56 States'';
                      (B) in paragraph (2)(A), by striking ``1.96 percent''
                    and inserting ``1.785 percent'';
                      (C) in paragraph (2)(B), by striking ``51 States''
                    and inserting ``56 States''; and
                      (D) in paragraph (2)(B), by amending clause (ii) to
                    read as follows:
                              ``(ii) the amount of funds remaining after
                            each State described in paragraph (1) receives
                            the 1.785-percent allocation under this
                            paragraph.''.

    SEC. 130. LOAN GUARANTEES FOR PROJECTS TO CONSTRUCT RENEWABLE FUEL
                        PIPELINES.

      (a) Definitions.--Section 1701 of the Energy Policy Act of 2005 (42
    U.S.C. 16511) is amended by adding at the end the following:
              ``(6) Renewable fuel.--The term `renewable fuel' has the
            meaning given the term in section 211(o)(1) of the Clean Air
            Act (42 U.S.C. 7545(o)(1)), except that the term shall include
            all ethanol and biodiesel.
              ``(7) Renewable fuel pipeline.--The term `renewable fuel
            pipeline' means a common carrier pipeline for transporting
            renewable fuel.''.
      (b) Renewable Fuel Pipeline Eligibility.--Section 1703(b) the Energy
    Policy Act of 2005 (42 U.S.C. 16513) is amended by adding at the end
    the following:
              ``(11) Renewable fuel pipelines.''.

         Subtitle D--State Energy and Environment Development Accounts

    SEC. 131. ESTABLISHMENT OF SEED ACCOUNTS.

      (a) Definitions.--In this section:
              (1) SEED account.--The term ``SEED Account'' means a State
            Energy and Environment Development Account established pursuant
            to this section.
              (2) State energy office.--The term ``State Energy Office''
            means a State entity eligible for grants under part D of title
            III of the Energy Policy and Conservation Act (42 U.S.C. 6321
            et seq.).
      (b) Establishment of Program.--The Administrator shall establish a
    program under which a State, through its State Energy Office or other
    State agency designated by the State, may operate a State Energy and
    Environment Development Account.
      (c) Purpose.--The purpose of each SEED Account is to serve as a
    common State-level repository for managing and accounting for emission
    allowances provided to States designated for renewable energy and
    energy efficiency purposes.
      (d) Regulations.--Not later than one year after the date of enactment
    of this Act, the Administrator shall promulgate regulations to carry
    out this section, including regulations--
              (1) to ensure that each State operates its SEED Account and
            any subaccounts thereof efficiently and in accordance with this
            Act and applicable State and Federal laws;
              (2) to prevent waste, fraud, and abuse;
              (3) to indicate the emission allowances that may be deposited
            in a State's SEED Account pending distribution or use;
              (4) to indicate the programs and objectives authorized by
            Federal law for which emission allowances in a SEED Account may
            be distributed or used;
              (5) to identify the forms of financial assistance and
            incentives that States may provide through distribution or use
            of SEED Accounts; and
              (6) to prescribe the form and content of reports that the
            States are required to submit under this section on the use of
            SEED Accounts.
      (e) Operation.--
              (1) Deposits.--
                      (A) In general.--In the allowance tracking system
                    established pursuant to section 724(d) of the Clean Air
                    Act, the Administrator shall establish a SEED Account
                    for each State and place in it the allowances allocated
                    pursuant to section 782(g) of the Clean Air Act to be
                    distributed to States pursuant to sections 132 and 201
                    of this Act.
                      (B) Financial account.--A State may create a
                    financial account associated with its SEED Account to
                    deposit, retain, and manage any proceeds of any sale of
                    any allowance provided pursuant to this Act pending
                    expenditure or disbursement of those proceeds for
                    purposes permitted under this section. The funds in
                    such an account shall not be commingled with other
                    funds not derived from the sale of allowances provided
                    to the State; however, loans made by the State from
                    such funds pursuant to paragraph (2)(C)(i) may be
                    repaid into such a financial account, including any
                    interest charged.
              (2) Withdrawals.--
                      (A) In general.--All allowances distributed pursuant
                    to sections 132 and 201, including the proceeds of any
                    sale of such allowances, shall support renewable energy
                    and energy efficiency programs authorized or approved
                    by the Federal Government.
                      (B) Dedicated allowances.--Allowances distributed
                    pursuant to sections 132 and 201 that are required by
                    law to be used for specific purposes for a specified
                    period shall be used according to those requirements
                    during that period.
                      (C) Undedicated allowances.--To the extent that
                    allowances distributed pursuant to sections 132 and 201
                    are not required by law to be used for specific
                    purposes for a specified period as described in
                    subparagraph (B), such allowances or the proceeds of
                    their sale may be used for any of the following
                    purposes:
                              (i) Loans.--Loans of allowances, or the
                            proceeds from the sale of allowances, may be
                            provided, interest on commercial loans may be
                            subsidized at an interest rate as low as zero,
                            and other credit support may be provided to
                            support programs authorized to use SEED Account
                            allowance value or any other renewable energy
                            or energy efficiency purpose authorized or
                            approved by the Federal Government.
                              (ii) Grants.--Grants of allowances or the
                            proceeds of their sale may be provided to
                            support programs authorized to use SEED Account
                            allowance value or any other renewable energy
                            or energy efficiency purpose authorized or
                            approved by the Federal Government.
                              (iii) Other forms of support.--Allowances or
                            the proceeds of the sale of allowances may be
                            provided for other forms of support for
                            programs authorized to use SEED Account
                            allowance value or any other renewable energy
                            or energy efficiency purpose authorized or
                            approved by the Federal Government.
                              (iv) Administrative costs.--Except to the
                            extent provided in Federal law authorizing or
                            allocating allowances deposited in a SEED
                            Account, not more than 5 percent of the
                            allowance value in a SEED Account in any year
                            may be used to cover administrative expenses of
                            the SEED Account.
                      (D) Subaccounts.--A State may request that the
                    Administrator establish accounts for local governments
                    that request such subaccounts to hold allowances
                    distributed to local governments for renewable energy
                    or energy efficiency programs authorized or approved by
                    the Federal Government.
                      (E) Intended use plans.--
                              (i) In general.--After providing for public
                            review and comment, each State administering a
                            SEED Account shall annually prepare a plan that
                            identifies the intended uses of the allowances
                            or proceeds from the sale of allowances in its
                            SEED Account.
                              (ii) Contents.--An intended use plan shall
                            include--
                                      (I) a list of the projects or
                                    programs for which withdrawals from the
                                    SEED Account are intended in the next
                                    fiscal year that begins after the date
                                    of the plan, including a description of
                                    each project;
                                      (II) the relationship of each of the
                                    projects or programs to an identified
                                    Federal purpose authorized by this Act,
                                    or any other Federal statute;
                                      (III) the expected terms of use of
                                    allowance value to provide assistance;
                                      (IV) the criteria and methods
                                    established for the distribution of
                                    allowances or allowance value;
                                      (V) a description of the equivalent
                                    financial value and status of the SEED
                                    Account; and
                                      (VI) a statement of the mid-term and
                                    long-term goals of the State for use of
                                    its SEED Account.
              (3) Accountability and transparency.--
                      (A) Controls and procedures.--Any State that has a
                    SEED Account shall establish fiscal controls and
                    recordkeeping and accounting procedures for the SEED
                    Account sufficient to ensure proper accounting during
                    appropriate accounting periods for distributions into
                    the SEED Account, transfers from the SEED Account, and
                    SEED Account balances, including any related financial
                    accounts. Such controls and procedures shall conform to
                    generally accepted government accounting principles.
                    Any State that has a SEED Account shall retain records
                    for a period of at least 5 years.
                      (B) Audits.--Any State that has a SEED Account shall
                    have an annual audit conducted of the SEED Account by
                    an independent public accountant in accordance with
                    generally accepted auditing standards, and shall
                    transmit the results of that audit to the
                    Administrator.
                      (C) State report.--Each State administering a SEED
                    Account shall make publicly available and submit to the
                    Administrator a report every 2 years on its activities
                    related to its SEED Account.
                      (D) Public information.--Any--
                              (i) controls and procedures established under
                            subparagraph (A); and
                              (ii) information obtained through audits
                            conducted under subparagraph (B), except to the
                            extent that it would be protected from
                            disclosure, if it were information held by the
                            Federal Government, under section 552(b) of
                            title 5, United States Code,
                    shall be made publicly available.
                      (E) Other protections.--The Administrator shall
                    require such additional procedures and protections as
                    are necessary to ensure that any State that has a SEED
                    Account will operate the SEED Account in an accountable
                    and transparent manner.
      (f) Requirements for Eligibility.--A State's eligibility to receive
    allowances in its SEED Account shall depend on that State's compliance
    with the requirements of this Act (and the amendments made by this
    Act).
      (g) Authorization of Appropriations.--There are authorized to be
    appropriated to the Administrator such sums as may be necessary for
    SEED Account operations.

    SEC. 132. SUPPORT OF STATE RENEWABLE ENERGY AND ENERGY EFFICIENCY
                        PROGRAMS.

      (a) Definitions.--For purposes of this section:
              (1) Cost-effective.--The term ``cost-effective'', with
            respect to an energy efficiency program, means that the program
            meets the Total Resource Cost Test, which requires that the net
            present value of economic benefits over the life of the program
            or measure, including avoided supply and delivery costs and
            deferred or avoided investments, is greater than the net
            present value of the economic costs over the life of the
            program, including program costs and incremental costs borne by
            the energy consumer.
              (2) Renewable energy resource.--The term ``renewable energy
            resource'' shall have the meaning given that term in section
            610 of the Public Utility Regulatory Policies Act of 1978 (as
            added by section 101 of this Act).
      (b) Distribution Among States.--For each vintage year from 2012
    through 2050, the Administrator shall, in accordance with this section,
    distribute emission allowances allocated pursuant to section 782(g)(1)
    of the Clean Air Act not later than September 30 of the year preceding
    the vintage year. The Administrator shall distribute the emission
    allowances to States for renewable energy and energy efficiency
    programs to be deposited in and administered through the State Energy
    and Environment Development (SEED) Accounts established pursuant to
    section 131. The Administrator shall distribute allowances among the
    States under this section each year in accordance with the following
    formula:
              (1) One third of the allowances shall be divided equally
            among the States.
              (2) One third of the allowances shall be distributed ratably
            among the States based on the population of each State, as
            contained in the most recent reliable census data available
            from the Bureau of the Census, Department of Commerce, for all
            States at the time the Administrator calculates the formula for
            distribution.
              (3) One third of the allowances for shall be distributed
            ratably among the States on the basis of the energy consumption
            of each State as contained in the most recent State Energy Data
            Report available from the Energy Information Administration (or
            such alternative reliable source as the Administrator may
            designate).
      (c) Uses.--The allowances distributed to each State pursuant to this
    section shall be used exclusively for the purposes listed in this
    subsection, as set forth below:
              (1) Not less than 12.5 percent shall be distributed by the
            State to units of local government within such State to be used
            exclusively to support the energy efficiency and renewable
            energy purposes listed in paragraphs (2), (3), and (4).
              (2) Not less than 15 percent shall be used exclusively for
            the following energy efficiency purposes:
                      (A) Implementation and enforcement of building codes
                    adopted in compliance with section 201.
                      (B) Implementation of the energy efficient
                    manufactured homes program established pursuant to
                    section 203.
                      (C) Implementation of the building energy performance
                    labeling program established pursuant to section 204.
                      (D) Enabling the development of a Smart Grid (as
                    described in section 1301 of the Energy Independence
                    and Security Act of 2007 (42 U.S.C. 17381)) for State,
                    local government, and other public buildings and
                    facilities, including integration of renewable energy
                    resources and distributed generation, demand response,
                    demand side management, and systems analysis.
                      (E) Transportation planning pursuant to section 841
                    of the Clean Air Act.
                      (F) Low-income community energy efficiency programs
                    that are consistent with the grant program established
                    under section 264 of this Act.
                      (G) Other cost-effective energy efficiency programs
                    for end-use consumers of electricity, natural gas, home
                    heating oil, or propane, including, where appropriate,
                    programs or mechanisms administered by local
                    governments and entities other than the State.
              (3) Not less than 5 percent shall be used exclusively for
            implementation of the Retrofit for Energy and Environmental
            Performance (REEP) program established pursuant to section 202.
              (4) Not less than 20 percent shall be used exclusively for
            capital grants, tax credits, production incentives, loans, loan
            guarantees, forgivable loans, and interest rate buy-downs for--
                      (A) re-equipping, expanding, or establishing a
                    manufacturing facility that receives certification from
                    the Secretary of Energy pursuant to section 1302 of the
                    American Recovery and Reinvestment Act of 2009 for the
                    production of--
                              (i) property designed to be used to produce
                            energy from renewable energy sources; and
                              (ii) electricity storage systems;
                      (B) deployment of technologies to generate
                    electricity from renewable energy sources; and
                      (C) deployment of facilities or equipment, such as
                    solar panels, to generate electricity or thermal energy
                    from renewable energy resources in and on buildings in
                    an urban environment.
              (5) The remaining 47.5 percent shall be used exclusively for
            any of the purposes described in subparagraphs (A) through (F)
            of paragraph (2) and in paragraphs (3) and (4), provided that
            each State receiving emission allowances under this section
            shall use not less than 1 percent of such allowances for the
            purpose described in paragraph (2)(F).
      (d) Reporting.--Each State receiving emission allowances under this
    section shall include in its biennial reports required under section
    131, in accordance with such requirements as the Administrator may
    prescribe--
              (1) a list of entities receiving allowances or allowance
            value under this section;
              (2) the amount and nature of allowances or allowance value
            received by each recipient;
              (3) the specific purposes for which such allowances or
            allowance value was conveyed;
              (4) the amount of energy savings, emission reductions,
            renewable energy deployment, or new or retooled manufacturing
            capacity resulting from such allowances or allowance value; and
              (5) an assessment of the cost-effectiveness of any energy
            efficiency program supported under subsection (c)(2)(F).
      (e) Enforcement.--If the Administrator determines that a State is not
    in compliance with this section, the Administrator may withhold up to
    twice the number of allowances that the State failed to use in
    accordance with the requirements of this section, that such State would
    otherwise be eligible to receive under this section in later years.
    Allowances withheld pursuant to this subsection shall be distributed
    among the remaining States in accordance with the requirements of
    subsection (b).

                       Subtitle E--Smart Grid Advancement

    SEC. 141. DEFINITIONS.

      For purposes of this subtitle:
              (1) The term ``applicable baseline'' means the average of the
            highest three annual peak demands a load-serving entity has
            experienced during the 5 years immediately prior to the date of
            enactment of this Act.
              (2) The term ``Commission'' means Federal Energy Regulatory
            Commission.
              (3) The term ``load-serving entity'' means an entity that
            provides electricity directly to retail consumers with the
            responsibility to assure power quality and reliability,
            including such entities that are investor-owned, publicly
            owned, owned by rural electric cooperatives, or other entities.
              (4) The term ``peak demand'' means the highest point of
            electricity demand, net of any distributed electricity
            generation or storage from sources on the load-serving entity's
            customers' premises, during any hour on the system of a load
            serving entity during a calendar year, expressed in Megawatts
            (MW), or more than one such high point as a function of
            seasonal demand changes.
              (5) The term ``peak demand reduction'' means the reduction in
            annual peak demand as compared to a previous baseline year or
            period, expressed in Megawatts (MW), whether accomplished by
            diminishing the end-use requirements for electricity or by use
            of locally stored or generated electricity to meet those
            requirements from distributed resources on the load-serving
            entity's customers' premises and without use of high-voltage
            transmission.
              (6) The term ``peak demand reduction plan'' means a plan
            developed by or for a load-serving entity that it will
            implement to meet its peak demand reduction goals.
              (7) The term ``peak period'' means the time period on the
            system of a load-serving entity relative to peak demand that
            may warrant special measures or electricity resources to
            maintain system reliability while meeting peak demand.
              (8) The term ``Secretary'' means the Secretary of Energy.
              (9) The term ``Smart Grid'' has the meaning provided by
            section 1301 of the Energy Independence and Security Act of
            2007 (15 U.S.C. 17381).

    SEC. 142. ASSESSMENT OF SMART GRID COST EFFECTIVENESS IN PRODUCTS.

      (a) Assessment.--Within one year after the date of enactment of this
    Act, the Secretary and the Administrator shall each assess the
    potential for cost-effective integration of Smart Grid technologies and
    capabilities in all products that are reviewed by the Department of
    Energy and the Environmental Protection Agency, respectively, for
    potential designation as Energy Star products.
      (b) Analysis.--(1) Within 2 years after the date of enactment of this
    Act, the Secretary and the Administrator shall each prepare an analysis
    of the potential energy savings, greenhouse gas emission reductions,
    and electricity cost savings that could accrue for each of the products
    identified by the assessment in subsection (a) in the following optimal
    circumstances:
              (A) The products possessed Smart Grid capability and
            interoperability that is tested and proven reliable.
              (B) The products were utilized in an electricity utility
            service area which had Smart Grid capability and offered
            customers rate or program incentives to use the products.
              (C) The utility's rates reflected national average costs,
            including average peak and valley seasonal and daily
            electricity costs.
              (D) Consumers using such products took full advantage of such
            capability.
              (E) The utility avoided incremental investments and rate
            increases related to such savings.
      (2) The analysis under paragraph (1) shall be considered the ``best
    case'' Smart Grid analysis. On the basis of such an analysis for each
    product, the Secretary and the Administrator shall determine whether
    the installation of Smart Grid capability for such a product would be
    cost effective. For purposes of this paragraph, the term ``cost
    effective'' means that the cumulative savings from using the product
    under the best case Smart Grid circumstances for a period of one-half
    of the product's expected useful life will be greater than the
    incremental cost of the Smart Grid features included in the product.
      (3) To the extent that including Smart Grid capability in any
    products analyzed under paragraph (2) is found to be cost effective in
    the best case, the Secretary and the Administrator shall, not later
    than 3 years after the date of enactment of this Act take each of the
    following actions:
              (A) Inform the manufacturer of such product of such finding
            of cost effectiveness.
              (B) Assess the potential contributions the development and
            use of products with Smart Grid technologies bring to reducing
            peak demand and promoting grid stability.
              (C) Assess the potential national energy savings and
            electricity cost savings that could be realized if Smart Grid
            potential were installed in the relevant products reviewed by
            the Energy Star program.
              (D) Assess and identify options for providing consumers
            information on products with Smart Grid capabilities, including
            the necessary conditions for cost-effective savings.
              (E) Submit a report to Congress summarizing the results of
            the assessment for each class of products, and presenting the
            potential energy and greenhouse gas savings that could result
            if Smart Grid capability were installed and utilized on such
            products.

    SEC. 143. INCLUSIONS OF SMART GRID CAPABILITY ON APPLIANCE ENERGY GUIDE
                        LABELS.

      Section 324(a)(2) of the Energy Policy and Conservation Act (42
    U.S.C. 6294(a)(2)) is amended by adding the following at the end:
                      ``(J)(i) Not later than 3 years after the date of
                    enactment of this subparagraph, the Federal Trade
                    Commission shall initiate a rulemaking to consider
                    making a special note in a prominent manner on any
                    ENERGY GUIDE label for any product actually including
                    Smart Grid capability that--
                              ``(I) Smart Grid capability is a feature of
                            that product;
                              ``(II) the use and value of that feature
                            depended on the Smart Grid capability of the
                            utility system in which the product was
                            installed and the active utilization of that
                            feature by the customer; and
                              ``(III) on a utility system with Smart Grid
                            capability, the use of the product's Smart Grid
                            capability could reduce the customer's cost of
                            the product's annual operation by an estimated
                            dollar amount range representing the result of
                            incremental energy and electricity cost savings
                            that would result from the customer taking full
                            advantage of such Smart Grid capability.
                      ``(ii) Not later than 3 years after the date of
                    enactment of this subparagraph, the Commission shall
                    complete the rulemaking initiated under clause (i).''.

    SEC. 144. SMART GRID PEAK DEMAND REDUCTION GOALS.

      (a) Goals.--Not later than one year after the date of enactment of
    this Act, load-serving entities, or, at their option, States with
    respect to load-serving entities that they regulate, shall determine
    and publish peak demand reduction goals for any load-serving entities
    that have an applicable baseline in excess of 250 megawatts.
      (b) Baselines.--(1) The Commission, in consultation with the
    Secretary and the Administrator, shall develop and publish, after an
    opportunity for public comment, a methodology to provide for
    adjustments or normalization to a load-serving entity's applicable
    baseline over time to reflect changes in the number of customers
    served, weather conditions, general economic conditions, and any other
    appropriate factors external to peak demand management, as determined
    by the Commission.
      (2) The Commission shall support load-serving entities (including any
    load-serving entities with an applicable baseline of less than 250
    megawatts that volunteer to participate in achieving the purposes of
    this section) in determining their applicable baselines, and in
    developing their peak demand reduction goals.
      (3) The Secretary, in consultation with the Commission, the
    Administrator, and the North American Electric Reliability Corporation,
    shall develop a system and rules for measurement and verification of
    demand reductions.
      (c) Peak Demand Reduction Goals.--(1) Peak demand reduction goals may
    be established for an individual load-serving entity, or, at the
    determination of a State or regional entity, by that State or regional
    entity for a larger region that shares a common system peak demand and
    for which peak demand reduction measures would offer regional benefit.
      (2) A State or regional entity establishing peak demand reduction
    goals shall cooperate, as necessary and appropriate, with the
    Commission, the Secretary, State regulatory commissions, State energy
    offices, the North American Electric Reliability Corporation, and other
    relevant authorities.
      (3) In determining the applicable peak demand reduction goals, States
    and other jurisdictional entities may utilize the results of the 2009
    National Demand Response Potential Assessment, as authorized by section
    571 of the National Energy Conservation Policy Act (42 U.S.C. 8279).
      (4) The applicable peak demand reduction goals shall provide that--
              (A) load-serving entities will reduce or mitigate peak demand
            by a minimum percentage amount from the applicable baseline to
            a lower peak demand during calendar year 2012;
              (B) load-serving entities will reduce or mitigate peak demand
            by a minimum percentage greater amount from the applicable
            baseline to a lower peak demand during calendar year 2015; and
              (C) the minimum percentage reductions established as peak
            demand reduction goals shall be the maximum reductions that are
            realistically achievable with an aggressive effort to deploy
            Smart Grid and peak demand reduction technologies and methods,
            including but not limited to those listed in subsection (d).
      (d) Plan.--Each load-serving entity shall prepare a peak demand
    reduction plan that demonstrates its ability to meet each applicable
    goal by any or a combination of the following options:
              (1) Direct reduction in megawatts of peak demand through
            energy efficiency measures (including efficient transmission
            wire technologies which significantly reduce line loss compared
            to traditional wire technology) with reliable and continued
            application during peak demand periods.
              (2) Demonstration that an amount of megawatts equal to a
            stated portion of the applicable goal is contractually
            committed to be available for peak reduction through one or
            more of the following:
                      (A) Megawatts enrolled in demand response programs.
                      (B) Megawatts subject to the ability of a load-
                    serving entity to call on demand response programs,
                    smart appliances, smart electricity storage devices,
                    distributed generation resources on the entity's
                    customers' premises, or other measures directly capable
                    of actively, controllably, reliably, and dynamically
                    reducing peak demand (``dynamic peak management
                    control'').
                      (C) Megawatts available from distributed dynamic
                    electricity storage under agreement with the owner of
                    that storage.
                      (D) Megawatts committed from dispatchable distributed
                    generation demonstrated to be reliable under peak
                    period conditions and in compliance with air quality
                    regulations.
                      (E) Megawatts available from smart appliances and
                    equipment with Smart Grid capability available for
                    direct control by the utility through agreement with
                    the customer owning the appliances or equipment.
                      (F) Megawatts from a demonstrated and assured minimum
                    of distributed solar electric generation capacity in
                    instances where peak period and peak demand conditions
                    are directly related to solar radiation and
                    accompanying heat.
              (3) If any of the methods listed in subparagraph (C), (D), or
            (E) of paragraph (2) are relied upon to meet its peak demand
            reduction goals, the load-serving entity must demonstrate this
            capability by operating a test during the applicable calendar
            year.
              (4) Nothing in this section shall require the publication in
            peak demand reduction goals or in any peak demand reduction
            plan of any information that is confidential for competitive or
            other reasons or that identifies individual customers.
      (e) Existing Authority and Requirements.--Nothing in this section
    diminishes or supersedes any authority of a State or political
    subdivision of a State to adopt or enforce any law or regulation
    respecting peak demand management, demand response, distributed
    storage, use of distributed generation, or the regulation of load-
    serving entities. The Commission, in consultation with States having
    such peak management, demand response and distributed storage programs,
    shall to the maximum extent practicable, facilitate coordination
    between the Federal program and such State programs.
      (f) Relief.--The Commission may, for good cause, grant relief to
    load-serving entities from the requirements of this section.
      (g) Other Laws.--Except as provided in subsections (e) and (f), no
    law or regulation shall relieve any person of any requirement otherwise
    applicable under this section.
      (h) Compliance.--(1) The Commission shall within one year after the
    date of enactment of this Act establish a public website where the
    Commission will provide information and data demonstrating compliance
    by States, regional entities, and load-serving entities with this
    section, including the success of load-serving entities in meeting
    applicable peak demand reduction goals.
      (2) The Commission shall, by April 1 of each year beginning in 2012,
    provide a report to Congress on compliance with this section and
    success in meeting applicable peak demand reduction goals and, as
    appropriate, shall make recommendations as to how to increase peak
    demand reduction efforts.
      (3) The Commission shall note in each such report any State,
    political subdivision of a State, or load-serving entity that has
    failed to comply with this section, or is not a part of any region or
    group of load-serving entities serving a region that has complied with
    this section.
      (4) The Commission shall have and exercise the authority to take
    reasonable steps to modify the process of establishing peak demand
    reduction goals and to accept adjustments to them as appropriate when
    sought by load-serving entities.
      (i) Assistance to States and Funding.--
              (1) Assistance to states.--Any costs incurred by States for
            activities undertaken pursuant to this section shall be
            supported by the use of emission allowances allocated to the
            States' SEED Accounts pursuant to section 132 of this Act. To
            the extent that a State provides allowances to local
            governments within the State to implement this program, that
            shall be deemed a distribution of such allowances to units of
            local government pursuant to subsection (c)(1) of that section.
              (2) Funding.--There are authorized to be appropriated such
            sums as may be necessary to the Commission, the Secretary, and
            the Administrator to carry out the provisions of this section.

    SEC. 145. REAUTHORIZATION OF ENERGY EFFICIENCY PUBLIC INFORMATION
                        PROGRAM TO INCLUDE SMART GRID INFORMATION.

      (a) In General.--Section 134 of the Energy Policy Act of 2005 (42
    U.S.C. 15832) is amended as follows:
              (1) By amending the section heading to read as follows:
            ``ENERGY EFFICIENCY AND SMART GRID PUBLIC INFORMATION
            INITIATIVE''.
              (2) In paragraph (1) of subsection (a) by striking ``reduce
            energy consumption during the 4-year period beginning on the
            date of enactment of this Act'' and inserting ``increase energy
            efficiency and to adopt Smart Grid technology and practices''.
              (3) In paragraph (2) of subsection (a) by striking ``benefits
            to consumers of reducing'' and inserting ``economic and
            environmental benefits to consumers and the United States of
            optimizing''.
              (4) In subsection (a) by inserting at the beginning of
            paragraph (3) ``the effect of energy efficiency and Smart Grid
            capability in reducing energy and electricity prices throughout
            the economy, together with''.
              (5) In subsection (a)(4) by redesignating subparagraph (D) as
            (E), by striking ``and'' at the end of subparagraph (C), and by
            inserting after subparagraph (C) the following:
                      ``(D) purchasing and utilizing equipment that
                    includes Smart Grid features and capability; and''.
              (6) In subsection (c), by striking ``Not later than July 1,
            2009,'' and inserting, ``For each year when appropriations
            pursuant to the authorization in this section exceed
            $10,000,000,''.
              (7) In subsection (d) by striking ``2010'' and inserting
            ``2020''.
              (8) In subsection (e) by striking ``2010'' and inserting
            ``2020''.
      (b) Table of Contents.--The item relating to section 134 in the table
    of contents for the Energy Policy Act of 2005 (42 U.S.C. 15801 and
    following) is amended to read as follows:

    ``Sec. 134. Energy efficiency and Smart Grid public information
    initiative.''.

    SEC. 146. INCLUSION OF SMART GRID FEATURES IN APPLIANCE REBATE PROGRAM.

      (a) Amendments.--Section 124 of the Energy Policy Act of 2005 (42
    U.S.C. 15821) is amended as follows:
              (1) By amending the section heading to read as follows:
            ``ENERGY EFFICIENT AND SMART APPLIANCE REBATE PROGRAM.''.
              (2) By redesignating paragraphs (4) and (5) of subsection (a)
            as paragraphs (5) and (6), respectively, and inserting after
            paragraph (3) the following:
              ``(4) Smart appliance.--The term `smart appliance' means a
            product that the Administrator of the Environmental Protection
            Agency or the Secretary of Energy has determined qualifies for
            such a designation in the Energy Star program pursuant to
            section 142 of the American Clean Energy and Security Act of
            2009, or that the Secretary or the Administrator has separately
            determined includes the relevant Smart Grid capabilities listed
            in section 1301 of the Energy Independence and Security Act of
            2007 (15 U.S.C. 17381).''.
              (3) In subsection (b)(1) by inserting ``and smart'' after
            ``efficient'' and by inserting after ``products'' the first
            place it appears ``, including products designated as being
            smart appliances''.
              (4) In subsection (b)(3), by inserting ``the administration
            of'' after ``carry out''.
              (5) In subsection (d), by inserting ``the administration of''
            after ``carrying out'' and by inserting ``, and up to 100
            percent of the value of the rebates provided pursuant to this
            section'' before the period at the end.
              (6) In subsection (e)(3), by inserting ``, with separate
            consideration as applicable if the product is also a smart
            appliance,'' after ``Energy Star product'' the first place it
            appears and by inserting ``or smart appliance'' before the
            period at the end.
              (7) In subsection (f), by striking ``$50,000,000'' through
            the period at the end and inserting ``$100,000,000 for each
            fiscal year from 2010 through 2015.''.
      (b) Table of Contents.--The item relating to section 124 in the table
    of contents for the Energy Policy Act of 2005 (42 U.S.C. 15801 and
    following) is amended to read as follows:

    ``Sec. 124. Energy efficient and smart appliance rebate program.''.

                       Subtitle F--Transmission Planning

    SEC. 151. TRANSMISSION PLANNING.

      Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended
    by adding after section 216 the following new section:

    ``SEC. 216A. TRANSMISSION PLANNING.

      ``(a) Federal Policy.--
              ``(1) Objectives.--It is the policy of the United States that
            regional electric grid planning should facilitate the
            deployment of renewable and other zero-carbon energy sources
            for generating electricity to reduce greenhouse gas emissions
            while ensuring reliability, reducing congestion, ensuring
            cyber-security, and providing for cost-effective electricity
            services throughout the United States.
              ``(2) Options.--In addition to the policy under paragraph
            (1), it is the policy of the United States that regional
            electric grid planning to meet these objectives should take
            into account all significant demand-side and supply-side
            options, including energy efficiency, distributed generation,
            renewable energy and zero-carbon electricity generation
            technologies, smart-grid technologies and practices, demand
            response, electricity storage, voltage regulation technologies,
            high capacity conductors with at least 25 percent greater
            efficiency than traditional ACSR (aluminum stranded conductors
            steel reinforced) conductors, superconductor technologies,
            underground transmission technologies, and new conventional
            electric transmission capacity and corridors.
      ``(b) Planning.--
              ``(1) Planning principles.--Not later than 1 year after the
            date of enactment of this section, the Commission shall adopt,
            after notice and opportunity for comment, national electricity
            grid planning principles derived from the Federal policy
            established under subsection (a) to be applied in ongoing and
            future transmission planning that may implicate interstate
            transmission of electricity.
              ``(2) Regional planning entities.--Not later than 3 months
            after the date of adoption by the Commission of national
            electricity grid planning principles pursuant to paragraph (1),
            entities that conduct or may conduct transmission planning
            pursuant to State or Federal law or regulation, including
            States, entities designated by States, public utility
            transmission providers, operators and owners, regional
            organizations, and electric utilities, and that are willing to
            incorporate the national electricity grid planning principles
            adopted by the Commission in their electric grid planning,
            shall identify themselves and the regions for which they
            propose to develop plans to the Commission.
              ``(3) Coordination of regional planning entities.--The
            Commission shall encourage regional planning entities described
            under paragraph (2) to cooperate and coordinate across regions
            and to harmonize regional electric grid planning with planning
            in adjacent or overlapping jurisdictions to the maximum extent
            feasible. The Commission shall work with States, public
            utilities transmission providers, load-serving entities,
            transmission operators, and other organizations to resolve any
            conflict or competition among proposed planning entities in
            order to build consensus and promote the Federal policy
            established under subsection (a). The Commission shall seek to
            ensure that planning that is consistent with the national
            electricity grid planning principles adopted pursuant to
            paragraph (1) is conducted in all regions of the United States
            and the territories.
              ``(4) Relation to existing planning policy.--In implementing
            the Federal policy established under subsection (a), the
            Commission shall--
                      ``(A) incorporate any ongoing planning efforts
                    undertaken pursuant to section 217; and
                      ``(B) consult with and invite the participation of
                    the Secretary of Energy in relationship to the
                    Secretary's duties pursuant to section 216.
              ``(5) Assistance.--
                      ``(A) In general.--The Commission shall provide
                    support to and participate in the regional grid
                    planning processes conducted by regional planning
                    entities. The Commission may provide planning resources
                    and assistance as required or as requested by regional
                    planning entities, including system data, cost
                    information, system analysis, technical expertise,
                    modeling support, dispute resolution services, and
                    other assistance to regional planning entities, as
                    appropriate.
                      ``(B) Authorization.--There are authorized to be
                    appropriated such sums as may be necessary to carry out
                    this paragraph.
              ``(6) Conflict resolution.--In the event that regional grid
            plans conflict, the Commission shall assist the regional
            planning entities in resolving such conflicts in order to
            achieve the objectives of the Federal policy established under
            subsection (a).
              ``(7) Submission of plans.--The Commission shall require
            regional planning entities to submit initial regional electric
            grid plans to the Commission not later than 18 months after the
            date the Commission promulgates national electricity grid
            planning principles pursuant to paragraph (1). Regional
            electric grid plans should, in general, be developed from sub-
            regional requirements and plans, including planning input
            reflecting individual utility service areas. Regional plans may
            then in turn be combined into larger regional plans, up to
            interconnection-wide and national plans, as appropriate and
            necessary as determined by the Commission. The Commission shall
            review such plans for consistency with the national grid
            planning principles and may return a plan to one or more
            planning entities for further consideration, along with the
            Commission's own recommendations for resolution of any conflict
            or for improvement. To the extent practicable, all plans
            submitted to the Commission shall be public documents and
            available on the Commission's website.
              ``(8) Multi-regional meetings.--As regional grid plans are
            submitted to the Commission, the Commission may convene multi-
            regional meetings to discuss regional grid plan consistency and
            integration, including requirements for multi-regional
            projects, and to resolve any conflicts that emerge from such
            multi-regional projects. The Commission shall provide its
            recommendations for eliminating any inter-regional conflicts.
              ``(9) Report to congress.--Not later than 3 years after the
            date of enactment of this section, the Commission shall provide
            a report to Congress containing the results of the regional
            grid planning process, including summaries of the adopted
            regional plans. The Commission shall provide an electronic
            version of its report on its website with links to all regional
            and sub-regional plans taken into account. The Commission shall
            note and provide its recommended resolution for any conflicts
            not resolved during the planning process. The Commission shall
            make any recommendations to Congress on the appropriate Federal
            role or support required to address the needs of the electric
            grid, including recommendations for addressing any needs that
            are beyond the reach of existing State and Federal
            authority.''.

    SEC. 152. NET METERING FOR FEDERAL AGENCIES.

      (a) Standard.--Subsection (b) of section 113 of the Public Utility
    Regulatory Policies Act of 1978 (16 U.S.C. 2623) is amended by adding
    the following new paragraph at the end thereof:
              ``(6) Net metering for federal agencies.--Each electric
            utility shall offer to arrange (either directly or through a
            third party) to make interconnection and net metering available
            to Federal Government agencies, offices, or facilities in
            accordance with the requirements of section 115(j). The
            standard under this paragraph shall apply only to electric
            utilities that sold over 4,000,000 megawatt hours of
            electricity in the preceding year to the ultimate consumers
            thereof. In the case of a standard under this paragraph, a
            period of 1 year after the date of the enactment of this
            section shall be substituted for the 2-year period referred to
            in other provisions of this section.''.
      (b) Special Rules.--Section 115 of the Public Utility Regulatory
    Policies Act of 1978 (16 U.S.C. 2625) is amended by adding the
    following new subsection at the end thereof:
      ``(j) Net Metering for Federal Agencies.--(1) The standard under
    paragraph (6) of section 113(b) shall require that rates and charges
    and contract terms and conditions for the sale of electric energy to
    the Federal Government or agency shall be the same as the rates and
    charges and contract terms and conditions that would be applicable if
    the agency did not own or operate a qualified generation unit and use a
    net metering system.
      ``(2)(A) The standard under paragraph (6) of section 113(b) shall
    require that each electric utility shall arrange to provide to the
    Government office or agency that qualifies for net metering an
    electrical energy meter capable of net metering and measuring, to the
    maximum extent practicable, the flow of electricity to or from the
    customer, using a single meter and single register, the cost of which
    shall be recovered from the customer.
      ``(B) In a case in which it is not practicable to provide a meter
    under subparagraph (A), the utility (either directly or through a third
    party) shall, at the expense of the utility install 1 or more of those
    electric energy meters.
      ``(3)(A) The standard under paragraph (6) of section 113(b) shall
    require that each electric utility shall calculate the electric energy
    consumption for the Government office or agency using a net metering
    system that meets the requirements of this subsection and paragraph (6)
    of section 113(b) and shall measure the net electricity produced or
    consumed during the billing period using the metering installed in
    accordance with this paragraph.
      ``(B) If the electricity supplied by the retail electric supplier
    exceeds the electricity generated by the Government office or agency
    during the billing period, the Government office or agency shall be
    billed for the net electric energy supplied by the retail electric
    supplier in accordance with normal billing practices.
      ``(C) If electric energy generated by the Government office or agency
    exceeds the electric energy supplied by the retail electric supplier
    during the billing period, the Government office or agency shall be
    billed for the appropriate customer charges for that billing period and
    credited for the excess electric energy generated during the billing
    period, with the credit appearing as a kilowatt-hour credit on the bill
    for the following billing period.
      ``(D) Any kilowatt-hour credits provided to the Government office or
    agency as provided in this subsection shall be applied to the
    Government office or agency electric energy consumption on the
    following billing period bill (except for a billing period that ends in
    the next calendar year). At the beginning of each calendar year, any
    unused kilowatt-hour credits remaining from the preceding year will
    carry over to the new year.
      ``(4) The standard under paragraph (6) of section 113(b) shall
    require that each electric utility shall offer a meter and retail
    billing arrangement that has time-differentiated rates. The kilowatt-
    hour credit shall be based on the ratio representing the difference in
    retail rates for each time-of-use rate, or the credits shall be
    reflected on the bill of the Government office or agency as a monetary
    credit reflecting retail rates at the time of generation of the
    electric energy by the customer-generator.
      ``(5) The standard under paragraph (6) of section 113(b) shall
    require that the qualified generation unit, interconnection standards,
    and net metering system used by the Government office or agency shall
    meet all applicable safety and performance and reliability standards
    established by the National Electrical Code, the Institute of
    Electrical and Electronics Engineers, Underwriters Laboratories, and
    the American National Standards Institute.
      ``(6) The standard under paragraph (6) of section 113(b) shall
    require that electric utilities shall not make additional charges,
    including standby charges, for equipment or services for safety or
    performance that are in addition to those necessary to meet the other
    standards and requirements of this subsection and paragraph (6) of
    section 113(b).
      ``(7) For purposes of this subsection and paragraph (6) of section
    113(b):
              ``(A) The term `Government' means any office, facility, or
            agency of the Federal Government.
              ``(B) The term `customer-generator' means the owner or
            operator of a electricity generation unit.
              ``(C) The term `electric generation unit' means any renewable
            electric generation unit that is owned, operated, or sited on a
            Federal Government facility.
              ``(D) The term `net metering' means the process of--
                      ``(i) measuring the difference between the
                    electricity supplied to a customer-generator and the
                    electricity generated by the customer-generator that is
                    delivered to a utility at the same point of
                    interconnection during an applicable billing period;
                    and
                      ``(ii) providing an energy credit to the customer-
                    generator in the form of a kilowatt-hour credit for
                    each kilowatt-hour of electricity produced by the
                    customer-generator from an electric generation unit.''.
      (c) Savings Provision.--If this section or a portion of this section
    is determined to be invalid or unenforceable, that shall not affect the
    validity or enforceability of any other provision of this Act.

    SEC. 153. SUPPORT FOR QUALIFIED ADVANCED ELECTRIC TRANSMISSION
                        MANUFACTURING PLANTS, QUALIFIED HIGH EFFICIENCY
                        TRANSMISSION PROPERTY, AND QUALIFIED ADVANCED
                        ELECTRIC TRANSMISSION PROPERTY.

      (a) Loan Guarantees Prior to September 30, 2011.--Section 1705(a) of
    the Energy Policy Act of 2005 (42 U.S.C. 16515(a)), as added by section
    406 of the American Recovery and Reinvestment Act of 2009 (Public Law
    109-58; 119 Stat. 594) is amended by adding the following new paragraph
    at the end thereof:
              ``(5) The development, construction, acquisition,
            retrofitting, or engineering integration of a qualified
            advanced electric transmission manufacturing plant or the
            construction of a qualified high efficiency transmission
            property or a qualified advanced electric transmission property
            (whether by construction of new facilities or the modification
            of existing facilities). For purposes of this paragraph:
                      ``(A) The term `qualified advanced electric
                    transmission property' means any high voltage electric
                    transmission cable, related substation, converter
                    station, or other integrated facility that--
                              ``(i) utilizes advanced ultra low resistance
                            superconductive material or other advanced
                            technology that has been determined by the
                            Secretary of Energy as--
                                      ``(I) reasonably likely to become
                                    commercially viable within 10 years
                                    after the date of enactment of this
                                    paragraph;
                                      ``(II) capable of reliably
                                    transmitting at least 5 gigawatts of
                                    high-voltage electric energy for
                                    distances greater than 300 miles with
                                    energy losses not exceeding 3 percent
                                    of the total power transported; and
                                      ``(III) not creating an
                                    electromagnetic field;
                              ``(ii) has been determined by an appropriate
                            energy regulatory body, upon application, to be
                            in the public interest and thereby eligible for
                            inclusion in regulated rates; and
                              ``(iii) can be located safely and
                            economically in a permanent underground right
                            of way not to exceed 25 feet in width.
                    The term `qualified advanced electric transmission
                    property' shall not include any property placed in
                    service after December 31, 2016.
                      ``(B)(i) The term `qualified high efficiency
                    transmission property' means any high voltage overhead
                    electric transmission line, related substation, or
                    other integrated facility that--
                              ``(I) utilizes advanced conductor core
                            technology that--
                                      ``(aa) has been determined by the
                                    Secretary of Energy as reasonably
                                    likely to become commercially viable
                                    within 10 years after the date of
                                    enactment of this paragraph;
                                      ``(bb) is suitable for use on
                                    transmission lines up to 765kV; and
                                      ``(cc) exhibits power losses at least
                                    30 percent lower than that of
                                    transmission lines using conventional
                                    `ACSR' conductors;
                              ``(II) has been determined by an appropriate
                            energy regulatory body, upon application, to be
                            in the public interest and thereby eligible for
                            inclusion in regulated rates; and
                              ``(III) can be located safely and
                            economically in a right of way not to exceed
                            that used by conventional `ACSR' conductors;
                            and
                      ``(ii) The term `qualified high efficiency
                    transmission property' shall not include any property
                    placed in service after December 31, 2016.
                      ``(C) The term `qualified advanced electric
                    transmission manufacturing plant' means any industrial
                    facility located in the United States which can be
                    equipped, re-equipped, expanded, or established to
                    produce in whole or in part qualified advanced electric
                    transmission property.''.
      (b) Additional Loan Guarantee Authority.--Section 1703 of the Energy
    Policy Act of 2005 (42 U.S.C. 16513) is amended by adding the following
    new paragraph at the end of subsection (b):
              ``(12) The development, construction, acquisition,
            retrofitting, or engineering integration of a qualified
            advanced electric transmission manufacturing plant or the
            construction of a qualified advanced electric transmission
            property (whether by construction of new facilities or the
            modification of existing facilities). For purposes of this
            paragraph, the terms `qualified advanced electric transmission
            property' and `qualified advanced electric transmission
            manufacturing plant' have the meanings provided by section
            1705(a)(5).''.
      (c) Grants.--The Secretary of Energy is authorized to provide grants
    for up to 50 percent of costs incurred in connection with the
    development, construction, acquisition of components for, or
    engineering of a qualified advanced electric transmission property
    defined in paragraph (5) of section 1705(a) of the Energy Policy Act of
    2005 (42 U.S.C. 16515(a)). Such grants may only be made to the first
    project which qualifies under that paragraph. There are authorized to
    be appropriated for purposes of this subsection not more than
    $100,000,000 for fiscal year 2010. The United States shall take no
    equity or other ownership interest in the qualified advanced electric
    transmission manufacturing plant or qualified advanced electric
    transmission property for which funding is provided under this
    subsection.

                Subtitle G--Technical Corrections to Energy Laws

    SEC. 161. TECHNICAL CORRECTIONS TO ENERGY INDEPENDENCE AND SECURITY ACT
                        OF 2007.

      (a) Title III--Energy Savings Through Improved Standards for
    Appliance and Lighting.--(1) Section 325(u) of the Energy Policy and
    Conservation Act (42 U.S.C. 6295(u)) (as amended by section 301(c) of
    the Energy Independence and Security Act of 2007 (121 Stat. 1550)) is
    amended--
                      (A) by redesignating paragraph (7) as paragraph (4);
                    and
                      (B) in paragraph (4) (as so redesignated), by
                    striking ``supplies is'' and inserting ``supply is''.
      (2) Section 302 of the Energy Independence and Security Act of 2007
    (121 Stat. 1551)) is amended--
              (A) in subsection (a), by striking ``end of the paragraph''
            and inserting ``end of subparagraph (A)''; and
              (B) in subsection (b), by striking ``6313(a)'' and inserting
            ``6314(a)''.
      (3) Section 343(a)(1) of the Energy Policy and Conservation Act (42
    U.S.C. 6313(a)(1)) (as amended by section 302(b) of the Energy
    Independence and Security Act of 2007 (121 Stat. 1551)) is amended--
              (A) by striking ``Test procedures'' and all that follows
            through ``At least once'' and inserting ``Test procedures.--At
            least once''; and
              (B) by redesignating clauses (i) and (ii) as subparagraphs
            (A) and (B), respectively (and by moving the margins of such
            subparagraphs 2 ems to the left).
      (4) Section 342(a)(6) of the Energy Policy and Conservation Act (42
    U.S.C. 6313(a)(6)) (as amended by section 305(b)(2) of the Energy
    Independence and Security Act of 2007 (121 Stat. 1554)) is amended--
              (A) in subparagraph (B)--
                      (i) by striking ``If the Secretary'' and inserting
                    the following:
                              ``(i) In general.--If the Secretary'';
                      (ii) by striking ``clause (ii)(II)'' and inserting
                    ``subparagraph (A)(ii)(II)'';
                      (iii) by striking ``clause (i)'' and inserting
                    ``subparagraph (A)(i)''; and
                      (iv) by adding at the end the following:
                              ``(ii) Factors.--In determining whether a
                            standard is economically justified for the
                            purposes of subparagraph (A)(ii)(II), the
                            Secretary shall, after receiving views and
                            comments furnished with respect to the proposed
                            standard, determine whether the benefits of the
                            standard exceed the burden of the proposed
                            standard by, to the maximum extent practicable,
                            considering--
                                      ``(I) the economic impact of the
                                    standard on the manufacturers and on
                                    the consumers of the products subject
                                    to the standard;
                                      ``(II) the savings in operating costs
                                    throughout the estimated average life
                                    of the product in the type (or class)
                                    compared to any increase in the price
                                    of, or in the initial charges for, or
                                    maintenance expenses of, the products
                                    that are likely to result from the
                                    imposition of the standard;
                                      ``(III) the total projected quantity
                                    of energy savings likely to result
                                    directly from the imposition of the
                                    standard;
                                      ``(IV) any lessening of the utility
                                    or the performance of the products
                                    likely to result from the imposition of
                                    the standard;
                                      ``(V) the impact of any lessening of
                                    competition, as determined in writing
                                    by the Attorney General, that is likely
                                    to result from the imposition of the
                                    standard;
                                      ``(VI) the need for national energy
                                    conservation; and
                                      ``(VII) other factors the Secretary
                                    considers relevant.
                              ``(iii) Administration.--
                                      ``(I) Energy use and efficiency.--The
                                    Secretary may not prescribe any amended
                                    standard under this paragraph that
                                    increases the maximum allowable energy
                                    use, or decreases the minimum required
                                    energy efficiency, of a covered
                                    product.
                                      ``(II) Unavailability.--
                                              ``(aa) In general.--The
                                            Secretary may not prescribe an
                                            amended standard under this
                                            subparagraph if the Secretary
                                            finds (and publishes the
                                            finding) that interested
                                            persons have established by a
                                            preponderance of the evidence
                                            that a standard is likely to
                                            result in the unavailability in
                                            the United States in any
                                            product type (or class) of
                                            performance characteristics
                                            (including reliability,
                                            features, sizes, capacities,
                                            and volumes) that are
                                            substantially the same as those
                                            generally available in the
                                            United States at the time of
                                            the finding of the Secretary.
                                              ``(bb) Other types or
                                            classes.--The failure of some
                                            types (or classes) to meet the
                                            criterion established under
                                            this subclause shall not affect
                                            the determination of the
                                            Secretary on whether to
                                            prescribe a standard for the
                                            other types or classes.''; and
              (B) in subparagraph (C)(iv), by striking ``An amendment
            prescribed under this subsection'' and inserting
            ``Notwithstanding subparagraph (D), an amendment prescribed
            under this subparagraph''.
      (5) Section 342(a)(6)(B)(iii) of the Energy Policy and Conservation
    Act (as added by section 306(c) of the Energy Independence and Security
    Act of 2007) is transferred and redesignated as clause (vi) of section
    342(a)(6)(C) of the Energy Policy and Conservation Act (as amended by
    section 305(b)(2) of the Energy Independence and Security Act of 2007).
      (6) Section 340 of the Energy Policy and Conservation Act (42 U.S.C.
    6311) (as amended by sections 312(a)(2) and 314(a) of the Energy
    Independence and Security Act of 2007 (121 Stat. 1564, 1569)) is
    amended by redesignating paragraphs (22) and (23) (as added by section
    314(a) of that Act) as paragraphs (23) and (24), respectively.
      (7) Section 345 of the Energy Policy and Conservation Act (42 U.S.C.
    6316) (as amended by section 312(e) of the Energy Independence and
    Security Act of 2007 (121 Stat. 1567)) is amended--
              (A) by striking ``subparagraphs (B) through (G)'' each place
            it appears and inserting ``subparagraphs (B), (C), (D), (I),
            (J), and (K)'';
              (B) by striking ``part A'' each place it appears and
            inserting ``part B''; and
              (C) in subsection (h)(3), by striking ``section 342(f)(3)''
            and inserting ``section 342(f)(4)''.
      (8) Section 340(13) of the Energy Policy and Conservation Act (42
    U.S.C. 6311(13)) (as amended by section 313(a) of the Energy
    Independence and Security Act of 2007 (121 Stat. 1568)) is amended--
              (A) by striking subparagraphs (A) and (B) and inserting the
            following:
                      ``(A) In general.--The term `electric motor' means
                    any motor that is--
                              ``(i) a general purpose T-frame, single-
                            speed, foot-mounting, polyphase squirrel-cage
                            induction motor of the National Electrical
                            Manufacturers Association, Design A and B,
                            continuous rated, operating on 230/460 volts
                            and constant 60 Hertz line power as defined in
                            NEMA Standards Publication MG1-1987; or
                              ``(ii) a motor incorporating the design
                            elements described in clause (i), but is
                            configured to incorporate one or more of the
                            following variations--
                                      ``(I) U-frame motor;
                                      ``(II) NEMA Design C motor;
                                      ``(III) close-coupled pump motor;
                                      ``(IV) footless motor;
                                      ``(V) vertical solid shaft normal
                                    thrust motor (as tested in a horizontal
                                    configuration);
                                      ``(VI) 8-pole motor; or
                                      ``(VII) poly-phase motor with a
                                    voltage rating of not more than 600
                                    volts (other than 230 volts or 460
                                    volts, or both, or can be operated on
                                    230 volts or 460 volts, or both).'';
                                    and
              (B) by redesignating subparagraphs (C) through (I) as
            subparagraphs (B) through (H), respectively.
      (9)(A) Section 342(b) of the Energy Policy and Conservation Act (42
    U.S.C. 6313(b)) is amended--
      (i) in paragraph (1), by striking ``paragraph (2)'' and inserting
    ``paragraph (3)'';
      (ii) by redesignating paragraphs (2) and (3) as paragraphs (3) and
    (4);
      (iii) by inserting after paragraph (1) the following:
              ``(2) Standards effective beginning december 19, 2010.--
                      ``(A) In general.--Except for definite purpose
                    motors, special purpose motors, and those motors
                    exempted by the Secretary under paragraph (3) and
                    except as provided for in subparagraphs (B), (C), and
                    (D), each electric motor manufactured with power
                    ratings from 1 to 200 horsepower (alone or as a
                    component of another piece of equipment) on or after
                    December 19, 2010, shall have a nominal full load
                    efficiency of not less than the nominal full load
                    efficiency described in NEMA MG-1 (2006) Table 12-12.
                      ``(B) Fire pump electric motors.--Except for those
                    motors exempted by the Secretary under paragraph (3),
                    each fire pump electric motor manufactured with power
                    ratings from 1 to 200 horsepower (alone or as a
                    component of another piece of equipment) on or after
                    December 19, 2010, shall have a nominal full load
                    efficiency that is not less than the nominal full load
                    efficiency described in NEMA MG-1 (2006) Table 12-11.
                      ``(C) NEMA design b electric motors.--Except for
                    those motors exempted by the Secretary under paragraph
                    (3), each NEMA Design B electric motor with power
                    ratings of more than 200 horsepower, but not greater
                    than 500 horsepower, manufactured (alone or as a
                    component of another piece of equipment) on or after
                    December 19, 2010, shall have a nominal full load
                    efficiency of not less than the nominal full load
                    efficiency described in NEMA MG-1 (2006) Table 12-11.
                      ``(D) Motors incorporating certain design elements.--
                    Except for those motors exempted by the Secretary under
                    paragraph (3), each electric motor described in section
                    340(13)(A)(ii) manufactured with power ratings from 1
                    to 200 horsepower (alone or as a component of another
                    piece of equipment) on or after December 19, 2010,
                    shall have a nominal full load efficiency of not less
                    than the nominal full load efficiency described in NEMA
                    MG-1 (2006) Table 12-11.''; and
      (iv) in paragraph (3) (as redesignated by clause (ii)), by striking
    ``paragraph (1)'' each place it appears in subparagraphs (A) and (D)
    and inserting ``paragraphs (1) and (2)''.
      (B) Section 313 of the Energy Independence and Security Act of 2007
    (121 Stat. 1568) is repealed.
      (C) The amendments made by--
              (i) subparagraph (A) shall take effect on December 19, 2010;
            and
              (ii) subparagraph (B) shall take effect on December 19, 2007.
      (10) Section 321(30)(D)(i)(III) of the Energy Policy and Conservation
    Act (42 U.S.C. 6291(30)(D)(i)(III)) (as amended by section 321(a)(1)(A)
    of the Energy Independence and Security Act of 2007 (121 Stat. 1574))
    is amended by inserting before the semicolon the following: ``or, in
    the case of a modified spectrum lamp, not less than 232 lumens and not
    more than 1,950 lumens''.
      (11) Section 321(30)(T) of the Energy Policy and Conservation Act (42
    U.S.C. 6291(30)(T) (as amended by section 321(a)(1)(B) of the Energy
    Independence and Security Act of 2007 (121 Stat. 1574)) is amended--
              (A) in clause (i)--
                      (i) by striking the comma after ``household
                    appliance'' and inserting ``and''; and
                      (ii) by striking ``and is sold at retail,''; and
              (B) in clause (ii), by inserting ``when sold at retail,''
            before ``is designated''.
      (12) Section 325 of the Energy Policy and Conservation Act (42 U.S.C.
    6295) (as amended by sections 321(a)(3)(A) and 322(b) of the Energy
    Independence and Security Act of 2007 (121 Stat. 1577, 1588)) is
    amended by striking subsection (i) and inserting the following:
      ``(i) General Service Fluorescent Lamps, General Service Incandescent
    Lamps, Intermediate Base Incandescent Lamps, Candelabra Base
    Incandescent Lamps, and Incandescent Reflector Lamps.--
              ``(1) Energy efficiency standards.--
                      ``(A) In general.--Each of the following general
                    service fluorescent lamps, general service incandescent
                    lamps, intermediate base incandescent lamps, candelabra
                    base incandescent lamps, and incandescent reflector
                    lamps manufactured after the effective date specified
                    in the tables listed in this subparagraph shall meet or
                    exceed the following lamp efficacy, new maximum
                    wattage, and CRI standards:

                                                   ``FLUORESCENT LAMPS
    ----------------------------------------------------------------------------------------------------------------
                                                                                                      Effective Date
               Lamp Type               Nominal Lamp       Minimum CRI       Minimum Average Lamp        (Period of
                                          Wattage                              Efficacy (LPW)            Months)
    ----------------------------------------------------------------------------------------------------------------
    4-foot medium bi-pin...........        >35 W              69                    75.0                    36
                                           35 W               45                    75.0                    36
    2-foot U-shaped................        >35 W              69                    68.0                    36
                                            35 W              45                    64.0                    36
    8-foot slimline................         65 W              69                    80.0                    18
                                           65 W               45                    80.0                    18
    8-foot high output.............       >100 W              69                    80.0                    18
                                           100 W              45                    80.0                    18
    ----------------------------------------------------------------------------------------------------------------

                         ``INCANDESCENT REFLECTOR LAMPS
    ------------------------------------------------------------------------
                                                              Effective Date
         Nominal Lamp Wattage         Minimum Average Lamp      (Period of
                                         Efficacy (LPW)           Months)
    ------------------------------------------------------------------------
     40-50.......................             10.5                  36
     51-66.......................             11.0                  36
     67-85.......................             12.5                  36
     86-115......................             14.0                  36
    116-155......................             14.5                  36
    156-205......................             15.0                  36
    ------------------------------------------------------------------------

                                          ``GENERAL SERVICE INCANDESCENT LAMPS
    ----------------------------------------------------------------------------------------------------------------
                                                                                             Minimum
                           Rated Lumen Ranges                            Maximum Rated        Rated       Effective
                                                                            Wattage         Lifetime        Date
    ----------------------------------------------------------------------------------------------------------------
    1490-2600                                                                        72     1,000 hrs      1/1/2012
    1050-1489                                                                        53     1,000 hrs      1/1/2013
    750-1049                                                                         43     1,000 hrs      1/1/2014
    310-749                                                                          29     1,000 hrs      1/1/2014
    ----------------------------------------------------------------------------------------------------------------

                                 ``MODIFIED SPECTRUM GENERAL SERVICE INCANDESCENT LAMPS
    ----------------------------------------------------------------------------------------------------------------
                                                                                             Minimum
                           Rated Lumen Ranges                            Maximum Rated        Rated       Effective
                                                                            Wattage         Lifetime        Date
    ----------------------------------------------------------------------------------------------------------------
    1118-1950                                                                        72     1,000 hrs      1/1/2012
    788-1117                                                                         53     1,000 hrs      1/1/2013
    563-787                                                                          43     1,000 hrs      1/1/2014
    232-562                                                                          29     1,000 hrs      1/1/2014
    ----------------------------------------------------------------------------------------------------------------

                      ``(B) Application.--
                              ``(i) Application criteria.--This
                            subparagraph applies to each lamp that--
                                      ``(I) is intended for a general
                                    service or general illumination
                                    application (whether incandescent or
                                    not);
                                      ``(II) has a medium screw base or any
                                    other screw base not defined in ANSI
                                    C81.61-2006;
                                      ``(III) is capable of being operated
                                    at a voltage at least partially within
                                    the range of 110 to 130 volts; and
                                      ``(IV) is manufactured or imported
                                    after December 31, 2011.
                              ``(ii) Requirement.--For purposes of this
                            paragraph, each lamp described in clause (i)
                            shall have a color rendering index that is
                            greater than or equal to--
                                      ``(I) 80 for nonmodified spectrum
                                    lamps; or
                                      ``(II) 75 for modified spectrum
                                    lamps.
                      ``(C) Candelabra incandescent lamps and intermediate
                    base incandescent lamps.--
                              ``(i) Candelabra base incandescent lamps.--
                            Effective beginning January 1, 2012, a
                            candelabra base incandescent lamp shall not
                            exceed 60 rated watts.
                              ``(ii) Intermediate base incandescent
                            lamps.--Effective beginning January 1, 2012, an
                            intermediate base incandescent lamp shall not
                            exceed 40 rated watts.
                      ``(D) Exemptions.--
                              ``(i) Statutory exemptions.--The standards
                            specified in subparagraph (A) shall not apply
                            to the following types of incandescent
                            reflector lamps:
                                      ``(I) Lamps rated at 50 watts or less
                                    that are ER30, BR30, BR40, or ER40
                                    lamps.
                                      ``(II) Lamps rated at 65 watts that
                                    are BR30, BR40, or ER40 lamps.
                                      ``(III) R20 incandescent reflector
                                    lamps rated 45 watts or less.
                              ``(ii) Administrative exemptions.--
                                      ``(I) Petition.--Any person may
                                    petition the Secretary for an exemption
                                    for a type of general service lamp from
                                    the requirements of this subsection.
                                      ``(II) Criteria.--The Secretary may
                                    grant an exemption under subclause (I)
                                    only to the extent that the Secretary
                                    finds, after a hearing and opportunity
                                    for public comment, that it is not
                                    technically feasible to serve a
                                    specialized lighting application (such
                                    as a military, medical, public safety,
                                    or certified historic lighting
                                    application) using a lamp that meets
                                    the requirements of this subsection.
                                      ``(III) Additional criterion.--To
                                    grant an exemption for a product under
                                    this clause, the Secretary shall
                                    include, as an additional criterion,
                                    that the exempted product is unlikely
                                    to be used in a general service
                                    lighting application.
                      ``(E) Extension of coverage.--
                              ``(i) Petition.--Any person may petition the
                            Secretary to establish standards for lamp
                            shapes or bases that are excluded from the
                            definition of general service lamps.
                              ``(ii) Increased sales of exempted lamps.--
                            The petition shall include evidence that the
                            availability or sales of exempted incandescent
                            lamps have increased significantly since the
                            date on which the standards on general service
                            incandescent lamps were established.
                              ``(iii) Criteria.--The Secretary shall grant
                            a petition under clause (i) if the Secretary
                            finds that--
                                      ``(I) the petition presents evidence
                                    that demonstrates that commercial
                                    availability or sales of exempted
                                    incandescent lamp types have increased
                                    significantly since the standards on
                                    general service lamps were established
                                    and likely are being widely used in
                                    general lighting applications; and
                                      ``(II) significant energy savings
                                    could be achieved by covering exempted
                                    products, as determined by the
                                    Secretary based in part on sales data
                                    provided to the Secretary from
                                    manufacturers and importers.
                              ``(iv) No presumption.--The grant of a
                            petition under this subparagraph shall create
                            no presumption with respect to the
                            determination of the Secretary with respect to
                            any criteria under a rulemaking conducted under
                            this section.
                              ``(v) Expedited proceeding.--If the Secretary
                            grants a petition for a lamp shape or base
                            under this subparagraph, the Secretary shall--
                                      ``(I) conduct a rulemaking to
                                    determine standards for the exempted
                                    lamp shape or base; and
                                      ``(II) complete the rulemaking not
                                    later than 18 months after the date on
                                    which notice is provided granting the
                                    petition.
                      ``(F) Effective dates.--
                              ``(i) In general.--In this paragraph, except
                            as otherwise provided in a table contained in
                            subparagraph (A) or in clause (ii), the term
                            `effective date' means the last day of the
                            month specified in the table that follows
                            October 24, 1992.
                              ``(ii) Special effective dates.--
                                      ``(I) ER, br, and bpar lamps.--The
                                    standards specified in subparagraph (A)
                                    shall apply with respect to ER
                                    incandescent reflector lamps, BR
                                    incandescent reflector lamps, BPAR
                                    incandescent reflector lamps, and
                                    similar bulb shapes on and after
                                    January 1, 2008, or the date that is
                                    180 days after the date of enactment of
                                    the Energy Independence and Security
                                    Act of 2007.
                                      ``(II) Lamps between 2.25-2.75 inches
                                    in diameter.--The standards specified
                                    in subparagraph (A) shall apply with
                                    respect to incandescent reflector lamps
                                    with a diameter of more than 2.25
                                    inches, but not more than 2.75 inches,
                                    on and after the later of January 1,
                                    2008, or the date that is 180 days
                                    after the date of enactment of the
                                    Energy Independence and Security Act of
                                    2007.
              ``(2) Compliance with existing law.--Notwithstanding section
            332(a)(5) and section 332(b), it shall not be unlawful for a
            manufacturer to sell a lamp that is in compliance with the law
            at the time the lamp was manufactured.
              ``(3) Rulemaking before october 24, 1995.--
                      ``(A) In general.--Not later than 36 months after
                    October 24, 1992, the Secretary shall initiate a
                    rulemaking procedure and shall publish a final rule not
                    later than the end of the 54-month period beginning on
                    October 24, 1992, to determine whether the standards
                    established under paragraph (1) should be amended.
                      ``(B) Administration.--The rule shall contain the
                    amendment, if any, and provide that the amendment shall
                    apply to products manufactured on or after the 36-month
                    period beginning on the date on which the final rule is
                    published.
              ``(4) Rulemaking before october 24, 2000.--
                      ``(A) In general.--Not later than 8 years after
                    October 24, 1992, the Secretary shall initiate a
                    rulemaking procedure and shall publish a final rule not
                    later than 9 years and 6 months after October 24, 1992,
                    to determine whether the standards in effect for
                    fluorescent lamps and incandescent lamps should be
                    amended.
                      ``(B) Administration.--The rule shall contain the
                    amendment, if any, and provide that the amendment shall
                    apply to products manufactured on or after the 36-month
                    period beginning on the date on which the final rule is
                    published.
              ``(5) Rulemaking for additional general service fluorescent
            lamps.--
                      ``(A) In general.--Not later than the end of the 24-
                    month period beginning on the date labeling
                    requirements under section 324(a)(2)(C) become
                    effective, the Secretary shall--
                              ``(i) initiate a rulemaking procedure to
                            determine whether the standards in effect for
                            fluorescent lamps and incandescent lamps should
                            be amended so that the standards would be
                            applicable to additional general service
                            fluorescent lamps; and
                              ``(ii) publish, not later than 18 months
                            after initiating the rulemaking, a final rule
                            including the amended standards, if any.
                      ``(B) Administration.--The rule shall provide that
                    the amendment shall apply to products manufactured
                    after a date which is 36 months after the date on which
                    the rule is published.
              ``(6) Standards for general service lamps.--
                      ``(A) Rulemaking before january 1, 2014.--
                              ``(i) In general.--Not later than January 1,
                            2014, the Secretary shall initiate a rulemaking
                            procedure to determine whether--
                                      ``(I) standards in effect for general
                                    service lamps should be amended; and
                                      ``(II) the exclusions for certain
                                    incandescent lamps should be maintained
                                    or discontinued based, in part, on
                                    excluded lamp sales collected by the
                                    Secretary from manufacturers.
                              ``(ii) Scope.--The rulemaking--
                                      ``(I) shall not be limited to
                                    incandescent lamp technologies; and
                                      ``(II) shall include consideration of
                                    a minimum standard of 45 lumens per
                                    watt for general service lamps.
                              ``(iii) Amended standards.--If the Secretary
                            determines that the standards in effect for
                            general service lamps should be amended, the
                            Secretary shall publish a final rule not later
                            than January 1, 2017, with an effective date
                            that is not earlier than 3 years after the date
                            on which the final rule is published.
                              ``(iv) Phased-in effective dates.--The
                            Secretary shall consider phased-in effective
                            dates under this subparagraph after
                            considering--
                                      ``(I) the impact of any amendment on
                                    manufacturers, retiring and repurposing
                                    existing equipment, stranded
                                    investments, labor contracts, workers,
                                    and raw materials; and
                                      ``(II) the time needed to work with
                                    retailers and lighting designers to
                                    revise sales and marketing strategies.
                              ``(v) Backstop requirement.--If the Secretary
                            fails to complete a rulemaking in accordance
                            with clauses (i) through (iv) or if the final
                            rule does not produce savings that are greater
                            than or equal to the savings from a minimum
                            efficacy standard of 45 lumens per watt,
                            effective beginning January 1, 2020, the
                            Secretary shall prohibit the manufacture of any
                            general service lamp that does not meet a
                            minimum efficacy standard of 45 lumens per
                            watt.
                              ``(vi) State preemption.--Neither section
                            327(c) nor any other provision of law shall
                            preclude California or Nevada from adopting,
                            effective beginning on or after January 1,
                            2018--
                                      ``(I) a final rule adopted by the
                                    Secretary in accordance with clauses
                                    (i) through (iv);
                                      ``(II) if a final rule described in
                                    subclause (I) has not been adopted, the
                                    backstop requirement under clause (v);
                                    or
                                      ``(III) in the case of California, if
                                    a final rule described in subclause (I)
                                    has not been adopted, any California
                                    regulations relating to these covered
                                    products adopted pursuant to State
                                    statute in effect as of the date of
                                    enactment of the Energy Independence
                                    and Security Act of 2007.
                      ``(B) Rulemaking before january 1, 2020.--
                              ``(i) In general.--Not later than January 1,
                            2020, the Secretary shall initiate a rulemaking
                            procedure to determine whether--
                                      ``(I) standards in effect for general
                                    service lamps should be amended; and
                                      ``(II) the exclusions for certain
                                    incandescent lamps should be maintained
                                    or discontinued based, in part, on
                                    excluded lamp sales data collected by
                                    the Secretary from manufacturers.
                              ``(ii) Scope.--The rulemaking shall not be
                            limited to incandescent lamp technologies.
                              ``(iii) Amended standards.--If the Secretary
                            determines that the standards in effect for
                            general service lamps should be amended, the
                            Secretary shall publish a final rule not later
                            than January 1, 2022, with an effective date
                            that is not earlier than 3 years after the date
                            on which the final rule is published.
                              ``(iv) Phased-in effective dates.--The
                            Secretary shall consider phased-in effective
                            dates under this subparagraph after
                            considering--
                                      ``(I) the impact of any amendment on
                                    manufacturers, retiring and repurposing
                                    existing equipment, stranded
                                    investments, labor contracts, workers,
                                    and raw materials; and
                                      ``(II) the time needed to work with
                                    retailers and lighting designers to
                                    revise sales and marketing strategies.
              ``(7) Federal actions.--
                      ``(A) Comments of secretary.--
                              ``(i) In general.--With respect to any lamp
                            to which standards are applicable under this
                            subsection or any lamp specified in section
                            346, the Secretary shall inform any Federal
                            entity proposing actions that would adversely
                            impact the energy consumption or energy
                            efficiency of the lamp of the energy
                            conservation consequences of the action.
                              ``(ii) Consideration.--The Federal entity
                            shall carefully consider the comments of the
                            Secretary.
                      ``(B) Amendment of standards.--Notwithstanding
                    section 325(n)(1), the Secretary shall not be
                    prohibited from amending any standard, by rule, to
                    permit increased energy use or to decrease the minimum
                    required energy efficiency of any lamp to which
                    standards are applicable under this subsection if the
                    action is warranted as a result of other Federal action
                    (including restrictions on materials or processes) that
                    would have the effect of either increasing the energy
                    use or decreasing the energy efficiency of the product.
              ``(8) Compliance.--
                      ``(A) In general.--Not later than the date on which
                    standards established pursuant to this subsection
                    become effective, or, with respect to high-intensity
                    discharge lamps covered under section 346, the
                    effective date of standards established pursuant to
                    that section, each manufacturer of a product to which
                    the standards are applicable shall file with the
                    Secretary a laboratory report certifying compliance
                    with the applicable standard for each lamp type.
                      ``(B) Contents.--The report shall include the lumen
                    output and wattage consumption for each lamp type as an
                    average of measurements taken over the preceding 12-
                    month period.
                      ``(C) Other lamp types.--With respect to lamp types
                    that are not manufactured during the 12-month period
                    preceding the date on which the standards become
                    effective, the report shall--
                              ``(i) be filed with the Secretary not later
                            than the date that is 12 months after the date
                            on which manufacturing is commenced; and
                              ``(ii) include the lumen output and wattage
                            consumption for each such lamp type as an
                            average of measurements taken during the 12-
                            month period.''.
      (13) Section 325(l)(4)(A) of the Energy Policy and Conservation Act
    (42 U.S.C. 6295(l)(4)(A)) (as amended by section 321(a)(3)(B) of the
    Energy Independence and Security Act of 2007 (121 Stat. 1581)) is
    amended by striking ``only''.
      (14) Section 327(b)(1)(B) of the Energy Policy and Conservation Act
    (42 U.S.C. 6297(b)(1)(B)) (as amended by section 321(d)(3) of the
    Energy Independence and Security Act of 2007 (121 Stat. 1585)) is
    amended--
              (A) in clause (i), by inserting ``and'' after the semicolon
            at the end;
              (B) in clause (ii), by striking ``; and'' and inserting a
            period; and
              (C) by striking clause (iii).
      (15) Section 321(e) of the Energy Independence and Security Act of
    2007 (121 Stat. 1586) is amended--
              (A) in the matter preceding paragraph (1), by striking ``is
            amended'' and inserting ``(as amended by section 306(b)) is
            amended''; and
              (B) by striking paragraphs (1) and (2) and inserting the
            following:
              ``(1) in paragraph (5), by striking `or' after the semicolon
            at the end;
              ``(2) in paragraph (6), by striking the period at the end and
            inserting `; or'; and''.
      (16) Section 332(a) of the Energy Policy and Conservation Act (42
    U.S.C. 6302(a)) (as amended by section 321(e) of the Energy
    Independence and Security Act of 2007 (121 Stat. 1586)) is amended by
    redesignating the second paragraph (6) as paragraph (7).
      (17) Section 321(30)(C)(ii) of the Energy Policy and Conservation Act
    (42 U.S.C. 6291(30)(C)(ii)) (as amended by section 322(a)(1)(B) of the
    Energy Independence and Security Act of 2007 (121 Stat. 1587)) is
    amended by inserting a period after ``40 watts or higher''.
      (18) Section 322(b) of the Energy Independence and Security Act of
    2007 (121 Stat. 1588)) is amended by striking ``6995(i)'' and inserting
    ``6295(i)''.
      (19) Section 327(c) of the Energy Policy and Conservation Act (42
    U.S.C. 6297(c)) (as amended by sections 324(f) of the Energy
    Independence and Security Act of 2007 (121 Stat. 1594)) is amended--
              (A) in paragraph (6), by striking ``or'' after the semicolon
            at the end;
              (B) in paragraph (8)(B), by striking ``and'' after the
            semicolon at the end;
              (C) in paragraph (9)--
                      (i) by striking ``except that--'' and all that
                    follows through ``if the Secretary fails to issue'' and
                    inserting ``except that if the Secretary fails to
                    issue'';
                      (ii) by redesignating clauses (i) and (ii) as
                    subparagraphs (A) and (B), respectively (and by moving
                    the margins of such subparagraphs 2 ems to the left);
                    and
                      (iii) by striking the period at the end and inserting
                    a semicolon; and
              (D) by adding at the end the following:
              ``(10) is a regulation for general service lamps that
            conforms with Federal standards and effective dates;
              ``(11) is an energy efficiency standard for general service
            lamps enacted into law by the State of Nevada prior to December
            19, 2007, if the State has not adopted the Federal standards
            and effective dates pursuant to subsection (b)(1)(B)(ii); or''.
      (20) Section 325(b) of the Energy Independence and Security Act of
    2007 (121 Stat. 1596)) is amended by striking ``6924(c)'' and inserting
    ``6294(c)''.
      (b) Title IV--Energy Savings in Buildings and Industry.--(1) Section
    401 of the Energy Independence and Security Act of 2007 (42 U.S.C.
    17061) is amended--
              (A) in paragraph (2), by striking ``484'' and inserting
            ``494''; and
              (B) in paragraph (13), by striking ``Agency'' and inserting
            ``Administration''.
      (2) Section 422 of the Energy Conservation and Production Act (42
    U.S.C. 6872) (as amended by section 411(a) of the Energy Independence
    and Security Act of 2007 (121 Stat. 1600)) is amended by striking 1 of
    the 2 periods at the end of paragraph (5).
      (3) Section 305(a)(3)(D)(i) of the Energy Conservation and Production
    Act (42 U.S.C. 6834(a)(3)(D)(i)) (as amended by section 433(a) of the
    Energy Independence and Security Act of 2007 (121 Stat. 1612)) is
    amended--
              (A) in subclause (I)--
                      (i) by striking ``in fiscal year 2003 (as measured by
                    Commercial Buildings Energy Consumption Survey or
                    Residential Energy Consumption Survey data from the
                    Energy Information Agency'' and inserting ``as measured
                    by the calendar year 2003 Commercial Buildings Energy
                    Consumption Survey or the calendar year 2005
                    Residential Energy Consumption Survey data from the
                    Energy Information Administration''; and
                      (ii) in the table at the end, by striking ``Fiscal
                    Year'' and inserting ``Calendar Year''; and
              (B) in subclause (II)--
                      (i) by striking ``(II) Upon petition'' and inserting
                    the following:
                                      ``(II) Downward adjustment of numeric
                                    requirement.--
                                              ``(aa) In general.--On
                                            petition''; and
                      (ii) by striking the last sentence and inserting the
                    following:
                                              ``(bb) Exceptions to
                                            requirement for concurrence of
                                            secretary.--
                                                      ``(AA) In general.--
                                                    The requirement to
                                                    petition and obtain the
                                                    concurrence of the
                                                    Secretary under this
                                                    subclause shall not
                                                    apply to any Federal
                                                    building with respect
                                                    to which the
                                                    Administrator of
                                                    General Services is
                                                    required to transmit a
                                                    prospectus to Congress
                                                    under section 3307 of
                                                    title 40, United States
                                                    Code, or to any other
                                                    Federal building
                                                    designed, constructed,
                                                    or renovated by the
                                                    Administrator if the
                                                    Administrator
                                                    certifies, in writing,
                                                    that meeting the
                                                    applicable numeric
                                                    requirement under
                                                    subclause (I) with
                                                    respect to the Federal
                                                    building would be
                                                    technically
                                                    impracticable in light
                                                    of the specific
                                                    functional needs for
                                                    the building.
                                                      ``(BB) Adjustment.--
                                                    In the case of a
                                                    building described in
                                                    subitem (AA), the
                                                    Administrator may
                                                    adjust the applicable
                                                    numeric requirement of
                                                    subclause (I) downward
                                                    with respect to the
                                                    building.''.
      (4) Section 436(c)(3) of the Energy Independence and Security Act of
    2007 (42 U.S.C. 17092(c)(3)) is amended by striking ``474'' and
    inserting ``494''.
      (5) Section 440 of the Energy Independence and Security Act of 2007
    (42 U.S.C. 17096) is amended by striking ``and 482''.
      (6) Section 373(c) of the Energy Policy and Conservation Act (42
    U.S.C. 6343(c)) (as amended by section 451(a) of the Energy
    Independence and Security Act of 2007 (121 Stat. 1628)) is amended by
    striking ``Administrator'' and inserting ``Secretary''.
      (c) Date of Enactment.--Section 1302 of the Energy Independence and
    Security Act of 2007 (42 U.S.C. 17382) is amended in the first sentence
    by striking ``enactment'' and inserting ``the date of enactment of this
    Act''.
      (d) Reference.--Section 1306(c)(3) of the Energy Independence and
    Security Act of 2007 (42 U.S.C. 17386(c)(3)) is amended by striking
    ``section 1307 (paragraph (17) of section 111(d) of the Public Utility
    Regulatory Policies Act of 1978)'' and inserting ``paragraph (19) of
    section 111(d) of the Public Utility Regulatory Policies Act of 1978
    (16 U.S.C. 2621(d))''.
      (e) Effective Date.--This section and the amendments made by this
    section take effect as if included in the Energy Independence and
    Security Act of 2007 (Public Law 110-140; 121 Stat. 1492).

    SEC. 162. TECHNICAL CORRECTIONS TO ENERGY POLICY ACT OF 2005.

      (a) Title I--Energy Efficiency.--Section 325(g)(8)(C)(ii) of the
    Energy Policy and Conservation Act (42 U.S.C. 6295(g)(8)(C)(ii)) (as
    added by section 135(c)(2)(B) of the Energy Policy Act of 2005) is
    amended by striking ``20F'' and inserting ``-20F''.
      (b) Effective Date.--This section and the amendments made by this
    section take effect as if included in the Energy Policy Act of 2005
    (Public Law 109-58; 119 Stat. 594).

                   Subtitle H--Energy and Efficiency Centers

    SEC. 171. CLEAN ENERGY INNOVATION CENTERS.

      (a) Purpose.--The Secretary shall carry out a program to establish
    Clean Energy Innovation Centers to enhance the Nation's economic,
    environmental, and energy security by promoting commercial deployment
    of clean, indigenous energy alternatives to oil and other fossil fuels,
    reducing greenhouse gas emissions, and ensuring that the United States
    maintains a technological lead in developing and deploying state-of-
    the-art energy technologies. To achieve these purposes the program
    shall--
              (1) leverage the expertise and resources of the university
            and private research communities, industry, venture capital,
            national laboratories, and other participants in energy
            innovation to support cross-disciplinary research and
            development in areas not being served by the private sector in
            order to develop and transfer innovative clean energy
            technologies into the marketplace;
              (2) expand the knowledge base and human capital necessary to
            transition to a low-carbon economy; and
              (3) promote regional economic development by cultivating
            clusters of clean energy technology firms, private research
            organizations, suppliers, and other complementary groups and
            businesses.
      (b) Definitions.--For purposes of this section:
              (1) Allowance.--The term ``allowance'' means an emission
            allowance established under section 721 of the Clean Air Act.
              (2) Center.--The term ``Center'' means a Clean Energy
            Innovation Center established in accordance with this section.
              (3) Clean energy technology.--The term ``clean energy
            technology'' means a technology that--
                      (A) produces energy from solar, wind, geothermal,
                    biomass, tidal, wave, ocean, and other renewable energy
                    resources (as such term is defined in section 610 of
                    the Public Utility Regulatory Policies Act of 1978);
                      (B) more efficiently transmits, distributes, or
                    stores energy;
                      (C) enhances energy efficiency for buildings and
                    industry, including combined heat and power;
                      (D) enables the development of a Smart Grid (as
                    described in section 1301 of the Energy Independence
                    and Security Act of 2007 (42 U.S.C. 17381)), including
                    integration of renewable energy resources and
                    distributed generation, demand response, demand side
                    management, and systems analysis;
                      (E) produces an advanced or sustainable material with
                    energy or energy efficiency applications;
                      (F) enhances water security through improved water
                    management, conservation, distribution, and end use
                    applications; or
                      (G) improves energy efficiency for transportation,
                    including electric vehicles.
              (4) Cluster.--The term ``cluster'' means a concentration of
            firms directly involved in the research, development, finance,
            and commercialization of clean energy technologies whose
            geographic proximity facilitates utilization and sharing of
            skilled human resources, infrastructure, research facilities,
            educational and training institutions, venture capital, and
            input suppliers.
              (5) Project.--The term ``project'' means an activity with
            respect to which a Center provides support under subsection
            (e).
              (6) Qualifying entity.--The term ``qualifying entity'' means
            each of the following:
                      (A) A research university.
                      (B) A State institution with a focus on the
                    advancement of clean energy technologies.
                      (C) A nongovernmental organization with research or
                    commercialization expertise in clean energy technology
                    development.
              (7) Secretary.--The term ``Secretary'' means the Secretary of
            Energy.
              (8) Technology focus.--The term ``technology focus'' means
            the unique technology area in which a Center will specialize,
            and may include solar electricity, fuels from solar energy,
            batteries and energy storage, electricity grid systems and
            devices, energy efficient building systems and design, advanced
            materials, modeling and simulation, and other clean energy
            technology areas designated by the Secretary.
              (9) Translational research.--The term ``translational
            research'' means clean energy technology research to coordinate
            basic or applied research with technical and commercial
            applications to enable promising discoveries or inventions to
            attract investment sufficient for market penetration and
            diffusion.
      (c) Role of the Secretary.--The Secretary shall--
              (1) have ultimate responsibility for, and oversight of, all
            aspects of the program under this section;
              (2) provide for the distribution of allowances to consortia
            for the establishment of 8 Centers pursuant to this section,
            with each Center designated a unique technology focus area;
              (3) coordinate the innovation activities of Centers with
            those occurring through other Department of Energy entities,
            including the National Laboratories, the Advanced Research
            Projects Agency--Energy, and Energy Frontier Research Centers,
            and within industry, and to avoid duplication of research, by
            annually--
                      (A) issuing guidance regarding national energy
                    research and development priorities and strategic
                    objectives; and
                      (B) convening a conference of staff of the Department
                    of Energy and representatives from such other entities
                    to share research results, program plans, and
                    opportunities for collaboration.
      (d) Consortium.--A consortium shall be eligible to receive allowances
    to support the establishment of a Center under this section if--
              (1) it is composed of--
                      (A) 2 research universities with a combined annual
                    research budget of $500,000,000; and
                      (B) no fewer than 1 additional qualifying entity;
              (2) its members have established a binding agreement that
            documents--
                      (A) the structure of the partnership agreement;
                      (B) the governance and management structure to enable
                    cost-effective implementation of the program;
                      (C) an intellectual property management policy;
                      (D) a conflicts of interest policy consistent with
                    subsection (e)(4);
                      (E) an accounting structure that meets the
                    requirements of the Department and can be audited under
                    subsection (f)(3); and
                      (F) that it has an Advisory Board consistent with
                    subsection (e)(3);
              (3) it receives financial contributions from States,
            consortium participants, or other non-Federal sources, to be
            used pursuant to subsection (e)(2);
              (4) it is part of an existing cluster or demonstrates high
            potential to develop a new cluster; and
              (5) it operates as a nonprofit organization.
      (e) Clean Energy Innovation Centers.--
              (1) Role.--Centers shall provide support to activities
            leading to commercial deployment of clean energy technologies
            pursuant to the purposes of this section through issuance of
            awards to projects managed by qualifying entities and other
            entities meeting the Center's project criteria, including
            national laboratories. Each Center shall--
                      (A) develop and publish for public review and comment
                    proposed plans, programs, and project selection
                    criteria;
                      (B) submit an annual report to the Secretary
                    summarizing the Center's activities, organizational
                    expenditures, and Board members, which shall include a
                    certification of compliance with conflict of interest
                    policies and a description of each project in the
                    research portfolio;
                      (C) establish policies--
                              (i) regarding intellectual property developed
                            as a result of Center awards and other forms of
                            technology support that encourage individual
                            ingenuity and invention while speeding
                            knowledge transfer and facilitating the
                            establishment of rapid commercialization
                            pathways;
                              (ii) to prevent resources provided to the
                            Center from being used to displace private
                            sector investment likely to otherwise occur,
                            including investment from private sector
                            entities which are members of the consortium;
                              (iii) to facilitate the participation of
                            private investment firms or other private
                            entities that invest in clean energy
                            technologies to perform due diligence on award
                            proposals, to participate in the award review
                            process, and to provide guidance to projects
                            supported by the Center; and
                              (iv) to facilitate the participation of
                            entrepreneurs with a demonstrated history of
                            commercializing clean energy technologies;
                      (D) oversee project solicitations, review proposed
                    projects, and select projects for awards; and
                      (E) monitor project implementation.
              (2) Use and distribution of awards by centers.--A Center
            shall allocate awards and other support for--
                      (A) clean energy technology projects conducting
                    translational research and related activities, at least
                    40 percent of which shall be utilized for projects
                    related to the Center's technology focus; and
                      (B) administrative expenses, which may constitute no
                    more than 10 percent of the award.
              (3) Advisory boards.--
                      (A) In general.--Each Center shall establish an
                    Advisory Board whose members shall have extensive and
                    relevant scientific, technical, industry, financial, or
                    research management expertise. The Advisory Board shall
                    review the Center's proposed plans, programs, project
                    selection criteria, and projects and shall ensure that
                    projects selected for awards meet the conflict of
                    interest policies of the Center. Advisory Board members
                    other than those representing consortium members shall
                    serve for no more than three years and must comply with
                    conflict of interest provisions.
                      (B) Members.--Each Advisory Board shall consist of--
                              (i) 5 members selected by the consortium's
                            research universities;
                              (ii) 2 members selected by the consortium's
                            other qualifying entities; and
                              (iii) 2 members selected at large by other
                            Board members to represent the entrepreneur and
                            venture capital communities.
                    Individuals appointed under clause (iii) shall not be
                    State or Federal employees or affiliated with the
                    consortium's qualified entities.
                      (C) Nonvoting members.--The Board shall also include
                    1 nonvoting member appointed by the Secretary.
                      (D) Compensation.--Members of an Advisory Board may
                    receive reimbursement for travel expenses and a
                    reasonable stipend.
              (4) Conflict of interest.--
                      (A) Procedures.--Centers shall establish procedures
                    to ensure that employees or consortia designees for
                    Center activities who are in decisionmaking capacities
                    shall--
                              (i) disclose any financial interests in, or
                            financial relationships with, applicants for or
                            recipients of awards under paragraph (1),
                            including those of his or her spouse or minor
                            child, unless such relationships or interests
                            would be considered to be remote or
                            inconsequential; and
                              (ii) recuse himself or herself from any
                            funding decision for projects in which he or
                            she has a personal financial interest.
                      (B) Disqualification and revocation.--The Secretary
                    may disqualify an application or revoke allowances
                    distributed to the Center or awards provided under
                    paragraph (1), if cognizant officials of the Center
                    fail to comply with procedures required under
                    subparagraph (A).
      (f) Distribution of Allowances to Clean Energy Innovation Centers.--
              (1) Selection and schedule.--Allowances to support the
            establishment of a Center shall be distributed through a
            competitive process. Not later than 120 days after the date of
            enactment of this Act, the Secretary shall solicit proposals
            from eligible consortia to establish Centers, which shall be
            submitted not later than 180 days after the date of enactment
            of this Act. The Secretary shall select the program consortia
            not later than 270 days after the date of enactment of this Act
            pursuant to subsection (d). The Secretary shall award 3 grants
            for the establishment of 3 Centers to be located on the campus
            of 1890 Land Grant Institution (as defined in section 2 of the
            Agricultural Research, Extension, and Education Reform Act of
            1998 (7 U.S.C. 7061)).
              (2) Term and use of allowances.--Allowances distributed to
            Centers shall be used to provide awards pursuant to subsection
            (e)(1). The amount of allowances distributed to support the
            establishment of a Center under this section shall not be less
            than 10 and not more than 30 percent of the allowances
            allocated under section 782(h) of the Clean Air Act, each year
            for a 6 year period. Centers shall be eligible to compete for
            additional allowance distribution after the expiration of the
            initial period. Centers shall establish award periods for
            individual awards. The transfer of allowances to a Center shall
            occur at the start of each calendar year.
              (3) Audit.--Each Center shall conduct an annual audit to
            determine the extent to which allowances distributed to the
            Center, and awards under subsection (e) have been utilized in a
            manner consistent with this section. The auditor shall transmit
            a report of the results of the audit to the Secretary and to
            the Government Accountability Office. The Secretary shall
            include such report in the annual report to Congress, along
            with a plan to remedy any deficiencies cited in the report. The
            Government Accountability Office may review such audits as
            appropriate and shall have full access to the books, records,
            and personnel of the Center to ensure that allowances
            distributed to the Center, and awards made under subsection
            (e), have been utilized in a manner consistent with this
            section.

    SEC. 172. BUILDING ASSESSMENT CENTERS.

      (a) In General.--The Secretary of Energy (in this section referred to
    as the ``Secretary'') shall provide funding to institutions of higher
    education for Building Assessment Centers to--
              (1) identify opportunities for optimizing energy efficiency
            and environmental performance in existing buildings;
              (2) promote high-efficiency building construction techniques
            and materials options;
              (3) promote applications of emerging concepts and
            technologies in commercial and institutional buildings;
              (4) train engineers, architects, building scientists, and
            building technicians in energy-efficient design and operation;
              (5) assist local community colleges, trade schools,
            registered apprenticeship programs and other accredited
            training programs in training building technicians;
              (6) promote research and development for the use of
            alternative energy sources to supply heat and power, for
            buildings, particularly energy-intensive buildings; and
              (7) coordinate with and assist State-accredited technical
            training centers and community colleges, while ensuring
            appropriate services to all regions of the United States.
      (b) Coordination With Regional Centers for Energy and Environmental
    Knowledge and Outreach.--A Building Assessment Center may serve as a
    Center for Energy and Environmental Knowledge and Outreach established
    pursuant to section 173.
      (c) Coordination and Duplication.--The Secretary shall coordinate
    efforts under this section with other programs of the Department of
    Energy and other Federal agencies to avoid duplication of effort.
      (d) Authorization of Appropriations.--There are authorized to be
    appropriated to the Secretary to carry out this section $50,000,000 for
    fiscal year 2010 and each fiscal year thereafter.

    SEC. 173. CENTERS FOR ENERGY AND ENVIRONMENTAL KNOWLEDGE AND OUTREACH.

      (a) Regional Centers for Energy and Environmental Knowledge and
    Outreach.--
              (1) Establishment.--The Secretary shall establish not more
            than 10 regional Centers for Energy and Environmental Knowledge
            and Outreach at institutions of higher education to coordinate
            with and advise industrial research and assessment centers,
            Building Assessment Centers, and Clean Energy Application
            Centers located in the region of such Center for Energy and
            Environmental Knowledge and Outreach.
              (2) Technical assistance programs.--Each Center for Energy
            and Environmental Knowledge and Outreach shall consist of at
            least one, new or existing, high performing, of the following:
                      (A) An industrial research and assessment center.
                      (B) A Clean Energy Application Center.
                      (C) A Building Assessment Center.
              (3) Selection criteria.--The Secretary shall select Centers
            for Energy and Environmental Knowledge and Outreach through a
            competitive process, based on the following:
                      (A) Identification of the highest performing
                    industrial research and assessment centers, Clean
                    Energy Application Centers, and Building Assessment
                    Centers.
                      (B) The degree to which an institution of higher
                    education maintains credibility among regional private
                    sector organizations such as trade associations,
                    engineering associations, and environmental
                    organizations.
                      (C) The degree to which an institution of higher
                    education is providing or has provided technical
                    assistance, academic leadership, and market leadership
                    in the energy arena in a manner that is consistent with
                    the areas of focus of industrial research and
                    assessment centers, Clean Energy Application Centers,
                    and Building Assessment Centers.
                      (D) The presence of an additional industrial research
                    and assessment center, Clean Energy Application Center,
                    or Building Assessment Center at the institution of
                    higher education.
              (4) Geographic diversity.--In selecting Centers for Energy
            and Environmental Knowledge and Outreach under this subsection,
            the Secretary shall ensure such Centers are distributed
            geographically in a relatively uniform manner to ensure all
            regions of the Nation are represented.
              (5) Regional leadership.--Each Center for Energy and
            Environmental Knowledge and Outreach shall, to the extent
            possible, provide leadership to all other industrial research
            and assessment centers, Clean Energy Application Centers, and
            Building Assessment Centers located in the Center's geographic
            region, as determined by the Secretary. Such leadership shall
            include--
                      (A) developing regional goals specific to the purview
                    of the industrial research and assessment centers,
                    Clean Energy Application Centers, and Building
                    Assessment Centers programs;
                      (B) developing regionally specific technical
                    resources; and
                      (C) outreach to interested parties in the region to
                    inform them of the information, resources, and services
                    available through the associated industrial research
                    and assessment centers, Clean Energy Application
                    Centers, and Building Assessment Centers.
              (6) Further coordination.--To increase the value and
            capabilities of the regionally associated industrial research
            and assessment centers, Clean Energy Application Centers, and
            Building Assessment Centers programs, Centers for Energy and
            Environmental Knowledge and Outreach shall--
                      (A) coordinate with Manufacturing Extension
                    Partnership Centers of the National Institute of
                    Science and Technology;
                      (B) coordinate with the relevant programs in the
                    Department of Energy, including the Building Technology
                    Program and Industrial Technologies Program;
                      (C) increase partnerships with the National
                    Laboratories of the Department of Energy to leverage
                    the expertise and technologies of the National
                    Laboratories to achieve the goals of the industrial
                    research and assessment centers, Clean Energy
                    Application Centers, and Building Assessment Centers;
                      (D) work with relevant municipal, county, and State
                    economic development entities to leverage relevant
                    financial incentives for capital investment and other
                    policy tools for the protection and growth of local
                    business and industry;
                      (E) partner with local professional and private trade
                    associations and business development interests to
                    leverage existing knowledge of local business
                    challenges and opportunities;
                      (F) work with energy utilities and other
                    administrators of publicly funded energy programs to
                    leverage existing energy efficiency and clean energy
                    programs;
                      (G) identify opportunities for reducing greenhouse
                    gas emissions; and
                      (H) promote sustainable business practices for those
                    served by the industrial research and assessment
                    centers, Clean Energy Application Centers, and Building
                    Assessment Centers.
              (7) Workforce training.--
                      (A) In general.--The Secretary shall require each
                    Center for Energy and Environmental Knowledge and
                    Outreach to establish or maintain an internship program
                    for the region of such Center, designed to encourage
                    students who perform energy assessments to continue
                    working with a particular company, building, or
                    facility to help implement the recommendations
                    contained in any such assessment provided to such
                    company, building, or facility. Each Center for Energy
                    and Environmental Knowledge and Outreach shall act as
                    internship coordinator to help match students to
                    available opportunities.
                      (B) Federal share.--The Federal share of the cost of
                    carrying out internship programs described under
                    subparagraph (A) shall be 50 percent.
                      (C) Funding.--Subject to the availability of
                    appropriations, of the funds made available to carry
                    out this subsection, the Secretary shall use to carry
                    out this paragraph not less than $5,000,000 for fiscal
                    year 2010 and each fiscal year thereafter.
              (8) Small business loans.--The Administrator of the Small
            Business Administration shall, to the maximum practicable,
            expedite consideration of applications from eligible small
            business concerns for loans under the Small Business Act (15
            U.S.C. 631 et seq.) for loans to implement recommendations of
            any industrial research and assessment center, Clean Energy
            Application Center, or Building Assessment Center.
              (9) Definitions.--In this subsection:
                      (A) Industrial research and assessment center.--The
                    term ``industrial research and assessment center''
                    means a center established or maintained pursuant to
                    section 452(e) of the Energy Independence and Security
                    Act of 2007 (42 U.S.C. 17111(e)).
                      (B) Clean energy application center.--The term
                    ``Clean Energy Application Center'' means a center
                    redesignated and described section under section 375 of
                    the Energy Policy and Conservation Act (42 U.S.C.
                    6345).
                      (C) Building assessment center.--The term ``Building
                    Assessment Center'' means an institution of higher
                    education-based center established pursuant to section
                    172.
                      (D) Secretary.--The term ``Secretary'' means the
                    Secretary of Energy.
              (10) Funding.--There are authorized to be appropriated to the
            Secretary to carry out this subsection $10,000,000 for fiscal
            year 2010 and each fiscal year thereafter. Subject to the
            availability of appropriations, of the funds made available to
            carry out this subsection, the Secretary shall provide to each
            Center for Energy and Environmental Knowledge and Outreach not
            less than $500,000 for fiscal year 2010 and each fiscal year
            thereafter.
      (b) Integration of Other Technical Assistance Programs.--
              (1) Clean energy application centers.--Section 375 of the
            Energy Policy and Conservation Act (42 U.S.C. 6345) is
            amended--
                      (A) by redesignating subsection (f) as subsection
                    (g); and
                      (B) by adding after subsection (e) the following new
                    subsection:
      ``(f) Coordination With Centers for Energy and Environmental
    Knowledge and Outreach.--A Clean Energy Application Center may serve as
    a Center for Energy and Environmental Knowledge and Outreach
    established pursuant to section 173 of the American Clean Energy and
    Security Act of 2009.''.
              (2) Industrial research and assessment centers.--Section
            452(e) of the Energy Independence and Security Act of 2007 (42
            U.S.C. 17111(e)) is amended--
                      (A) by striking ``The Secretary'' and all that
                    follows through ``shall be--'' and inserting the
                    following:
              ``(1) In general.--The Secretary shall provide funding to
            institution of higher education-based industrial research and
            assessment centers, whose purposes shall be--'';
                      (B) by redesignating paragraphs (1) through (5) as
                    subparagraphs (A) through (E), respectively (and by
                    moving the margins of such subparagraphs 2 ems to the
                    right); and
                      (C) by adding at the end the following new paragraph:
              ``(2) Coordination with centers for energy and environmental
            knowledge and outreach.--An industrial research and assessment
            center may serve as a Center for Energy and Environmental
            Knowledge and Outreach established pursuant to section 173 of
            the American Clean Energy and Security Act of 2009.''.
      (c) Additional Funding for Clean Energy Application Centers.--
    Subsection (g) of section 375 of the Energy Policy and Conservation Act
    (42 U.S.C. 6345(f)), as redesignated by subsection (b)(1) of this
    section, is amended by striking ``$10,000,000 for each of fiscal years
    2008 through 2012'' and inserting ``$30,000,000 for fiscal year 2010
    and each fiscal year thereafter''.

                 Subtitle I--Nuclear and Advanced Technologies

    SEC. 181. REVISIONS TO LOAN GUARANTEE PROGRAM AUTHORITY.

      (a) Definition of Conditional Commitment.--Section 1701 of the Energy
    Policy Act of 2005 (42 U.S.C. 16511), as amended by section 130(a) of
    this Act, is amended by adding after paragraph (7) the following:
              ``(8) Conditional commitment.--The term `conditional
            commitment' means a final term sheet negotiated between the
            Secretary and a project sponsor or sponsors, which term sheet
            shall be binding on both parties and become a final loan
            guarantee agreement if all conditions precedent established in
            the term sheet, which shall include the acquisition of all
            necessary permits and licenses, are satisfied.''.
      (b) Specific Appropriation or Contribution.--Section 1702 of the
    Energy Policy Act of 2005 (42 U.S.C. 16512) is amended by striking
    subsection (b) and inserting the following:
      ``(b) Specific Appropriation or Contribution.--
              ``(1) In general.--No guarantee shall be made unless--
                      ``(A) an appropriation for the cost has been made;
                      ``(B) the Secretary has received from the borrower a
                    payment in full for the cost of the obligation and
                    deposited the payment into the Treasury; or
                      ``(C) a combination of appropriations or payments
                    from the borrower has been made sufficient to cover the
                    cost of the obligation.
              ``(2) Limitation.--The source of payments received from a
            borrower under paragraph (1)(B) shall not be a loan or other
            debt obligation that is made or guaranteed by the Federal
            Government.''.
      (c) Fees.--Section 1702(h) of the Energy Policy Act of 2005 (42
    U.S.C. 16512(h)) is amended by striking paragraph (2) and inserting the
    following:
              ``(2) Availability.--Fees collected under this subsection
            shall--
                      ``(A) be deposited by the Secretary into a special
                    fund in the Treasury to be known as the `Incentives For
                    Innovative Technologies Fund'; and
                      ``(B) remain available to the Secretary for
                    expenditure, without further appropriation or fiscal
                    year limitation, for administrative expenses incurred
                    in carrying out this title.''.
      (d) Wage Rate Requirements.--Section 1702 of the Energy Policy Act of
    2005 (42 U.S.C. 16512) is amended by adding at the end the following
    new subsection:
      ``(k) Wage Rate Requirements.--No loan guarantee shall be made under
    this title unless the borrower has provided to the Secretary reasonable
    assurances that all laborers and mechanics employed by contractors and
    subcontractors in the performance of construction work financed in
    whole or in part by the guaranteed loan will be paid wages at rates not
    less than those prevailing on projects of a character similar to the
    contract work in the civil subdivision of the State in which the
    contract work is to be performed as determined by the Secretary of
    Labor in accordance with subchapter IV of chapter 31 of part A of
    subtitle II of title 40, United States Code. With respect to the labor
    standards specified in this subsection, the Secretary of Labor shall
    have the authority and functions set forth in Reorganization Plan
    Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and section 3145 of
    title 40, United States Code.''.

    SEC. 182. PURPOSE.

      The purpose of sections 183 through 189 of this subtitle is to
    promote the domestic development and deployment of clean energy
    technologies required for the 21st century through the establishment of
    a self-sustaining Clean Energy Deployment Administration that will
    provide for an attractive investment environment through partnership
    with and support of the private capital market in order to promote
    access to affordable financing for accelerated and widespread
    deployment of--
              (1) clean energy technologies;
              (2) advanced or enabling energy infrastructure technologies;
              (3) energy efficiency technologies in residential,
            commercial, and industrial applications, including end-use
            efficiency in buildings; and
              (4) manufacturing technologies for any of the technologies or
            applications described in this section.

    SEC. 183. DEFINITIONS.

      In this subtitle:
              (1) Administration.--The term ``Administration'' means the
            Clean Energy Deployment Administration established by section
            186.
              (2) Advisory council.--The term ``Advisory Council'' means
            the Energy Technology Advisory Council of the Administration.
              (3) Breakthrough technology.--The term ``breakthrough
            technology'' means a clean energy technology that--
                      (A) presents a significant opportunity to advance the
                    goals developed under section 185, as assessed under
                    the methodology established by the Advisory Council;
                    but
                      (B) has generally not been considered a commercially
                    ready technology as a result of high perceived
                    technology risk or other similar factors.
              (4) Clean energy technology.--The term ``clean energy
            technology'' means a technology related to the production, use,
            transmission, storage, control, or conservation of energy--
                      (A) that will contribute to a stabilization of
                    atmospheric greenhouse gas concentrations thorough
                    reduction, avoidance, or sequestration of energy-
                    related emissions and--
                              (i) reduce the need for additional energy
                            supplies by using existing energy supplies with
                            greater efficiency or by transmitting,
                            distributing, or transporting energy with
                            greater effectiveness through the
                            infrastructure of the United States; or
                              (ii) diversify the sources of energy supply
                            of the United States to strengthen energy
                            security and to increase supplies with a
                            favorable balance of environmental effects if
                            the entire technology system is considered; and
                      (B) for which, as determined by the Administrator,
                    insufficient commercial lending is available to allow
                    for widespread deployment.
              (5) Cost.--The term ``cost'' has the meaning given the term
            in section 502 of the Federal Credit Reform Act of 1990 (2
            U.S.C. 661a).
              (6) Direct loan.--The term ``direct loan'' has the meaning
            given the term in section 502 of the Federal Credit Reform Act
            of 1990 (2 U.S.C. 661a).
              (7) Fund.--The term ``Fund'' means the Clean Energy
            Investment Fund established by section 184(a).
              (8) Loan guarantee.--The term ``loan guarantee'' has the
            meaning given the term in section 502 of the Federal Credit
            Reform Act of 1990 (2 U.S.C. 661a).
              (9) National laboratory.--The term ``National Laboratory''
            has the meaning given the term in section 2 of the Energy
            Policy Act of 2005 (42 U.S.C. 15801).
              (10) Secretary.--The term ``Secretary'' means the Secretary
            of Energy.
              (11) State.--The term ``State'' means--
                      (A) a State;
                      (B) the District of Columbia;
                      (C) the Commonwealth of Puerto Rico; and
                      (D) any other territory or possession of the United
                    States.
              (12) Technology risk.--The term ``technology risk'' means the
            risks during construction or operation associated with the
            design, development, and deployment of clean energy
            technologies (including the cost, schedule, performance,
            reliability and maintenance, and accounting for the perceived
            risk), from the perspective of commercial lenders, that may be
            increased as a result of the absence of adequate historical
            construction, operating, or performance data from commercial
            applications of the technology.

    SEC. 184. CLEAN ENERGY INVESTMENT FUND.

      (a) Establishment.--There is established in the Treasury of the
    United States a revolving fund, to be known as the ``Clean Energy
    Investment Fund'', consisting of--
              (1) such amounts as are deposited in the Fund under this
            subtitle; and
              (2) such sums as may be appropriated to supplement the Fund.
      (b) Authorization of Appropriations.--There are authorized to be
    appropriated to the Fund such sums as are necessary to carry out this
    subtitle.
      (c) Expenditures From Fund.--
              (1) In general.--Amounts in the Fund shall be available to
            the Administrator of the Administration for obligation without
            fiscal year limitation, to remain available until expended.
              (2) Administrative expenses.--
                      (A) Fees.--Fees collected for administrative expenses
                    shall be available without limitation to cover
                    applicable expenses.
                      (B) Fund.--To the extent that administrative expenses
                    are not reimbursed through fees, an amount not to
                    exceed 1.5 percent of the amounts in the Fund as of the
                    beginning of each fiscal year shall be available to pay
                    the administrative expenses for the fiscal year
                    necessary to carry out this subtitle.
      (d) Transfers of Amounts.--
              (1) In general.--The amounts required to be transferred to
            the Fund under this section shall be transferred at least
            monthly from the general fund of the Treasury to the Fund on
            the basis of estimates made by the Secretary of the Treasury.
              (2) Adjustments.--Proper adjustment shall be made in amounts
            subsequently transferred to the extent prior estimates were in
            excess of or less than the amounts required to be transferred.

    SEC. 185. ENERGY TECHNOLOGY DEPLOYMENT GOALS.

      (a) Goals.--Not later than 1 year after the date of enactment of this
    Act, the Secretary, after consultation with the Advisory Council, shall
    develop and publish for review and comment in the Federal Register
    near-, medium-, and long-term goals (including numerical performance
    targets at appropriate intervals to measure progress toward those
    goals) for the deployment of clean energy technologies through the
    credit support programs established by section 187 to promote--
              (1) sufficient electric generating capacity using clean
            energy technologies to meet the energy needs of the United
            States;
              (2) clean energy technologies in vehicles and fuels that will
            substantially reduce the reliance of the United States on
            foreign sources of energy and insulate consumers from the
            volatility of world energy markets;
              (3) a domestic commercialization and manufacturing capacity
            that will establish the United States as a world leader in
            clean energy technologies across multiple sectors;
              (4) installation of sufficient infrastructure to allow for
            the cost-effective deployment of clean energy technologies
            appropriate to each region of the United States;
              (5) the transformation of the building stock of the United
            States to zero net energy consumption;
              (6) the recovery, use, and prevention of waste energy;
              (7) domestic manufacturing of clean energy technologies on a
            scale that is sufficient to achieve price parity with
            conventional energy sources;
              (8) domestic production of commodities and materials (such as
            steel, chemicals, polymers, and cement) using clean energy
            technologies so that the United States will become a world
            leader in environmentally sustainable production of the
            commodities and materials;
              (9) a robust, efficient, and interactive electricity
            transmission grid that will allow for the incorporation of
            clean energy technologies, distributed generation, and demand-
            response in each regional electric grid;
              (10) sufficient availability of financial products to allow
            owners and users of residential, retail, commercial, and
            industrial buildings to make energy efficiency and distributed
            generation technology investments with reasonable payback
            periods; and
              (11) such other goals as the Secretary, in consultation with
            the Advisory Council, determines to be consistent with the
            purpose stated in section 182.
      (b) Revisions.--The Secretary shall revise the goals established
    under subsection (a), from time to time as appropriate, to account for
    advances in technology and changes in energy policy.

    SEC. 186. CLEAN ENERGY DEPLOYMENT ADMINISTRATION.

      (a) Establishment.--
              (1) In general.--There is established in the Department of
            Energy an administration to be known as the Clean Energy
            Deployment Administration, under the direction of the
            Administrator of the Administration and the Board of Directors.
              (2) Status.--
                      (A) In general.--The Administration (including
                    officers, employees, and agents of the Administration)
                    shall not be responsible to, or subject to the
                    authority, direction, or control of, any other officer,
                    employee, or agent of the Department of Energy other
                    than the Secretary, acting through the Administrator of
                    the Administration.
                      (B) Exemption from reorganization.--The
                    Administration shall be exempt from the reorganization
                    authority provided under section 643 of the Department
                    of Energy Reorganization Act (42 U.S.C. 7253).
                      (C) Inspector general.--Section 12 of the Inspector
                    General Act of 1978 (5 U.S.C. App.) is amended--
                              (i) in paragraph (1), by inserting ``the
                            Administrator of the Clean Energy Deployment
                            Administration;'' after ``Export-Import
                            Bank;''; and
                              (ii) in paragraph (2), by inserting ``the
                            Clean Energy Deployment Administration,'' after
                            ``Export-Import Bank,''.
              (3) Offices.--
                      (A) Principal office.--The Administration shall--
                              (i) maintain the principal office of the
                            Administration in the District of Columbia; and
                              (ii) for purposes of venue in civil actions,
                            be considered to be a resident of the District
                            of Columbia.
                      (B) Other offices.--The Administration may establish
                    other offices in such other places as the
                    Administration considers necessary or appropriate for
                    the conduct of the business of the Administration.
      (b) Administrator.--
              (1) In general.--The Administrator of the Administration
            shall be--
                      (A) appointed by the President, with the advice and
                    consent of the Senate, for a 5-year term; and
                      (B) compensated at the annual rate of basic pay
                    prescribed for level II of the Executive Schedule under
                    section 5313 of title 5, United States Code.
              (2) Duties.--The Administrator of the Administration shall--
                      (A) serve as the Chief Executive Officer of the
                    Administration and Chairman of the Board;
                      (B) ensure that--
                              (i) the Administration operates in a safe and
                            sound manner, including maintenance of adequate
                            capital and internal controls (consistent with
                            section 404 of the Sarbanes-Oxley Act of 2002
                            (15 U.S.C. 7262));
                              (ii) the operations and activities of the
                            Administration foster liquid, efficient,
                            competitive, and resilient energy and energy
                            efficiency finance markets;
                              (iii) the Administration carries out the
                            purpose stated in section 182 only through
                            activities that are authorized under and
                            consistent with sections 182 through 189; and
                              (iv) the activities of the Administration and
                            the manner in which the Administration is
                            operated are consistent with the public
                            interest;
                      (C) develop policies and procedures for the
                    Administration that will--
                              (i) promote a self-sustaining portfolio of
                            investments that will maximize the value of
                            investments to effectively promote clean energy
                            technologies;
                              (ii) promote transparency and openness in
                            Administration operations;
                              (iii) afford the Administration with
                            sufficient flexibility to meet the purpose
                            stated in section 182; and
                              (iv) provide for the efficient processing of
                            applications; and
                      (D) with the concurrence of the Board, set expected
                    loss reserves for the support provided by the
                    Administration consistent with section 187(c).
      (c) Board of Directors.--
              (1) In general.--The Board of Directors of the Administration
            shall consist of--
                      (A) the Secretary or the designee of the Secretary,
                    who shall serve as an ex-officio voting member of the
                    Board of Directors;
                      (B) the Administrator of the Administration, who
                    shall serve as the Chairman of the Board of Directors;
                    and
                      (C) 7 additional members who shall--
                              (i) be appointed by the President, with the
                            advice and consent of the Senate, for staggered
                            5-year terms; and
                              (ii) have experience in banking, financial
                            services, technology assessment, energy
                            regulation, or risk management, including
                            individuals with substantial experience in the
                            development of energy projects, the electricity
                            generation sector, the transportation sector,
                            the manufacturing sector, and the energy
                            efficiency sector.
              (2) Duties.--The Board of Directors shall--
                      (A) oversee the operations of the Administration and
                    ensure industry best practices are followed in all
                    financial transactions involving the Administration;
                      (B) consult with the Administrator of the
                    Administration on the general policies and procedures
                    of the Administration to ensure the interests of the
                    taxpayers are protected;
                      (C) ensure the portfolio of investments are
                    consistent with purpose stated in section 182 and with
                    the long-term financial stability of the
                    Administration;
                      (D) ensure that the operations and activities of the
                    Administration are consistent with the development of a
                    robust private sector that can provide commercial loans
                    or financing products; and
                      (E) not serve on a full-time basis, except that the
                    Board of Directors shall meet at least quarterly to
                    review, as appropriate, applications for credit support
                    and set policies and procedures as necessary.
            No member of the Board shall take part in any review or
            decision of any project as to which that member or member's
            immediate family has a financial or other interest.
              (3) Removal.--An appointed member of the Board of Directors
            may be removed from office by the President for good cause.
              (4) Vacancies.--An appointed seat on the Board of Directors
            that becomes vacant shall be filled by appointment by the
            President, but only for the unexpired portion of the term of
            the vacating member.
              (5) Compensation of members.--An appointed member of the
            Board of Directors shall be compensated at a rate equal to the
            daily equivalent of the annual rate of basic pay prescribed for
            level III of the Executive Schedule under section 5314 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 Board of Directors.
      (d) Energy Technology Advisory Council.--
              (1) In general.--The Administration shall have an Energy
            Technology Advisory Council consisting of--
                      (A) 5 members selected by the Secretary; and
                      (B) 3 members selected by the Board of Directors of
                    the Administration.
              (2) Qualifications.--The members of the Advisory Council
            shall--
                      (A) have relevant scientific expertise; and
                      (B) in the case of the members selected by the
                    Secretary under paragraph (1)(A), include
                    representatives of--
                              (i) the academic community;
                              (ii) the private research community;
                              (iii) National Laboratories;
                              (iv) the technology or project development
                            community; and
                              (v) the commercial energy financing and
                            operations sector.
              (3) Duties.--The Advisory Council shall--
                      (A) develop and publish for comment in the Federal
                    Register a methodology for assessment of clean energy
                    technologies that will allow the Administration to
                    evaluate projects based on the progress likely to be
                    achieved per-dollar invested in maximizing the
                    attributes of the definition of clean energy
                    technology, taking into account the extent to which
                    support for a clean energy technology is likely to
                    accrue subsequent benefits that are attributable to a
                    commercial scale deployment taking place earlier than
                    that which otherwise would have occurred without the
                    support; and
                      (B) advise on the technological approaches that
                    should be supported by the Administration to meet the
                    technology deployment goals established by the
                    Secretary pursuant to section 185.
              (4) Term.--
                      (A) In general.--Members of the Advisory Council
                    shall have 5-year staggered terms, as determined by the
                    Secretary and the Administrator of the Administration.
                      (B) Reappointment.--A member of the Advisory Council
                    may be reappointed.
              (5) Compensation.--A member of the Advisory Council, who is
            not otherwise compensated as a Federal employee, 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
            Advisory Council.
      (e) Staff.--
              (1) In general.--The Administrator of the Administration, in
            consultation with the Board of Directors, may--
                      (A) appoint and terminate such officers, attorneys,
                    employees, and agents as are necessary to carry out
                    this subtitle; and
                      (B) vest those personnel with such powers and duties
                    as the Administrator of the Administration may
                    determine.
              (2) Direct hire authority.--
                      (A) In general.--Notwithstanding section 3304 and
                    sections 3309 through 3318 of title 5, United States
                    Code, the Administrator of the Administration may, on a
                    determination that there is a severe shortage of
                    candidates or a critical hiring need for particular
                    positions, recruit and directly appoint highly
                    qualified critical personnel with specialized knowledge
                    important to the function of the Administration into
                    the competitive service.
                      (B) Exception.--The authority granted under
                    subparagraph (A) shall not apply to positions in the
                    excepted service or the Senior Executive Service.
                      (C) Requirements.--In exercising the authority
                    granted under subparagraph (A), the Administrator of
                    the Administration shall ensure that any action taken
                    by the Administrator of the Administration--
                              (i) is consistent with the merit principles
                            of section 2301 of title 5, United States Code;
                            and
                              (ii) complies with the public notice
                            requirements of section 3327 of title 5, United
                            States Code.
                      (D) Termination of effectiveness.--The authority
                    provided by this paragraph terminates effective on the
                    date that is 2 years after the date of enactment of
                    this Act.
              (3) Critical pay authority.--
                      (A) In general.--Notwithstanding section 5377 of
                    title 5, United States Code, and without regard to the
                    provisions of that title governing appointments in the
                    competitive service or the Senior Executive Service and
                    chapters 51 and 53 of that title (relating to
                    classification and pay rates), the Administrator of the
                    Administration may establish, fix the compensation of,
                    and appoint individuals to critical positions needed to
                    carry out the functions of the Administration, if the
                    Administrator of the Administration certifies that--
                              (i) the positions require expertise of an
                            extremely high level in a financial, technical,
                            or scientific field;
                              (ii) the Administration would not
                            successfully accomplish an important mission
                            without such an individual; and
                              (iii) exercise of the authority is necessary
                            to recruit an individual who is exceptionally
                            well qualified for the position.
                      (B) Limitations.--The authority granted under
                    subparagraph (A) shall be subject to the following
                    conditions:
                              (i) The number of critical positions
                            authorized by subparagraph (A) may not exceed
                            20 at any 1 time in the Administration.
                              (ii) The term of an appointment under
                            subparagraph (A) may not exceed 4 years.
                              (iii) An individual appointed under
                            subparagraph (A) may not have been an
                            Administration employee at any time during the
                            2-year period preceding the date of
                            appointment.
                              (iv) Total annual compensation for any
                            individual appointed under subparagraph (A) may
                            not exceed the highest total annual
                            compensation payable at the rate determined
                            under section 104 of title 3, United States
                            Code.
                              (v) An individual appointed under
                            subparagraph (A) may not be considered to be an
                            employee for purposes of subchapter II of
                            chapter 75 of title 5, United States Code.
                      (C) Notification.--Each year, the Administrator of
                    the Administration shall submit to Congress a
                    notification that lists each individual appointed under
                    this paragraph.

    SEC. 187. DIRECT SUPPORT.

      (a) In General.--The Administration may issue direct loans, letters
    of credit, and loan guarantees to deploy clean energy technologies if
    the Administrator of the Administration has determined that deployment
    of the technologies would benefit or be accelerated by the support.
      (b) Eligibility Criteria.--In carrying out this section and awarding
    credit support to projects, the Administrator of the Administration
    shall account for--
              (1) how the technology rates based on an evaluation
            methodology established by the Advisory Council;
              (2) how the project fits with the goals established under
            section 185; and
              (3) the potential for the applicant to successfully complete
            the project.
      (c) Risk.--
              (1) Expected loan loss reserve.--The Administrator of the
            Administration shall establish an expected loan loss reserve to
            account for estimated losses attributable to activities under
            this section that is consistent with the purposes of--
                      (A) developing breakthrough technologies to the point
                    at which technology risk is largely mitigated;
                      (B) achieving widespread deployment and advancing the
                    commercial viability of clean energy technologies; and
                      (C) advancing the goals established under section
                    185.
              (2) Initial expected loan loss reserve.--Until such time as
            the Administrator of the Administration determines sufficient
            data exist to establish an expected loan loss reserve that is
            appropriate, the Administrator of the Administration shall
            consider establishing an initial rate of 10 percent for the
            portfolio of investments under this subtitle.
              (3) Portfolio investment approach.--The Administration
            shall--
                      (A) use a portfolio investment approach to mitigate
                    risk and diversify investments across technologies and
                    ensure that no particular technology is provided more
                    than 30 percent of the financial support available;
                      (B) to the maximum extent practicable and consistent
                    with long-term self-sufficiency, weigh the portfolio of
                    investments in projects to advance the goals
                    established under section 185;
                      (C) consistent with the expected loan loss reserve
                    established under this subsection, the purpose stated
                    in section 182, and section 186(b)(2)(B), provide the
                    maximum practicable percentage of support to promote
                    breakthrough technologies; and
                      (D) give the highest priority to investments that
                    promote technologies that will achieve the maximum
                    greenhouse gas emission reductions within a reasonable
                    period of time per dollar invested and the earliest
                    reductions in greenhouse gas emissions.
              (4) Loss rate review.--
                      (A) In general.--The Board of Directors shall review
                    on an annual basis the loss rates of the portfolio to
                    determine the adequacy of the reserves.
                      (B) Report.--Not later than 90 days after the date of
                    the initiation of the review, the Administrator of the
                    Administration shall submit to the Committee on Energy
                    and Natural Resources of the Senate and the Committee
                    on Energy and Commerce of the House of Representatives
                    a report describing the results of the review and any
                    recommended policy changes.
              (5) Federal cost share.--A loan guarantee by the
            Administration shall not exceed an amount equal to 80 percent
            of the project cost of the facility that is the subject of the
            guarantee, as estimated at the time at which the guarantee is
            issued.
      (d) Application Review.--
              (1) In general.--To the maximum extent practicable and
            consistent with sound business practices, the Administration
            shall seek to consolidate reviews of applications for credit
            support under this subtitle such that final decisions on
            applications can generally be issued not later than 180 days
            after the date of submission of a completed application.
              (2) Environmental review.--In carrying out this subtitle, the
            Administration shall, to the maximum extent practicable--
                      (A) avoid duplicating efforts that have already been
                    undertaken by other agencies (including State agencies
                    acting under Federal programs); and
                      (B) with the advice of the Council on Environmental
                    Quality and any other applicable agencies, use the
                    administrative records of similar reviews conducted
                    throughout the executive branch to develop the most
                    expeditious review process practicable.
      (e) Wage Rate Requirements.--
              (1) In general.--No credit support shall be issued under this
            section unless the borrower has provided to the Administrator
            of the Administration reasonable assurances that all laborers
            and mechanics employed by contractors and subcontractors in the
            performance of construction work financed in whole or in part
            by the Administration will be paid wages at rates not less than
            those prevailing on projects of a character similar to the
            contract work in the civil subdivision of the State in which
            the contract work is to be performed as determined by the
            Secretary of Labor in accordance with subchapter IV of chapter
            31 of part A of subtitle II of title 40, United States Code.
              (2) Labor standards.--With respect to the labor standards
            specified in this subsection, the Secretary of Labor shall have
            the authority and functions set forth in Reorganization Plan
            Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and section
            3145 of title 40, United States Code.

    SEC. 188. FEDERAL CREDIT AUTHORITY.

      (a) Payments of Liabilities.--
              (1) In general.--Any payment made to discharge liabilities
            arising from agreements under this subtitle shall be paid out
            of the Fund or the associated credit account, as appropriate.
              (2) Security.--The full faith and credit of the United States
            is pledged to the payment of all obligations entered into by
            the Administration pursuant to this subtitle.
      (b) Fees.--
              (1) In general.--Consistent with achieving the purpose stated
            in section 182, the Administrator of the Administration shall
            charge fees or collect compensation generally in accordance
            with commercial rates.
              (2) Availability of fees.--All fees collected by the
            Administration may be retained by the Administration and placed
            in the Fund and may remain available to the Administration,
            without further appropriation or fiscal year limitation, for
            use in carrying out the purpose stated in section 182.
              (3) Breakthrough technologies.--The Administration shall
            charge the minimum amount in fees or compensation practicable
            for breakthrough technologies, consistent with the long-term
            viability of the Administration, unless the Administration
            first determines that a higher charge will not impede the
            development of the technology.
              (4) Alternative fee arrangements.--The Administration may use
            such alternative arrangements (such as profit participation,
            contingent fees, and other valuable contingent interests) as
            the Administration considers appropriate to compensate the
            Administration for the expenses of the Administration and the
            risk inherent in the support of the Administration.
      (c) Cost Transfer Authority.--Amounts collected by the Administration
    for the cost of a loan or loan guarantee shall be transferred by the
    Administration to the respective credit accounts.

    SEC. 189. GENERAL PROVISIONS.

      (a) Immunity From Impairment, Limitation, or Restriction.--
              (1) In general.--All rights and remedies of the
            Administration (including any rights and remedies of the
            Administration on, under, or with respect to any mortgage or
            any obligation secured by a mortgage) shall be immune from
            impairment, limitation, or restriction by or under--
                      (A) any law (other than a law enacted by Congress
                    expressly in limitation of this paragraph) that becomes
                    effective after the acquisition by the Administration
                    of the subject or property on, under, or with respect
                    to which the right or remedy arises or exists or would
                    so arise or exist in the absence of the law; or
                      (B) any administrative or other action that becomes
                    effective after the acquisition.
              (2) State law.--The Administrator of the Administration may
            conduct the business of the Administration without regard to
            any qualification or law of any State relating to
            incorporation.
      (b) Use of Other Agencies.--With the consent of a department,
    establishment, or instrumentality (including any field office), the
    Administration may--
              (1) use and act through any department, establishment, or
            instrumentality; and
              (2) use, and pay compensation for, information, services,
            facilities, and personnel of the department, establishment, or
            instrumentality.
      (c) Procurement.--The Administrator of the Administration shall be
    the senior procurement officer for the Administration for purposes of
    section 16(a) of the Office of Federal Procurement Policy Act (41
    U.S.C. 414(a)).
      (d) Financial Matters.--
              (1) Investments.--Funds of the Administration may be invested
            in such investments as the Board of Directors may prescribe.
              (2) Fiscal agents.--Any Federal Reserve bank or any bank as
            to which at the time of the designation of the bank by the
            Administrator of the Administration there is outstanding a
            designation by the Secretary of the Treasury as a general or
            other depository of public money, may be designated by the
            Administrator of the Administration as a depositary or
            custodian or as a fiscal or other agent of the Administration.
      (e) Jurisdiction.--Notwithstanding section 1349 of title 28, United
    States Code, or any other provision of law--
              (1) the Administration shall be considered a corporation
            covered by sections 1345 and 1442 of title 28, United States
            Code;
              (2) all civil actions to which the Administration is a party
            shall be considered to arise under the laws of the United
            States, and the district courts of the United States shall have
            original jurisdiction of all such actions, without regard to
            amount or value; and
              (3) any civil or other action, case or controversy in a court
            of a State, or in any court other than a district court of the
            United States, to which the Administration is a party may at
            any time before trial be removed by the Administration, without
            the giving of any bond or security and by following any
            procedure for removal of causes in effect at the time of the
            removal--
                      (A) to the district court of the United States for
                    the district and division embracing the place in which
                    the same is pending; or
                      (B) if there is no such district court, to the
                    district court of the United States for the district in
                    which the principal office of the Administration is
                    located.
      (f) Periodic Reports.--Not later than 1 year after commencement of
    operation of the Administration and at least biannually thereafter, the
    Administrator of the Administration shall submit to the Committee on
    Energy and Natural Resources of the Senate and the Committee on Energy
    and Commerce of the House of Representatives a report that includes a
    description of--
              (1) the technologies supported by activities of the
            Administration and how the activities advance the purpose
            stated in section 182; and
              (2) the performance of the Administration on meeting the
            goals established under section 185.
      (g) Audits by the Comptroller General.--
              (1) In general.--The programs, activities, receipts,
            expenditures, and financial transactions of the Administration
            shall be subject to audit by the Comptroller General of the
            United States under such rules and regulations as may be
            prescribed by the Comptroller General.
              (2) Access.--The representatives of the Government
            Accountability Office shall--
                      (A) have access to the personnel and to all books,
                    accounts, documents, records (including electronic
                    records), reports, files, and all other papers,
                    automated data, things, or property belonging to, under
                    the control of, or in use by the Administration, or any
                    agent, representative, attorney, advisor, or consultant
                    retained by the Administration, and necessary to
                    facilitate the audit;
                      (B) be afforded full facilities for verifying
                    transactions with the balances or securities held by
                    depositories, fiscal agents, and custodians;
                      (C) be authorized to obtain and duplicate any such
                    books, accounts, documents, records, working papers,
                    automated data and files, or other information relevant
                    to the audit without cost to the Comptroller General;
                    and
                      (D) have the right of access of the Comptroller
                    General to such information pursuant to section 716(c)
                    of title 31, United States Code.
              (3) Assistance and cost.--
                      (A) In general.--For the purpose of conducting an
                    audit under this subsection, the Comptroller General
                    may, in the discretion of the Comptroller General,
                    employ by contract, without regard to section 3709 of
                    the Revised Statutes (41 U.S.C. 5), professional
                    services of firms and organizations of certified public
                    accountants for temporary periods or for special
                    purposes.
                      (B) Reimbursement.--
                              (i) In general.--On the request of the
                            Comptroller General, the Administration shall
                            reimburse the Government Accountability Office
                            for the full cost of any audit conducted by the
                            Comptroller General under this subsection.
                              (ii) Crediting.--Such reimbursements shall--
                                      (I) be credited to the appropriation
                                    account entitled ``Salaries and
                                    Expenses, Government Accountability
                                    Office'' at the time at which the
                                    payment is received; and
                                      (II) remain available until expended.
      (h) Annual Independent Audits.--
              (1) In general.--The Administrator of the Administration
            shall--
                      (A) have an annual independent audit made of the
                    financial statements of the Administration by an
                    independent public accountant in accordance with
                    generally accepted auditing standards; and
                      (B) submit to the Secretary the results of the audit.
              (2) Content.--In conducting an audit under this subsection,
            the independent public accountant shall determine and report on
            whether the financial statements of the Administration--
                      (A) are presented fairly in accordance with generally
                    accepted accounting principles; and
                      (B) comply with any disclosure requirements imposed
                    under this subtitle.
      (i) Financial Reports.--
              (1) In general.--The Administrator of the Administration
            shall submit to the Secretary annual and quarterly reports of
            the financial condition and operations of the Administration,
            which shall be in such form, contain such information, and be
            submitted on such dates as the Secretary shall require.
              (2) Contents of annual reports.--Each annual report shall
            include--
                      (A) financial statements prepared in accordance with
                    generally accepted accounting principles;
                      (B) any supplemental information or alternative
                    presentation that the Secretary may require; and
                      (C) an assessment (as of the end of the most recent
                    fiscal year of the Administration), signed by the chief
                    executive officer and chief accounting or financial
                    officer of the Administration, of--
                              (i) the effectiveness of the internal control
                            structure and procedures of the Administration;
                            and
                              (ii) the compliance of the Administration
                            with applicable safety and soundness laws.
              (3) Special reports.--The Secretary may require the
            Administrator of the Administration to submit other reports on
            the condition (including financial condition), management,
            activities, or operations of the Administration, as the
            Secretary considers appropriate.
              (4) Accuracy.--Each report of financial condition shall
            contain a declaration by the Administrator of the
            Administration or any other officer designated by the Board of
            Directors of the Administration to make the declaration, that
            the report is true and correct to the best of the knowledge and
            belief of the officer.
              (5) Availability of reports.--Reports required under this
            section shall be published and made publicly available as soon
            as is practicable after receipt by the Secretary.
      (j) Scope and Termination of Authority.--
              (1) New obligations.--The Administrator of the Administration
            shall not initiate any new obligations under this subtitle on
            or after January 1, 2029.
              (2) Reversion to secretary.--The authorities and obligations
            of the Administration shall revert to the Secretary on January
            1, 2029.

                           Subtitle J--Miscellaneous

    SEC. 191. STUDY OF OCEAN RENEWABLE ENERGY AND TRANSMISSION PLANNING AND
                        SITING.

      (a) Definitions.--In this section:
              (1) Marine spatial plan.--The term ``marine spatial plan''
            means the analysis and allocation of ocean space for various
            uses to achieve ecological, economic, and social objectives,
            based on the principle of ecosystem-based management.
              (2) Marine spatial planning.--The term ``marine spatial
            planning'' means the process of developing a marine spatial
            plan.
              (3) Ecosystem-based management.--The term ``ecosystem-based
            management'' means a management approach that ensures the
            future ecological and economic sustainability of natural
            resources by--
                      (A) accounting for all ecosystem interactions and
                    direct, indirect, and cumulative impacts of human
                    activities on the ecosystem;
                      (B) emphasizing protection of ecosystem structure,
                    functions, patterns, and processes; and
                      (C) maintaining ecosystems in a healthy and resilient
                    condition.
              (4) Offshore renewable energy.--The term ``offshore renewable
            energy'' means energy generated from offshore wind or offshore
            hydrokinetic (wave, tidal, ocean current, and tidal-current)
            energy technologies.
              (5) Offshore renewable energy facility.--The term ``offshore
            renewable energy facility'' means a facility that generates
            offshore renewable energy or any offshore transmission line
            associated with such facility.
      (b) Study.--
              (1) In general.--As soon as practicable after the date of
            enactment of this section, the Federal Energy Regulatory
            Commission, the Secretary of the Interior, and the National
            Oceanic and Atmospheric Administration, in consultation with
            the Council on Environmental Quality and, as appropriate,
            coastal States, regional organizations of coastal States, and
            relevant nongovernmental organizations, shall jointly conduct a
            study of the potential for marine spatial planning to
            facilitate the development of offshore renewable energy
            facilities in a manner that protects and maintains coastal and
            marine ecosystem health.
              (2) Requirements.--The study under paragraph (1) shall
            include--
                      (A) identification of the steps involved in regional
                    marine spatial planning for the siting of offshore
                    renewable energy facilities;
                      (B) a recommended approach for the development of
                    regional marine spatial plans for the siting of
                    offshore renewable energy facilities that provides
                    for--
                              (i) the participation of relevant Federal
                            agencies and State governments;
                              (ii) coordination, to the maximum extent
                            practicable, with any marine spatial planning
                            undertaken by States;
                              (iii) public input; and
                              (iv) the periodic revision of such plans as
                            necessary to account for significant new
                            information and ensure achievement of plan
                            objectives;
                      (C) identification of required elements of such
                    regional marine spatial plans, including rules that
                    Federal agencies shall apply to applications for any
                    authorizations required under existing Federal law to
                    construct or operate offshore renewable energy
                    facilities within areas covered by such plans;
                      (D) an assessment of the adequacy of existing data,
                    including baseline environmental data, to support such
                    marine spatial planning and identification of gaps in
                    such data and the studies needed to fill such gaps;
                      (E) an assessment of the resources required to carry
                    out such marine spatial planning;
                      (F) recommended mechanisms for the formal adoption
                    and implementation of regional marine spatial plans for
                    the development of offshore renewable energy facilities
                    by relevant Federal agencies;
                      (G) identification of any additional authority
                    relevant Federal agencies would need to adopt and
                    implement regional marine spatial plans for the
                    development of offshore renewable energy facilities;
                    and
                      (H) such other recommendations as appropriate.
              (3) Report.--Not later than 6 months after the date of
            enactment of this section, the Federal Energy Regulatory
            Commission, the Secretary of the Interior, and the National
            Oceanic and Atmospheric Administration shall jointly publish
            the findings and recommendations of the study conducted
            pursuant to this subsection and shall accept public comment for
            at least 30 days after such publication. Following
            consideration of any public comments, and not later than 8
            months after the date of enactment of this section, the Federal
            Energy Regulatory Commission, the Secretary of the Interior,
            and the National Oceanic and Atmospheric Administration shall
            jointly submit to Congress and the Council on Environmental
            Quality the findings and recommendations of the study conducted
            pursuant to this subsection.
      (c) Assessment of Report.--
              (1) In general.--Not later than 4 months after the date of
            submission of the report required under subsection (b)(3), the
            Council on Environmental Quality shall assess the
            recommendations of such report, issue a written determination
            as to whether the recommended approach to marine spatial
            planning should be implemented, and transmit such written
            determination to the relevant Federal agencies and Congress.
              (2) Coordination for recommended approach.--If the Council on
            Environmental Quality determines that the recommended approach
            to marine spatial planning should be implemented, the relevant
            Federal agencies shall implement such approach and complete the
            development of marine spatial plans pursuant to that approach
            no later than 18 months after the written determination
            required by paragraph (1), and the Council on Environmental
            Quality shall coordinate such implementation. At the time of
            the written determination required by paragraph (1), the
            Council on Environmental Quality shall notify Congress if the
            relevant Federal agencies lack authority to carry out any
            aspect of the recommended approach.
              (3) Alternative approach.--If the Council on Environmental
            Quality determines that the recommended approach to marine
            spatial planning should not be implemented, the Council on
            Environmental Quality shall formulate an alternative approach
            and submit such alternative approach to the relevant Federal
            agencies and Congress at the time of the written determination
            required by paragraph (1).
      (d) Relationship to Existing Law.--Nothing in this section shall
    affect or be construed to affect any law, regulation, or memoranda of
    understanding governing the development of offshore renewable energy
    facilities in effect prior to the implementation of the recommended or
    alternative approach pursuant to subsection (c).
      (e) Authorization.--There are authorized to be appropriated such sums
    as may be necessary to carry out this section.

    SEC. 192. CLEAN TECHNOLOGY BUSINESS COMPETITION GRANT PROGRAM.

      (a) In General.--The Secretary of Energy is authorized to provide
    grants to organizations to conduct business competitions that provide
    incentives, training, and mentorship to entrepreneurs and early stage
    start-up companies throughout the United States to meet high priority
    economic, environmental, and energy security goals in areas to include
    energy efficiency, renewable energy, air quality, water quality and
    conservation, transportation, smart grid, green building, and waste
    management. Such competitions shall have the purpose of accelerating
    the development and deployment of clean technology businesses and green
    jobs; stimulating green economic development; providing business
    training and mentoring to early stage clean technology companies; and
    strengthening the competitiveness of United States clean technology
    industry in world trade markets. Priority shall be given to business
    competitions that are private sector led, encourage regional and
    interregional cooperation, and can demonstrate market-driven practices
    and show the creation of cost-effective green jobs through an annual
    publication of competition activities and directory of companies.
      (b) Eligibility.--An organization eligible for a grant under
    subsection (a) is--
              (1) any organization described in section 501(c)(3) of the
            Internal Revenue Code of 1986 and exempt from tax under section
            501(a) of such Code; and
              (2) any sponsored entity of an organization described in
            paragraph (1) that is operated as a nonprofit entity.
      (c) Priority.--In making grants under this section, the Secretary
    shall give priority to those organizations that can demonstrate broad
    funding support from private and other non-Federal funding sources to
    leverage Federal investment.
      (d) Authorization of Appropriations.--For the purpose of carrying out
    this section, there are authorized to be appropriated $20,000,000.

    SEC. 193. NATIONAL BIOENERGY PARTNERSHIP.

      (a) In General.--The Secretary of Energy shall establish a National
    Bioenergy Partnership to provide coordination among programs of State
    governments, the Federal Government, and the private sector that
    support the institutional and physical infrastructure necessary to
    promote the deployment of sustainable biomass fuels and bioenergy
    technologies for the United States.
      (b) Program.--The National Bioenergy Partnership shall consist of
    five regions, to be administered by the CONEG Policy Research Center,
    the Council of Great Lakes Governors, the Southern States Energy Board,
    the Western Governors Association, and the Pacific Regional Biomass
    Energy Partnership led by the Washington State University Energy
    Program.
      (c) Authorization of Appropriations.--There are authorized to be
    appropriated for each of fiscal years 2010 through 2014 to carry out
    this section--
              (1) $5,000,000, to be allocated among the 5 regions described
            in subsection (b) on the basis of the number of States in each
            region, for distribution among the member States of that region
            based on procedures developed by the member States of the
            region; and
              (2) $2,500,000, to be allocated equally among the 5 regions
            described in subsection (b) for region-wide activities,
            including technical assistance and regional studies and
            coordination.

    SEC. 194. OFFICE OF CONSUMER ADVOCACY.

      (a) Office.--
              (1) Establishment.--There is an Office of Consumer Advocacy
            established within the Commission to serve as an advocate for
            the public interest.
              (2) Director.--The Office shall be headed by a Director to be
            appointed by the President, who is admitted to the Federal Bar,
            with experience in public utility proceedings, and by and with
            the advice and consent of the Senate.
              (3) Duties.--The Office may--
                      (A) represent, and appeal on behalf of, energy
                    customers on matters concerning rates or service of
                    public utilities and natural gas companies under the
                    jurisdiction of the Commission--
                              (i) at hearings of the Commission;
                              (ii) in judicial proceedings in the courts of
                            the United States; and
                              (iii) at hearings or proceedings of other
                            Federal regulatory agencies and commissions;
                      (B) monitor and review energy customer complaints and
                    grievances on matters concerning rates or service of
                    public utilities and natural gas companies under the
                    jurisdiction of the Commission;
                      (C) investigate independently, or within the context
                    of formal proceedings, the services provided by, the
                    rates charged by, and the valuation of the properties
                    of, public utilities and natural gas companies under
                    the jurisdiction of the Commission;
                      (D) develop means, such as public dissemination of
                    information, consultative services, and technical
                    assistance, to ensure, to the maximum extent
                    practicable, that the interests of energy consumers are
                    adequately represented in the course of any hearing or
                    proceeding described in subparagraph (A);
                      (E) collect data concerning rates or service of
                    public utilities and natural gas companies under the
                    jurisdiction of the Commission; and
                      (F) prepare and issue reports and recommendations.
              (4) Compensation and powers.--The Director may--
                      (A) employ and fix the compensation of such staff
                    personnel as is deemed necessary; and
                      (B) procure temporary and intermittent services as
                    needed.
              (5) Access to information.--Each department, agency, and
            instrumentality of the Federal Government is authorized and
            directed to furnish to the Director such reports and other
            information as he deems necessary to carry out his functions
            under this section.
      (b) Consumer Advocacy Advisory Committee.--
              (1) Establishment.--The Director shall establish an advisory
            committee to be known as Consumer Advocacy Advisory Committee
            (in this section referred to as the ``Advisory Committee'') to
            review rates, services, and disputes and to make
            recommendations to the Director.
              (2) Composition.--The Director shall appoint 5 members to the
            Advisory Committee including--
                      (A) 2 individuals representing State Utility Consumer
                    Advocates; and
                      (B) 1 individual, from a nongovernmental
                    organization, representing consumers.
              (3) Meetings.--The Advisory Committee shall meet at such
            frequency as may be required to carry out its duties.
              (4) Reports.--The Director shall provide for publication of
            recommendations of the Advisory Committee on the public website
            established for the Office.
              (5) Duration.--Notwithstanding any other provision of law,
            the Advisory Committee shall continue in operation during the
            period in which the Office exists.
              (6) Application of faca.--Except as otherwise specifically
            provided, the Advisory Committee shall be subject to the
            Federal Advisory Committee Act.
      (c) Definitions.--
              (1) Commission.--The term ``Commission'' means the Federal
            Energy Regulatory Commission.
              (2) Energy customer.--The term ``energy customer'' means a
            residential customer or a small commercial customer that
            receives products or services from a public utility or natural
            gas company under the jurisdiction of the Commission.
              (3) Natural gas company.--The term ``natural gas company''
            has the meaning given the term in section 2 of the Natural Gas
            Act (15 U.S.C. 717a), as modified by section 601(a) of the
            Natural Gas Policy Act of 1978 (15 U.S.C. 3431(a)).
              (4) Office.--The term ``Office'' means the Office of Consumer
            Advocacy established by subsection (a)(1).
              (5) Public utility.--The term ``public utility'' has the
            meaning given the term in section 201(e) of the Federal Power
            Act (16 U.S.C. 824(e)).
              (6) Small commercial customer.--The term ``small commercial
            customer'' means a commercial customer that has a peak demand
            of not more than 1,000 kilowatts per hour.
      (d) Authorization of Appropriations.--There are authorized such sums
    as necessary to carry out this section.
      (e) Savings Clause.--Nothing in this section affects the rights or
    obligations of State Utility Consumer Advocates.

                          TITLE II--ENERGY EFFICIENCY

                Subtitle A--Building Energy Efficiency Programs

    SEC. 201. GREATER ENERGY EFFICIENCY IN BUILDING CODES.

      Section 304 of the Energy Conservation and Production Act (42 U.S.C.
    6833) is amended to read as follows:

    ``SEC. 304. GREATER ENERGY EFFICIENCY IN BUILDING CODES.

      ``(a) Energy Efficiency Targets.--
              ``(1) In general.--Except as provided in paragraph (2) or
            (3), the national building code energy efficiency target for
            the national average percentage improvement of a building's
            energy performance when built to a code meeting the target
            shall be--
                      ``(A) effective on the date of enactment of the
                    American Clean Energy and Security Act of 2009, 30
                    percent reduction in energy use relative to a
                    comparable building constructed in compliance with the
                    baseline code;
                      ``(B) effective January 1, 2014, for residential
                    buildings, and January 1, 2015, for commercial
                    buildings, 50 percent reduction in energy use relative
                    to the baseline code; and
                      ``(C) effective January 1, 2017, for residential
                    buildings, and January 1, 2018, for commercial
                    buildings, and every 3 years thereafter, respectively,
                    through January 1, 2029, and January 1, 2030, 5 percent
                    additional reduction in energy use relative to the
                    baseline code.
              ``(2) Consensus-based codes.--If on any effective date
            specified in paragraph (1)(A), (B), or (C) a successor code to
            the baseline codes provides for greater reduction in energy use
            than is required under paragraph (1), the overall percentage
            reduction in energy use provided by that successor code shall
            be the national building code energy efficiency target.
              ``(3) Targets established by secretary.--The Secretary may by
            rule establish a national building code energy efficiency
            target for residential or commercial buildings achieving
            greater reductions in energy use than the targets prescribed in
            paragraph (1) or (2) if the Secretary determines that such
            greater reductions in energy use can be achieved with a code
            that is life cycle cost-justified and technically feasible. The
            Secretary may by rule establish a national building code energy
            efficiency target for residential or commercial buildings
            achieving a reduction in energy use that is greater than zero
            but less than the targets prescribed in paragraph (1) or (2) if
            the Secretary determines that such lesser target is the maximum
            reduction in energy use that can be achieved through a code
            that is life cycle cost-justified and technically feasible.
              ``(4) Additional reductions in energy use.--Effective on
            January 1, 2033, and once every 3 years thereafter, the
            Secretary shall determine, after notice and opportunity for
            comment, whether further energy efficiency building code
            improvements for residential or commercial buildings,
            respectively, are life cycle cost-justified and technically
            feasible, and shall establish updated national building code
            energy efficiency targets that meet such criteria.
              ``(5) Zero-net-energy buildings.--In setting targets under
            this subsection, the Secretary shall consider ways to support
            the deployment of distributed renewable energy technology, and
            shall seek to achieve the goal of zero-net-energy commercial
            buildings established in section 422 of the Energy Independence
            and Security Act of 2007 (42 U.S.C. 17082).
              ``(6) Baseline code.--For purposes of this section, the term
            `baseline code' means--
                      ``(A) for residential buildings, the 2006
                    International Energy Conservation Code (IECC) published
                    by the International Code Council; and
                      ``(B) for commercial buildings, the code published in
                    ASHRAE Standard 90.1-2004.
              ``(7) Consultation.--In establishing the targets required by
            this section, the Secretary shall consult with the Director of
            the National Institute of Standards and Technology.
      ``(b) National Energy Efficiency Building Codes.--
              ``(1) Requirement.--
                      ``(A) In general.--There shall be established
                    national energy efficiency building codes under this
                    subsection, for residential and commercial buildings,
                    sufficient to meet each of the national building code
                    energy efficiency targets established under subsection
                    (a), not later than the date that is one year after the
                    deadline for establishment of each such target.
                      ``(B) Existing code.--If the Secretary finds prior to
                    the date one year after the deadline for establishing a
                    target that one or more energy efficiency building
                    codes published by a recognized consensus-based code
                    development organization meet or exceed the established
                    target, the Secretary shall select the code that meets
                    the target with the highest efficiency in the most
                    cost-effective manner, and such code shall be the
                    national energy efficiency building code.
                      ``(C) Requirement to establish code.--If the
                    Secretary does not make a finding under subparagraph
                    (B), the national energy efficiency building code shall
                    be established by rule by the Secretary under paragraph
                    (2).
              ``(2) Establishment by secretary.--
                      ``(A) Procedure.--In order to establish a national
                    energy efficiency building code as required under
                    paragraph (1)(C), the Secretary shall--
                              ``(i) not later than six months prior to the
                            effective date for each target, review existing
                            and proposed codes published or under review by
                            recognized consensus-based code development
                            organizations;
                              ``(ii) determine the percentage of energy
                            efficiency improvements that are or would be
                            achieved in such published or proposed code
                            versions relative to the target;
                              ``(iii) propose improvements to such
                            published or proposed code versions sufficient
                            to meet or exceed the target; and
                              ``(iv) unless a finding is made under
                            paragraph (1)(B) with respect to a code
                            published by a recognized consensus-based code
                            development organization, adopt a code that
                            meets or exceeds the relevant national building
                            code energy efficiency target by not later than
                            one year after the effective date of such
                            target.
                      ``(B) Calculations.--Each code established by the
                    Secretary under this paragraph shall be set at the
                    maximum level the Secretary determines is life cycle
                    cost-justified and technically feasible, in accordance
                    with the following:
                              ``(i) Savings calculations.--Calculations of
                            energy savings shall take into account the
                            typical lifetimes of different products,
                            measures, and system configurations.
                              ``(ii) Cost-effectiveness calculations.--
                            Calculations of life cycle cost-effectiveness
                            shall be based on life cycle cost methods and
                            procedures under section 544 of the National
                            Energy Conservation Policy Act (42 U.S.C.
                            8254), but shall incorporate to the extent
                            feasible externalities such as impacts on
                            climate change and on peak energy demand that
                            are not already incorporated in assumed energy
                            costs.
                      ``(C) Considerations.--In developing a national
                    energy efficiency building code under this paragraph,
                    the Secretary shall consider--
                              ``(i) for residential codes--
                                      ``(I) residential building standards
                                    published or proposed by ASHRAE;
                                      ``(II) residential building codes
                                    published or proposed in the
                                    International Energy Conservation Code
                                    (IECC);
                                      ``(III) data from the Residential
                                    Energy Services Network (RESNET) on
                                    compliance measures utilized by
                                    consumers to qualify for the
                                    residential energy efficiency tax
                                    credits established under the Energy
                                    Policy Act of 2005;
                                      ``(IV) data and information from the
                                    Department of Energy's Building America
                                    Program;
                                      ``(V) data and information from the
                                    Energy Star New Homes program;
                                      ``(VI) data and information from the
                                    New Building Institute and similar
                                    organizations; and
                                      ``(VII) standards for practices and
                                    materials to achieve cool roofs in
                                    residential buildings, taking into
                                    consideration reduced air conditioning
                                    energy use as a function of cool roofs,
                                    the potential reduction in global
                                    warming from increased solar
                                    reflectance from buildings, and cool
                                    roofs criteria in State and local
                                    building codes and in national and
                                    local voluntary programs; and
                              ``(ii) for commercial codes--
                                      ``(I) commercial building standards
                                    proposed by ASHRAE;
                                      ``(II) commercial building codes
                                    proposed in the International Energy
                                    Conservation Code (IECC);
                                      ``(III) the Core Performance Criteria
                                    published by the New Buildings
                                    Institute;
                                      ``(IV) data and information developed
                                    by the Director of the Commercial High-
                                    Performance Green Building Office of
                                    the Department of Energy and any
                                    public-private partnerships established
                                    under that Office;
                                      ``(V) data and information from the
                                    Energy Star for Buildings program;
                                      ``(VI) data and information from the
                                    New Building Institute, RESNET, and
                                    similar organizations; and
                                      ``(VII) standards for practices and
                                    materials to achieve cool roofs in
                                    commercial buildings, taking into
                                    consideration reduced air conditioning
                                    energy use as a function of cool roofs,
                                    the potential reduction in global
                                    warming from increased solar
                                    reflectance from buildings, and cool
                                    roofs criteria in State and local
                                    building codes and in national and
                                    local voluntary programs.
                      ``(D) Consultation.--In establishing any national
                    energy efficiency building code required by this
                    section, the Secretary shall consult with the Director
                    of the National Institute of Standards and Technology.
              ``(3) Consensus standard assistance.--(A) To support the
            development of consensus standards that may provide the basis
            for national energy efficiency building codes, minimize
            duplication of effort, encourage progress through consensus,
            and facilitate the development of greater building efficiency,
            the Secretary shall provide assistance to recognized consensus-
            based code development organizations to develop, and where the
            relevant code has been adopted as the national code,
            disseminate consensus based energy efficiency building codes as
            provided in this paragraph.
              ``(B) Upon a finding by the Secretary that a code developed
            by such an organization meets a target established under
            subsection (a), the Secretary shall--
                      ``(i) send notice of the Secretary's finding to all
                    duly authorized or appointed State and local code
                    agencies; and
                      ``(ii) provide sufficient support to such an
                    organization to make the code available on the
                    Internet, or to accomplish distribution of such code to
                    all such State and local code agencies at no cost to
                    the State and local code agencies.
              ``(C) The Secretary may contract with such an organization
            and with other organizations with expertise on codes to provide
            training for State and local code officials and building
            inspectors in the implementation and enforcement of such code.
              ``(D) The Secretary may provide grants and other support to
            such an organization to--
                      ``(i) develop appropriate refinements to such code;
                    and
                      ``(ii) support analysis of options for improvements
                    in the code to meet the next scheduled target.
              ``(4) Code developed by secretary.--If the Secretary
            establishes a national energy efficiency building code under
            paragraph (2), the Secretary shall--
                      ``(A) to the extent that such code is based on a
                    prior code developed by a recognized consensus-based
                    code development organization, negotiate and provide
                    appropriate compensation to such organization for the
                    use of the code materials that remain in the code
                    established by the Secretary; and
                      ``(B) disseminate the national energy efficiency
                    building codes to State and local code officials, and
                    support training and provide guidance and technical
                    assistance to such officials as appropriate.
      ``(c) State Adoption of Energy Efficiency Building Codes.--
              ``(1) Requirement.--Not later than 1 year after a national
            energy efficiency building code for residential or commercial
            buildings is established or revised under subsection (b), each
            State--
                      ``(A) shall--
                              ``(i) review and update the provisions of its
                            building code regarding energy efficiency to
                            meet or exceed the target met in the new
                            national code, to achieve equivalent or greater
                            energy savings;
                              ``(ii) document, where local governments
                            establish building codes, that local
                            governments representing not less than 80
                            percent of the State's urban population have
                            adopted the new national code, or have adopted
                            local codes that meet or exceed the target met
                            in the new national code to achieve equivalent
                            or greater energy savings; or
                              ``(iii) adopt the new national code; and
                      ``(B) shall provide a certification to the Secretary
                    demonstrating that energy efficiency building code
                    provisions that apply throughout the State meet or
                    exceed the target met by the new national code, to
                    achieve equivalent or greater energy savings.
              ``(2) Confirmation.--
                      ``(A) Requirement.--Not later than 90 days after a
                    State certification is provided under paragraph (1)(B),
                    the Secretary shall determine whether the State's
                    energy efficiency building code provisions meet the
                    requirements of this subsection.
                      ``(B) Acceptance by secretary.--If the Secretary
                    determines under subparagraph (A) that the State's
                    energy efficiency building code or codes meet the
                    requirements of this subsection, the Secretary shall
                    accept the certification.
                      ``(C) Deficiency notice.--If the Secretary determines
                    under subparagraph (A) that the State's building code
                    or codes do not meet the requirements of this
                    subsection, the Secretary shall identify the deficiency
                    in meeting the national building code energy efficiency
                    target, and, to the extent possible, indicate areas
                    where further improvement in the State's code
                    provisions would allow the deficiency to be eliminated.
                      ``(D) Revision of code and recertification.--A State
                    may revise its code or codes and submit a
                    recertification under paragraph (1)(B) to the Secretary
                    at any time.
              ``(3) Compliant code.--For the purposes of meeting the target
            described in subsection (a)(1)(A) for residential buildings, a
            State that adopts the code represented in California's Title
            24-2009 by the date two years after the date of enactment of
            the American Clean Energy and Security Act of 2009 shall be
            considered to have met the requirements of this subsection for
            the applicable period.
      ``(d) Application of National Code to State and Local
    Jurisdictions.--
              ``(1) In general.--Upon the expiration of 1 year after a
            national energy efficiency building code is established under
            subsection (b), in any jurisdiction where the State has not had
            a certification relating to that code accepted by the Secretary
            under subsection (c)(2)(B), and the local government has not
            had a certification relating to that code accepted by the
            Secretary under subsection (e)(6)(B), the national code shall
            become the applicable energy efficiency building code for such
            jurisdiction.
              ``(2) State legislative adoption.--In a State in which the
            relevant building energy code is adopted legislatively, the
            deadline in paragraph (1) shall not be earlier than 1 year
            after the first day that the legislature meets following
            establishment of a national energy efficiency building code.
              ``(3) Violations.--Violations of this section shall be
            defined as follows:
                      ``(A) If the building is subject to the requirements
                    of a State energy efficiency building code with respect
                    to which a certification has been accepted by the
                    Secretary under subsection (c)(2)(B) or a local energy
                    efficiency building code with respect to which a
                    certification has been accepted by the Secretary
                    pursuant to subsection (e)(6)(B), a violation shall be
                    determined pursuant to the relevant provisions of the
                    State or local code.
                      ``(B) If the building is subject to the requirements
                    of a national energy efficiency building code adopted
                    under subsection (c)(1)(A)(i) or made applicable under
                    paragraph (1) of this subsection, a violation shall be
                    defined by the Secretary pursuant to subsection (g).
      ``(e) State Enforcement of Energy Efficiency Building Codes.--
              ``(1) In general.--Each State, or where applicable under
            State law each local government, shall implement and enforce
            applicable State or local codes with respect to which a
            certification was accepted by the Secretary under subsection
            (c)(2)(B) or paragraph (6)(B) of this subsection, or the
            national energy efficiency building codes, as provided in this
            subsection.
              ``(2) State certification.--Not later than 2 years after the
            date of a certification under subsection (c)(1) or the
            establishment of a national energy efficiency building code
            under subsection (b), each State shall certify that it has--
                      ``(A) achieved compliance with--
                              ``(i) State codes, or, as provided under
                            State law, local codes, with respect to which a
                            certification was accepted by the Secretary
                            under subsection (c)(2)(B); or
                              ``(ii) the national energy efficiency
                            building code, as applicable; or
                      ``(B) for any certification submitted within 7 years
                    after the date of enactment of the American Clean
                    Energy and Security Act of 2009, made significant
                    progress toward achieving such compliance.
              ``(3) Achieving compliance.--A State shall be considered to
            achieve compliance with a code described in paragraph (2)(A) if
            at least 90 percent of new and substantially renovated building
            space in that State in the preceding year upon inspection meets
            the requirements of the code. A certification under paragraph
            (2) shall include documentation of the rate of compliance based
            on--
                      ``(A) independent inspections of a random sample of
                    the new and substantially renovated buildings covered
                    by the code in the preceding year; or
                      ``(B) an alternative method that yields an accurate
                    measure of compliance as determined by the Secretary.
              ``(4) Significant progress.--A State shall be considered to
            have made significant progress toward achieving compliance with
            a code described in paragraph (2)(A) if--
                      ``(A) the State has developed a plan, including for
                    hiring enforcement staff, providing training, providing
                    manuals and checklists, and instituting enforcement
                    programs, designed to achieve full compliance within 5
                    years after the date of the adoption of the code;
                      ``(B) the State is taking significant, timely, and
                    measurable action to implement that plan;
                      ``(C) the State has not reduced its expenditures for
                    code enforcement; and
                      ``(D) at least 50 percent of new and substantially
                    renovated building space in the State in the preceding
                    year upon inspection meets the requirements of the
                    code.
              ``(5) Secretary's determination.--Not later than 90 days
            after a State certification under paragraph (2), the Secretary
            shall determine whether the State has demonstrated that it has
            complied with the requirements of this subsection, including
            accurate measurement of compliance, or that it has made
            significant progress toward compliance. If such determination
            is positive, the Secretary shall accept the certification. If
            the determination is negative, the Secretary shall identify the
            areas of deficiency.
              ``(6) Out of compliance.--
                      ``(A) In general.--Any State for which the Secretary
                    has not accepted a certification under paragraph (5) by
                    a deadline established under this subsection is out of
                    compliance with this section.
                      ``(B) Local compliance.--In any State that is out of
                    compliance with this section as provided in
                    subparagraph (A), a local government may be in
                    compliance with this section by meeting all
                    certification requirements applicable to the State.
                      ``(C) Noncompliance.--Any State that is not in
                    compliance with this section, as provided in
                    subparagraph (A), shall, until the State regains such
                    compliance, be ineligible to receive--
                              ``(i) emission allowances pursuant to
                            subsection (h)(1);
                              ``(ii) Federal funding in excess of that
                            State's share (calculated according to the
                            allocation formula in section 363 of the Energy
                            Policy and Conservation Act (42 U.S.C. 6323))
                            of $125,000,000 each year; and
                              ``(iii) for--
                                      ``(I) the first year for which the
                                    State is out of compliance, 25 percent
                                    of any additional funding or other
                                    items of monetary value otherwise
                                    provided under the American Clean
                                    Energy and Security Act of 2009;
                                      ``(II) the second year for which the
                                    State is out of compliance, 50 percent
                                    of any additional funding or other
                                    items of monetary value otherwise
                                    provided under the American Clean
                                    Energy and Security Act of 2009;
                                      ``(III) the third year for which the
                                    State is out of compliance, 75 percent
                                    of any additional funding or other
                                    items of monetary value otherwise
                                    provided under the American Clean
                                    Energy and Security Act of 2009; and
                                      ``(IV) the fourth and subsequent
                                    years for which the State is out of
                                    compliance, 100 percent of any
                                    additional funding or other items of
                                    monetary value otherwise provided under
                                    the American Clean Energy and Security
                                    Act of 2009.
      ``(f) Federal Enforcement.--Where a State fails and local governments
    in that State also fail to enforce the applicable State or national
    energy efficiency building codes, the Secretary shall enforce such
    codes, as follows:
              ``(1) The Secretary shall establish, by rule, within 2 years
            after the date of enactment of the American Clean Energy and
            Security Act of 2009, an energy efficiency building code
            enforcement capability.
              ``(2) Such enforcement capability shall be designed to
            achieve 90 percent compliance with such code in any State
            within 1 year after the date of the Secretary's determination
            that such State is out of compliance with this section.
              ``(3) The Secretary may set and collect reasonable inspection
            fees to cover the costs of inspections required for such
            enforcement. Revenue from fees collected shall be available to
            the Secretary to carry out the requirements of this section
            upon appropriation.
      ``(g) Enforcement Procedures.--The Secretary shall propose and, not
    later than three years after the date of enactment of the American
    Clean Energy and Security Act of 2009, shall determine and adopt by
    rule what shall constitute violations of the energy efficiency building
    codes to be enforced pursuant to this section, and the penalties that
    shall apply to violators. To the extent that the Secretary determines
    that the authority to adopt and impose such violations and penalties by
    rule requires further statutory authority, the Secretary shall report
    such determination to Congress as soon as such determination is made,
    but not later than one year after the enactment of the American Clean
    Energy and Security Act of 2009.
      ``(h) Federal Support.--
              ``(1) Allowance allocation for state compliance.--For each
            vintage year from 2012 through 2050, the Administrator shall
            distribute allowances allocated pursuant to section 782(g)(2)
            of the Clean Air Act to the SEED Account for each State that
            the Secretary identifies as a State from which he has accepted
            the State's certification under subsection (e)(5) for
            compliance with the then current national energy efficiency
            building codes. Such allowances shall be distributed according
            to a formula established by the Secretary as follows:
                      ``(A) One-fifth in an equal amount to each of the 50
                    States and United States territories.
                      ``(B) Two-fifths as a function of the relative energy
                    use in all buildings in each State in the most recent
                    year for which data is available.
                      ``(C) Two-fifths based on the number of building
                    construction starts recorded in each State, the number
                    of new building permits applied for in each State, or
                    other relevant available data indicating building
                    activity in each State, in the judgment of the
                    Secretary, for the year prior to the year of the
                    distribution.
              ``(2) Allowance allocation to local governments.--In the
            instance that the Secretary certifies that one or more local
            governments are in compliance with this section pursuant to
            subsection (e)(6)(B), the Administrator shall provide to each
            such local government the portion of the emission allowances
            that would have been provided to that State as a function of
            the population of that locality as a proportion of the
            population of that State as a whole.
              ``(3) Unallocated allowances.--To the extent that allowances
            are not provided to State or local governments for lack of
            certification in any year, those allowances shall be added to
            the amount provided to those States and local governments that
            are certified as eligible in that year.
              ``(4) Use of allowances.--Each State or each local government
            shall use such emission allowances as it receives pursuant to
            this section exclusively for the purposes of this section,
            including covering a reasonable portion of the costs of the
            development, adoption, implementation, and enforcement of a
            State or local energy efficiency building code with respect to
            which a certification is accepted by the Secretary under
            subsection (c)(2)(B) or subsection (e)(6)(B), or the national
            energy efficiency building code. In a State where local
            governments provide building code enforcement, a minimum of 50
            percent of the allowance value received pursuant to this
            section shall be distributed to local governments as a function
            of the relative populations of such localities.
      ``(i) Authorization of Appropriations.--There are authorized to be
    appropriated to the Secretary of Energy $100,000,000 for each of fiscal
    years 2010 through 2020 and such sums thereafter as may be necessary to
    support the purposes of this section.
      ``(j) Annual Reports by Secretary.--The Secretary shall annually
    submit to Congress, and publish in the Federal Register, a report on--
              ``(1) the status of national building energy efficiency
            codes;
              ``(2) the status of energy efficiency building code adoption
            and compliance in the States;
              ``(3) the implementation of this section; and
              ``(4) impacts of past action under this section, and
            potential impacts of further action, on lifetime energy use by
            buildings, including resulting energy and cost savings.''.

    SEC. 202. BUILDING RETROFIT PROGRAM.

      (a) Definitions.--For purposes of this section:
              (1) Nonresidential building.--The term ``nonresidential
            building'' means a building with a primary use or purpose other
            than residential housing, including commercial offices,
            schools, academic and other public and private institutions,
            nonprofit organizations, hospitals, hotels, and houses of
            worship. Such buildings shall include mixed-use properties used
            for both residential and nonresidential purposes in which more
            than half of building floor space is nonresidential.
              (2) Performance-based building retrofit program.--The term
            ``performance-based building retrofit program'' means a program
            that determines building energy efficiency success based on
            actual measured savings after a retrofit is complete, as
            evidenced by energy invoices or evaluation protocols.
              (3) Prescriptive building retrofit program.--The term
            ``prescriptive building retrofit program'' means a program that
            projects building retrofit energy efficiency success based on
            the known effectiveness of measures prescribed to be included
            in a retrofit.
              (4) Recommissioning; retrocommissioning.--The terms
            ``recommissioning'' and ``retrocommissioning'' have the meaning
            given those terms in section 543(f)(1) of the National Energy
            Conservation Policy Act (42 U.S.C. 8253(f)(1)).
              (5) Residential building.--The term ``residential building''
            means a building whose primary use is residential. Such
            buildings shall include single-family homes (both attached and
            detached), owner-occupied units in larger buildings with their
            own dedicated space-conditioning systems, and buildings used
            for both residential and nonresidential purposes in which more
            than half of building floor space is residential.
              (6) State energy program.--The term ``State Energy Program''
            means the program under part D of title III of the Energy
            Policy and Conservation Act (42 U.S.C. 6321 et seq.).
      (b) Establishment.--The Administrator shall develop and implement, in
    consultation with the Secretary of Energy, standards for a national
    energy and environmental building retrofit policy for single-family and
    multifamily residences. The Administrator shall develop and implement,
    in consultation with the Secretary of Energy and the Director of
    Commercial High-Performance Green Buildings, standards for a national
    energy and environmental building retrofit policy for nonresidential
    buildings. The programs to implement the residential and nonresidential
    policies based on the standards developed under this section shall
    together be known as the Retrofit for Energy and Environmental
    Performance (REEP) program.
      (c) Purpose.--The purpose of the REEP program is to facilitate the
    retrofitting of existing buildings across the United States to achieve
    maximum cost-effective energy efficiency improvements and significant
    improvements in water use and other environmental attributes.
      (d) Federal Administration.--
              (1) Existing programs.-- In creating and operating the REEP
            program--
                      (A) the Administrator shall make appropriate use of
                    existing programs, including the Energy Star program
                    and in particular the Environmental Protection Agency
                    Energy Star for Buildings program; and
                      (B) the Secretary of Energy shall make appropriate
                    use of existing programs, including delegating
                    authority to the Director of Commercial High-
                    Performance Green Buildings appointed under section 421
                    of the Energy Independence and Security Act of 2007 (42
                    U.S.C. 17081), who shall designate and provide funding
                    to support a high-performance green building
                    partnership consortium pursuant to subsection (f) of
                    such section to support efforts under this section.
              (2) Consultation and coordination.--The Administrator and the
            Secretary of Energy shall consult with and coordinate with the
            Secretary of Housing and Urban Development in carrying out the
            REEP program.
              (3) Assistance.--The Administrator and the Secretary of
            Energy shall provide consultation and assistance to State and
            local agencies for the establishment of revolving loan funds,
            loan guarantees, or other forms of financial assistance under
            this section.
      (e) State and Local Administration.--
              (1) Designation and delegation.--A State may designate one or
            more agencies or entities, including those regulated by the
            State, to carry out the purposes of this section, but shall
            designate one entity or individual as the principal point of
            contact for the Administrator regarding the REEP Program. The
            designated State agency, agencies, or entities may delegate
            performance of appropriate elements of the REEP program, upon
            their request and subject to State law, to counties,
            municipalities, appropriate public agencies, and other
            divisions of local government, as well as to entities regulated
            by the State. In making any such designation or delegation, a
            State shall give priority to entities that administer existing
            comprehensive retrofit programs, including those under the
            supervision of State utility regulators. States shall maintain
            responsibility for meeting the standards and requirements of
            the REEP program. In any State that elects not to administer
            the REEP program, a unit of local government may propose to do
            so within its jurisdiction, and if the Administrator finds that
            such local government is capable of administering the program,
            the Administrator may provide allowances to that local
            government, prorated according to the population of the local
            jurisdiction relative to the population of the State, for
            purposes of the REEP program.
              (2) Employment.--States and local government entities may
            administer a REEP program in a manner that authorizes public or
            regulated investor-owned utilities, building auditors and
            inspectors, contractors, nonprofit organizations, for-profit
            companies, and other entities to perform audits and retrofit
            services under this section. A State may provide incentives for
            retrofits without direct participation by the State or its
            agents, so long as the resulting savings are measured and
            verified. A State or local administrator of a REEP program
            shall seek to ensure that sufficient qualified entities are
            available to support retrofit activities so that building
            owners have a competitive choice among qualified auditors,
            raters, contractors, and providers of services related to
            retrofits. Nothing in this section is intended to preclude or
            preempt the right of a building owner to choose the specific
            providers of retrofit services to engage for a retrofit project
            in that owner's building.
              (3) Equal incentives for equal improvement.--In general, the
            States should strive to offer the same levels of incentives for
            retrofits that meet the same efficiency improvement goals,
            regardless of whether the State, its agency or entity, or the
            building owner has conducted the retrofit achieving the
            improvement, provided the improvement is measured and verified.
      (f) Elements of REEP Program.--The Administrator, in consultation
    with the Secretary of Energy, shall establish goals, guidelines,
    practices, and standards for accomplishing the purpose stated in
    subsection (c), and shall annually review and, as appropriate, revise
    such goals, guidelines, practices, and standards. The program under
    this section shall include the following:
              (1) Residential Energy Services Network (RESNET) or Building
            Performance Institute (BPI) analyst certification of
            residential building energy and environment auditors,
            inspectors, and raters, or an equivalent certification system
            as determined by the Administrator.
              (2) BPI certification or licensing by States of residential
            building energy and environmental retrofit contractors, or an
            equivalent certification or licensing system as determined by
            the Administrator.
              (3) Provision of BPI, RESNET, or other appropriate
            information on equipment and procedures, as determined by the
            Administrator, that contractors can use to test the energy and
            environmental efficiency of buildings effectively (such as
            infrared photography and pressurized testing, and tests for
            water use and indoor air quality).
              (4) Provision of clear and effective materials to describe
            the testing and retrofit processes for typical buildings.
              (5) Guidelines for offering and managing prescriptive
            building retrofit programs and performance-based building
            retrofit programs for residential and nonresidential buildings.
              (6) Guidelines for applying recommissioning and
            retrocommissioning principles to improve a building's
            operations and maintenance procedures.
              (7) A requirement that building retrofits conducted pursuant
            to a REEP program utilize, especially in all air-conditioned
            buildings, roofing materials with high solar energy
            reflectance, unless inappropriate due to green roof management,
            solar energy production, or for other reasons identified by the
            Administrator, in order to reduce energy consumption within the
            building, increase the albedo of the building's roof, and
            decrease the heat island effect in the area of the building.
              (8) Determination of energy savings in a performance-based
            building retrofit program through--
                      (A) for residential buildings, comparison of before
                    and after retrofit scores on the Home Energy Rating
                    System (HERS) Index, where the final score is produced
                    by an objective third party;
                      (B) for nonresidential buildings, Environmental
                    Protection Agency Portfolio Manager benchmarks; or
                      (C) for either residential or nonresidential
                    buildings, use of an Administrator-approved simulation
                    program by a contractor with the appropriate
                    certification, subject to appropriate software
                    standards and verification of at least 15 percent of
                    all work done, or such other percentage as the
                    Administrator may determine.
              (9) Guidelines for utilizing the Energy Star Portfolio
            Manager, the Home Energy Rating System (HERS) rating system,
            Home Performance with Energy Star program approvals, and any
            other tools associated with the retrofit program.
              (10) Requirements and guidelines for post-retrofit inspection
            and confirmation of work and energy savings.
              (11) Detailed descriptions of funding options for the benefit
            of State and local governments, along with model forms,
            accounting aids, agreements, and guides to best practices.
              (12) Guidance on opportunities for--
                      (A) rating or certifying retrofitted buildings as
                    Energy Star buildings, or as green buildings under a
                    recognized green building rating system;
                      (B) assigning Home Energy Rating System (HERS) or
                    similar ratings; and
                      (C) completing any applicable building performance
                    labels.
              (13) Sample materials for publicizing the program to building
            owners, including public service announcements and
            advertisements.
              (14) Processes for tracking the numbers and locations of
            buildings retrofitted under the REEP program, with information
            on projected and actual savings of energy and its value over
            time.
      (g) Requirements.--As a condition of receiving allowances for the
    REEP program pursuant to this Act, a State or qualifying local
    government shall--
              (1) adopt the standards for training, certification of
            contractors, certification of buildings, and post-retrofit
            inspection as developed by the Administrator for residential
            and nonresidential buildings, respectively, except as necessary
            to match local conditions, needs, efficiency opportunities, or
            other local factors, or to accord with State laws or
            regulations, and then only after the Administrator approves
            such a variance; and
              (2) establish fiscal controls and accounting procedures
            (which conform to generally accepted government accounting
            principles) sufficient to ensure proper accounting during
            appropriate accounting periods for payments received and
            disbursements, and for fund balances.
    The Administrator shall conduct or require each State to have such
    independent financial audits of REEP-related funding as the
    Administrator considers necessary or appropriate to carry out the
    purposes of this section.
      (h) Options to Support REEP Program.--The emission allowances
    provided pursuant to this Act to the States' SEED Accounts shall
    support the implementation through State REEP programs of alternate
    means of creating incentives for, or reducing financial barriers to,
    improved energy and environmental performance in buildings, consistent
    with this section, including--
              (1) implementing prescriptive building retrofit programs and
            performance-based building retrofit programs;
              (2) providing credit enhancement, interest rate subsidies,
            loan guarantees, or other credit support;
              (3) providing initial capital for public revolving fund
            financing of retrofits, with repayments by beneficiary building
            owners over time through their tax payments, calibrated to
            create net positive cash flow to the building owner;
              (4) providing funds to support utility-operated retrofit
            programs with repayments over time through utility rates,
            calibrated to create net positive cash flow to the building
            owner, and transferable from one building owner to the next
            with the building's utility services;
              (5) providing funds to local government programs to provide
            REEP services and financial assistance; and
              (6) other means proposed by State and local agencies, subject
            to the approval of the Administrator.
      (i) Support for Program.--
              (1) Use of allowances.--Direct Federal support for the REEP
            program is provided through the emission allowances allocated
            to the States' SEED Accounts pursuant to section 132 of this
            Act. To the extent that a State provides allowances to local
            governments within the State to implement elements of the REEP
            Program, that shall be deemed a distribution of such allowances
            to units of local government pursuant to subsection (c)(1) of
            that section.
              (2) Initial award limits.--Except as provided in paragraph
            (3), State and local REEP programs may make per-building direct
            expenditures for retrofit improvements, or their equivalent in
            indirect or other forms of financial support, from funds
            derived from the sale of allowances received directly from the
            Administrator in amounts not to exceed the following:
                      (A) Residential building program.--
                              (i) Awards.--For residential buildings--
                                      (I) support for a free or low-cost
                                    detailed building energy audit that
                                    prescribes, as part of a energy-
                                    reducing measures sufficient to achieve
                                    at least a 20 percent reduction in
                                    energy use, by providing an incentive
                                    equal to the documented cost of such
                                    audit, but not more than $200, in
                                    addition to any earned by achieving a
                                    20 percent or greater efficiency
                                    improvement;
                                      (II) a total of $1,000 for a
                                    combination of measures, prescribed in
                                    an audit conducted under subclause (I),
                                    designed to reduce energy consumption
                                    by more than 10 percent, and $2,000 for
                                    a combination of measures prescribed in
                                    such an audit, designed to reduce
                                    energy consumption by more than 20
                                    percent;
                                      (III) $3,000 for demonstrated savings
                                    of 20 percent, pursuant to a
                                    performance-based building retrofit
                                    program; and
                                      (IV) $1,000 for each additional 5
                                    percentage points of energy savings
                                    achieved beyond savings for which
                                    funding is provided under subclause
                                    (II) or (III).
                            Funding shall not be provided under clauses
                            (II) and (III) for the same energy savings.
                              (ii) Maximum percentage.--Awards under clause
                            (i) shall not exceed 50 percent of retrofit
                            costs for each building. For buildings with
                            multiple residential units, awards under clause
                            (i) shall not be greater than 50 percent of the
                            total cost of retrofitting the building,
                            prorated among individual residential units on
                            the basis of relative costs of the retrofit.
                              (iii) Additional awards.--Additional awards
                            may be provided for purposes of increasing
                            energy efficiency, for buildings achieving at
                            least 20 percent energy savings using funding
                            provided under clause (i), in the form of
                            grants of not more than $600 for measures
                            projected or measured (using an appropriate
                            method approved by the Administrator) to
                            achieve at least 35 percent potable water
                            savings through equipment or systems with an
                            estimated service life of not less than seven
                            years, and not more than an additional $20 may
                            be provided for each additional one percent of
                            such savings, up to a maximum total grant of
                            $1,200.
                      (B) Nonresidential building program.--
                              (i) Awards.--For nonresidential buildings--
                                      (I) support for a free or low-cost
                                    detailed building energy audit that
                                    prescribes, as part of a energy-
                                    reducing measures sufficient to achieve
                                    at least a 20 percent reduction in
                                    energy use, by providing an incentive
                                    equal to the documented cost of such
                                    audit, but not more than $500, in
                                    addition to any award earned by
                                    achieving a 20 percent or greater
                                    efficiency improvement;
                                      (II) $0.15 per square foot of
                                    retrofit area for demonstrated energy
                                    use reductions from 20 percent to 30
                                    percent;
                                      (III) $0.75 per square foot for
                                    demonstrated energy use reductions from
                                    30 percent to 40 percent;
                                      (IV) $1.60 per square foot for
                                    demonstrated energy use reductions from
                                    40 percent to 50 percent; and
                                      (V) $2.50 per square foot for
                                    demonstrated energy use reductions
                                    exceeding 50 percent.
                              (ii) Maximum percentage.--Amounts provided
                            under subclauses (II) through (V) of clause (i)
                            combined shall not exceed 50 percent of the
                            total retrofit cost of a building. In
                            nonresidential buildings with multiple units,
                            such awards shall be prorated among individual
                            units on the basis of relative costs of the
                            retrofit.
                              (iii) Additional awards.--Additional awards
                            may be provided, for buildings achieving at
                            least 20 percent energy savings using funding
                            provided under clause (i), as follows:
                                      (I) Water.--For purposes of
                                    increasing energy efficiency, grants
                                    may be made for whole building potable
                                    water use reduction (using an
                                    appropriate method approved by the
                                    Secretary of Energy) for up to 50
                                    percent of the total retrofit cost,
                                    including amounts up to--
                                              (aa) $24.00 per thousand
                                            gallons per year of potable
                                            water savings of 40 percent or
                                            more;
                                              (bb) $27.00 per thousand
                                            gallons per year of potable
                                            water savings of 50 percent or
                                            more; and
                                              (cc) $30.00 per thousand
                                            gallons per year of potable
                                            water savings of 60 percent or
                                            more.
                                      (II) Environmental improvements.--
                                    Additional awards of up to $1,000 may
                                    be granted for the inclusion of other
                                    environmental attributes that the
                                    Secretary, in consultation with the
                                    Administrator, identifies as
                                    contributing to energy efficiency. Such
                                    attributes may include, but are not
                                    limited to waste diversion and the use
                                    of environmentally preferable materials
                                    (including salvaged, renewable, or
                                    recycled materials, and materials with
                                    no or low-VOC content). The
                                    Administrator may recommend that States
                                    develop such standards as are necessary
                                    to account for local or regional
                                    conditions that may affect the
                                    feasibility or availability of
                                    identified resources and attributes.
                              (iv) Indoor air quality minimum.--
                            Nonresidential buildings receiving incentives
                            under this section must satisfy at a minimum
                            the most recent version of ASHRAE Standard 62.1
                            for ventilation, or the equivalent as
                            determined by the Administrator. A State may
                            issue a waiver from this requirement to a
                            building project on a showing that such
                            compliance is infeasible due to the physical
                            constraints of the building's existing
                            ventilation system, or such other limitations
                            as may be specified by the Administrator.
                      (C) Historic buildings.--Notwithstanding
                    subparagraphs (A) and (B), a building in or eligible
                    for the National Register of Historic Places shall be
                    eligible for awards under this paragraph in amounts up
                    to 120 percent of the amounts set forth in
                    subparagraphs (A) and (B).
                      (D) Supplemental support.--State and local
                    governments may supplement the per-building
                    expenditures under this paragraph with funding from
                    other sources.
              (3) Adjustment.--The Administrator may adjust the specific
            dollar limits funded by the sale of allowances pursuant to
            paragraph (2) in years subsequent to the second year after the
            date of enactment of this Act, and every 2 years thereafter, as
            the Administrator determines necessary to achieve optimum cost-
            effectiveness and to maximize incentives to achieve energy
            efficiency within the total building award amounts provided in
            that paragraph, and shall publish and hold constant such
            revised limits for at least 2 years.
      (j) Report to Congress.--The Administrator shall conduct an annual
    assessment of the achievements of the REEP program in each State, shall
    prepare an annual report of such achievements and any recommendations
    for program modifications, and shall provide such report to Congress at
    the end of each fiscal year during which funding or other resources
    were made available to the States for the REEP Program.
      (k) Other Sources of Federal Support.--
              (1) Additional state energy program funds.--Any Federal
            funding provided to a State Energy Program that is not required
            to be expended for a different federally designated purpose may
            be used to support a REEP program.
              (2) Program administration.--State Energy Offices or
            designated State agencies may expend up to 10 percent of
            available allowance value provided under this section for
            program administration.
              (3) Authorization of appropriations.--There are authorized to
            be appropriated for the purposes of this section, for each of
            fiscal years 2010, 2011, 2012, and 2013--
                      (A) $50,000,000 to the Administrator for program
                    administration costs; and
                      (B) $20,000,000 to the Secretary of Energy for
                    program administration costs.

    SEC. 203. ENERGY EFFICIENT MANUFACTURED HOMES.

      (a) Definitions.--In this section:
              (1) Manufactured home.--The term ``manufactured home'' has
            the meaning given such term in section 603 of the National
            Manufactured Housing Construction and Safety Standards Act of
            1974 (42 U.S.C. 5402).
              (2) Energy star qualified manufactured home.--The term
            ``Energy Star qualified manufactured home'' means a
            manufactured home that has been designed, produced, and
            installed in accordance with Energy Star's guidelines by an
            Energy Star certified plant.
      (b) Purpose.--The purpose of this section is to assist low-income
    households residing in manufactured homes constructed prior to 1976 to
    save energy and energy expenditures by providing support toward the
    purchase of new Energy Star qualified manufactured homes.
      (c) State Implementation of Program.--
              (1) Manufactured home replacement program.--Any State may
            provide to the owner of a manufactured home constructed prior
            to 1976 a rebate to use toward the purchase of a new Energy
            Star qualified manufactured home pursuant to this section.
              (2) Use of allowances.--Direct Federal support for the
            program established in this section is provided through the
            emission allowances allocated to the States' SEED Accounts
            pursuant to section 132 of this Act. To the extent that a State
            provides allowances to local governments within the State to
            implement this program, that shall be deemed a distribution of
            such allowances to units of local government pursuant to
            subsection (c)(1) of that section.
              (3) Rebates.--
                      (A) Primary residence requirement.--A rebate
                    described under paragraph (1) may only be made to an
                    owner of a manufactured home constructed prior to 1976
                    that is used on a year-round basis as a primary
                    residence.
                      (B) Dismantling and replacement.--A rebate described
                    under paragraph (1) may be made only if the
                    manufactured home constructed prior to 1976 will be--
                              (i) rendered unusable for human habitation
                            (including appropriate recycling); and
                              (ii) replaced, in the same general location,
                            as determined by the applicable State agency,
                            with an Energy Star qualified manufactured
                            home.
                      (C) Single rebate.--A rebate described under
                    paragraph (1) may not be provided to any owner of a
                    manufactured home constructed prior to 1976 that was or
                    is a member of a household for which any other member
                    of the household was provided a rebate pursuant to this
                    section.
                      (D) Eligible households.--To be eligible to receive a
                    rebate described under paragraph (1), an owner of a
                    manufactured home constructed prior to 1976 shall
                    demonstrate to the applicable State agency that the
                    total income of all members the owner's household does
                    not exceed 200 percent of the Federal poverty level for
                    income in the applicable area.
                      (E) Advance availability.--A rebate may be provided
                    under this section in a manner to facilitate the
                    purchase of a new Energy Star qualified manufactured
                    home.
              (4) Rebate limitation.--Rebates provided by States under this
            section shall not exceed $7,500 per manufactured home from any
            value derived from the use of emission allowances provided to
            the State pursuant to section 132.
              (5) Use of state funds.--A State providing rebates under this
            section may supplement the amount of such rebates under
            paragraph (4) by any additional amount is from State funds and
            other sources, including private donations or grants from
            charitable organizations.
              (6) Coordination with similar programs.--
                      (A) State programs.--A State conducting an existing
                    program that has the purpose of replacing manufactured
                    homes constructed prior to 1976 with Energy Star
                    qualified manufactured homes, may use allowance value
                    provided under section 782 of the Clean Air Act to
                    support such a program, provided such funding does not
                    exceed the rebate limitation amount under paragraph
                    (4).
                      (B) Federal programs.--The Secretary of Energy shall
                    coordinate with and seek to achieve the purpose of this
                    section through similar Federal programs including--
                              (i) the Weatherization Assistance Program
                            under part A of title IV of the Energy
                            Conservation and Production Act (42 U.S.C. 6861
                            et seq.); and
                              (ii) the program under part D of title III of
                            the Energy Policy and Conservation Act (42
                            U.S.C. 6321 et seq.).
                      (C) Coordination with other state agencies.--A State
                    agency using allowance value to administer the program
                    under this section may coordinate its efforts, and
                    share funds for administration, with other State
                    agencies involved in low-income housing programs.
              (7) Administrative expenses.--A State using allowance value
            under this section may expend not more than 10 percent of such
            value for administrative expenses related to this program.

    SEC. 204. BUILDING ENERGY PERFORMANCE LABELING PROGRAM.

      (a) Establishment.--
              (1) Purpose.--The Administrator shall establish a building
            energy performance labeling program with broad applicability to
            the residential and commercial markets to enable and encourage
            knowledge about building energy performance by owners and
            occupants and to inform efforts to reduce energy consumption
            nationwide.
              (2) Components.--In developing such program, the
            Administrator shall--
                      (A) consider existing programs, such as Environmental
                    Protection Agency's Energy Star program, the Home
                    Energy Rating System (HERS) Index, and programs at the
                    Department of Energy;
                      (B) support the development of model performance
                    labels for residential and commercial buildings; and
                      (C) utilize incentives and other means to spur use of
                    energy performance labeling of public and private
                    sector buildings nationwide.
      (b) Data Assessment for Building Energy Performance.--
              (1) Initial report.--Not later than 90 days after the date of
            enactment of this Act, the Administrator shall provide to
            Congress, as well as to the Secretary of Energy and the Office
            of Management and Budget, a report identifying--
                      (A) all principal building types for which
                    statistically significant energy performance data
                    exists to serve as the basis of measurement protocols
                    and labeling requirements for achieved building energy
                    performance; and
                      (B) those building types for which additional data
                    are required to enable the development of such
                    protocols and requirements.
              (2) Additional reports.--Additional updated reports shall be
            provided under this subsection as often as The Administrator
            considers practicable, but not less than every 2 years.
      (c) Building Data Acquisition.--
              (1) Resource requirements.--For all principal building types
            identified under subsection (b), the Secretary of Energy, not
            later than 90 days after a report by the Administrator under
            subsection (b), shall provide to Congress, the Administrator,
            and the Office of Management and Budget a statement of
            additional resources needed, if any, to fully develop the
            relevant data, as well as the anticipated timeline for data
            development.
              (2) Consultation.--The Secretary of Energy shall consult with
            the Administrator concerning the Administrator's ability to use
            data series for these additional building types to support the
            achieved performance component in the labeling program.
              (3) Improvements to building energy consumption databases.--
                      (A) Commercial database.--The Secretary of Energy
                    shall support improvements to the Commercial Buildings
                    Energy Consumption Survey (CBECS) as authorized by
                    section 205(k) of the Department of Energy Organization
                    Act (42 U.S.C. 7135(k))--
                              (i) to enable complete and robust data for
                            the actual energy performance of principal
                            building types currently covered by survey;
                              (ii) to cover additional building types as
                            identified by the Administrator under
                            subsection (b)(1)(B), to enable the development
                            of achieved performance measurement protocols
                            are developed for at least 90 percent of all
                            major commercial building types within 5 years
                            after the date of enactment of this Act; and
                              (iii) to include third-party audits of random
                            data samplings to ensure the quality and
                            accuracy of survey information.
                      (B) Residential databases.--The Administrator, in
                    consultation with the Energy Information Administration
                    and the Secretary of Energy, shall support improvements
                    to the Residential Energy Consumption Survey (RECS) as
                    authorized by section 205(k) of the Department of
                    Energy Organization Act (42 U.S.C. 7135(k)), or such
                    other residential energy performance databases as the
                    Administrator considers appropriate, to aid the
                    development of achieved performance measurement
                    protocols for residential building energy use for at
                    least 90 percent of the residential market within 5
                    years after the date of enactment of this Act.
                      (C) Consultation.--The Secretary of Energy and the
                    Administrator shall consult with public, private, and
                    nonprofit sector representatives from the building
                    industry and real estate industry to assist in the
                    evaluation and improvement of building energy
                    performance databases and labeling programs.
      (d) Identification of Measurement Protocols for Achieved
    Performance.--
              (1) Proposed protocols and requirements.--At the earliest
            practicable date, but not later than 1 year after identifying a
            building type under subsection (b)(1)(A), the Administrator
            shall propose a measurement protocol for that building type and
            a requirement detailing how to use that protocol in completing
            applicable commercial or residential performance labels created
            pursuant to this section.
              (2) Final rule.--After providing for notice and comment, the
            Administrator shall publish a final rule containing a
            measurement protocol and the corresponding requirements for
            applying that protocol. Such a rule--
                      (A) shall define the minimum period for measurement
                    of energy use by buildings of that type and other
                    details for determining achieved performance, to
                    include leased buildings or parts thereof;
                      (B) shall identify necessary data collection and
                    record retention requirements; and
                      (C) may specify transition rules and exemptions for
                    classes of buildings within the building type.
      (e) Procedures for Evaluating Designed Performance.--The
    Administrator shall develop protocols for evaluating the designed
    performance of individual building types. The Administrator may conduct
    such feasibility studies and demonstration projects as are necessary to
    evaluate the sufficiency of proposed protocols for designed
    performance.
      (f) Creation of Building Energy Performance Labeling Program.--
              (1) Model label.--Not later than 1 year after the date of
            enactment of this Act, the Administrator shall propose a model
            building energy label that provides a format--
                      (A) to display achieved performance and designed
                    performance data;
                      (B) that may be tailored for residential and
                    commercial buildings, and for single-occupancy and
                    multitenanted buildings; and
                      (C) to display other appropriate elements identified
                    during the development of measurement protocols under
                    subsections (d) and (e).
              (2) Inclusions.--Nothing in this section shall require the
            inclusion on such a label of designed performance data where
            impracticable or not cost effective, or to preclude the display
            of both achieved performance and designed performance data for
            a particular building where both such measures are available,
            practicable, and cost effective.
              (3) Existing programs.--In developing the model label, the
            Administrator shall consider existing programs, including--
                      (A) the Environmental Protection Agency's Energy Star
                    Portfolio Manager program and the California HERS II
                    Program Custom Approach for the achieved performance
                    component of the label;
                      (B) the Home Energy Rating System (HERS) Index system
                    for the designed performance component of the label;
                    and
                      (C) other Federal and State programs, including the
                    Department of Energy's related programs on building
                    technologies and those of the Federal Energy Management
                    Program.
              (4) Final rule.--After providing for notice and comment, the
            Administrator shall publish a final rule containing the label
            applicable to covered building types.
      (g) Demonstration Projects for Labeling Program.--
              (1) In general.--The Administrator shall conduct building
            energy performance labeling demonstration projects for
            different building types--
                      (A) to ensure the sufficiency of the current
                    Commercial Buildings Energy Consumption Survey and
                    other data to serve as the basis for new measurement
                    protocols for the achieved performance component of the
                    building energy performance labeling program;
                      (B) to inform the development of measurement
                    protocols for building types not currently covered by
                    the Commercial Buildings Energy Consumption Survey; and
                      (C) to identify any additional information that needs
                    to be developed to ensure effective use of the model
                    label.
              (2) Participation.--Such demonstration projects shall include
            participation of--
                      (A) buildings from diverse geographical and climate
                    regions;
                      (B) buildings in both urban and rural areas;
                      (C) single-family residential buildings;
                      (D) multihousing residential buildings with more than
                    50 units, including at least one project that provides
                    affordable housing to individuals of diverse incomes;
                      (E) single-occupant commercial buildings larger than
                    30,000 square feet;
                      (F) multitenanted commercial buildings larger than
                    50,000 square feet; and
                      (G) buildings from both the public and private
                    sectors.
              (3) Priority.--Priority in the selection of demonstration
            projects shall be given to projects that facilitate large-scale
            implementation of the labeling program for samples of buildings
            across neighborhoods, geographic regions, cities, or States.
              (4) Findings.--The Administrator shall report any findings
            from demonstration projects under this subsection, including an
            identification of any areas of needed data improvement, to the
            Department of Energy's Energy Information Administration and
            Building Technologies Program.
              (5) Coordination.--The Administrator and the Secretary of
            Energy shall coordinate demonstration projects undertaken
            pursuant to this subsection with those undertaken as part of
            the Zero-Net-Energy Commercial Buildings Initiative adopted
            under section 422 of the Energy Independence and Security Act
            of 2007 (42 U.S.C. 17082).
      (h) Implementation of Labeling Program.--
              (1) In general.--The Administrator, in consultation with the
            Secretary of Energy, shall work with all State Energy Offices
            established pursuant to part D of title III of the Energy
            Policy and Conservation Act (42 U.S.C. 6321 et seq.) or other
            State authorities as necessary for the purpose of implementing
            the labeling program established under this section for
            commercial and residential buildings.
              (2) Outreach to local authorities.--The Administrator shall,
            acting in consultation and coordination with the respective
            States, encourage use of the labeling program by counties and
            other localities to broaden access to information about
            building energy use, for example, through disclosure of
            building label contents in tax, title, and other records those
            localities maintain. For this purpose, the Administrator shall
            develop an electronic version of the label and information that
            can be readily transmitted and read in widely-available
            computer programs but is protected from unauthorized
            manipulation.
              (3) Means of implementation.--In adopting the model labeling
            program established under this section, a State shall seek to
            ensure that labeled information be made accessible to the
            public in a manner so that owners, lenders, tenants, occupants,
            or other relevant parties can utilize it. Such accessibility
            may be accomplished through--
                      (A) preparation, and public disclosure of the label
                    through filing with tax and title records at the time
                    of--
                              (i) a building audit conducted with support
                            from Federal or State funds;
                              (ii) a building energy-efficiency retrofit
                            conducted in response to such an audit;
                              (iii) a final inspection of major renovations
                            or additions made to a building in accordance
                            with a building permit issued by a local
                            government entity;
                              (iv) a sale that is recorded for title and
                            tax purposes consistent with paragraph (8);
                              (v) a new lien recorded on the property for
                            more than a set percentage of the assessed
                            value of the property, if that lien reflects
                            public financial assistance for energy-related
                            improvements to that building; or
                              (vi) a change in ownership or operation of
                            the building for purposes of utility billing;
                            or
                      (B) other appropriate means.
              (4) State implementation of program.--
                      (A) Eligibility.--A State may become eligible to
                    utilize allowance value to implement this program by--
                              (i) adopting by statute or regulation a
                            requirement that buildings be assessed and
                            labeled, consistent with the labeling
                            requirements of the program established under
                            this section; or
                              (ii) adopting a plan to implement a model
                            labeling program consistent with this section
                            within one year of enactment of this Act,
                            including the establishment of that program
                            within 3 years after the date of enactment of
                            this Act, and demonstrating continuous progress
                            under that plan.
                      (B) Use of allowances.--Direct Federal support for
                    the program established in this section is provided
                    through the emission allowances allocated to the
                    States' SEED Accounts pursuant to section 132 of this
                    Act. To the extent that a State provides allowances to
                    local governments within the State to implement this
                    program, that shall be deemed a distribution of such
                    allowances to units of local government pursuant to
                    subsection (c)(1) of that section.
              (5) Guidance.--The Administrator may create or identify model
            programs and resources to provide guidance to offer to States
            and localities for creating labeling programs consistent with
            the model program established under this section.
              (6) Progress report.--The Administrator, in consultation with
            the Secretary of Energy, shall provide a progress report to
            Congress not later than 3 years after the date of enactment of
            this Act that--
                      (A) evaluates the effectiveness of efforts to advance
                    use of the model labeling program by States and
                    localities;
                      (B) recommends any legislative changes necessary to
                    broaden the use of the model labeling program; and
                      (C) identifies any changes to broaden the use of the
                    model labeling program that the Administrator has made
                    or intends to make that do not require additional
                    legislative authority.
              (7) State information.--The Administrator may require States
            to report to the Administrator information that the
            Administrator requires to provide the report required under
            paragraph (6).
              (8) Prevention of disruption of sales transactions.--No State
            shall implement a new labeling program pursuant to this section
            in a manner that requires the labeling of a building to occur
            after a contract has been executed for the sale of that
            building and before the sales transaction is completed.
      (i) Implementation of Labeling Program in Federal Buildings.--
              (1) Use of labeling program.--The Secretary of Energy and the
            Administrator shall use the labeling program established under
            this section to evaluate energy performance in the facilities
            of the Department of Energy and the Environmental Protection
            Agency, respectively, to the extent practicable, and shall
            encourage and support implementation efforts in other Federal
            agencies.
              (2) Annual progress report.--The Secretary of Energy and
            Administrator shall provide an annual progress report to
            Congress and the Office of Management and Budget detailing
            efforts to implement this subsection, as well as any best
            practices or needed resources identified as a result of such
            efforts.
      (j) Public Outreach.--The Secretary of Energy and the Administrator,
    in consultation with nonprofit and industry stakeholders with
    specialized expertise, and in conjunction with other energy efficiency
    public awareness efforts, shall establish a business and consumer
    education program to increase awareness about the importance of
    building energy efficiency and to facilitate widespread use of the
    labeling program established under this section.
      (k) Definitions.--In this section:
              (1) Building type.--The term ``building type'' means a
            grouping of buildings as identified by their principal building
            activities, or as grouped by their use, including office
            buildings, laboratories, libraries, data centers, retail
            establishments, hotels, warehouses, and educational buildings.
              (2) Measurement protocol.--The term ``measurement protocol''
            means the methodology, prescribed by the Administrator, for
            defining a benchmark for building energy performance for a
            specific building type and for measuring that performance
            against the benchmark.
              (3) Achieved performance.--The term ``achieved performance''
            means the actual energy consumption of a building as compared
            to a baseline building of the same type and size, determined by
            actual consumption data normalized for appropriate variables.
              (4) Designed performance.--The term ``designed performance''
            means the energy consumption performance a building would
            achieve if operated consistent with its design intent for
            building energy use, utilizing a standardized set of
            operational conditions informed by data collected or confirmed
            during an energy audit.
      (l) Authorization of Appropriations.--There are authorized to be
    appropriated--
              (1) to the Administrator $50,000,000 for implementation of
            this section for each fiscal year from 2010 through 2020; and
              (2) to the Secretary of Energy $20,000,000 for implementation
            of this section for fiscal year 2010 and $10,000,000 for fiscal
            years 2011 through 2020.

    SEC. 205. TREE PLANTING PROGRAMS.

      (a) Findings.--The Congress finds that--
              (1) the utility sector is the largest single source of
            greenhouse gas emissions in the United States today, producing
            approximately one-third of the country's emissions;
              (2) heating and cooling homes accounts for nearly 60 percent
            of residential electricity usage in the United States;
              (3) shade trees planted in strategic locations can reduce
            residential cooling costs by as much as 30 percent;
              (4) shade trees have significant clean-air benefits
            associated with them;
              (5) every 100 healthy large trees removes about 300 pounds of
            air pollution (including particulate matter and ozone) and
            about 15 tons of carbon dioxide from the air each year;
              (6) tree cover on private property and on newly-developed
            land has declined since the 1970s, even while emissions from
            transportation and industry have been rising; and
              (7) in over a dozen test cities across the United States,
            increasing urban tree cover has generated between two and five
            dollars in savings for every dollar invested in such tree
            planting.
      (b) Definitions.--As used in this section:
              (1) The term ``Secretary'' refers to the Secretary of Energy.
              (2) The term ``retail power provider'' means any entity
            authorized under applicable State or Federal law to generate,
            distribute, or provide retail electricity, natural gas, or fuel
            oil service.
              (3) The term ``tree-planting organization'' means any
            nonprofit or not-for-profit group which exists, in whole or in
            part, to--
                      (A) expand urban and residential tree cover;
                      (B) distribute trees for planting;
                      (C) increase awareness of the environmental and
                    energy-related benefits of trees;
                      (D) educate the public about proper tree planting,
                    care, and maintenance strategies; or
                      (E) carry out any combination of the foregoing
                    activities.
              (4) The term ``tree-siting guidelines'' means a comprehensive
            list of science-based measurements outlining the species and
            minimum distance required between trees planted pursuant to
            this section, in addition to the minimum required distance to
            be maintained between such trees and--
                      (A) building foundations;
                      (B) air conditioning units;
                      (C) driveways and walkways;
                      (D) property fences;
                      (E) preexisting utility infrastructure;
                      (F) septic systems;
                      (G) swimming pools; and
                      (H) other infrastructure as deemed appropriate.
              (5) The terms ``small office'', ``small office buildings'',
            and ``small office settings'' means nonresidential buildings or
            structures zoned for business purposes that are 20,000 square
            feet or less in total area.
      (c) Purposes.--The purpose of this section is to establish a grant
    program to assist retail power providers with the establishment and
    operation of targeted tree-planting programs in residential and small
    office settings, for the following purposes:
              (1) Reducing the peak-load demand for electricity from
            residences and small office buildings during the summer months
            through direct shading of buildings provided by strategically
            planted trees.
              (2) Reducing wintertime demand for energy from residences and
            small office buildings by blocking cold winds from reaching
            such structures, which lowers interior temperatures and drives
            heating demand.
              (3) Protecting public health by removing harmful pollution
            from the air.
              (4) Utilizing the natural photosynthetic and transpiration
            process of trees to lower ambient temperatures and absorb
            carbon dioxide, thus mitigating the effects of climate change.
              (5) Lowering electric bills for residential and small office
            ratepayers by limiting electricity consumption without reducing
            benefits.
              (6) Relieving financial and demand pressure on retail power
            providers that stems from large peak-load energy demand.
              (7) Protecting water quality and public health by reducing
            stormwater runoff and keeping harmful pollutants from entering
            waterways.
              (8) Ensuring that trees are planted in locations that limit
            the amount of public money needed to maintain public and
            electric infrastructure.
      (d) General Authority.--
              (1) Assistance.--The Secretary is authorized to provide
            financial, technical, and related assistance to retail power
            providers to assist with the establishment of new, or continued
            operation of existing, targeted tree-planting programs for
            residences and small office buildings.
              (2) Public recognition initiative.--In carrying out the
            authority provided under this section, the Secretary shall also
            create a national public recognition initiative to encourage
            participation in tree-planting programs by retail power
            providers.
              (3) Eligibility.--Only those programs which utilize targeted,
            strategic tree-siting guidelines to plant trees in relation to
            building location, sunlight, and prevailing wind direction
            shall be eligible for assistance under this section.
              (4) Requirements.--In order to qualify for assistance under
            this section, a tree-planting program shall meet each of the
            following requirements:
                      (A) The program shall provide free or discounted
                    shade-providing or wind-reducing trees to residential
                    and small office consumers interested in lowering their
                    home energy costs.
                      (B) The program shall optimize the electricity-
                    consumption reduction benefit of each tree by planting
                    in strategic locations around a given residence or
                    small office.
                      (C) The program shall either--
                              (i) provide maximum amounts of shade during
                            summer intervals when residences and small
                            offices are exposed to the most sun intensity;
                            or
                              (ii) provide maximum amounts of wind
                            protection during fall and winter intervals
                            when residences and small offices are exposed
                            to the most wind intensity.
                      (D) The program shall use the best available science
                    to create tree siting guidelines which dictate where
                    the optimum tree species are best planted in locations
                    that achieve maximum reductions in consumer energy
                    demand while causing the least disruption to public
                    infrastructure, considering overhead and underground
                    facilities.
                      (E) The program shall receive certification from the
                    Secretary that it is designed to achieve the goals set
                    forth in subparagraphs (A) through (D). In designating
                    criteria for such certification, the Secretary shall
                    collaborate with the United States Forest Service's
                    Urban and Community Forestry Program to ensure that
                    certification requirements are consistent with such
                    above goals.
              (5) New program funding share.--The Secretary shall ensure
            that no less than 30 percent of the funds made available under
            this section are distributed to retail power providers which--
                      (A) have not previously established or operated
                    qualified tree-planting programs; or
                      (B) are operating qualified tree-planting programs
                    which were established no more than three years prior
                    to the date of enactment of this section.
      (e) Agreements Between Electricity Providers and Tree-Planting
    Organizations.--
              (1) Grant authorization.--In providing assistance under this
            section, the Secretary is authorized to award grants only to
            retail power providers that have entered into binding legal
            agreements with nonprofit tree-planting organizations.
              (2) Conditions of agreement.--Those agreements between retail
            power providers and tree-planting organizations shall set forth
            conditions under which nonprofit tree-planting organizations
            shall provide targeted tree-planting programs which may require
            these organizations to--
                      (A) participate in local technical advisory
                    committees responsible for drafting general tree-siting
                    guidelines and choosing the most effective species of
                    trees to plant in given locations;
                      (B) coordinate volunteer recruitment to assist with
                    the physical act of planting trees in residential
                    locations;
                      (C) undertake public awareness campaigns to educate
                    local residents about the benefits, cost savings, and
                    availability of free shade trees;
                      (D) establish education and information campaigns to
                    encourage recipients to maintain their shade trees over
                    the long term;
                      (E) serve as the point of contact for existing and
                    potential residential participants who have questions
                    or concerns regarding the tree-planting program;
                      (F) require tree recipients to sign agreements
                    committing to voluntary stewardship and care of
                    provided trees;
                      (G) monitor and report on the survival, growth,
                    overall health, and estimated energy savings of
                    provided trees up until the end of their establishment
                    period which shall be no less than five years; and
                      (H) ensure that trees planted near existing power
                    lines will not interfere with energized electricity
                    distribution lines when mature, and that no new trees
                    will be planted under or adjacent to high-voltage
                    electric transmission lines without prior consultation
                    with the applicable retail power provider receiving
                    assistance under this section.
              (3) Lack of nonprofit organization.--If qualified nonprofit
            or not-for-profit tree planting organizations do not exist or
            operate within areas served by retail power providers applying
            for assistance under this section, the requirements of this
            section shall apply to binding legal agreements entered into by
            such retail power providers and one of the following entities:
                      (A) Local municipal governments with jurisdiction
                    over the urban or suburban forest.
                      (B) The State Forester for the State in which the
                    tree planting program will operate.
                      (C) The United States Forest Service's Urban and
                    Community Forestry representative for the State in
                    which the tree-planting program will operate.
                      (D) A landscaping services company that is--
                              (i) identified in consultation with a
                            national or State nonprofit or not-for-profit
                            tree-planting organization;
                              (ii) licensed to operate in the State in
                            which the tree-planting program will operate;
                            and
                              (iii) a business as defined by the United
                            States Census Bureau's 2007 North American
                            Industry Classification System Code 561730.
      (f) Technical Advisory Committees.--
              (1) Description.--In order to qualify for assistance under
            this section, the retail power provider shall establish and
            consult with a local technical advisory committee which shall
            provide advice and consultation to the program, and may--
                      (A) design and adopt an approved plant list that
                    emphasizes the use of hardy, noninvasive tree species
                    and, where geographically appropriate, the use of
                    native, or site-adapted, or low water-use shade trees;
                      (B) design and adopt planting, installation, and
                    maintenance specifications and create a process for
                    inspection and quality control;
                      (C) ensure that tree recipients are educated to care
                    for and maintain their trees over the long term;
                      (D) help the public become more engaged and educated
                    in the planting and care of shade trees;
                      (E) prioritize which sites receive trees, giving
                    preference to locations with the most potential for
                    energy conservation and secondary preference to areas
                    where the average annual income is below the regional
                    median; and
                      (F) assist with monitoring and collection of data on
                    tree health, tree survival, and energy conservation
                    benefits generated under this section.
              (2) Compensation.--Individuals serving on local technical
            advisory committees shall not receive compensation for their
            service.
              (3) Composition.--Local technical advisory committees shall
            be composed of representatives from public, private, and
            nongovernmental agencies with expertise in demand-side energy
            efficiency management, urban forestry, or arboriculture, and
            shall be composed of the following:
                      (A) Up to 4 persons, but no less than one person,
                    representing the retail power provider receiving
                    assistance under this section.
                      (B) Up to 4 persons, but no less than one person,
                    representing the local tree-planting organization which
                    will partner with the retail power provider to carry
                    out this section.
                      (C) Up to 3 persons representing local nonprofit
                    conservation or environmental organizations. Preference
                    shall be given to those entities which are organized
                    under section 501(c)(3) of the Internal Revenue Code of
                    1986, and which have demonstrated expertise engaging
                    the public in energy conservation, energy efficiency,
                    or green building practices or a combination thereof,
                    such that no single organization is represented by more
                    than one individual under this paragraph.
                      (D) Up to 2 persons representing a local affordable
                    housing agency, affordable housing builder, or
                    community development corporation.
                      (E) Up to 3, but no less than one, persons
                    representing local city or county government for each
                    municipality where a shade tree-planting program will
                    take place; at least one of these representatives shall
                    be the city or county forester, city or county
                    arborist, or functional equivalent.
                      (F) Up to one person representing the local
                    government agency responsible for management of roads,
                    sewers, and infrastructure, including but not limited
                    to public works departments, transportation agencies,
                    or equivalents.
                      (G) Up to 3 persons representing the nursery and
                    landscaping industry.
                      (H) Up to 3 persons representing the research
                    community or academia with expertise in natural
                    resources or energy management issues.
              (4) Chairperson.--Each local technical advisory committee
            shall elect a chairperson to preside over Committee meetings,
            act as a liaison to governmental and other outside entities,
            and direct the general operation of the committee; only
            committee representatives from paragraph (3)(A) or paragraph
            (3)(B) of this subsection shall be eligible to act as local
            technical advisory committee chairpersons.
              (5) Credentials.--At least one of the members of each local
            technical advisory committee shall be certified with one or
            more of the following credentials: International Society of
            Arboriculture; Certified Arborist, ISA; Certified Arborist
            Municipal Specialist, ISA; Certified Arborist Utility
            Specialist, ISA; Board Certified Master Arborist; or Registered
            Landscape Architect recommended by the American Society of
            Landscape Architects.
      (g) Cost-Share Program.--
              (1) Federal share.--The Federal share of support for projects
            funded under this section shall not exceed 50 percent of the
            cost of such project and shall be provided on a matching basis.
              (2) Non-federal share.--The non-Federal share of such costs
            may be paid or contributed by any governmental or
            nongovernmental entity other than from funds derived directly
            or indirectly from an agency or instrumentality of the United
            States.
      (h) Rulemaking.--
              (1) Rulemaking period.--The Secretary shall be authorized to
            solicit comments and initiate a rulemaking period that shall
            last no more than 6 months after the date of enactment of this
            section.
              (2) Competitive grant rule.--At the conclusion of the
            rulemaking period under paragraph (1), the Secretary shall
            promulgate a rule governing a public, competitive grants
            process through which retail power providers may apply for
            Federal support under this section.
      (i) Nonduplicity.--Nothing in this section shall be construed to
    supersede, duplicate, cancel, or negate the programs or authorities
    provided under section 9 of the Cooperative Forestry Assistance Act of
    1978 (92 Stat. 369; Public Law 95-313; 16 U.S.C. 2105).
      (j) Authorization of Appropriations.--There are hereby authorized to
    be appropriated such sums as may be necessary for the implementation of
    this section.

    SEC. 206. ENERGY EFFICIENCY FOR DATA CENTER BUILDINGS.

      Section 453(c)(1) of the Energy Independence and Security Act of 2007
    (42 U.S.C. 17112(c)(1)) is amended by inserting ``but not later than 2
    years after the date of enactment of this Act'' after ``described in
    subsection (b)''.

         Subtitle B--Lighting and Appliance Energy Efficiency Programs

    SEC. 211. LIGHTING EFFICIENCY STANDARDS.

      (a) Outdoor Lighting.--
              (1) Definitions.--
                      (A) Section 340(1) of the Energy Policy and
                    Conservation Act (42 U.S.C. 6311(1)) is amended by
                    striking subparagraph (L) and inserting the following:
                      ``(L) Outdoor luminaires.
                      ``(M) Outdoor high light output lamps.
                      ``(N) Any other type of industrial equipment which
                    the Secretary classifies as covered equipment under
                    section 341(b).''.
                      (B) Section 340 of the Energy Policy and Conservation
                    Act (42 U.S.C. 6311) is amended as adding at the end
                    the following:
              ``(25) The term `luminaire' means a complete lighting unit
            consisting of one or more light sources and ballast(s),
            together with parts designed to distribute the light, to
            position and protect such lamps, and to connect such light
            sources to the power supply.
              ``(26) The term `outdoor luminaire' means a luminaire that is
            listed as suitable for wet locations pursuant to Underwriters
            Laboratories Inc. standard UL 1598 and is labeled as `Suitable
            for Wet Locations' consistent with section 410.4(A) of the
            National Electrical Code 2005, or is designed for roadway
            illumination and meets the requirements of Addendum A for IESNA
            TM-15-07: Backlight, Uplight, and Glare (BUG) Ratings, except
            for--
                      ``(A) luminaires designed for outdoor video display
                    images that cannot be used in general lighting
                    applications;
                      ``(B) portable luminaires designed for use at
                    construction sites;
                      ``(C) luminaires designed for continuous immersion in
                    swimming pools and other water features;
                      ``(D) seasonal luminaires incorporating solely
                    individual lamps rated at 10 watts or less;
                      ``(E) luminaires designed to be used in emergency
                    conditions that incorporate a means of charging a
                    battery and a device to switch the power supply to
                    emergency lighting loads automatically upon failure of
                    the normal power supply;
                      ``(F) components used for repair of installed
                    luminaries and that meet the requirements of section
                    342(h);
                      ``(G) a luminaire utilizing an electrode-less
                    fluorescent lamp as the light source;
                      ``(H) decorative gas lighting systems;
                      ``(I) luminaires designed explicitly for lighting for
                    theatrical purposes, including performance, stage, film
                    production, and video production;
                      ``(J) luminaires designed as theme elements in theme/
                    amusement parks and that cannot be used in most general
                    lighting applications;
                      ``(K) luminaires designed explicitly for vehicular
                    roadway tunnels designed to comply with ANSI/IESNA RP-
                    22-05;
                      ``(L) luminaires designed explicitly for hazardous
                    locations meeting UL Standard 844;
                      ``(M) searchlights;
                      ``(N) luminaires that are designed to be recessed
                    into a building, and that cannot be used in most
                    general lighting applications;
                      ``(O) a luminaire rated only for residential
                    applications utilizing a light source or sources
                    regulated under the amendments made by section 321 of
                    the Energy Independence and Security Act of 2007 and
                    with a light output no greater than 2,600 lumens;
                      ``(P) a residential pole-mounted luminaire that is
                    not rated for commercial use utilizing a light source
                    or sources meeting the efficiency requirements of
                    section 231 of the Energy Independence and Security Act
                    of 2007 and mounted on a post or pole not taller than
                    10.5 feet above ground and with a light output not
                    greater than 2,600 lumens;
                      ``(Q) a residential fixture with E12 (Candelabra)
                    bases that is rated for not more than 300 watts total;
                    or
                      ``(R) a residential fixture with medium screw bases
                    that is rated for not more than 145 watts.
              ``(27) The term `outdoor high light outputlamp' means a lamp
            that--
                      ``(A) has a rated lumen output not less than 2601
                    lumens;
                      ``(B) is capable of being operated at a voltage not
                    less than 110 volts and not greater than 300 volts, or
                    driven at a constant current of 6.6 amperes;
                      ``(C) is not a Parabolic Aluminized Reflector lamp;
                    and
                      ``(D) is not a J-type double-ended (T-3) halogen
                    quartz lamp, utilizing R-7S bases, that is manufactured
                    before January 1, 2015.
              ``(28) The term `outdoor lighting control' means a device
            incorporated in a luminaire that receives a signal, from either
            a sensor (such as an occupancy sensor, motion sensor, or
            daylight sensor) or an input signal (including analog or
            digital signals communicated through wired or wireless
            technology), and can adjust the light level according to the
            signal.''.
              (2) Standards.-- Section 342 of the Energy Policy and
            Conservation Act (42 U.S.C. 6313) is amended by adding at the
            end the following:
      ``(g) Outdoor Luminaires.--
              ``(1) Each outdoor luminaire manufactured on or after January
            1, 2011, shall--
                      ``(A) have an initial luminaire efficacy of at least
                    50 lumens per watt; and
                      ``(B) be designed to use a light source with a lumen
                    maintenance, calculated as mean rated lumens divided by
                    initial lumens, of at least 0.6.
              ``(2) Each outdoor luminaire manufactured on or after January
            1, 2013, shall--
                      ``(A) have an initial luminaire efficacy of at least
                    70 lumens per watt; and
                      ``(B) be designed to use a light source with a lumen
                    maintenance, calculated as mean rated lumens divided by
                    initial lumens, of at least 0.6.
              ``(3) Each outdoor luminaire manufactured on or after January
            1, 2015, shall--
                      ``(A) have an initial luminaire efficacy of at least
                    80 lumens per watt; and
                      ``(B) be designed to use a light source with a lumen
                    maintenance, calculated as mean rated lumens divided by
                    initial lumens, of at least 0.65.
              ``(4) In addition to the requirements of paragraphs (1)
            through (3), each outdoor luminaire manufactured on or after
            January 1, 2011, shall have the capability of producing at
            least two different light levels, including 100 percent and 60
            percent of full lamp output as tested with the maximum rated
            lamp per UL1598 or the manufacturer's maximum specified for the
            luminaire under test.
              ``(5)(A) Not later than January 1, 2017, the Secretary shall
            issue a final rule amending the applicable standards
            established in paragraphs (3) and (4) if technologically
            feasible and economically justified.
              ``(B) A final rule issued under subparagraph (A) shall
            establish efficiency standards at the maximum level that is
            technically feasible and economically justified, as provided in
            subsections (o) and (p) of section 325. The Secretary may also,
            in such rulemaking, amend or discontinue the product exclusions
            listed in section 340(26)(A) through (P), or amend the lumen
            maintenance requirements in paragraph (3) if the Secretary
            determines that such amendments are consistent with the
            purposes of this Act.
              ``(C) If the Secretary issues a final rule under subparagraph
            (A) establishing amended standards, the final rule shall
            provide that the amended standards apply to products
            manufactured on or after January 1, 2020, or one year after the
            date on which the final amended standard is published,
            whichever is later.
      ``(h) Outdoor High Light Output Lamps.--Each outdoor high light
    output lamp manufactured on or after January 1, 2012, shall have a
    lighting efficiency of at least 45 lumens per watt.''.
              (3) Test procedures.-- Section 343(a) of the Energy Policy
            and Conservation Act (42 U.S.C. 6314(a)) is amended by adding
            at the end the following:
              ``(10) Outdoor lighting.--
                      ``(A) With respect to outdoor luminaires and outdoor
                    high light output lamps, the test procedures shall be
                    based upon the test procedures specified in
                    illuminating engineering society procedures LM-79 as of
                    March 1, 2009, and LM-31, and/or other appropriate
                    consensus test procedures developed by the Illuminating
                    Engineering Society or other appropriate consensus
                    standards bodies.
                      ``(B) If illuminating engineering society procedure
                    LM--79 is amended, the Secretary shall amend the test
                    procedures established in subparagraph (A) as necessary
                    to be consistent with the amended LM-79 test procedure,
                    unless the Secretary determines, by rule, published in
                    the Federal Register and supported by clear and
                    convincing evidence, that to do so would not meet the
                    requirements for test procedures under paragraph (2).
                      ``(C) The Secretary may revise the test procedures
                    for outdoor luminaires or outdoor high light output
                    lamps by rule consistent with paragraph (2), and may
                    incorporate as appropriate consensus test procedures
                    developed by the Illuminating Engineering Society or
                    other appropriate consensus standards bodies.''.
              (4) Preemption.-- Section 345 of the Energy Policy and
            Conservation Act (42 U.S.C. 6316) is amended by adding at the
            end the following:
      ``(i)(1) Except as provided in paragraph (2), section 327 shall apply
    to outdoor luminaires to the same extent and in the same manner as the
    section applies under part B.
      ``(2) Any State standard that is adopted on or before January 1,
    2015, pursuant to a statutory requirement to adopt efficiency standards
    for reducing outdoor lighting energy use enacted prior to January 31,
    2008, shall not be preempted.''.
              (5) Energy efficiency standards for certain luminaires.--Not
            later than 1 year after the date of enactment of this Act, the
            Secretary of Energy shall, in consultation with the National
            Electrical Manufacturers Association, collect data for United
            States sales of luminaires described in section 340(26)(H) and
            (M) of the Energy Policy and Conservation Act, to determine the
            historical growth rate. If the Secretary finds that the growth
            in market share of such luminaires exceeds twice the year to
            year rate of the average of the previous three years, then the
            Secretary shall within 12 months initiate a rulemaking to
            determine if such exclusion should be eliminated, if substitute
            products exist that perform more efficiently and fulfill the
            performance functions of these luminaires.
      (b) Portable Lighting.--
              (1) Portable light fixtures.--
                      (A) Definitions.--Section 321 of the Energy Policy
                    and Conservation Act (42 U.S.C. 6291) is amended by
                    adding at the end the following:
              ``(67) Art work light fixture.--The term `art work light
            fixture' means a light fixture designed only to be mounted
            directly to an art work and for the purpose of illuminating
            that art work.
              ``(68) LED light engine.--The term `LED light engine' or `LED
            light engine with integral heat sink' means a subsystem of an
            LED light fixture that--
                      ``(A) includes 1 or more LED components, including--
                              ``(i) an LED driver power source with
                            electrical and mechanical interfaces; and
                              ``(ii) an integral heat sink to provide
                            thermal dissipation; and
                      ``(B) may be designed to accept additional components
                    that provide aesthetic, optical, and environmental
                    control.
              ``(69) LED light fixture.--The term `LED light fixture' means
            a complete lighting unit consisting of--
                      ``(A) an LED light source with 1 or more LED lamps or
                    LED light engines; and
                      ``(B) parts--
                              ``(i) to distribute the light;
                              ``(ii) to position and protect the light
                            source; and
                              ``(iii) to connect the light source to
                            electrical power.
              ``(70) Light fixture.--The term `light fixture' means a
            product designed to provide light that includes--
                      ``(A) at least 1 lamp socket; and
                      ``(B) parts--
                              ``(i) to distribute the light;
                              ``(ii) position and protect 1 or more lamps;
                            and
                              ``(iii) to connect 1 or more lamps to a power
                            supply.
              ``(71) Portable light fixture.--
                      ``(A) In general.--The term `portable light fixture'
                    means a light fixture that has a flexible cord and an
                    attachment plug for connection to a nominal 120-volt
                    circuit that--
                              ``(i) allows the user to relocate the product
                            without any rewiring; and
                              ``(ii) typically can be controlled with a
                            switch located on the product or the power cord
                            of the product.
                      ``(B) Exclusions.--The term `portable light fixture'
                    does not include--
                              ``(i) direct plug-in night lights, sun or
                            heat lamps, medical or dental lights, portable
                            electric hand lamps, signs or commercial
                            advertising displays, photographic lamps,
                            germicidal lamps, or light fixtures for marine
                            use or for use in hazardous locations (as those
                            terms are defined in ANSI/NFPA 70 of the
                            National Electrical Code); or
                              ``(ii) decorative lighting strings,
                            decorative lighting outfits, or electric
                            candles or candelabra without lamp shades that
                            are covered by Underwriter Laboratories (UL)
                            standard 588, `Seasonal and Holiday Decorative
                            Products'.''.
                      (B) Coverage.--
                              (i) In general.--Section 322(a) of the Energy
                            Policy and Conservation Act (42 U.S.C. 6292(a))
                            is amended--
                                      (I) by redesignating paragraph (20)
                                    as paragraph (24); and
                                      (II) by inserting after paragraph
                                    (19) the following:
              ``(20) Portable light fixtures.''.
                              (ii) Conforming amendments.--Section 325(l)
                            of the Energy Policy and Conservation Act (42
                            U.S.C. 6295(l)) is amended by striking
                            ``paragraph (19)'' each place it appears in
                            paragraphs (1) and (2) and inserting
                            ``paragraph (24)''.
                      (C) Test procedures.--Section 323(b) of the Energy
                    Policy and Conservation Act (42 U.S.C. 6293(b)) is
                    amended by adding at the end the following:
              ``(19) LED fixtures and led light engines.--Test procedures
            for LED fixtures and LED light engines shall be based on
            Illuminating Engineering Society of North America (IESNA) test
            procedure LM-79, Approved Method for Electrical and Photometric
            Testing of Solid-State Lighting Devices, and IESNA-approved
            test procedure for testing LED light engines.''.
                      (D) Standards.--Section 325 of the Energy Policy and
                    Conservation Act (42 U.S.C. 6295) is amended--
                              (i) by redesignating subsection (ii) as
                            subsection (oo);
                              (ii) in subsection (oo)(2), as redesignated
                            in clause (i) of this subparagraph, by striking
                            ``(hh)'' each place it appears and inserting
                            ``(mm)''; and
                              (iii) by inserting after subsection (hh) the
                            following:
      ``(ii) Portable Light Fixtures.--
              ``(1) In general.--Subject to paragraphs (2) and (3),
            portable light fixtures manufactured on or after January 1,
            2012, shall meet 1 or more of the following requirements:
                      ``(A) Be a fluorescent light fixture that meets the
                    requirements of the Energy Star Program for Residential
                    Light Fixtures, Version 4.2.
                      ``(B) Be equipped with only 1 or more GU-24 line-
                    voltage sockets, not be rated for use with incandescent
                    lamps of any type (as defined in ANSI standards), and
                    meet the requirements of version 4.2 of the Energy Star
                    program for residential light fixtures.
                      ``(C) Be an LED light fixture or a light fixture with
                    an LED light engine and comply with the following
                    minimum requirements:
                              ``(i) Minimum light output: 200 lumens
                            (initial).
                              ``(ii) Minimum LED light engine efficacy: 40
                            lumens/watt installed in fixtures that meet the
                            minimum light fixture efficacy of 29 lumens/
                            watt or, alternatively, a minimum LED light
                            engine efficacy of 60 lumens/watt for fixtures
                            that do not meet the minimum light fixture
                            efficacy of 29 lumens/watt.
                              ``(iii) All portable fixtures shall have a
                            minimum LED light fixture efficacy of 29
                            lumens/watt and a minimum LED light engine
                            efficacy of 60 lumens/watt by January 1, 2016.
                              ``(iv) Color Correlated Temperature (CCT):
                            2700K through 4000K.
                              ``(v) Minimum Color Rendering Index (CRI):
                            75.
                              ``(vi) Power factor equal to or greater than
                            0.70.
                              ``(vii) Portable luminaries that have
                            internal power supplies shall have zero standby
                            power when the luminaire is turned off.
                              ``(viii) LED light sources shall deliver at
                            least 70 percent of initial lumens for at least
                            25,000 hours.
                      ``(D)(i) Be equipped with an ANSI-designated E12,
                    E17, or E26 screw-based socket and be prepackaged and
                    sold together with 1 screw-based compact fluorescent
                    lamp or screw-based LED lamp for each screw-based
                    socket on the portable light fixture.
                      ``(ii) The compact fluorescent or LED lamps
                    prepackaged with the light fixture shall be fully
                    compatible with any light fixture controls incorporated
                    into the light fixture (for example, light fixtures
                    with dimmers shall be packed with dimmable lamps).
                      ``(iii) Compact fluorescent lamps prepackaged with
                    light fixtures shall meet the requirements of the
                    Energy Star Program for CFLs Version 4.0.
                      ``(iv) Screw-based LED lamps shall comply with the
                    minimum requirements described in subparagraph (C).
                      ``(E) Be equipped with 1 or more single-ended, non-
                    screw based halogen lamp sockets (line or low voltage),
                    a dimmer control or high-low control, and be rated for
                    a maximum of 100 watts.
              ``(2) Review.--
                      ``(A) Review.--The Secretary shall review the
                    criteria and standards established under paragraph (1)
                    to determine if revised standards are technologically
                    feasible and economically justified.
                      ``(B) Components.--The review shall include
                    consideration of--
                              ``(i) whether a separate compliance procedure
                            is still needed for halogen fixtures described
                            in subparagraph (E) and, if necessary, what an
                            appropriate standard for halogen fixtures shall
                            be;
                              ``(ii) whether the specific technical
                            criteria described in subparagraphs (A), (C),
                            and (D)(iii) should be modified; and
                              ``(iii) which fixtures should be exempted
                            from the light fixture efficacy standard as of
                            January 1, 2016, because the fixtures are
                            primarily decorative in nature (as defined by
                            the Secretary) and, even if exempted, are
                            likely to be sold in limited quantities.
                      ``(C) Timing.--
                              ``(i) Determination.--Not later than January
                            1, 2014, the Secretary shall publish amended
                            standards, or a determination that no amended
                            standards are justified, under this subsection.
                              ``(ii) Standards.--Any standards under this
                            paragraph shall take effect on January 1, 2016.
              ``(3) Art work light fixtures.--Art work light fixtures
            manufactured on or after January 1, 2012, shall--
                      ``(A) comply with paragraph (1); or
                      ``(B)(i) contain only ANSI-designated E12 screw-based
                    line-voltage sockets;
                      ``(ii) have not more than 3 sockets;
                      ``(iii) be controlled with an integral high/low
                    switch;
                      ``(iv) be rated for not more than 25 watts if fitted
                    with 1 socket; and
                      ``(v) be rated for not more than 15 watts per socket
                    if fitted with 2 or 3 sockets.
              ``(4) Exception from preemption.--Notwithstanding section
            327, Federal preemption shall not apply to a regulation
            concerning portable light fixtures adopted by the California
            Energy Commission on or before January 1, 2014.''.
              (2) GU-24 base lamps.--
                      (A) Definitions.--Section 321 of the Energy Policy
                    and Conservation Act (42 U.S.C. 6291) (as amended by
                    paragraph (1)(A)) is amended by adding at the end the
                    following:
              ``(72) GU-24.--The term `GU-24' means the designation of a
            lamp socket, based on a coding system by the International
            Electrotechnical Commission, under which--
                      ``(A) `G' indicates a holder and socket type with 2
                    or more projecting contacts, such as pins or posts;
                      ``(B) `U' distinguishes between lamp and holder
                    designs of similar type that are not interchangeable
                    due to electrical or mechanical requirements; and
                      ``(C) 24 indicates the distance in millimeters
                    between the electrical contact posts.
              ``(73) GU-24 adaptor.--
                      ``(A) In general.--The term `GU-24 Adaptor' means a
                    1-piece device, pig-tail, wiring harness, or other such
                    socket or base attachment that--
                              ``(i) connects to a GU-24 socket on 1 end and
                            provides a different type of socket or
                            connection on the other end; and
                              ``(ii) does not alter the voltage.
                      ``(B) Exclusion.--The term `GU-24 Adaptor' does not
                    include a fluorescent ballast with a GU-24 base.
              ``(74) GU-24 base lamp.--`GU-24 base lamp' means a light bulb
            designed to fit in a GU-24 socket.''.
                      (B) Standards.--Section 325 of the Energy Policy and
                    Conservation Act (42 U.S.C. 6295) (as amended by
                    paragraph (1)(D)) is amended by inserting after
                    subsection (ii) the following:
      ``(jj) GU-24 Base Lamps.--
              ``(1) In general.--A GU-24 base lamp shall not be an
            incandescent lamp as defined by ANSI.
              ``(2) GU-24 adaptors.--GU-24 adaptors shall not adapt a GU-24
            socket to any other line voltage socket.''.
              (3) Standards for certain incandescent reflector lamps.--
            Section 325(i) of the Energy Policy and Conservation Act (42
            U.S.C. 6295(i)), as amended by section 161(a)(12) of this Act,
            is amended by adding at the end the following:
              ``(9) Certain incandescent reflector lamps.--(A) No later
            than 12 months after enactment of this paragraph, the Secretary
            shall publish a final rule establishing standards for
            incandescent reflector lamp types described in paragraph
            (1)(D). Such standards shall be effective on July 1, 2013.
              ``(B) Any rulemaking for incandescent reflector lamps
            completed after enactment of this section shall consider
            standards for all incandescent reflector lamps, inclusive of
            those specified in paragraph (1)(C).
              ``(10) Reflector lamps.--No later than January 1, 2015, the
            Secretary shall publish a final rule establishing and amending
            standards for reflector lamps, including incandescent reflector
            lamps. Such standards shall be effective no sooner than three
            years after publication of the final rule. Such rulemaking
            shall consider incandescent and nonincandescent technologies.
            Such rulemaking shall consider a new metric other than lumens-
            per-watt based on the photometric distribution of light from
            such lamps.''.

    SEC. 212. OTHER APPLIANCE EFFICIENCY STANDARDS.

      (a) Standards for Water Dispensers, Hot Food Holding Cabinets, and
    Portable Electric Spas.--
              (1) Definitions.--Section 321 of the Energy Policy and
            Conservation Act (42 U.S.C. 6291), as amended by section 211 of
            this Act, is further amended by adding at the end the
            following:
              ``(75) The term `water dispenser' means a factory-made
            assembly that mechanically cools and heats potable water and
            that dispenses the cooled or heated water by integral or remote
            means.
              ``(76) The term `bottle-type water dispenser' means a
            drinking water dispenser designed for dispensing both hot and
            cold water that uses a removable bottle or container as the
            source of potable water.
              ``(77) The term `commercial hot food holding cabinet' means a
            heated, fully-enclosed compartment with one or more solid or
            glass doors that is designed to maintain the temperature of hot
            food that has been cooked in a separate appliance. Such term
            does not include heated glass merchandizing cabinets, drawer
            warmers, commercial hot food holding cabinets with interior
            volumes of less than 8 cubic feet, or cook-and-hold appliances.
              ``(78) The term `portable electric spa' means a factory-built
            electric spa or hot tub, supplied with equipment for heating
            and circulating water.''.
              (2) Coverage.--Section 322(a) of the Energy Policy and
            Conservation Act (42 U.S.C. 6292(a)), as amended by section
            211(b)(1)(B) of this Act, is further amended by inserting after
            paragraph (20) the following new paragraphs:
              ``(21) Bottle type water dispensers.
              ``(22) Commercial hot food holding cabinets.
              ``(23) Portable electric spas.''.
              (3) Test procedures.--Section 323(b) of the Energy Policy and
            Conservation Act (42 U.S.C. 6293(b)), as amended by section
            211(b)(1)(C) of this Act, is further amended by adding at the
            end the following:
              ``(20) Bottle type water dispensers.--Test procedures for
            bottle type water dispensers shall be based on `Energy Star
            Program Requirements for Bottled Water Coolers version 1.1'
            published by the Environmental Protection Agency. Units with an
            integral, automatic timer shall not be tested using section 4D,
            `Timer Usage,' of the test criteria.
              ``(21) Commercial hot food holding cabinets.--Test procedures
            for commercial hot food holding cabinets shall be based on the
            test procedures described in ANSI/ASTM F2140-01 (Test for idle
            energy rate-dry test). Interior volume shall be based on the
            method shown in the Environmental Protection Agency's `Energy
            Star Program Requirements for Commercial Hot Food Holding
            Cabinets' as in effect on August 15, 2003.
              ``(22) Portable electric spas.--Test procedures for portable
            electric spas shall be based on the test method for portable
            electric spas contained in section 1604, title 20, California
            Code of Regulations as amended on December 3, 2008. When the
            American National Standards Institute publishes a test
            procedure for portable electric spas, the Secretary shall
            revise the Department of Energy's procedure.''.
              (4) Standards.--Section 325 of the Energy Policy and
            Conservation Act (42 U.S.C. 6295), as amended by section 211 of
            this Act, is further amended by adding after subsection (jj)
            the following:
      ``(kk) Bottle Type Water Dispensers.--Effective January 1, 2012,
    bottle-type water dispensers designed for dispensing both hot and cold
    water shall not have standby energy consumption greater than 1.2
    kilowatt-hours per day.
      ``(ll) Commercial Hot Food Holding Cabinets.--Effective January 1,
    2012, commercial hot food holding cabinets with interior volumes of 8
    cubic feet or greater shall have a maximum idle energy rate of 40 watts
    per cubic foot of interior volume.
      ``(mm) Portable Electric Spas.--Effective January 1, 2012, portable
    electric spas shall not have a normalized standby power greater than
    5(V\2/3\) Watts where V=the fill volume in gallons.
      ``(nn) Revisions.--The Secretary of Energy shall consider revisions
    to the standards in subsections (kk), (ll), and (mm) in accordance with
    subsection (o) and publish a final rule no later than January 1, 2013
    establishing such revised standards, or make a finding that no
    revisions are technically feasible and economically justified. Any such
    revised standards shall take effect January 1, 2016.''.
      (b) Commercial Furnace Efficiency Standards.--Section 342(a) of the
    Energy Policy and Conservation Act (42 U.S.C. 6312(a)) is amended by
    inserting after paragraph (10) the following new paragraph:
              ``(11) Warm air furnaces.--Each warm air furnace with an
            input rating of 225,000 Btu per hour or more and manufactured
            after January 1, 2011, shall meet the following standard
            levels:
                      ``(A) Gas-fired units.--
                              ``(i) Minimum thermal efficiency of 80
                            percent.
                              ``(ii) Include an interrupted or intermittent
                            ignition device.
                              ``(iii) Have jacket losses not exceeding 0.75
                            percent of the input rating.
                              ``(iv) Have either power venting or a flue
                            damper.
                      ``(B) Oil-fired units.--
                              ``(i) Minimum thermal efficiency of 81
                            percent.
                              ``(ii) Have jacket losses not exceeding 0.75
                            percent of the input rating.
                              ``(iii) Have either power venting or a flue
                            damper.''.

    SEC. 213. APPLIANCE EFFICIENCY DETERMINATIONS AND PROCEDURES.

      (a) Definition of Energy Conservation Standard.--Section 321(6) of
    the Energy Policy and Conservation Act (42 U.S.C. 6291(6)) is amended
    to read as follows:
              ``(6) Energy conservation standard.--
                      ``(A) In general.--The term `energy conservation
                    standard' means 1 or more performance standards that--
                              ``(i) for covered products (excluding clothes
                            washers, dishwashers, showerheads, faucets,
                            water closets, and urinals), prescribe a
                            minimum level of energy efficiency or a maximum
                            quantity of energy use, determined in
                            accordance with test procedures prescribed
                            under section 323;
                              ``(ii) for showerheads, faucets, water
                            closets, and urinals, prescribe a minimum level
                            of water efficiency or a maximum quantity of
                            water use, determined in accordance with test
                            procedures prescribed under section 323; and
                              ``(iii) for clothes washers and dishwashers--
                                      ``(I) prescribe a minimum level of
                                    energy efficiency or a maximum quantity
                                    of energy use, determined in accordance
                                    with test procedures prescribed under
                                    section 323; and
                                      ``(II) may include a minimum level of
                                    water efficiency or a maximum quantity
                                    of water use, determined in accordance
                                    with those test procedures.
                      ``(B) Inclusions.--The term `energy conservation
                    standard' includes--
                              ``(i) 1 or more design requirements, if the
                            requirements were established--
                                      ``(I) on or before the date of
                                    enactment of this subclause;
                                      ``(II) as part of a direct final rule
                                    under section 325(p)(4); or
                                      ``(III) as part of a final rule
                                    published on or after January 1, 2012,
                                    and
                              ``(ii) any other requirements that the
                            Secretary may prescribe under section 325(r).
                      ``(C) Exclusion.--The term `energy conservation
                    standard' does not include a performance standard for a
                    component of a finished covered product, unless
                    regulation of the component is specifically authorized
                    or established pursuant to this title.''.
      (b) Adopting Consensus Test Procedures and Test Procedures in Use
    Elsewhere.--Section 323(b) of the Energy Policy and Conservation Act
    (42 U.S.C. 6293(b)), as amended by sections 211 and 212 of this Act, is
    further amended by adding the following new paragraph after paragraph
    (22):
              ``(23) Consensus and alternate test procedures.--
                      ``(A) Receipt of joint recommendation or alternate
                    testing procedure.--On receipt of--
                              ``(i) a statement that is submitted jointly
                            by interested persons that are fairly
                            representative of relevant points of view
                            (including representatives of manufacturers of
                            covered products, States, and efficiency
                            advocates), as determined by the Secretary, and
                            contains recommendations with respect to the
                            testing procedure for a covered product; or
                              ``(ii) a submission of a testing procedure
                            currently in use for a covered product by a
                            State, nation, or group of nations--
                                      ``(I) if the Secretary determines
                                    that the recommended testing procedure
                                    contained in the statement or
                                    submission is in accordance with
                                    subsection (b)(3), the Secretary may
                                    issue a final rule that establishes an
                                    energy or water conservation testing
                                    procedure that is published
                                    simultaneously with a notice of
                                    proposed rulemaking that proposes a new
                                    or amended energy or water conservation
                                    testing procedure that is identical to
                                    the testing procedure established in
                                    the final rule to establish the
                                    recommended testing procedure (referred
                                    to in this paragraph as a `direct final
                                    rule'); or
                                      ``(II) if the Secretary determines
                                    that a direct final rule cannot be
                                    issued based on the statement or
                                    submission, the Secretary shall publish
                                    a notice of the determination, together
                                    with an explanation of the reasons for
                                    the determination.
                      ``(B) Public comment.--The Secretary shall solicit
                    public comment for a period of at least 110 days with
                    respect to each direct final rule issued by the
                    Secretary under subparagraph (A)(ii)(I).
                      ``(C) Withdrawal of direct final rules.--
                              ``(i) In general.--Not later than 120 days
                            after the date on which a direct final rule
                            issued under subparagraph (A)(ii)(I) is
                            published in the Federal Register, the
                            Secretary shall withdraw the direct final rule
                            if--
                                      ``(I) the Secretary receives 1 or
                                    more adverse public comments relating
                                    to the direct final rule under
                                    subparagraph (B)or any alternative
                                    joint recommendation; and
                                      ``(II) based on the rulemaking record
                                    relating to the direct final rule, the
                                    Secretary determines that such adverse
                                    public comments or alternative joint
                                    recommendation may provide a reasonable
                                    basis for withdrawing the direct final
                                    rule under paragraph (3) or any other
                                    applicable law.
                              ``(ii) Action on withdrawal.--On withdrawal
                            of a direct final rule under clause (i), the
                            Secretary shall--
                                      ``(I) proceed with the notice of
                                    proposed rulemaking published
                                    simultaneously with the direct final
                                    rule as described in subparagraph
                                    (A)(ii)(I); and
                                      ``(II) publish in the Federal
                                    Register the reasons why the direct
                                    final rule was withdrawn.
                              ``(iii) Treatment of withdrawn direct final
                            rules.--A direct final rule that is withdrawn
                            under clause (i) shall not be considered to be
                            a final rule for purposes of subsection (b).
                      ``(D) Effect of paragraph.--Nothing in this paragraph
                    authorizes the Secretary to issue a direct final rule
                    based solely on receipt of more than 1 statement
                    containing recommended test procedures relating to the
                    direct final rule.''.
      (c) Updating Television Test Methods.--Section 323(b) of the Energy
    Policy and Conservation Act (42 U.S.C. 6293(b)), as amended by sections
    211 and 212 of this Act, and subsection (b) of this section, is further
    amended by adding at the end the following new paragraph:
              ``(24) Televisions.--(A) On the date of enactment of this
            paragraph, Appendix H to Subpart B of Part 430 of the United
            States Code of Federal Regulations, `Uniform Test Method for
            Measuring the Energy Consumption of Television Sets', is
            repealed.
              ``(B) No later than 12 months after the date of enactment of
            this paragraph the Secretary shall publish in the Federal
            Register a final rule prescribing a new test method for
            televisions.''.
      (d) Criteria for Prescribing New or Amended Standards.--(1) Section
    325(o)(2)(B)(i) of the Energy Policy and Conservation Act (42 U.S.C.
    6295(o)(2)(B)(i)) is amended as follows:
              (A) By striking ``and'' at the end of subclause (VI).
              (B) By redesignating subclause (VII) as subclause (XI).
              (C) By inserting the following new subclauses after subclause
            (VI):
              ``(VII) the estimated value of the carbon dioxide and other
            emission reductions that will be achieved by virtue of the
            higher energy efficiency of the covered products resulting from
            the imposition of the standard;
              ``(VIII) the estimated impact of standards for a particular
            product on average consumer energy prices;
              ``(IX) the increased energy efficiency that may be
            attributable to the installation of Smart Grid technologies or
            capabilities in the covered products, if applicable in the
            determination of the Secretary;
              ``(X) the availability in the United States or in other
            nations of examples or prototypes of covered products that
            achieve significantly higher efficiency standards for energy or
            for water; and''.
      (2) Section 325(o)(2)(B)(iii) of such Act is amended as follows:
              (A) By striking ``three'' and inserting ``5''.
              (B) By inserting after the first sentence the following ``For
            products with an average expected useful life of less than 5
            years, such rebuttable presumption shall be determined
            utilizing 75 percent of the product's average expected useful
            life as a multiplier instead of 5.''.
              (C) By striking the last sentence and inserting the
            following: ``Such a presumption may be rebutted only if the
            Secretary finds, based on clear, convincing, and reliable
            evidence, that--
              ``(I) such standard level would cause serious and unavoidable
            hardship to the average consumer of the product, or to
            manufacturers supplying a significant portion of the market for
            the product, that substantially outweighs the standard level's
            benefits;
              ``(II) the standard and implementing regulations cannot be
            designed to avoid or mitigate the hardship identified under
            subclause (I), through the adoption of regional standards
            consistent with paragraph (6) of this subsection, or other
            reasonable means consistent with this part;
              ``(III) the same or substantially similar hardship would not
            occur under a standard adopted in the absence of the
            presumption, but that otherwise meets the requirements of this
            section; and
              ``(IV) the hardship cannot be avoided or mitigated pursuant
            the procedures specified in section 504 of the Department of
            Energy Organization Act (42 U.S.C. 7194).
    A determination by the Secretary that the criteria triggering such
    presumption are not met, or that the criterion for rebutting the
    presumption are met shall not be taken into consideration in the
    Secretary's determination of whether a standard is economically
    justified.''.
      (e) Obtaining Appliance Information From Manufacturers.--Section
    326(d) of the Energy Policy and Conservation Act (42 U.S.C. 6295(d)) is
    amended to read as follows:
      ``(d) Information Requirements.--(1) For purposes of carrying out
    this part, the Secretary shall publish proposed regulations not later
    than one year after the date of enactment of the American Clean Energy
    and Security Act of 2009, and after receiving public comment, final
    regulations not later than 18 months from such date of enactment under
    this part or other provision of law administered by the Secretary,
    which shall require each manufacturer of a covered product to submit
    information or reports to the Secretary on an annual basis in a form
    adopted by the Secretary. Such reports shall include information or
    data with respect to--
              ``(A) the manufacturers' compliance with all requirements
            applicable pursuant to this part;
              ``(B) the economic impact of any proposed energy conservation
            standard;
              ``(C) the manufacturers' annual shipments of each class or
            category of covered products, organized, to the maximum extent
            practicable, by--
                      ``(i) energy efficiency, energy use, and, if
                    applicable, water use;
                      ``(ii) the presence or absence of such efficiency
                    related or energy consuming operational characteristics
                    or components as the Secretary determines are relevant
                    for the purposes of carrying out this part; and
                      ``(iii) the State or regional location of sale, for
                    covered products for which the Secretary may adopt
                    regional standards; and
              ``(D) such other categories of information as the Secretary
            deems relevant to carry out this part, including such other
            information as may be necessary to establish and revise test
            procedures, labeling rules, and energy conservation standards
            and to insure compliance with the requirements of this part.
      ``(2) In adopting regulations under this subsection, the Secretary
    shall consider existing public sources of information, including
    nationally recognized certification programs of trade associations.
      ``(3) The Secretary shall exercise authority under this section in a
    manner designed to minimize unnecessary burdens on manufacturers of
    covered products.
      ``(4) To the extent that they do not conflict with the duties of the
    Secretary in carrying out this part, the provisions of section 11(d) of
    the Energy Supply and Environmental Coordination Act of 1974 (15 U.S.C.
    796(d)) shall apply with respect to information obtained under this
    subsection to the same extent and in the same manner as they apply with
    respect to other energy information obtained under such section.''.
      (f) State Waiver.--Section 327(c) of the Energy Policy and
    Conservation Act (42 U.S.C. 6297(c)), as amended by section 161(a)(19)
    of this Act, is further amended by adding at the end the following:
              ``(12) is a regulation concerning standards for hot food
            holding cabinets, drinking water dispensers and portable
            electric spas adopted by the California Energy Commission on or
            before January 1, 2013.''.
      (g) Waiver of Federal Preemption.--Paragraph (1) of section 327(d) of
    the Energy Policy and Conservation Act (42 U.S.C. 6297(d)) is amended
    as follows:
              (1) In subparagraph (A) by striking ``State regulation'' each
            place it appears and inserting ``State statute or regulation''.
              (2) In subparagraph (B) by adding at the end the following
            new sentence: ``In making such a finding, the Secretary may not
            reject a petition for failure of the petitioning State or river
            basin commission to produce confidential information maintained
            by any manufacturer or distributor, or group or association of
            manufacturers or distributors, and which the petitioning party
            does not have the legal right to obtain.''.
              (3) In clause (ii) of subparagraph (C) by striking ``costs''
            each place it appears and inserting ``estimated costs''.
              (4) In subparagraph (C) by striking ``within the context of
            the State's energy plan and forecast, and,''.
      (h) Inclusion of Carbon Output on Appliance ``Energyguide'' Labels.--
    (1) Section 324(a)(2) of the Energy Policy and Conservation Act (42
    U.S.C. 6294(a)(2)) is amended by adding the following at the end:
      ``(I)(i) Not later than 90 days after the date of enactment of this
    subparagraph, the Commission shall initiate a rulemaking to implement
    the additional labeling requirements specified in subsection (c)(1)(C)
    of this section with an effective date for the revised labeling
    requirement not later than 12 months from issuance of the final rule.
      ``(ii) Not later than 24 months after the date of enactment of this
    subparagraph, the Commission shall complete the rulemaking initiated
    under clause (i).
      ``(iii) Not later than 90 days after issuance of the final rule as
    provided in this subparagraph, the Secretary shall issue calculation
    methods required to effectuate the labeling requirements specified in
    subsection (c)(1)(C) of this section.''.
      (2) Section 324(c)(1) of the Energy Policy and Conservation Act (42
    U.S.C. 6294(c)(1)) is amended--
              (A) by striking ``and'' at the end of subparagraph (A);
              (B) by striking the period at the end of subparagraph (B) and
            inserting a semicolon; and
              (C) by adding at the end the following new subparagraphs:
              ``(C) for products or groups of products providing a
            comparable function (including the group of products comprising
            the heating function of heat pumps and furnaces) among covered
            products listed in paragraphs (3), (4), (5), (8), (9), (10),
            and (11) of section 322(a) of this part, and others designated
            by the Secretary, the estimated total annual atmospheric carbon
            dioxide emissions (or their equivalent in other greenhouse
            gases) associated with, or caused by, the product, calculated
            utilizing--
                      ``(i) national average energy use for the product
                    including energy consumed at the point of end use based
                    on test procedures developed under section 323 of this
                    part;
                      ``(ii) national average energy consumed or lost in
                    the production, generation, transportation, storage,
                    and distribution of energy to the point of end use; and
                      ``(iii) any direct emissions of greenhouse gases from
                    the product during normal use;
                      ``(D) in determining the national average energy
                    consumption and total annual atmospheric carbon dioxide
                    emissions, the Secretary shall utilize Federal
                    Government sources, including the Energy Information
                    Administration Annual Energy Review, the Environmental
                    Protection Agency eGRID data base, Environmental
                    Protection Agency AP-42 Emission Factors as amended,
                    and other sources determined to be appropriate by the
                    Secretary; and
                      ``(E) information presenting, for each product (or
                    group of products providing the comparable function)
                    identified in section (c)(1)(C) of this section, the
                    estimated annual carbon dioxide emissions calculated
                    within the range of emissions calculated for all models
                    of the product or group according to its function,
                    including those models consuming fuels and those models
                    not consuming fuels.''.
      (i) Permitting States to Seek Injunctive Enforcement.--(1) Section
    334 of the Energy Policy and Conservation Act (42 U.S.C. 6304) is
    amended to read as follows:

    ``SEC. 334. JURISDICTION AND VENUE.

      ``(a) Jurisdiction.--The United States district courts shall have
    jurisdiction to restrain--
              ``(1) any violation of section 332; and
              ``(2) any person from distributing in commerce any covered
            product which does not comply with an applicable rule under
            section 324 or 325.
      ``(b) Authority.--Any action referred to in subsection (a) shall be
    brought by the Commission or by the attorney general of a State in the
    name of the State, except that--
              ``(1) any such action to restrain any violation of section
            332(a)(3) which relates to requirements prescribed by the
            Secretary or any violation of section 332(a)(4) which relates
            to request of the Secretary under section 326(b)(2) shall be
            brought by the Secretary; and
              ``(2) any violation of section 332(a)(5) or 332(a)(7) shall
            be brought by the Secretary or by the attorney general of a
            State in the name of the State.
      ``(c) Venue and Service of Process.--Any such action may be brought
    in the United States district court for a district wherein any act,
    omission, or transaction constituting the violation occurred, or in
    such court of the district wherein the defendant is found or transacts
    business. In any action under this section, process may be served on a
    defendant in any other district in which the defendant resides or may
    be found.''.
      (2) The item relating to section 334 in the table of contents for
    such Act is amended to read as follows:
    ``Sec. 334. Jurisdiction and venue.''.
      (j) Treatment of Appliances Within Building Codes.--(1) Section
    327(f)(3) of the Energy Policy and Conservation Act (42 U.S.C.
    6297(f)(3)) is amended by striking subparagraphs (B) through (G) and
    inserting the following:
              ``(B) The code meets at least one of the following
            requirements:
                      ``(i) The code does not require that the covered
                    product have an energy efficiency exceeding--
                              ``(I) the applicable energy conservation
                            standard established in or prescribed under
                            section 325;
                              ``(II) the level required by a regulation of
                            that State for which the Secretary has issued a
                            rule granting a waiver under subsection (d) of
                            this section; or
                              ``(III) the required level established in the
                            International Energy Conservation Code or in a
                            standard of the American Society of Heating,
                            Refrigerating and Air-Conditioning Engineers,
                            or by the Secretary pursuant to section 304 of
                            the Energy Conservation and Production Act.
                      ``(ii) If the code uses one or more baseline building
                    designs against which all submitted building designs
                    are to be evaluated and such baseline building designs
                    contain a covered product subject to an energy
                    conservation standard established in or prescribed
                    under section 325, the baseline building designs are
                    based on an efficiency level for such covered product
                    which meets but does not exceed one of the levels
                    specified in clause (i).
                      ``(iii) If the code sets forth one or more optional
                    combinations of items which meet the energy consumption
                    or conservation objective, in at least one combination
                    that the State has found to be reasonably achievable
                    using commercially available technologies the
                    efficiency of the covered product meets but does not
                    exceed one of the levels specified in clause (i).
              ``(C) The credit to the energy consumption or conservation
            objective allowed by the code for installing covered products
            having energy efficiencies exceeding one of the levels
            specified in subparagraph (B)(i) is on a one-for-one equivalent
            energy use or equivalent energy cost basis, taking into account
            the typical lifetime of the product.
              ``(D) The energy consumption or conservation objective is
            specified in terms of an estimated total consumption of energy
            (which may be calculated from energy loss- or gain-based codes)
            utilizing an equivalent amount of energy (which may be
            specified in units of energy or its equivalent cost) and
            equivalent lifetimes.
              ``(E) The estimated energy use of any covered product
            permitted or required in the code, or used in calculating the
            objective, is determined using the applicable test procedures
            prescribed under section 323, except that the State may permit
            the estimated energy use calculation to be adjusted to reflect
            the conditions of the areas where the code is being applied if
            such adjustment is based on the use of the applicable test
            procedures prescribed under section 323 or other technically
            accurate documented procedure.''.
              (2) Section 327(f)(4)(B) of the Energy Policy and
            Conservation Act (42 U.S.C. 6297(f)(4)(B)) is amended to read
            as follows:
      ``(B) If a building code requires the installation of covered
    products with efficiencies exceeding the levels and requirements
    specified in paragraph (3)(B), such requirement of the building code
    shall not be applicable unless the Secretary has granted a waiver for
    such requirement under subsection (d) of this section.''.

    SEC. 214. BEST-IN-CLASS APPLIANCES DEPLOYMENT PROGRAM.

      (a) In General.--Not later than 1 year after the date of enactment of
    this Act, the Secretary of Energy, in consultation with the
    Administrator, shall establish a program to be known as the ``Best-in-
    Class Appliances Deployment Program'' to--
              (1) provide bonus payments to retailers or distributors under
            subsection (c) for sales of best-in-class high-efficiency
            household appliance models, high-efficiency installed building
            equipment, and high-efficiency consumer electronics, with the
            goal of reducing life-cycle costs for consumers, encouraging
            innovation, and maximizing energy savings and public benefit;
              (2) provide bounties under subsection (d) to retailers for
            the replacement, retirement, and recycling of old, inefficient,
            and environmentally harmful products; and
              (3) provide premium awards under subsection (e) to
            manufacturers for developing and producing new Superefficient
            Best-in-Class Products.
      (b) Designation of Best-in-Class Product Models.--
              (1) In general.--The Secretary of Energy shall designate
            product models of appliances, equipment, or electronics as
            Best-in-Class Product models. The Secretary shall publicly
            announce the Best-in-Class Product models designated under this
            subsection. The Secretary shall define product classes broadly
            and, except as provided in paragraph (2), shall designate as
            Best-in-Class Product models no more than the most efficient 10
            percent of the commercially available product models in a class
            that demonstrate, as a group, a distinctly greater energy
            efficiency than the average energy efficiency of that class of
            appliances, equipment, or electronics. In designating models,
            the Secretary shall--
                      (A) identify commercially available models in the
                    relevant class of products;
                      (B) identify the subgroup of those models that share
                    the distinctly higher energy-efficiency characteristics
                    that warrant designation as best-in-class; and
                      (C) add other models in that class to the list of
                    Best-in-Class Product models as they demonstrate their
                    ability to meet the higher-efficiency characteristics
                    on which the designation was made.
              (2) Percentage exception.--If there are fewer than 10 product
            models in a class of products, the Secretary may designate one
            or more of such models as Best-in-Class Products.
              (3) Review of best-in-class standards.--The Secretary shall
            review annually the product-specific criteria for designating,
            and the product models that qualify as, Best-in-Class Products
            and, after notice and a 30-day comment period, make upwards
            adjustments in the efficiency criteria as necessary to maintain
            an appropriate ratio of such product models to the total number
            of product models in the product class.
      (c) Bonuses for Sales of Best-in-Class Products.--
              (1) In general.--The Secretary of Energy shall make bonus
            payments to retailers or, as provided in paragraph (5)(B),
            distributors for the sale of Best-in-Class Products.
              (2) Bonus program.--The Secretary shall--
                      (A) publicly announce the availability and amount of
                    the bonus to be paid for each sale of a Best-in-Class
                    Product of a model designated under subsection (b); and
                      (B) make bonus payments in at least that amount for
                    each Best-in-Class Product of that model sold during
                    the 3-year period beginning on the date the model is
                    designated under subsection (b).
              (3) Upgrade of best-in-class product eligibility.--In
            conducting a review under subsection (b)(3), the Secretary
            shall--
                      (A) consider designating as a Best-in-Class Product
                    model a Superefficient Best-in-Class Product model that
                    has been designated pursuant to subsection (e);
                      (B) announce any change in the bonus payment as
                    necessary to increase the market share of Best-in-Class
                    Product models;
                      (C) list models that will be eligible for bonuses in
                    the new amount; and
                      (D) continue paying bonus payments at the original
                    level, for the sale of any models that previously
                    qualified as Best-in-Class Products but do not qualify
                    at the new level, for the remainder of the 3-year
                    period announced with the original designation.
              (4) Size of individual bonus payments.--(A) The size of each
            bonus payment under this subsection shall be the product of--
                              (i) an amount determined by the Secretary;
                            and
                              (ii) the difference in energy consumption
                            between the Best-in-Class Product and the
                            average product in the product class.
              (B) The Secretary shall determine the amount under
            subparagraph (A)(i) for each product type, in consultation with
            State and utility efficiency program administrators as well as
            the Administrator, based on estimates of the amount of bonus
            payment that would provide significant incentive to increase
            the market share of Best-in-Class Products.
              (5) Eligible bonus recipient.--(A) The Secretary shall ensure
            that not more than 1 bonus payment is provided under this
            subsection for each Best-in-Class Product.
              (B) The Secretary may make distributors eligible to receive
            bonus payments under this subsection for sales that are not to
            the final end-user, to the extent that the Secretary determines
            that for a particular product category distributors are well
            situated to increase sales of Best-in-Class Products.
      (d) Bounties for Replacement, Retirement, and Recycling of Existing
    Low-Efficiency Products.--
              (1) In general.--The Secretary of Energy shall make bounty
            payments to retailers for the replacement, retirement, and
            recycling of older operating low-efficiency products that might
            otherwise continue in operation.
              (2) Bounties.--Bounties shall be payable upon documentation
            that the sale of a Best-in-Class Product was accompanied by the
            replacement, retirement, and recycling of--
                      (A) an inefficient but still-functioning product; or
                      (B) a nonfunctioning product containing a
                    refrigerant,
            by the consumer to whom the Best-in-Class Product was sold.
              (3) Amount.--
                      (A) Functioning products.--The bounty payment payable
                    under this subsection for a product described in
                    paragraph (2)(A) shall be based on the difference
                    between the estimated energy use of the product
                    replaced and the energy use of an average new product
                    in the product class, over the estimated remaining
                    lifetime of the product that was replaced.
                      (B) Nonfunctioning products containing
                    refrigerants.--The bounty payment payable under this
                    subsection for a product described in paragraph (2)(B)
                    shall be in the amount that the Secretary of Energy, in
                    consultation with the Administrator, determines is
                    sufficient to promote the recycling of such products,
                    up to the amount of bounty for a comparable product
                    described in paragraph (2)(A).
              (4) Retirement.--The Secretary shall ensure that no product
            for which a bounty is paid under this subsection is returned to
            active service, but that it is instead destroyed, and recycled
            to the extent feasible.
              (5) Recycling appliances containing refrigerants.--
            Exclusively for the purpose of implementing the bounty payment
            program for products containing a refrigerant under this
            section, the Administrator shall establish standards for
            environmentally responsible methods of recycling and disposal
            of refrigerant-containing appliances that, at a minimum, meet
            the requirements set by the Responsible Appliance Disposal
            (RAD) Program for refrigerant disposal. The Secretary shall
            ensure that such standards are met before a bounty payment is
            made under this subsection for a product containing a
            refrigerant. Nothing in this section shall be interpreted to
            alter the requirements of section 608 of the Clean Air Act or
            to relieve any person from complying with those requirements.
      (e) Premium Awards for Development and Production of Superefficient
    Best-in-Class Products.--
              (1) In general.--(A) The Secretary of Energy shall provide
            premium awards to manufacturers for the development and
            production of Superefficient Best-in-Class Products. The
            Secretary shall set and periodically revise standards for
            eligibility of products for designation as a Superefficient
            Best-in-Class Product.
              (B) The Secretary may establish a standard for a
            Superefficient Best-in-Class Product even if no product meeting
            that standard exists, if the Secretary has reasonable grounds
            to conclude that a mass-producible product could be made to
            meet that standard.
              (C) The Secretary may also establish a Superefficient Best-
            in-Class Product standard that is met by one or more existing
            Best-in-Class Product models, if those product models have
            distinct energy efficiency attributes and performance
            characteristics that make them significantly better than other
            product models qualifying as best-in-class. The Secretary may
            not designate as Superefficient Best-in-Class Products under
            this subparagraph models that represent more than 10 percent of
            the currently qualifying Best-in-Class Product models.
              (2) Premium awards.--(A) The premium award payment provided
            to a manufacturer under this subsection shall be in addition to
            any bonus payments made under subsection (c).
              (B) The amount of the premium award paid per unit of
            Superefficient Best-in-Class Products sold to retailers or
            distributors shall be the product of--
                      (i) an amount determined by the Secretary; and
                      (ii) the difference in energy consumption between the
                    Superefficient Best-in-Class Product and the average
                    product in the product class.
              (C) The Secretary shall determine the amount under
            subparagraph (B)(i) for each product type, in consultation with
            State and utility efficiency program administrators as well as
            the Administrator, based on consideration of the present value
            to the Nation of the energy (and water or other resources or
            inputs) saved over the useful life of the product. The
            Secretary may also take into consideration the methods used to
            increase sales of qualifying products in determining such
            amount.
              (D) The Secretary may adjust the value described in
            subparagraph (C) upward or downward as appropriate, including
            based on the effect of the premium awards on the sales of
            products in different classes that may be affected by the
            program under this subsection.
              (E) Premium award payments shall be applied to sales of any
            Superefficient Best-in-Class Product for the first 3 years
            after designation as a Superefficient Best-in-Class Product.
              (3) Coordination of incentives.--No product for which Federal
            tax credit is received under section 45M of the Internal
            Revenue Code of 1986 shall be eligible to receive premium award
            payments pursuant to this subsection.
      (f) Reporting.--The Secretary of Energy shall require, as a condition
    of receiving a bonus, bounty, or premium award under this section, that
    a report containing the following documentation be provided:
              (1) For retailers and distributors, the number of units sold
            within each product type, and model-specific wholesale purchase
            prices and retail sale prices, on a monthly basis.
              (2) For manufacturers, model-specific energy consumption
            data.
              (3) For manufacturers, on an immediate basis, information
            concerning any product design or function changes that affect
            the energy consumption of the unit.
              (4) The methods used to increase the sales of qualifying
            products.
      (g) Monitoring and Verification Protocols.--The Secretary of Energy
    shall establish monitoring and verification protocols for energy
    consumption tests for each product model and for sales of energy-
    efficient models.
      (h) Disclosure.--The Secretary of Energy may require that retailers
    and distributors disclose publicly and to consumers their participation
    in the program under this section.
      (i) Cost-Effectiveness Requirement.--
              (1) Requirement.--The Secretary of Energy shall make cost-
            effectiveness a top priority in designing the program under,
            and administering, this section, except that the cost-
            effectiveness of providing premium awards to manufacturers
            under subsection (e), in aggregate, may be lower by this
            measure than that of the bonuses and bounties to retailers and
            distributors under subsections (c) and (d).
              (2) Definitions.--In this subsection:
                      (A) Cost-effectiveness.--The term ``cost-
                    effectiveness'' means a measure of aggregate savings in
                    the cost of energy over the lifetime of a product in
                    relation to the cost to the Secretary of the bonuses,
                    bounties, and premium awards provided under this
                    section for a product.
                      (B) Savings.--The term ``savings'' means the
                    cumulative megawatt-hours of electricity or million
                    British thermal units of other fuels saved by a product
                    during the projected useful life of the product, in
                    comparison to projected energy consumption of the
                    average product in the same class, taking into
                    consideration the impact of any documented measures to
                    replace, retire, and recycle low-efficiency products at
                    the time of purchase of highly-efficient substitutes.
      (j) Definitions.--In this section--
              (1) the term ``distributor'' mean an individual,
            organization, or company that sells products in multiple lots
            and not directly to end-users;
              (2) the term ``retailer'' means an individual, organization,
            or company that sells products directly to end-users; and
              (3) the term ``Superefficient Best-in-Class Product'' means a
            product that--
                      (A) can be mass produced; and
                      (B) achieves the highest level of efficiency that the
                    Secretary of Energy finds can, given the current state
                    of technology, be produced and sold commercially to
                    mass-market consumers.
      (k) Authorization of Appropriations.--There are authorized to be
    appropriated $300,000,000 for each of the fiscal years 2010 through
    2014 to the Secretary of Energy for purposes of this section, of which
    not more than 10 percent for any fiscal year may be expended on program
    administration.

    SEC. 215. WATERSENSE.

      (a) In General.--There is established within the Environmental
    Protection Agency a WaterSense program to identify and promote water
    efficient products, buildings and landscapes, and services in order--
              (1) to reduce water use;
              (2) to reduce the strain on water, wastewater, and stormwater
            infrastructure;
              (3) to conserve energy used to pump, heat, transport, and
            treat water; and
              (4) to preserve water resources for future generations,
    through voluntary labeling of, or other forms of communications about,
    products, buildings and landscapes, and services that meet the highest
    water efficiency and performance standards.
      (b) Duties.--The Administrator shall--
              (1) promote WaterSense labeled products, buildings and
            landscapes, and services in the market place as the preferred
            technologies and services for--
                      (A) reducing water use; and
                      (B) ensuring product and service performance;
              (2) work to enhance public awareness of the WaterSense label
            through public outreach, education, and other means;
              (3) establish and maintain performance standards so that
            products, buildings and landscapes, and services labeled with
            the WaterSense label perform as well or better than their less
            efficient counterparts;
              (4) publicize the need for proper installation and
            maintenance of WaterSense products by a licensed, and where
            certification guidelines exist, WaterSense-certified
            professional to ensure optimal performance;
              (5) preserve the integrity of the WaterSense label;
              (6) regularly review and, when appropriate, update WaterSense
            criteria for categories of products, buildings and landscapes,
            and services, at least once every four years;
              (7) to the extent practical, regularly estimate and make
            available to the public the production and relative market
            shares of WaterSense labeled products, buildings and
            landscapes, and services, at least annually;
              (8) to the extent practical, regularly estimate and make
            available to the public the water and energy savings
            attributable to the use of WaterSense labeled products,
            buildings and landscapes, and services, at least annually;
              (9) solicit comments from interested parties and the public
            prior to establishing or revising a WaterSense category,
            specification, installation criterion, or other criterion (or
            prior to effective dates for any such category, specification,
            installation criterion, or other criterion);
              (10) provide reasonable notice to interested parties and the
            public of any changes (including effective dates), on the
            adoption of a new or revised category, specification,
            installation criterion, or other criterion, along with--
                      (A) an explanation of changes; and
                      (B) as appropriate, responses to comments submitted
                    by interested parties;
              (11) provide appropriate lead time (as determined by the
            Administrator) prior to the applicable effective date for a new
            or significant revision to a category, specification,
            installation criterion, or other criterion, taking into account
            the timing requirements of the manufacturing, marketing,
            training, and distribution process for the specific product,
            building and landscape, or service category addressed; and
              (12) identify and, where appropriate, implement other
            voluntary approaches in commercial, institutional, residential,
            municipal, and industrial sectors to encourage reuse and
            recycling technologies, improve water efficiency, or lower
            water use while meeting, where applicable, the performance
            standards established under paragraph (3).
      (c) Authorization of Appropriations.--There are authorized to be
    appropriated $7,500,000 for fiscal year 2010, $10,000,000 for fiscal
    year 2011, $20,000,000 for fiscal year 2012, and $50,000,000 for fiscal
    year 2013 and each year thereafter, adjusted for inflation, to carry
    out this section.

    SEC. 216. FEDERAL PROCUREMENT OF WATER EFFICIENT PRODUCTS.

      (a) Definitions.--In this section:
              (1) Agency.--The term ``agency'' has the meaning given that
            term in section 7902(a) of title 5, United States Code.
              (2) Watersense product or service.--The term ``WaterSense
            product or service'' means a product or service that is rated
            for water efficiency under the WaterSense program.
              (3) Watersense program.--The term ``WaterSense program''
            means the program established by section 215 of this Act.
              (4) FEMP designated product.--The term ``FEMP designated
            product'' means a product that is designated under the Federal
            Energy Management Program of the Department of Energy as being
            among the highest 25 percent of equivalent products for
            efficiency.
              (5) Product and service.--The terms ``product'' and
            ``service'' do not include any water consuming product or
            service designed or procured for combat or combat-related
            missions. The terms also exclude products or services already
            covered by the Federal procurement regulations established
            under section 553 of the National Energy Conservation Policy
            Act (42 U.S.C. 8259b).
      (b) Procurement of Water Efficient Products.--
              (1) Requirement.--To meet the requirements of an agency for a
            water consuming product or service, the head of the agency
            shall, except as provided in paragraph (2), procure--
                      (A) a WaterSense product or service; or
                      (B) a FEMP designated product.
            A WaterSense plumbing product should preferably, when possible,
            be installed by a licensed and, when WaterSense certification
            guidelines exist, WaterSense-certified plumber or mechanical
            contractor, and a WaterSense irrigation system should
            preferably, when possible, be installed, maintained, and
            audited by a WaterSense-certified irrigation professional to
            ensure optimal performance.
              (2) Exceptions.--The head of an agency is not required to
            procure a WaterSense product or service or FEMP designated
            product under paragraph (1) if the head of the agency finds in
            writing that--
                      (A) a WaterSense product or service or FEMP
                    designated product is not cost-effective over the life
                    of the product, taking energy and water cost savings
                    into account; or
                      (B) no WaterSense product or service or FEMP
                    designated product is reasonably available that meets
                    the functional requirements of the agency.
              (3) Procurement planning.--The head of an agency shall
            incorporate into the specifications for all procurements
            involving water consuming products and systems, including guide
            specifications, project specifications, and construction,
            renovation, and services contracts that include provision of
            water consuming products and systems, and into the factors for
            the evaluation of offers received for the procurement, criteria
            used for rating WaterSense products and services and FEMP
            designated products. The head of an agency shall consider, to
            the maximum extent practicable, additional measures for
            reducing agency water consumption, including water reuse
            technologies, leak detection and repair, and use of waterless
            products that perform similar functions to existing water-
            consuming products.
      (c) Regulations.--Not later than 180 days after the date of enactment
    of this Act, the Secretary of Energy, working in coordination with the
    Administrator, shall issue guidelines to carry out this section.

    SEC. 217. WATER EFFICIENT PRODUCT REBATE PROGRAMS.

      (a) Definitions.--In this section:
              (1) Eligible state.--The term ``eligible State'' means a
            State that meets the requirements of subsection (b).
              (2) Residential water efficient product or service.--The term
            ``residential water efficient product or service'' means a
            product or service for a residence or its landscape that is
            rated for water efficiency and performance--
                      (A) by the WaterSense program, where a WaterSense
                    specification does not exist; or
                      (B) by a State program and approved by the
                    Administrator.
            Categories of water efficient products and services may include
            faucets, irrigation technologies and services, point-of-use
            water treatment devices, reuse and recycling technologies,
            toilets, and showerheads.
              (3) State program.--The term ``State program'' means a State
            program for administering rebates or vouchers for consumer
            purchase of water efficient products and services as described
            in subsection (b)(1).
              (4) Watersense program.--The term ``WaterSense program''
            means the program established by section 215 of this Act.
      (b) Eligible States.--A State shall be eligible to receive an
    allocation under subsection (c) if the State--
              (1) establishes (or has established) a State program to
            provide rebates or vouchers to residential consumers for the
            purchase of residential water efficient products or services to
            replace used products of the same type;
              (2) submits an application for the allocation at such time,
            in such form, and containing such information as the
            Administrator may require; and
              (3) provides assurances satisfactory to the Administrator
            that the State will use the allocation to supplement, but not
            supplant, funds made available to carry out the State program.
      (c) Amount of Allocations.--
              (1) In general.--Subject to paragraph (2), for each fiscal
            year, the Administrator shall allocate to each eligible State
            to carry out subsection (d) an amount equal to the product
            obtained by multiplying the amount made available under
            subsection (g) for the fiscal year by the ratio that the
            population of the State in the most recent calendar year for
            which data are available bears to the total population of all
            eligible States in that calendar year.
              (2) Minimum allocations.--For each fiscal year, the amounts
            allocated under this subsection shall be adjusted
            proportionately so that no eligible State is allocated a sum
            that is less than an amount determined by the Administrator.
      (d) Use of Allocated Funds.--Funds allocated to a State under
    subsection (c) may be used to pay up to 50 percent of the cost of
    establishing and carrying out a State program.
      (e) Fixture Recycling.--States are encouraged to promote or implement
    fixture recycling programs to manage the disposal of older fixtures
    replaced due to the rebate program under this section.
      (f) Issuance of Rebates.--Rebates or vouchers may be provided to
    residential consumers that meet the requirements of the State program.
    The State may issue all rebates or vouchers directly to residential
    consumers or, with approval of the Administrator, delegate some or all
    rebate and voucher administration to other organizations including, but
    not limited to, local governments, municipal water authorities, and
    water utilities. The amount of a rebate or voucher shall be determined
    by the State, taking into consideration--
              (1) the amount of the allocation to the State under
            subsection (c);
              (2) the amount of any Federal or State tax incentive
            available for the purchase of the residential water efficient
            product or service;
              (3) the amount necessary to change consumer behavior to
            purchase water efficient products and services; and
              (4) the consumer expenditures for onsite preparation,
            assembly, and original installation of the product.
      (g) Authorization of Appropriations.--There are authorized to be
    appropriated to the Administrator to carry out this section $50,000,000
    for each of the fiscal years 2010 and 2011, $75,000,000 for fiscal year
    2012, $100,000,000 for fiscal year 2013, and $150,000,000 for fiscal
    year 2014 and each year thereafter, adjusted for inflation.

    SEC. 218. CERTIFIED STOVES PROGRAM.

      (a) Definitions.--In this section:
              (1) Agency.--The term ``Agency'' means the Environmental
            Protection Agency.
              (2) Wood stove or pellet stove.--The term ``wood stove or
            pellet stove'' means a wood stove, pellet stove, or fireplace
            insert that uses wood or pellets for fuel.
              (3) Certified stove.--The term ``certified stove'' means a
            wood stove or pellet stove that meets the standards of
            performance for new residential wood heaters under subpart AAA
            of part 60 of subchapter C of chapter I of title 40, Code of
            Federal Regulations (or successor regulations), as certified by
            the Administrator. Pellet stoves and fireplace inserts using
            pellets for fuel that are exempt from testing by the
            Administrator but meet the same standards of performance as
            wood stoves are considered certified for the purposes of this
            section.
              (4) Eligible entity.--The term ``eligible entity'' means--
                      (A) a State, a local government, or a federally
                    recognized Indian tribe;
                      (B) Alaskan Native villages or regional or village
                    corporations (as defined in, or established under, the
                    Alaskan Native Claims Settlement Act (43 U.S.C. 1601 et
                    seq.)); and
                      (C) a nonprofit organization or institution that--
                              (i) represents or provides pollution
                            reduction or educational services relating to
                            wood smoke minimization to persons,
                            organizations, or communities; or
                              (ii) has, as its principal purpose, the
                            promotion of air quality or energy efficiency.
      (b) Establishment.--The Administrator shall establish and carry out a
    program to assist in the replacement of wood stoves or pellet stoves
    that do not meet the standards of performance referred to in subsection
    (a)(4) by--
              (1) requiring that each wood stove or pellet stove sold in
            the United States on and after the date of enactment of this
            Act meet the standards of performance referred to in subsection
            (a)(4);
              (2) requiring that no wood stove or pellet stove replaced
            under this program is sold or returned to active service, but
            that it is instead destroyed and recycled to the maximum extent
            feasible;
              (3) providing funds to an eligible entity to replace a wood
            stove or pellet stove that does not meet the standards of
            performance in subsection (a)(4) with a certified stove,
            including funds to pay for--
                      (A) installation of a replacement certified stove;
                    and
                      (B) necessary replacement of or repairs to
                    ventilation, flues, chimneys, or other relevant items
                    necessary for safe installation of a replacement
                    certified stove;
              (4) in addition to any funds that may be appropriated for the
            program under this subsection, using existing Federal, State,
            and local programs and incentives, to the greatest extent
            practicable;
              (5) prioritizing the replacement of wood stoves or pellet
            stoves manufactured before July 1, 1990; and
              (6) carrying out such other activities as the Administrator
            determines appropriate to facilitate the replacement of wood
            stoves or pellet stoves that do not meet the standards of
            performance referred to in subsection (a)(3).
      (c) Regulations.--The Administrator may promulgate such regulations
    as are necessary to carry out the program established under subsection
    (b).
      (d) Funding.--
              (1) Authorization of appropriations.--There are authorized to
            be appropriated to carry out the program under this section
            $20,000,000 for the period of fiscal years 2010 through 2014.
              (2) Designated use.--Of amounts appropriated pursuant to this
            subsection--
                      (A) 25 percent shall be designated for use to carry
                    out the program under this section on lands held in
                    trust for the benefit of a federally recognized Indian
                    tribe;
                      (B) 3 percent shall be designated for use to carry
                    out the program under this section in Alaskan Native
                    villages or regional or village corporations (as
                    defined in, or established under, the Alaskan Native
                    Claims Settlement Act (43 U.S.C. 1601 et seq.)); and
                      (C) 72 percent shall be designated for use to carry
                    out the program under this section nationwide.
              (3) Regulatory programs.--
                      (A) In general.--No grant or loan provided under this
                    section shall be used to fund the costs of emissions
                    reductions that are mandated under Federal, State, or
                    local law.
                      (B) Mandated.--For purposes of subparagraph (A),
                    voluntary or elective emission reduction measures shall
                    not be considered ``mandated'', regardless of whether
                    the reductions are included in the implementation plan
                    of a State.
      (e) EPA Authority to Accept Wood Stove or Pellet Stove Replacement
    Supplemental Environmental Projects.--
              (1) In general.--The Administrator may accept
            (notwithstanding sections 3302 and 1301 of title 31, United
            States Code) wood stove or pellet stove replacement
            Supplemental Environmental Projects if such projects, as part
            of a settlement of any alleged violation of environmental law--
                      (A) protect human health or the environment;
                      (B) are related to the underlying alleged violation;
                      (C) do not constitute activities that the defendant
                    would otherwise be legally required to perform; and
                      (D) do not provide funds for the staff of the Agency
                    or for contractors to carry out the Agency's internal
                    operations.
              (2) Certification.--In any settlement agreement regarding an
            alleged violation of environmental law in which a defendant
            agrees to perform a wood stove or pellet stove replacement
            Supplemental Environmental Project, the Administrator shall
            require the defendant to include in the settlement documents a
            certification under penalty of law that the defendant would
            have agreed to perform a comparably valued, alternative project
            other than a wood stove or pellet stove replacement
            Supplemental Environmental Project if the Administrator were
            precluded by law from accepting a wood stove or pellet stove
            replacement Supplemental Environmental Project. A failure by
            the Administrator to include this language in such a settlement
            agreement shall not create a cause of action against the United
            States under the Clean Air Act or any other law or create a
            basis for overturning a settlement agreement entered into by
            the United States.

    SEC. 219. ENERGY STAR STANDARDS.

      (a) Energy Star.--Section 324A(c) of the Energy Policy and
    Conservation Act is amended--
              (1) in paragraph (6)(B), by striking ``and'' after the
            semicolon at the end;
              (2) in paragraph (7), by striking the period at the end and
            inserting a semicolon; and
              (3) by adding at the end the following:
              ``(8) in establishing and revising an Energy Star product
            category, specification, or criterion, require inclusion of
            developmental products planned for sale within 2 years in the
            testing or evaluation of products proposed for purposes of such
            establishment or revision;
              ``(9) not later than 18 months after the date of enactment of
            this paragraph, establish and implement a rating system for
            products identified as Energy Star products pursuant to this
            section to provide consumers with the most helpful information
            on the relative energy efficiency of those products, unless the
            Administrator and the Secretary communicate to Congress that
            establishing such a system would diminish the value of the
            Energy Star brand to consumers;
              ``(10)(A) review the Energy Star product criteria for the 10
            products in each product category with the greatest energy
            consumption at least once every 3 years; and
              ``(B) based on the review, update and publish the Energy Star
            product criteria for each such category, as necessary; and
              ``(11) require periodic verification of compliance with the
            Energy Star product criteria by products identified as Energy
            Star products pursuant to this section, including--
                      ``(A) purchase and testing of products from the
                    market; or
                      ``(B) other appropriate testing and compliance
                    approaches.''.
      (b) Authorization of Appropriations.--There are authorized to be
    appropriated to carry out the amendments made by this section
    $5,000,000 for fiscal year 2010 and for each fiscal year thereafter.

                     Subtitle C--Transportation Efficiency

    SEC. 221. EMISSIONS STANDARDS.

      Title VIII of the Clean Air Act, as added by section 331 of this Act,
    is amended by inserting after part A the following new part:

                            ``PART B--MOBILE SOURCES

    ``SEC. 821. GREENHOUSE GAS EMISSION STANDARDS FOR MOBILE SOURCES.

      ``(a) New Motor Vehicles and New Motor Vehicle Engines.--(1) Pursuant
    to section 202(a)(1), by December 31, 2010, the Administrator shall
    promulgate standards applicable to emissions of greenhouse gases from
    new heavy-duty motor vehicles or new heavy-duty motor vehicle engines,
    excluding such motor vehicles covered by the Tier II standards (as
    established by the Administrator as of the date of the enactment of
    this section). The Administrator may revise these standards from time
    to time.
      ``(2) Regulations issued under section 202(a)(1) applicable to
    emissions of greenhouse gases from new heavy-duty motor vehicles or new
    heavy-duty motor vehicle engines, excluding such motor vehicles covered
    by the Tier II standards (as established by the Administrator as of the
    date of the enactment of this section), shall contain standards that
    reflect the greatest degree of emissions reduction achievable through
    the application of technology which the Administrator determines will
    be available for the model year to which such standards apply, giving
    appropriate consideration to cost, energy, and safety factors
    associated with the application of such technology. Any such
    regulations shall take effect after such period as the Administrator
    finds necessary to permit the development and application of the
    requisite technology, and, at a minimum, shall apply for a period no
    less than 3 model years beginning no earlier than the model year
    commencing 4 years after such regulations are promulgated.
      ``(3) Regulations issued under section 202(a)(1) applicable to
    emissions of greenhouse gases from new heavy-duty motor vehicles or new
    heavy-duty motor vehicle engines, excluding such motor vehicles covered
    by the Tier II standards (as established by the Administrator as of the
    date of the enactment of this section), shall supersede and satisfy any
    and all of the rulemaking and compliance requirements of section
    32902(k) of title 49, United States Code.
      ``(4) Other than as specifically set forth in paragraph (3) of this
    subsection, nothing in this section shall affect or otherwise increase
    or diminish the authority of the Secretary of Transportation to adopt
    regulations to improve the overall fuel efficiency of the commercial
    goods movement system.
      ``(b) Nonroad Vehicles and Engines.--(1) Pursuant to section
    213(a)(4) and (5), the Administrator shall identify those classes or
    categories of new nonroad vehicles or engines, or combinations of such
    classes or categories, that, in the judgment of the Administrator, both
    contribute significantly to the total emissions of greenhouse gases
    from nonroad engines and vehicles, and provide the greatest potential
    for significant and cost-effective reductions in emissions of
    greenhouse gases. The Administrator shall promulgate standards
    applicable to emissions of greenhouse gases from these new nonroad
    engines or vehicles by December 31, 2012. The Administrator shall also
    promulgate standards applicable to emissions of greenhouse gases for
    such other classes and categories of new nonroad vehicles and engines
    as the Administrator determines appropriate and in the timeframe the
    Administrator determines appropriate. The Administrator shall base such
    determination, among other factors, on the relative contribution of
    greenhouse gas emissions, and the costs for achieving reductions, from
    such classes or categories of new nonroad engines and vehicles. The
    Administrator may revise these standards from time to time.
      ``(2) Standards under section 213(a)(4) and (5) applicable to
    emissions of greenhouse gases from those classes or categories of new
    nonroad engines or vehicles identified in the first sentence of
    paragraph (1) of this subsection, shall achieve the greatest degree of
    emissions reduction achievable based on the application of technology
    which the Administrator determines will be available at the time such
    standards take effect, taking into consideration cost, energy, and
    safety factors associated with the application of such technology. Any
    such regulations shall take effect after such period as the
    Administrator finds necessary to permit the development and application
    of the requisite technology.
      ``(3) For purposes of this section and standards under section
    213(a)(4) or (5) applicable to emissions of greenhouse gases, the term
    `nonroad engines and vehicles' shall include non-internal combustion
    engines and the vehicles these engines power (such as electric engines
    and electric vehicles), for those non-internal combustion engines and
    vehicles which would be in the same category and have the same uses as
    nonroad engines and vehicles that are powered by internal combustion
    engines.
      ``(c) Aircraft and Aircraft Engines.--
              ``(1) Pursuant to section 231(a), the Administrator shall
            promulgate standards applicable to emissions of greenhouse
            gases from new aircraft and new engines used in aircraft by
            December 31, 2012. Notwithstanding any requirement in section
            231(a), the Administrator, in consultation with the
            Administrator of the Federal Aviation Administration, shall
            also promulgate standards applicable to emissions of greenhouse
            gases from other classes and categories of aircraft and
            aircraft engines for such classes and categories as the
            Administrator determines appropriate and in the timeframe the
            Administrator determines appropriate. The Administrator may
            revise these standards from time to time.
              ``(2) Standards under section 231(a) applicable to emissions
            of greenhouse gases from new aircraft and new engines used in
            aircraft, and any later revisions or additional standards,
            shall achieve the greatest degree of emissions reduction
            achievable based on the application of technology which the
            Administrator determines will be available at the time such
            standards take effect, taking into consideration cost, energy,
            and safety factors associated with the application of such
            technology. Any such standards shall take effect after such
            period as the Administrator finds necessary to permit the
            development and application of the requisite technology.
      ``(d) Averaging, Banking, and Trading of Emissions Credits.--In
    establishing standards applicable to emissions of greenhouse gases
    pursuant to this section and sections 202(a), 213(a)(4) and (5), and
    231(a), the Administrator may establish provisions for averaging,
    banking, and trading of greenhouse gas emissions credits within or
    across classes or categories of motor vehicles and motor vehicle
    engines, nonroad vehicles and engines (including marine vessels), and
    aircraft and aircraft engines, to the extent the Administrator
    determines appropriate and considering the factors appropriate in
    setting standards under those sections. Such provisions may include
    reasonable and appropriate provisions concerning generation, banking,
    trading, duration, and use of credits.
      ``(e) Reports.--The Administrator shall, from time to time, submit a
    report to Congress that projects the amount of greenhouse gas emissions
    from the transportation sector, including transportation fuels, for the
    years 2030 and 2050, based on the standards adopted under this section.
      ``(f) Greenhouse Gases.--Notwithstanding the provisions of section
    711, hydrofluorocarbons shall be considered a greenhouse gas for
    purposes of this section.''.

    SEC. 222. GREENHOUSE GAS EMISSIONS REDUCTIONS THROUGH TRANSPORTATION
                        EFFICIENCY.

      Title VIII of the Clean Air Act, as added by section 331 of this Act,
    is further amended by inserting after part C the following new part:

                        ``PART D--PLANNING REQUIREMENTS

    ``SEC. 841. GREENHOUSE GAS EMISSIONS REDUCTIONS THROUGH TRANSPORTATION
                        EFFICIENCY.

      ``(a) In General.--Each State shall--
              ``(1) not later than 3 years after the date of enactment of
            this section, submit to the Administrator goals for
            transportation-related greenhouse gas emissions reductions,
            which goals shall be reasonably commensurate with the targets
            for overall greenhouse gas emissions reduction established by
            this Act; and
              ``(2) as part of each transportation plan or transportation
            improvement program developed under title 23 or title 49,
            United States Code, ensure that a plan to achieve such goals,
            or an updated version of such a plan, is submitted to the
            Administrator and to the Secretary of Transportation (in this
            section referred to as the `Secretary') by each metropolitan
            planning organization in the State for an area with a
            population exceeding 200,000.
      ``(b) Models and Methodologies.--
              ``(1) In general.--The Administrator shall promulgate
            regulations to establish standards for use in developing goals,
            plans, and strategies under this section and for monitoring
            progress toward such goals. Such standards shall include--
                      ``(A) data collection techniques for assessing State
                    and regional transportation-related greenhouse gas
                    emissions;
                      ``(B) methodologies for determining transportation-
                    related greenhouse gas emissions baselines;
                      ``(C) models and methodologies for scenario analysis;
                    and
                      ``(D) models and methodologies for estimating
                    transportation-related greenhouse gas emissions
                    reductions from the strategies considered under this
                    section.
            Such regulations may approve or improve existing models and
            methodologies
              ``(2) Timing.--The Administrator shall--
                      ``(A) publish proposed regulations under paragraph
                    (1) not later than 1 year after the date of enactment
                    of this section; and
                      ``(B) promulgate final regulations under paragraph
                    (1) not later than 2 years after such date of
                    enactment.
              ``(3) Assessment.--At least every 6 years after promulgating
            final regulations under paragraph (1), the Administrator, in
            coordination with the Secretary, shall assess current and
            projected progress in reducing transportation-related
            greenhouse gas emissions. The assessment shall examine the
            contributions to emissions reductions attributable to
            improvements in vehicle efficiency, greenhouse gas performance
            of transportation fuels, and increased efficiency in utilizing
            transportation systems.
      ``(c) Greenhouse Gas Reduction Goals.--
              ``(1) Consultation.--Each State shall develop the goals
            referred to in subsection (a)(1)--
                      ``(A) in concurrence with State agencies responsible
                    for air quality and transportation;
                      ``(B) in consultation with each metropolitan planning
                    organization for an area in the State with a population
                    exceeding 200,000 and applicable local air quality and
                    transportation agencies; and
                      ``(C) with public involvement, including public
                    comment periods and meetings.
              ``(2) Period.--The goals referred to in subsection (a)(1)
            shall be for 4-, 10-, and 20-year periods.
              ``(3) Targets; designated year.--The goals referred to in
            subsection (a)(1) shall establish targets to reduce
            transportation-related greenhouse gas emissions in the covered
            area. The targets shall be designed to ensure that the levels
            of such emissions stabilize and decrease after a designated
            year. The State shall consider designating 2010 as such
            designated year.
              ``(4) Covered area.--The goals referred to in subsection
            (a)(1)--
                      ``(A) shall be established on a statewide basis;
                      ``(B) shall be established for each metropolitan
                    planning organization in the State for an area with a
                    population exceeding 200,000; and
                      ``(C) may be established on a voluntary basis, in
                    accordance with the provisions of this section, for any
                    metropolitan planning organization not described in
                    subparagraph (B).
              ``(5) Revised goals.--Every 4 years, each State shall update
            and revise, as appropriate, the goals referred to in subsection
            (a)(1).
      ``(d) Planning.--A plan submitted under subsection (a)(2) shall--
              ``(1) be based upon the models and methodologies established
            by the Administrator under subsection (b);
              ``(2) use transportation and land use scenario analysis to
            address transportation-related greenhouse gas emissions and
            economic development impacts; and
              ``(3) be developed--
                      ``(A) with public involvement, including public
                    comment periods and meetings that provide opportunities
                    for comment from a variety of stakeholders based on
                    age, race, income, and disability;
                      ``(B) with regional coordination, including with
                    respect to--
                              ``(i) metropolitan planning organizations;
                              ``(ii) the localities comprising the
                            metropolitan planning organization;
                              ``(iii) the State in which the metropolitan
                            planning organization is located; and
                              ``(iv) air quality, environmental health, and
                            transportation agencies for the State and
                            region involved; and
                      ``(C) in consultation with the State and local
                    housing, public health, economic development, land use,
                    environment, and public transportation agencies.
      ``(e) Strategies.--In developing goals under subsection (a)(1) and a
    plan under subsection (a)(2), the State or metropolitan planning
    organization, as applicable, shall consider transportation and land use
    planning strategies to reduce transportation-related greenhouse gas
    emissions, including the following:
              ``(1) Efforts to increase or improve public transportation,
            including--
                      ``(A) new public transportation systems, including
                    new commuter rail systems;
                      ``(B) expansion of existing public transportation
                    systems;
                      ``(C) employer-based subsidies;
                      ``(D) cleaner locomotive technologies;
                      ``(E) quality of service improvements, including
                    improved frequency of service; and
                      ``(F) use of transit buses that are powered by
                    alternative fuels.
              ``(2) Updates to zoning and other land use regulations and
            plans to support development that--
                      ``(A) coordinates transportation and land use
                    planning;
                      ``(B) focuses future growth close to existing and
                    planned job centers and public facilities;
                      ``(C) uses existing infrastructure;
                      ``(D) promotes walking, bicycling, and public
                    transportation use; and
                      ``(E) mixes land uses such as housing, retail, and
                    schools.
              ``(3) Implementation of a policy (referred to as a `complete
            streets policy') that--
                      ``(A) ensures adequate accommodation of all users of
                    transportation systems, including pedestrians,
                    bicyclists, public transportation users, motorists,
                    children, the elderly, and individuals with
                    disabilities; and
                      ``(B) adequately addresses the safety and convenience
                    of all users of the transportation system.
              ``(4) Construction of bicycle and pedestrian infrastructure
            facilities, including facilities that improve the connections
            with networks that provide access to human services,
            employment, schools, and retail.
              ``(5) Projects to promote telecommuting, flexible work
            schedules, or satellite work centers.
              ``(6) Pricing measures, including tolling, congestion
            pricing, and pay-as-you-drive insurance.
              ``(7) Intermodal freight system strategies, including
            enhanced rail services, short sea shipping, and other
            strategies.
              ``(8) Parking policies.
              ``(9) Intercity rail service, including high speed rail.
              ``(10) Travel demand management projects.
              ``(11) Restriction of the use of certain roads, or lanes, by
            vehicles other than passenger buses and high-occupancy
            vehicles.
              ``(12) Reduction of vehicle idling, including idling
            associated with freight management, construction,
            transportation, and commuter operations.
              ``(13) Policies to encourage the use of retrofit technologies
            and early replacement of vehicles, engines and equipment to
            reduce transportation-related greenhouse gas emissions from
            existing mobile sources.
              ``(14) Other projects that the Administrator finds reduce
            transportation-related greenhouse gas emissions.
      ``(f) Public Availability.--The Administrator shall publish,
    including by posting on the Environmental Protection Agency's website--
              ``(1) the goals and plans submitted under subsection (a); and
              ``(2) for each plan submitted under subsection (a)(2), an
            analysis of the anticipated effects of the plan on greenhouse
            gas emissions and oil consumption.
      ``(g) Certification.--The Administrator, in consultation with the
    Secretary, shall certify a State or metropolitan planning organization
    greenhouse gas reduction plan submitted under subsection (a)(2) if the
    plan's implementation is likely to meet the corresponding greenhouse
    gas reduction goal referred to in subsection (a)(1). If the
    Administrator, in consultation with the Secretary, determines that a
    submitted plan cannot be certified, the State or metropolitan planning
    organization shall revise and resubmit the plan within 1 year.
      ``(h) Enforcement.--If the Administrator finds that a State has
    failed to submit goals under subsection (a)(1), has failed to ensure
    the submission of a plan under subsection (a)(2), or has failed to
    submit a revised plan under subsection (g), for any area in the State
    (irrespective of whether the area is a nonattainment area), the
    Administrator shall impose a prohibition in accordance with section
    179(b)(1) applicable to the area within 2 years of such a finding. The
    Administrator may not impose a prohibition under the preceding
    sentence, and no action may be brought by the Administrator or any
    other entity alleging a violation of this section, based on the content
    or adequacy of a goal or plan submitted under subsection (a)(1) or
    (a)(2) or failure to achieve the goal submitted under subsection
    (a)(1).
      ``(i) Competitive Grants.--
              ``(1) Grants.--The Administrator, in consultation with the
            Secretary, may award grants to States or metropolitan planning
            organizations--
                      ``(A) to support activities related to improving data
                    collection, modeling, and monitoring systems to assess
                    transportation-related greenhouse gas emissions and the
                    effects of plans, policies, and strategies referenced
                    in this section;
                      ``(B) for the development of goals and plans to be
                    submitted under sections (a)(1) or (a)(2); and
                      ``(C) to implement plans certified under subsection
                    (g) or elements thereof, provided that each project
                    thus funded includes a measurement and evaluation
                    component that meets the regulations promulgated under
                    subsection (b).
              ``(2) Priority.--In making grants under paragraph (1)(C), the
            Administrator shall give priority to applicants based upon--
                      ``(A) the amount of total greenhouse gas emissions to
                    be reduced as a result of implementation of a certified
                    plan, within the covered area, as determined by methods
                    established under subsection (b);
                      ``(B) the amount of per capita greenhouse gas
                    emissions to be reduced as a result of implementation
                    of a certified plan, within the covered area, as
                    determined by methods established under subsection (b);
                      ``(C) the cost effectiveness, in terms of dollars per
                    tons of greenhouse gas reductions, to be achieved as a
                    result of the implementation of a certified plan;
                      ``(D) the potential for both short- and long-term
                    reductions; and
                      ``(E) such other factors as the Administrator
                    determines appropriate.
              ``(3) Authorization of appropriations.--To carry out this
            subsection, there are authorized to be appropriated such sums
            as may be necessary.
      ``(j) Definitions.--In this section:
              ``(1) The term `metropolitan planning organization' means a
            metropolitan planning organization, as such term is used in
            section 176.
              ``(2) The term `scenario analysis' means an analysis that is
            conducted by identifying different trends and making
            projections based on those trends to develop a range of
            scenarios and estimates of how each scenario could improve
            access to goods and services, including access to employment,
            education, and health care (especially for elderly and
            economically disadvantaged communities), and could affect rates
            of--
                      ``(A) vehicle miles traveled;
                      ``(B) vehicle hours traveled;
                      ``(C) use of mobile source fuel by type, including
                    electricity; and
                      ``(D) transportation-related greenhouse gas
                    emissions.
      ``(k) Land Use Authority.--Nothing in this section may be construed
    to--
              ``(1) infringe upon the existing authority of State or local
            governments to plan or control land use; or
              ``(2) provide or transfer authority over land use to any
            other entity.''.

    SEC. 223. SMARTWAY TRANSPORTATION EFFICIENCY PROGRAM.

      Part B of title VIII of the Clean Air Act, as added by section 221 of
    this Act is amended by adding after section 821 the following section:

    ``SEC. 822. SMARTWAY TRANSPORTATION EFFICIENCY PROGRAM.

      ``(a) In General.--There is established within the Environmental
    Protection Agency a SmartWay Transport Program to quantify,
    demonstrate, and promote the benefits of technologies, products, fuels,
    and operational strategies that reduce petroleum consumption, air
    pollution, and greenhouse gas emissions from the mobile source sector.
      ``(b) General Duties.--Under the program established under this
    section, the Administrator shall carry out each of the following:
              ``(1) Development of measurement protocols to evaluate the
            energy consumption and greenhouse gas impacts from technologies
            and strategies in the mobile source sector, including those for
            passenger transport and goods movement.
              ``(2) Development of qualifying thresholds for certifying,
            verifying, or designating energy-efficient, low-greenhouse gas
            SmartWay technologies and strategies for each mode of passenger
            transportation and goods movement.
              ``(3) Development of partnership and recognition programs to
            promote best practices and drive demand for energy-efficient,
            low-greenhouse gas transportation performance.
              ``(4) Promotion of the availability of, and encouragement of
            the adoption of, SmartWay certified or verified technologies
            and strategies, and publication of the availability of
            financial incentives, such as assistance from loan programs and
            other Federal and State incentives.
      ``(c) Smartway Transport Freight Partnership.--The Administrator
    shall establish a SmartWay Transport Partnership program with shippers
    and carriers of goods to promote energy-efficient, low-greenhouse gas
    transportation. In carrying out such partnership, the Administrator
    shall undertake each of the following:
              ``(1) Certification of the energy and greenhouse gas
            performance of participating freight carriers, including those
            operating rail, trucking, marine, and other goods movement
            operations.
              ``(2) Publication of a comprehensive energy and greenhouse
            gas performance index of freight modes (including rail,
            trucking, marine, and other modes of transporting goods) and
            individual freight companies so that shippers can choose to
            deliver their goods more efficiently.
              ``(3) Development of tools for--
                      ``(A) carriers to calculate their energy and
                    greenhouse gas performance; and
                      ``(B) shippers to calculate the energy and greenhouse
                    gas impacts of moving their products and to evaluate
                    the relative impacts from transporting their goods by
                    different modes and corporate carriers.
              ``(4) Provision of recognition opportunities for
            participating shipper and carrier companies demonstrating
            advanced practices and achieving superior levels of greenhouse
            gas performance.
      ``(d) Improving Freight Greenhouse Gas Performance Databases.--The
    Administrator shall, in coordination with other appropriate agencies,
    define and collect data on the physical and operational characteristics
    of the Nation's truck population, with special emphasis on data related
    to energy efficiency and greenhouse gas performance to inform the
    performance index published under subsection (c)(2) of this section,
    and other means of goods transport as necessary, at least every 5
    years.
      ``(e) Establishment of Financing Program.--The Administrator shall
    establish a SmartWay Financing Program to competitively award funding
    to eligible entities identified by the Administrator in accordance with
    the program requirements in subsection (g).
      ``(f) Purpose.--Under the SmartWay Financing Program, eligible
    entities shall--
              ``(1) use funds awarded by the Administrator to provide
            flexible loan and lease terms that increase approval rates or
            lower the costs of loans and leases in accordance with guidance
            developed by the Administrator; and
              ``(2) make such loans and leases available to public and
            private entities for the purpose of adopting low-greenhouse gas
            technologies or strategies for the mobile source sector that
            are designated by the Administrator.
      ``(g) Program Requirements.--The Administrator shall determine
    program design elements and requirements, including--
              ``(1) the type of financial mechanism with which to award
            funding, in the form of grants or contracts;
              ``(2) the designation of eligible entities to receive
            funding, including State, tribal, and local governments,
            regional organizations comprised of governmental units,
            nonprofit organizations, or for-profit companies;
              ``(3) criteria for evaluating applications from eligible
            entities, including anticipated--
                      ``(A) cost-effectiveness of loan or lease program on
                    a metric-ton-of-greenhouse gas-saved-per-dollar basis;
                      ``(B) ability to promote the loan or lease program
                    and associated technologies and strategies to the
                    target audience; and
              ``(4) reporting requirements for entities that receive
            awards, including--
                      ``(A) actual cost-effectiveness and greenhouse gas
                    savings from the loan or lease program based on a
                    methodology designated by the Administrator;
                      ``(B) the total number of applications and number of
                    approved applications; and
                      ``(C) terms granted to loan and lease recipients
                    compared to prevailing market practices.
      ``(h) Authorization of Appropriations.--Such sums as necessary are
    authorized to be appropriated to the Administrator to carry out this
    section.''.

    SEC. 224. STATE VEHICLE FLEETS.

      Section 507(o) of the Energy Policy Act of 1992 (42 U.S.C. 13257) is
    amended by adding the following new paragraph at the end thereof:
      ``(3) The Secretary shall revise the rules under this subsection with
    respect to the types of alternative fueled vehicles required for
    compliance with this subsection to ensure those rules are consistent
    with any guidance issued pursuant to section 303 of this Act.''.

               Subtitle D--Industrial Energy Efficiency Programs

    SEC. 241. INDUSTRIAL PLANT ENERGY EFFICIENCY STANDARDS.

      The Secretary of Energy shall continue to support the development of
    the American National Standards Institute (ANSI) voluntary industrial
    plant energy efficiency certification program, pending International
    Standards Organization (ISO) consensus standard 50001, and other
    related ANSI/ISO standards. In addition, the Department shall undertake
    complementary activities through the Department of Energy's Industry
    Technologies Program that support the voluntary implementation of such
    standards by manufacturing firms. There are authorized to be
    appropriated to the Secretary such sums as are necessary to carry out
    these activities. The Secretary shall report to Congress on the status
    of standards development and plans for further standards development
    pursuant to this section by not later than 18 months after the date of
    enactment of this Act, and shall prepare a second such report 18 months
    thereafter.

    SEC. 242. ELECTRIC AND THERMAL WASTE ENERGY RECOVERY AWARD PROGRAM.

      (a) Electric and Thermal Waste Energy Recovery Awards.--The Secretary
    of Energy shall establish a program to make monetary awards to the
    owners and operators of new and existing electric energy generation
    facilities or thermal energy production facilities using fossil or
    nuclear fuel, to encourage them to use innovative means of recovering
    any thermal energy that is a potentially useful byproduct of electric
    power generation or other processes to--
              (1) generate additional electric energy; or
              (2) make sales of thermal energy not used for electric
            generation, in the form of steam, hot water, chilled water, or
            desiccant regeneration, or for other commercially valid
            purposes.
      (b) Amount of Awards.--
              (1) Eligibility.--Awards shall be made under subsection (a)
            only for the use of innovative means that achieve net energy
            efficiency at the facility concerned significantly greater than
            the current standard technology in use at similar facilities.
              (2) Amount.--The amount of an award made under subsection (a)
            shall equal an amount up to the value of 25 percent of the
            energy projected to be recovered or generated during the first
            5 years of operation of the facility using the innovative
            energy recovery method, or such lesser amount that the
            Secretary determines to be the minimum amount that can cost-
            effectively stimulate such innovation.
              (3) Limitation.--No person may receive an award under this
            section if a grant under the waste energy incentive grant
            program under section 373 of the Energy Policy and Conservation
            Act (42 U.S.C. 6343) is made for the same energy savings
            resulting from the same innovative method.
      (c) Regulatory Status.--The Secretary of Energy shall--
              (1) assist State regulatory commissions to identify and make
            changes in State regulatory programs for electric utilities to
            provide appropriate regulatory status for thermal energy
            byproduct businesses of regulated electric utilities to
            encourage those utilities to enter businesses making the sales
            referred to in subsection (a)(2); and
              (2) encourage self-regulated utilities to enter businesses
            making the sales referred to in subsection (a)(2).
      (d) Authorization of Appropriations.--There are authorized to be
    appropriated to the Secretary of Energy such sums as are necessary for
    the purposes of this section.

    SEC. 243. CLARIFYING ELECTION OF WASTE HEAT RECOVERY FINANCIAL
                        INCENTIVES.

      Section 373(e) of the Energy Policy and Conservation Act (42 U.S.C.
    6343(e)) is amended--
              (1) by striking ``that qualifies for'' and inserting ``who
            elects to claim''; and
              (2) by inserting ``from that project'' after ``for waste heat
            recovery''.

    SEC. 244. MOTOR MARKET ASSESSMENT AND COMMERCIAL AWARENESS PROGRAM.

      (a) Findings.--Congress finds that--
              (1) electric motor systems account for about half of the
            electricity used in the United States;
              (2) electric motor energy use is determined by both the
            efficiency of the motor and the system in which the motor
            operates;
              (3) Federal Government research on motor end use and
            efficiency opportunities is more than a decade old; and
              (4) the Census Bureau has discontinued collection of data on
            motor and generator importation, manufacture, shipment, and
            sales.
      (b) Definitions.--In this section:
              (1) Department.--The term ``Department'' means the Department
            of Energy.
              (2) Interested parties.--The term ``interested parties''
            includes--
                      (A) trade associations;
                      (B) motor manufacturers;
                      (C) motor end users;
                      (D) electric utilities; and
                      (E) individuals and entities that conduct energy
                    efficiency programs.
              (3) Secretary.--The term ``Secretary'' means the Secretary of
            Energy, in consultation with interested parties.
      (c) Assessment.--The Secretary shall conduct an assessment of
    electric motors and the electric motor market in the United States that
    shall--
              (1) include important subsectors of the industrial and
            commercial electric motor market (as determined by the
            Secretary), including--
                      (A) the stock of motors and motor-driven equipment;
                      (B) efficiency categories of the motor population;
                    and
                      (C) motor systems that use drives, servos, and other
                    control technologies;
              (2) characterize and estimate the opportunities for
            improvement in the energy efficiency of motor systems by market
            segment, including opportunities for--
                      (A) expanded use of drives, servos, and other control
                    technologies;
                      (B) expanded use of process control, pumps,
                    compressors, fans or blowers, and material handling
                    components; and
                      (C) substitution of existing motor designs with
                    existing and future advanced motor designs, including
                    electronically commutated permanent magnet, interior
                    permanent magnet, and switched reluctance motors; and
              (3) develop an updated profile of motor system purchase and
            maintenance practices, including surveying the number of
            companies that have motor purchase and repair specifications,
            by company size, number of employees, and sales.
      (d) Recommendations; Update.--Based on the assessment conducted under
    subsection (c), the Secretary shall--
              (1) develop--
                      (A) recommendations to update the detailed motor
                    profile on a periodic basis;
                      (B) methods to estimate the energy savings and market
                    penetration that is attributable to the Save Energy Now
                    Program of the Department; and
                      (C) recommendations for the Director of the Census
                    Bureau on market surveys that should be undertaken in
                    support of the motor system activities of the
                    Department; and
              (2) prepare an update to the Motor Master+ program of the
            Department.
      (e) Program.--Based on the assessment, recommendations, and update
    required under subsections (c) and (d), the Secretary shall establish a
    proactive, national program targeted at motor end-users and delivered
    in cooperation with interested parties to increase awareness of--
              (1) the energy and cost-saving opportunities in commercial
            and industrial facilities using higher efficiency electric
            motors;
              (2) improvements in motor system procurement and management
            procedures in the selection of higher efficiency electric
            motors and motor-system components, including drives, controls,
            and driven equipment; and
              (3) criteria for making decisions for new, replacement, or
            repair motor and motor system components.

    SEC. 245. MOTOR EFFICIENCY REBATE PROGRAM.

      (a) In General.--Part C of title III of the Energy Policy and
    Conservation Act (42 U.S.C. 6311 et seq.) is amended by adding at the
    end the following:

    ``SEC. 347. MOTOR EFFICIENCY REBATE PROGRAM.

      ``(a) Establishment.--Not later than January 1, 2010, in accordance
    with subsection (b), the Secretary shall establish a program to provide
    rebates for expenditures made by entities--
              ``(1) for the purchase and installation of a new electric
            motor that has a nominal full load efficiency that is not less
            than the nominal full load efficiency as defined in--
                      ``(A) table 12-12 of NEMA Standards Publication MG 1-
                    2006 for random wound motors rated 600 volts or lower;
                    or
                      ``(B) table 12-13 of NEMA Standards Publication MG 1-
                    2006 for form wound motors rated 5000 volts or lower;
                    and
              ``(2) to replace an installed motor of the entity the
            specifications of which are established by the Secretary by a
            date that is not later than 90 days after the date of enactment
            of this section.
      ``(b) Requirements.--
              ``(1) Application.--To be eligible to receive a rebate under
            this section, an entity shall submit to the Secretary an
            application in such form, at such time, and containing such
            information as the Secretary may require, including--
                      ``(A) demonstrated evidence that the entity purchased
                    an electric motor described in subsection (a)(1) to
                    replace an installed motor described in subsection
                    (a)(2);
                      ``(B) demonstrated evidence that the entity--
                              ``(i) removed the installed motor of the
                            entity from service; and
                              ``(ii) properly disposed the installed motor
                            of the entity; and
                      ``(C) the physical nameplate of the installed motor
                    of the entity.
              ``(2) Authorized amount of rebate.--The Secretary may provide
            to an entity that meets each requirement under paragraph (1) a
            rebate the amount of which shall be equal to the product
            obtained by multiplying--
                      ``(A) the nameplate horsepower of the electric motor
                    purchased by the entity in accordance with subsection
                    (a)(1); and
                      ``(B) $25.00.
              ``(3) Payments to distributors of qualifying electric
            motors.--To assist in the payment for expenses relating to
            processing and motor core disposal costs, the Secretary shall
            provide to the distributor of an electric motor described in
            subsection (a)(1), the purchaser of which received a rebate
            under this section, an amount equal to the product obtained by
            multiplying--
                      ``(A) the nameplate horsepower of the electric motor;
                    and
                      ``(B) $5.00.
      ``(c) Authorization of Appropriations.--There are authorized to be
    appropriated to carry out this section, to remain available until
    expended--
              ``(1) $80,000,000 for fiscal year 2011;
              ``(2) $75,000,000 for fiscal year 2012;
              ``(3) $70,000,000 for fiscal year 2013;
              ``(4) $65,000,000 for fiscal year 2014; and
              ``(5) $60,000,000 for fiscal year 2015.''.
      (b) Table of Contents.--The table of contents of the Energy Policy
    and Conservation Act (42 U.S.C. prec. 6201) is amended by adding at the
    end of the items relating to part C of title III the following:

    ``Sec. 347. Motor efficiency rebate program.''.

       Subtitle E--Improvements in Energy Savings Performance Contracting

    SEC. 251. ENERGY SAVINGS PERFORMANCE CONTRACTS.

      (a) Competition Requirements for Task or Delivery Orders Under Energy
    Savings Performance Contracts.--
              (1) Competition requirements.--Subsection (a) of section 801
            of the National Energy Conservation Policy Act (42 U.S.C.
            8287(a)) is amended by adding at the end the following
            paragraph:
      ``(3)(A) The head of a Federal agency may issue a task or delivery
    order under an energy savings performance contract by--
              ``(i) notifying all contractors that have received an award
            under such contract that the agency proposes to discuss energy
            savings performance services for some or all of its facilities,
            soliciting an expression of interest in performing site surveys
            or investigations and feasibility designs and studies and the
            submission of qualifications from such contractors, and
            including in such notice summary information concerning energy
            use for any facilities that the agency has specific interest in
            including in such contract;
              ``(ii) reviewing all expressions of interest and
            qualifications submitted pursuant to the notice under clause
            (i);
              ``(iii) selecting two or more contractors (from among those
            reviewed under clause (ii)) to conduct discussions concerning
            the contractors' respective qualifications to implement
            potential energy conservation measures, including requesting
            references demonstrating experience on similar efforts and the
            resulting energy savings of such similar efforts;
              ``(iv) selecting and authorizing--
                      ``(I) more than one contractor (from among those
                    selected under clause (iii)) to conduct site surveys,
                    investigations, feasibility designs and studies or
                    similar assessments for the energy savings performance
                    contract services (or for discrete portions of such
                    services), for the purpose of allowing each such
                    contractor to submit a firm, fixed-price proposal to
                    implement specific energy conservation measures; or
                      ``(II) one contractor (from among those selected
                    under clause (iii)) to conduct a site survey,
                    investigation, a feasibility design and study or
                    similar for the purpose of allowing the contractor to
                    submit a firm, fixed-price proposal to implement
                    specific energy conservation measures;
              ``(v) negotiating a task or delivery order for energy savings
            performance contracting services with the contractor or
            contractors selected under clause (iv) based on the energy
            conservation measures identified; and
              ``(vi) issuing a task or delivery order for energy savings
            performance contracting services to such contractor or
            contractors.
      ``(B) The issuance of a task or delivery order for energy savings
    performance contracting services pursuant to subparagraph (A) is deemed
    to satisfy the task and delivery order competition requirements in
    section 2304c(d) of title 10, United States Code, and section 303J(d)
    of the Federal Property and Administrative Services Act of 1949 (41
    U.S.C. 253j(d)).
      ``(C) The Secretary may issue guidance as necessary to agencies
    issuing task or delivery orders pursuant to subparagraph (A).''.
              (2) Effective date.--The amendment made by paragraph (1) is
            inapplicable to task or delivery orders issued before the date
            of enactment of this section.
      (b) Inclusion of Thermal Renewable Energy.--Section 203 of the Energy
    Policy Act of 2005 (42 U.S.C. 15852) is amended--
              (1) in subsection (a), by striking ``electric''; and
              (2) in subsection (b)(2), by inserting ``or thermal'' after
            ``means electric''.
      (c)  Credit for Renewable Energy Produced and Used on Site.--
    Subsection (c) of section 203 of the Energy Policy Act of 2005 (42
    U.S.C. 15852) is amended to read as follows:
      ``(c) Calculation.--Renewable energy produced at a Federal facility,
    on Federal lands, or on Indian lands (as defined in title XXVI of the
    Energy Policy Act of 1992 (25 U.S.C. 3501 et seq.)) shall be calculated
    separately from renewable energy consumed at a Federal facility, and
    each may be used to comply with the consumption requirement under
    subsection (a).''.
      (d) Financing Flexibility.--Section 801(a)(2)(E) of the National
    Energy Conservation Policy Act (42 U.S.C. 8287(a)(2)(E)) is amended by
    striking ``In'' and inserting ``Notwithstanding any other provision of
    law, in''.

                        Subtitle F--Public Institutions

    SEC. 261. PUBLIC INSTITUTIONS.

      Section 399A of the Energy Policy and Conservation Act (42 U.S.C.
    6371h-1) is amended--
              (1) in subsection (a)(5), by striking ``or a designee'' and
            inserting ``a not-for-profit hospital or not-for-profit
            inpatient health care facility, or a designated agent'';
              (2) in subsection (c)(1), by striking subparagraph (C);
              (3) in subsection (f)(3)(A), by striking ``$1,000,000'' and
            inserting ``$2,500,000''; and
              (4) in subsection (i)(1), by striking ``$250,000,000 for each
            of fiscal years 2009 through 2013'' and inserting
            ``$250,000,000 for each of fiscal years 2010 through 2015''.

    SEC. 262. COMMUNITY ENERGY EFFICIENCY FLEXIBILITY.

      Section 545(b)(3) of the Energy Independence and Security Act of 2007
    (42 U.S.C. 17155(b)(3)) is amended--
              (1) by striking ``Indian tribe may use'' and all that follows
            through ``for administrative expenses'' and inserting ``Indian
            tribe may use for administrative expenses'';
              (2) by striking subparagraphs (B) and (C);
              (3) by redesignating the remaining clauses (i) and (ii) as
            subparagraphs (A) and (B), respectively and adjusting the
            margin of those subparagraphs accordingly; and
              (4) by striking the semicolon at the end and inserting a
            period.

    SEC. 263. SMALL COMMUNITY JOINT PARTICIPATION.

      (a) Section 541(3)(A) of the Energy Independence and Security Act of
    2007 is amended in clause (i) by striking ``and'' at the end of
    subclause (II), in clause (ii) by striking the period at the end of
    subclause (II) and inserting ``; or'', and by inserting the following
    new clause (iii):
                      ``(iii) a group of adjacent, contiguous, or
                    geographically proximate units of local government that
                    reach agreement to act jointly for purposes of this
                    section and that represent a combined population of not
                    less than 35,000.''.
      (b) Section 541(3)(B) of the Energy Independence and Security Act of
    2007 is amended in clause (i) by striking ``or'', in clause (ii) by
    striking the period at the end and inserting ``; or'', and by inserting
    the following new clause (iii):
                      ``(iii) a group of adjacent, contiguous, or
                    geographically proximate units of local government that
                    reach agreement to act jointly for purposes of this
                    section and that represent a combined population of not
                    less than 50,000.''.

    SEC. 264. LOW INCOME COMMUNITY ENERGY EFFICIENCY PROGRAM.

      (a) In General.--The Secretary of Energy is authorized to make grants
    to private, nonprofit, mission-driven community development
    organizations including community development corporations and
    community development financial institutions to provide financing to
    businesses and projects that improve energy efficiency; identify and
    develop alternative, renewable, and distributed energy supplies;
    provide technical assistance and promote job and business opportunities
    for low-income residents; and increase energy conservation in low
    income rural and urban communities.
      (b) Grants.--The purpose of such grants is to increase the flow of
    capital and benefits to low income communities, minority-owned and
    woman-owned businesses and entrepreneurs and other projects and
    activities located in low income communities in order to reduce
    environmental degradation, foster energy conservation and efficiency
    and create job and business opportunities for local residents. The
    Secretary may make grants on a competitive basis for--
              (1) investments that develop alternative, renewable, and
            distributed energy supplies;
              (2) capitalizing loan funds that lend to energy efficiency
            projects and energy conservation programs;
              (3) technical assistance to plan, develop, and manage an
            energy efficiency financing program; and
              (4) technical and financial assistance to assist small-scale
            businesses and private entities develop new renewable and
            distributed sources of power or combined heat and power
            generation.
      (c) Authorization of Appropriations.--For the purposes of this
    section there is authorized to be appropriated $50,000,000 for each of
    the fiscal years 2010 through 2015.

                           Subtitle G--Miscellaneous

    SEC. 271. ENERGY EFFICIENT INFORMATION AND COMMUNICATIONS TECHNOLOGIES.

      Section 543 of the National Energy Conservation Policy Act (42 U.S.C.
    8253) is amended to read as follows:

    ``SEC. 543. ENERGY EFFICIENT INFORMATION AND COMMUNICATIONS
                        TECHNOLOGIES.

      ``(a) In General.--Not later than 1 year after the date of enactment
    of the American Clean Energy and Security Act of 2009, each Federal
    agency shall collaborate with the Director of the Office of Management
    and Budget (referred to in this section as the `Director') to create an
    implementation strategy, including best practices and measurement and
    verification techniques, for the purchase and use of energy efficient
    information and communications technologies and practices. Wherever
    possible, existing standards, specifications, performance metrics, and
    best management practices that have been or are being developed in open
    collaboration and with broad stakeholder input and review should be
    incorporated. In addition, agency strategies shall be flexible, cost-
    effective, and based on the specific operating requirements and
    statutory mission of each agency.
      ``(b) Energy Efficient Information and Communications Technologies.--
    In developing an implementation strategy, each agency shall--
              ``(1) consider information and communications technologies
            and infrastructure, including, but not limited to, advanced
            metering infrastructure, information and communications
            technology services and products, efficient data center
            strategies, applications modernization and rationalization,
            building systems energy efficiency, and telework; and
              ``(2) ensure that agencies are eligible to realize the
            savings and rewards brought about through increased
            efficiencies.
      ``(c) Performance Goals.--Not later than 6 months after the date of
    enactment of the American Clean Energy and Security Act of 2009, the
    Director shall establish performance goals for evaluating the efforts
    of the agencies in improving the maintenance, purchase and use of
    energy efficiency of information and communications technology systems.
    These performance goals should measure information technology costs
    over a specific time horizon (3 to 5 years), providing a complete
    picture of all costs, including energy.
      ``(d) Report.--Not later than 18 months after the date of enactment
    of the American Clean Energy and Security Act of 2009, and annually
    thereafter, the Director shall submit a report to Congress on--
              ``(1) the progress of each agency in reducing energy use
            through its implementation strategy; and
              ``(2) new and emerging technologies that would help achieve
            increased energy efficiency.''.

    SEC. 272. NATIONAL ENERGY EFFICIENCY GOALS.

      (a) Goals.--The energy efficiency goals of the United States are--
              (1) to achieve an improvement in the overall energy
            productivity of the United States (measured in gross domestic
            product per unit of energy input) of at least 2.5 percent per
            year by the year 2012; and
              (2) to maintain that annual rate of improvement each year
            through 2030.
      (b) Strategic Plan.--
              (1) In general.--Not later than 1 year after the date of
            enactment of this Act, the Secretary of Energy (referred to in
            this section as the ``Secretary''), in cooperation with the
            Administrator and the heads of other appropriate Federal
            agencies, shall develop a strategic plan to achieve the
            national goals for improvement in energy productivity
            established under subsection (a).
              (2) Public input and comment.--The Secretary shall develop
            the plan in a manner that provides appropriate opportunities
            for public input and comment.
      (c) Plan Contents.--The strategic plan shall--
              (1) identify future regulatory, funding, and policy
            priorities that would assist the United States in meeting the
            national goals;
              (2) include energy savings estimates for each sector; and
              (3) include data collection methodologies and compilations
            used to establish baseline and energy savings data.
      (d) Plan Updates.--
              (1) In general.--The Secretary shall--
                      (A) update the strategic plan biennially; and
                      (B) include the updated strategic plan in the
                    national energy policy plan required by section 801 of
                    the Department of Energy Organization Act (42 U.S.C.
                    7321).
              (2) Contents.--In updating the plan, the Secretary shall--
                      (A) report on progress made toward implementing
                    efficiency policies to achieve the national goals
                    established under subsection (a); and
                      (B) verify, to the maximum extent practicable, energy
                    savings resulting from the policies.
      (e) Report to Congress and the Public.--The Secretary shall submit to
    Congress, and make available to the public, the initial strategic plan
    developed under subsection (b) and each updated plan.

    SEC. 273. AFFILIATED ISLAND ENERGY INDEPENDENCE TEAM.

      (a) Definitions.--In this section:
              (1) Affiliated island.--The term ``affiliated island''
            means--
                      (A) the Commonwealth of Puerto Rico;
                      (B) Guam;
                      (C) American Samoa;
                      (D) the Commonwealth of the Northern Mariana Islands;
                      (E) the Federated States of Micronesia;
                      (F) the Republic of the Marshall Islands;
                      (G) the Republic of Palau; and
                      (H) the United States Virgin Islands.
              (2) Secretary.--The term ``Secretary'' means the Secretary of
            Energy (acting through the Assistant Secretary of Energy
            Efficiency and Renewable Energy), in consultation with the
            Secretary of the Interior and the Secretary of State.
              (3) Team.--The term ``team'' means the team established by
            the Secretary under subsection (b).
      (b) Establishment.--As soon as practicable after the date of
    enactment of this Act, the Secretary shall assemble a team of
    technical, policy, and financial experts to address the energy needs of
    each affiliated island--
              (1) to reduce the reliance and expenditure of each affiliated
            island on imported fossil fuels;
              (2) to increase the use by each affiliated island of
            indigenous, nonfossil fuel energy sources;
              (3) to improve the performance of the energy infrastructure
            of the affiliated island through projects--
                      (A) to improve the energy efficiency of power
                    generation, transmission, and distribution; and
                      (B) to increase consumer energy efficiency;
              (4) to improve the performance of the energy infrastructure
            of each affiliated island through enhanced planning, education,
            and training;
              (5) to adopt research-based and public-private partnership-
            based approaches as appropriate;
              (6) to stimulate economic development and job creation; and
              (7) to enhance the engagement by the Federal Government in
            international efforts to address island energy needs.
      (c) Duties of Team.--
              (1) Energy action plans.--
                      (A) In general.--In accordance with subparagraph (B),
                    the team shall provide technical, programmatic, and
                    financial assistance to each utility of each affiliated
                    island, and the government of each affiliated island,
                    as appropriate, to develop and implement an energy
                    Action Plan for each affiliated island to reduce the
                    reliance of each affiliated island on imported fossil
                    fuels through increased efficiency and use of
                    indigenous clean-energy resources.
                      (B) Requirements.--Each Action Plan described in
                    subparagraph (A) for each affiliated island shall
                    require and provide for--
                              (i) the conduct of 1 or more studies to
                            assess opportunities to reduce fossil fuel use
                            through--
                                      (I) the improvement of the energy
                                    efficiency of the affiliated island;
                                    and
                                      (II) the increased use by the
                                    affiliated island of indigenous clean-
                                    energy resources;
                              (ii) the identification and implementation of
                            the most cost-effective strategies and projects
                            to reduce the dependence of the affiliated
                            island on fossil fuels;
                              (iii) the promotion of education and training
                            activities to improve the capacity of the local
                            utilities of the affiliated island, and the
                            government of the affiliated island, as
                            appropriate, to plan for, maintain, and operate
                            the energy infrastructure of the affiliated
                            island through the use of local or regional
                            institutions, as appropriate;
                              (iv) the coordination of the activities
                            described in clause (iii) to leverage the
                            expertise and resources of international
                            entities, the Department of Energy, the
                            Department of the Interior, and the regional
                            utilities of the affiliated island;
                              (v) the identification, and development, as
                            appropriate, of research-based and private-
                            public, partnership approaches to implement the
                            Action Plan; and
                              (vi) any other component that the Secretary
                            determines to be necessary to reduce
                            successfully the use by each affiliated island
                            of fossil fuels.
              (2) Reports to secretary.--Not later than 1 year after the
            date on which the Secretary establishes the team and biennially
            thereafter, the team shall submit to the Secretary a report
            that contains a description of the progress of each affiliated
            island in--
                      (A) implementing the Action Plan of the affiliated
                    island developed under paragraph (1)(A); and
                      (B) reducing the reliance of the affiliated island on
                    fossil fuels.
      (d) Use of Regional Utility Organizations.--To provide expertise to
    affiliated islands to assist the affiliated islands in meeting the
    purposes of this section, the Secretary shall consider--
              (1) including regional utility organizations in the
            establishment of the team; and
              (2) providing assistance through regional utility
            organizations.
      (e) Annual Reports to Congress.--Not later than 30 days after the
    date on which the Secretary receives a report submitted by the team
    under subsection (c)(2), the Secretary shall submit to the appropriate
    committees of Congress a report that contains a summary of the report
    of the team.
      (f) Authorization of Appropriations.--There are authorized to be
    appropriated such sums as are necessary to carry out this section.

    SEC. 274. PRODUCT CARBON DISCLOSURE PROGRAM.

      (a) EPA Study.--The Administrator shall conduct a study to determine
    the feasibility of establishing a national program for measuring,
    reporting, publicly disclosing, and labeling products or materials sold
    in the United States for their carbon content, and shall, not later
    than 18 months after the date of enactment of this Act, transmit a
    report to Congress which shall include the following:
              (1) A determination of whether a national product carbon
            disclosure program and labeling program would be effective in
            achieving the intended goals of achieving greenhouse gas
            reductions and an examination of existing programs globally and
            their strengths and weaknesses.
              (2) Criteria for identifying and prioritizing sectors and
            products and processes that should be covered in such program
            or programs.
              (3) An identification of products, processes, or sectors
            whose inclusion could have a substantial carbon impact
            (prioritizing industrial products such as iron and steel,
            aluminum, cement, chemicals, and paper products, and also
            including food, beverage, hygiene, cleaning, household
            cleaners, construction, metals, clothing, semiconductor, and
            consumer electronics).
              (4) Suggested methodology and protocols for measuring the
            carbon content of the products across the entire carbon
            lifecycle of such products for use in a carbon disclosure
            program and labeling program.
              (5) A review of existing greenhouse gas product accounting
            standards, methodologies, and practices including the
            Greenhouse Gas Protocol, ISO 14040/44, ISO 14067, and
            Publically Available Specification 2050, and including a review
            of the strengths and weaknesses of each.
              (6) A survey of secondary databases including the
            Manufacturing Energy Consumption Survey and evaluate the
            quality of data for use in a product carbon disclosure program
            and product carbon labeling program and an identification of
            gaps in the data relative to the potential purposes of a
            national product carbon disclosure program and product carbon
            labeling program and development of recommendations for
            addressing these data gaps.
              (7) An assessment of the utility of comparing products and
            the appropriateness of product carbon standards.
              (8) An evaluation of the information needed on a label for
            clear and accurate communication, including what pieces of
            quantitative and qualitative information needs to be disclosed.
              (9) An evaluation of the appropriate boundaries of the carbon
            lifecycle analysis for different sectors and products.
              (10) An analysis of whether default values should be
            developed for products whose producer does not participate in
            the program or does not have data to support a disclosure or
            label and determine best ways to develop such default values.
              (11) A recommendation of certification and verification
            options necessary to assure the quality of the information and
            avoid greenwashing or the use of insubstantial or meaningless
            environmental claims to promote a product.
              (12) An assessment of options for educating consumers about
            product carbon content and the product carbon disclosure
            program and product carbon labeling program.
              (13) An analysis of the costs and timelines associated with
            establishing a national product carbon disclosure program and
            product carbon labeling program, including options for a phased
            approach. Costs should include those for businesses associated
            with the measurement of carbon footprints and those associated
            with creating a product carbon label and managing and operating
            a product carbon labeling program, and options for minimizing
            these costs.
              (14) An evaluation of incentives (such as financial
            incentives, brand reputation, and brand loyalty) to determine
            whether reductions in emissions can be accelerated through
            encouraging more efficient manufacturing or by encouraging
            preferences for lower-emissions products to substitute for
            higher-emissions products whose level of performance is no
            better.
      (b) Development of National Carbon Disclosure Program.--Upon
    conclusion of the study, and not more than 36 months after the date of
    enactment of this Act, the Administrator shall establish a national
    product carbon disclosure program, participation in which shall be
    voluntary, and which may involve a product carbon label with broad
    applicability to the wholesale and consumer markets to enable and
    encourage knowledge about carbon content by producers and consumers and
    to inform efforts to reduce energy consumption (carbon dioxide
    equivalent emissions) nationwide. In developing such a program, the
    Administrator shall--
              (1) consider the results of the study conducted under
            subsection (a);
              (2) consider existing and planned programs and proposals and
            measurement standards (including the Publicly Available
            Specification 2050, standards to be developed by the World
            Resource Institute/World Business Council for Sustainable
            Development, the International Standards Organization, and the
            bill AB19 pending in the California legislature);
              (3) consider the compatibility of a national product carbon
            disclosure program with existing programs;
              (4) utilize incentives and other means to spur the adoption
            of product carbon disclosure and product carbon labeling;
              (5) develop protocols and parameters for a product carbon
            disclosure program, including a methodology and formula for
            assessing, verifying, and potentially labeling a product's
            greenhouse gas content, and for data quality requirements to
            allow for product comparison;
              (6) create a means to--
                      (A) document best practices;
                      (B) ensure clarity and consistency;
                      (C) work with suppliers, manufacturers, and retailers
                    to encourage participation;
                      (D) ensure that protocols are consistent and
                    comparable across like products; and
                      (E) evaluate the effectiveness of the program;
              (7) make publicly available information on product carbon
            content to ensure transparency;
              (8) provide for public outreach, including a consumer
            education program to increase awareness;
              (9) develop training and education programs to help
            businesses learn how to measure and communicate their carbon
            footprint and easy tools and templates for businesses to use to
            reduce cost and time to measure their products' carbon
            lifecycle;
              (10) consult with the Secretary of Energy, the Secretary of
            Commerce, the Federal Trade Commission, and other Federal
            agencies, as necessary;
              (11) gather input from stakeholders through consultations,
            public workshops or hearings with representatives of consumer
            product manufacturers, consumer groups, and environmental
            groups;
              (12) utilize systems for verification and product
            certification that will ensure that claims manufacturers make
            about their products are valid;
              (13) create a process for reviewing the accuracy of product
            carbon label information and protecting the product carbon
            label in the case of a change in the product's energy source,
            supply chain, ingredients, or other factors, and specify the
            frequency to which data should be updated; and
              (14) develop a standardized, easily understandable carbon
            label, if appropriate, and create a process for responding to
            inaccuracies and misuses of such a label.
      (c) Report to Congress.--Not later than 5 years after the program is
    established pursuant to subsection (b), the Administrator shall report
    to Congress on the effectiveness and impact of the program, the level
    of voluntary participation, and any recommendations for additional
    measures.
      (d) Definitions.--As used in this section--
              (1) the term ``carbon content'' means the amount of
            greenhouse gas emissions and their warming impact on the
            atmosphere expressed in carbon dioxide equivalent associated
            with a product's value chain;
              (2) the term ``carbon footprint'' means the level of
            greenhouse gas emissions produced by a particular activity,
            service, or entity; and
              (3) the term ``carbon lifecycle'' means the greenhouse gas
            emissions that are released as part of the processes of
            creating, producing, processing or manufacturing, modifying,
            transporting, distributing, storing, using, recycling, or
            disposing of goods and services.
      (e) Authorization of Appropriations.--There is authorized to be
    appropriated to the Administrator $5,000,000 for the study required by
    subsection (a) and $25,000,000 for each of fiscal years 2010 through
    2025 for the program required under subsection (b).

                  TITLE III--REDUCING GLOBAL WARMING POLLUTION

    SEC. 301. SHORT TITLE.

      This title, and sections 112, 116, 221, 222, 223, and 401 of this
    Act, may be cited as the ``Safe Climate Act''.

                 Subtitle A--Reducing Global Warming Pollution

    SEC. 311. REDUCING GLOBAL WARMING POLLUTION.

      The Clean Air Act (42 U.S.C. and following) is amended by adding
    after title VI the following new title:

            ``TITLE VII--GLOBAL WARMING POLLUTION REDUCTION PROGRAM

         ``PART A--GLOBAL WARMING POLLUTION REDUCTION GOALS AND TARGETS

    ``SEC. 701. FINDINGS AND PURPOSE.

      ``(a) Findings.--The Congress finds as follows:
              ``(1) Global warming poses a significant threat to the
            national security, economy, public health and welfare, and
            environment of the United States, as well as of other nations.
              ``(2) Reviews of scientific studies, including by the
            Intergovernmental Panel on Climate Change and the National
            Academy of Sciences, demonstrate that global warming is the
            result of the combined anthropogenic greenhouse gas emissions
            from numerous sources of all types and sizes. Each increment of
            emission, when combined with other emissions, causes or
            contributes materially to the acceleration and extent of global
            warming and its adverse effects for the lifetime of such gas in
            the atmosphere. Accordingly, controlling emissions in small as
            well as large amounts is essential to prevent, slow the pace
            of, reduce the threats from, and mitigate global warming and
            its adverse effects.
              ``(3) Because they induce global warming, greenhouse gas
            emissions cause or contribute to injuries to persons in the
            United States, including--
                      ``(A) adverse health effects such as disease and loss
                    of life;
                      ``(B) displacement of human populations;
                      ``(C) damage to property and other interests related
                    to ocean levels, acidification, and ice changes;
                      ``(D) severe weather and seasonal changes;
                      ``(E) disruption, costs, and losses to business,
                    trade, employment, farms, subsistence, aesthetic
                    enjoyment of the environment, recreation, culture, and
                    tourism;
                      ``(F) damage to plants, forests, lands, and waters;
                      ``(G) harm to wildlife and habitat;
                      ``(H) scarcity of water and the decreased abundance
                    of other natural resources;
                      ``(I) worsening of tropospheric air pollution;
                      ``(J) substantial threats of similar damage; and
                      ``(K) other harm.
              ``(4) That many of these effects and risks of future effects
            of global warming are widely shared does not minimize the
            adverse effects individual persons have suffered, will suffer,
            and are at risk of suffering because of global warming.
              ``(5) That some of the adverse and potentially catastrophic
            effects of global warming are at risk of occurring and not a
            certainty does not negate the harm persons suffer from actions
            that increase the likelihood, extent, and severity of such
            future impacts.
              ``(6) Nations of the world look to the United States for
            leadership in addressing the threat of and harm from global
            warming. Full implementation of the Safe Climate Act is
            critical to engage other nations in an international effort to
            mitigate the threat of and harm from global warming.
              ``(7) Global warming and its adverse effects are occurring
            and are likely to continue and increase in magnitude, and to do
            so at a greater and more harmful rate, unless the Safe Climate
            Act is fully implemented and enforced in an expeditious manner.
      ``(b) Purpose.--It is the general purpose of the Safe Climate Act to
    help prevent, reduce the pace of, mitigate, and remedy global warming
    and its adverse effects. To fulfill such purpose, it is necessary to--
              ``(1) require the timely fulfillment of all governmental acts
            and duties, both substantive and procedural, and the prompt
            compliance of covered entities with the requirements of the
            Safe Climate Act;
              ``(2) establish and maintain an effective, transparent, and
            fair market for emission allowances and preserve the integrity
            of the cap on emissions and of offset credits;
              ``(3) advance the production and deployment of clean energy
            and energy efficiency technologies; and
              ``(4) ensure effective enforcement of the Safe Climate Act by
            citizens, States, Indian tribes, and all levels of government
            because each violation of the Safe Climate Act is likely to
            result in an additional increment of greenhouse gas emission
            and will slow the pace of implementation of the Safe Climate
            Act and delay the achievement of the goals set forth in section
            702, and cause or contribute to global warming and its adverse
            effects.

    ``SEC. 702. ECONOMY-WIDE REDUCTION GOALS.

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

    ``SEC. 703. REDUCTION TARGETS FOR SPECIFIED SOURCES.

      ``(a) In General.--The regulations issued under section 721 shall cap
    and reduce annually the greenhouse gas emissions of capped sources each
    calendar year beginning in 2012 such that--
              ``(1) in 2012, the quantity of greenhouse gas emissions from
            capped sources does not exceed 97 percent of the quantity of
            greenhouse gas emissions from such sources in 2005;
              ``(2) in 2020, the quantity of greenhouse gas emissions from
            capped sources does not exceed 83 percent of the quantity of
            greenhouse gas emissions from such sources in 2005;
              ``(3) in 2030, the quantity of greenhouse gas emissions from
            capped sources does not exceed 58 percent of the quantity of
            greenhouse gas emissions from such sources in 2005; and
              ``(4) in 2050, the quantity of greenhouse gas emissions from
            capped sources does not exceed 17 percent of the quantity of
            greenhouse gas emissions from such sources in 2005.
      ``(b) Definition.--For purposes of this section, the term `greenhouse
    gas emissions from such sources in 2005' means emissions to which
    section 722 would have applied if the requirements of this title for
    the specified year had been in effect for 2005.

    ``SEC. 704. SUPPLEMENTAL POLLUTION REDUCTIONS.

      ``For the purposes of decreasing the likelihood of catastrophic
    climate change, preserving tropical forests, building capacity to
    generate offset credits, and facilitating international action on
    global warming, the Administrator shall set aside the percentage
    specified in section 781 of the quantity of emission allowances
    established under section 721(a) for each year, to be used to achieve a
    reduction of greenhouse gas emissions from deforestation in developing
    countries in accordance with part E. In 2020, activities supported
    under part E shall provide greenhouse gas reductions in an amount equal
    to an additional 10 percentage points of reductions from United States
    greenhouse gas emissions in 2005. The Administrator shall distribute
    these allowances with respect to activities in countries that enter
    into and implement agreements or arrangements relating to reduced
    deforestation as described in section 754(a)(2).

    ``SEC. 705. REVIEW AND PROGRAM RECOMMENDATIONS.

      ``(a) In General.--The Administrator shall, in consultation with
    appropriate Federal agencies, submit to Congress a report not later
    than July 1, 2013, and every 4 years thereafter, that includes--
              ``(1) an analysis of key findings based on the latest
            scientific information and data relevant to global climate
            change;
              ``(2) an analysis of capabilities to monitor and verify
            greenhouse gas reductions on a worldwide basis, including for
            the United States, as required under the Safe Climate Act; and
              ``(3) an analysis of the status of worldwide greenhouse gas
            reduction efforts, including implementation of the Safe Climate
            Act and other policies, both domestic and international, for
            reducing greenhouse gas emissions, preventing dangerous
            atmospheric concentrations of greenhouse gases, preventing
            significant irreversible consequences of climate change, and
            reducing vulnerability to the impacts of climate change.
      ``(b) Exception.--Paragraph (3) of subsection (a) shall not apply to
    the first report submitted under such subsection.
      ``(c) Latest Scientific Information.--The analysis required under
    subsection (a)(1) shall--
              ``(1) address existing scientific information and reports,
            considering, to the greatest extent possible, the most recent
            assessment report of the Intergovernmental Panel on Climate
            Change, reports by the United States Global Change Research
            Program, the Natural Resources Climate Change Adaptation Panel
            established under section 475 of the American Clean Energy and
            Security Act of 2009, and Federal agencies, and the European
            Union's global temperature data assessment; and
              ``(2) review trends and projections for--
                      ``(A) global and country-specific annual emissions of
                    greenhouse gases, and cumulative greenhouse gas
                    emissions produced between 1850 and the present,
                    including--
                              ``(i) global cumulative emissions of
                            anthropogenic greenhouse gases;
                              ``(ii) global annual emissions of
                            anthropogenic greenhouse gases; and
                              ``(iii) by country, annual total, annual per
                            capita, and cumulative anthropogenic emissions
                            of greenhouse gases for the top 50 emitting
                            nations;
                      ``(B) significant changes, both globally and by
                    region, in annual net non-anthropogenic greenhouse gas
                    emissions from natural sources, including permafrost,
                    forests, or oceans;
                      ``(C) global atmospheric concentrations of greenhouse
                    gases, expressed in annual concentration units as well
                    as carbon dioxide equivalents based on 100-year global
                    warming potentials;
                      ``(D) major climate forcing factors, such as
                    aerosols;
                      ``(E) global average temperature, expressed as
                    seasonal and annual averages in land, ocean, and land-
                    plus-ocean averages; and
                      ``(F) sea level rise;
              ``(3) assess the current and potential impacts of global
            climate change on--
                      ``(A) human populations, including impacts on public
                    health, economic livelihoods, subsistence, human
                    infrastructure, and displacement or permanent
                    relocation due to flooding, severe weather, extended
                    drought, erosion, or other ecosystem changes;
                      ``(B) freshwater systems, including water resources
                    for human consumption and agriculture and natural and
                    managed ecosystems, flood and drought risks, and
                    relative humidity;
                      ``(C) the carbon cycle, including impacts related to
                    the thawing of permafrost, the frequency and intensity
                    of wildfire, and terrestrial and ocean carbon sinks;
                      ``(D) ecosystems and animal and plant populations,
                    including impacts on species abundance, phenology, and
                    distribution;
                      ``(E) oceans and ocean ecosystems, including effects
                    on sea level, ocean acidity, ocean temperatures, coral
                    reefs, ocean circulation, fisheries, and other
                    indicators of ocean ecosystem health;
                      ``(F) the cryosphere, including effects on ice sheet
                    mass balance, mountain glacier mass balance, and sea-
                    ice extent and volume;
                      ``(G) changes in the intensity, frequency, or
                    distribution of severe weather events, including
                    precipitation, tropical cyclones, tornadoes, and severe
                    heat waves;
                      ``(H) agriculture and forest systems; and
                      ``(I) any other indicators the Administrator deems
                    appropriate;
              ``(4) summarize any significant socio-economic impacts of
            climate change in the United States, including the territories
            of the United States, drawing on work by Federal agencies and
            the academic literature, including impacts on--
                      ``(A) public health;
                      ``(B) economic livelihoods and subsistence;
                      ``(C) displacement or permanent relocation due to
                    flooding, severe weather, extended drought, or other
                    ecosystem changes;
                      ``(D) human infrastructure, including coastal
                    infrastructure vulnerability to extreme events and sea
                    level rise, river floodplain infrastructure, and sewer
                    and water management systems;
                      ``(E) agriculture and forests, including effects on
                    potential growing season, distribution, and yield;
                      ``(F) water resources for human consumption,
                    agriculture and natural and managed ecosystems, flood
                    and drought risks, and relative humidity;
                      ``(G) energy supply and use; and
                      ``(H) transportation;
              ``(5) in assessing risks and impacts, use a risk management
            framework, including both qualitative and quantitative
            measures, to assess the observed and projected impacts of
            current and future climate change, accounting for--
                      ``(A) both monetized and non-monetized losses;
                      ``(B) potential nonlinear, abrupt, or essentially
                    irreversible changes in the climate system;
                      ``(C) potential nonlinear increases in the cost of
                    impacts;
                      ``(D) potential low-probability, high impact events;
                    and
                      ``(E) whether impacts are transitory or essentially
                    permanent; and
              ``(6) based on the findings of the Administrator under this
            section, as well as assessments produced by the
            Intergovernmental Panel on Climate Change, the United States
            Global Change Research program, and other relevant scientific
            entities--
                      ``(A) describe increased risks to natural systems and
                    society that would result from an increase in global
                    average temperature 3.6 degrees Fahrenheit (2 degrees
                    Celsius) above the pre-industrial average or an
                    increase in atmospheric greenhouse gas concentrations
                    above 450 parts per million carbon dioxide equivalent;
                    and
                      ``(B) identify and assess--
                              ``(i) significant residual risks not avoided
                            by the thresholds described in subparagraph
                            (A);
                              ``(ii) alternative thresholds or targets that
                            may more effectively limit the risks identified
                            pursuant to clause (i); and
                              ``(iii) thresholds above those described in
                            subparagraph (A) which significantly increase
                            the risk of certain impacts or render them
                            essentially permanent.
      ``(d) Status of Monitoring and Verification Capabilities to Evaluate
    Greenhouse Gas Reduction Efforts.--The analysis required under
    subsection (a)(2) shall evaluate the capabilities of the monitoring,
    reporting, and verification systems used to quantify progress in
    achieving reductions in greenhouse gas emissions both globally and in
    the United States (as described in section 702), including--
              ``(1) quantification of emissions and emission reductions by
            entities participating in the cap and trade program under this
            title;
              ``(2) quantification of emissions and emission reductions by
            entities participating in the offset program under this title;
              ``(3) quantification of emission and emissions reductions by
            entities regulated by performance standards;
              ``(4) quantification of aggregate net emissions and emissions
            reductions by the United States; and
              ``(5) quantification of global changes in net emissions and
            in sources and sinks of greenhouse gases.
      ``(e) Status of Greenhouse Gas Reduction Efforts.--The analysis
    required under subsection (a)(3) shall address--
              ``(1) whether the programs under Safe Climate Act and other
            Federal statutes are resulting in sufficient United States
            greenhouse gas emissions reductions to meet the emissions
            reduction goals described in section 702, taking into account
            the use of offsets; and
              ``(2) whether United States actions, taking into account
            international actions, commitments, and trends, and considering
            the range of plausible emissions scenarios, are sufficient to
            avoid--
                      ``(A) atmospheric greenhouse gas concentrations above
                    450 parts per million carbon dioxide equivalent;
                      ``(B) global average surface temperature 3.6 degrees
                    Fahrenheit (2 degrees Celsius) above the pre-industrial
                    average, or such other temperature thresholds as the
                    Administrator deems appropriate; and
                      ``(C) other temperature or greenhouse gas thresholds
                    identified pursuant to subsection (c)(6)(B).
      ``(f) Recommendations.--
              ``(1) Latest scientific information.--Based on the analysis
            described in subsection (a)(1), each report under subsection
            (a) shall identify actions that could be taken to--
                      ``(A) improve the characterization of changes in the
                    earth-climate system and impacts of global climate
                    change;
                      ``(B) better inform decision making and actions
                    related to global climate change;
                      ``(C) mitigate risks to natural and social systems;
                    and
                      ``(D) design policies to better account for climate
                    risks.
              ``(2) Monitoring, reporting and verification.--Based on the
            analysis described in subsection (a)(2), each report under
            subsection (a) shall identify key gaps in measurement,
            reporting, and verification capabilities and make
            recommendations to improve the accuracy and reliability of
            those capabilities.
              ``(3) Status of greenhouse gas reduction efforts.--Based on
            the analysis described in subsection (a)(3), taking into
            account international actions, commitments, and trends, and
            considering the range of plausible emissions scenarios, each
            report under subsection (a) shall identify--
                      ``(A) the quantity of additional reductions required
                    to meet the emissions reduction goals in section 702;
                      ``(B) the quantity of additional reductions in global
                    greenhouse gas emissions needed to avoid the
                    concentration and temperature thresholds identified in
                    subsection (e); and
                      ``(C) possible strategies and approaches for
                    achieving additional reductions.
      ``(g) Authorization of Appropriations.--There are authorized to be
    appropriated to carry out this section such sums as may be necessary.

    ``SEC. 706. NATIONAL ACADEMY REVIEW.

      ``(a) In General.--Not later than 1 year after the date of enactment
    of this title, the Administrator shall offer to enter into a contract
    with the National Academy of Sciences (in this section referred to as
    the `Academy') under which the Academy shall, not later than July 1,
    2014, and every 4 years thereafter, submit to Congress and the
    Administrator a report that includes--
              ``(1) a review of the most recent report and recommendations
            issued under section 705; and
              ``(2) an analysis of technologies to achieve reductions in
            greenhouse gas emissions.
      ``(b) Failure to Issue a Report.--In the event that the Administrator
    has not issued all or part of the most recent report required under
    section 705, the Academy shall conduct its own review and analysis of
    the required information.
      ``(c) Technological Information.--The analysis required under
    subsection (a)(2) shall--
              ``(1) review existing technological information and reports,
            including the most recent reports by the Department of Energy,
            the United States Global Change Research Program, the
            Intergovernmental Panel on Climate Change, and the
            International Energy Agency and any other relevant information
            on technologies or practices that reduce or limit greenhouse
            gas emissions;
              ``(2) include the participation of technical experts from
            relevant private industry sectors;
              ``(3) review the current and future projected deployment of
            technologies and practices in the United States that reduce or
            limit greenhouse gas emissions, including--
                      ``(A) technologies for capture and sequestration of
                    greenhouse gases;
                      ``(B) technologies to improve energy efficiency;
                      ``(C) low- or zero-greenhouse gas emitting energy
                    technologies;
                      ``(D) low- or zero-greenhouse gas emitting fuels;
                      ``(E) biological sequestration practices and
                    technologies; and
                      ``(F) any other technologies the Academy deems
                    relevant; and
              ``(4) review and compare the emissions reduction potential,
            commercial viability, market penetration, investment trends,
            and deployment of the technologies described in paragraph (3),
            including--
                      ``(A) the need for additional research and
                    development, including publicly funded research and
                    development;
                      ``(B) the extent of commercial deployment, including,
                    where appropriate, a comparison to the cost and level
                    of deployment of conventional fossil fuel-fired energy
                    technologies and devices; and
                      ``(C) an evaluation of any substantial technological,
                    legal, or market-based barriers to commercial
                    deployment.
      ``(d) Recommendations.--
              ``(1) Latest scientific information.--Based on the review
            described in subsection (a)(1), the Academy shall identify
            actions that could be taken to--
                      ``(A) improve the characterization of changes in the
                    earth-climate system and impacts of global climate
                    change;
                      ``(B) better inform decision making and actions
                    related to global climate change;
                      ``(C) mitigate risks to natural and social systems;
                      ``(D) design policies to better account for climate
                    risks; and
                      ``(E) improve the accuracy and reliability of
                    capabilities to monitor, report, and verify greenhouse
                    gas emissions reduction efforts.
              ``(2) Technological information.--Based on the analysis
            described in subsection (a)(2), the Academy shall identify--
                      ``(A) additional emissions reductions that may be
                    possible as a result of technologies described in the
                    analysis;
                      ``(B) barriers to the deployment of such
                    technologies; and
                      ``(C) actions that could be taken to speed deployment
                    of such technologies.
              ``(3) Status of greenhouse gas reduction efforts.--Based on
            the review described in subsection (a)(1), the Academy shall
            identify--
                      ``(A) the quantity of additional reductions required
                    to meet the emissions reduction goals described in
                    section 702; and
                      ``(B) the quantity of additional reductions in global
                    greenhouse gas emissions needed to avoid the
                    concentration and temperature thresholds described in
                    section 705(c)(6)(A) or identified pursuant to section
                    705(c)(6)(B).
      ``(e) Authorization of Appropriations.--There are authorized to be
    appropriated to carry out this section such sums as may be necessary.

    ``SEC. 707. PRESIDENTIAL RESPONSE AND RECOMMENDATIONS.

      ``Not later than July 1, 2015, and every 4 years thereafter--
              ``(1) the President shall direct relevant Federal agencies to
            use existing statutory authority to take appropriate actions
            identified in the reports submitted under sections 705 and 706
            and to address any shortfalls identified in such reports; and
              ``(2) in the event that the National Academy of Sciences has
            concluded, in the most recent report submitted under section
            706, that the United States will not achieve the necessary
            domestic greenhouse gas emissions reductions, or that global
            actions will not maintain safe global average surface
            temperature and atmospheric greenhouse gas concentration
            thresholds, the President shall submit to Congress a plan
            identifying domestic and international actions that will
            achieve necessary additional greenhouse gas reductions,
            including any recommendations for legislative action.

           ``PART B--DESIGNATION AND REGISTRATION OF GREENHOUSE GASES

    ``SEC. 711. DESIGNATION OF GREENHOUSE GASES.

      ``(a) Greenhouse Gases.--For purposes of this title, the following
    are greenhouse gases:
              ``(1) Carbon dioxide.
              ``(2) Methane.
              ``(3) Nitrous oxide.
              ``(4) Sulfur hexafluoride.
              ``(5) Hydrofluorocarbons from a chemical manufacturing
            process at an industrial stationary source.
              ``(6) Any perfluorocarbon.
              ``(7) Nitrogen trifluoride.
              ``(8) Any other anthropogenic gas designated as a greenhouse
            gas by the Administrator under this section.
      ``(b) Determination on Administrator's Initiative.--The Administrator
    shall, by rule--
              ``(1) determine whether 1 metric ton of another anthropogenic
            gas makes the same or greater contribution to global warming
            over 100 years as 1 metric ton of carbon dioxide;
              ``(2) determine the carbon dioxide equivalent value for each
            gas with respect to which the Administrator makes an
            affirmative determination under paragraph (1);
              ``(3) for each gas with respect to which the Administrator
            makes an affirmative determination under paragraph (1) and that
            is used as a substitute for a class I or class II substance
            under title VI, determine the extent to which to regulate that
            gas under section 619 and specify appropriate compliance
            obligations under section 619;
              ``(4) designate as a greenhouse gas for purposes of this
            title each gas for which the Administrator makes an affirmative
            determination under paragraph (1), to the extent that it is not
            regulated under section 619; and
              ``(5) specify the appropriate compliance obligations under
            this title for each gas designated as a greenhouse gas under
            paragraph (4).
      ``(c) Petitions to Designate a Greenhouse Gas.--
              ``(1) In general.--Any person may petition the Administrator
            to designate as a greenhouse gas any anthropogenic gas 1 metric
            ton of which makes the same or greater contribution to global
            warming over 100 years as 1 metric ton of carbon dioxide.
              ``(2) Contents of petition.--The petitioner shall provide
            sufficient data, as specified by rule by the Administrator, to
            demonstrate that the gas is likely to be a greenhouse gas and
            is likely to be produced, imported, used, or emitted in the
            United States. To the extent practicable, the petitioner shall
            also identify producers, importers, distributors, users, and
            emitters of the gas in the United States.
              ``(3) Review and action by the administrator.--Not later than
            90 days after receipt of a petition under paragraph (2), the
            Administrator shall determine whether the petition is complete
            and notify the petitioner and the public of the decision.
              ``(4) Additional information.--The Administrator may require
            producers, importers, distributors, users, or emitters of the
            gas to provide information on the contribution of the gas to
            global warming over 100 years compared to carbon dioxide.
              ``(5) Treatment of petition.--For any substance used as a
            substitute for a class I or class II substance under title VI,
            the Administrator may elect to treat a petition under this
            subsection as a petition to list the substance as a class II,
            group II substance under section 619, and may require the
            petition to be amended to address listing criteria promulgated
            under that section.
              ``(6) Determination.--Not later than 2 years after receipt of
            a complete petition, the Administrator shall, after notice and
            an opportunity for comment--
                      ``(A) issue and publish in the Federal Register--
                              ``(i) a determination that 1 metric ton of
                            the gas does not make a contribution to global
                            warming over 100 years that is equal to or
                            greater than that made by 1 metric ton of
                            carbon dioxide; and
                              ``(ii) an explanation of the decision; or
                      ``(B) determine that 1 metric ton of the gas makes a
                    contribution to global warming over 100 years that is
                    equal to or greater than that made by 1 metric ton of
                    carbon dioxide, and take the actions described in
                    subsection (b) with respect to such gas.
              ``(7) Grounds for denial.--The Administrator may not deny a
            petition under this subsection solely on the basis of
            inadequate Environmental Protection Agency resources or time
            for review.
      ``(d) Science Advisory Board Consultation.--
              ``(1) Consultation.--The Administrator shall--
                      ``(A) give notice to the Science Advisory Board prior
                    to making a determination under subsection (b)(1),
                    (c)(6), or (e)(2)(B);
                      ``(B) consider the written recommendations of the
                    Science Advisory Board under paragraph (2) regarding
                    the determination; and
                      ``(C) consult with the Science Advisory Board
                    regarding such determination, including consultation
                    subsequent to receipt of such written recommendations.
              ``(2) Formulation of recommendations.--Upon receipt of notice
            under paragraph (1)(A) regarding a pending determination under
            subsection (b)(1), (c)(6), or (e)(2)(B), the Science Advisory
            Board shall--
                      ``(A) formulate recommendations regarding such
                    determination, subject to a peer review process; and
                      ``(B) submit such recommendations in writing to the
                    Administrator.
      ``(e) Manufacturing and Emission Notices.--
              ``(1) Notice requirement.--
                      ``(A) In general.--Effective 24 months after the date
                    of enactment of this title, no person may manufacture
                    or introduce into interstate commerce a fluorinated
                    gas, or emit a significant quantity, as determined by
                    the Administrator, of any fluorinated gas that is
                    generated as a byproduct during the production or use
                    of another fluorinated gas, unless--
                              ``(i) the gas is designated as a greenhouse
                            gas under this section or is an ozone-depleting
                            substance listed as a class I or class II
                            substance under title VI;
                              ``(ii) the Administrator has determined that
                            1 metric ton of such gas does not make a
                            contribution to global warming that is equal to
                            or greater than that made by 1 metric ton of
                            carbon dioxide; or
                              ``(iii) the person manufacturing or importing
                            the gas for distribution into interstate
                            commerce, or emitting the gas, has submitted to
                            the Administrator, at least 90 days before the
                            start of such manufacture, introduction into
                            commerce, or emission, a notice of such
                            person's manufacture, introduction into
                            commerce, or emission of such gas, and the
                            Administrator has not determined that notice or
                            a substantially similar notice is incomplete.
                      ``(B) Alternative compliance.--For a gas that is a
                    substitute for a class I or class II substance under
                    title VI and either has been listed as acceptable for
                    use under section 612 or is currently subject to
                    evaluation under section 612, the Administrator may
                    accept the notice and information provided pursuant to
                    that section as fulfilling the obligation under clause
                    (iii) of subparagraph (A).
              ``(2) Review and action by the administrator.--
                      ``(A) Completeness.--Not later than 90 days after
                    receipt of notice under paragraph (1)(A)(iii) or (B),
                    the Administrator shall determine whether the notice is
                    complete.
                      ``(B) Determination.-- If the Administrator
                    determines that the notice is complete, the
                    Administrator shall, after notice and an opportunity
                    for comment, not later than 12 months after receipt of
                    the notice--
                              ``(i) issue and publish in the Federal
                            Register a determination that 1 metric ton of
                            the gas does not make a contribution to global
                            warming over 100 years that is equal to or
                            greater than that made by 1 metric ton of
                            carbon dioxide and an explanation of the
                            decision; or
                              ``(ii) determine that 1 metric ton of the gas
                            makes a contribution to global warming over 100
                            years that is equal to or greater than that
                            made by 1 metric ton of carbon dioxide, and
                            take the actions described in subsection (b)
                            with respect to such gas.
      ``(f) Regulations.--Not later than one year after the date of
    enactment of this title, the Administrator shall promulgate regulations
    to carry out this section. Such regulations shall include--
              ``(1) requirements for the contents of a petition submitted
            under subsection (c);
              ``(2) requirements for the contents of a notice required
            under subsection (e); and
              ``(3) methods and standards for evaluating the carbon dioxide
            equivalent value of a gas.
      ``(g) Gases Regulated Under Title VI.--The Administrator shall not
    designate a gas as a greenhouse gas under this section to the extent
    that the gas is regulated under title VI.
      ``(h) Savings Clause.--Nothing in this section shall be interpreted
    to relieve any person from complying with the requirements of section
    612.

    ``SEC. 712. CARBON DIOXIDE EQUIVALENT VALUE OF GREENHOUSE GASES.

      ``(a) Measure of Quantity of Greenhouse Gases.--Any provision of this
    title or title VIII that refers to a quantity or percentage of a
    quantity of greenhouse gases shall mean the quantity or percentage of
    the greenhouse gases expressed in carbon dioxide equivalents.
      ``(b) Initial Value.--Except as provided by the Administrator under
    this section or section 711--
              ``(1) the carbon dioxide equivalent value of greenhouse gases
            for purposes of this Act shall be as follows:

                             ``CARBON DIOXIDE EQUIVALENT OF 1 TON OF LISTED GREENHOUSE GASES
    ----------------------------------------------------------------------------------------------------------------
                 Greenhouse gas (1 metric ton)                       Carbon dioxide equivalent (metric tons)
    ----------------------------------------------------------------------------------------------------------------
    Carbon dioxide                                           1
    ----------------------------------------------------------------------------------------------------------------
    Methane                                                  25
    ----------------------------------------------------------------------------------------------------------------
    Nitrous oxide                                            298
    ----------------------------------------------------------------------------------------------------------------
    HFC-23                                                   14,800
    ----------------------------------------------------------------------------------------------------------------
    HFC-125                                                  3,500
    ----------------------------------------------------------------------------------------------------------------
    HFC-134a                                                 1,430
    ----------------------------------------------------------------------------------------------------------------
    HFC-143a                                                 4,470
    ----------------------------------------------------------------------------------------------------------------
    HFC-152a                                                 124
    ----------------------------------------------------------------------------------------------------------------
    HFC-227ea                                                3,220
    ----------------------------------------------------------------------------------------------------------------
    HFC-236fa                                                9,810
    ----------------------------------------------------------------------------------------------------------------
    HFC-4310mee                                              1,640
    ----------------------------------------------------------------------------------------------------------------
    CF4                                                      7,390
    ----------------------------------------------------------------------------------------------------------------
    C2F6                                                     12,200
    ----------------------------------------------------------------------------------------------------------------
    C4F10                                                    8,860
    ----------------------------------------------------------------------------------------------------------------
    C6F14                                                    9,300
    ----------------------------------------------------------------------------------------------------------------
    SF6                                                      22,800
    ----------------------------------------------------------------------------------------------------------------
    NF3                                                      17,200
    ----------------------------------------------------------------------------------------------------------------

            ; and
              ``(2) the carbon dioxide equivalent value for purposes of
            this Act for any greenhouse gas not listed in the table under
            paragraph (1) shall be the 100-year Global Warming Potentials
            provided in the Intergovernmental Panel on Climate Change
            Fourth Assessment Report.
      ``(c) Periodic Review.--
              ``(1) Not later than February 1, 2017, and (except as
            provided in paragraph (3)) not less than every 5 years
            thereafter, the Administrator shall--
                      ``(A) review and, if appropriate, revise the carbon
                    dioxide equivalent values established under this
                    section or section 711(b)(2), based on a determination
                    of the number of metric tons of carbon dioxide that
                    makes the same contribution to global warming over 100
                    years as 1 metric ton of each greenhouse gas; and
                      ``(B) publish in the Federal Register the results of
                    that review and any revisions.
              ``(2) A revised determination published in the Federal
            Register under paragraph (1)(B) shall take effect for
            greenhouse gas emissions starting on January 1 of the first
            calendar year starting at least 9 months after the date on
            which the revised determination was published.
              ``(3) The Administrator may decrease the frequency of review
            and revision under paragraph (1) if the Administrator
            determines that such decrease is appropriate in order to
            synchronize such review and revision with any similar review
            process carried out pursuant to the United Nations Framework
            Convention on Climate Change, done at New York on May 9, 1992,
            or to an agreement negotiated under that convention, except
            that in no event shall the Administrator carry out such review
            and revision any less frequently than every 10 years.
      ``(d) Methodology.--In setting carbon dioxide equivalent values, for
    purposes of this section or section 711, the Administrator shall take
    into account publications by the Intergovernmental Panel on Climate
    Change or a successor organization under the auspices of the United
    Nations Environmental Programme and the World Meteorological
    Organization.

    ``SEC. 713. GREENHOUSE GAS REGISTRY.

      ``(a) Definitions.--For purposes of this section:
              ``(1) Climate registry.--The term `Climate Registry' means
            the greenhouse gas emissions registry jointly established and
            managed by more than 40 States and Indian tribes in 2007 to
            collect high-quality greenhouse gas emission data from
            facilities, corporations, and other organizations to support
            various greenhouse gas emission reporting and reduction
            policies for the member States and Indian tribes.
              ``(2) Reporting entity.--The term `reporting entity' means--
                      ``(A) a covered entity;
                      ``(B) an entity that--
                              ``(i) would be a covered entity if it had
                            emitted, produced, imported, manufactured, or
                            delivered in 2008 or any subsequent year more
                            than the applicable threshold level in the
                            definition of covered entity in paragraph (13)
                            of section 700; and
                              ``(ii) has emitted, produced, imported,
                            manufactured, or delivered in 2008 or any
                            subsequent year more than the applicable
                            threshold level in the definition of covered
                            entity in paragraph (13) of section 700,
                            provided that the figure of 25,000 tons of
                            carbon dioxide equivalent is read instead as
                            10,000 tons of carbon dioxide equivalent and
                            the figure of 460,000,000 cubic feet is read
                            instead as 184,000,000 cubic feet;
                      ``(C) any other entity that emits a greenhouse gas,
                    or produces, imports, manufactures, or delivers
                    material whose use results or may result in greenhouse
                    gas emissions if the Administrator determines that
                    reporting under this section by such entity will help
                    achieve the purposes of this title or title VIII;
                      ``(D) any vehicle fleet with emissions of more than
                    25,000 tons of carbon dioxide equivalent on an annual
                    basis, if the Administrator determines that the
                    inclusion of such fleet will help achieve the purposes
                    of this title or title VIII; or
                      ``(E) any entity that delivers electricity to an
                    energy-intensive facility in an industrial sector that
                    meets the energy or greenhouse gas intensity criteria
                    in section 764(b)(2)(A)(i).
      ``(b) Regulations.--
              ``(1) In general.--Not later than 6 months after the date of
            enactment of this title, the Administrator shall issue
            regulations establishing a Federal greenhouse gas registry.
            Such regulations shall--
                      ``(A) require reporting entities to submit to the
                    Administrator data on--
                              ``(i) greenhouse gas emissions in the United
                            States;
                              ``(ii) the production and manufacture in the
                            United States, importation into the United
                            States, and, at the discretion of the
                            Administrator, exportation from the United
                            States, of fuels and industrial gases the uses
                            of which result or may result in greenhouse gas
                            emissions;
                              ``(iii) deliveries in the United States of
                            natural gas, and any other gas meeting the
                            specifications for commingling with natural gas
                            for purposes of delivery, the combustion of
                            which result or may result in greenhouse gas
                            emissions; and
                              ``(iv) the capture and sequestration of
                            greenhouse gases;
                      ``(B) require covered entities and, where
                    appropriate, other reporting entities to submit to the
                    Administrator data sufficient to ensure compliance with
                    or implementation of the requirements of this title;
                      ``(C) require reporting of electricity delivered to
                    industrial sources in energy-intensive industries;
                      ``(D) ensure the completeness, consistency,
                    transparency, accuracy, precision, and reliability of
                    such data;
                      ``(E) take into account the best practices from the
                    most recent Federal, State, tribal, and international
                    protocols for the measurement, accounting, reporting,
                    and verification of greenhouse gas emissions, including
                    protocols from the Climate Registry and other mandatory
                    State or multistate authorized programs;
                      ``(F) take into account the latest scientific
                    research;
                      ``(G) require that, for covered entities with respect
                    to greenhouse gases to which section 722 applies, and,
                    to the extent determined to be appropriate by the
                    Administrator, for covered entities with respect to
                    other greenhouse gases and for other reporting
                    entities, submitted data are based on--
                              ``(i) continuous monitoring systems for fuel
                            flow or emissions, such as continuous emission
                            monitoring systems;
                              ``(ii) alternative systems that are
                            demonstrated as providing data with the same
                            precision, reliability, accessibility, and
                            timeliness, or, to the extent the Administrator
                            determines is appropriate for reporting small
                            amounts of emissions, the same precision,
                            reliability, and accessibility and similar
                            timeliness, as data provided by continuous
                            monitoring systems for fuel flow or emissions;
                            or
                              ``(iii) alternative methodologies that are
                            demonstrated to provide data with precision,
                            reliability, accessibility, and timeliness, or,
                            to the extent the Administrator determines is
                            appropriate for reporting small amounts of
                            emissions, precision, reliability, and
                            accessibility, as similar as is technically
                            feasible to that of data generally provided by
                            continuous monitoring systems for fuel flow or
                            emissions, if the Administrator determines
                            that, with respect to a reporting entity, there
                            is no continuous monitoring system or
                            alternative system described in clause (i) or
                            (ii) that is technically feasible;
                      ``(H) require that the Administrator, in determining
                    the extent to which the requirement to use systems or
                    methodologies in accordance with subparagraph (G) is
                    appropriate for reporting entities other than covered
                    entities or for greenhouse gases to which section 722
                    does not apply, consider the cost of using such systems
                    and methodologies, and of using other systems and
                    methodologies that are available and suitable, for
                    quantifying the emissions involved in light of the
                    purposes of this title, including the goal of
                    collecting consistent entity-wide data;
                      ``(I) include methods for minimizing double reporting
                    and avoiding irreconcilable double reporting of
                    greenhouse gas emissions;
                      ``(J) establish measurement protocols for carbon
                    capture and sequestration systems, taking into
                    consideration the regulations promulgated under section
                    813;
                      ``(K) require that reporting entities provide the
                    data required under this paragraph in reports submitted
                    electronically to the Administrator, in such form and
                    containing such information as may be required by the
                    Administrator;
                      ``(L) include requirements for keeping records
                    supporting or related to, and protocols for auditing,
                    submitted data;
                      ``(M) establish consistent policies for calculating
                    carbon content and greenhouse gas emissions for each
                    type of fossil fuel with respect to which reporting is
                    required;
                      ``(N) subsequent to implementation of policies
                    developed under subparagraph (M), provide for immediate
                    dissemination, to States, Indian tribes, and on the
                    Internet, of all data reported under this section as
                    soon as practicable after electronic audit by the
                    Administrator and any resulting correction of data,
                    except that data shall not be disseminated under this
                    subparagraph if--
                              ``(i) its nondissemination is vital to the
                            national security of the United States, as
                            determined by the President; or
                              ``(ii) it is confidential business
                            information that cannot be derived from
                            information that is otherwise publicly
                            available and that would cause significant
                            calculable competitive harm if published,
                            except that--
                                      ``(I) data relating to greenhouse gas
                                    emissions, including any upstream or
                                    verification data from reporting
                                    entities, shall not be considered to be
                                    confidential business information; and
                                      ``(II) data that is confidential
                                    business information shall be provided
                                    to a State or Indian tribe within whose
                                    jurisdiction the reporting entity is
                                    located, if the Administrator
                                    determines that such State or Indian
                                    tribe has in effect protections for
                                    confidential business information that
                                    are equivalent to protections
                                    applicable to the Federal Government;
                      ``(O) prescribe methods by which the Administrator
                    shall, in cases in which satisfactory data are not
                    submitted to the Administrator for any period of time,
                    estimate emission, production, importation,
                    manufacture, or delivery levels--
                              ``(i) for covered entities with respect to
                            greenhouse gas emissions, production,
                            importation, manufacture, or delivery regulated
                            under this title to ensure that emissions,
                            production, importation, manufacture, or
                            deliveries are not underreported, and to create
                            a strong incentive for meeting data monitoring
                            and reporting requirements--
                                      ``(I) with a conservative estimate of
                                    the highest emission, production,
                                    importation, manufacture, or delivery
                                    levels that may have occurred during
                                    the period for which data are missing;
                                    or
                                      ``(II) to the extent the
                                    Administrator considers appropriate,
                                    with an estimate of such levels
                                    assuming the unit is emitting,
                                    producing, importing, manufacturing, or
                                    delivering at a maximum potential level
                                    during the period, in order to ensure
                                    that such levels are not underreported
                                    and to create a strong incentive for
                                    meeting data monitoring and reporting
                                    requirements; and
                              ``(ii) for covered entities with respect to
                            greenhouse gas emissions to which section 722
                            does not apply and for other reporting
                            entities, with a reasonable estimate of the
                            emission, production, importation, manufacture,
                            or delivery levels that may have occurred
                            during the period for which data are missing;
                      ``(P) require the designation of a designated
                    representative for each reporting entity;
                      ``(Q) require an appropriate certification, by the
                    designated representative for the reporting entity, of
                    accurate and complete accounting of greenhouse gas
                    emissions, as determined by the Administrator; and
                      ``(R) include requirements for other data necessary
                    for accurate and complete accounting of greenhouse gas
                    emissions, as determined by the Administrator,
                    including data for quality assurance of monitoring
                    systems, monitors and other measurement devices, and
                    other data needed to verify reported emissions,
                    production, importation, manufacture, or delivery.
              ``(2) Timing.--
                      ``(A) Calendar years 2007 through 2010.--For a base
                    period of calendar years 2007 through 2010, each
                    reporting entity shall submit annual data required
                    under this section to the Administrator not later than
                    March 31, 2011. The Administrator may waive or modify
                    reporting requirements for calendar years 2007 through
                    2010 for categories of reporting entities to the extent
                    that the Administrator determines that the reporting
                    entities did not keep data or records necessary to meet
                    reporting requirements. The Administrator may, in
                    addition to or in lieu of such requirements, collect
                    information on energy consumption and production.
                      ``(B) Subsequent calendar years.--For calendar year
                    2011 and each subsequent calendar year, each reporting
                    entity shall submit quarterly data required under this
                    section to the Administrator not later than 60 days
                    after the end of the applicable quarter, except when
                    the data is already being reported to the Administrator
                    on an earlier timeframe for another program.
              ``(3) Waiver of reporting requirements.--The Administrator
            may waive reporting requirements under this section for
            specific entities to the extent that the Administrator
            determines that sufficient and equally or more reliable
            verified and timely data are available to the Administrator and
            the public on the Internet under other mandatory statutory
            requirements.
              ``(4) Alternative threshold.--The Administrator may, by rule,
            establish applicability thresholds for reporting under this
            section using alternative metrics and levels, provided that
            such metrics and levels are easier to administer and cover the
            same size and type of sources as the threshold defined in this
            section.
      ``(c) Interrelationship With Other Systems.--In developing the
    regulations issued under subsection (b), the Administrator shall take
    into account the work done by the Climate Registry and other mandatory
    State or multistate programs. Such regulations shall include an
    explanation of any major differences in approach between the system
    established under the regulations and such registries and programs.

                            ``PART C--PROGRAM RULES

    ``SEC. 721. EMISSION ALLOWANCES.

      ``(a) In General.--The Administrator shall establish a separate
    quantity of emission allowances for each calendar year starting in
    2012, in the amounts prescribed under subsection (e).
      ``(b) Identification Numbers.--The Administrator shall assign to each
    emission allowance established under subsection (a) a unique
    identification number that includes the vintage year for that emission
    allowance.
      ``(c) Legal Status of Emission Allowances.--
              ``(1) In general.--An allowance established by the
            Administrator under this title does not constitute a property
            right.
              ``(2) Termination or limitation.--Nothing in this Act or any
            other provision of law shall be construed to limit or alter the
            authority of the United States, including the Administrator
            acting pursuant to statutory authority, to terminate or limit
            allowances or offset credits.
              ``(3) Other provisions unaffected.--Except as otherwise
            specified in this Act, nothing in this Act relating to
            allowances or offset credits established or issued under this
            title shall affect the application of any other provision of
            law to a covered entity, or the responsibility for a covered
            entity to comply with any such provision of law.
      ``(d) Savings Provision.--Nothing in this part shall be construed as
    requiring a change of any kind in any State law regulating electric
    utility rates and charges, or as affecting any State law regarding such
    State regulation, or as limiting State regulation (including any
    prudency review) under such a State law. Nothing in this part shall be
    construed as modifying the Federal Power Act or as affecting the
    authority of the Federal Energy Regulatory Commission under that Act.
    Nothing in this part shall be construed to interfere with or impair any
    program for competitive bidding for power supply in a State in which
    such program is established.
      ``(e) Allowances for Each Calendar Year.--
              ``(1) In general.--Except as provided in paragraph (2), the
            number of emission allowances established by the Administrator
            under subsection (a) for each calendar year shall be as
            provided in the following table:

    ----------------------------------------------------------------------------------------------------------------
                        ``Calendar year                                 Emission allowances (in millions)
    ----------------------------------------------------------------------------------------------------------------
    2012                                                     4,627
    ----------------------------------------------------------------------------------------------------------------
    2013                                                     4,544
    ----------------------------------------------------------------------------------------------------------------
    2014                                                     5,099
    ----------------------------------------------------------------------------------------------------------------
    2015                                                     5,003
    ----------------------------------------------------------------------------------------------------------------
    2016                                                     5,482
    ----------------------------------------------------------------------------------------------------------------
    2017                                                     5,375
    ----------------------------------------------------------------------------------------------------------------
    2018                                                     5,269
    ----------------------------------------------------------------------------------------------------------------
    2019                                                     5,162
    ----------------------------------------------------------------------------------------------------------------
    2020                                                     5,056
    ----------------------------------------------------------------------------------------------------------------
    2021                                                     4,903
    ----------------------------------------------------------------------------------------------------------------
    2022                                                     4,751
    ----------------------------------------------------------------------------------------------------------------
    2023                                                     4,599
    ----------------------------------------------------------------------------------------------------------------
    2024                                                     4,446
    ----------------------------------------------------------------------------------------------------------------
    2025                                                     4,294
    ----------------------------------------------------------------------------------------------------------------
    2026                                                     4,142
    ----------------------------------------------------------------------------------------------------------------
    2027                                                     3,990
    ----------------------------------------------------------------------------------------------------------------
    2028                                                     3,837
    ----------------------------------------------------------------------------------------------------------------
    2029                                                     3,685
    ----------------------------------------------------------------------------------------------------------------
    2030                                                     3,533
    ----------------------------------------------------------------------------------------------------------------
    2031                                                     3,408
    ----------------------------------------------------------------------------------------------------------------
    2032                                                     3,283
    ----------------------------------------------------------------------------------------------------------------
    2033                                                     3,158
    ----------------------------------------------------------------------------------------------------------------
    2034                                                     3,033
    ----------------------------------------------------------------------------------------------------------------
    2035                                                     2,908
    ----------------------------------------------------------------------------------------------------------------
    2036                                                     2,784
    ----------------------------------------------------------------------------------------------------------------
    2037                                                     2,659
    ----------------------------------------------------------------------------------------------------------------
    2038                                                     2,534
    ----------------------------------------------------------------------------------------------------------------
    2039                                                     2,409
    ----------------------------------------------------------------------------------------------------------------
    2040                                                     2,284
    ----------------------------------------------------------------------------------------------------------------
    2041                                                     2,159
    ----------------------------------------------------------------------------------------------------------------
    2042                                                     2,034
    ----------------------------------------------------------------------------------------------------------------
    2043                                                     1,910
    ----------------------------------------------------------------------------------------------------------------
    2044                                                     1,785
    ----------------------------------------------------------------------------------------------------------------
    2045                                                     1,660
    ----------------------------------------------------------------------------------------------------------------
    2046                                                     1,535
    ----------------------------------------------------------------------------------------------------------------
    2047                                                     1,410
    ----------------------------------------------------------------------------------------------------------------
    2048                                                     1,285
    ----------------------------------------------------------------------------------------------------------------
    2049                                                     1,160
    ----------------------------------------------------------------------------------------------------------------
    2050 and each year thereafter                            1,035
    ----------------------------------------------------------------------------------------------------------------

              ``(2) Revision.--
                      ``(A) In general.--The Administrator may adjust, in
                    accordance with subparagraph (B), the number of
                    emission allowances established pursuant to paragraph
                    (1) if, after notice and an opportunity for public
                    comment, the Administrator determines that--
                              ``(i) United States greenhouse gas emissions
                            in 2005 were other than 7,206 million metric
                            tons carbon dioxide equivalent;
                              ``(ii) if the requirements of this title for
                            2012 had been in effect in 2005, section 722
                            would have required emission allowances to be
                            held for other than 66.2 percent of United
                            States greenhouse gas emissions in 2005;
                              ``(iii) if the requirements of this title for
                            2014 had been in effect in 2005, section 722
                            would have required emission allowances to be
                            held for other than 75.7 percent of United
                            States greenhouse gas emissions in 2005; or
                              ``(iv) if the requirements of this title for
                            2016 had been in effect in 2005, section 722
                            would have required emission allowances to be
                            held for other than 84.5 percent United States
                            greenhouse gas emissions in 2005.
                      ``(B) Adjustment formula.--
                              ``(i) In general.--If the Administrator
                            adjusts under this paragraph the number of
                            emission allowances established pursuant to
                            paragraph (1), the number of emission
                            allowances the Administrator establishes for
                            any given calendar year shall equal the product
                            of--
                                      ``(I) United States greenhouse gas
                                    emissions in 2005, expressed in tons of
                                    carbon dioxide equivalent;
                                      ``(II) the percent of United States
                                    greenhouse gas emissions in 2005,
                                    expressed in tons of carbon dioxide
                                    equivalent, that would have been
                                    subject to section 722 if the
                                    requirements of this title for the
                                    given calendar year had been in effect
                                    in 2005; and
                                      ``(III) the percentage set forth for
                                    that calendar year in section 703(a),
                                    or determined under clause (ii) of this
                                    subparagraph.
                              ``(ii) Targets.--In applying the portion of
                            the formula in clause (i)(III) of this
                            subparagraph, for calendar years for which a
                            percentage is not listed in section 703(a), the
                            Administrator shall use a uniform annual
                            decline in the amount of emissions between the
                            years that are specified.
                              ``(iii) Carbon dioxide equivalent value.--If
                            the Administrator adjusts under this paragraph
                            the number of emission allowances established
                            pursuant to paragraph (1), the Administrator
                            shall use the carbon dioxide equivalent values
                            established pursuant to section 712.
                              ``(iv) Limitation on adjustment timing.--Once
                            a calendar year has started, the Administrator
                            may not adjust the number of emission
                            allowances to be established for that calendar
                            year.
                      ``(C) Limitation on adjustment authority.--The
                    Administrator may adjust under this paragraph the
                    number of emission allowances to be established
                    pursuant to paragraph (1) only once.
      ``(f) Compensatory Allowance.--
              ``(1) In general.--The regulations promulgated under
            subsection (h) shall provide for the establishment and
            distribution of compensatory allowances for--
                      ``(A) the destruction, in 2012 or later, of
                    fluorinated gases that are greenhouse gases if--
                              ``(i) allowances or offset credits were
                            retired for their production or importation;
                            and
                              ``(ii) such gases are not required to be
                            destroyed under any other provision of law;
                      ``(B) the nonemissive use, in 2012 or later, of
                    petroleum-based or coal-based liquid or gaseous fuel,
                    petroleum coke, natural gas liquid, or natural gas as a
                    feedstock, if allowances or offset credits were retired
                    for the greenhouse gases that would have been emitted
                    from their combustion; and
                      ``(C) the conversionary use, in 2012 or later, of
                    fluorinated gases in a manufacturing process, including
                    semiconductor research or manufacturing, if allowances
                    or offset credits were retired for the production or
                    importation of such gas.
              ``(2) Establishment and distribution.--
                      ``(A) In general.--Not later than 90 days after the
                    end of each calendar year, the Administrator shall
                    establish and distribute to the entity taking the
                    actions described in subparagraph (A), (B), or (C) of
                    paragraph (1) a quantity of compensatory allowances
                    equivalent to the number of tons of carbon dioxide
                    equivalent of avoided emissions achieved through such
                    actions. In establishing the quantity of compensatory
                    allowances, the Administrator shall take into account
                    the carbon dioxide equivalent value of any greenhouse
                    gas resulting from such action.
                      ``(B) Source of allowances.--Compensatory allowances
                    established under this subsection shall not be emission
                    allowances established under subsection (a).
                      ``(C) Identification numbers.--The Administrator
                    shall assign to each compensatory allowance established
                    under subparagraph (A) a unique identification number.
              ``(3) Definitions.--For purposes of this subsection--
                      ``(A) the term `destruction' means the conversion of
                    a greenhouse gas by thermal, chemical, or other means
                    to another gas or set of gases with little or no carbon
                    dioxide equivalent value;
                      ``(B) the term `nonemissive use' means the use of
                    fossil fuel as a feedstock in an industrial or
                    manufacturing process to the extent that greenhouse
                    gases are not emitted from such process, and to the
                    extent that the products of such process are not
                    intended for use as, or to be contained in, a fuel; and
                      ``(C) the term `conversionary use' means the
                    conversion during research or manufacturing of a
                    fluorinated gas into another greenhouse gas or set of
                    gases with a lower carbon dioxide equivalent value.
              ``(4) Feedstock emissions study.--
                      ``(A) The Administrator may conduct a study to
                    determine the extent to which petroleum-based or coal-
                    based liquid or gaseous fuel, petroleum coke, natural
                    gas liquid, or natural gas are used as feedstocks in
                    manufacturing processes to produce products and the
                    greenhouse gas emissions resulting from such uses.
                      ``(B) If as a result of such a study, the
                    Administrator determines that the use of such products
                    by noncovered sources results in substantial emissions
                    of greenhouse gases or their precursors and that such
                    emissions have not been adequately addressed under
                    other requirements of this Act, the Administrator may,
                    after notice and comment rulemaking, promulgate a
                    regulation reducing compensatory allowances
                    commensurately if doing so will not result in leakage.
      ``(g) Fluorinated Gases Assessment.--No later than March 31, 2014,
    the Administrator shall conduct an assessment of the regulation of non-
    HFC fluorinated gases under this title to determine whether the most
    appropriate point of regulation is at the gas manufacturer or importer
    level, or at the source of emissions downstream. If the Administrator
    determines, based on consideration of environmental effectiveness, cost
    effectiveness, administrative feasibility, extent of coverage of
    emissions, and competitiveness considerations, that emissions of non-
    HFC fluorinated gases can best be regulated by designating downstream
    emission sources as covered entities with compliance obligations under
    section 722, the Administrator shall, after notice and comment
    rulemaking, change the definition of covered entity with respect to
    fluorinated gases (other than HFCs) accordingly and establish such
    requirements as are necessary to ensure compliance for such entities
    with the requirements of this title.
      ``(h) Regulations.--Not later than 24 months after the date of
    enactment of this title, the Administrator shall promulgate regulations
    to carry out the provisions of this title.

    ``SEC. 722. PROHIBITION OF EXCESS EMISSIONS.

      ``(a) Prohibition.--Except as provided in subsection (c), effective
    January 1, 2012, each covered entity is prohibited from emitting
    greenhouse gases, and having attributable greenhouse gas emissions, in
    combination, in excess of its allowable emissions level. A covered
    entity's allowable emissions level for each calendar year is the number
    of emission allowances (or credits or other allowances as provided in
    subsection (d)) it holds as of 12:01 a.m. on April 1 (or a later date
    established by the Administrator under subsection (j)) of the following
    calendar year.
      ``(b) Methods of Demonstrating Compliance.--Except as otherwise
    provided in this section, the owner or operator of a covered entity
    shall not be considered to be in compliance with the prohibition in
    subsection (a) unless, as of 12:01 a.m. on April 1 (or a later date
    established by the Administrator under subsection (j)) of each calendar
    year starting in 2013, the owner or operator holds a quantity of
    emission allowances (or credits or other allowances as provided in
    subsection (d)) at least as great as the quantity calculated as
    follows:
              ``(1) Electricity sources.--For a covered entity described in
            section 700(13)(A), 1 emission allowance for each ton of carbon
            dioxide equivalent of greenhouse gas that such covered entity
            emitted in the previous calendar year, excluding emissions
            resulting from the combustion of--
                      ``(A) petroleum-based or coal-based liquid fuel;
                      ``(B) natural gas liquid;
                      ``(C) renewable biomass or gas derived from renewable
                    biomass; or
                      ``(D) petroleum coke or gas derived from petroleum
                    coke.
              ``(2) Fuel producers and importers.--For a covered entity
            described in section 700(13)(B), 1 emission allowance for each
            ton of carbon dioxide equivalent of greenhouse gas that would
            be emitted from the combustion of any petroleum-based or coal-
            based liquid fuel, petroleum coke, or natural gas liquid,
            produced or imported by such covered entity during the previous
            calendar year for sale or distribution in interstate commerce,
            assuming no capture and sequestration of any greenhouse gas
            emissions.
              ``(3) Industrial gas producers and importers.--For a covered
            entity described in section 700(13)(C), 1 emission allowance
            for each ton of carbon dioxide equivalent of fossil fuel-based
            carbon dioxide, nitrous oxide, or any other fluorinated gas
            that is a greenhouse gas (except for nitrogen trifluoride), or
            any combination thereof, produced or imported by such covered
            entity during the previous calendar year for sale or
            distribution in interstate commerce or released as fugitive
            emissions in the production of fluorinated gas.
              ``(4) Nitrogen trifluoride sources.--For a covered entity
            described in section 700(13)(D), 1 emission allowance for each
            ton of carbon dioxide equivalent of nitrogen trifluoride that
            such covered entity emitted in the previous calendar year.
              ``(5) Geological sequestration sites.--For a covered entity
            described in section 700(13)(E), 1 emission allowance for each
            ton of carbon dioxide equivalent of greenhouse gas that such
            covered entity emitted in the previous calendar year.
              ``(6) Industrial stationary sources.--For a covered entity
            described in section 700(13)(F), (G), or (H), 1 emission
            allowance for each ton of carbon dioxide equivalent of
            greenhouse gas that such covered entity emitted in the previous
            calendar year, excluding emissions resulting from--
                      ``(A) the combustion of petroleum-based or coal-based
                    liquid fuel;
                      ``(B) the combustion of natural gas liquid;
                      ``(C) the combustion of renewable biomass or gas
                    derived from renewable biomass;
                      ``(D) the combustion of petroleum coke or gas derived
                    from petroleum coke; or
                      ``(E) the use of any fluorinated gas that is a
                    greenhouse gas purchased for use at that covered
                    entity, except for nitrogen trifluoride.
              ``(7) Industrial fossil fuel-fired combustion devices.--For a
            covered entity described in section 700(13)(I), 1 emission
            allowance for each ton of carbon dioxide equivalent of
            greenhouse gas that the devices emitted in the previous
            calendar year, excluding emissions resulting from the
            combustion of--
                      ``(A) petroleum-based or coal-based liquid fuel;
                      ``(B) natural gas liquid;
                      ``(C) renewable biomass or gas derived from renewable
                    biomass; or
                      ``(D) petroleum coke or gas derived from petroleum
                    coke.
              ``(8) Natural gas local distribution companies.--For a
            covered entity described in section 700(13)(J), 1 emission
            allowance for each ton of carbon dioxide equivalent of
            greenhouse gas that would be emitted from the combustion of the
            natural gas, and any other gas meeting the specifications for
            commingling with natural gas for purposes of delivery, that
            such entity delivered during the previous calendar year to
            customers that are not covered entities, assuming no capture
            and sequestration of that greenhouse gas.
              ``(9) Algae-based fuels.--Where carbon dioxide (or another
            greenhouse gas) is used as an input in the production of algae-
            based fuels, the Administrator shall ensure that allowances are
            required to be held either for the carbon dioxide used to grow
            the algae or for the carbon dioxide emitted from combustion of
            the fuel produced from such algae, but not for both.
              ``(10) Fugitive emissions.--The greenhouse gas emissions to
            which paragraphs (1), (4), (6), and (7) apply shall not include
            fugitive emissions of greenhouse gas, except to the extent the
            Administrator determines that data on the carbon dioxide
            equivalent value of greenhouse gas in the fugitive emissions
            can be provided with sufficient precision, reliability,
            accessibility, and timeliness to ensure the integrity of
            emission allowances, the allowance tracking system, and the cap
            on emissions.
              ``(11) Export exemption.--This section shall not apply to any
            petroleum-based or coal-based liquid fuel, petroleum coke,
            natural gas liquid, fossil fuel-based carbon dioxide, nitrous
            oxide, or fluorinated gas that is exported for sale or use.
              ``(12) Natural gas liquids.--Notwithstanding subsection (a),
            if the owner or operator of a covered entity described in
            section 700(13)(B) that produces natural gas liquids does not
            take ownership of the liquids, and is not responsible for the
            distribution or use of the liquids in commerce, the owner of
            the liquids shall be responsible for compliance with this
            section, section 723, and other relevant sections of this title
            with respect to such liquids. In the regulations promulgated
            under section 721, the Administrator shall include such
            provisions with respect to such liquids as the Administrator
            determines are appropriate to determine and ensure compliance,
            and to penalize noncompliance. In such a case, the owner of the
            covered entity shall provide to the Administrator, in a manner
            to be determined by the Administrator, information regarding
            the quantity and ownership of liquids produced at the covered
            entity.
              ``(13) Application of multiple paragraphs.--For a covered
            entity to which more than 1 of paragraphs (1) through (8)
            apply, all applicable paragraphs shall apply, except that not
            more than 1 emission allowance shall be required for the same
            emission.
      ``(c) Phase-in of Prohibition.--
              ``(1) Industrial stationary sources.--The prohibition under
            subsection (a) shall first apply to a covered entity described
            in section 700(13)(D), (F), (G), (H), or (I), with respect to
            emissions occurring during calendar year 2014.
              ``(2) Natural gas local distribution companies.--The
            prohibition under subsection (a) shall first apply to a covered
            entity described in section 700(13)(J) with respect to
            deliveries occurring during calendar year 2016.
      ``(d) Additional Methods.--In addition to using the method of
    compliance described in subsection (b), a covered entity may do the
    following:
              ``(1) Offset credits.--
                      ``(A) In general.--Covered entities collectively may,
                    in accordance with this paragraph, use offset credits
                    to demonstrate compliance for up to a maximum of 2
                    billion tons of greenhouse gas emissions annually. The
                    ability to demonstrate compliance with offset credits
                    shall be divided pro rata among covered entities by
                    allowing each covered entity to satisfy a percentage of
                    the number of allowances required to be held under
                    subsection (b) to demonstrate compliance by holding 1
                    domestic offset credit or 1.25 international offset
                    credits in lieu of an emission allowance, except as
                    provided in subparagraph (D).
                      ``(B) Applicable percentage.--The percentage referred
                    to in subparagraph (A) for a given calendar year shall
                    be determined by dividing 2 billion by the sum of 2
                    billion plus the number of emission allowances
                    established under section 721(a) for the previous year,
                    and multiplying that number by 100. Not more than one
                    half of the applicable percentage under this paragraph
                    may be used by holding domestic offset credits, and not
                    more than one half of the applicable percentage under
                    this paragraph may be used by holding international
                    offset credits, except as provided in subparagraph (C).
                      ``(C) Modified percentages.--If the Administrator
                    determines that domestic offset credits available for
                    use in demonstrating compliance in any calendar year at
                    domestic offset prices generally equal to or less than
                    allowance prices, are likely to offset less than 0.9
                    billion tons of greenhouse gas emissions (measured in
                    tons of carbon dioxide equivalents), the Administrator
                    shall increase the percent of emissions that can be
                    offset through the use of international offset credits
                    (and decrease the percent of emissions that can be
                    allowed through the use of domestic offset credits by
                    the same amount) to reflect the amount that 1.0 billion
                    exceeds the number of domestic offset credits the
                    Administrator determines is available for that year, up
                    to a maximum of 0.5 billion tons of greenhouse gas
                    emissions.
                      ``(D) International offset credits.--Notwithstanding
                    subparagraph (A), to demonstrate compliance prior to
                    calendar year 2018, a covered entity may use 1
                    international offset credit in lieu of an emission
                    allowance up to the amount permitted under this
                    paragraph.
                      ``(E) President's recommendation.--The President may
                    make a recommendation to Congress as to whether the
                    number 2 billion specified in subparagraphs (A) and (B)
                    should be increased or decreased.
              ``(2) International emission allowances.--To demonstrate
            compliance, a covered entity may hold an international emission
            allowance in lieu of an emission allowance, except as modified
            under section 728(d).
              ``(3) Compensatory allowances.--To demonstrate compliance, a
            covered entity may hold a compensatory allowance obtained under
            section 721(f) in lieu of an emission allowance.
      ``(e) Retirement of Allowances and Credits.--As soon as practicable
    after a deadline established for covered entities to demonstrate
    compliance with this title, the Administrator shall retire the quantity
    of allowances or credits required to be held under this title.
      ``(f) Alternative Metrics.--For categories of covered entities
    described in subparagraph (B), (C), (D), (G), (H), or (I) of section
    700(13), the Administrator may, by rule, establish an applicability
    threshold for inclusion under those subparagraphs using an alternative
    metric and level, provided that such metric and level are easier to
    administer and cover the same size and type of sources as the threshold
    defined in such subparagraphs.
      ``(g) Threshold Review.--For each category of covered entities
    described in subparagraph (B), (C), (D), (G), (H), or (I) of section
    700(13), the Administrator shall, in 2020 and once every 8 years
    thereafter, review the carbon dioxide equivalent emission thresholds
    that are used to define covered entities. After consideration of--
              ``(1) emissions from covered entities in each such category,
            and from other entities of the same type that emit less than
            the threshold amount for the category (including emission
            sources that commence operation after the date of enactment of
            this title that are not covered entities); and
              ``(2) whether greater greenhouse gas emission reductions can
            be cost-effectively achieved by lowering the applicable
            threshold,
    the Administrator may by rule lower such threshold to not less than
    10,000 tons of carbon dioxide equivalent emissions. In determining the
    cost effectiveness of potential reductions from lowering the threshold
    for covered entities, the Administrator shall consider alternative
    regulatory greenhouse gas programs, including setting standards under
    other titles of this Act.
      ``(h) Designated Representatives.--The regulations promulgated under
    section 721(h) shall require that each covered entity, and each entity
    holding allowances or credits or receiving allowances or credits from
    the Administrator under this title, select a designated representative.
      ``(i) Education and Outreach.--
              ``(1) In general.--The Administrator shall establish and
            carry out a program of education and outreach to assist covered
            entities, especially entities having little experience with
            environmental regulatory requirements similar or comparable to
            those under this title, in preparing to meet the compliance
            obligations of this title. Such program shall include education
            with respect to using markets to effectively achieve such
            compliance.
              ``(2) Failure to receive information.--A failure to receive
            information or assistance under this subsection may not be used
            as a defense against an allegation of any violation of this
            title.
      ``(j) Adjustment of Deadline.--The Administrator may, by rule,
    establish a deadline for demonstrating compliance, for a calendar year,
    later than the date provided in subsection (a), as necessary to ensure
    the availability of emissions data, but in no event shall the deadline
    be later than June 1.
      ``(k) Notice Requirement for Covered Entities Receiving Natural Gas
    From Natural Gas Local Distribution Companies.--The owner or operator
    of a covered entity that takes delivery of natural gas from a natural
    gas local distribution company shall, not later than September 1 of
    each calendar year, notify such natural gas local distribution company
    in writing that such entity will qualify as a covered entity under this
    title for that calendar year.
      ``(l) Compliance Obligation.--For purposes of this title, the year of
    a compliance obligation is the year in which compliance is determined,
    not the year in which the greenhouse gas emissions occur or the covered
    entity has attributable greenhouse gas emissions.

    ``SEC. 723. PENALTY FOR NONCOMPLIANCE.

      ``(a) Enforcement.--A violation of any prohibition of, requirement
    of, or regulation promulgated pursuant to this title shall be a
    violation of this Act. It shall be a violation of this Act for a
    covered entity to emit greenhouse gases, and have attributable
    greenhouse gas emissions, in combination, in excess of its allowable
    emissions level as provided in section 722(a). Each ton of carbon
    dioxide equivalent for which a covered entity fails to demonstrate
    compliance under section 722(b) shall be a separate violation.
      ``(b) Excess Emissions Penalty.--
              ``(1) In general.--The owner or operator of any covered
            entity that fails for any year to comply, on the deadline
            described in section 722(a) or (j), shall be liable for payment
            to the Administrator of an excess emissions penalty in the
            amount described in paragraph (2).
              ``(2) Amount.--The amount of an excess emissions penalty
            required to be paid under paragraph (1) shall be equal to the
            product obtained by multiplying--
                      ``(A) the tons of carbon dioxide equivalent of
                    greenhouse gas emissions or attributable greenhouse gas
                    emissions for which the owner or operator of a covered
                    entity failed to comply under section 722(b) on the
                    deadline; by
                      ``(B) twice the fair market value of emission
                    allowances established for emissions occurring in the
                    calendar year for which the emission allowances were
                    due.
              ``(3) Timing.--An excess emissions penalty required under
            this subsection shall be immediately due and payable to the
            Administrator, without demand, in accordance with regulations
            promulgated by the Administrator, which shall be issued not
            later than 2 years after the date of enactment of this title.
              ``(4) No effect on liability.--An excess emissions penalty
            due and payable by the owners or operators of a covered entity
            under this subsection shall not diminish the liability of the
            owners or operators for any fine, penalty, or assessment
            against the owners or operators for the same violation under
            any other provision of this Act or any other law.
      ``(c) Excess Emissions Allowances.--The owner or operator of a
    covered entity that fails for any year to comply on the deadline
    described in section 722(a) or (j) shall be liable to offset the
    covered entity's excess combination of greenhouse gases emitted and
    attributable greenhouse gas emissions by an equal quantity of emission
    allowances during the following calendar year, or such longer period as
    the Administrator may prescribe. During the year in which the covered
    entity failed to comply, or any year thereafter, the Administrator may
    deduct the emission allowances required under this subsection to offset
    the covered entity's excess actual or attributable emissions.

    ``SEC. 724. TRADING.

      ``(a) Permitted Transactions.--Except as otherwise provided in this
    title, the lawful holder of an emission allowance, compensatory
    allowance, or offset credit may, without restriction, sell, exchange,
    transfer, hold for compliance in accordance with section 722, or
    request that the Administrator retire the emission allowance,
    compensatory allowance, or offset credit.
      ``(b) No Restriction on Transactions.--The privilege of purchasing,
    holding, selling, exchanging, transferring, and requesting retirement
    of emission allowances, compensatory allowances, or offset credits
    shall not be restricted to the owners and operators of covered
    entities, except as otherwise provided in this title.
      ``(c) Effectiveness of Allowance Transfers.--No transfer of an
    allowance or offset credit shall be effective for purposes of this
    title until a certification of the transfer, signed by the designated
    representative of the transferor, is received and recorded by the
    Administrator in accordance with regulations promulgated under section
    721(h).
      ``(d) Allowance Tracking System.--The regulations promulgated under
    section 721(h) shall include a system for issuing, recording, holding,
    and tracking allowances and offset credits that shall specify all
    necessary procedures and requirements for an orderly and competitive
    functioning of the allowance and offset credit markets. Such
    regulations shall provide for appropriate publication of the
    information in the system on the Internet.

    ``SEC. 725. BANKING AND BORROWING.

      ``(a) Banking.--An emission allowance may be used to comply with
    section 722 or section 723 for emissions in--
              ``(1) the vintage year for the allowance; or
              ``(2) any calendar year subsequent to the vintage year for
            the allowance.
      ``(b) Expiration.--
              ``(1) Regulations.--The Administrator may establish by
            regulation criteria and procedures for determining whether, and
            for implementing a determination that, the expiration of an
            allowance or credit established or issued by the Administrator
            under this title, or expiration of the ability to use an
            international emission allowance to comply with section 722, is
            necessary to ensure the authenticity and integrity of
            allowances or credits or the allowance tracking system.
              ``(2) General rule.--An allowance or credit established or
            issued by the Administrator under this title shall not expire
            unless--
                      ``(A) it is retired by the Administrator as required
                    under this title; or
                      ``(B) it is determined to expire or to have expired
                    by a specific date by the Administrator in accordance
                    with regulations promulgated under paragraph (1).
              ``(3) International emission allowances.--The ability to use
            an international emission allowance to comply with section 722
            shall not expire unless--
                      ``(A) the allowance is retired by the Administrator
                    as required by this title; or
                      ``(B) the ability to use such allowance to meet such
                    compliance obligation requirements is determined to
                    expire or to have expired by a specific date by the
                    Administrator in accordance with regulations
                    promulgated under paragraph (1).
      ``(c) Borrowing Future Vintage Year Allowances.--
              ``(1) Borrowing without interest.--In addition to the uses
            described in subsection (a), an emission allowance may be used
            to comply with section 722(a) or section 723 for emissions,
            production, importation, manufacture, or deliveries in the
            calendar year immediately preceding the vintage year for the
            allowance.
              ``(2) Borrowing with interest.--
                      ``(A) In general.--A covered entity may demonstrate
                    compliance under subsection (b) in a specific calendar
                    year for up to 15 percent of its emissions by holding
                    emission allowances with a vintage year 1 to 5 years
                    later than that calendar year.
                      ``(B) Limitations.--An emission allowance borrowed
                    pursuant to this paragraph shall be an emission
                    allowance that is established by the Administrator for
                    a specific future calendar year under section 721(a)
                    and that is held by the borrower.
                      ``(C) Prepayment of interest.--For each emission
                    allowance that an owner or operator of a covered entity
                    borrows pursuant to this paragraph, such owner or
                    operator shall, at the time it borrows the allowance,
                    hold for retirement by the Administrator a quantity of
                    emission allowances that is equal to the product
                    obtained by multiplying--
                              ``(i) 0.08; by
                              ``(ii) the number of years between the
                            calendar year in which the allowance is being
                            used to satisfy a compliance obligation and the
                            vintage year of the allowance.

    ``SEC. 726. STRATEGIC RESERVE.

      ``(a) Strategic Reserve Auctions.--
              ``(1) In general.--Once each quarter of each calendar year
            for which allowances are established under section 721(a), the
            Administrator shall auction strategic reserve allowances.
              ``(2) Restriction to covered entities.--In each auction
            conducted under paragraph (1), only covered entities that the
            Administrator expects will be required to comply with section
            722 in the following calendar year shall be eligible to make
            purchases.
      ``(b) Pool of Emission Allowances for Strategic Reserve Auctions.--
              ``(1) Filling the strategic reserve initially.--
                      ``(A) In general.--The Administrator shall, not later
                    than 2 years after the date of enactment of this title,
                    establish a strategic reserve account, and shall place
                    in that account an amount of emission allowances
                    established under section 721(a) for each calendar year
                    from 2012 through 2050 in the amounts specified in
                    subparagraph (B) of this paragraph.
                      ``(B) Amount.--The amount referred to in subparagraph
                    (A) shall be--
                              ``(i) for each of calendar years 2012 through
                            2019, 1 percent of the quantity of emission
                            allowances established for that year pursuant
                            to section 721(e)(1);
                              ``(ii) for each of calendar years 2020
                            through 2029, 2 percent of the quantity of
                            emission allowances established for that year
                            pursuant to section 721(e)(1); and
                              ``(iii) for each of calendar years 2030
                            through 2050, 3 percent of the quantity of
                            emission allowances established for that year
                            pursuant to section 721(e)(1).
                      ``(C) Effect on other provisions.--Any provision in
                    this title (except for subparagraph (B) of this
                    paragraph) that refers to a quantity or percentage of
                    the emission allowances established for a calendar year
                    under section 721(a) shall be considered to refer to
                    the amount of emission allowances as determined
                    pursuant to section 721(e), less any emission
                    allowances established for that year that are placed in
                    the strategic reserve account under this paragraph.
              ``(2) Supplementing the strategic reserve.--The Administrator
            shall also--
                      ``(A) at the end of each calendar year, transfer to
                    the strategic reserve account each emission allowance
                    that was offered for sale but not sold at any auction
                    conducted under section 791; and
                      ``(B) transfer emission allowances established under
                    subsection (g) from auction proceeds, and deposit them
                    into the strategic reserve, to the extent necessary to
                    maintain the reserve at its original size.
      ``(c) Minimum Strategic Reserve Auction Price.--
              ``(1) In general.--At each strategic reserve auction, the
            Administrator shall offer emission allowances for sale
            beginning at a minimum price per emission allowance, which
            shall be known as the `minimum strategic reserve auction
            price'.
              ``(2) Initial minimum strategic reserve auction prices.--The
            minimum strategic reserve auction price shall be $28 (in
            constant 2009 dollars) for the strategic reserve auctions held
            in 2012. For the strategic reserve auctions held in 2013 and
            2014, the minimum strategic reserve auction price shall be the
            strategic reserve auction price for the previous year increased
            by 5 percent plus the rate of inflation (as measured by the
            Consumer Price Index for All Urban Consumers).
              ``(3) Minimum strategic reserve auction price in subsequent
            years.--For each strategic reserve auction held in 2015 and
            each year thereafter, the minimum strategic reserve auction
            price shall be 60 percent above a rolling 36-month average of
            the daily closing price for that year's emission allowance
            vintage as reported on registered carbon trading facilities,
            calculated using constant dollars.
      ``(d) Quantity of Emission Allowances Released From the Strategic
    Reserve.--
              ``(1) Initial limits.--For each of calendar years 2012
            through 2016, the annual limit on the number of emission
            allowances from the strategic reserve account that may be
            auctioned is an amount equal to 5 percent of the emission
            allowances established for that calendar year under section
            721(a). This limit does not apply to international offset
            credits sold on consignment pursuant to subsection (h).
              ``(2) Limits in subsequent years.--For calendar year 2017 and
            each year thereafter, the annual limit on the number of
            emission allowances from the strategic reserve account that may
            be auctioned is an amount equal to 10 percent of the emission
            allowances established for that calendar year under section
            721(a). This limit does not apply to international offset
            credits sold on consignment pursuant to subsection (h).
              ``(3) Allocation of limitation.--One-fourth of each year's
            annual strategic reserve auction limit under this subsection
            shall be made available for auction in each quarter. Any
            allowances from the strategic reserve account that are made
            available for sale in a quarterly auction and not sold shall be
            rolled over and added to the quantity available for sale in the
            following quarter, except that allowances not sold at auction
            in the fourth quarter of a year shall not be rolled over to the
            following calendar year's auctions, but shall be returned to
            the strategic reserve account.
      ``(e) Purchase Limit.--
              ``(1) In general.--Except as provided in paragraph (2) or
            (3), the annual number of emission allowances that a covered
            entity may purchase at the strategic reserve auctions in each
            calendar year shall not exceed 20 percent of the covered
            entity's emissions during the most recent year for which
            allowances or credits were retired under section 722.
              ``(2) 2012 Limit.--For calendar year 2012, the maximum
            aggregate number of emission allowances that a covered entity
            may purchase from that year's strategic reserve auctions shall
            be 20 percent of the covered entity's greenhouse gas emissions
            that the covered entity reported to the registry established
            under section 713 for 2011 and that would be subject to section
            722(a) if occurring in later calendar years.
              ``(3) New entrants.--The Administrator shall, by regulation,
            establish a separate purchase limit applicable to entities that
            expect to become a covered entity in the year of the auction,
            permitting them to purchase emission allowances at the
            strategic reserve auctions in their first calendar year of
            operation in an amount of at least 20 percent of their expected
            combined emissions and attributable greenhouse gas emissions
            for that year.
      ``(f) Delegation or Contract.--Pursuant to regulations under this
    section, the Administrator may, by delegation or contract, provide for
    the conduct of strategic reserve auctions under the Administrator's
    supervision by other departments or agencies of the Federal Government
    or by nongovernmental agencies, groups, or organizations.
      ``(g) Use of Auction Proceeds.--
              ``(1) Deposit in strategic reserve fund.--The proceeds from
            strategic reserve auctions shall be placed in the Strategic
            Reserve Fund established under section 793(1), and shall be
            available without further appropriation or fiscal year
            limitation for the purposes described in this subsection.
              ``(2) International offset credits for reduced
            deforestation.--The Administrator shall use the proceeds from
            each strategic reserve auction to purchase international offset
            credits issued for reduced deforestation activities pursuant to
            section 743(e). The Administrator shall retire those
            international offset credits and establish a number of emission
            allowances equal to 80 percent of the number of international
            offset credits so retired. Emission allowances established
            under this paragraph shall be in addition to those established
            under section 721(a).
              ``(3) Emission allowances.--The Administrator shall deposit
            emission allowances established under paragraph (2) in the
            strategic reserve, except that, with respect to any such
            emission allowances in excess of the amount necessary to fill
            the strategic reserve to its original size, the Administrator
            shall--
                      ``(A) except as provided in subparagraph (B), assign
                    a vintage year to the emission allowance, which shall
                    be no earlier than the year in which the allowance is
                    established under paragraph (2) and shall treat such
                    allowances as ones that are not designated for
                    distribution or auction for purposes of section 782(q)
                    and (r); and
                      ``(B) to the extent any such allowances cannot be
                    assigned a vintage year because of the limitation in
                    paragraph (4), retire the allowances.
              ``(4) Limitation.--In no case may the Administrator assign
            under paragraph (3)(A) more emission allowances to a vintage
            year than the number of emission allowances from that vintage
            year that were placed in the strategic reserve account under
            subsection (b)(1).
      ``(h) Availability of International Offset Credits for Auction.--
              ``(1) In general.--The regulations promulgated under section
            721(h) shall allow any entity holding international offset
            credits from reduced deforestation issued under section 743(e)
            to request that the Administrator include such offset credits
            in an upcoming strategic reserve auction. The regulations shall
            provide that--
                      ``(A) such international offset credits will be used
                    to fill bid orders only after the supply of strategic
                    reserve allowances available for sale at that auction
                    has been depleted;
                      ``(B) international offset credits may be sold at a
                    strategic reserve auction under this subsection only if
                    the Administrator determines that it is highly likely
                    that covered entities will, to cover emissions
                    occurring in the year the auction is held, use offset
                    credits to demonstrate compliance under section 722 for
                    emissions equal to or greater than 80 percent of 2
                    billion tons of carbon dioxide equivalent;
                      ``(C) upon sale of such international offset credits,
                    the Administrator shall retire those international
                    offset credits, and establish and provide to the
                    purchasers a number of emission allowances equal to 80
                    percent of the number of international offset credits
                    so retired, which allowances shall be in addition to
                    those established under section 721(a); and
                      ``(D) for international offset credits sold pursuant
                    to this subsection, the proceeds for the entity that
                    offered the international offset credits for sale shall
                    be the lesser of--
                              ``(i) the average daily closing price for
                            international offset credits sold on registered
                            exchanges (or if such price is unavailable, the
                            average price as determined by the
                            Administrator) during the six months prior to
                            the strategic reserve auction at which they
                            were auctioned, with the remaining funds
                            collected upon the sale of the international
                            offset credits deposited in the Treasury; and
                              ``(ii) the amount received for the
                            international offset credits at the auction.
              ``(2) Proceeds.--For international offset credits sold
            pursuant to this subsection, notwithstanding section 3302 of
            title 31, United States Code, or any other provision of law,
            within 90 days of receipt, the United States shall transfer the
            proceeds from the auction, as defined in paragraph (1)(D), to
            the entity that offered the international offset credits for
            sale. No funds transferred from a purchaser to a seller of
            international offset credits under this paragraph shall be held
            by any officer or employee of the United States or treated for
            any purpose as public monies.
              ``(3) Pricing.--When the Administrator acts under this
            subsection as the agent of an entity in possession of
            international offset credits, the Administrator is not
            obligated to obtain the highest price possible for the
            international offset credits, and instead shall auction such
            international offset credits in the same manner and pursuant to
            the same rules (except as modified in paragraph (1)) as set
            forth for auctioning strategic reserve allowances. Entities
            requesting that such international offset credits be offered
            for sale at a strategic reserve auction may not set a minimum
            reserve price for their international offset credits that is
            different than the minimum strategic reserve auction price set
            pursuant to subsection (c).
      ``(i) Initial Regulations.--Not later than 24 months after the date
    of enactment of this title, the Administrator shall promulgate
    regulations, in consultation with other appropriate agencies, governing
    the auction of allowances under this section. Such regulations shall
    include the following requirements:
              ``(1) Frequency; first auction.--Auctions shall be held four
            times per year at regular intervals, with the first auction to
            be held no later than March 31, 2012.
              ``(2) Auction format.--Auctions shall follow a single-round,
            sealed-bid, uniform price format.
              ``(3) Participation; financial assurance.--Auctions shall be
            open to any covered entity eligible to purchase emission
            allowances at the auction under subsection (a)(2), except that
            the Administrator may establish financial assurance
            requirements to ensure that auction participants can and will
            perform on their bids.
              ``(4) Disclosure of beneficial ownership.--Each bidder in an
            auction shall be required to disclose the person or entity
            sponsoring or benefitting from the bidder's participation in
            the auction if such person or entity is, in whole or in part,
            other than the bidder.
              ``(5) Purchase limits.--No person may, directly or in concert
            with another participant, purchase more than 20 percent of the
            allowances offered for sale at any quarterly auction.
              ``(6) Publication of information.--After the auction, the
            Administrator shall, in a timely fashion, publish the
            identities of winning bidders, the quantity of allowances
            obtained by each winning bidder, and the auction clearing
            price.
              ``(7) Other requirements.--The Administrator may include in
            the regulations such other requirements or provisions as the
            Administrator, in consultation with other agencies as
            appropriate, considers appropriate to promote effective,
            efficient, transparent, and fair administration of auctions
            under this section.
      ``(j) Revision of Regulations.--The Administrator may, at any time,
    in consultation with other agencies as appropriate, revise the initial
    regulations promulgated under subsection (i). Such revised regulations
    need not meet the requirements identified in subsection (i) if the
    Administrator determines that an alternative auction design would be
    more effective, taking into account factors including costs of
    administration, transparency, fairness, and risks of collusion or
    manipulation. In determining whether and how to revise the initial
    regulations under this subsection, the Administrator shall not consider
    maximization of revenues to the Federal Government.

    ``SEC. 727. PERMITS.

      ``(a) Permit Program.--For stationary sources subject to title V of
    this Act, that are covered entities, the provisions of this title shall
    be implemented by permits issued to such covered entities (and
    enforced) in accordance with the provisions of title V, as modified by
    this title. Any such permit issued by the Administrator, or by a State
    with an approved permit program, shall require the owner or operator of
    a covered entity to hold emission allowances or offset credits at least
    equal to the total annual amount of carbon dioxide equivalents for its
    combined emissions and attributable greenhouse gas emissions to which
    section 722 applies. No such permit shall be issued that is
    inconsistent with the requirements of this title, and title V as
    applicable. Nothing in this section regarding compliance plans or in
    title V shall be construed as affecting allowances or offset credits.
    Submission of a statement by the owner or operator, or the designated
    representative of the owners and operators, of a covered entity that
    the owners and operators will hold emission allowances or offset
    credits for the entity's combined emissions and attributable greenhouse
    gas emissions to which section 722 applies shall be deemed to meet the
    proposed and approved planning requirements of title V. Recordation by
    the Administrator of transfers of emission allowances shall amend
    automatically all applicable proposed or approved permit applications,
    compliance plans, and permits.
      ``(b) Multiple Owners.--No permit shall be issued under this section
    and no allowances or offset credits shall be disbursed under this title
    to a covered entity or any other person until the designated
    representative of the owners or operators has filed a certificate of
    representation with regard to matters under this title, including the
    holding and distribution of emission allowances and the proceeds of
    transactions involving emission allowances. Where there are multiple
    holders of a legal or equitable title to, or a leasehold interest in,
    such a covered entity or other entity or where a utility or industrial
    customer purchases power under a long-term power purchase contract from
    an independent power production facility that is a covered entity, the
    certificate shall state--
              ``(1) that emission allowances and the proceeds of
            transactions involving emission allowances will be deemed to be
            held or distributed in proportion to each holder's legal,
            equitable, leasehold, or contractual reservation or
            entitlement; or
              ``(2) if such multiple holders have expressly provided for a
            different distribution of emission allowances by contract, that
            emission allowances and the proceeds of transactions involving
            emission allowances will be deemed to be held or distributed in
            accordance with the contract.
    A passive lessor, or a person who has an equitable interest through
    such lessor, whose rental payments are not based, either directly or
    indirectly, upon the revenues or income from the covered entity or
    other entity shall not be deemed to be a holder of a legal, equitable,
    leasehold, or contractual interest for the purpose of holding or
    distributing emission allowances as provided in this subsection, during
    either the term of such leasehold or thereafter, unless expressly
    provided for in the leasehold agreement. Except as otherwise provided
    in this subsection, where all legal or equitable title to or interest
    in a covered entity, or other entity, is held by a single person, the
    certificate shall state that all emission allowances received by the
    entity are deemed to be held for that person.
      ``(c) Prohibition.--It shall be unlawful for any person to operate
    any stationary source subject to the requirements of this section
    except in compliance with the terms and requirements of a permit issued
    by the Administrator or a State with an approved permit program in
    accordance with this section. For purposes of this subsection,
    compliance, as provided in section 504(f), with a permit issued under
    title V which complies with this title for covered entities shall be
    deemed compliance with this subsection as well as section 502(a).
      ``(d) Reliability.--Nothing in this section or title V shall be
    construed as requiring termination of operations of a stationary source
    that is a covered entity for failure to have an approved permit, or
    compliance plan, that is consistent with the requirements in the second
    and fifth sentences of subsection (a) concerning the holding of
    emission allowances, compensatory allowances, international emission
    allowances, or offset allowances, except that any such covered entity
    may be subject to the applicable enforcement provision of section 113.
      ``(e) Regulations.--The Administrator shall promulgate regulations to
    implement this section. To provide for permits required under this
    section, each State in which one or more stationary sources and that
    are covered entities are located shall submit, in accordance with this
    section and title V, revised permit programs for approval.

    ``SEC. 728. INTERNATIONAL EMISSION ALLOWANCES.

      ``(a) Qualifying Programs.--The Administrator, in consultation with
    the Secretary of State, may by rule designate an international climate
    change program as a qualifying international program if--
              ``(1) the program is run by a national or supranational
            foreign government, and imposes a mandatory absolute tonnage
            limit on greenhouse gas emissions from 1 or more foreign
            countries, or from 1 or more economic sectors in such a country
            or countries; and
              ``(2) the program is at least as stringent as the program
            established by this title, including provisions to ensure at
            least comparable monitoring, compliance, enforcement, quality
            of offsets, and restrictions on the use of offsets.
      ``(b) Disqualified Allowances.--An international emission allowance
    may not be held under section 722(d)(2) if it is in the nature of an
    offset instrument or allowance awarded based on the achievement of
    greenhouse gas emission reductions or avoidance, or greenhouse gas
    sequestration, that are not subject to the mandatory absolute tonnage
    limits referred to in subsection (a)(1).
      ``(c) Retirement.--
              ``(1) Entity certification.--The owner or operator of an
            entity that holds an international emission allowance under
            section 722(d)(2) shall certify to the Administrator that such
            international emission allowance has not previously been used
            to comply with any foreign, international, or domestic
            greenhouse gas regulatory program.
              ``(2) Retirement.--
                      ``(A) Foreign and international regulatory
                    entities.--The Administrator, in consultation with the
                    Secretary of State, shall seek, by whatever means
                    appropriate, including agreements and technical
                    cooperation on allowance tracking, to ensure that any
                    relevant foreign, international, and domestic
                    regulatory entities--
                              ``(i) are notified of the use, for purposes
                            of compliance with this title, of any
                            international emission allowance; and
                              ``(ii) provide for the disqualification of
                            such international emission allowance for any
                            subsequent use under the relevant foreign,
                            international, or domestic greenhouse gas
                            regulatory program, regardless of whether such
                            use is a sale, exchange, or submission to
                            satisfy a compliance obligation.
                      ``(B) Disqualification from further use.--The
                    Administrator shall ensure that, once an international
                    emission allowance has been disqualified or otherwise
                    used for purposes of compliance with this title, such
                    allowance shall be disqualified from any further use
                    under this title.
      ``(d) Use Limitations.--The Administrator may, by rule, modify the
    percentage applicable to international emission allowances under
    section 722(d)(2), consistent with the purposes of the Safe Climate
    Act.

                               ``PART D--OFFSETS

    ``SEC. 731. OFFSETS INTEGRITY ADVISORY BOARD.

      ``(a) Establishment.--Not later than 30 days after the date of
    enactment of this title, the Administrator shall establish an
    independent Offsets Integrity Advisory Board. The Advisory Board shall
    make recommendations to the Administrator for use in promulgating and
    revising regulations under this part and part E, and for ensuring the
    overall environmental integrity of the programs established pursuant to
    those regulations.
      ``(b) Membership.--The Advisory Board shall be comprised of at least
    nine members. Each member shall be qualified by education, training,
    and experience to evaluate scientific and technical information on
    matters referred to the Board under this section. The Administrator
    shall appoint Advisory Board members, including a chair and vice-chair
    of the Advisory Board. Terms shall be 3 years in length, except for
    initial terms, which may be up to 5 years in length to allow
    staggering. Members may be reappointed only once for an additional 3-
    year term, and such second term may follow directly after a first term.
      ``(c) Activities.--The Advisory Board established pursuant to
    subsection (a) shall--
              ``(1) provide recommendations, not later than 90 days after
            the Advisory Board's establishment and periodically thereafter,
            to the Administrator regarding offset project types that should
            be considered for eligibility under section 733, taking into
            consideration relevant scientific and other issues, including--
                      ``(A) the availability of a representative data set
                    for use in developing the activity baseline;
                      ``(B) the potential for accurate quantification of
                    greenhouse gas reduction, avoidance, or sequestration
                    for an offset project type;
                      ``(C) the potential level of scientific and
                    measurement uncertainty associated with an offset
                    project type; and
                      ``(D) any beneficial or adverse environmental, public
                    health, welfare, social, economic, or energy effects
                    associated with an offset project type;
              ``(2) make available to the Administrator its advice and
            comments on offset methodologies that should be considered
            under regulations promulgated pursuant to section 734(a) and
            (b), including methodologies to address the issues of
            additionality, activity baselines, measurement, leakage,
            uncertainty, permanence, and environmental integrity;
              ``(3) make available to the Administrator, and other relevant
            Federal agencies, its advice and comments regarding scientific,
            technical, and methodological issues specific to the issuance
            of international offset credits under section 743;
              ``(4) make available to the Administrator, and other relevant
            Federal agencies, its advice and comments regarding scientific,
            technical, and methodological issues associated with the
            implementation of part E;
              ``(5) make available to the Administrator its advice and
            comments on areas in which further knowledge is required to
            appraise the adequacy of existing, revised, or proposed
            methodologies for use under this part and part E, and describe
            the research efforts necessary to provide the required
            information; and
              ``(6) make available to the Administrator its advice and
            comments on other ways to improve or safeguard the
            environmental integrity of programs established under this part
            and part E.
      ``(d) Scientific Review of Offset and Deforestation Reduction
    Programs.--Not later than January 1, 2017, and at five-year intervals
    thereafter, the Advisory Board shall submit to the Administrator and
    make available to the public an analysis of relevant scientific and
    technical information related to this part and part E. The Advisory
    Board shall review approved and potential methodologies, scientific
    studies, offset project monitoring, offset project verification
    reports, and audits related to this part and part E, and evaluate the
    net emissions effects of implemented offset projects. The Advisory
    Board shall recommend changes to offset methodologies, protocols, or
    project types, or to the overall offset program under this part, to
    ensure that offset credits issued by the Administrator do not
    compromise the integrity of the annual emission reductions established
    under section 703, and to avoid or minimize adverse effects to human
    health or the environment.

    ``SEC. 732. ESTABLISHMENT OF OFFSETS PROGRAM.

      ``(a) Regulations.--Not later than 2 years after the date of
    enactment of this title, the Administrator, in consultation with
    appropriate Federal agencies and taking into consideration the
    recommendations of the Advisory Board, shall promulgate regulations
    establishing a program for the issuance of offset credits in accordance
    with the requirements of this part. The Administrator shall
    periodically revise these regulations as necessary to meet the
    requirements of this part.
      ``(b) Requirements.--The regulations described in subsection (a)
    shall--
              ``(1) authorize the issuance of offset credits with respect
            to qualifying offset projects that result in reductions or
            avoidance of greenhouse gas emissions, or sequestration of
            greenhouse gases;
              ``(2) ensure that such offset credits represent verifiable
            and additional greenhouse gas emission reductions or avoidance,
            or increases in sequestration;
              ``(3) ensure that offset credits issued for sequestration
            offset projects are only issued for greenhouse gas reductions
            that are permanent;
              ``(4) provide for the implementation of the requirements of
            this part; and
              ``(5) include as reductions in greenhouse gases reductions
            achieved through the destruction of methane and its conversion
            to carbon dioxide.
      ``(c) Coordination to Minimize Negative Effects.--In promulgating and
    implementing regulations under this part, the Administrator shall act
    (including by rejecting projects, if necessary) to avoid or minimize,
    to the maximum extent practicable, adverse effects on human health or
    the environment resulting from the implementation of offset projects
    under this part.
      ``(d) Offset Registry.--The Administrator shall establish within the
    allowance tracking system established under section 724(d) an Offset
    Registry for qualifying offset projects and offset credits issued with
    respect thereto under this part.
      ``(e) Legal Status of Offset Credit.--An offset credit does not
    constitute a property right.
      ``(f) Fees.--The Administrator shall assess fees payable by offset
    project developers in an amount necessary to cover the administrative
    costs to the Environmental Protection Agency of carrying out the
    activities under this part. Amounts collected for such fees shall be
    available to the Administrator for carrying out the activities under
    this part to the extent provided in advance in appropriations Acts.

    ``SEC. 733. ELIGIBLE PROJECT TYPES.

      ``(a) List of Eligible Project Types.--
              ``(1) In general.--As part of the regulations promulgated
            under section 732(a), the Administrator shall establish, and
            may periodically revise, a list of types of projects eligible
            to generate offset credits, including international offset
            credits, under this part.
              ``(2) Advisory board recommendations.--In determining the
            eligibility of project types, the Administrator shall take into
            consideration the recommendations of the Advisory Board. If a
            list established under this section differs from the
            recommendations of the Advisory Board, the regulations
            promulgated under section 732(a) shall include a justification
            for the discrepancy.
              ``(3) Initial determination.--The Administrator shall
            establish the initial eligibility list under paragraph (1) not
            later than one year after the date of enactment of this title.
            The Administrator shall add additional project types to the
            list not later than 2 years after the date of enactment of this
            title. In determining the initial list, the Administrator shall
            give priority to consideration of offset project types that are
            recommended by the Advisory Board and for which there are well
            developed methodologies that the Administrator determines would
            meet the criteria of section 734, with such modifications as
            the Administrator deems appropriate. In issuing methodologies
            pursuant to section 734, the Administrator shall give priority
            to methodologies for offset types included on the initial
            eligibility list.
      ``(b) Modification of List.--The Administrator--
              ``(1) may at any time, by rule, add a project type to the
            list established under subsection (a) if the Administrator, in
            consultation with appropriate Federal agencies and taking into
            consideration the recommendations of the Advisory Board,
            determines that the project type can generate additional
            reductions or avoidance of greenhouse gas emissions, or
            sequestration of greenhouse gases, subject to the requirements
            of this part;
              ``(2) may at any time, by rule, determine that a project type
            on the list does not meet the requirements of this part, and
            remove a project type from the list established under
            subsection (a), in consultation with appropriate Federal
            agencies and taking into consideration any recommendations of
            the Advisory Board; and
              ``(3) shall consider adding to or removing from the list
            established under subsection (a), at a minimum, project types
            proposed to the Administrator--
                      ``(A) by petition pursuant to subsection (c); or
                      ``(B) by the Advisory Board.
      ``(c) Petition Process.--Any person may petition the Administrator to
    modify the list established under subsection (a) by adding or removing
    a project type pursuant to subsection (b). Any such petition shall
    include a showing by the petitioner that there is adequate data to
    establish that the project type does or does not meet the requirements
    of this part. Not later than 12 months after receipt of such a
    petition, the Administrator shall either grant or deny the petition and
    publish a written explanation of the reasons for the Administrator's
    decision. The Administrator may not deny a petition under this
    subsection on the basis of inadequate Environmental Protection Agency
    resources or time for review.

    ``SEC. 734. REQUIREMENTS FOR OFFSET PROJECTS.

      ``(a) Methodologies.--As part of the regulations promulgated under
    section 732(a), the Administrator shall establish, for each type of
    offset project listed as eligible under section 733, the following:
              ``(1) Additionality.--A standardized methodology for
            determining the additionality of greenhouse gas emission
            reductions or avoidance, or greenhouse gas sequestration,
            achieved by an offset project of that type. Such methodology
            shall ensure, at a minimum, that any greenhouse gas emission
            reduction or avoidance, or any greenhouse gas sequestration, is
            considered additional only to the extent that it results from
            activities that--
                      ``(A) are not required by or undertaken to comply
                    with any law, including any regulation or consent
                    order;
                      ``(B) were not commenced prior to January 1, 2009,
                    except in the case of--
                              ``(i) offset project activities that
                            commenced after January 1, 2001, and were
                            registered as of the date of enactment of this
                            title under an offset program with respect to
                            which the Administrator has made an affirmative
                            determination under section 740(a)(2); or
                              ``(ii) activities that are readily
                            reversible, with respect to which the
                            Administrator may set an alternative earlier
                            date under this subparagraph that is not
                            earlier than January 1, 2001, where the
                            Administrator determines that setting such an
                            alternative date may produce an environmental
                            benefit by removing an incentive to cease and
                            then reinitiate activities that began prior to
                            January 1, 2009;
                      ``(C) are not receiving support under part E of this
                    title or title IV, subtitle D of the American Clean
                    Energy and Security Act of 2009; and
                      ``(D) exceed the activity baseline established under
                    paragraph (2).
              ``(2) Activity baselines.--A standardized methodology for
            establishing activity baselines for offset projects of that
            type. The Administrator shall set activity baselines to reflect
            a conservative estimate of business-as-usual performance or
            practices for the relevant type of activity such that the
            baseline provides an adequate margin of safety to ensure the
            environmental integrity of offsets calculated in reference to
            such baseline.
              ``(3) Quantification methods.--A standardized methodology for
            determining the extent to which greenhouse gas emission
            reductions or avoidance, or greenhouse gas sequestration,
            achieved by an offset project of that type exceed a relevant
            activity baseline, including protocols for monitoring and
            accounting for uncertainty.
              ``(4) Leakage.--A standardized methodology for accounting for
            and mitigating potential leakage, if any, from an offset
            project of that type, taking uncertainty into account.
      ``(b) Accounting for Reversals.--
              ``(1) In general.--For each type of sequestration project
            listed under section 733, the Administrator shall establish
            requirements to account for and address reversals, including--
                      ``(A) a requirement to report any reversal with
                    respect to an offset project for which offset credits
                    have been issued under this part;
                      ``(B) provisions to require emission allowances to be
                    held in amounts to fully compensate for greenhouse gas
                    emissions attributable to reversals, and to assign
                    responsibility for holding such emission allowances;
                    and
                      ``(C) any other provisions the Administrator
                    determines necessary to account for and address
                    reversals.
              ``(2) Mechanisms.--The Administrator shall prescribe
            mechanisms to ensure that any sequestration with respect to
            which an offset credit is issued under this part results in a
            permanent net increase in sequestration, and that full account
            is taken of any actual or potential reversal of such
            sequestration, with an adequate margin of safety. The
            Administrator shall prescribe at least one of the following
            mechanisms to meet the requirements of this paragraph:
                      ``(A) An offsets reserve, pursuant to paragraph (3).
                      ``(B) Insurance that provides for purchase and
                    provision to the Administrator for retirement of an
                    amount of offset credits or emission allowances equal
                    in number to the tons of carbon dioxide equivalents of
                    greenhouse gas emissions released due to reversal.
                      ``(C) Another mechanism that the Administrator
                    determines satisfies the requirements of this part.
              ``(3) Offsets reserve.--
                      ``(A) In general.--An offsets reserve referred to in
                    paragraph (2)(A) is a program under which, before
                    issuance of offset credits under this part, the
                    Administrator shall subtract and reserve from the
                    quantity to be issued a quantity of offset credits
                    based on the risk of reversal. The Administrator
                    shall--
                              ``(i) hold these reserved offset credits in
                            the offsets reserve; and
                              ``(ii) register the holding of the reserved
                            offset credits in the Offset Registry
                            established under section 732(d).
                      ``(B) Project reversal.--
                              ``(i) In general.--If a reversal has occurred
                            with respect an offset project for which offset
                            credits are reserved under this paragraph, the
                            Administrator shall remove offset credits from
                            the offsets reserve and cancel them to fully
                            account for the tons of carbon dioxide
                            equivalent that are no longer sequestered.
                              ``(ii) Intentional reversals.--If the
                            Administrator determines that a reversal was
                            intentional, the offset project developer for
                            the relevant offset project shall place into
                            the offsets reserve a quantity of offset
                            credits, or combination of offset credits and
                            emission allowances, equal in number to the
                            number of reserve offset credits that were
                            canceled due to the reversal pursuant to clause
                            (i).
                              ``(iii) Unintentional reversals.--If the
                            Administrator determines that a reversal was
                            unintentional, the offset project developer for
                            the relevant offset project shall place into
                            the offsets reserve a quantity of offset
                            credits, or combination of offset credits and
                            emission allowances, equal in number to half
                            the number of offset credits that were reserved
                            for that offset project, or half the number of
                            reserve offset credits that were canceled due
                            to the reversal pursuant to clause (i),
                            whichever is less.
                      ``(C) Use of reserved offset credits.--Offset credits
                    placed into the offsets reserve under this paragraph
                    may not be used to comply with section 722.
      ``(c) Crediting Periods.--
              ``(1) In general.--For each offset project type, the
            Administrator shall specify a crediting period, and establish
            provisions for petitions for new crediting periods, in
            accordance with this subsection.
              ``(2) Duration.--The crediting period shall be no less than 5
            and no greater than 10 years for any project type other than
            those involving sequestration.
              ``(3) Eligibility.--An offset project shall be eligible to
            generate offset credits under this part only during the
            project's crediting period. During such crediting period, the
            project shall remain eligible to generate offset credits,
            subject to the methodologies and project type eligibility list
            that applied as of the date of project approval under section
            735, except as provided in paragraph (4) of this subsection.
              ``(4) Petition for new crediting period.--An offset project
            developer may petition for a new crediting period to commence
            after termination of a crediting period, subject to the
            methodologies and project type eligibility list in effect at
            the time when such petition is submitted. A petition may not be
            submitted under this paragraph more than 18 months before the
            end of the pending crediting period. The Administrator may
            limit the number of new crediting periods available for
            projects of particular project types.
      ``(d) Environmental Integrity.--In establishing the requirements
    under this section, the Administrator shall apply conservative
    assumptions or methods to maximize the certainty that the environmental
    integrity of the cap established under section 703 is not compromised.
      ``(e) Pre-Existing Methodologies.--In promulgating requirements under
    this section, the Administrator shall give due consideration to
    methodologies for offset projects existing as of the date of enactment
    of this title.
      ``(f) Added Project Types.--The Administrator shall establish
    methodologies described in subsection (a), and, as applicable,
    requirements and mechanisms for reversals as described in subsection
    (b), for any project type that is added to the list pursuant to section
    733.

    ``SEC. 735. APPROVAL OF OFFSET PROJECTS.

      ``(a) Approval Petition.--An offset project developer shall submit an
    offset project approval petition providing such information as the
    Administrator requires to determine whether the offset project is
    eligible for issuance of offset credits under rules promulgated
    pursuant to this part.
      ``(b) Timing.--An approval petition shall be submitted to the
    Administrator under subsection (a) no later than the time at which an
    offset project's first verification report is submitted under section
    736.
      ``(c) Approval Petition Requirements.--As part of the regulations
    promulgated under section 732, the Administrator shall include
    provisions for, and shall specify, the required components of an offset
    project approval petition required under subsection (a), which shall
    include--
              ``(1) designation of an offset project developer; and
              ``(2) any other information that the Administrator considers
            to be necessary to achieve the purposes of this part.
      ``(d) Approval and Notification.--Not later than 90 days after
    receiving a complete approval petition under subsection (a), the
    Administrator shall approve or deny the petition in writing and, if the
    petition is denied, provide the reasons for denial. After an offset
    project is approved, the offset project developer shall not be required
    to resubmit an approval petition during the offset project's crediting
    period, except as provided in section 734(c)(4).
      ``(e) Appeal.--The Administrator shall establish procedures for
    appeal and review of determinations made under subsection (d).
      ``(f) Voluntary Preapproval Review.--The Administrator may establish
    a voluntary preapproval review procedure, to allow an offset project
    developer to request the Administrator to conduct a preliminary
    eligibility review for an offset project. Findings of such reviews
    shall not be binding upon the Administrator. The voluntary preapproval
    review procedure--
              ``(1) shall require the offset project developer to submit
            such basic project information as the Administrator requires to
            provide a meaningful review; and
              ``(2) shall require a response from the Administrator not
            later than 6 weeks after receiving a request for review under
            this subsection.

    ``SEC. 736. VERIFICATION OF OFFSET PROJECTS.

      ``(a) In General.--As part of the regulations promulgated under
    section 732(a), the Administrator shall establish requirements,
    including protocols, for verification of the quantity of greenhouse gas
    emission reductions or avoidance, or sequestration of greenhouse gases,
    resulting from an offset project. The regulations shall require that an
    offset project developer shall submit a report, prepared by a third-
    party verifier accredited under subsection (d), providing such
    information as the Administrator requires to determine the quantity of
    greenhouse gas emission reductions or avoidance, or sequestration of
    greenhouse gas, resulting from the offset project.
      ``(b) Schedule.--The Administrator shall prescribe a schedule for the
    submission of verification reports under subsection (a).
      ``(c) Verification Report Requirements.--The Administrator shall
    specify the required components of a verification report required under
    subsection (a), which shall include--
              ``(1) the name and contact information for a designated
            representative for the offset project developer;
              ``(2) the quantity of greenhouse gas reduced, avoided, or
            sequestered;
              ``(3) the methodologies applicable to the project pursuant to
            section 734;
              ``(4) a certification that the project meets the applicable
            requirements;
              ``(5) a certification establishing that the conflict of
            interest requirements in the regulations promulgated under
            subsection (d)(1) have been complied with; and
              ``(6) any other information that the Administrator considers
            to be necessary to achieve the purposes of this part.
      ``(d) Verifier Accreditation.--
              ``(1) In general.--As part of the regulations promulgated
            under section 732(a), the Administrator shall establish a
            process and requirements for periodic accreditation of third-
            party verifiers to ensure that such verifiers are
            professionally qualified and have no conflicts of interest.
              ``(2) Standards.--
                      ``(A) American national standards institute
                    accreditation.--The Administrator may accredit, or
                    accept for purposes of accreditation under this
                    subsection, verifiers accredited under the American
                    National Standards Institute (ANSI) accreditation
                    program in accordance with ISO 14065. The Administrator
                    shall accredit, or accept for accreditation, verifiers
                    under this subparagraph only if the Administrator finds
                    that the American National Standards Institute
                    accreditation program provides sufficient assurance
                    that the requirements of this part will be met.
                      ``(B) EPA accreditation.--As part of the regulations
                    promulgated under section 732(a), the Administrator may
                    establish accreditation standards for verifiers under
                    this subsection, and may establish related training and
                    testing programs and requirements.
              ``(3) Public accessibility.--Each verifier meeting the
            requirements for accreditation in accordance with this
            subsection shall be listed in a publicly accessible database,
            which shall be maintained and updated by the Administrator.

    ``SEC. 737. ISSUANCE OF OFFSET CREDITS.

      ``(a) Determination and Notification.--Not later than 90 days after
    receiving a complete verification report under section 736, the
    Administrator shall--
              ``(1) make the report publicly available;
              ``(2) make a determination of the quantity of greenhouse gas
            emissions reduced or avoided, or greenhouse gases sequestered,
            resulting from an offset project approved under section 735;
            and
              ``(3) notify the offset project developer in writing of such
            determination.
      ``(b) Issuance Of Offset Credits.--The Administrator shall issue one
    offset credit to an offset project developer for each ton of carbon
    dioxide equivalent that the Administrator has determined has been
    reduced, avoided, or sequestered during the period covered by a
    verification report submitted in accordance with section 736, only if--
              ``(1) the Administrator has approved the offset project
            pursuant to section 735; and
              ``(2) the relevant emissions reduction, avoidance, or
            sequestration has--
                      ``(A) already occurred, during the offset project's
                    crediting period; and
                      ``(B) occurred after January 1, 2009.
      ``(c) Appeal.--The Administrator shall establish procedures for
    appeal and review of determinations made under subsection (a).
      ``(d) Timing.--Offset credits meeting the criteria established in
    subsection (b) shall be issued not later than 2 weeks following the
    verification determination made by the Administrator under subsection
    (a).
      ``(e) Registration.--The Administrator shall assign a unique serial
    number to and register each offset credit to be issued in the Offset
    Registry established under section 732(d).

    ``SEC. 738. AUDITS.

      ``(a) In General.--The Administrator shall, on an ongoing basis,
    conduct random audits of offset projects, offset credits, and practices
    of third-party verifiers. In each year, the Administrator shall conduct
    audits, at minimum, for a representative sample of project types and
    geographic areas.
      ``(b) Delegation.--The Administrator may delegate to a State or
    tribal government the responsibility for conducting audits under this
    section if the Administrator finds that the program proposed by the
    State or tribal government provides assurances equivalent to those
    provided by the auditing program of the Administrator, and that the
    integrity of the offset program under this part will be maintained.
    Nothing in this subsection shall prevent the Administrator from
    conducting any audit the Administrator considers necessary and
    appropriate.

    ``SEC. 739. PROGRAM REVIEW AND REVISION.

      ``At least once every 5 years, the Administrator shall review and,
    based on new or updated information and taking into consideration the
    recommendations of the Advisory Board, update and revise--
              ``(1) the list of eligible project types established under
            section 733;
              ``(2) the methodologies established, including specific
            activity baselines, under section 734(a);
              ``(3) the reversal requirements and mechanisms established or
            prescribed under section 734(b);
              ``(4) measures to improve the accountability of the offsets
            program; and
              ``(5) any other requirements established under this part to
            ensure the environmental integrity and effective operation of
            this part.

    ``SEC. 740. EARLY OFFSET SUPPLY.

      ``(a) Projects Registered Under Other Government-Recognized
    Programs.--Except as provided in subsection (b) or (c), the
    Administrator shall issue one offset credit for each ton of carbon
    dioxide equivalent emissions reduced, avoided, or sequestered--
              ``(1) under an offset project that was started after January
            1, 2001;
              ``(2) for which a credit was issued under any regulatory or
            voluntary greenhouse gas emission offset program that the
            Administrator determines--
                      ``(A) was established under State or tribal law or
                    regulation prior to January 1, 2009, or has been
                    approved by the Administrator pursuant to subsection
                    (e);
                      ``(B) has developed offset project type standards,
                    methodologies, and protocols through a public
                    consultation process or a peer review process;
                      ``(C) has made available to the public standards,
                    methodologies, and protocols that require that credited
                    emission reductions, avoidance, or sequestration are
                    permanent, additional, verifiable, and enforceable;
                      ``(D) requires that all emission reductions,
                    avoidance, or sequestration be verified by a State
                    regulatory agency or an accredited third-party
                    independent verification body;
                      ``(E) requires that all credits issued are registered
                    in a publicly accessible registry, with individual
                    serial numbers assigned for each ton of carbon dioxide
                    equivalent emission reductions, avoidance, or
                    sequestration; and
                      ``(F) ensures that no credits are issued for
                    activities for which the entity administering the
                    program, or a program administrator or representative,
                    has funded, solicited, or served as a fund
                    administrator for the development of, the project or
                    activity that caused the emission reduction, avoidance,
                    or sequestration; and
              ``(3) for which the credit described in paragraph (2) is
            transferred to the Administrator.
      ``(b) Ineligible Credits.--Subsection (a) shall not apply to offset
    credits that have expired or have been retired, canceled, or used for
    compliance under a program established under State or tribal law or
    regulation.
      ``(c) Limitation.--Notwithstanding subsection (a)(1), offset credits
    shall be issued under this section--
              ``(1) only for reductions or avoidance of greenhouse gas
            emissions, or sequestration of greenhouse gases, that occur
            after January 1, 2009; and
              ``(2) only until the date that is 3 years after the date of
            enactment of this title, or the date that regulations
            promulgated under section 732(a) take effect, whichever occurs
            sooner.
      ``(d) Retirement of Credits.--The Administrator shall seek to ensure
    that offset credits described in subsection (a)(2) are retired for
    purposes of use under a program described in subsection (b).
      ``(e) Other Programs.--(1) Offset programs that either--
              ``(A) were not established under State or tribal law; or
              ``(B) were not established prior to January 1, 2009,
            but that otherwise meet all of the criteria of subsection
            (a)(2) may apply to the Administrator to be approved under this
            subsection as an eligible program for early offset credits
            under this section.
      ``(2) The Administrator shall approve any such program that the
    Administrator determines has criteria and methodologies of at least
    equal stringency to the criteria and methodologies of the programs
    established under State or tribal law that the Administrator determines
    meet the criteria of subsection (a)(2). The Administrator may approve
    types of offsets under any such program that are subject to criteria
    and methodologies of at least equal stringency to the criteria and
    methodologies for such types of offsets applied under the programs
    established under State or tribal law that the Administrator determines
    meet the criteria of subsection (a)(2). The Administrator shall make a
    determination on any application received under this subsection by no
    later than 180 days from the date of receipt of the application.

    ``SEC. 741. ENVIRONMENTAL CONSIDERATIONS.

      ``If the Administrator lists forestry projects as eligible offset
    project types under section 733, the Administrator, in consultation
    with appropriate Federal agencies, shall promulgate regulations for the
    selection and use of species in forestry and other relevant land
    management-related offset projects--
              ``(1) to ensure that native species are given primary
            consideration in such projects;
              ``(2) to enhance biological diversity in such projects;
              ``(3) to prohibit the use of federally designated or State-
            designated noxious weeds;
              ``(4) to prohibit the use of a species listed by a regional
            or State invasive plant authority within the applicable region
            or State; and
              ``(5) in accordance with widely accepted, environmentally
            sustainable forestry practices.

    ``SEC. 742. TRADING.

      ``Section 724 shall apply to the trading of offset credits.

    ``SEC. 743. INTERNATIONAL OFFSET CREDITS.

      ``(a) In General.--The Administrator, in consultation with the
    Secretary of State and the Administrator of the United States Agency
    for International Development, may issue, in accordance with this
    section, international offset credits based on activities that reduce
    or avoid greenhouse gas emissions, or increase sequestration of
    greenhouse gases, in a developing country. Such credits may be issued
    for projects pursuant to the requirements of this part or as provided
    in subsection (c), (d), or (e).
      ``(b) Issuance.--
              ``(1) Regulations.--Not later than 2 years after the date of
            enactment of this title, the Administrator, in consultation
            with the Secretary of State, the Administrator of the United
            States Agency for International Development, and any other
            appropriate Federal agency, and taking into consideration the
            recommendations of the Advisory Board, shall promulgate
            regulations for implementing this section. Except as otherwise
            provided in this section, the issuance of international offset
            credits under this section shall be subject to the requirements
            of this part.
              ``(2) Requirements for international offset credits.--The
            Administrator may issue international offset credits only if--
                      ``(A) the United States is a party to a bilateral or
                    multilateral agreement or arrangement that includes the
                    country in which the project or measure achieving the
                    relevant greenhouse gas emission reduction or
                    avoidance, or greenhouse gas sequestration, has
                    occurred;
                      ``(B) such country is a developing country; and
                      ``(C) such agreement or arrangement--
                              ``(i) ensures that all of the requirements of
                            this part apply to the issuance of
                            international offset credits under this
                            section; and
                              ``(ii) provides for the appropriate
                            distribution of international offset credits
                            issued.
      ``(c) Sector-Based Credits.--
              ``(1) In general.--In order to minimize the potential for
            leakage and to encourage countries to take nationally
            appropriate mitigation actions to reduce or avoid greenhouse
            gas emissions, or sequester greenhouse gases, the
            Administrator, in consultation with the Secretary of State and
            the Administrator of the United States Agency for International
            Development, shall--
                      ``(A) identify sectors of specific countries with
                    respect to which the issuance of international offset
                    credits on a sectoral basis is appropriate; and
                      ``(B) issue international offset credits for such
                    sectors only on a sectoral basis.
              ``(2) Identification of sectors.--
                      ``(A) General rule.--For purposes of paragraph
                    (1)(A), a sectoral basis shall be appropriate for
                    activities--
                              ``(i) in countries that have comparatively
                            high greenhouse gas emissions, or comparatively
                            greater levels of economic development; and
                              ``(ii) that, if located in the United States,
                            would be within a sector subject to the
                            compliance obligation under section 722.
                      ``(B) Factors.--In determining the sectors and
                    countries for which international offset credits should
                    be awarded only on a sectoral basis, the Administrator,
                    in consultation with the Secretary of State and the
                    Administrator of the United States Agency for
                    International Development, shall consider the following
                    factors:
                              ``(i) The country's gross domestic product.
                              ``(ii) The country's total greenhouse gas
                            emissions.
                              ``(iii) Whether the comparable sector of the
                            United States economy is covered by the
                            compliance obligation under section 722.
                              ``(iv) The heterogeneity or homogeneity of
                            sources within the relevant sector.
                              ``(v) Whether the relevant sector provides
                            products or services that are sold in
                            internationally competitive markets.
                              ``(vi) The risk of leakage if international
                            offset credits were issued on a project-level
                            basis, instead of on a sectoral basis, for
                            activities within the relevant sector.
                              ``(vii) The capability of accurately
                            measuring, monitoring, reporting, and verifying
                            the performance of sources across the relevant
                            sector.
                              ``(viii) Such other factors as the
                            Administrator, in consultation with the
                            Secretary of State and the Administrator of the
                            United States Agency for International
                            Development, determines are appropriate to--
                                      ``(I) ensure the integrity of the
                                    United States greenhouse gas emissions
                                    cap established under section 703; and
                                      ``(II) encourage countries to take
                                    nationally appropriate mitigation
                                    actions to reduce or avoid greenhouse
                                    gas emissions, or sequester greenhouse
                                    gases.
              ``(3) Sectoral basis.--
                      ``(A) Definition.--In this subsection, the term
                    `sectoral basis' means the issuance of international
                    offset credits only for the quantity of sector-wide
                    reductions or avoidance of greenhouse gas emissions, or
                    sector-wide increases in sequestration of greenhouse
                    gases, achieved across the relevant sector of the
                    economy relative to a baseline level of performance
                    established in an agreement or arrangement described in
                    subsection (b)(2)(A) for the sector.
                      ``(B) Baseline.--The baseline for a sector shall be
                    established at levels of greenhouse gas emissions lower
                    than would occur under a business-as-usual scenario
                    taking into account relevant domestic or international
                    policies or incentives to reduce greenhouse gas
                    emissions, among other factors, and additionality and
                    performance shall be determined on the basis of such
                    baseline.
      ``(d) Credits Issued by an International Body.--
              ``(1) In general.--The Administrator, in consultation with
            the Secretary of State, may issue international offset credits
            in exchange for instruments in the nature of offset credits
            that are issued by an international body established pursuant
            to the United Nations Framework Convention on Climate Change,
            to a protocol to such Convention, or to a treaty that succeeds
            such Convention. The Administrator may issue international
            offset credits under this subsection only if, in addition to
            the requirements of subsection (b), the Administrator has
            determined that the international body that issued the
            instruments has implemented substantive and procedural
            requirements for the relevant project type that provide equal
            or greater assurance of the integrity of such instruments as is
            provided by the requirements of this part.
              ``(2) Retirement.--The Administrator, in consultation with
            the Secretary of State, shall seek, by whatever means
            appropriate, including agreements, arrangements, or technical
            cooperation with the international issuing body described in
            paragraph (1), to ensure that such body--
                      ``(A) is notified of the Administrator's issuance,
                    under this subsection, of an international offset
                    credit in exchange for an instrument issued by such
                    international body; and
                      ``(B) provides, to the extent feasible, for the
                    disqualification of the instrument issued by such
                    international body for subsequent use under any
                    relevant foreign or international greenhouse gas
                    regulatory program, regardless of whether such use is a
                    sale, exchange, or submission to satisfy a compliance
                    obligation.
      ``(e) Offsets From Reduced Deforestation.--
              ``(1) Requirements.--The Administrator, in accordance with
            the regulations promulgated under subsection (b)(1) and an
            agreement or arrangement described in subsection (b)(2)(A),
            shall issue international offset credits for greenhouse gas
            emission reductions achieved through activities to reduce
            deforestation only if, in addition to the requirements of
            subsection (b)--
                      ``(A) the activity occurs in--
                              ``(i) a country listed by the Administrator
                            pursuant to paragraph (2);
                              ``(ii) a state or province listed by the
                            Administrator pursuant to paragraph (5); or
                              ``(iii) a country listed by the Administrator
                            pursuant to paragraph (6);
                      ``(B) except as provided in paragraph (5) or (6), the
                    quantity of the international offset credits is
                    determined by comparing the national emissions from
                    deforestation relative to a national deforestation
                    baseline for that country established, in accordance
                    with an agreement or arrangement described in
                    subsection (b)(2)(A), pursuant to paragraph (4);
                      ``(C) the reduction in emissions from deforestation
                    has occurred before the issuance of the international
                    offset credit and, taking into consideration relevant
                    international standards, has been demonstrated using
                    ground-based inventories, remote sensing technology,
                    and other methodologies to ensure that all relevant
                    carbon stocks are accounted;
                      ``(D) the Administrator has made appropriate
                    adjustments, such as discounting for any additional
                    uncertainty, to account for circumstances specific to
                    the country, including its technical capacity described
                    in paragraph (2)(A);
                      ``(E) the activity is designed, carried out, and
                    managed--
                              ``(i) in accordance with widely accepted,
                            environmentally sustainable forest management
                            practices;
                              ``(ii) to promote or restore native forest
                            species and ecosystems where practicable, and
                            to avoid the introduction of invasive nonnative
                            species;
                              ``(iii) in a manner that gives due regard to
                            the rights and interests of local communities,
                            indigenous peoples, forest-dependent
                            communities, and vulnerable social groups;
                              ``(iv) with consultations with, and full
                            participation of, local communities, indigenous
                            peoples, and forest-dependent communities, in
                            affected areas, as partners and primary
                            stakeholders, prior to and during the design,
                            planning, implementation, and monitoring and
                            evaluation of activities; and
                              ``(v) with equitable sharing of profits and
                            benefits derived from offset credits with local
                            communities, indigenous peoples, and forest-
                            dependent communities; and
                      ``(F) the reduction otherwise satisfies and is
                    consistent with any relevant requirements established
                    by an agreement reached under the auspices of the
                    United Nations Framework Convention on Climate Change.
              ``(2) Eligible countries.--The Administrator, in consultation
            with the Secretary of State and the Administrator of the United
            States Agency for International Development, and in accordance
            with an agreement or arrangement described in subsection
            (b)(2)(A), shall establish, and periodically review and update,
            a list of the developing countries that have the capacity to
            participate in deforestation reduction activities at a national
            level, including--
                      ``(A) the technical capacity to monitor, measure,
                    report, and verify forest carbon fluxes for all
                    significant sources of greenhouse gas emissions from
                    deforestation with an acceptable level of uncertainty,
                    as determined taking into account relevant
                    internationally accepted methodologies, such as those
                    established by the Intergovernmental Panel on Climate
                    Change;
                      ``(B) the institutional capacity to reduce emissions
                    from deforestation, including strong forest governance
                    and mechanisms to equitably distribute deforestation
                    resources for local actions; and
                      ``(C) a land use or forest sector strategic plan
                    that--
                              ``(i) assesses national and local drivers of
                            deforestation and forest degradation and
                            identifies reforms to national policies needed
                            to address them;
                              ``(ii) estimates the country's emissions from
                            deforestation and forest degradation;
                              ``(iii) identifies improvements in data
                            collection, monitoring, and institutional
                            capacity necessary to implement a national
                            deforestation reduction program; and
                              ``(iv) establishes a timeline for
                            implementing the program and transitioning to
                            low-emissions development.
              ``(3) Protection of interests.--With respect to an agreement
            or arrangement described in subsection (b)(2)(A) with a country
            that addresses international offset credits under this
            subsection, the Administrator, in consultation with the
            Secretary of State and the Administrator of the United States
            Agency for International Development, shall seek to ensure the
            establishment and enforcement by such country of legal regimes,
            processes, standards, and safeguards that--
                      ``(A) give due regard to the rights and interests of
                    local communities, indigenous peoples, forest-dependent
                    communities, and vulnerable social groups;
                      ``(B) promote consultations with, and full
                    participation of, forest-dependent communities and
                    indigenous peoples in affected areas, as partners and
                    primary stakeholders, prior to and during the design,
                    planning, implementation, and monitoring and evaluation
                    of activities; and
                      ``(C) encourage equitable sharing of profits and
                    benefits derived from international offset credits with
                    local communities, indigenous peoples, and forest-
                    dependent communities.
              ``(4) National deforestation baseline.--A national
            deforestation baseline established under this subsection
            shall--
                      ``(A) be national in scope;
                      ``(B) be consistent with nationally appropriate
                    mitigation commitments or actions with respect to
                    deforestation, taking into consideration the average
                    annual historical deforestation rates of the country
                    during a period of at least 5 years, the applicable
                    drivers of deforestation, and other factors to ensure
                    additionality;
                      ``(C) establish a trajectory that would result in
                    zero net deforestation by not later than 20 years after
                    the national deforestation baseline has been
                    established;
                      ``(D) be adjusted over time to take account of
                    changing national circumstances;
                      ``(E) be designed to account for all significant
                    sources of greenhouse gas emissions from deforestation
                    in the country; and
                      ``(F) be consistent with the national deforestation
                    baseline, if any, established for such country under
                    section 754(d)(1).
              ``(5) State-level or province-level activities.--
                      ``(A) Eligible states or provinces.--The
                    Administrator, in consultation with the Secretary of
                    State and the Administrator of the United States Agency
                    for International Development, shall establish, and
                    periodically review and update, a list of states or
                    provinces in developing countries where--
                              ``(i) the developing country is not included
                            on the list of countries established pursuant
                            to paragraph (6)(A);
                              ``(ii) the state or province by itself is a
                            major emitter of greenhouse gases from tropical
                            deforestation on a scale commensurate to the
                            emissions of other countries; and
                              ``(iii) the state or province meets the
                            eligibility criteria in paragraphs (2) and (3)
                            for the geographic area under its jurisdiction.
                      ``(B) Activities.--The Administrator may issue
                    international offset credits for greenhouse gas
                    emission reductions achieved through activities to
                    reduce deforestation at a state or provincial level
                    that meet the requirements of this section. Such
                    credits shall be determined by comparing the emissions
                    from deforestation within that state or province
                    relative to the state or province deforestation
                    baseline for that state or province established, in
                    accordance with an agreement or arrangement described
                    in subsection (b)(2)(A), pursuant to subparagraph (C)
                    of this paragraph.
                      ``(C) State-level or province-level deforestation
                    baseline.--A state-level or province-level
                    deforestation baseline shall--
                              ``(i) be consistent with any existing
                            nationally appropriate mitigation commitments
                            or actions for the country in which the
                            activity is occurring, taking into
                            consideration the average annual historical
                            deforestation rates of the state or province
                            during a period of at least 5 years, relevant
                            drivers of deforestation, and other factors to
                            ensure additionality;
                              ``(ii) establish a trajectory that would
                            result in zero net deforestation by not later
                            than 20 years after the state-level or
                            province-level deforestation baseline has been
                            established; and
                              ``(iii) be designed to account for all
                            significant sources of greenhouse gas emissions
                            from deforestation in the state or province and
                            adjusted to fully account for emissions leakage
                            outside the state or province.
                      ``(D) Phase out.--Beginning 5 years after the first
                    calendar year for which a covered entity must
                    demonstrate compliance with section 722(a), the
                    Administrator shall issue no further international
                    offset credits for eligible state-level or province-
                    level activities to reduce deforestation pursuant to
                    this paragraph.
              ``(6) Projects and programs to reduce deforestation.--
                      ``(A) Eligible countries.--The Administrator, in
                    consultation with the Secretary of State and the
                    Administrator of the United States Agency for
                    International Development, shall establish, and
                    periodically review and update, a list of developing
                    countries that--
                              ``(i) the Administrator determines, based on
                            recent, credible, and reliable emissions data,
                            account for less than 1 percent of global
                            greenhouse gas emissions and less than 3
                            percent of global forest-sector and land use
                            change greenhouse gas emissions; and
                              ``(ii) have, or in the determination of the
                            Administrator are making a good faith effort to
                            develop, a land use or forest sector strategic
                            plan that meets the criteria described in
                            paragraph (2)(C).
                      ``(B) Activities.--The Administrator may issue
                    international offset credits for greenhouse gas
                    emission reductions achieved through project or program
                    level activities to reduce deforestation in countries
                    listed under subparagraph (A) that meet the
                    requirements of this section. The quantity of
                    international offset credits shall be determined by
                    comparing the project-level or program-level emissions
                    from deforestation to a deforestation baseline for such
                    project or program established pursuant to subparagraph
                    (C).
                      ``(C) Project-level or program-level baseline.--A
                    project-level or program-level deforestation baseline
                    shall--
                              ``(i) be consistent with any existing
                            nationally appropriate mitigation commitments
                            or actions for the country in which the project
                            or program is occurring, taking into
                            consideration the average annual historical
                            deforestation rates in the project or program
                            boundary during a period of at least 5 years,
                            applicable drivers of deforestation, and other
                            factors to ensure additionality;
                              ``(ii) be designed to account for all
                            significant sources of greenhouse gas emissions
                            from deforestation in the project or program
                            boundary; and
                              ``(iii) be adjusted to fully account for
                            emissions leakage outside the project or
                            program boundary.
                      ``(D) Phase out.--(i) Beginning 5 years after the
                    first calendar year for which a covered entity must
                    demonstrate compliance with section 722(a), the
                    Administrator shall issue no further international
                    offset credits for project-level or program-level
                    activities as described in this paragraph, except as
                    provided in clause (ii).
                      ``(ii) The Administrator may extend the phase out
                    deadline for the issuance of international offset
                    credits under this section by up to 8 years with
                    respect to eligible activities taking place in a least
                    developed nation, which is a foreign country that the
                    United Nations has identified as among the least
                    developed of developing countries at the time that the
                    Administrator determines to provide an extension,
                    provided that the Administrator, in consultation with
                    the Secretary of State and the Administrator of the
                    United States Agency for International Development,
                    determines the nation--
                              ``(I) lacks sufficient capacity to adopt and
                            implement effective programs to achieve
                            reductions in deforestation measured against
                            national baselines;
                              ``(II) is receiving support under part E to
                            develop such capacity; and
                              ``(III) has developed and is working to
                            implement a credible national strategy or plan
                            to reduce deforestation.
              ``(7) Deforestation.--In implementing this subsection, the
            Administrator, taking into consideration the recommendations of
            the Advisory Board, may include forest degradation, or soil
            carbon losses associated with forested wetlands or peatlands,
            within the meaning of deforestation.
      ``(f) Modification of Requirements.--In promulgating regulations
    under subsection (b)(1) with respect to the issuance of international
    offset credits under subsection (c), (d), or (e), the Administrator, in
    consultation with the Secretary of State and the Administrator of the
    United States Agency for International Development, may modify or omit
    a requirement of this part (excluding the requirements of this section)
    if the Administrator determines that the application of that
    requirement to such subsection is not feasible. In modifying or
    omitting such a requirement on the basis of infeasibility, the
    Administrator, in consultation with the Secretary of State and the
    Administrator of the United States Agency for International
    Development, shall ensure, with an adequate margin of safety, the
    integrity of international offset credits issued under this section and
    of the greenhouse gas emissions cap established pursuant to section
    703.
      ``(g) Avoiding Double Counting.--The Administrator, in consultation
    with the Secretary of State, shall seek, by whatever means appropriate,
    including agreements, arrangements, or technical cooperation, to ensure
    that activities on the basis of which international offset credits are
    issued under this section are not used for compliance with an
    obligation to reduce or avoid greenhouse gas emissions, or increase
    greenhouse gas sequestration, under a foreign or international
    regulatory system. In addition, no international offset credits shall
    be issued for emission reductions from activities with respect to which
    emission allowances were allocated under section 781 for distribution
    under part E.
      ``(h) Limitation.--The Administrator shall not issue international
    offset credits generated by projects based on the destruction of
    hydrofluorocarbons.

     ``PART E--SUPPLEMENTAL EMISSIONS REDUCTIONS FROM REDUCED DEFORESTATION

    ``SEC. 751. DEFINITIONS.

      ``In this part:
              ``(1) Leakage prevention activities.--The term `leakage
            prevention activities' means activities in developing countries
            that are directed at preserving existing forest carbon stocks,
            including forested wetlands and peatlands, that might, absent
            such activities, be lost through leakage.
              ``(2) National deforestation reduction activities.--The term
            `national deforestation reduction activities' means activities
            in developing countries that reduce a quantity of greenhouse
            gas emissions from deforestation that is calculated by
            measuring actual emissions against a national deforestation
            baseline established pursuant to section 754(d)(1) and (2).
              ``(3) Subnational deforestation reduction activities.--The
            term `subnational deforestation reduction activities' means
            activities in developing countries that reduce a quantity of
            greenhouse gas emissions from deforestation that are calculated
            by measuring actual emissions using an appropriate baseline
            established by the Administrator that is less than national in
            scope.
              ``(4) Supplemental emissions reductions.--The term
            `supplemental emissions reductions' means greenhouse gas
            emissions reductions achieved from reduced or avoided
            deforestation under this part.
              ``(5) USAID.--The term `USAID' means the United States Agency
            for International Development.

    ``SEC. 752. FINDINGS.

      ``Congress finds that--
              ``(1) as part of a global effort to mitigate climate change,
            it is in the national interest of the United States to assist
            developing countries to reduce and ultimately halt emissions
            from deforestation;
              ``(2) deforestation is one of the largest sources of
            greenhouse gas emissions in developing countries, amounting to
            roughly 20 percent of overall emissions globally;
              ``(3) recent scientific analysis shows that it will be
            substantially more difficult to limit the increase in global
            temperatures to less than 2 degrees centigrade above
            preindustrial levels without reducing and ultimately halting
            net emissions from deforestation;
              ``(4) reducing emissions from deforestation is highly cost-
            effective, compared to many other sources of emissions
            reductions;
              ``(5) in addition to contributing significantly to worldwide
            efforts to address global warming, this assistance will
            generate significant environmental and social cobenefits,
            including protection of biodiversity, ecosystem services, and
            forest-related livelihoods; and
              ``(6) Under the Bali Action Plan, developed country parties
            to the United Nations Framework Convention on Climate Change,
            including the United States, committed to `enhanced action on
            the provision of financial resources and investment to support
            action on mitigation and adaptation and technology
            cooperation,' including, inter alia, consideration of `improved
            access to adequate, predictable, and sustainable financial
            resources and financial and technical support, and the
            provision of new and additional resources, including official
            and concessional funding for developing country parties' .

    ``SEC. 753. SUPPLEMENTAL EMISSIONS REDUCTIONS THROUGH REDUCED
                        DEFORESTATION.

      ``(a) Regulations.--Not later than 2 years after the date of
    enactment of this title, the Administrator, in consultation with the
    Administrator of USAID and any other appropriate agencies, shall
    promulgate regulations establishing a program to use emission
    allowances set aside for this purpose under section 781 to achieve the
    reduction of greenhouse gas emissions from deforestation in developing
    countries in accordance with the requirements of this part.
      ``(b) Objectives.--The objectives of the program established under
    this section shall be to--
              ``(1) achieve supplemental emissions reductions of at least
            720,000,000 tons of carbon dioxide equivalent in 2020, a
            cumulative amount of at least 6,000,000,000 tons of carbon
            dioxide equivalent by December 31, 2025, and additional
            supplemental emissions reductions in subsequent years;
              ``(2) build capacity to reduce deforestation in developing
            countries experiencing deforestation, including preparing
            developing countries to participate in international markets
            for international offset credits for reduced emissions from
            deforestation; and
              ``(3) preserve existing forest carbon stocks in countries
            where such forest carbon may be vulnerable to international
            leakage, particularly in developing countries with largely
            intact native forests.

    ``SEC. 754. REQUIREMENTS FOR INTERNATIONAL DEFORESTATION REDUCTION
                        PROGRAM.

      ``(a) Eligible Countries.--The Administrator may support activities
    under this part only with respect to a developing country that--
              ``(1) the Administrator, in consultation with the
            Administrator of USAID, determines is experiencing
            deforestation or forest degradation or has standing forest
            carbon stocks that may be at risk of deforestation or
            degradation; and
              ``(2) has entered into a bilateral or multilateral agreement
            or arrangement with the United States establishing the
            conditions of its participation in the program established
            under this part, which shall include an agreement to meet the
            standards established under subsection (d) for the activities
            to which those standards apply.
      ``(b) Activities.--(1) Subject to the requirements of this part, the
    Administrator, in consultation with the Administrator of USAID, may
    support activities to achieve the objectives identified in section
    753(b), including--
                      ``(A) national deforestation reduction activities;
                      ``(B) subnational deforestation reduction activities,
                    including pilot activities that reduce greenhouse gas
                    emissions but are subject to significant uncertainty;
                      ``(C) activities to measure, monitor, and verify
                    deforestation, avoided deforestation, and deforestation
                    rates;
                      ``(D) leakage prevention activities;
                      ``(E) development of measurement, monitoring, and
                    verification capacities to enable a country to quantify
                    supplemental emissions reductions and to generate for
                    sale offset credits from reduced or avoided
                    deforestation;
                      ``(F) development of governance structures to reduce
                    deforestation and illegal logging;
                      ``(G) enforcement of requirements for reduced
                    deforestation or forest conservation;
                      ``(H) efforts to combat illegal logging and increase
                    enforcement cooperation;
                      ``(I) providing incentives for policy reforms to
                    achieve the objectives identified in section 753(b);
                    and
                      ``(J) monitoring and evaluation of the results of the
                    activities conducted under this section.
              ``(2) Activities selected by usaid.--
                      ``(A) The Administrator of USAID, in consultation
                    with the Administrator, may select for support and
                    implementation pursuant to subsection (c) any of the
                    activities described in paragraph (1), consistent with
                    this part and the regulations promulgated under
                    subsection (d), and subject to the requirement to
                    achieve the objectives listed in section 753(b)(1).
                      ``(B) With respect to the activities listed in
                    subparagraphs (D) through (J) of paragraph (1), the
                    Administrator of USAID, in consultation with the
                    Administrator, shall have primary but not exclusive
                    responsibility for selecting the activities to be
                    supported and implemented.
              ``(3) Interagency coordination.--The Administrator and the
            Administrator of USAID shall jointly develop and biennially
            update a strategic plan for meeting the objectives listed in
            section 753(b) and shall execute a memorandum of understanding
            delineating the agencies' respective roles in implementing this
            part.
      ``(c) Mechanisms.--
              ``(1) In general.--The Administrator may support activities
            to achieve the objectives identified in section 753(b) by--
                      ``(A) developing and implementing programs and
                    projects that achieve such objectives; and
                      ``(B) distributing emission allowances to a country
                    that is eligible under subsection (a), to any private
                    or public group (including international
                    organizations), or to an international fund established
                    by an international agreement to which the United
                    States is a party, to carry out activities to achieve
                    such objectives.
              ``(2) USAID activities.--With respect to activities selected
            and implemented by the Administrator of USAID pursuant to
            (b)(2), the Administrator shall distribute emission allowances
            as provided in subparagraph (1) based upon the direction of the
            Administrator of USAID, subject to the availability of
            allowances for such activities.
              ``(3) Implementation through international organizations.--If
            support is distributed through an international organization,
            the agency responsible for selecting activities in accordance
            with subparagraph (b)(1) or (2), in consultation with the
            Secretary of State, shall ensure the establishment and
            implementation of adequate mechanisms to apply and enforce the
            eligibility requirements and other requirements of this
            section.
              ``(4) Role of the secretary of state.--The Administrator may
            not distribute emission allowances to the government of another
            country or to an international organization or international
            fund unless the Secretary of State has concurred with such
            distribution.
      ``(d) Standards.--The Administrator, in consultation with the
    Administrator of USAID, shall promulgate standards to ensure that
    supplemental emissions reductions achieved through supported activities
    are additional, measurable, verifiable, permanent, monitored, and
    account for leakage and uncertainty. In addition, such standards
    shall--
              ``(1) require the establishment of a national deforestation
            baseline for each country with national deforestation reduction
            activities that is used to account for reductions achieved from
            such activities;
              ``(2) provide that a national deforestation baseline
            established under paragraph (1) shall--
                      ``(A) be national in scope;
                      ``(B) be consistent with nationally appropriate
                    mitigation commitments or actions with respect to
                    deforestation, taking into consideration the average
                    annual historical deforestation rates of the country
                    during a period of at least 5 years and other factors
                    to ensure additionality;
                      ``(C) establish a trajectory that would result in
                    zero net deforestation by not later than 20 years from
                    the date the baseline is established;
                      ``(D) be adjusted over time to take account of
                    changing national circumstances;
                      ``(E) be designed to account for all significant
                    sources of greenhouse gas emissions from deforestation
                    in the country; and
                      ``(F) be consistent with the national deforestation
                    baseline, if any, established for such country under
                    section 743(e)(4);
              ``(3) with respect to support provided pursuant to subsection
            (b)(1)(A) or (B), require supplemental emissions reductions to
            be achieved and verified prior to compensation through the
            distribution of emission allowances under this part;
              ``(4) with respect to accounting for subnational
            deforestation reduction activities that lack the standardized
            or precise measurement and monitoring techniques needed for a
            full accounting of changes in emissions or baselines, or are
            subject to other sources of uncertainty, apply a conservative
            discount factor to reflect the uncertainty regarding the levels
            of reductions achieved;
              ``(5) ensure that activities under this part shall be
            designed, carried out, and managed--
                      ``(A) in accordance with widely accepted,
                    environmentally sustainable forestry practices;
                      ``(B) to promote native species and conservation or
                    restoration of native forests, if practicable, and to
                    avoid the introduction of invasive nonnative species;
                      ``(C) in a manner that gives due regard to the rights
                    and interests of local communities, indigenous peoples,
                    forest-dependent communities, and vulnerable social
                    groups;
                      ``(D) with consultations with, and full participation
                    of, local communities, indigenous peoples, and forest-
                    dependent communities in affected areas, as partners
                    and primary stakeholders, prior to and during the
                    design, planning, implementation, and monitoring and
                    evaluation of activities; and
                      ``(E) with equitable sharing of profits and benefits
                    derived from the activities with local communities,
                    indigenous peoples, and forest-dependent communities;
                    and
              ``(6) with respect to support for all activities under this
            part, seek to ensure the establishment and enforcement by the
            recipient country of legal regimes, standards, processes, and
            safeguards that--
                      ``(A) give due regard to the rights and interests of
                    local communities, indigenous peoples, forest-dependent
                    communities, and vulnerable social groups;
                      ``(B) promote consultations with local communities
                    and indigenous peoples and forest-dependent communities
                    in affected areas, as partners and primary
                    stakeholders, prior to and during the design, planning,
                    implementation, monitoring, and evaluation of
                    activities under this part; and
                      ``(C) encourage equitable sharing of profits and
                    benefits from incentives for emissions reductions or
                    leakage prevention with local communities, indigenous
                    peoples, and forest-dependent communities.
      ``(e) Expansion of Scope.--The Administrator, in consultation with
    the Administrator of USAID, may decide, taking into account any advice
    from the Advisory Board, to expand, where appropriate, the scope of
    activities under this part to include--
              ``(1) reduced emissions from forest degradation; or
              ``(2) reduced soil carbon-derived emissions associated with
            deforestation and degradation of forested wetlands and
            peatlands.
      ``(f) Accounting.--The Administrator shall establish a publicly
    accessible registry of the supplemental emissions reductions achieved
    through support provided under this part each year, after appropriately
    discounting for uncertainty and other relevant factors as required by
    the standards established under subsection (d).
      ``(g) Transition to National Reductions.--Beginning 5 years after the
    date that a country entered into the agreement or arrangement required
    under subsection (a)(2), the Administrator shall provide no further
    compensation through emission allowances to that country under this
    part for any subnational deforestation reduction activities, except
    that the Administrator may extend this period by an additional 5 years
    if the Administrator, in consultation with the Administrator of USAID,
    determines that--
              ``(1) the country is making substantial progress towards
            adopting and implementing a program to achieve reductions in
            deforestation measured against a national baseline;
              ``(2) the greenhouse gas emissions reductions achieved are
            not resulting in significant leakage; and
              ``(3) the greenhouse gas emissions reductions achieved are
            being appropriately discounted to account for any leakage that
            is occurring.
    The limitation under this subsection shall not apply to support for
    activities to further the objectives listed in section 753(b)(2) or
    (3).
      ``(h) Coordination With U.S. Foreign Assistance.--Subject to the
    direction of the President, the Administrator and the Administrator of
    USAID shall, to the extent practicable and consistent with the
    objectives of this program, seek to align activities under this section
    with broader development, poverty alleviation, or natural resource
    management objectives and initiatives in the recipient country.
      ``(i) Support as Supplement.--The provision of support for activities
    under this part shall be used to supplement, and not to supplant, any
    other Federal, State, or local support available to carry out such
    qualifying activities under this part.

    ``SEC. 755. REPORTS AND REVIEWS.

      ``(a) Reports.--Not later than January 1, 2014, and annually
    thereafter, the Administrator and the Administrator of USAID shall
    submit to the Committee on Energy and Commerce and the Committee on
    Foreign Affairs of the House of Representatives, and the Committee on
    Environment and Public Works and the Committee on Foreign Relations of
    the Senate, and make available to the public, a report on the support
    provided under this part during the prior fiscal year. The report shall
    include--
              ``(1) a statement of the quantity of supplemental emissions
            reductions for which compensation in the form of emission
            allowances was provided under this part during the prior fiscal
            year, as registered by the Administrator under section 754(f);
            and
              ``(2) a description of the national and subnational
            deforestation reduction activities, capacity-building
            activities, and leakage prevention activities supported under
            this part, including a statement of the quantity of emission
            allowances distributed to each recipient for each activity
            during the prior fiscal year, and a description of what was
            accomplished through each of the activities.
      ``(b) Reviews.--Not later than 4 years after the date of enactment of
    this title and every 5 years thereafter, the Administrator and the
    Administrator of USAID and taking into consideration any evaluation by
    or recommendations from the Advisory Board established under section
    731, shall conduct a review of the activities undertaken pursuant to
    this part and make any appropriate changes in the program established
    under this part based on the findings of the review. The review shall
    include the effects of the activities on--
              ``(1) total documented carbon stocks of each country that
            directly or indirectly received support under this part
            compared with such country's national deforestation baseline
            established under section 754(d)(1);
              ``(2) the number of countries with the capacity to generate
            for sale instruments in the nature of offset credits from
            forest-related activities, and the amount of such activities;
              ``(3) forest governance in each country that directly or
            indirectly received support under this part;
              ``(4) indigenous peoples and forest-dependent communities
            residing in areas affected by such activities;
              ``(5) biodiversity and ecosystem services within forested
            areas associated with the activities;
              ``(6) international leakage; and
              ``(7) any program or mechanism established under the United
            Nations Framework Convention on Climate Change related to
            greenhouse gas emissions from deforestation.

    ``SEC. 756. LEGAL EFFECT OF PART.

              ``(1) In general.--Nothing in this part supersedes, limits,
            or otherwise affects any restriction imposed by Federal law
            (including regulations) on any interaction between an entity
            located in the United States and an entity located in a foreign
            country.
              ``(2) Role of the secretary of state.--Nothing in this part
            shall be construed as affecting the role of the Secretary of
            State or the responsibilities of the Secretary under section
            622 (c) of the Foreign Assistance Act of 1961.''.

    SEC. 312. DEFINITIONS.

      Title VII of the Clean Air Act, as added by section 311 of this Act,
    is amended by inserting before part A the following new section:

    ``SEC. 700. DEFINITIONS.

      ``In this title:
              ``(1) Additional.--The term `additional', when used with
            respect to reductions or avoidance of greenhouse gas emissions,
            or to sequestration of greenhouse gases, means reductions,
            avoidance, or sequestration that result in a lower level of net
            greenhouse gas emissions or atmospheric concentrations than
            would occur in the absence of an offset project.
              ``(2) Additionality.--The term `additionality' means the
            extent to which reductions or avoidance of greenhouse gas
            emissions, or sequestration of greenhouse gases, are
            additional.
              ``(3) Advisory board.--The term `Advisory Board' means the
            Offsets Integrity Advisory Board established under section 731.
              ``(4) Affiliated.--The term `affiliated'--
                      ``(A) when used in relation to an entity means owned
                    or controlled by, or under common ownership or control
                    with, another entity, as determined by the
                    Administrator; and
                      ``(B) when used in relation to a natural gas local
                    distribution company, means owned or controlled by, or
                    under common ownership or control with, another natural
                    gas local distribution company, as determined by the
                    Administrator.
              ``(5) Allowance.--The term `allowance' means a limited
            authorization to emit, or have attributable greenhouse gas
            emissions in an amount of, 1 ton of carbon dioxide equivalent
            of a greenhouse gas in accordance with this title; it includes
            an emission allowance, a compensatory allowance, or an
            international emission allowance.
              ``(6) Attributable greenhouse gas emissions.--The term
            `attributable greenhouse gas emissions' means--
                      ``(A) for a covered entity that is a fuel producer or
                    importer described in paragraph (13)(B), greenhouse
                    gases that would be emitted from the combustion of any
                    petroleum-based or coal-based liquid fuel, petroleum
                    coke, or natural gas liquid, produced or imported by
                    that covered entity for sale or distribution in
                    interstate commerce, assuming no capture and
                    sequestration of any greenhouse gas emissions;
                      ``(B) for a covered entity that is an industrial gas
                    producer or importer described in paragraph (13)(C),
                    the tons of carbon dioxide equivalent of fossil fuel-
                    based carbon dioxide, nitrous oxide, any fluorinated
                    gas, other than nitrogen trifluoride, that is a
                    greenhouse gas, or any combination thereof--
                              ``(i) produced or imported by such covered
                            entity during the previous calendar year for
                            sale or distribution in interstate commerce; or
                              ``(ii) released as fugitive emissions in the
                            production of fluorinated gas; and
                      ``(C) for a natural gas local distribution company
                    described in paragraph (13)(J), greenhouse gases that
                    would be emitted from the combustion of the natural
                    gas, and any other gas meeting the specifications for
                    commingling with natural gas for purposes of delivery,
                    that such entity delivered during the previous calendar
                    year to customers that are not covered entities,
                    assuming no capture and sequestration of that
                    greenhouse gas.
              ``(7) Biological sequestration; biologically sequestered.--
            The terms `biological sequestration' and `biologically
            sequestered' mean the removal of greenhouse gases from the
            atmosphere by terrestrial biological means, such as by growing
            plants, and the storage of those greenhouse gases in plants or
            soils.
              ``(8) Capped emissions.--The term `capped emissions' means
            greenhouse gas emissions to which section 722 applies,
            including emissions from the combustion of natural gas,
            petroleum-based or coal-based liquid fuel, petroleum coke, or
            natural gas liquid to which section 722(b)(2) or (8) applies.
              ``(9) Capped source.--The term `capped source' means a source
            that directly emits capped emissions.
              ``(10) Carbon dioxide equivalent.--The term `carbon dioxide
            equivalent' means the unit of measure, expressed in metric
            tons, of greenhouse gases as provided under section 711 or 712.
              ``(11) Carbon stock.--The term `carbon stock' means the
            quantity of carbon contained in a biological reservoir or
            system which has the capacity to accumulate or release carbon.
              ``(12) Compensatory allowance.--The term `compensatory
            allowance' means an allowance issued under section 721(f).
              ``(13) Covered entity.--The term `covered entity' means each
            of the following:
                      ``(A) Any electricity source.
                      ``(B) Any stationary source that produces, and any
                    entity that (or any group of two or more affiliated
                    entities that, in the aggregate) imports, for sale or
                    distribution in interstate commerce in 2008 or any
                    subsequent year, petroleum-based or coal-based liquid
                    fuel, petroleum coke, or natural gas liquid, the
                    combustion of which would emit more than 25,000 tons of
                    carbon dioxide equivalent, as determined by the
                    Administrator.
                      ``(C) Any stationary source that produces, and any
                    entity that (or any group of two or more affiliated
                    entities that, in the aggregate) imports, for sale or
                    distribution in interstate commerce, in bulk, or in
                    products designated by the Administrator, in 2008 or
                    any subsequent year more than 25,000 tons of carbon
                    dioxide equivalent of--
                              ``(i) fossil fuel-based carbon dioxide;
                              ``(ii) nitrous oxide;
                              ``(iii) perfluorocarbons;
                              ``(iv) sulfur hexafluoride;
                              ``(v) any other fluorinated gas, except for
                            nitrogen trifluoride, that is a greenhouse gas,
                            as designated by the Administrator under
                            section 711(b) or (c); or
                              ``(vi) any combination of greenhouse gases
                            described in clauses (i) through (vi).
                      ``(D) Any stationary source that has emitted 25,000
                    or more tons of carbon dioxide equivalent of nitrogen
                    trifluoride in 2008 or any subsequent year.
                      ``(E) Any geologic sequestration site.
                      ``(F) Any stationary source in the following
                    industrial sectors:
                              ``(i) Adipic acid production.
                              ``(ii) Primary aluminum production.
                              ``(iii) Ammonia manufacturing.
                              ``(iv) Cement production, excluding grinding-
                            only operations.
                              ``(v) Hydrochlorofluorocarbon production.
                              ``(vi) Lime manufacturing.
                              ``(vii) Nitric acid production.
                              ``(viii) Petroleum refining.
                              ``(ix) Phosphoric acid production.
                              ``(x) Silicon carbide production.
                              ``(xi) Soda ash production.
                              ``(xii) Titanium dioxide production.
                              ``(xiii) Coal-based liquid or gaseous fuel
                            production.
                      ``(G) Any stationary source in the chemical or
                    petrochemical sector that, in 2008 or any subsequent
                    year--
                              ``(i) produces acrylonitrile, carbon black,
                            ethylene, ethylene dichloride, ethylene oxide,
                            or methanol; or
                              ``(ii) produces a chemical or petrochemical
                            product if producing that product results in
                            annual combustion plus process emissions of
                            25,000 or more tons of carbon dioxide
                            equivalent.
                      ``(H) Any stationary source that--
                              ``(i) is in one of the following industrial
                            sectors: ethanol production; ferroalloy
                            production; fluorinated gas production; food
                            processing; glass production; hydrogen
                            production; iron and steel production; lead
                            production; pulp and paper manufacturing; and
                            zinc production; and
                              ``(ii) has emitted 25,000 or more tons of
                            carbon dioxide equivalent in 2008 or any
                            subsequent year.
                      ``(I) Any fossil fuel-fired combustion device (such
                    as a boiler) or grouping of such devices that--
                              ``(i) is all or part of an industrial source
                            not specified in subparagraph (D), (F), (G), or
                            (H); and
                              ``(ii) has emitted 25,000 or more tons of
                            carbon dioxide equivalent in 2008 or any
                            subsequent year.
                      ``(J) Any natural gas local distribution company that
                    (or any group of 2 or more affiliated natural gas local
                    distribution companies that, in the aggregate) in 2008
                    or any subsequent year, delivers 460,000,000 cubic feet
                    or more of natural gas to customers that are not
                    covered entities.
              ``(14) Crediting period.--The term `crediting period' means
            the period with respect to which an offset project is eligible
            to earn offset credits under part D, as determined under
            section 734(c).
              ``(15) Designated representative.--The term `designated
            representative' means, with respect to a covered entity, a
            reporting entity, an offset project developer, or any other
            entity receiving or holding allowances or offset credits under
            this title, an individual authorized, through a certificate of
            representation submitted to the Administrator by the owners and
            operators or similar entity official, to represent the owners
            and operators or similar entity official in all matters
            pertaining to this title (including the holding, transfer, or
            disposition of allowances or offset credits), and to make all
            submissions to the Administrator under this title.
              ``(16) Developing country.--The term `developing country'
            means a country eligible to receive official development
            assistance according to the income guidelines of the
            Development Assistance Committee of the Organization for
            Economic Cooperation and Development.
              ``(17) Domestic offset credit.--The term `domestic offset
            credit' means an offset credit issued under part D, other than
            an international offset credit.
              ``(18) Electricity source.--The term `electricity source'
            means a stationary source that includes one or more utility
            units.
              ``(19) Emission.--The term `emission' means the release of a
            greenhouse gas into the ambient air. Such term does not include
            gases that are captured and sequestered, except to the extent
            that they are later released into the atmosphere, in which case
            compliance must be demonstrated pursuant to section 722(b)(5).
              ``(20) Emission allowance.--The term `emission allowance'
            means an allowance established under section 721(a) or section
            726(g)(2) or (h)(1)(C).
              ``(21) Fair market value.--The term `fair market value' means
            the average daily closing price on registered exchanges or, if
            such a price is unavailable, the average price as determined by
            the Administrator, during a specified time period, of an
            emission allowance.
              ``(22) Federal land.--The term `Federal land' means land that
            is owned by the United States, other than land held in trust
            for an Indian or Indian tribe.
              ``(23) Fossil fuel.--The term `fossil fuel' means natural
            gas, petroleum, or coal, or any form of solid, liquid, or
            gaseous fuel derived from such material, including consumer
            products that are derived from such materials and are
            combusted.
              ``(24) Fossil fuel-fired.--The term `fossil fuel-fired' means
            powered by combustion of fossil fuel, alone or in combination
            with any other fuel, regardless of the percentage of fossil
            fuel consumed.
              ``(25) Fugitive emissions.--The term `fugitive emissions'
            means emissions from leaks, valves, joints, or other small
            openings in pipes, ducts, or other equipment, or from vents.
              ``(26) Geologic sequestration; geologically sequestered.--The
            terms `geologic sequestration' and `geologically sequestered'
            mean the sequestration of greenhouse gases in subsurface
            geologic formations for purposes of permanent storage.
              ``(27) Geologic sequestration site.--The term `geologic
            sequestration site' means a site where carbon dioxide is
            geologically sequestered.
              ``(28) Greenhouse gas.--The term `greenhouse gas' means any
            gas described in section 711(a) or designated under section
            711(b), (c), or (e), except to the extent that it is regulated
            under title VI.
              ``(29) High conservation priority land.--The term `high
            conservation priority land' means land that is not Federal land
            and is--
                      ``(A) globally or State ranked as critically
                    imperiled or imperiled under a State Natural Heritage
                    Program; or
                      ``(B) old-growth or late-successional forest, as
                    identified by the office of the State Forester or
                    relevant State agency with regulatory jurisdiction over
                    forestry activities.
              ``(30) Hold.--The term `hold' means, with respect to an
            allowance or offset credit, to have in the appropriate account
            in the allowance tracking system, or submit to the
            Administrator for recording in such account.
              ``(31) Industrial source.--The term `industrial source' means
            any stationary source that--
                      ``(A) is not an electricity source; and
                      ``(B) is in--
                              ``(i) the manufacturing sector (as defined in
                            North American Industrial Classification System
                            codes 31, 32, and 33); or
                              ``(ii) the natural gas processing or natural
                            gas pipeline transportation sector (as defined
                            in North American Industrial Classification
                            System codes 211112 or 486210).
              ``(32) International emission allowance.--The term
            `international emission allowance' means a tradable
            authorization to emit 1 ton of carbon dioxide equivalent of
            greenhouse gas that is issued by a national or supranational
            foreign government pursuant to a qualifying international
            program designated by the Administrator pursuant to section
            728(a).
              ``(33) International offset credit.--The term `international
            offset credit' means an offset credit issued by the
            Administrator under section 743.
              ``(34) Leakage.--The term `leakage' means a significant
            increase in greenhouse gas emissions, or significant decrease
            in sequestration, which is caused by an offset project and
            occurs outside the boundaries of the offset project.
              ``(35) Mineral sequestration.--The term `mineral
            sequestration' means sequestration of carbon dioxide from the
            atmosphere by capturing carbon dioxide into a permanent
            mineral, such as the aqueous precipitation of carbonate
            minerals that results in the storage of carbon dioxide in a
            mineral form.
              ``(36) Natural gas liquid.--The term `natural gas liquid'
            means ethane, butane, isobutane, natural gasoline, and propane
            which is ready for commercial sale or use.
              ``(37) Natural gas local distribution company.--The term
            `natural gas local distribution company' has the meaning given
            the term `local distribution company' in section 2(17) of the
            Natural Gas Policy Act of 1978 (15 U.S.C. 3301(17)).
              ``(38) Offset credit.--The term `offset credit' means a
            credit issued under part D.
              ``(39) Offset project.--The term `offset project' means a
            project or activity that reduces or avoids greenhouse gas
            emissions, or sequesters greenhouse gases, and for which offset
            credits are issued under part D.
              ``(40) Offset project developer.--The term `offset project
            developer' means the individual or entity designated as the
            offset project developer in an offset project approval petition
            under section 735(c)(1).
              ``(41) Petroleum.--The term `petroleum' includes crude oil,
            tar sands, oil shale, and heavy oils.
              ``(42) Renewable biomass.--The term `renewable biomass' means
            any of the following:
                      ``(A) Plant material, including waste material,
                    harvested or collected from actively managed
                    agricultural land that was in cultivation, cleared, or
                    fallow and nonforested on January 1, 2009.
                      ``(B) Plant material, including waste material,
                    harvested or collected from pastureland that was
                    nonforested on January 1, 2009.
                      ``(C) Nonhazardous vegetative matter derived from
                    waste, including separated yard waste, landscape right-
                    of-way trimmings, construction and demolition debris or
                    food waste (but not municipal solid waste, recyclable
                    waste paper, painted, treated or pressurized wood, or
                    wood contaminated with plastic or metals).
                      ``(D) Animal waste or animal byproducts, including
                    products of animal waste digesters.
                      ``(E) Algae.
                      ``(F) Trees, brush, slash, residues, or any other
                    vegetative matter removed from within 600 feet of any
                    building, campground, or route designated for
                    evacuation by a public official with responsibility for
                    emergency preparedness, or from within 300 feet of a
                    paved road, electric transmission line, utility tower,
                    or water supply line.
                      ``(G) Residues from or byproducts of milled logs.
                      ``(H) Any of the following removed from forested land
                    that is not Federal and is not high conservation
                    priority land:
                              ``(i) Trees, brush, slash, residues,
                            interplanted energy crops, or any other
                            vegetative matter removed from an actively
                            managed tree plantation established--
                                      ``(I) prior to January 1, 2009; or
                                      ``(II) on land that, as of January 1,
                                    2009, was cultivated or fallow and non-
                                    forested.
                              ``(ii) Trees, logging residue, thinnings,
                            cull trees, pulpwood, and brush removed from
                            naturally-regenerated forests or other non-
                            plantation forests, including for the purposes
                            of hazardous fuel reduction or preventative
                            treatment for reducing or containing insect or
                            disease infestation.
                              ``(iii) Logging residue, thinnings, cull
                            trees, pulpwood, brush and species that are
                            non-native and noxious, from stands that were
                            planted and managed after January 1, 2009, to
                            restore or maintain native forest types.
                              ``(iv) Dead or severely damaged trees removed
                            within 5 years of fire, blowdown, or other
                            natural disaster, and badly infested trees.
                      ``(I) Materials, pre-commercial thinnings, or removed
                    invasive species from National Forest System land and
                    public lands (as defined in section 103 of the Federal
                    Land Policy and Management Act of 1976 (43 U.S.C.
                    1702)), including those that are byproducts of
                    preventive treatments (such as trees, wood, brush,
                    thinnings, chips, and slash), that are removed as part
                    of a federally recognized timber sale, or that are
                    removed to reduce hazardous fuels, to reduce or contain
                    disease or insect infestation, or to restore ecosystem
                    health, and that are--
                              ``(i) not from components of the National
                            Wilderness Preservation System, Wilderness
                            Study Areas, Inventoried Roadless Areas, old
                            growth or mature forest stands, components of
                            the National Landscape Conservation System,
                            National Monuments, National Conservation
                            Areas, Designated Primitive Areas; or Wild and
                            Scenic Rivers corridors;
                              ``(ii) harvested in environmentally
                            sustainable quantities, as determined by the
                            appropriate Federal land manager; and
                              ``(iii) are harvested in accordance with
                            Federal and State law, and applicable land
                            management plans.
              ``(43) Retire.--The term `retire', with respect to an
            allowance or offset credit established or issued under this
            title, means to disqualify such allowance or offset credit for
            any subsequent use under this title, regardless of whether the
            use is a sale, exchange, or submission of the allowance or
            offset credit to satisfy a compliance obligation.
              ``(44) Reversal.--The term `reversal' means an intentional or
            unintentional loss of sequestered greenhouse gases to the
            atmosphere.
              ``(45) Sequestered and sequestration.--The terms
            `sequestered' and `sequestration' mean the separation,
            isolation, or removal of greenhouse gases from the atmosphere,
            as determined by the Administrator. The terms include
            biological, geologic, and mineral sequestration, but do not
            include ocean fertilization techniques.
              ``(46) Stationary source.--The term `stationary source' means
            any integrated operation comprising any plant, building,
            structure, or stationary equipment, including support buildings
            and equipment, that is located within one or more contiguous or
            adjacent properties, is under common control of the same person
            or persons, and emits or may emit a greenhouse gas.
              ``(47) Strategic reserve allowance.--The term `strategic
            reserve allowance' means an emission allowance reserved for,
            transferred to, or deposited in the strategic reserve, or
            established, under section 726.
              ``(48) Uncapped emissions.--The term `uncapped emissions'
            means emissions of greenhouse gases emitted after December 31,
            2011, that are not capped emissions.
              ``(49) United states greenhouse gas emissions.--The term
            `United States greenhouse gas emissions' means the total
            quantity of annual greenhouse gas emissions from the United
            States, as calculated by the Administrator and reported to the
            United Nations Framework Convention on Climate Change
            Secretariat.
              ``(50) Utility unit.--The term `utility unit' means a
            combustion device that, on January 1, 2009, or any date
            thereafter, is fossil fuel-fired and serves a generator that
            produces electricity for sale, unless such combustion device,
            during the 12-month period starting the later of January 1,
            2009, or the commencement of commercial operation and each
            calendar year starting after such later date--
                      ``(A) is part of an integrated cycle system that
                    cogenerates steam and electricity during normal
                    operation and that supplies one-third or less of its
                    potential electric output capacity and 25 MW or less of
                    electrical output for sale; or
                      ``(B) combusts materials of which more than 95
                    percent is municipal solid waste on a heat input basis.
              ``(51) Vintage year.--The term `vintage year' means the
            calendar year for which an emission allowance is established
            under section 721(a) or which is assigned to an emission
            allowance under section 726(g)(3)(A), except that the vintage
            year for a strategic reserve allowance shall be the year in
            which such allowance is purchased at auction.''.

                     Subtitle B--Disposition of Allowances

    SEC. 321. DISPOSITION OF ALLOWANCES FOR GLOBAL WARMING POLLUTION
                        REDUCTION PROGRAM.

      Title VII of the Clean Air Act, as added by section 311 of this Act,
    is amended by adding at the end the following part:

                      ``PART H--DISPOSITION OF ALLOWANCES

    ``SEC. 781. ALLOCATION OF ALLOWANCES FOR SUPPLEMENTAL REDUCTIONS.

      ``(a) In General.--The Administrator shall allocate for each vintage
    year the following percentage of the emission allowances established
    under section 721(a), for distribution in accordance with part E:
              ``(1) For vintage years 2012 through 2025, 5 percent.
              ``(2) For vintage years 2026 through 2030, 3 percent.
              ``(3) For vintage years 2031 through 2050, 2 percent.
      ``(b) Adjustment.--The Administrator shall modify the percentages set
    forth in subsection (a) as necessary to ensure the achievement of the
    annual supplemental emission reduction objective for 2020, and the
    cumulative reduction objective through 2025, set forth in section
    753(b)(1).
      ``(c) Carryover.--If the Administrator has not distributed all of the
    allowances allocated pursuant to this section for a given vintage year
    by the end of that year, the Administrator shall--
              ``(1) auction the remaining emission allowances under section
            791 not later than March 31 of the year following that vintage
            year; and
              ``(2) increase the allocation for the vintage year after the
            vintage year for which emission allowances were undistributed
            by the amount of undistributed emission allowances.

    ``SEC. 782. ALLOCATION OF EMISSION ALLOWANCES.

      ``(a) Electricity Consumers.--The Administrator shall allocate
    emission allowances for the benefit of electricity consumers, to be
    distributed in accordance with section 783 in the following amounts:
              ``(1) For vintage years 2012 and 2013, 43.75 percent of the
            emission allowances established for each year under section
            721(a).
              ``(2) For vintage years 2014 and 2015, 38.89 percent of the
            emission allowances established for each year under section
            721(a).
              ``(3) For vintage years 2016 through 2025, 35.00 percent of
            the emission allowances established for each year under section
            721(a).
              ``(4) For vintage year 2026, 28 percent of the emission
            allowances established for each year under section 721(a).
              ``(5) For vintage year 2027, 21 percent of the emission
            allowances established for each year under section 721(a).
              ``(6) For vintage year 2028, 14 percent of the emission
            allowances established for each year under section 721(a).
              ``(7) For vintage year 2029, 7 percent of the emission
            allowances established for each year under section 721(a).
      ``(b) Natural Gas Consumers.--The Administrator shall allocate
    emission allowances for the benefit of natural gas consumers to be
    distributed in accordance with section 784 in the following amounts:
              ``(1) For vintage years 2016 through 2025, 9 percent of the
            emission allowances established for each year under section
            721(a).
              ``(2) For vintage year 2026, 7.2 percent of the emission
            allowances established for each year under section 721(a).
              ``(3) For vintage year 2027, 5.4 percent of the emission
            allowances established for each year under section 721(a).
              ``(4) For vintage year 2028, 3.6 percent of the emission
            allowances established for each year under section 721(a).
              ``(5) For vintage year 2029, 1.8 percent of the emission
            allowances established for each year under section 721(a).
      ``(c) Home Heating Oil and Propane Consumers.--The Administrator
    shall allocate emission allowances for the benefit of home heating oil
    and propane consumers to be distributed in accordance with section 785
    in the following amounts:
              ``(1) For vintage years 2012 and 2013, 1.875 percent of the
            emission allowances established for each year under section
            721(a).
              ``(2) For vintage years 2014 and 2015, 1.67 percent of the
            emission allowances established for each year under section
            721(a).
              ``(3) For vintage years 2016 through 2025, 1.5 percent of the
            emission allowances established for each year under section
            721(a).
              ``(4) For vintage year 2026, 1.2 percent of the emission
            allowances established for each year under section 721(a).
              ``(5) For vintage year 2027, 0.9 percent of the emission
            allowances established for each year under section 721(a).
              ``(6) For vintage year 2028, 0.6 percent of the emission
            allowances established for each year under section 721(a).
              ``(7) For vintage year 2029, 0.3 percent of the emission
            allowances established for each year under section 721(a).
      ``(d) Low Income Consumers.--For each vintage year starting in 2012,
    the Administrator shall auction pursuant to section 791 15 percent of
    the emission allowances established for each year under section 721(a),
    with the proceeds used for the benefit of low income consumers to fund
    the program set forth in subtitle C of title IV of American Clean
    Energy and Security Act of 2009.
      ``(e) Trade-Vulnerable Industries.--The Administrator shall allocate
    emission allowances to energy-intensive, trade-exposed entities, to be
    distributed in accordance with section 765, in the following amounts:
              ``(1) For vintage years 2012 and 2013, up to 2.0 percent of
            the emission allowances established for each year under section
            721(a).
              ``(2) For vintage year 2014, up to 15 percent of the emission
            allowances established for that year under section 721(a).
              ``(3) For vintage year 2015, up to the product of the amount
            specified in paragraph (2), multiplied by the quantity of
            emission allowances established for 2015 under section 721(a)
            divided by the quantity of emission allowances established for
            2014 under section 721(a).
              ``(4) For vintage year 2016, up to the product of the amount
            specified in paragraph (3), multiplied by the quantity of
            emission allowances established for 2015 under section 721(a)
            divided by the quantity of emission allowances established for
            2014 under section 721(a).
              ``(5) For vintage years 2017 through 2025, up to the product
            of the amount specified in paragraph (4), multiplied by the
            quantity of emission allowances established for that year under
            section 721(a) divided by the quantity of emission allowances
            established for 2016 under section 721(a).
              ``(6) For vintage years 2026 through 2050, up to the product
            of the amount specified in paragraph (4)--
                      ``(A) multiplied by the quantity of emission
                    allowances established for the applicable year during
                    2026 through 2050 under section 721(a) divided by the
                    quantity of emission allowances established for 2016
                    under section 721(a); and
                      ``(B) multiplied by a factor, not exceeding 100
                    percent, that shall equal 90 percent for 2026 and
                    decline 10 percent for each year thereafter until
                    reaching zero,
            except that, if the President sets one or more factors for a
            year under section 767(c)(3)(A), the highest factor set (not
            exceeding 100 percent) shall be used for that year instead of
            the factor specified in subparagraph (B).
      ``(f) Deployment of Carbon Capture and Sequestration Technology.--
              ``(1) Annual allocation.--The Administrator shall allocate
            emission allowances for the deployment of carbon capture and
            sequestration technology to be distributed in accordance with
            section 786 in the following amounts:
                      ``(A) For vintage years 2014 through 2017, 1.75
                    percent of the emission allowances established for each
                    year under section 721(a).
                      ``(B) For vintage years 2018 and 2019, 4.75 percent
                    of the emission allowances established for each year
                    under section 721(a).
                      ``(C) For vintage years 2020 through 2050, 5 percent
                    of the emission allowances established for each year
                    under section 721(a).
              ``(2) Carryover.--If the Administrator has not distributed
            all of the allowances allocated pursuant to this subsection for
            a given vintage year by the end of that year, the Administrator
            shall--
                      ``(A) auction those emission allowances under section
                    791 not later than March 31 of the year following that
                    vintage year; and
                      ``(B) increase the allocation under this subsection
                    for the vintage year after the vintage year for which
                    emission allowances were undisbursed by the amount of
                    undisbursed emission allowances, but only to the extent
                    that allowances for that later year are to be
                    auctioned.
      ``(g) Investment in Energy Efficiency and Renewable Energy.--The
    Administrator shall allocate emission allowances to invest in energy
    efficiency and renewable energy as follows:
              ``(1) To be distributed in accordance with section 132 of the
            American Clean Energy and Security Act of 2009 in the following
            amounts:
                      ``(A) For vintage years 2012 through 2015, 9.5
                    percent of the emission allowances established for each
                    year under section 721(a).
                      ``(B) For vintage years 2016 through 2017, 6.5
                    percent of the emission allowances established for each
                    year under section 721(a).
                      ``(C) For vintage years 2018 through 2021, 5.5
                    percent of the emission allowances established for each
                    year under section 721(a).
                      ``(D) For vintage years 2022 through 2025, 1.0
                    percent of the emission allowances established for each
                    year under section 721(a).
                      ``(E) For vintage years 2026 through 2050, 4.5
                    percent of the emission allowances established for each
                    year under section 721(a).
                      ``(F) At the same time the vintage year 2022 through
                    2025 allowances are distributed, 3.55 percent of
                    emission allowances established under section 721(a)
                    for the vintage year four years greater shall also be
                    distributed (which shall be in addition to the emission
                    allowances in subparagraph (E)).
              ``(2) To be distributed in accordance with section 201 of the
            American Clean Energy and Security Act of 2009, for each
            vintage year from 2012 through 2050, 0.5 percent of emission
            allowances established under section 721(a).
      ``(h) Clean Energy Innovation Centers.--For each vintage year from
    2012 through 2050, the Administrator shall allocate for Clean Energy
    Innovation Centers, 1.5 percent of emission allowances established
    under section 721(a), to be distributed in accordance with section 171
    of the American Clean Energy and Security Act of 2009.
      ``(i) Investment in Clean Vehicle Technology.--The Administrator
    shall allocate emission allowances to invest in the development and
    deployment of clean vehicles, to be distributed in accordance with
    section 124 of the American Clean Energy and Security Act of 2009 in
    the following amounts:
              ``(1) For vintage years 2012 through 2017, 3 percent of the
            emission allowances established for each year under section
            721(a).
              ``(2) For vintage years 2018 through 2025, 1 percent of the
            emission allowances established for each year under section
            721(a).
      ``(j) Domestic Fuel Production.--For vintage years 2014 through 2026,
    the Administrator shall allocate 2.0 percent of the emission allowances
    established under section 721(a) to domestic refiners, to be
    distributed in accordance with section 787.
      ``(k) Investment in Workers.--The Administrator shall auction
    pursuant to section 791 emission allowances for workers in the
    following amounts and shall report to the Secretary of Labor the amount
    of proceeds from the sale of these allowances:
              ``(1) For vintage years 2012 through 2021, 0.5 percent of the
            emission allowances established for each year under section
            721(a).
              ``(2) For vintage years 2022 through 2050, 1.0 percent of the
            emission allowances established for each year under section
            721(a).
      ``(l) Domestic Adaptation.--The Administrator shall allocate emission
    allowances for domestic adaptation as follows:
              ``(1) To be distributed in accordance with section 453 of the
            American Clean Energy and Security Act of 2009 in the following
            amounts:
                      ``(A) For vintage years 2012 through 2021, 0.9
                    percent of the emission allowances established for each
                    year under section 721(a).
                      ``(B) For vintage years 2022 through 2026, 1.9
                    percent of the emission allowances established for each
                    year under section 721(a).
                      ``(C) For vintage years 2027 through 2050, 3.9
                    percent of the emission allowances established for each
                    year under section 721(a).
              ``(2) For vintage year 2012 and thereafter, the Administrator
            shall auction, pursuant to section 791, 0.1 percent of the
            emission allowances established for each year under section
            721(a), and shall deposit the proceeds in the Climate Change
            Health Protection and Promotion Fund established by section 467
            of the American Clean Energy and Security Act of 2009.
      ``(m) Wildlife and Natural Resource Adaptation.--The Administrator
    shall allocate emission allowances for wildlife and natural resource
    adaptation as follows:
              ``(1) To be distributed to State agencies in accordance with
            section 480(c)(1) of the American Clean Energy and Security Act
            of 2009 in the following amounts:
                      ``(A) For vintage years 2012 through 2021, 0.385
                    percent of the emission allowances established for each
                    year under section 721(a).
                      ``(B) For vintage years 2022 through 2026, 0.77
                    percent of the emission allowances established for each
                    year under section 721(a).
                      ``(C) For vintage years 2027 through 2050, 1.54
                    percent of the emission allowances established for each
                    year under section 721(a).
              ``(2) To be auctioned pursuant to section 791, with the
            proceeds to be deposited in the Natural Resources Climate
            Change Adaptation Fund established pursuant to section 480(a),
            in the following amounts:
                      ``(A) For vintage years 2012 through 2021, 0.615
                    percent of the emission allowances established for each
                    year under section 721(a).
                      ``(B) For vintage years 2022 through 2026, 1.23
                    percent of the emission allowances established for each
                    year under section 721(a).
                      ``(C) For vintage years 2027 through 2050, 2.46
                    percent of the emission allowances established for each
                    year under section 721(a).
      ``(n) International Adaptation.--The Administrator shall allocate
    emission allowances for international adaptation to be distributed in
    accordance with part 2 of subtitle E of title IV of the American Clean
    Energy and Security Act of 2009 in the following amounts:
              ``(1) For vintage years 2012 through 2021, 1.0 percent of the
            emission allowances established for each year under section
            721(a).
              ``(2) For vintage years 2022 through 2026, 2.0 percent of the
            emission allowances established for each year under section
            721(a).
              ``(3) For vintage years 2027 through 2050, 4.0 percent of the
            emission allowances established for each year under section
            721(a).
      ``(o) International Clean Technology Deployment.--The Administrator
    shall allocate emission allowances for international clean technology
    deployment for distribution in accordance with subtitle D of title IV
    of the American Clean Energy and Security Act of 2009 in the following
    amounts:
              ``(1) For vintage years 2012 through 2021, 1.0 percent of the
            emission allowances established for each year under section
            721(a).
              ``(2) For vintage years 2022 through 2026, 2.0 percent of the
            emission allowances established for each year under section
            721(a).
              ``(3) For vintage years 2027 through 2050, 4.0 percent of the
            emission allowances established for each year under section
            721(a).
      ``(p) Release of Future Allowances.--The Administrator shall make
    future year allowances available by auctioning allowances, pursuant to
    section 791, in the following amounts:
              ``(1) In each of calendar years 2014 through 2019, a string
            of 0.70 billion allowances with vintage years 12 to 17 years
            after the year of the auction, with an equal number of
            allowances from each vintage year in the string.
              ``(2) In each of calendar years 2020 through 2025, a string
            of 0.50 billion allowances with vintage years 12 to 17 years
            after the year of the auction, with an equal number of
            allowances from each vintage year in the string.
              ``(3) In each of calendar years 2026 through 2030, a string
            of 0.3 billion allowances with vintage years 12 to 17 years
            after the year of the auction, with an equal number of
            allowances from each vintage year in the string.
      ``(q) Deficit Reduction.--
              ``(1) For each of vintage years 2012 through 2025, any
            allowances not designated for distribution or auction pursuant
            to section 781, subsections (a) through (o) of this section, or
            section 790 shall be auctioned by the Administrator pursuant to
            section 791 and the proceeds shall be deposited into the
            Treasury.
              ``(2) Unless otherwise specified, any allowances allocated
            pursuant to subsections (a) through (o) and not distributed by
            March 31 of the calendar year following the allowance's vintage
            year, shall be auctioned by the Administrator and the proceeds
            shall be deposited into the Treasury.
              ``(3) For auctions conducted through calendar year 2020
            pursuant to subsection (p), the auction proceeds shall be
            deposited into the Treasury.
      ``(r) Climate Change Consumer Refund.--
              ``(1) For each of vintage years 2026 through 2050, the
            Administrator shall auction the following allowances
            established under section 721(a) and deposit the proceeds into
            the Climate Change Consumer Refund Account:
                      ``(A) Any allowances not designated for distribution
                    or auction pursuant to section 781, subsections (a)
                    through (p) of this section, or section 790.
                      ``(B) Unless otherwise specified, any allowances
                    allocated pursuant to subsections (a) through (o) and
                    not distributed by March 31 of the calendar year
                    following the allowance's vintage year.
              ``(2) For auctions conducted pursuant to subsection (p) in
            calendar years 2021 and thereafter, the Administrator shall
            place the proceeds from the sales of the these allowances into
            the Climate Change Consumer Refund Account. Funds deposited
            into the Climate Change Consumer Refund Account shall be used
            as specified in section 789 and shall be available for
            expenditure, without further appropriation or fiscal year
            limitation.

    ``SEC. 783. ELECTRICITY CONSUMERS.

      ``(a) Definitions.--For purposes of this section:
              ``(1) Electricity local distribution company.--The term
            `electricity local distribution company' means an electric
            utility--
                      ``(A) that has a legal, regulatory, or contractual
                    obligation to deliver electricity directly to retail
                    consumers in the United States, regardless of whether
                    that entity or another entity sells the electricity as
                    a commodity to those retail consumers; and
                      ``(B) the retail rates of which, except in the case
                    of a registered electric cooperative, are regulated by
                    a State regulatory authority, regulatory commission,
                    municipality, public utility, or by an Indian tribe
                    pursuant to tribal law.
              ``(2) Long-term contract generator.--The term `long-term
            contract generator' means a qualifying small power production
            facility or a qualifying cogeneration facility (within the
            meaning of section 3(17)(C) or 3(18)(B) of the Federal Power
            Act), or a new independent power production facility (within
            the meaning of section 416(a)(2) of this Act, except that
            subparagraph (C) of such definition shall not apply for
            purposes of this paragraph), that is--
                      ``(A) a covered entity;
                      ``(B) as of the commencement of operation, a facility
                    consisting of one or more utility units with total
                    installed net output capacity (in MWe) of no more than
                    130 percent of the facility's total planned net output
                    capacity (in MWe);
                      ``(C) as of the date of enactment of this title, a
                    facility with a power sales agreement executed before
                    January 1, 2007, that governs the facility's
                    electricity sales and provides for sales at a price
                    (whether a fixed price or a price formula) for
                    electricity that does not allow for recovery of the
                    costs of compliance with the limitation on greenhouse
                    gas emissions under this title; and
                      ``(D) not a merchant coal generator.
              ``(3) Merchant coal generator.--The term `merchant coal
            generator' means an electric generation facility that--
                      ``(A) is a covered entity;
                      ``(B) derives at least 85 percent of its heat input
                    from coal, petroleum coke, or any combination of these
                    2 fuels;
                      ``(C) is not owned by a Federal, State, or regional
                    agency or power authority; and
                      ``(D) generates electricity for sale to others,
                    provided that such sales are not subject to--
                              ``(i) retail rate regulation by a State
                            public utility commission; or
                              ``(ii) self-regulation of rates by a local
                            government, State agency, or electric
                            cooperative.
              ``(4) State regulatory authority.--The term `State regulatory
            authority' has the meaning given that term in section 3(17) of
            the Public Utility Regulatory Policies Act of 1978 (16 U.S.C.
            2602(17)).
      ``(b) Electricity Local Distribution Companies.--
              ``(1) Allocation.--Not later than June 30 of 2011 and each
            calendar year thereafter through 2028, the Administrator shall
            distribute to electricity local distribution companies for the
            benefit of retail ratepayers the quantity of emission
            allowances allocated for the electricity sector for the
            following vintage year pursuant to section 782(a), provided
            that the Administrator shall first subtract from such quantity
            and distribute or reserve for distribution the quantity of
            emission allowances for the relevant vintage year that are
            required for distribution under subsections (c) and (d) of this
            section.
              ``(2) Distribution of allowances based on emissions.--
                      ``(A) In general.--For each vintage year, 50 percent
                    of the emission allowances available for distribution
                    under paragraph (1) shall be distributed by the
                    Administrator among individual electricity local
                    distribution companies ratably based on the annual
                    average carbon dioxide emissions attributable to
                    generation of electricity delivered at retail by each
                    such company during the base period determined under
                    subparagraph (B).
                      ``(B) Base period.--
                              ``(i) Vintage years 2012 and 2013.--For
                            vintage years 2012 and 2013, an electricity
                            local distribution company's base period shall
                            be--
                                      ``(I) calendar years 2006 through
                                    2008; or
                                      ``(II) any 3 consecutive calendar
                                    years between 1999 and 2008, inclusive,
                                    that such company selects, provided
                                    that the company timely informs the
                                    Administrator of such selection.
                              ``(ii) Vintage years 2014 and thereafter.--
                            For vintage years 2014 and thereafter, the base
                            period shall be--
                                      ``(I) the base period selected under
                                    clause (i); or
                                      ``(II) any 3 consecutive calendar
                                    years between 2009 through 2012,
                                    inclusive, or, for local distribution
                                    companies with new units that are not
                                    fully operational before 2012, solely
                                    calendar year 2012, provided that such
                                    company selects a period from among
                                    these options and timely informs the
                                    Administrator of such selection.
                      ``(C) Determination of emissions.--As part of the
                    regulations promulgated pursuant to subsection (e), the
                    Administrator, after consultation with the Energy
                    Information Administration, shall determine the average
                    amount of carbon dioxide emissions attributable to
                    generation of electricity delivered at retail by each
                    electricity local distribution company for each of the
                    years 1999 through 2009 or the most recent calendar
                    year for which appropriate data are available, taking
                    into account entities' electricity generation,
                    electricity purchases, and electricity sales. Not later
                    than March 31, 2013, the Administrator, after
                    consultation with the Energy Information
                    Administration, shall update such determination to
                    include emissions for any additional calendar years
                    through 2012. Such determinations shall be as precise
                    as practicable, taking into account the nature of data
                    currently available and the nature of markets and
                    regulation in effect in various regions of the country.
                    The following requirements shall apply to such
                    determinations:
                              ``(i) The Administrator shall determine the
                            amount of fossil fuel-based electricity
                            delivered at retail by each electricity local
                            distribution company, and shall use appropriate
                            emission factors to calculate carbon dioxide
                            emissions associated with the generation of
                            such electricity.
                              ``(ii) Where it is not practical to determine
                            the precise fuel mix for the electricity
                            delivered at retail by an individual
                            electricity local distribution company, the
                            Administrator may use the best available data,
                            including average data on a regional basis with
                            reference to Regional Transmission
                            Organizations or regional entities (as that
                            term is defined in section 215(a)(7) of the
                            Federal Power Act (16 U.S.C. 824o(a)(7)), to
                            estimate fuel mix and emissions. Different
                            methodologies may be applied in different
                            regions if appropriate to obtain the most
                            accurate estimate.
              ``(3) Distribution of allowances based on deliveries.--
                      ``(A) Initial allocation formula.--Except as provided
                    in subparagraph (B), for each vintage year, the
                    Administrator shall distribute 50 percent of the
                    emission allowances allocated under paragraph (1) of
                    this subsection among individual electricity local
                    distribution companies ratably based on each
                    electricity local distribution company's annual average
                    retail electricity deliveries for 2006 through 2008,
                    unless the owner or operator of the company selects 3
                    other consecutive years between 1999 and 2008,
                    inclusive, and timely notifies the Administrator of its
                    selection.
                      ``(B) Updating.--Prior to distributing 2015 vintage
                    emission allowances under this subparagraph and at 3-
                    year intervals thereafter, the Administrator shall
                    update the distribution formula under this subparagraph
                    to reflect changes in each electricity local
                    distribution company's service territory since the most
                    recent formula was established. For each successive 3-
                    year period, the Administrator shall distribute
                    allowances ratably among individual electricity local
                    distribution companies based on the product of--
                              ``(i) each electricity local distribution
                            company's average annual deliveries per
                            customer during calendar years 2006 through
                            2008, or during the 3 alternative consecutive
                            years selected by such company under
                            subparagraph (A); and
                              ``(ii) the number of customers of such
                            electricity local distribution company in the
                            most recent year in which the formula is
                            updated under this clause.
              ``(4) Use of allowances.--
                      ``(A) Ratepayer benefit.--Emission allowances
                    distributed to an electricity local distribution
                    company under this subsection shall be used exclusively
                    for the benefit of retail ratepayers of such
                    electricity local distribution company and may not be
                    used to support electricity sales or deliveries to
                    entities or persons other than such ratepayers.
                      ``(B) Ratepayer classes.--In using emission
                    allowances distributed under this section for the
                    benefit of ratepayers, an electricity local
                    distribution company shall ensure that ratepayer
                    benefits are distributed--
                              ``(i) among ratepayer classes ratably based
                            on electricity deliveries to each class; and
                              ``(ii) equitably among individual ratepayers
                            within each ratepayer class, including entities
                            that receive emission allowances pursuant to
                            part F.
                      ``(C) Limitation.--An electricity local distribution
                    company shall not use the value of emission allowances
                    distributed under this subsection to provide to any
                    ratepayer a rebate that is based solely on the quantity
                    of electricity delivered to such ratepayer. To the
                    extent an electricity local distribution company uses
                    the value of emission allowances distributed under this
                    subsection to provide rebates, it shall, to the maximum
                    extent practicable, provide such rebates with regard to
                    the fixed portion of ratepayers' bills or as a fixed
                    credit or rebate on electricity bills.
                      ``(D) Guidelines.--As part of the regulations
                    promulgated under subsection (e), the Administrator
                    shall prescribe specific guidelines for the
                    implementation of the requirements of this paragraph.
              ``(5) Regulatory proceedings.--
                      ``(A) Requirement.--No electricity local distribution
                    company shall be eligible to receive emission
                    allowances under this subsection unless the State
                    regulatory authority with authority over such company,
                    or the entity with authority to regulate retail
                    electricity rates of an electricity local distribution
                    company not regulated by a State regulatory authority,
                    has--
                              ``(i) promulgated a regulation or completed a
                            rate proceeding (or the equivalent, in the case
                            of a ratemaking entity other than a State
                            regulatory authority) that provides for the
                            full implementation of the requirements of
                            paragraph (4) of this subsection; and
                              ``(ii) made available to the Administrator
                            and the public a report describing, in adequate
                            detail, the manner in which the requirements of
                            paragraph (4) will be implemented.
                      ``(B) Updating.--The Administrator shall require, as
                    a condition of continued receipt of emission allowances
                    under this subsection by an electricity local
                    distribution company, that a new regulation be
                    promulgated or rate proceeding be completed, and a new
                    report be made available to the Administrator and the
                    public, pursuant to subparagraph (A), not less
                    frequently than every 5 years.
              ``(6) Plans and reporting.--
                      ``(A) Regulations.--As part of the regulations
                    promulgated under subsection (e), the Administrator
                    shall prescribe requirements governing plans and
                    reports to be submitted in accordance with this
                    paragraph.
                      ``(B) Plans.--Not later than April 30 of 2011 and
                    every 5 years thereafter through 2026, each electricity
                    local distribution company shall submit to the
                    Administrator a plan, approved by the State regulatory
                    authority or other entity charged with regulating the
                    retail rates of such company, describing such company's
                    plans for the disposition of the value of emission
                    allowances to be received pursuant to this subsection,
                    in accordance with the requirements of this subsection.
                      ``(C) Reports.--Not later than June 30 of 2013 and
                    each calendar year thereafter through 2031, each
                    electricity local distribution company shall submit a
                    report to the Administrator, and to the relevant State
                    regulatory authority or other entity charged with
                    regulating the retail electricity rates of such
                    company, describing the disposition of the value of any
                    emission allowances received by such company in the
                    prior calendar year pursuant to this subsection,
                    including--
                              ``(i) a description of sales, transfer,
                            exchange, or use by the company for compliance
                            with obligations under this title, of any such
                            emission allowances;
                              ``(ii) the monetary value received by the
                            company, whether in money or in some other
                            form, from the sale, transfer, or exchange of
                            emission allowances received by the company
                            under this subsection;
                              ``(iii) the manner in which the company's
                            disposition of emission allowances received
                            under this subsection complies with the
                            requirements of this subsection, including each
                            of the requirements of paragraph (4); and
                              ``(iv) such other information as the
                            Administrator may require pursuant to
                            subparagraph (A).
                      ``(D) Publication.--The Administrator shall make
                    available to the public all plans and reports submitted
                    under this subsection, including by publishing such
                    plans and reports on the Internet.
              ``(7) Audits.--Each year, the Administrator shall audit a
            representative sample of electricity local distribution
            companies to ensure that emission allowances distributed under
            this subsection have been used exclusively for the benefit of
            retail ratepayers and that such companies are complying with
            the requirements of this subsection. In selecting companies for
            audit, the Administrator shall take into account any credible
            evidence of noncompliance with such requirements. The
            Administrator shall make available to the public a report
            describing the results of each such audit, including by
            publishing such report on the Internet.
              ``(8) Enforcement.--A violation of any requirement of this
            subsection shall be a violation of this Act. Each emission
            allowance the value of which is used in violation of the
            requirements of this subsection shall be a separate violation.
      ``(c) Merchant Coal Generators.--
              ``(1) Qualifying emissions.--The qualifying emissions for a
            merchant coal generator for a given calendar year shall be the
            product of the number of megawatt hours of electricity
            generated by such generator in such calendar year and the
            average carbon dioxide emissions per megawatt hour generated by
            such generator during calendar years 2006 through 2008,
            provided that the number of megawatt hours in a given calendar
            year for purposes of such calculation shall be reduced in
            proportion to the portion of such generator's carbon dioxide
            emissions that are either--
                      ``(A) captured and sequestered in such calendar year;
                    or
                      ``(B) attributable to the combustion or gasification
                    of renewable biomass, such that the generator is not
                    required to hold emission allowances for such
                    emissions.
              ``(2) Phase-down schedule.--The Administrator shall identify
            an annual phase-down factor, applicable to distributions to
            merchant coal generators for each of vintage years 2012 through
            2029, that corresponds to the overall decline in the amount of
            emission allowances to be allocated to the electricity sector
            in such years pursuant to section 782(a). Such factor shall--
                      ``(A) for vintage year 2012, be equal to 1.0;
                      ``(B) for each of vintage years 2013 through 2029,
                    correspond to the quotient of--
                              ``(i) the quantity of emission allowances
                            allocated to the electricity sector under
                            section 782(a) for such vintage year; divided
                            by
                              ``(ii) the quantity of emission allowances
                            allocated to the electricity sector under
                            section 782(a) for vintage year 2012.
              ``(3) Distribution of emission allowances.--Not later than
            March 1 of 2013 and each calendar year through 2030, the
            Administrator shall distribute emission allowances of the
            preceding vintage year to the owner or operator of each
            merchant coal generator equal to the product of--
                      ``(A) 0.5;
                      ``(B) the qualifying emissions for such merchant coal
                    generator for the preceding year, as determined under
                    paragraph (1); and
                      ``(C) the phase-down factor for the preceding
                    calendar year, as identified under paragraph (2).
              ``(4) Adjustment.--
                      ``(A) Study.--Not later than July 1, 2014, the
                    Administrator, in consultation with the Federal Energy
                    Regulatory Commission, shall complete a study to
                    determine whether the allocation formula under
                    paragraph (3) is resulting in, or is likely to result
                    in, windfall profits to merchant coal generators or
                    substantially disparate treatment of merchant coal
                    generators operating in different markets or regions.
                      ``(B) Regulation.--If the Administrator, in
                    consultation with the Federal Energy Regulatory
                    Commission, makes an affirmative finding of windfall
                    profits or disparate treatment under subparagraph (A),
                    the Administrator shall, not later than 18 months after
                    the completion of the study described in subparagraph
                    (A), promulgate regulations providing for the
                    adjustment of the allocation formula under paragraph
                    (3) to mitigate, to the extent practicable, such
                    windfall profits, if any, and such disparate treatment,
                    if any.
              ``(5) Limitation on allowances.--Notwithstanding paragraph
            (3) or (4), for any vintage year the Administrator shall
            distribute under this subsection no more than 10 percent of the
            total quantity of emission allowances available for such
            vintage year for distribution to the electricity sector under
            section 782(a). If the quantity of emission allowances that
            would otherwise be distributed pursuant to paragraph (3) or (4)
            for any vintage year would exceed such limit, the Administrator
            shall distribute 10 percent of the total emission allowances
            available for distribution under section 782(a) for such
            vintage year ratably among merchant coal generators based on
            the applicable formula under paragraph (3) or (4).
      ``(d) Generators With Long-Term Power Purchase Agreements.--
              ``(1) Reserved allowances.--Notwithstanding subsections (b)
            and (c) of this section, the Administrator shall withhold from
            distribution to electricity local distribution companies a
            number of emission allowances equal to 105 percent of the
            emission allowances the Administrator anticipates will be
            distributed to long-term contract generators under this
            subsection. If not required to distribute all of these reserved
            allowances under this subsection, the Administrator shall
            distribute any remaining emission allowances to the electricity
            local distribution companies in accordance with subsection (b).
              ``(2) Distribution.--Not later than March 1 of 2013 and each
            calendar year through 2030, the Administrator shall distribute
            to the owner or operator of each long-term contract generator
            the number of emission allowances of the preceding vintage year
            that are equal to the number of tons of carbon dioxide emitted
            as a result of a qualifying long-term power purchase agreement
            referred to in subsection (a)(2)(C).
              ``(3) Duration.--A long-term contract generator shall cease
            to be eligible to receive allocations under this subsection
            upon the earliest of the following dates:
                      ``(A) The date when the facility no longer qualifies
                    as a qualifying small power production facility or a
                    qualifying cogeneration facility (within the meaning of
                    section 3(17)(C) or 3(18)(B) of the Federal Power Act),
                    or a new independent power production facility (within
                    the meaning of section 416(a)(2) of this Act, except
                    that subparagraph (C) of such definition shall not
                    apply for purposes of this clause).
                      ``(B) The date when the facility no longer meets the
                    total installed net output capacity criterion required
                    to be met as of the commencement of operation in
                    subsection (a)(2)(B).
                      ``(C) The date when the power purchase agreement
                    referred to in subsection (a)(2)(C)--
                              ``(i) expires;
                              ``(ii) is terminated; or
                              ``(iii) is amended in any way that changes
                            the location of the facility, the price
                            (whether a fixed price or price formula) for
                            electricity sold under such agreement, the
                            quantity of electricity sold under the
                            agreement, or the expiration or termination
                            date of the agreement.
              ``(4) Eligibility.--To be eligible to receive allowance
            distributions under this subsection, the owner or operator of a
            long-term contract generator shall submit each of the following
            in writing to the Administrator within 180 days after the date
            of enactment of this title, and not later than September 30 of
            each vintage year for which such generator wishes to receive
            emission allowances:
                      ``(A) A certificate of representation described in
                    section 700(15).
                      ``(B) An identification of each owner and each
                    operator of the facility.
                      ``(C) An identification of the units at the facility
                    and the location of the facility.
                      ``(D) A written certification by the designated
                    representative that the facility meets all the
                    requirements of the definition of a long-term contract
                    generator.
                      ``(E) The expiration date of the power purchase
                    agreement referred to in subsection (a)(2)(C).
                      ``(F) A copy of the power purchase agreement referred
                    to in subsection (a)(2)(C).
              ``(5) Notification.--Not later than 30 days after a facility
            loses, in accordance with paragraph (3), its eligibility for
            emission allowances distributed pursuant to this subsection,
            the designated representative of such facility shall notify the
            Administrator in writing when, and on what basis, the facility
            lost its eligibility to receive emission allowances.
      ``(e) Regulations.--Not later than 2 years after the date of
    enactment of this title, the Administrator, in consultation with the
    Federal Energy Regulatory Commission, shall promulgate regulations to
    implement the requirements of this section.

    ``SEC. 784. NATURAL GAS CONSUMERS.

      ``(a) Definitions.--For purposes of this section:
              ``(1) Natural gas local distribution company.--The term
            `natural gas local distribution company' means a natural gas
            local distribution company that is a covered entity.
              ``(2) Cost-effective.--The term `cost-effective', with
            respect to an energy efficiency program, means that the program
            meets the Total Resource Cost Test, which requires that the net
            present value of economic benefits over the life of the
            program, including avoided supply and delivery costs and
            deferred or avoided investments, is greater than the net
            present value of the economic costs over the life of the
            program, including program costs and incremental costs borne by
            the energy consumer.
      ``(b) Allocation.--Not later than June 30 of 2015 and each calendar
    year thereafter through 2028, the Administrator shall distribute to
    natural gas local distribution companies for the benefit of retail
    ratepayers the quantity of emission allowances allocated for the
    following vintage year pursuant to section 782(b). Such allowances
    shall be distributed among local natural gas distribution companies
    based on the following formula:
              ``(1) Initial formula.--Except as provided in paragraph (2),
            for each vintage year, the Administrator shall distribute
            emission allowances among natural gas local distribution
            companies ratably based on each such company's annual average
            retail natural gas deliveries for 2006 through 2008, unless the
            owner or operator of the company selects 3 other consecutive
            years between 1999 and 2008, inclusive, and timely notifies the
            Administrator of its selection.
              ``(2) Updating.--Prior to distributing 2019 vintage emission
            allowances and at 3-year intervals thereafter, the
            Administrator shall update the distribution formula under this
            subsection to reflect changes in each natural gas local
            distribution company's service territory since the most recent
            formula was established. For each successive 3-year period, the
            Administrator shall distribute allowances ratably among natural
            gas local distribution companies based on the product of--
                      ``(A) each natural gas local distribution company's
                    average annual natural gas deliveries per customer
                    during calendar years 2006 through 2008, or during the
                    3 alternative consecutive years selected by such
                    company under paragraph (1); and
                      ``(B) the number of customers of such natural gas
                    local distribution company in the most recent year in
                    which the formula is updated under this paragraph.
      ``(c) Use of Allowances.--
              ``(1) Ratepayer benefit.--Emission allowances distributed to
            a natural gas local distribution company under this section
            shall be used exclusively for the benefit of retail ratepayers
            of such natural gas local distribution company and may not be
            used to support natural gas sales or deliveries to entities or
            persons other than such ratepayers.
              ``(2) Ratepayer classes.--In using emission allowances
            distributed under this section for the benefit of ratepayers, a
            natural gas local distribution company shall ensure that
            ratepayer benefits are distributed--
                      ``(A) among ratepayer classes ratably based on
                    natural gas deliveries to each class; and
                      ``(B) equitably among individual ratepayers within
                    each ratepayer class.
              ``(3) Limitation.--A natural gas local distribution company
            shall not use the value of emission allowances distributed
            under this section to provide to any ratepayer a rebate that is
            based solely on the quantity of natural gas delivered to such
            ratepayer. To the extent a natural gas local distribution
            company uses the value of emission allowances distributed under
            this section to provide rebates, it shall, to the maximum
            extent practicable, provide such rebates with regard to the
            fixed portion of ratepayers' bills or as a fixed creditor
            rebate on natural gas bills.
              ``(4) Energy efficiency programs.--The value of no less than
            one third of the emission allowances distributed to natural gas
            local distribution companies pursuant to this section in any
            calendar year shall be used for cost-effective energy
            efficiency programs for natural gas consumers. Such programs
            must be authorized and overseen by the State regulatory
            authority, or by the entity with regulatory authority over
            retail natural gas rates in the case of a natural gas local
            distribution company that is not regulated by a State
            regulatory authority.
              ``(5) Guidelines.--As part of the regulations promulgated
            under subsection (h), the Administrator shall prescribe
            specific guidelines for the implementation of the requirements
            of this subsection.
      ``(d) Regulatory Proceedings.--
              ``(1) Requirement.--No natural gas local distribution company
            shall be eligible to receive emission allowances under this
            section unless the State regulatory authority with authority
            over such company, or the entity with authority to regulate
            retail rates of a natural gas local distribution company not
            regulated by a State regulatory authority, has--
                      ``(A) promulgated a regulation or completed a rate
                    proceeding (or the equivalent, in the case of a
                    ratemaking entity other than a State regulatory
                    authority) that provides for the full implementation of
                    the requirements of subsection (c); and
                      ``(B) made available to the Administrator and the
                    public a report describing, in adequate detail, the
                    manner in which the requirements of subsection (c) will
                    be implemented.
              ``(2) Updating.--The Administrator shall require, as a
            condition of continued receipt of emission allowances under
            this section, that a new regulation be promulgated or rate
            proceeding be completed, and a new report be made available to
            the Administrator and the public, pursuant to paragraph (1),
            not less frequently than every 5 years.
      ``(e) Plans and Reporting.--
              ``(1) Regulations.--As part of the regulations promulgated
            under subsection (h), the Administrator shall prescribe
            requirements governing plans and reports to be submitted in
            accordance with this subsection.
              ``(2) Plans.--Not later than April 30 of 2015 and every 5
            years thereafter through 2025, each natural gas local
            distribution company shall submit to the Administrator a plan,
            approved by the State regulatory authority or other entity
            charged with regulating the retail rates of such company,
            describing such company's plans for the disposition of the
            value of emission allowances to be received pursuant to this
            section, in accordance with the requirements of this section.
              ``(3) Reports.--Not later than June 30 of 2017 and each
            calendar year thereafter through 2031, each natural gas local
            distribution company shall submit a report to the
            Administrator, approved by the relevant State regulatory
            authority or other entity charged with regulating the retail
            natural gas rates of such company, describing the disposition
            of the value of any emission allowances received by such
            company in the prior calendar year pursuant to this subsection,
            including--
                      ``(A) a description of sales, transfer, exchange, or
                    use by the company for compliance with obligations
                    under this title, of any such emission allowances;
                      ``(B) the monetary value received by the company,
                    whether in money or in some other form, from the sale,
                    transfer, or exchange of emission allowances received
                    by the company under this section;
                      ``(C) the manner in which the company's disposition
                    of emission allowances received under this subsection
                    complies with the requirements of this section,
                    including each of the requirements of subsection (c);
                      ``(D) the cost-effectiveness of, and energy savings
                    achieved by, energy efficiency programs supported
                    through such emission allowances; and
                      ``(E) such other information as the Administrator may
                    require pursuant to paragraph (1).
              ``(4) Publication.--The Administrator shall make available to
            the public all plans and reports submitted by natural gas local
            distribution companies under this subsection, including by
            publishing such plans and reports on the Internet.
      ``(f) Audits.--Each year, the Administrator shall audit a
    representative sample of natural gas local distribution companies to
    ensure that emission allowances distributed under this section have
    been used exclusively for the benefit of retail ratepayers and that
    such companies are complying with the requirements of this section. In
    selecting companies for audit, the Administrator shall take into
    account any credible evidence of noncompliance with such requirements.
    The Administrator shall make available to the public a report
    describing the results of each such audit, including by publishing such
    report on the Internet.
      ``(g) Enforcement.--A violation of any requirement of this section
    shall be a violation of this Act. Each emission allowance the value of
    which is used in violation of the requirements of this section shall be
    a separate violation.
      ``(h) Regulations.--Not later than January 1, 2014, the
    Administrator, in consultation with the Federal Energy Regulatory
    Commission, shall promulgate regulations to implement the requirements
    of this section.

    ``SEC. 785. HOME HEATING OIL AND PROPANE CONSUMERS.

      ``(a) Definitions.--For purposes of this section:
              ``(1) Carbon content.--The term `carbon content' means the
            amount of carbon dioxide that would be emitted as a result of
            the combustion of a fuel.
              ``(2) Cost-effective.--The term `cost-effective' has the
            meaning given that term in section 784(a)(2).
      ``(b) Allocation.--Not later than September 30 of each of calendar
    years 2012 through 2029, the Administrator shall distribute among the
    States, in accordance with this section, the quantity of emission
    allowances allocated pursuant to section 782(c).
      ``(c) Distribution Among States.--The Administrator shall distribute
    emission allowances among the States under this section each year
    ratably based on the ratio of--
              ``(1) the carbon content of home heating oil and propane sold
            to consumers within each State in the preceding year for
            residential or commercial uses; to
              ``(2) the carbon content of home heating oil and propane sold
            to consumers within the United States in the preceding year for
            residential or commercial uses.
      ``(d) Use of Allowances.--
              ``(1) In general.--States shall use emission allowances
            distributed under this section exclusively for the benefit of
            consumers of home heating oil or propane for residential or
            commercial purposes. Such proceeds shall be used exclusively
            for--
                      ``(A) cost-effective energy efficiency programs for
                    consumers that use home heating oil or propane for
                    residential or commercial purposes; or
                      ``(B) rebates or other direct financial assistance
                    programs for consumers of home heating oil or propane
                    used for residential or commercial purposes.
              ``(2) Administration and delivery mechanisms.--In
            administering programs supported by this section, States
            shall--
                      ``(A) use no less than 50 percent of the value of
                    emission allowances received under this section for
                    cost-effective energy efficiency programs to reduce
                    consumers' overall fuel costs;
                      ``(B) to the extent practicable, deliver consumer
                    support under this section through existing energy
                    efficiency and consumer energy assistance programs or
                    delivery mechanisms, including, where appropriate,
                    programs or mechanisms administered by parties other
                    than the State; and
                      ``(C) seek to coordinate the administration and
                    delivery of energy efficiency and consumer energy
                    assistance programs supported under this section, with
                    one another and with existing programs for various fuel
                    types, so as to deliver comprehensive, fuel-blind,
                    coordinated programs to consumers.
      ``(e) Reporting.--Each State receiving emission allowances under this
    section shall submit to the Administrator, within 12 months of each
    receipt of such allowances, a report, in accordance with such
    requirements as the Administrator may prescribe, that--
              ``(1) describes the State's use of emission allowances
            distributed under this section, including a description of the
            energy efficiency and consumer assistance programs supported
            with such allowances;
              ``(2) demonstrates the cost-effectiveness of, and the energy
            savings achieved by, energy efficiency programs supported under
            this section; and
              ``(3) includes a report prepared by an independent third
            party, in accordance with such regulations as the Administrator
            may promulgate, evaluating the performance of the energy
            efficiency and consumer assistance programs supported under
            this section.
      ``(f) Enforcement.--If the Administrator determines that a State is
    not in compliance with this section, the Administrator may withhold a
    portion of the emission allowances, the quantity of which is equal to
    up to twice the quantity of the allowances that the State failed to use
    in accordance with the requirements of this section, that such State
    would otherwise be eligible to receive under this section in later
    years. Allowances withheld pursuant to this subsection shall be
    distributed among the remaining States ratably in accordance with the
    formula in subsection (c).

    ``SEC. 787. ALLOCATIONS TO REFINERIES.

      ``(a) Purpose.--To provide emission allowance rebates to petroleum
    refiners in the United States in a manner that promotes energy
    efficiency and a reduction in greenhouse gas emissions at such
    facilities.
      ``(b) Definitions.--In this section:
              ``(1) Emissions.--The term `emissions' means the greenhouse
            gas emissions in the calendar year preceding the calendar year
            in which emission allowances are being distributed. The term
            includes direct emissions from fuel combustion, process
            emissions, and indirect emissions from the generation of
            electricity used to produce the output of the petroleum
            refinery or sector.
              ``(2) Intensity.--The term `intensity' means tons of carbon
            dioxide equivalent emissions per unit of output in a given
            year.
              ``(3) Intensity factor.--The term `intensity factor' means
            the intensity of the petroleum refining sector divided by the
            intensity for an individual petroleum refinery.
              ``(4) Output.--The term `output' means the average annual
            number of gallons of refined fuel produced in the three
            calendar years preceding the calendar year in which emission
            allowances are being distributed.
              ``(5) Petroleum refinery.--The term `petroleum refinery'
            means a facility classified under 324110 of the North American
            Industrial Classification System of 2002.
              ``(6) Production factor.--The term `production factor' means
            the output of an individual petroleum refinery divided by the
            output of the petroleum refining sector.
      ``(c) In General.--For each vintage year between 2014 and 2026, the
    Administrator shall distribute allowances pursuant to this section to
    owners and operators of petroleum refineries in the United States.
      ``(d) Distribution Schedule.--The Administrator shall distribute
    emission allowances of each vintage year no later than October 31 of
    the preceding calendar year.
      ``(e) Calculation of Emission Allowance Rebates.--
              ``(1) For each petroleum refinery, the Administrator shall
            calculate an individual allocation factor for each vintage
            year, based upon the product of the intensity factor for such
            refinery multiplied by the production factor for such refinery.
              ``(2) The Administrator shall also calculate a total
            allocation factor for each vintage year, based upon the sum of
            all of the individual allocation factors.
              ``(3) The Administrator shall calculate the number of
            emission allowances to be provided to each petroleum refinery
            in each vintage year by dividing the individual allocation
            factor for such refinery by the total allocation factor, then
            multiplying the result by the number of emission allowances
            allocated to the program under this section for that vintage
            year.
      ``(f) Data Sources.--
              ``(1) The Administrator shall use data from the greenhouse
            gas registry, established under section 713, where it is
            available.
              ``(2) The Administrator shall determine, by rule, the
            methodology by which to calculate indirect emissions for a
            refinery. The Administrator shall also determine, by rule, the
            methodology by which to take into account the value of
            allowances provided at no cost to local distribution companies
            that is passed through to a refinery. Each person selling
            electricity to the owner or operator of a petroleum refinery
            shall provide the owner or operator and the Administrator, on
            an annual basis, such data as the Administrator determines is
            necessary to implement this section.

    ``SEC. 788. [SECTION RESERVED].

    ``SEC. 789. CLIMATE CHANGE CONSUMER REFUNDS.

      ``(a) Refund.--In each year after deposits are made to the Climate
    Change Consumer Refund Account, the Secretary of the Treasury shall
    provide tax refunds on a per capita basis to each household in the
    United States that shall collectively equal the amount deposited into
    the Climate Change Consumer Refund Account.
      ``(b) Limitations.--The Secretary of the Treasury shall establish
    procedures to ensure that individuals who are not--
              ``(1) citizens or nationals of the United States; or
              ``(2) immigrants lawfully residing in the United States,
    are excluded for the purpose of calculating and distributing refunds
    under this section.

    ``SEC. 790. EXCHANGE FOR STATE-ISSUED ALLOWANCES.

      ``(a) In General.--Not later than one year after the date of
    enactment of this title, the Administrator shall issue regulations
    allowing any person in the United States to exchange greenhouse gas
    emission allowances issued before December 31, 2011, by the State of
    California or for the Regional Greenhouse Gas Initiative, or the
    Western Climate Initiative (in this section referred to as `State
    allowances') for emission allowances established by the Administrator
    under section 721(a).
      ``(b) Regulations.--Regulations issued under subsection (a) shall--
              ``(1) provide that a person exchanging State allowances under
            this section receive emission allowances established under
            section 721(a) in the amount that is sufficient to compensate
            for the cost of obtaining and holding such State allowances;
              ``(2) establish a deadline by which persons must exchange the
            State allowances; and
              ``(3) provide that the Federal emission allowances disbursed
            pursuant to this section shall be deducted from the allowances
            to be auctioned pursuant to section 782(b).
      ``(c) Cost of Obtaining State Allowance.--For purposes of this
    section, the cost of obtaining a State allowance shall be the average
    auction price, for emission allowances issued in the year in which the
    State allowance was issued, under the program under which the State
    allowance was issued.

    ``SEC. 791. AUCTION PROCEDURES.

      ``(a) In General.--To the extent that auctions of emission allowances
    by the Administrator are authorized by this part, such auctions shall
    be carried out pursuant to this section and the regulations established
    hereunder.
      ``(b) Initial Regulations.--Not later than 12 months after the date
    of enactment of this title, the Administrator, in consultation with
    other agencies, as appropriate, shall promulgate regulations governing
    the auction of allowances under this section. Such regulations shall
    include the following requirements:
              ``(1) Frequency; first auction.--Auctions shall be held four
            times per year at regular intervals, with the first auction to
            be held no later than March 31, 2011.
              ``(2) Auction schedule; current and future vintages.--The
            Administrator shall, at each quarterly auction under this
            section, offer for sale both a portion of the allowances with
            the same vintage year as the year in which the auction is being
            conducted and a portion of the allowances with vintage years
            from future years. The preceding sentence shall not apply to
            auctions held before 2012, during which period, by necessity,
            the Administrator shall auction only allowances with a vintage
            year that is later than the year in which the auction is held.
            Beginning with the first auction and at each quarterly auction
            held thereafter, the Administrator may offer for sale
            allowances with vintage years of up to four years after the
            year in which the auction is being conducted, except as
            provided in section 782(p).
              ``(3) Auction format.--Auctions shall follow a single-round,
            sealed-bid, uniform price format.
              ``(4) Participation; financial assurance.--Auctions shall be
            open to any person, except that the Administrator may establish
            financial assurance requirements to ensure that auction
            participants can and will perform on their bids.
              ``(5) Disclosure of beneficial ownership.--Each bidder in the
            auction shall be required to disclose the person or entity
            sponsoring or benefitting from the bidder's participation in
            the auction if such person or entity is, in whole or in part,
            other than the bidder.
              ``(6) Purchase limits.--No person may, directly or in concert
            with another participant, purchase more than 5 percent of the
            allowances offered for sale at any quarterly auction.
              ``(7) Publication of information.--After the auction, the
            Administrator shall, in a timely fashion, publish the
            identities of winning bidders, the quantity of allowances
            obtained by each winning bidder, and the auction clearing
            price.
              ``(8) Other requirements.--The Administrator may include in
            the regulations such other requirements or provisions as the
            Administrator, in consultation with other agencies, as
            appropriate, considers appropriate to promote effective,
            efficient, transparent, and fair administration of auctions
            under this section.
      ``(c) Revision of Regulations.--The Administrator may, in
    consultation with other agencies, as appropriate, at any time, revise
    the initial regulations promulgated under subsection (b). Such revised
    regulations need not meet the requirements identified in subsection (b)
    if the Administrator determines that an alternative auction design
    would be more effective, taking into account factors including costs of
    administration, transparency, fairness, and risks of collusion or
    manipulation. In determining whether and how to revise the initial
    regulations under this subsection, the Administrator shall not consider
    maximization of revenues to the Federal Government.
      ``(d) Reserve Auction Price.--The minimum reserve auction price shall
    be $10 (in constant 2009 dollars) for auctions occurring in 2012. The
    minimum reserve price for auctions occurring in years after 2012 shall
    be the minimum reserve auction price for the previous year increased by
    5 percent plus the rate of inflation (as measured by the Consumer Price
    Index for all urban consumers).
      ``(e) Delegation or Contract.--Pursuant to regulations under this
    section, the Administrator may by delegation or contract provide for
    the conduct of auctions under the Administrator's supervision by other
    departments or agencies of the Federal Government or by nongovernmental
    agencies, groups, or organizations.

    ``SEC. 792. AUCTIONING ALLOWANCES FOR OTHER ENTITIES.

      ``(a) Consignment.--Any entity holding emission allowances or
    compensatory allowances may request that the Administrator auction,
    pursuant to section 791, the allowances on consignment.
      ``(b) Pricing.--When the Administrator acts under this section as the
    agent of an entity in possession of emission allowances, the
    Administrator is not obligated to obtain the highest price possible for
    the emission allowances, and instead shall auction consignment
    allowances in the same manner and pursuant to the same rules as
    auctions of other allowances under section 791. The Administrator may
    permit the entity offering the allowance for sale to condition the sale
    of its allowances pursuant to this section on a minimum reserve price
    that is different than the reserve auction price set pursuant to
    section 791(d).
      ``(c) Proceeds.--For emission allowances and compensatory allowances
    auctioned pursuant to this section, notwithstanding section 3302 of
    title 31, United States Code, or any other provision of law, within 90
    days of receipt, the United States shall transfer the proceeds from the
    auction to the entity which held the allowances auctioned. No funds
    transferred from a purchaser to a seller of emission allowances or
    compensatory allowances under this subsection shall be held by any
    officer or employee of the United States or treated for any purpose as
    public monies.
      ``(d) Regulations.--The Administrator shall issue regulations within
    24 months after the date of enactment of this title to implement this
    section.

    ``SEC. 793. ESTABLISHMENT OF FUNDS.

      ``There is established in the Treasury of the United States the
    following funds:
              ``(1) The Strategic Reserve Fund.
              ``(2) The Climate Change Consumer Refund Fund.

    ``SEC. 794. OVERSIGHT OF ALLOCATIONS.

      ``(a) In General.--Not later than January 1, 2014, and every 2 years
    thereafter, the Comptroller General of the United States shall carry
    out a review of programs administered by the Federal Government that
    distribute emission allowances or funds from any Federal auction of
    allowances.
      ``(b) Contents.--Each such report shall include a comprehensive
    evaluation of the administration and effectiveness of each program,
    including--
              ``(1) the efficiency, transparency, and soundness of the
            administration of each program;
              ``(2) the performance of activities receiving assistance
            under each program;
              ``(3) the cost-effectiveness of each program in achieving the
            stated purposes of the program; and
              ``(4) recommendations, if any, for regulatory or
            administrative changes to each program to improve its
            effectiveness.
      ``(c) Focus.--In evaluating program performance, each review under
    this section review shall address the effectiveness of such programs
    in--
              ``(1) creating and preserving jobs;
              ``(2) ensuring a manageable transition for working families
            and workers;
              ``(3) reducing the emissions, or enhancing sequestration, of
            greenhouse gases;
              ``(4) developing clean technologies; and
              ``(5) building resilience to the impacts of climate
            change.''.

                Subtitle C--Additional Greenhouse Gas Standards

    SEC. 331. GREENHOUSE GAS STANDARDS.

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

               ``TITLE VIII--ADDITIONAL GREENHOUSE GAS STANDARDS

    ``SEC. 801. DEFINITIONS.

      ``For purposes of this title, terms that are defined in title VII,
    except for the term `stationary source', shall have the meaning given
    those terms in title VII.

                     ``PART A--STATIONARY SOURCE STANDARDS

    ``SEC. 811. STANDARDS OF PERFORMANCE.

      ``(a) Uncapped Stationary Sources.--
              ``(1) Inventory of source categories.--(A) Within 12 months
            after the date of enactment of this title, the Administrator
            shall publish under section 111(b)(1)(A) an inventory of
            categories of stationary sources that consist of those
            categories that contain sources that individually had uncapped
            greenhouse gas emissions greater than 10,000 tons of carbon
            dioxide equivalent and that, in the aggregate, were responsible
            for emitting at least 20 percent annually of the uncapped
            greenhouse gas emissions.
              ``(B) The Administrator shall include in the inventory under
            this paragraph each source category that is responsible for at
            least 10 percent of the uncapped methane emissions in 2005.
            Notwithstanding any other provision, the inventory required by
            this section shall not include sources of enteric fermentation.
            The list under this paragraph shall include industrial sources,
            the emissions from which, when added to the capped emissions
            from industrial sources, constitute at least 95 percent of the
            greenhouse gas emissions of the industrial sector.
              ``(C) For purposes of this subsection, emissions shall be
            calculated using tons of carbon dioxide equivalents. In
            promulgating the inventory required by this paragraph and the
            schedule required under by paragraph (2)(C), the Administrator
            shall use the most current emissions data available at the time
            of promulgation, except as provided in subparagraph (B).
              ``(D) Notwithstanding any other provisions, the Administrator
            may list under 111(b) any source category identified in the
            inventory required by this subsection without making a finding
            that the source category causes or contributes significantly
            to, air pollution with may be reasonably anticipated to
            endanger public health or welfare.
              ``(2) Standards and schedule.--(A) For each category
            identified as provided in paragraph (1), the Administrator
            shall promulgate standards of performance under section 111 for
            the uncapped emissions of greenhouse gases from stationary
            sources in that category and shall promulgate corresponding
            regulations under section 111(d).
              ``(B) The Administrator shall promulgate standards as
            required by this subsection for stationary sources in
            categories identified as provided in paragraph (1) as
            expeditiously as practicable, assuring that--
                      ``(i) standards for identified source categories
                    that, combined, emitted 80 percent or more of the
                    greenhouse gas emissions of the identified source
                    categories shall be promulgated not later than 3 years
                    after the date of enactment of this title and shall
                    include standards for natural gas extraction; and
                      ``(ii) for all other identified source categories--
                              ``(I) standards for not less than an
                            additional 25 percent of the identified
                            categories shall be promulgated not later than
                            5 years after the date of enactment of this
                            title;
                              ``(II) standards for not less than an
                            additional 25 percent of the identified
                            categories shall be promulgated not later than
                            7 years after the date of enactment of this
                            title; and
                              ``(III) standards for all the identified
                            categories shall be promulgated not later than
                            10 years after the date of enactment of this
                            title.
              ``(C) Not later than 24 months after the date of enactment of
            this title and after notice and opportunity for comment, the
            Administrator shall publish a schedule establishing a date for
            the promulgation of standards for each category of sources
            identified pursuant to paragraph (1). The date for each
            category shall be consistent with the requirements of
            subparagraph (B). The determination of priorities for the
            promulgation of standards pursuant to this paragraph is not a
            rulemaking and shall not be subject to judicial review, except
            that failure to promulgate any standard pursuant to the
            schedule established by this paragraph shall be subject to
            review under section 304(a)(2).
              ``(D) Notwithstanding section 307, no action of the
            Administrator listing a source category under paragraph (1)
            shall be a final agency action subject to judicial review,
            except that any such action may be reviewed under section 307
            when the Administrator issues performance standards for such
            category.
      ``(b) Capped Sources.--No standard of performance shall be
    established under section 111 for capped greenhouse gas emissions from
    a capped source unless the Administrator determines that such standards
    are appropriate because of effects that do not include climate change
    effects. In promulgating a standard of performance under section 111
    for the emission from capped sources of any air pollutant that is not a
    greenhouse gas, the Administrator shall treat the emission of any
    greenhouse gas by those entities as a nonair quality public health and
    environmental impact within the meaning of section 111(a)(1).
      ``(c) Performance Standards.--For purposes of setting a performance
    standard for source categories identified pursuant to subsection (a)--
              ``(1) The Administrator shall take into account the goal of
            reducing total United States greenhouse gas emissions as set
            forth in section 702.
              ``(2) The Administrator may promulgate a design, equipment,
            work practice, or operational standard, or any combination
            thereof, under section 111 in lieu of a standard of performance
            under that section without regard to any determination of
            feasibility that would otherwise be required under section
            111(h).
              ``(3) Notwithstanding any other provision, in setting the
            level of each standard required by this section, the
            Administrator shall take into account projections of allowance
            prices, such that the marginal cost of compliance (expressed as
            dollars per ton of carbon dioxide equivalent reduced) imposed
            by the standard would not, in the judgement of the
            Administrator, be expected to exceed the Administrator's
            projected allowance prices over the time period spanning from
            the date of initial compliance to the date that the next
            revisions of the standard would come into effect pursuant to
            the schedule under section 111(b)(1)(B).
      ``(d) Definitions.--In this section, the terms `uncapped greenhouse
    gas emissions' and `uncapped methane emissions' mean those greenhouse
    gas or methane emissions, respectively, to which section 722 would not
    have applied if the requirements of this title had been in effect for
    the same year as the emissions data upon which the list is based.
      ``(e) Study of the Effects of Performance Standards.--
              ``(1) Study.--The Administrator shall conduct a study of the
            impacts of performance standards required under this section,
            which shall evaluate the effect of such standards on the--
                      ``(A) costs of achieving compliance with the economy-
                    wide reduction goals specified in section 702 and the
                    reduction targets specified in section 703;
                      ``(B) available supply of offset credits; and
                      ``(C) ability to achieve the economy-wide reduction
                    goals specified in section 702 and any other benefits
                    of such standards.
              ``(2) Report.--The Administrator shall submit to the House
            Energy and Commerce Committee a report that describes the
            results of the study not later than 18 months after the
            publication of the standards required under subsection
            (a)(2)(B)(i).

                    ``PART C--EXEMPTIONS FROM OTHER PROGRAMS

    ``SEC. 831. CRITERIA POLLUTANTS.

      ``As of the date of the enactment of the Safe Climate Act, no
    greenhouse gas may be added to the list under section 108(a) on the
    basis of its effect on global climate change.

    ``SEC. 832. INTERNATIONAL AIR POLLUTION.

      ``Section 115 shall not apply to an air pollutant with respect to
    that pollutant's contribution to global warming.

    ``SEC. 833. HAZARDOUS AIR POLLUTANTS.

      ``No greenhouse gas may be added to the list of hazardous air
    pollutants under section 112 unless such greenhouse gas meets the
    listing criteria of section 112(b) independent of its effects on global
    climate change.

    ``SEC. 834. NEW SOURCE REVIEW.

      ``The provisions of part C of title I shall not apply to a major
    emitting facility that is initially permitted or modified after January
    1, 2009, on the basis of its emissions of any greenhouse gas.

    ``SEC. 835. TITLE V PERMITS.

      ``Notwithstanding any provision of title III or V, no stationary
    source shall be required to apply for, or operate pursuant to, a permit
    under title V, solely because the source emits any greenhouse gases
    that are regulated solely because of their effect on global climate
    change.''.

    SEC. 332. HFC REGULATION.

      (a) In General.--Title VI of the Clean Air Act (42 U.S.C. 7671 et
    seq.) (relating to stratospheric ozone protection) is amended by adding
    at the end the following:

    ``SEC. 619. HYDROFLUOROCARBONS (HFCS).

      ``(a) Treatment as Class II, Group II Substances.--Except as
    otherwise provided in this section, hydrofluorocarbons shall be treated
    as class II substances for purposes of applying the provisions of this
    title. The Administrator shall establish two groups of class II
    substances. Class II, group I substances shall include all
    hydrochlorofluorocarbons (HCFCs) listed pursuant to section 602(b).
    Class II, group II substances shall include each of the following:
              ``(1) Hydrofluorocarbon-23 (HFC-23).
              ``(2) Hydrofluorocarbon-32 (HFC-32).
              ``(3) Hydrofluorocarbon-41 (HFC-41).
              ``(4) Hydrofluorocarbon-125 (HFC-125).
              ``(5) Hydrofluorocarbon-134 (HFC-134).
              ``(6) Hydrofluorocarbon-134a (HFC-134a).
              ``(7) Hydrofluorocarbon-143 (HFC-143).
              ``(8) Hydrofluorocarbon-143a (HFC-143a).
              ``(9) Hydrofluorocarbon-152 (HFC-152).
              ``(10) Hydrofluorocarbon-152a (HFC-152a).
              ``(11) Hydrofluorocarbon-227ea (HFC-227ea).
              ``(12) Hydrofluorocarbon-236cb (HFC-236cb).
              ``(13) Hydrofluorocarbon-236ea (HFC-236ea).
              ``(14) Hydrofluorocarbon-236fa (HFC-236fa).
              ``(15) Hydrofluorocarbon-245ca (HFC-245ca).
              ``(16) Hydrofluorocarbon-245fa (HFC-245fa).
              ``(17) Hydrofluorocarbon-365mfc (HFC-365mfc).
              ``(18) Hydrofluorocarbon-43-10mee (HFC-43-10mee).
              ``(19) Hydrofluoroolefin-1234yf (HFO-1234yf).
              ``(20) Hydrofluoroolefin-1234ze (HFO-1234ze).
    Not later than 6 months after the date of enactment of this title, the
    Administrator shall publish an initial list of class II, group II
    substances, which shall include the substances listed in this
    subsection. The Administrator may add to the list of class II, group II
    substances any other substance used as a substitute for a class I or II
    substance if the Administrator determines that 1 metric ton of the
    substance makes the same or greater contribution to global warming over
    100 years as 1 metric ton of carbon dioxide. Within 24 months after the
    date of enactment of this section, the Administrator shall amend the
    regulations under this title (including the regulations referred to in
    sections 603, 608, 609, 610, 611, 612, and 613) to apply to class II,
    group II substances.
      ``(b) Consumption and Production of Class II, Group II Substances.--
              ``(1) In general.--
                      ``(A) Consumption phase down.--In the case of class
                    II, group II substances, in lieu of applying section
                    605 and the regulations thereunder, the Administrator
                    shall promulgate regulations phasing down the
                    consumption of class II, group II substances in the
                    United States, and the importation of products
                    containing any class II, group II substance, in
                    accordance with this subsection within 18 months after
                    the date of enactment of this section. Effective
                    January 1, 2012, it shall be unlawful for any person to
                    produce any class II, group II substance, import any
                    class II, group II substance, or import any product
                    containing any class II, group II substance without
                    holding one consumption allowance or one destruction
                    offset credit for each carbon dioxide equivalent ton of
                    the class II, group II substance. Any person who
                    exports a class II, group II substance for which a
                    consumption allowance was retired may receive a refund
                    of that allowance from the Administrator following the
                    export.
                      ``(B) Production.--If the United States becomes a
                    party or otherwise adheres to a multilateral agreement,
                    including any amendment to the Montreal Protocol on
                    Substances That Deplete the Ozone Layer, that restricts
                    the production of class II, group II substances, the
                    Administrator shall promulgate regulations establishing
                    a baseline for the production of class II, group II
                    substances in the United States and phasing down the
                    production of class II, group II substances in the
                    United States, in accordance with such multilateral
                    agreement and subject to the same exceptions and other
                    provisions as are applicable to the phase down of
                    consumption of class II, group II substances under this
                    section (except that the Administrator shall not
                    require a person who obtains production allowances from
                    the Administrator to make payment for such allowances
                    if the person is making payment for a corresponding
                    quantity of consumption allowances of the same vintage
                    year). Upon the effective date of such regulations, it
                    shall be unlawful for any person to produce any class
                    II, group II substance without holding one consumption
                    allowance and one production allowance, or one
                    destruction offset credit, for each carbon dioxide
                    equivalent ton of the class II, group II substance.
                      ``(C) Integrity of cap.--To maintain the integrity of
                    the class II, group II cap, the Administrator may,
                    through rulemaking, limit the percentage of each
                    person's compliance obligation that may be met through
                    the use of destruction offset credits or banked
                    allowances.
                      ``(D) Counting of violations.--Each emission
                    allowance or destruction offset credit not held as
                    required by this section shall be a separate violation
                    of this section.
              ``(2) Schedule.--Pursuant to the regulations promulgated
            pursuant to paragraph (1), the number of class II, group II
            consumption allowances established by the Administrator for
            each calendar year beginning in 2012 shall be the following
            percentage of the baseline, as established by the Administrator
            pursuant to paragraph (3):

    ----------------------------------------------------------------------------------------------------------------
                        ``Calendar year                                        Percent of baseline
    ----------------------------------------------------------------------------------------------------------------
    2012                                                     90
    ----------------------------------------------------------------------------------------------------------------
    2013                                                     87.5
    ----------------------------------------------------------------------------------------------------------------
    2014                                                     85
    ----------------------------------------------------------------------------------------------------------------
    2015                                                     82.5
    ----------------------------------------------------------------------------------------------------------------
    2016                                                     80
    ----------------------------------------------------------------------------------------------------------------
    2017                                                     77.5
    ----------------------------------------------------------------------------------------------------------------
    2018                                                     75
    ----------------------------------------------------------------------------------------------------------------
    2019                                                     71
    ----------------------------------------------------------------------------------------------------------------
    2020                                                     67
    ----------------------------------------------------------------------------------------------------------------
    2021                                                     63
    ----------------------------------------------------------------------------------------------------------------
    2022                                                     59
    ----------------------------------------------------------------------------------------------------------------
    2023                                                     54
    ----------------------------------------------------------------------------------------------------------------
    2024                                                     50
    ----------------------------------------------------------------------------------------------------------------
    2025                                                     46
    ----------------------------------------------------------------------------------------------------------------
    2026                                                     42
    ----------------------------------------------------------------------------------------------------------------
    2027                                                     38
    ----------------------------------------------------------------------------------------------------------------
    2028                                                     34
    ----------------------------------------------------------------------------------------------------------------
    2029                                                     30
    ----------------------------------------------------------------------------------------------------------------
    2030                                                     25
    ----------------------------------------------------------------------------------------------------------------
    2031                                                     21
    ----------------------------------------------------------------------------------------------------------------
    2032                                                     17
    ----------------------------------------------------------------------------------------------------------------
    after 2032                                               15
    ----------------------------------------------------------------------------------------------------------------

              ``(3) Baseline.--(A) Within 12 months after the date of
            enactment of this section, the Administrator shall promulgate
            regulations to establish the baseline for purposes of paragraph
            (2). The baseline shall be the sum, expressed in tons of carbon
            dioxide equivalents, of--
                      ``(i) the annual average consumption of all class II
                    substances in calendar years 2004, 2005, and 2006; plus
                      ``(ii) the annual average quantity of all class II
                    substances contained in imported products in calendar
                    years 2004, 2005, and 2006.
              ``(B) Notwithstanding subparagraph (A), if the Administrator
            determines that the baseline is higher than 370 million metric
            tons of carbon dioxide equivalents, then the Administrator
            shall establish the baseline at 370 million metric tons of
            carbon dioxide equivalents.
              ``(C) Notwithstanding subparagraph (A), if the Administrator
            determines that the baseline is lower than 280 million metric
            tons of carbon dioxide equivalents, then the Administrator
            shall establish the baseline at 280 million metric tons of
            carbon dioxide equivalents.
              ``(4) Distribution of allowances.--
                      ``(A) In general.--Pursuant to the regulations
                    promulgated under paragraph (1), for each calendar year
                    beginning in 2012, the Administrator shall sell
                    consumption allowances in accordance with this
                    paragraph.
                      ``(B) Establishment of pools.--The Administrator
                    shall establish two allowance pools. Eighty percent of
                    the consumption allowances available for a calendar
                    year shall be placed in the producer-importer pool, and
                    20 percent of the consumption allowances available for
                    a calendar year shall be placed in the secondary pool.
                      ``(C) Producer-importer pool.--
                              ``(i) Auction.--(I) For each calendar year,
                            the Administrator shall offer for sale at
                            auction the following percentage of the
                            consumption allowances in the producer-importer
                            pool:

    ----------------------------------------------------------------------------------------------------------------
                        ``Calendar year                                   Percent available for auction
    ----------------------------------------------------------------------------------------------------------------
    2012                                                     10
    ----------------------------------------------------------------------------------------------------------------
    2013                                                     20
    ----------------------------------------------------------------------------------------------------------------
    2014                                                     30
    ----------------------------------------------------------------------------------------------------------------
    2015                                                     40
    ----------------------------------------------------------------------------------------------------------------
    2016                                                     50
    ----------------------------------------------------------------------------------------------------------------
    2017                                                     60
    ----------------------------------------------------------------------------------------------------------------
    2018                                                     70
    ----------------------------------------------------------------------------------------------------------------
    2019                                                     80
    ----------------------------------------------------------------------------------------------------------------
    2020 and thereafter                                      90
    ----------------------------------------------------------------------------------------------------------------

                              ``(II) Any person who produced or imported
                            any class II substance during calendar year
                            2004, 2005, or 2006 may participate in the
                            auction. No other persons may participate in
                            the auction unless permitted to do so pursuant
                            to subclause (III).
                              ``(III) Not later than three years after the
                            date of the initial auction and from time to
                            time thereafter, the Administrator shall
                            determine through rulemaking whether any
                            persons who did not produce or import a class
                            II substance during calendar year 2004, 2005,
                            or 2006 will be permitted to participate in
                            future auctions. The Administrator shall base
                            this determination on the duration,
                            consistency, and scale of such person's
                            purchases of consumption allowances in the
                            secondary pool under subparagraph (D), as well
                            as economic or technical hardship and other
                            factors deemed relevant by the Administrator.
                              ``(IV) The Administrator shall set a minimum
                            bid per consumption allowance of the following:
                                      ``(aa) For vintage year 2012, $1.00.
                                      ``(bb) For vintage year 2013, $1.20.
                                      ``(cc) For vintage year 2014, $1.40.
                                      ``(dd) For vintage year 2015, $1.60.
                                      ``(ee) For vintage year 2016, $1.80.
                                      ``(ff) For vintage year 2017, $2.00.
                                      ``(gg) For vintage year 2018 and
                                    thereafter, $2.00 adjusted for
                                    inflation after vintage year 2017 based
                                    upon the producer price index as
                                    published by the Department of
                                    Commerce.
                              ``(ii) Non-auction sale.--(I) For each
                            calendar year, as soon as practicable after
                            auction, the Administrator shall offer for sale
                            the remaining consumption allowances in the
                            producer-importer pool at the following prices:
                                      ``(aa) A fee of $1.00 per vintage
                                    year 2012 allowance.
                                      ``(bb) A fee of $1.20 per vintage
                                    year 2013 allowance.
                                      ``(cc) A fee of $1.40 per vintage
                                    year 2014 allowance.
                                      ``(dd) For each vintage year 2015
                                    allowance, a fee equal to the average
                                    of $1.10 and the auction clearing price
                                    for vintage year 2014 allowances.
                                      ``(ee) For each vintage year 2016
                                    allowance, a fee equal to the average
                                    of $1.30 and the auction clearing price
                                    for vintage year 2015 allowances.
                                      ``(ff) For each vintage year 2017
                                    allowance, a fee equal to the average
                                    of $1.40 and the auction clearing price
                                    for vintage year 2016 allowances.
                                      ``(gg) For each allowance of vintage
                                    year 2018 and subsequent vintage years,
                                    a fee equal to the auction clearing
                                    price for that vintage year.
                              ``(II) The Administrator shall offer to sell
                            the remaining consumption allowances in the
                            producer-importer pool to producers of class
                            II, group II substances and importers of class
                            II, group II substances in proportion to their
                            relative allocation share.
                              ``(III) Such allocation share for such sale
                            shall be determined by the Administrator using
                            such producer's or importer's annual average
                            data on class II substances from calendar years
                            2004, 2005, and 2006, on a carbon dioxide
                            equivalent basis, and--
                                      ``(aa) shall be based on a producer's
                                    production, plus importation, plus
                                    acquisitions and purchases from persons
                                    who produced class II substances in the
                                    United States during calendar years
                                    2004, 2005, or 2006, less exportation,
                                    less transfers and sales to persons who
                                    produced class II substances in the
                                    United States during calendar years
                                    2004, 2005, or 2006; and
                                      ``(bb) for an importer of class II
                                    substances that did not produce in the
                                    United States any class II substance
                                    during calendar years 2004, 2005, and
                                    2006, shall be based on the importer's
                                    importation less exportation.
                            For purposes of item (aa), the Administrator
                            shall account for 100 percent of class II,
                            group II substances and 60 percent of class II,
                            group I substances. For purposes of item (bb),
                            the Administrator shall account for 100 percent
                            of class II, group II substances and 100
                            percent of class II, group I substances.
                              ``(IV) Any consumption allowances made
                            available for nonauction sale to a specific
                            producer or importer of class II, group II
                            substances but not purchased by the specific
                            producer or importer shall be made available
                            for sale to any producer or importer of class
                            II substances during calendar years 2004, 2005,
                            or 2006. If demand for such consumption
                            allowances exceeds supply of such consumption
                            allowances, the Administrator shall develop and
                            utilize criteria for the sale of such
                            consumption allowances that may include pro
                            rata shares, historic production and
                            importation, economic or technical hardship, or
                            other factors deemed relevant by the
                            Administrator. If the supply of such
                            consumption allowances exceeds demand, the
                            Administrator may offer such consumption
                            allowances for sale in the secondary pool as
                            set forth in subparagraph (D).
                      ``(D) Secondary pool.--(i) For each calendar year, as
                    soon as practicable after the auction required in
                    subparagraph (C), the Administrator shall offer for
                    sale the consumption allowances in the secondary pool
                    at the prices listed in subparagraph (C)(ii).
                      ``(ii) The Administrator shall accept applications
                    for purchase of secondary pool consumption allowances
                    from--
                              ``(I) importers of products containing class
                            II, group II substances;
                              ``(II) persons who purchased any class II,
                            group II substance directly from a producer or
                            importer of class II, group II substances for
                            use in a product containing a class II, group
                            II substance, a manufacturing process, or a
                            reclamation process;
                              ``(III) persons who did not produce or import
                            a class II substance during calendar year 2004,
                            2005, or 2006, but who the Administrator
                            determines have subsequently taken significant
                            steps to produce or import a substantial
                            quantity of any class II, group II substance;
                            and
                              ``(IV) persons who produced or imported any
                            class II substance during calendar year 2004,
                            2005, or 2006.
                      ``(iii) If the supply of consumption allowances in
                    the secondary pool equals or exceeds the demand for
                    consumption allowances in the secondary pool as
                    presented in the applications for purchase, the
                    Administrator shall sell the consumption allowances in
                    the secondary pool to the applicants in the amounts
                    requested in the applications for purchase. Any
                    consumption allowances in the secondary pool not
                    purchased in a calendar year may be rolled over and
                    added to the quantity available in the secondary pool
                    in the following year.
                      ``(iv) If the demand for consumption allowances in
                    the secondary pool as presented in the applications for
                    purchase exceeds the supply of consumption allowances
                    in the secondary pool, the Administrator shall sell the
                    consumption allowances as follows:
                              ``(I) The Administrator shall first sell the
                            consumption allowances in the secondary pool to
                            any importers of products containing class II,
                            group II substances in the amounts requested in
                            their applications for purchase. If the demand
                            for such consumption allowances exceeds supply
                            of such consumption allowances, the
                            Administrator shall develop and utilize
                            criteria for the sale of such consumption
                            allowances among importers of products
                            containing class II, group II substances that
                            may include pro rata shares, historic
                            importation, economic or technical hardship, or
                            other factors deemed relevant by the
                            Administrator.
                              ``(II) The Administrator shall next sell any
                            remaining consumption allowances to persons
                            identified in subclauses (II) and (III) of
                            clause (ii) in the amounts requested in their
                            applications for purchase. If the demand for
                            such consumption allowances exceeds remaining
                            supply of such consumption allowances, the
                            Administrator shall develop and utilize
                            criteria for the sale of such consumption
                            allowances among subclauses (II) and (III)
                            applicants that may include pro rata shares,
                            historic use, economic or technical hardship,
                            or other factors deemed relevant by the
                            Administrator.
                              ``(III) The Administrator shall then sell any
                            remaining consumption allowances to persons who
                            produced or imported any class II substance
                            during calendar year 2004, 2005, or 2006 in the
                            amounts requested in their applications for
                            purchase. If demand for such consumption
                            allowances exceeds remaining supply of such
                            consumption allowances, the Administrator shall
                            develop and utilize criteria for the sale of
                            such consumption allowances that may include
                            pro rata shares, historic production and
                            importation, economic or technical hardship, or
                            other factors deemed relevant by the
                            Administrator.
                              ``(IV) Each person who purchases consumption
                            allowances in a non-auction sale under this
                            subparagraph shall be required to disclose the
                            person or entity sponsoring or benefitting from
                            the purchases if such person or entity is, in
                            whole or in part, other than the purchaser or
                            the purchaser's employer.
                      ``(E) Discretion to withhold allowances.--Nothing in
                    this paragraph prevents the Administrator from
                    exercising discretion to withhold and retire
                    consumption allowances that would otherwise be
                    available for auction or nonauction sale. Not later
                    than 18 months after the date of enactment of this
                    section, the Administrator shall promulgate regulations
                    establishing criteria for withholding and retiring
                    consumption allowances.
              ``(5) Banking.--A consumption allowance or destruction offset
            credit may be used to meet the compliance obligation
            requirements of paragraph (1) in--
                      ``(A) the vintage year for the allowance or
                    destruction offset credit; or
                      ``(B) any calendar year subsequent to the vintage
                    year for the allowance or destruction offset credit.
              ``(6) Auctions.--
                      ``(A) Initial regulations.--Not later than 18 months
                    after the date of enactment of this section, the
                    Administrator shall promulgate regulations governing
                    the auction of allowances under this section. Such
                    regulations shall include the following requirements:
                              ``(i) Frequency; first auction.--Auctions
                            shall be held one time per year at regular
                            intervals, with the first auction to be held no
                            later than October 31, 2011.
                              ``(ii) Auction format.--Auctions shall follow
                            a single-round, sealed-bid, uniform price
                            format.
                              ``(iii) Financial assurance.--The
                            Administrator may establish financial assurance
                            requirements to ensure that auction
                            participants can and will perform on their
                            bids.
                              ``(iv) Disclosure of beneficial ownership.--
                            Each bidder in the auction shall be required to
                            disclose the person or entity sponsoring or
                            benefitting from the bidder's participation in
                            the auction if such person or entity is, in
                            whole or in part, other than the bidder or the
                            bidder's employer.
                              ``(v) Publication of information.--After the
                            auction, the Administrator shall, in a timely
                            fashion, publish the number of bidders, number
                            of winning bidders, the quantity of allowances
                            sold, and the auction clearing price.
                              ``(vi) Bidding limits in 2012.--In the
                            vintage year 2012 auction, no auction
                            participant may, directly or in concert with
                            another participant, bid for or purchase more
                            allowances offered for sale at the auction than
                            the greater of--
                                      ``(I) the number of allowances which,
                                    when added to the number of allowances
                                    available for purchase by the
                                    participant in the producer-importer
                                    pool non-auction sale, would equal the
                                    participant's annual average
                                    consumption of class II, group II
                                    substances in calendar years 2004,
                                    2005, and 2006; or
                                      ``(II) the number of allowances equal
                                    to the product of--
                                              ``(aa) 1.20 multiplied by the
                                            participant's allocation share
                                            of the producer-importer pool
                                            non-auction sale as determined
                                            under paragraph (4)(C)(ii); and
                                              ``(bb) the number of vintage
                                            year 2012 allowances offered at
                                            auction.
                              ``(vii) Bidding limits in 2013.--In the
                            vintage year 2013 auction, no auction
                            participant may, directly or in concert with
                            another participant, bid for or purchase more
                            allowances offered for sale at the auction than
                            the product of--
                                      ``(I) 1.15 multiplied by the ratio of
                                    the total number of vintage year 2012
                                    allowances purchased by the participant
                                    from the auction and from the producer-
                                    importer pool non-auction sale to the
                                    total number of vintage year 2012
                                    allowances in the producer-importer
                                    pool; and
                                      ``(II) the number of vintage year
                                    2013 allowances offered at auction.
                              ``(viii) Bidding limits in subsequent
                            years.--In the auctions for vintage year 2014
                            and subsequent vintage years, no auction
                            participant may, directly or in concert with
                            another participant, bid for or purchase more
                            allowances offered for sale at the auction than
                            the product of--
                                      ``(I) 1.15 multiplied by the ratio of
                                    the highest number of allowances held
                                    by the participant in any of the three
                                    prior vintage years to meet its
                                    compliance obligation under paragraph
                                    (1) to the total number of allowances
                                    in the producer-importer pool for such
                                    vintage year; and
                                      ``(II) the number of allowances
                                    offered at auction for that vintage
                                    year.
                              ``(ix) Other requirements.--The Administrator
                            may include in the regulations such other
                            requirements or provisions as the Administrator
                            considers necessary to promote effective,
                            efficient, transparent, and fair administration
                            of auctions under this section.
                      ``(B) Revision of regulations.--The Administrator
                    may, at any time, revise the initial regulations
                    promulgated under subparagraph (A) based on the
                    Administrator's experience in administering allowance
                    auctions. Such revised regulations need not meet the
                    requirements identified in subparagraph (A) if the
                    Administrator determines that an alternative auction
                    design would be more effective, taking into account
                    factors including costs of administration,
                    transparency, fairness, and risks of collusion or
                    manipulation. In determining whether and how to revise
                    the initial regulations under this paragraph, the
                    Administrator shall not consider maximization of
                    revenues to the Federal Government.
                      ``(C) Delegation or contract.--Pursuant to
                    regulations under this section, the Administrator may,
                    by delegation or contract, provide for the conduct of
                    auctions under the Administrator's supervision by other
                    departments or agencies of the Federal Government or by
                    nongovernmental agencies, groups, or organizations.
              ``(7) Payments for allowances.--
                      ``(A) Initial regulations.--Not later than 18 months
                    after the date of enactment of this section, the
                    Administrator shall promulgate regulations governing
                    the payment for allowances purchased in auction and
                    non-auction sales under this section. Such regulations
                    shall include the requirement that, in the event that
                    full payment for purchased allowances is not made on
                    the date of purchase, equal payments shall be made one
                    time per calendar quarter with all payments for
                    allowances of a vintage year made by the end of that
                    vintage year.
                      ``(B) Revision of regulations.-- The Administrator
                    may, at any time, revise the initial regulations
                    promulgated under subparagraph (A) based on the
                    Administrator's experience in administering collection
                    of payments. Such revised regulations need not meet the
                    requirements identified in subparagraph (A) if the
                    Administrator determines that an alternative payment
                    structure or frequency would be more effective, taking
                    into account factors including cost of administration,
                    transparency, and fairness. In determining whether and
                    how to revise the initial regulations under this
                    paragraph, the Administrator shall not consider
                    maximization of revenues to the Federal Government.
                      ``(C) Penalties for non-payment.--Failure to pay for
                    purchased allowances in accordance with the regulations
                    promulgated pursuant to this paragraph shall be a
                    violation of the requirements of subsection (b).
                    Section 113(c)(3) shall apply in the case of any person
                    who knowingly fails to pay for purchased allowances in
                    accordance with the regulations promulgated pursuant to
                    this paragraph.
              ``(8) Imported products.--If the United States becomes a
            party or otherwise adheres to a multilateral agreement,
            including any amendment to the Montreal Protocol on Substances
            That Deplete the Ozone Layer, which restricts the production
            and consumption of class II, group II substances--
                      ``(A) as of the date on which such agreement or
                    amendment enters into force, it shall no longer be
                    unlawful for any person to import from a party to such
                    agreement or amendment any product containing any class
                    II, group II substance whose production and consumption
                    are regulated by such agreement or amendment without
                    holding one consumption allowance or one destruction
                    offset credit for each carbon dioxide equivalent ton of
                    the class II, group II substance;
                      ``(B) the Administrator shall promulgate regulations
                    within 12 months of the date the United States becomes
                    a party or otherwise adheres to such agreement or
                    amendment, or the date on which such agreement or
                    amendment enters into force, whichever is later, to
                    establish a new baseline for purposes of paragraph (2),
                    which new baseline shall be the original baseline less
                    the carbon dioxide equivalent of the annual average
                    quantity of any class II substances regulated by such
                    agreement or amendment contained in products imported
                    from parties to such agreement or amendment in calendar
                    years 2004, 2005, and 2006;
                      ``(C) as of the date on which such agreement or
                    amendment enters into force, no person importing any
                    product containing any class II, group II substance
                    may, directly or in concert with another person,
                    purchase any consumption allowances for sale by the
                    Administrator for the importation of products from a
                    party to such agreement or amendment that contain any
                    class II, group II substance restricted by such
                    agreement or amendment; and
                      ``(D) the Administrator may adjust the two allowance
                    pools established in paragraph (4) such that up to 90
                    percent of the consumption allowances available for a
                    calendar year are placed in the producer-importer pool
                    with the remaining consumption allowances placed in the
                    secondary pool.
              ``(9) Offsets.--
                      ``(A) Chlorofluorocarbon destruction.--Within 18
                    months after the date of enactment of this section, the
                    Administrator shall promulgate regulations to provide
                    for the issuance of offset credits for the destruction,
                    in the calendar year 2012 or later, of
                    chlorofluorocarbons in the United States. The
                    Administrator shall establish and distribute to the
                    destroying entity a quantity of destruction offset
                    credits equal to 0.8 times the number of tons of carbon
                    dioxide equivalents of reduction achieved through the
                    destruction. No destruction offset credits shall be
                    established for the destruction of a class II, group II
                    substance.
                      ``(B) Definition.--For purposes of this paragraph,
                    the term `destruction' means the conversion of a
                    substance by thermal, chemical, or other means to
                    another substance with little or no carbon dioxide
                    equivalent value and no ozone depletion potential.
                      ``(C) Regulations.--The regulations promulgated under
                    this paragraph shall include standards and protocols
                    for project eligibility, certification of destroyers,
                    monitoring, tracking, destruction efficiency,
                    quantification of project and baseline emissions and
                    carbon dioxide equivalent value, and verification. The
                    Administrator shall ensure that destruction offset
                    credits represent real and verifiable destruction of
                    chlorofluorocarbons or other class I or class II, group
                    I, substances authorized under subparagraph (D).
                      ``(D) Other substances.--The Administrator may
                    promulgate regulations to add to the list of class I
                    and class II, group I, substances that may be destroyed
                    for destruction offset credits, taking into account a
                    candidate substance's carbon dioxide equivalent value,
                    ozone depletion potential, prevalence in banks in the
                    United States, and emission rates, as well as the need
                    for additional cost containment under the class II,
                    group II cap and the integrity of the class II, group
                    II cap. The Administrator shall not add a class I or
                    class II, group I substance to the list if the
                    consumption of the substance has not been completely
                    phased-out internationally (except for essential use
                    exemptions or other similar exemptions) pursuant to the
                    Montreal Protocol.
                      ``(E) Extension of offsets.--(i) At any time after
                    the Administrator promulgates regulations pursuant to
                    subparagraph (A), the Administrator may add the types
                    of destruction projects authorized to receive
                    destruction offset credits under this paragraph to the
                    list of types of projects eligible for offset credits
                    under section 733. Nothing in this paragraph shall
                    affect the issuance of offset credits under section
                    740.
                      ``(ii) The Administrator shall not make the addition
                    under clause (i) unless the Administrator finds that
                    insufficient destruction is occurring or is projected
                    to occur under this paragraph and that the addition
                    would increase destruction.
                      ``(iii) In no event shall more than one destruction
                    offset credit be issued under title VII and this
                    section for the destruction of the same quantity of a
                    substance.
              ``(10) Legal status of allowances and credits.--None of the
            following constitutes a property right:
                      ``(A) A production or consumption allowance.
                      ``(B) A destruction offset credit.
      ``(c) Deadlines for Compliance.--Notwithstanding the deadlines
    specified for class II substances in sections 608, 609, 610, 612, and
    613 that occur prior to January 1, 2009, the deadline for promulgating
    regulations under those sections for class II, group II substances
    shall be January 1, 2012.
      ``(d) Exceptions for Essential Uses.--Notwithstanding any phase down
    of production and consumption required by this section, to the extent
    consistent with any applicable multilateral agreement to which the
    United States is a party or otherwise adheres, the Administrator may
    provide the following exceptions for essential uses:
              ``(1) Medical devices.--The Administrator, after notice and
            opportunity for public comment, and in consultation with the
            Commissioner of the Food and Drug Administration, may provide
            an exception for the production and consumption of class II,
            group II substances solely for use in medical devices.
              ``(2) Aviation safety.--The Administrator, after notice and
            opportunity for public comment, may authorize the production
            and consumption of limited quantities of class II, group II
            substances solely for the purposes of aviation safety if the
            Administrator of the Federal Aviation Administration, in
            consultation with the Administrator, determines that no safe
            and effective substitute has been developed and that such
            authorization is necessary for aviation safety purposes.
      ``(e) Developing Countries.--Notwithstanding any phase down of
    production required by this section, the Administrator, after notice
    and opportunity for public comment, may authorize the production of
    limited quantities of class II, group II substances in excess of the
    amounts otherwise allowable under this section solely for export to,
    and use in, developing countries. Any production authorized under this
    subsection shall be solely for purposes of satisfying the basic
    domestic needs of such countries as provided in applicable
    international agreements, if any, to which the United States is a party
    or otherwise adheres.
      ``(f) National Security; Fire Suppression, etc.--The provisions of
    subsection (f) and paragraphs (1) and (2) of subsection (g) of section
    604 shall apply to any consumption and production phase down of class
    II, group II substances in the same manner and to the same extent,
    consistent with any applicable international agreement to which the
    United States is a party or otherwise adheres, as such provisions apply
    to the substances specified in such subsection.
      ``(g) Accelerated Schedule.--In lieu of section 606, the provisions
    of paragraphs (1), (2), and (3) of this subsection shall apply in the
    case of class II, group II substances.
              ``(1) In general.--The Administrator shall promulgate initial
            regulations not later than 18 months after the date of
            enactment of this section, and revised regulations any time
            thereafter, which establish a schedule for phasing down the
            consumption (and, if the condition in subsection (b)(1)(B) is
            met, the production) of class II, group II substances that is
            more stringent than the schedule set forth in this section if,
            based on the availability of substitutes, the Administrator
            determines that such more stringent schedule is practicable,
            taking into account technological achievability, safety, and
            other factors the Administrator deems relevant, or if the
            Montreal Protocol, or any applicable international agreement to
            which the United States is a party or otherwise adheres, is
            modified or established to include a schedule or other
            requirements to control or reduce production, consumption, or
            use of any class II, group II substance more rapidly than the
            applicable schedule under this section.
              ``(2) Petition.--Any person may submit a petition to
            promulgate regulations under this subsection in the same manner
            and subject to the same procedures as are provided in section
            606(b).
              ``(3) Inconsistency.--If the Administrator determines that
            the provisions of this section regarding banking, allowance
            rollover, or destruction offset credits create a significant
            potential for inconsistency with the requirements of any
            applicable international agreement to which the United States
            is a party or otherwise adheres, the Administrator may
            promulgate regulations restricting the availability of banking,
            allowance rollover, or destruction offset credits to the extent
            necessary to avoid such inconsistency.
      ``(h) Exchange.--Section 607 shall not apply in the case of class II,
    group II substances. Production and consumption allowances for class
    II, group II substances may be freely exchanged or sold but may not be
    converted into allowances for class II, group I substances.
      ``(i) Labeling.--(1) In applying section 611 to products containing
    or manufactured with class II, group II substances, in lieu of the
    words `destroying ozone in the upper atmosphere' on labels required
    under section 611 there shall be substituted the words `contributing to
    global warming'.
      ``(2) The Administrator may, through rulemaking, exempt from the
    requirements of section 611 products containing or manufactured with
    class II, group II substances determined to have little or no carbon
    dioxide equivalent value compared to other substances used in similar
    products.
      ``(j) Nonessential Products.--For the purposes of section 610, class
    II, group II substances shall be regulated under section 610(b), except
    that in applying section 610(b) the word `hydrofluorocarbon' shall be
    substituted for the word `chlorofluorocarbon' and the term `class II,
    group II' shall be substituted for the term `class I'. Class II, group
    II substances shall not be subject to the provisions of section 610(d).
      ``(k) International Transfers.--In the case of class II, group II
    substances, in lieu of sections 616(a) and 616(b), this subsection
    shall apply. To the extent consistent with any applicable international
    agreement to which the United States is a party or otherwise adheres,
    including any amendment to the Montreal Protocol, the United States may
    engage in transfers with other parties to such agreement or amendment
    under the following conditions:
              ``(1) The United States may transfer production allowances to
            another party to such agreement or amendment if, at the time of
            the transfer, the Administrator establishes revised production
            limits for the United States accounting for the transfer in
            accordance with regulations promulgated pursuant to this
            subsection.
              ``(2) The United States may acquire production allowances
            from another party to such agreement or amendment if, at the
            time of the transfer, the Administrator finds that the other
            party has revised its domestic production limits in the same
            manner as provided with respect to transfers by the United
            States in the regulations promulgated pursuant to this
            subsection.
      ``(l) Relationship to Other Laws.--
              ``(1) State laws.--For purposes of section 116, the
            requirements of this section for class II, group II substances
            shall be treated as requirements for the control and abatement
            of air pollution.
              ``(2) Multilateral agreements.--Section 614 shall apply to
            the provisions of this section concerning class II, group II
            substances, except that for the words `Montreal Protocol' there
            shall be substituted the words `Montreal Protocol, or any
            applicable multilateral agreement to which the United States is
            a party or otherwise adheres that restricts the production or
            consumption of class II, group II substances,' and for the
            words `Article 4 of the Montreal Protocol' there shall be
            substituted `any provision of such multilateral agreement
            regarding trade with non-parties'.
              ``(3) Federal facilities.--For purposes of section 118, the
            requirements of this section for class II, group II substances
            and corresponding State, interstate, and local requirements,
            administrative authority, and process and sanctions shall be
            treated as requirements for the control and abatement of air
            pollution within the meaning of section 118.
      ``(m) Carbon Dioxide Equivalent Value.--(1) In lieu of section
    602(e), the provisions of this subsection shall apply in the case of
    class II, group II substances. Simultaneously with establishing the
    list of class II, group II substances, and simultaneously with any
    addition to that list, the Administrator shall publish the carbon
    dioxide equivalent value of each listed class II, group II substance,
    based on a determination of the number of metric tons of carbon dioxide
    that makes the same contribution to global warming over 100 years as 1
    metric ton of each class II, group II substance.
      ``(2) Not later than February 1, 2017, and not less than every 5
    years thereafter, the Administrator shall--
              ``(A) review, and if appropriate, revise the carbon dioxide
            equivalent values established for class II, group II substances
            based on a determination of the number of metric tons of carbon
            dioxide that makes the same contributions to global warming
            over 100 years as 1 metric ton of each class II, group II
            substance; and
              ``(B) publish in the Federal Register the results of that
            review and any revisions.
      ``(3) A revised determination published in the Federal Register under
    paragraph (2)(B) shall take effect for production of class II, group II
    substances, consumption of class II, group II substances, and
    importation of products containing class II, group II substances
    starting on January 1 of the first calendar year starting at least 9
    months after the date on which the revised determination was published.
      ``(4) The Administrator may decrease the frequency of review and
    revision under paragraph (2) if the Administrator determines that such
    decrease is appropriate in order to synchronize such review and
    revisions with any similar review process carried out pursuant to the
    United Nations Framework Convention on Climate Change, an agreement
    negotiated under that convention, The Vienna Convention for the
    Protection of the Ozone Layer, or an agreement negotiated under that
    convention, except that in no event shall the Administrator carry out
    such review and revision any less frequently than every 10 years.
      ``(n) Reporting Requirements.--In lieu of subsections (b) and (c) of
    section 603, paragraphs (1) and (2) of this subsection shall apply in
    the case of class II, group II substances:
              ``(1) In general.--On a quarterly basis, or such other basis
            (not less than annually) as determined by the Administrator,
            each person who produced, imported, or exported a class II,
            group II substance, or who imported a product containing a
            class II, group II substance, shall file a report with the
            Administrator setting forth the carbon dioxide equivalent
            amount of the substance that such person produced, imported, or
            exported, as well as the amount that was contained in products
            imported by that person, during the preceding reporting period.
            Each such report shall be signed and attested by a responsible
            officer. If all other reporting is complete, no such report
            shall be required from a person after April 1 of the calendar
            year after such person permanently ceases production,
            importation, and exportation of the substance, as well as
            importation of products containing the substance, and so
            notifies the Administrator in writing. If the United States
            becomes a party or otherwise adheres to a multilateral
            agreement, including any amendment to the Montreal Protocol on
            Substances That Deplete the Ozone Layer, that restricts the
            production and consumption of class II, group II substances,
            then, if all other reporting is complete, no such report shall
            be required from a person with respect to importation from
            parties to such agreement or amendment of products containing
            any class II, group II substance restricted by such agreement
            or amendment, after April 1 of the calendar year following the
            year during which such agreement or amendment enters into
            force.
              ``(2) Baseline reports for class ii, group ii substances.--
                      ``(A) In general.--Unless such information has been
                    previously reported to the Administrator, on the date
                    on which the first report under paragraph (1) of this
                    subsection is required to be filed, each person who
                    produced, imported, or exported a class II, group II
                    substance, or who imported a product containing a class
                    II substance, (other than a substance added to the list
                    of class II, group II substances after the publication
                    of the initial list of such substances under this
                    section), shall file a report with the Administrator
                    setting forth the amount of such substance that such
                    person produced, imported, exported, or that was
                    contained in products imported by that person, during
                    each of calendar years 2004, 2005, and 2006.
                      ``(B) Producers.--In reporting under subparagraph
                    (A), each person who produced in the United States a
                    class II substance during calendar years 2004, 2005, or
                    2006 shall--
                              ``(i) report all acquisitions or purchases of
                            class II substances during each of calendar
                            years 2004, 2005, and 2006 from all other
                            persons who produced in the United States a
                            class II substance during calendar years 2004,
                            2005, or 2006, and supply evidence of such
                            acquisitions and purchases as deemed necessary
                            by the Administrator; and
                              ``(ii) report all transfers or sales of class
                            II substances during each of calendar years
                            2004, 2005, and 2006 to all other persons who
                            produced in the United States a class II
                            substance during calendar years 2004, 2005, or
                            2006, and supply evidence of such transfers and
                            sales as deemed necessary by the Administrator.
                      ``(C) Added substances.--In the case of a substance
                    added to the list of class II, group II substances
                    after publication of the initial list of such
                    substances under this section, each person who
                    produced, imported, exported, or imported products
                    containing such substance in calendar year 2004, 2005,
                    or 2006 shall file a report with the Administrator
                    within 180 days after the date on which such substance
                    is added to the list, setting forth the amount of the
                    substance that such person produced, imported, and
                    exported, as well as the amount that was contained in
                    products imported by that person, in calendar years
                    2004, 2005, and 2006.
      ``(o) Stratospheric Ozone and Climate Protection Fund.--
              ``(1) In general.--There is established in the Treasury of
            the United States a Stratospheric Ozone and Climate Protection
            Fund.
              ``(2) Deposits.--The Administrator shall deposit all proceeds
            from the auction and non-auction sale of allowances under this
            section into the Stratospheric Ozone and Climate Protection
            Fund.
              ``(3) Use.--Amounts deposited into the Stratospheric Ozone
            and Climate Protection Fund shall be available, subject to
            appropriations, exclusively for the following purposes:
                      ``(A) Recovery, recycling, and reclamation.--The
                    Administrator may utilize funds to establish a program
                    to incentivize the recovery, recycling, and reclamation
                    of any Class II substances in order to reduce emissions
                    of such substances.
                      ``(B) Multilateral fund.--If the United States
                    becomes a party or otherwise adheres to a multilateral
                    agreement, including any amendment to the Montreal
                    Protocol on Substances That Deplete the Ozone Layer,
                    which restricts the production and consumption of class
                    II, group II substances, the Administrator may utilize
                    funds to meet any related contribution obligation of
                    the United States to the Multilateral Fund for the
                    Implementation of the Montreal Protocol or similar
                    multilateral fund established under such multilateral
                    agreement.
                      ``(C) Best-in-class appliances deployment program.--
                    The Secretary of Energy is authorized to utilize funds
                    to carry out the purposes of section 214 of the
                    American Clean Energy and Security Act of 2009.
                      ``(D) Low global warming product transition
                    assistance program.--
                              ``(i) In general.--The Administrator, in
                            consultation with the Secretary of Energy, may
                            utilize funds in fiscal years 2012 through 2022
                            to establish a program to provide financial
                            assistance to manufacturers of products
                            containing class II, group II substances to
                            facilitate the transition to products that
                            contain or utilize alternative substances with
                            no or low carbon dioxide equivalent value and
                            no ozone depletion potential.
                              ``(ii) Definition.--In this subparagraph, the
                            term `products' means refrigerators, freezers,
                            dehumidifiers, air conditioners, foam
                            insulation, technical aerosols, fire protection
                            systems, and semiconductors.
                              ``(iii) Financial assistance.--The
                            Administrator may provide financial assistance
                            to manufacturers pursuant to clause (i) for--
                                      ``(I) the design and configuration of
                                    new products that use alternative
                                    substances with no or low carbon
                                    dioxide equivalent value and no ozone
                                    depletion potential; and
                                      ``(II) the redesign and retooling of
                                    facilities for the manufacture of
                                    products in the United States that use
                                    alternative substances with no or low
                                    carbon dioxide equivalent value and no
                                    ozone depletion potential.
                              ``(iv) Reports.--For any fiscal year during
                            which the Administrator provides financial
                            assistance pursuant to this subparagraph, the
                            Administrator shall submit a report to the
                            Congress within 3 months of the end of such
                            fiscal year detailing the amounts, recipients,
                            specific purposes, and results of the financial
                            assistance provided.''.
      (b) Table of Contents.--The table of contents of title VI of the
    Clean Air Act (42 U.S.C. 7671 et seq.) is amended by adding the
    following new item at the end thereof:

    ``Sec. 619. Hydrofluorocarbons (HFCs).''.
      (c) Fire Suppression Agents.--Section 605(a) of the Clean Air Act (42
    U.S.C. 7671(a)) is amended--
              (1) by striking ``or'' at the end of paragraph (2);
              (2) by striking the period at the end of paragraph (3) and
            inserting ``; or''; and
              (3) by adding the following new paragraph after paragraph
            (3):
              ``(4) is listed as acceptable for use as a fire suppression
            agent for nonresidential applications in accordance with
            section 612(c).''.
      (d) Motor Vehicle Air Conditioners.--
              (1) Section 609(e) of the Clean Air Act (42 U.S.C. 7671h(e))
            is amended by inserting ``, group I'' after each reference to
            ``class II'' in the text and heading.
              (2) Section 609 of the Clean Air Act (42 U.S.C. 7671h) is
            amended by adding the following new subsection after subsection
            (e):
      ``(f) Class II, Group II Substances.--
              ``(1) Repair.--The Administrator may promulgate regulations
            establishing requirements for repair of motor vehicle air
            conditioners prior to adding a class II, group II substance.
              ``(2) Small containers.--(A) The Administrator may promulgate
            regulations establishing servicing practices and procedures for
            recovery of class II, group II substances from containers which
            contain less than 20 pounds of such class II, group II
            substances.
              ``(B) Not later than 18 months after enactment of this
            subsection, the Administrator shall either promulgate
            regulations requiring that containers which contain less than
            20 pounds of a class II, group II substance be equipped with a
            device or technology that limits refrigerant emissions and
            leaks from the container and limits refrigerant emissions and
            leaks during the transfer of refrigerant from the container to
            the motor vehicle air conditioner or issue a determination that
            such requirements are not necessary or appropriate.
              ``(C) Not later than 18 months after enactment of this
            subsection, the Administrator shall promulgate regulations
            establishing requirements for consumer education materials on
            best practices associated with the use of containers which
            contain less than 20 pounds of a class II, group II substance
            and prohibiting the sale or distribution, or offer for sale or
            distribution, of any class II, group II substance in any
            container which contains less than 20 pounds of such class II,
            group II substance, unless consumer education materials
            consistent with such requirements are displayed and available
            at point-of-sale locations, provided to the consumer, or
            included in or on the packaging of the container which contain
            less than 20 pounds of a class II, group II substance.
              ``(D) The Administrator may, through rulemaking, extend the
            requirements established under this paragraph to containers
            which contain 30 pounds or less of a class II, group II
            substance if the Administrator determines that such action
            would produce significant environmental benefits.
              ``(3) Restriction of sales.--Effective January 1, 2014, no
            person may sell or distribute or offer to sell or distribute or
            otherwise introduce into interstate commerce any motor vehicle
            air conditioner refrigerant in any size container unless the
            substance has been found acceptable for use in a motor vehicle
            air conditioner under section 612.''.
      (e) Safe Alternatives Policy.--Section 612(e) of the Clean Air Act
    (42 U.S.C. 7671k(e)) is amended by inserting ``or class II'' after each
    reference to ``class I''.

    SEC. 333. BLACK CARBON.

      (a) Definition.--As used in this section, the term ``black carbon''
    means primary light absorbing aerosols, as defined by the
    Administrator, based on the best available science.
      (b) Black Carbon Abatement Report.--Not later than one year after the
    date of enactment of this section, the Administrator shall, in
    consultation with other appropriate Federal agencies, submit to
    Congress a report regarding black carbon emissions. The report shall
    include the following:
              (1) A summary of the current information and research that
            identifies--
                      (A) an inventory of the major sources of black carbon
                    emissions in the United States and throughout the
                    world, including--
                              (i) an estimate of the quantity of current
                            and projected future emissions; and
                              (ii) the net climate forcing of the emissions
                            from such sources, including consideration of
                            co-emissions of other pollutants;
                      (B) effective and cost-effective control
                    technologies, operations, and strategies for additional
                    domestic and international black carbon emissions
                    reductions, such as diesel retrofit technologies on
                    existing on-road, non-road, and stationary engines and
                    programs to address residential cookstoves, and forest
                    and agriculture-based burning;
                      (C) potential metrics and approaches for quantifying
                    the climatic effects of black carbon emissions,
                    including its radiative forcing and warming effects,
                    that may be used to compare the climate benefits of
                    different mitigation strategies, including an
                    assessment of the uncertainty in such metrics and
                    approaches; and
                      (D) the public health and environmental benefits
                    associated with additional controls for black carbon
                    emissions.
              (2) Recommendations regarding--
                      (A) development of additional emissions monitoring
                    techniques and capabilities, modeling, and other black
                    carbon-related areas of study;
                      (B) areas of focus for additional study of
                    technologies, operations, and strategies with the
                    greatest potential to reduce emissions of black carbon
                    and associated public health, economic, and
                    environmental impacts associated with these emissions;
                    and
                      (C) actions, in addition to those identified by the
                    Administrator under section 851 of the Clean Air Act
                    (as added by subsection (c)), the Federal Government
                    may take to encourage or require reductions in black
                    carbon emissions.
      (c) Black Carbon Mitigation.--Title VIII of the Clean Air Act, as
    added by section 331 of this Act, and amended by section 222 of this
    Act, is further amended by adding after part D the following new part:

                             ``PART E--BLACK CARBON

    ``SEC. 851. BLACK CARBON.

      ``(a) Domestic Black Carbon Mitigation.--Not later than 18 months
    after the date of enactment of this section, the Administrator, taking
    into consideration the public health and environmental impacts of black
    carbon emissions, including the effects on global and regional warming,
    the Arctic, and other snow and ice-covered surfaces, shall propose
    regulations under the existing authorities of this Act to reduce
    emissions of black carbon or propose a finding that existing
    regulations promulgated pursuant to this Act adequately regulate black
    carbon emissions. Not later than two years after the date of enactment
    of this section, the Administrator shall promulgate final regulations
    under the existing authorities of this Act or finalize the proposed
    finding.
      ``(b) International Black Carbon Mitigation.--
              ``(1) Report.--Not later than one year after the date of
            enactment of this section, the Administrator, in coordination
            with the Secretary of State and other appropriate Federal
            agencies, shall transmit a report to Congress on the amount,
            type, and direction of all present United States financial,
            technical, and related assistance to foreign countries to
            reduce, mitigate, and otherwise abate black carbon emissions.
              ``(2) Other opportunities.--The report required under
            paragraph (1) shall also identify opportunities and
            recommendations, including action under existing authorities,
            to achieve significant black carbon emission reductions in
            foreign countries through technical assistance or other
            approaches to--
                      ``(A) promote sustainable solutions to bring clean,
                    efficient, safe, and affordable stoves, fuels, or both
                    stoves and fuels to residents of developing countries
                    that are reliant on solid fuels such as wood, dung,
                    charcoal, coal, or crop residues for home cooking and
                    heating, so as to help reduce the public health,
                    environmental, and economic impacts of black carbon
                    emissions from these sources by--
                              ``(i) identifying key regions for large-scale
                            demonstration efforts, and key partners in each
                            such region; and
                              ``(ii) developing for each such region a
                            large-scale implementation strategy with a goal
                            of collectively reaching 20,000,000 homes over
                            5 years with interventions that will--
                                      ``(I) increase stove efficiency by
                                    over 50 percent (or such other goal as
                                    determined by the Administrator);
                                      ``(II) reduce emissions of black
                                    carbon by over 60 percent (or such
                                    other goal as determined by the
                                    Administrator); and
                                      ``(III) reduce the incidence of
                                    severe pneumonia in children under 5
                                    years old by over 30 percent (or such
                                    other goal as determined by the
                                    Administrator);
                      ``(B) make technological improvements to diesel
                    engines and provide greater access to fuels that emit
                    less or no black carbon;
                      ``(C) reduce unnecessary agricultural or other
                    biomass burning where feasible alternatives exist;
                      ``(D) reduce unnecessary fossil fuel burning that
                    produces black carbon where feasible alternatives
                    exist;
                      ``(E) reduce other sources of black carbon emissions;
                    and
                      ``(F) improve capacity to achieve greater compliance
                    with existing laws to address black carbon
                    emissions.''.
      (d) Authorization of Appropriations.--There are authorized to be
    appropriated such sums as are necessary to carry out this section.

    SEC. 334. STATES.

      Section 116 of the Clean Air Act (42 U.S.C. 7416) is amended by
    adding the following at the end thereof: ``For the purposes of this
    section, the phrases `standard or limitation respecting emissions of
    air pollutants' and `requirements respecting control or abatement of
    air pollution' shall include any provision to: cap greenhouse gas
    emissions, require surrender to the State or a political subdivision
    thereof of emission allowances or offset credits established or issued
    under this Act, and require the use of such allowances or credits as a
    means of demonstrating compliance with requirements established by a
    State or political subdivision thereof.''.

    SEC. 335. STATE PROGRAMS.

      Title VIII of the Clean Air Act, as added by section 331 of this Act
    and amended by several sections of this Act, is further amended by
    adding after part E (as added by section 333(c) of this Act) the
    following new part:

                            ``PART F--MISCELLANEOUS

    ``SEC. 861. STATE PROGRAMS.

      ``Notwithstanding section 116, no State or political subdivision
    thereof shall implement or enforce a cap and trade program that covers
    any capped emissions emitted during the years 2012 through 2017. For
    purposes of this section, the term `cap and trade program' means a
    system of greenhouse gas regulation under which a State or political
    subdivision issues a limited number of tradable instruments in the
    nature of emission allowances and requires that sources within its
    jurisdiction surrender such tradeable instruments for each unit of
    greenhouse gases emitted during a compliance period. For purposes of
    this section, a `cap-and-trade program' does not include a target or
    limit on greenhouse gas emissions adopted by a State or political
    subdivision that is implemented other than through the issuance and
    surrender of a limited number of tradable instruments in the nature of
    emission allowances, nor does it include any other standard, limit,
    regulation, or program to reduce greenhouse gas emissions that is not
    implemented through the issuance and surrender of a limited number of
    tradeable instruments in the nature of emission allowances. For
    purposes of this section, the term `cap and trade program' does not
    include, among other things, fleet-wide motor vehicle emission
    requirements that allow greater emissions with increased vehicle
    production, or requirements that fuels, or other products, meet an
    average pollution emission rate or lifecycle greenhouse gas standard.

    ``SEC. 862. GRANTS FOR SUPPORT OF AIR POLLUTION CONTROL PROGRAMS.

      ``The Administrator is authorized to make grants to air pollution
    control agencies pursuant to section 105 for purposes of assisting in
    the implementation of programs to address global warming established
    under the Safe Climate Act.''.

    SEC. 336. ENFORCEMENT.

      (a) Remand.--Section 307(b) of the Clean Air Act (42 U.S.C. 7607(b))
    is amended by adding the following new paragraph at the end thereof:
              ``(3) If the court determines that any action of the
            Administrator is arbitrary, capricious, or otherwise unlawful,
            the court may remand such action, without vacatur, if vacatur
            would impair or delay protection of the environment or public
            health or otherwise undermine the timely achievement of the
            purposes of this Act.''.
      (b) Petition for Reconsideration.--Section 307(d)(7)(B) of the Clean
    Air Act (42 U.S.C. 7607(d)(7)(B)) is amended as follows:
              (1) By inserting after the second sentence ``If a petition
            for reconsideration is filed, the Administrator shall take
            final action on such petition, including promulgation of final
            action either revising or determining not to revise the action
            for which reconsideration is sought, within 150 days after the
            petition is received by the Administrator or the petition shall
            be deemed denied for the purpose of judicial review.''.
              (2) By amending the third sentence to read as follows: ``Such
            person may seek judicial review of such denial, or of any other
            final action, by the Administrator, in response to a petition
            for reconsideration, in the United States court of appeals for
            the appropriate circuit (as provided in subsection (b)).''.

    SEC. 337. CONFORMING AMENDMENTS.

      (a) Federal Enforcement.--Section 113 of the Clean Air Act (42 U.S.C.
    7413) is amended as follows:
              (1) In subsection (a)(3), by striking ``or title VI,'' and
            inserting ``title VI, title VII, or title VIII''.
              (2) In subsection (b), by striking ``or a major stationary
            source'' and inserting ``a major stationary source, or a
            covered EGU under title VIII'' in the material preceding
            paragraph (1).
              (3) In paragraph (2) of subsection (b), by striking ``or
            title VI'' and inserting ``title VI, title VII, or title
            VIII''.
              (4) In subsection (c)--
                      (A) in the first sentence of paragraph (1), by
                    striking ``or title VI (relating to stratospheric ozone
                    control),'' and inserting ``title VI, title VII, or
                    title VIII,''; and
                      (B) in the first sentence of paragraph (3), by
                    striking ``or VI'' and inserting ``VI, VII, or VIII''.
              (5) In subsection (d)(1)(B), by striking ``or VI'' and
            inserting ``VI, VII, or VIII''.
              (6) In subsection (f), in the first sentence, by striking
            ``or VI'' and inserting ``VI, VII, or VIII''.
      (b) Retention of State Authority.--Section 116 of the Clean Air Act
    (42 U.S.C. 7416) is amended as follows:
              (1) By striking ``and 233'' and inserting ``233''.
              (2) By striking ``of moving sources)'' and inserting ``of
            moving sources), and 861 (preempting certain State greenhouse
            gas programs for a limited time)''.
      (c) Inspections, Monitoring, and Entry.--Section 114(a) of the Clean
    Air Act (42 U.S.C. 7414(a)) is amended by striking ``section 112,'' and
    all that follows through ``(ii)'' and inserting the following:
    ``section 112, or any regulation of greenhouse gas emissions under
    title VII or VIII, (ii)''.
      (d) Enforcement.--Subsection (f) of section 304 of the Clean Air Act
    (42 U.S.C. 7604(f)) is amended as follows:
              (1) By striking ``; or'' at the end of paragraph (3) thereof
            and inserting a comma.
              (2) By striking the period at the end of paragraph (4)
            thereof and inserting ``, or''.
              (3) By adding the following after paragraph (4) thereof:
              ``(5) any requirement of title VII or VIII.''.
      (e) Administrative Proceedings and Judicial Review.--Section 307 of
    the Clean Air Act (42 U.S.C. 7607) is amended as follows:
              (1) In subsection (a), by striking ``, or section 306'' and
            inserting ``section 306, or title VII or VIII''.
              (2) In subsection (b)(1)--
                      (A) by striking ``,,'' and inserting ``,'' in each
                    place such punctuation appears; and
                      (B) by striking ``section 120,'' in the first
                    sentence and inserting ``section 120, any final action
                    under title VII or VIII,''.
              (3) In subsection (d)(1) by amending subparagraph (S) to read
            as follows:
                      ``(S) the promulgation or revision of any regulation
                    under title VII or VIII,''.

    SEC. 338. DAVIS-BACON COMPLIANCE.

      (a) In General.--Notwithstanding any other provision of law and in a
    manner consistent with other provisions in this Act, to receive
    emission allowances or funding under this Act the recipient shall
    provide reasonable assurances that all laborers and mechanics employed
    by contractors and subcontractors on projects funded directly by or
    assisted in whole or in part by and through the Federal Government
    pursuant to this Act, or by any entity established in accordance with
    this Act, including the Carbon Storage Research Corporation, will be
    paid wages at rates not less than those prevailing on projects of a
    character similar in the locality as determined by the Secretary of
    Labor in accordance with subchapter IV of chapter 31 of title 40,
    United States Code (commonly known as the ``Davis-Bacon Act''). With
    respect to the labor standards specified in this section, the Secretary
    of Labor shall have the authority and functions set forth in
    Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.)
    and section 3145 of title 40, United States Code.
      (b) Exemption.--Neither subsection (a) nor the requirements of
    subchapter IV of chapter 31 of title 40, United States Code, shall
    apply to retrofitting of any residential building (as defined in
    section 202(a)(5)), or to retrofitting of a nonresidential building (as
    defined in section 202(a)(1)) if the net interior space of such
    nonresidential building is less than 6,500 square feet, or if such
    nonresidential building is designed for residential use for less than 4
    families.

                      Subtitle D--Carbon Market Assurance

    SEC. 341. CARBON MARKET ASSURANCE.

      The Federal Power Act (16 U.S.C. 791a and following) is amended by
    adding at the end the following:

                       ``PART IV--CARBON MARKET ASSURANCE

    ``SEC. 401. OVERSIGHT AND ASSURANCE OF CARBON MARKETS.

      ``(a) Definitions.--In this section:
              ``(1) Contract of sale.--The term `contract of sale' includes
            sales, agreements of sale, and agreements to sell.
              ``(2) Covered entity.--The term `covered entity' shall have
            the meaning given in section 700 of the Clean Air Act.
              ``(3) Future delivery.--The term `future delivery' does not
            include any sale of any cash commodity for deferred shipment or
            delivery.
              ``(4) Offset creation contract.--The term `offset creation
            contract' mean a written agreement for the origination and
            development of an offset project, and the related issuance of
            offset credits, pursuant to title VII of the Clean Air Act.
              ``(5) Regulated allowance.--The term `regulated allowance'
            means any emission allowance, compensatory allowance, offset
            credit, or Federal renewable electricity credit established or
            issued under the American Clean Energy and Security Act of
            2009.
              ``(6) Regulated allowance derivative.--The term `regulated
            allowance derivative' means an instrument that is, or includes,
            an instrument--
                      ``(A) which--
                              ``(i) is of the character of, or is commonly
                            known to the trade as, a `put option', `call
                            option', `privilege', `indemnity', `advance
                            guaranty', `decline guaranty', or `swap
                            agreement'; or
                              ``(ii) is a contract of sale for future
                            delivery other than an offset creation
                            contract; and
                      ``(B) the value of which, in whole or in part, is
                    expressly linked to the price of a regulated allowance
                    or another regulated allowance derivative.
              ``(7) Regulated instrument.--The term `regulated instrument'
            means a regulated allowance or a regulated allowance
            derivative.
      ``(b) Regulated Allowance Market.--
              ``(1) Authority.--The Commission shall promulgate regulations
            for the establishment, operation, and oversight of markets for
            regulated allowances not later than 18 months after the date of
            the enactment of this section, and from time to time thereafter
            as may be appropriate.
              ``(2) Regulations.--The regulations promulgated pursuant to
            paragraph (1) shall--
                      ``(A) provide for effective and comprehensive market
                    oversight;
                      ``(B) prohibit fraud, market manipulation (including
                    an entity's fraudulent or manipulative conduct with
                    respect to regulated allowance derivatives that
                    benefits the entity in regulated allowance markets),
                    and excess speculation, and provide measures to limit
                    unreasonable fluctuation in the prices of regulated
                    allowances;
                      ``(C) facilitate compliance with title VII of the
                    Clean Air Act by covered entities;
                      ``(D) ensure market transparency and recordkeeping
                    deemed necessary and appropriate by the Commission to
                    provide for efficient price discovery; prevention of
                    fraud, market manipulation, and excess speculation; and
                    compliance with title VII of the Clean Air Act and
                    section 610 of the Public Utility Regulatory Policies
                    Act of 1978;
                      ``(E) as necessary, ensure that position limitations
                    for individual market participants are established with
                    respect to each class of regulated allowances;
                      ``(F) as necessary, ensure that margin requirements
                    are established for each class of regulated allowances;
                      ``(G) provide for the formation and operation of a
                    fair, orderly and liquid national market system that
                    allows for the best execution in the trading of
                    regulated allowances;
                      ``(H) limit or eliminate counterparty risks, market
                    power concentration risks, and other risks associated
                    with over-the-counter trading; and
                      ``(I) establish standards for qualification as, and
                    operation of, trading facilities for regulated
                    allowances;
                      ``(J) establish standards for qualification as, and
                    operation of, clearing organizations for trading
                    facilities for regulated allowances; and
                      ``(K) include such other requirements as necessary to
                    preserve market integrity and facilitate compliance
                    with title VII of the Clean Air Act and section 610 of
                    the Public Utility Regulatory Policies Act of 1978 and
                    the regulations promulgated under such title and such
                    section.
              ``(3) Enforcement.--
                      ``(A) In general.--If the Commission determines,
                    after notice and an opportunity for a hearing on the
                    record, that any entity has violated any rule or order
                    issued by the Commission under this subsection, the
                    Commission may issue an order--
                              ``(i) prohibiting the entity from trading on
                            a trading facility for regulated allowances
                            registered with the Commission, and requiring
                            all such facilities to refuse the entity all
                            privileges for such period as may be specified
                            in the order;
                              ``(ii) if the entity is registered with the
                            Commission in any capacity, suspending for a
                            period of not more than 6 months, or revoking,
                            the registration of the entity;
                              ``(iii) assessing the entity a civil penalty
                            of not more than $1,000,000 per day per
                            violation for as long as the violation
                            continues (and in determining the amount of a
                            civil penalty, the Commission shall take into
                            account the nature and seriousness of the
                            violation and the efforts to remedy the
                            violation); and
                              ``(iv) requiring disgorgement of unjust
                            profits, restitution to entities harmed by the
                            violation as determined by the Commission, or
                            both.
                      ``(B) Authority to suspend or revoke registration.--
                    The Commission may suspend for a period of not more
                    than 6 months, or revoke, the registration of a trading
                    facility for regulated allowances or of a clearing
                    organization registered by the Commission if, after
                    notice and opportunity for a hearing on the record, the
                    Commission finds that--
                              ``(i) the entity violated any rule or order
                            issued by the Commission under this subsection;
                            or
                              ``(ii) a director, officer, employee, or
                            agent of the entity has violated any rule or
                            order issued by the Commission under this
                            subsection.
                      ``(C) Cease and desist proceedings.--
                              ``(i) In general.--If the Commission
                            determines that any entity may be violating,
                            may have violated, or may be about to violate
                            any provision of this part, or any regulation
                            promulgated by, or any restriction, condition,
                            or order made or imposed by, the Commission
                            under this Act, and if the Commission finds
                            that the alleged violation or threatened
                            violation, or the continuation of the
                            violation, is likely to result in significant
                            harm to covered entities or market
                            participants, or significant harm to the public
                            interest, the Commission may issue a temporary
                            order requiring the entity--
                                      ``(I) to cease and desist from the
                                    violation or threatened violation;
                                      ``(II) to take such action as is
                                    necessary to prevent the violation or
                                    threatened violation; and
                                      ``(III) to prevent, as the Commission
                                    determines to be appropriate--
                                              ``(aa) significant harm to
                                            covered entities or market
                                            participants;
                                              ``(bb) significant harm to
                                            the public interest; and
                                              ``(cc) frustration of the
                                            ability of the Commission to
                                            conduct the proceedings or to
                                            redress the violation at the
                                            conclusion of the proceedings.
                              ``(ii) Timing of entry.--An order issued
                            under clause (i) shall be entered only after
                            notice and opportunity for a hearing, unless
                            the Commission determines that notice and
                            hearing before entry would be impracticable or
                            contrary to the public interest.
                              ``(iii) Effective date.--A temporary order
                            issued under clause (i) shall--
                                      ``(I) become effective upon service
                                    upon the entity; and
                                      ``(II) unless set aside, limited, or
                                    suspended by the Commission or a court
                                    of competent jurisdiction, remain
                                    effective and enforceable pending the
                                    completion of the proceedings.
                      ``(D) Proceedings regarding dissipation or conversion
                    of assets.--
                              ``(i) In general.--In a proceeding involving
                            an alleged violation of a regulation or order
                            promulgated or issued by the Commission, if the
                            Commission determines that the alleged
                            violation or related circumstances are likely
                            to result in significant dissipation or
                            conversion of assets, the Commission may issue
                            a temporary order requiring the respondent to
                            take such action as is necessary to prevent the
                            dissipation or conversion of assets.
                              ``(ii) Timing of entry.--An order issued
                            under clause (i) shall be entered only after
                            notice and opportunity for a hearing, unless
                            the Commission determines that notice and
                            hearing before entry would be impracticable or
                            contrary to the public interest.
                              ``(iii) Effective date.--A temporary order
                            issued under clause (i) shall--
                                      ``(I) become effective upon service
                                    upon the respondent; and
                                      ``(II) unless set aside, limited, or
                                    suspended by the Commission or a court
                                    of competent jurisdiction, remain
                                    effective and enforceable pending the
                                    completion of the proceedings.
                      ``(E) Review of temporary orders.--
                              ``(i) Application for review.--At any time
                            after a respondent has been served with a
                            temporary cease-and-desist order pursuant to
                            subparagraph (C) or order regarding the
                            dissipation or conversion of assets pursuant to
                            subparagraph (D), the respondent may apply to
                            the Commission to have the order set aside,
                            limited, or suspended.
                              ``(ii) No prior hearing.--If a respondent has
                            been served with a temporary order entered
                            without a prior hearing of the Commission--
                                      ``(I) the respondent may, not later
                                    than 10 days after the date on which
                                    the order was served, request a hearing
                                    on the application; and
                                      ``(II) the Commission shall hold a
                                    hearing and render a decision on the
                                    application at the earliest practicable
                                    time.
                              ``(iii) Judicial review.--
                                      ``(I) In general.--An entity shall
                                    not be required to submit a request for
                                    rehearing of a temporary order before
                                    seeking judicial review in accordance
                                    with this subparagraph.
                                      ``(II) Timing of review.--Not later
                                    than 10 days after the date on which a
                                    respondent is served with a temporary
                                    cease-and-desist order entered with a
                                    prior hearing of the Commission, or 10
                                    days after the date on which the
                                    Commission renders a decision on an
                                    application and hearing under clause
                                    (i) with respect to any temporary order
                                    entered without such a prior hearing--
                                              ``(aa) the respondent may
                                            obtain a review of the order in
                                            a United States circuit court
                                            having jurisdiction over the
                                            circuit in which the respondent
                                            resides or has a principal
                                            place of business, or in the
                                            United States Court of Appeals
                                            for the District of Columbia
                                            Circuit, for an order setting
                                            aside, limiting, or suspending
                                            the effectiveness or
                                            enforcement of the order; and
                                              ``(bb) the court shall have
                                            jurisdiction to enter such an
                                            order.
                                      ``(III) No prior hearing.--A
                                    respondent served with a temporary
                                    order entered without a prior hearing
                                    of the Commission may not apply to the
                                    applicable court described in subclause
                                    (II) except after a hearing and
                                    decision by the Commission on the
                                    application of the respondent under
                                    clauses (i) and (ii).
                              ``(iv) Procedures.--Section 222 and Part III
                            shall apply to--
                                      ``(I) an application for review of an
                                    order under clause (i); and
                                      ``(II) an order subject to review
                                    under clause (iii).
                              ``(v) No automatic stay of temporary order.--
                            The commencement of proceedings under clause
                            (iii) shall not, unless specifically ordered by
                            the court, operate as a stay of the order of
                            the Commission.
                      ``(F) Actions to collect civil penalties.--If any
                    person fails to pay a civil penalty assessed under this
                    subsection after an order assessing the penalty has
                    become final and unappealable, the Commission shall
                    bring an action to recover the amount of the penalty in
                    any appropriate United States district court. In any
                    such action, the validity or appropriateness of the
                    final assessment order or judgment shall not be subject
                    to review.
              ``(4) Transaction fees.--
                      ``(A) In general.--The Commission shall, in
                    accordance with this paragraph, establish and collect
                    transaction fees designed to recover the costs to the
                    Federal Government of the supervision and regulation of
                    regulated allowance markets and market participants,
                    including related costs for enforcement activities,
                    policy and rulemaking activities, administration, legal
                    services, and international regulatory activities.
                      ``(B) Initial fee rate.--Each trading facility on or
                    through which regulated allowances are transacted shall
                    pay to the Commission a fee at a rate of not more than
                    $15 per $1,000,000 of the aggregate dollar amount of
                    sales of regulated allowances transacted through the
                    facility.
                      ``(C) Annual adjustment of fee rate.--The Commission
                    shall, on an annual basis--
                              ``(i) assess the rate at which fees are to be
                            collected as necessary to meet the cost
                            recovery requirement in subparagraph (A); and
                              ``(ii) consistent with subparagraph (B),
                            adjust the rate as necessary in order to meet
                            the requirement.
                      ``(D) Report on adequacy of fees in recovering
                    costs.--The Commission, shall, on an annual basis,
                    report to the Committee on Energy and Commerce of the
                    House of Representatives and the Committee on Energy
                    and Natural Resources of the Senate on the adequacy of
                    the transaction fees in providing funding for the
                    Commission to regulate the regulated allowance markets.
              ``(5) Judicial review.--Judicial review of actions taken by
            the Commission under this subsection shall be pursuant to part
            III.
              ``(6) Information-sharing.--Within 6 months after a Federal
            agency with jurisdiction over regulated allowance derivatives
            is delegated authority pursuant to subsection (c)(1), the
            agency shall enter into a memorandum of understanding with the
            Commission relating to information sharing, which shall include
            provisions ensuring that information requests to markets within
            the respective jurisdiction of the agency are properly
            coordinated to facilitate, among other things, effective
            information-sharing while minimizing duplicative information
            requests, and provisions regarding the treatment of proprietary
            information.
              ``(7) Additional employees report and appointment.--Within 18
            months after the date of the enactment of this section, the
            Commission shall submit to the President, the Committee on
            Energy and Commerce of the House of Representatives, and the
            Committee on Energy and Natural Resources of the Senate, a
            report that contains recommendations as to how many additional
            employees would be necessary to provide robust oversight and
            enforcement of the regulations promulgated under this
            subsection. As soon as practicable after the completion of the
            report, subject to appropriations, the Commission shall appoint
            the recommended number of additional employees for such
            purposes.
      ``(c) Delegation of Authority by the President.--
              ``(1) Delegation.--The President, taking into consideration
            the recommendations of the interagency working group
            established in subsection (d), shall delegate to members of the
            working group and the heads of other appropriate Federal
            agencies the authority to promulgate regulations for the
            establishment, operation, and oversight of all markets for
            regulated allowance derivatives.
              ``(2) Regulations.--The regulations promulgated pursuant to
            paragraph (1) shall--
                      ``(A) provide for effective and comprehensive market
                    oversight;
                      ``(B) prohibit fraud, market manipulation, and excess
                    speculation, and provide measures to limit unreasonable
                    fluctuation in the prices of regulated allowance
                    derivatives;
                      ``(C) facilitate compliance with title VII of the
                    Clean Air Act by covered entities;
                      ``(D) ensure market transparency and recordkeeping
                    necessary to provide for efficient price discovery;
                    prevention of fraud, market manipulation, and excess
                    speculation; and compliance with title VII of the Clean
                    Air Act and section 610 of the Public Utility
                    Regulatory Policies Act of 1978;
                      ``(E) ensure that position limitations for individual
                    market participants are established with respect to
                    each regulated allowance derivative and aggregate
                    position limitations for individual market participants
                    are established with respect to all regulated allowance
                    derivative markets;
                      ``(F) ensure that margin requirements are established
                    for each regulated allowance derivative;
                      ``(G) provide for the formation and operation of a
                    market system that allows for best execution in the
                    trading of regulated allowance derivatives;
                      ``(H) to the extent the regulations deviate from the
                    rule set forth in paragraph (4)(B), limit or eliminate
                    counterparty risks, market power concentration risks,
                    and other risks associated with over-the-counter
                    trading, and promulgate reporting and market
                    transparency rules for large traders;
                      ``(I) ensure that market participants do not evade
                    position limits or otherwise undermine the integrity
                    and effectiveness of the regulations promulgated under
                    subparagraph (C) through participation in markets not
                    subject to the position limits and regulations;
                      ``(J) establish standards, as necessary, for
                    qualification as, and operation of, trading facilities
                    for regulated allowance derivatives;
                      ``(K) establish standards, as necessary, for
                    qualification as, and operation of, clearing
                    organizations for trading facilities for regulated
                    allowance derivatives;
                      ``(L) provide boards of trade designated as contract
                    markets under the Commodity Exchange Act, and market
                    participants, with an adequate transition period for
                    compliance with any new regulatory requirements
                    established under this paragraph;
                      ``(M) determine whether and to what extent offset
                    creation contracts, to the extent incorporating
                    regulated allowance derivatives, should be governed by
                    the same regulations that apply to other regulated
                    allowance derivatives; and
                      ``(N) include such other requirements as necessary to
                    preserve market integrity and facilitate compliance
                    with title VII of the Clean Air Act and section 610 of
                    the Public Utility Regulatory Policies Act of 1978 and
                    the regulations promulgated under such title and such
                    section.
              ``(3) Deadline.--The agencies authorized to promulgate
            regulations for the establishment, operation, and oversight of
            markets for regulated allowance derivatives pursuant to
            paragraph (1) shall promulgate such regulations not later than
            18 months after the date of the enactment of this section, and
            from time to time thereafter as may be appropriate.
              ``(4) Default rules.--
                      ``(A) An individual market participant, directly or
                    in concert with another participant, shall not control
                    more than 10 percent of the open interest in any
                    regulated allowance derivative.
                      ``(B) All contracts for the purchase or sale of any
                    regulated allowance derivative shall be executed on or
                    through a board of trade designated as a contract
                    market under the Commodity Exchange Act.
                      ``(C) To the extent that regulations promulgated
                    under this subsection provide different rules with
                    respect to the matters described in subparagraph (A) or
                    (B), the regulations shall supersede subparagraph (A)
                    or (B), as the case may be.
      ``(d) Working Group.--
              ``(1) Establishment.--Not later than 30 days after the date
            of the enactment of this section, the President shall establish
            an interagency working group on carbon market oversight, which
            shall include the Administrator of the Environmental Protection
            Agency and representatives of other relevant agencies, to make
            recommendations to the President regarding proposed regulations
            for the establishment, operation, and oversight of markets for
            regulated allowance derivatives.
              ``(2) Report.--Not later than 180 days after the date of the
            enactment of this section, and biennially thereafter, the
            interagency working group shall submit a written report to the
            President and Congress that includes its recommendations to the
            President regarding proposed regulations for the establishment,
            operation, and oversight of markets for regulated allowance
            derivatives and any recommendations to Congress for statutory
            changes needed to ensure the establishment, operation, and
            oversight of transparent, fair, stable, and efficient markets
            for regulated allowance derivatives.
      ``(e) Enforcement of Regulations.--Each Federal agency that
    promulgates under subsection (c) a regulation of conduct with respect
    to a regulated allowance derivative shall have the same authority to
    enforce compliance with the regulation as the Commodity Futures Trading
    Commission has to enforce compliance with any regulation of similar
    conduct with respect to a contract, agreement, or transaction over
    which the Commodity Futures Trading Commission has jurisdiction, except
    that any enforcement by the Federal Energy Regulatory Commission shall
    be pursuant to section 222 and Part III.
      ``(f) Prohibition on Price or Market Manipulation, Fraud, and False
    or Misleading Statements or Reports.--(1) It shall be a felony
    punishable by a fine of not more than $25,000,000 (or $5,000,000 in the
    case of a person who is an individual) or imprisonment for not more
    than 20 years, or both, together with the costs of prosecution for any
    person, directly or indirectly--
              ``(A) in connection with a transaction involving a regulated
            instrument, to knowingly--
                      ``(i) use any manipulative or deceptive device or
                    contrivance in violation of regulations promulgated
                    pursuant to this section;
                      ``(ii) corner or attempt to corner the regulated
                    instrument; or
                      ``(iii) cheat or defraud, or attempt to cheat or
                    defraud, any other person;
              ``(B) to knowingly deliver or cause to be delivered a false,
            misleading, or inaccurate report concerning information or
            conditions that affect or tend to affect the price of a
            regulated instrument;
              ``(C) to knowingly make, or cause to be made, in an
            application, report, or document required to be filed under any
            regulation promulgated pursuant to this section, a statement
            which is false or misleading with respect to a material fact,
            or to omit any material fact required to be stated therein or
            necessary to make the statements therein not misleading; or
              ``(D) to knowingly falsify, conceal, or cover up by any
            trick, scheme, or artifice a material fact, make any false,
            fictitious, or fraudulent statements or representations, or
            make or use any false writing or document that contains a
            false, fictitious, or fraudulent statement or entry, to an
            entity on or through which transactions in regulated
            instruments occur, or are settled or cleared, acting in
            furtherance of its official duties under this section or
            regulations promulgated under this section.
      ``(2) If a person is found guilty of a felony established in
    paragraph (1), the person may be prohibited from holding or trading
    regulated instruments for a period of not more than 5 years pursuant to
    the regulations promulgated under this section, except that, if the
    person is a covered entity, the person shall be allowed to hold
    sufficient regulated allowances to meet its compliance obligations.
      ``(g) Relation to State Law.--Nothing in this section shall preclude,
    diminish or qualify any authority of a State or political subdivision
    thereof to adopt or enforce any unfair competition, antitrust, consumer
    protection, securities, commodities or any other law or regulation,
    except that no such State law or regulation may relieve any person of
    any requirement otherwise applicable under this section.
      ``(h) Market Reports.--
              ``(1) Collection and analysis of information.--The
            Commission, in conjunction with the Federal agency with
            jurisdiction over regulated allowance derivatives pursuant to
            subsection (c)(1), shall, on a continuous basis, collect and
            analyze the following information on the functioning of the
            markets for regulated instruments established under this part:
                      ``(A) The status of, and trends in, the markets,
                    including prices, trading volumes, transaction types,
                    and trading channels and mechanisms.
                      ``(B) Spikes, collapses, and volatility in prices of
                    regulated instruments, and the causes therefor.
                      ``(C) The relationship between the market for
                    regulated allowances and allowance derivatives, and the
                    spot and futures markets for energy commodities,
                    including electricity.
                      ``(D) Evidence of fraud or manipulation in any such
                    market, the effects on any such market of any such
                    fraud or manipulation (or threat of fraud or
                    manipulation) that the Commission, in conjunction with
                    the Federal agency, has identified, and the
                    effectiveness of corrective measures undertaken by the
                    Commission, in conjunction with the Federal agency, to
                    address the fraud, manipulation, or threat.
                      ``(E) The economic effects of the markets, including
                    to macro- and micro-economic effects of unexpected
                    significant increases and decreases in the price of
                    regulated instruments.
                      ``(F) Any changes in the roles, activities, or
                    strategies of various market participants.
                      ``(G) Regional, industrial, and consumer responses to
                    the markets, and energy investment responses to the
                    markets.
                      ``(H) Any other issue related to the markets that the
                    Commission, in conjunction with the entities, deems
                    appropriate.
              ``(2) Annual reports to the congress.-- Not later than 1
            month after the end of each calendar year, the Commission, in
            conjunction with the Federal agency, shall submit to the
            President, the Committee on Energy and Commerce of the House of
            Representatives, and the Committee on Energy and Natural
            Resources of the Senate, and make available to the public, a
            report on the matters described in paragraph (1) with respect
            to the year, including recommendations for any administrative
            or statutory measures the Commission, in conjunction with the
            Federal agency, considers necessary to address any threats to
            the transparency, fairness, or integrity of the markets in
            regulated instruments.

    ``SEC. 402. APPLICABILITY OF PART III PROVISIONS.

      ``(a) Sections 301, 304, and 306.--Sections 301, 304, and 306 shall
    not apply to this part.
      ``(b) Sections 307, 309, and 314.--Sections 307, 309, and 314 shall
    only apply to section 401(c) to the extent that the Commission is
    delegated authority to promulgate regulations for the establishment,
    operation, and oversight of markets for regulated allowance derivatives
    (as defined in section 401). If the Commission is not delegated
    authority to promulgate regulations for the establishment, operation,
    and oversight of markets for regulated allowance derivatives, sections
    307, 309, and 314 shall not apply to section 401(f) in the case of
    regulated allowance derivatives.
      ``(c) Section 315.--In applying section 315(a) to this part, the
    words ``person or entity'' shall be substituted for the words
    ``licensee or public utility''. In applying section 315(b) to this
    part, the words ``an entity'' shall be substituted for the words ``a
    licensee or public utility'' and the words ``such entity'' shall be
    substituted for the words ``such licensee or public utility.''
      ``(d) Section 316.--Section 316(a) shall not apply to section
    401(f).''.

                    Subtitle E--Additional Market Assurance

    SEC. 351. REGULATION OF CERTAIN TRANSACTIONS IN DERIVATIVES INVOLVING
                        ENERGY COMMODITIES.

      (a) Energy Commodity Defined.--Section 1a of the Commodity Exchange
    Act (7 U.S.C. 1a) is amended--
              (1) in paragraph (14), by inserting ``, an energy
            commodity,'' after ``excluded commodity'';
              (2) by redesignating paragraphs (13) through (21) and
            paragraphs (22) through (34) as paragraphs (14) through (22)
            and paragraphs (24) through (36), respectively;
              (3) by inserting after paragraph (12) the following:
              ``(13) Energy commodity.--The term `energy commodity' means--
                      ``(A) coal;
                      ``(B) crude oil, gasoline, diesel fuel, jet fuel,
                    heating oil, and propane;
                      ``(C) electricity (excluding financial transmission
                    rights which are subject to regulation and oversight by
                    the Federal Energy Regulatory Commission);
                      ``(D) natural gas; and
                      ``(E) any other substance (other than an excluded
                    commodity, a metal, or an agricultural commodity) that
                    is used as a source of energy, as the Commission, in
                    its discretion, deems appropriate.''; and
              (4) by inserting after paragraph (22) (as so redesignated by
            paragraph (2) of this subsection) the following:
              ``(23) Included energy transaction.--The term `included
            energy transaction' means a contract, agreement, or transaction
            in an energy commodity for future delivery that provides for a
            delivery point of the energy commodity in the United States or
            a territory or possession of the United States, or that is
            offered or transacted on or through a computer terminal located
            in the United States.''.
      (b) Extension of Regulatory Authority to Swaps Involving Energy
    Transactions.--Section 2(g) of such Act (7 U.S.C. 2(g)) is amended by
    inserting ``or an energy commodity'' after ``agricultural commodity''.
      (c) Elimination of Exemption for Over-the-Counter Swaps Involving
    Energy Commodities.--Section 2(h)(1) of such Act (7 U.S.C. 2(h)(1)) is
    amended by inserting ``(other than an energy commodity)'' after
    ``exempt commodity''.
      (d) Extension of Regulatory Authority to Included Energy Transactions
    on Foreign Boards of Trade.--Section 4 of such Act (7 U.S.C. 6) is
    amended--
              (1) in subsection (a), by inserting ``, and which is not an
            included energy transaction'' after ``territories or
            possessions'' the 2nd place it appears; and
              (2) in subsection (b), by adding at the end the following:
            ``The preceding sentence shall not apply with respect to
            included energy transactions.''.
      (e) Limitation of General Exemptive Authority of the CFTC With
    Respect to Included Energy Transactions.--
              (1) In general.--Section 4(c) of such Act (7 U.S.C. 6(c)) is
            amended by adding at the end the following:
      ``(6) The Commission may not exempt any included energy transaction
    from the requirements of subsection (a), unless the Commission provides
    60 days advance notice to the Congress and the Position Limit Energy
    Advisory Group and solicits public comment about the exemption request
    and any proposed Commission action.''.
              (2) Nullification of no-action letter exemptions to certain
            requirements applicable to included energy transactions.--
            Beginning 180 days after the date of the enactment of this Act,
            any exemption provided by the Commodity Futures Trading
            Commission that has allowed included energy transactions (as
            defined in section 1a(13) of the Commodity Exchange Act) to be
            conducted without regard to the requirements of section 4(a) of
            such Act shall be null and void.
      (f) Requirement to Establish Uniform Speculative Position Limits for
    Energy Transactions.--
              (1) In general.--Section 4a(a) of such Act (7 U.S.C. 6a(a))
            is amended--
                      (A) by inserting ``(1)'' after ``(a)'';
                      (B) by inserting after the 2nd sentence the
                    following: ``With respect to energy transactions, the
                    Commission shall fix limits on the aggregate number of
                    positions which may be held by any person for each
                    month across all markets subject to the jurisdiction of
                    the Commission.'';
                      (C) in the 4th sentence by inserting ``, consistent
                    with the 3rd sentence,'' after ``Commission''; and
                      (D) by adding after and below the end the following:
      ``(2)(A) Not later than 60 days after the date of the enactment of
    this paragraph, the Commission shall convene a Position Limit Energy
    Advisory Group consisting of representatives from--
              ``(i) 7 predominantly commercial short hedgers of the actual
            energy commodity for future delivery;
              ``(ii) 7 predominantly commercial long hedgers of the actual
            energy commodity for future delivery;
              ``(iii) 4 non-commercial participants in markets for energy
            commodities for future delivery; and
              ``(iv) each designated contract market or derivatives
            transaction execution facility upon which a contract in the
            energy commodity for future delivery is traded, and each
            electronic trading facility that has a significant price
            discovery contract in the energy commodity.
      ``(B) Not later than 60 days after the date on which the advisory
    group is convened under subparagraph (A), and annually thereafter, the
    advisory group shall submit to the Commission advisory recommendations
    regarding the position limits to be established in paragraph (1).
      ``(C) The Commission shall have exclusive authority to grant
    exemptions for bona fide hedging transactions and positions from
    position limits imposed under this Act on energy transactions.''.
              (2) Conforming amendments.--
                      (A) Significant price discovery contracts.--Section
                    2(h)(7) of such Act (7 U.S.C. 2(h)(7)) is amended--
                              (i) in subparagraph (A)--
                                      (I) by inserting ``of this paragraph
                                    and section 4a(a)'' after ``(B) through
                                    (D)''; and
                                      (II) by inserting ``of this
                                    paragraph'' before the period; and
                              (ii) in subparagraph (C)(ii)(IV)--
                                      (I) in the heading, by striking
                                    ``limitations or''; and
                                      (II) by striking ``position
                                    limitations or''.
                      (B) Contracts traded on or through designated
                    contract markets.--Section 5(d)(5) of such Act (7
                    U.S.C. 7(d)(5)) is amended--
                              (i) in the heading by striking ``limitations
                            or''; and
                              (ii) by striking ``position limitations or''.
                      (C) Contracts traded on or through derivatives
                    transaction execution facilities.--Section 5a(d)(4) of
                    such Act (7 U.S.C. 7a(d)(4)) is amended--
                              (i) in the heading by striking ``limitations
                            or''; and
                              (ii) by striking ``position limits or''.
      (g) Elimination of the Swaps Loophole.--Section 4a(c) of such Act (7
    U.S.C. 6a(c)) is amended--
              (1) by inserting ``(1)'' after ``(c)''; and
              (2) by adding after and below the end the following:
      ``(2) For the purposes of contracts of sale for future delivery and
    options on such contracts or commodities, the Commission shall define
    what constitutes a bona fide hedging transaction or position as a
    transaction or position that--
              ``(A)(i) represents a substitute for transactions made or to
            be made or positions taken or to be taken at a later time in a
            physical marketing channel;
              ``(ii) is economically appropriate to the reduction of risks
            in the conduct and management of a commercial enterprise; and
              ``(iii) arises from the potential change in the value of--
                      ``(I) assets that a person owns, produces,
                    manufactures, processes, or merchandises or anticipates
                    owning, producing, manufacturing, processing, or
                    merchandising;
                      ``(II) liabilities that a person owns or anticipates
                    incurring; or
                      ``(III) services that a person provides, purchases,
                    or anticipates providing or purchasing; or
              ``(B) reduces risks attendant to a position resulting from a
            transaction that--
                      ``(i) was executed pursuant to subsection (d), (g),
                    (h)(1), or (h)(2) of section 2, or an exemption issued
                    by the Commission by rule, regulation or order; and
                      ``(ii) was executed opposite a counterparty for which
                    the transaction would qualify as a bona fide hedging
                    transaction pursuant to paragraph (2)(A) of this
                    subsection.''.
      (h) Detailed Reporting and Disaggregation of Market Data.--Section 4
    of such Act (7 U.S.C. 6) is amended by adding at the end the following:
      ``(e) Detailed Reporting and Disaggregation of Market Data.--
              ``(1) Index traders and swap dealers reporting.--The
            Commission shall issue a proposed rule defining and classifying
            index traders and swap dealers (as those terms are defined by
            the Commission) for purposes of data reporting requirements and
            setting routine detailed reporting requirements for any
            positions of such entities in contracts traded on designated
            contract markets, over-the-counter markets, derivatives
            transaction execution facilities, foreign boards of trade
            subject to section 4(f), and electronic trading facilities with
            respect to significant price discovery contracts not later than
            120 days after the date of the enactment of this subsection,
            and issue a final rule within 180 days after such date of
            enactment.
              ``(2) Disaggregation of index funds and other data in
            markets.--Subject to section 8 and beginning within 60 days of
            the issuance of the final rule required by paragraph (1), the
            Commission shall disaggregate and make public weekly--
                      ``(A) the number of positions and total notional
                    value of index funds and other passive, long-only and
                    short-only positions (as defined by the Commission) in
                    all markets to the extent such information is
                    available; and
                      ``(B) data on speculative positions relative to bona
                    fide physical hedgers in those markets to the extent
                    such information is available.
              ``(3) Disclosure of identity of holders of positions in
            indexes in excess of position limits.--The Commission shall
            include in its weekly Commitment of Trader reports the identity
            of each person who holds a position in an index in excess of a
            limit imposed under section 4i.''.
      (i) Authority to Set Limits to Prevent Excessive Speculation in
    Indexes.--
              (1) In general.--Section 4a of such Act (7 U.S.C. 6a) is
            amended by adding at the end the following:
      ``(f) The provisions of this section shall apply to the amounts of
    trading which may be done or positions which may be held by any person
    under contracts of sale of an index for future delivery on or subject
    to the rules of any contract market, derivatives transaction execution
    facility, or over-the-counter market, or on an electronic trading
    facility with respect to a significant price discovery contract, in the
    same manner in which this section applies to contracts of sale of a
    commodity for future delivery.''.
              (2) Regulations.--The Commodity Futures Trading Commission
            shall issue regulations under section 4a(f) of the Commodity
            Exchange Act within 180 days after the date of the enactment of
            this Act.

    SEC. 352. NO EFFECT ON AUTHORITY OF THE FEDERAL ENERGY REGULATORY
                        COMMISSION.

      Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended by
    adding at the end the following:.
      ``(j) This Act shall not be interpreted to affect the jurisdiction of
    the Federal Energy Regulatory Commission with respect to the authority
    of the Federal Energy Regulatory Commission under the Federal Power Act
    (16 U.S.C. 791a et seq.), the Natural Gas Act (15 U.S.C. 717 et seq.),
    or other law to obtain information, carry out enforcement actions, or
    otherwise carry out the responsibilities of the Federal Energy
    Regulatory Commission.''.

    SEC. 353. INSPECTOR GENERAL OF THE COMMODITY FUTURES TRADING
                        COMMISSION.

      (a) Elevation of Office.--
              (1) Inclusion of cftc in definition of establishment.--
                      (A) Section 12(1) of the Inspector General Act of
                    1978 (5 U.S.C. App.) is amended by striking ``or the
                    Federal Cochairpersons of the Commissions established
                    under section 15301 of title 40, United States Code;''
                    and inserting ``the Federal Cochairpersons of the
                    Commissions established under section 15301 of title
                    40, United States Code; or the Chairman of the
                    Commodity Futures Trading Commission;''.
                      (B) Section 12(2) of the Inspector General Act of
                    1978 (5 U.S.C. App.) is amended by striking ``or the
                    Commissions established under section 15301 of title
                    40, United States Code,'' and inserting ``the
                    Commissions established under section 15301 of title
                    40, United States Code, or the Commodity Futures
                    Trading Commission,''.
              (2) Exclusion of cftc from definition of designated federal
            entity.--Section 8G(a)(2) of the Inspector General Act of 1978
            (5 U.S.C. App.) is amended by striking ``the Commodity Futures
            Trading Commission,''.
      (b) Effective Date; Transition Rule.--
              (1) Effective date.--The amendments made by this section
            shall take effect 30 days after the date of the enactment of
            this Act.
              (2) Transition rule.--An individual serving as Inspector
            General of the Commodity Futures Trading Commission on the
            effective date of this section pursuant to an appointment made
            under section 8G of the Inspector General Act of 1978 (5 U.S.C.
            App.)--
                      (A) may continue so serving until the President makes
                    an appointment under section 3(a) of such Act
                    consistent with the amendments made by this section;
                    and
                      (B) shall, while serving under subparagraph (A),
                    remain subject to the provisions of section 8G of such
                    Act which apply with respect to the Commodity Futures
                    Trading Commission.

    SEC. 354. SETTLEMENT AND CLEARING THROUGH REGISTERED DERIVATIVES
                        CLEARING ORGANIZATIONS.

      (a) In General.--
              (1) Application to excluded derivative transactions.--
                      (A) Section 2(d)(1) of the Commodity Exchange Act (7
                    U.S.C. 2(d)(1)) is amended--
                              (i) by striking ``and'' at the end of
                            subparagraph (A);
                              (ii) by striking the period at the end of
                            subparagraph (B) and inserting ``; and''; and
                              (iii) by adding at the end the following:
                      ``(C) except as provided in section 4(f), the
                    agreement, contract, or transaction is settled and
                    cleared through a derivatives clearing organization
                    registered with the Commission.''.
                      (B) Section 2(d)(2) of such Act (7 U.S.C. 2(d)(2)) is
                    amended--
                              (i) by striking ``and'' at the end of
                            subparagraph (B);
                              (ii) by striking the period at the end of
                            subparagraph (C) and inserting ``; and''; and
                              (iii) by adding at the end the following:
                      ``(D) except as provided in section 4(f), the
                    agreement, contract, or transaction is settled and
                    cleared through a derivatives clearing organization
                    registered with the Commission.''.
              (2) Application to certain swap transactions.--Section 2(g)
            of such Act (7 U.S.C. 2(g)) is amended--
                      (A) by striking ``and'' at the end of paragraph (2);
                      (B) by striking the period at the end of paragraph
                    (3) and inserting ``; and''; and
                      (C) by adding at the end the following:
              ``(4) except as provided in section 4(f), settled and cleared
            through a derivatives clearing organization registered with the
            Commission.''.
              (3) Application to certain transactions in exempt
            commodities.--
                      (A) Section 2(h)(1) of such Act ( 7 U.S.C. 2(h)(1))
                    is amended--
                              (i) by striking ``and'' at the end of
                            subparagraph (A);
                              (ii) by striking the period at the end of
                            subparagraph (B) and inserting ``; and''; and
                              (iii) by adding at the end the following:
                      ``(C) except as provided in section 4(f), is settled
                    and cleared through a derivatives clearing organization
                    registered with the Commission.''.
                      (B) Section 2(h)(3) of such Act (7 U.S.C. 2(h)(3)) is
                    amended--
                              (i) by striking ``and'' at the end of
                            subparagraph (A);
                              (ii) by striking the period at the end of
                            subparagraph (B) and inserting ``; and''; and
                              (iii) by adding at the end the following:
                      ``(C) except as provided in section 4(f), settled and
                    cleared through a derivatives clearing organization
                    registered with the Commission.''.
              (4) General exemptive authority.--Section 4(c)(1) of such Act
            (7 U.S.C. 6(c)(1)) is amended by inserting ``the agreement,
            contract, or transaction, except as provided in section 4(h),
            will be settled and cleared through a derivatives clearing
            organization registered with the Commission and'' before ``the
            Commission determines''.
              (5) Conforming amendment relating to significant price
            discovery contracts.--Section 2(h)(7)(D) of such Act (7 U.S.C.
            2(h)(7)(D)) is amended by striking the designation and heading
            for the subparagraph and all that follows through ``As part
            of'' and inserting the following:
                      ``(D) Review of implementation.--As part of''.
      (b) Alternatives to Clearing Through Designated Clearing
    Organizations.--Section 4 of such Act (7 U.S.C. 6), as amended by
    section 351(h) of this Act, is amended by adding at the end the
    following:
      ``(f) Alternatives to Clearing Through Designated Clearing
    Organizations.--
              ``(1) Settlement and clearing through certain other regulated
            entities.--An agreement, contract, or transaction, or class
            thereof, relating to an excluded commodity, that would
            otherwise be required to be settled and cleared by section
            2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), or 2(h)(3)(C) of
            this Act, or subsection (c)(1) of this section may be settled
            and cleared through an entity listed in subsections (a) or (b)
            of section 409 of the Federal Deposit Insurance Corporation
            Improvement Act of 1991.
              ``(2) Waiver of clearing requirement.--
                      ``(A) The Commission, in its discretion, may exempt
                    an agreement, contract, or transaction, or class
                    thereof, that would otherwise be required by section
                    2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), or
                    2(h)(3)(C) of this Act, or subsection (c)(1) of this
                    section to be settled and cleared through a derivatives
                    clearing organization registered with the Commission
                    from such requirement.
                      ``(B) In granting exemptions pursuant to subparagraph
                    (A), the Commission shall consult with the Securities
                    and Exchange Commission and the Board of Governors of
                    the Federal Reserve System regarding exemptions that
                    relate to excluded commodities or entities for which
                    the Securities Exchange Commission or the Board of
                    Governors of the Federal Reserve System serve as the
                    primary regulator.
                      ``(C) Before granting an exemption pursuant to
                    subparagraph (A), the Commission shall find that the
                    agreement, contract, or transaction, or class thereof--
                              ``(i) is highly customized as to its material
                            terms and conditions;
                              ``(ii) is transacted infrequently;
                              ``(iii) does not serve a significant price-
                            discovery function in the marketplace; and
                              ``(iv) is being entered into by parties who
                            can demonstrate the financial integrity of the
                            agreement, contract, or transaction and their
                            own financial integrity, as such terms and
                            standards are determined by the Commission. The
                            standards may include, with respect to any
                            federally regulated financial entity for which
                            net capital requirements are imposed, a net
                            capital requirement associated with any
                            agreement, contract, or transaction subject to
                            an exemption from the clearing requirement that
                            is higher than the net capital requirement that
                            would be associated with such a transaction
                            were it cleared
                      ``(D) Any agreement, contract, or transaction, or
                    class thereof, which is exempted pursuant to
                    subparagraph (A) shall be reported to the Commission in
                    a manner designated by the Commission, or to such other
                    entity the Commission deems appropriate.
                      ``(E) The Commission, the Securities and Exchange
                    Commission and the Board of Governors of the Federal
                    Reserve System shall enter into a memorandum of
                    understanding by which the information reported to the
                    Commission pursuant to subparagraph (D) with regard to
                    excluded commodities or entities for which the
                    Securities Exchange Commission or the Board of
                    Governors of the Federal Reserve System serve as the
                    primary regulator may be provided to the other
                    agencies.
      ``(g) Spot and Forward Exclusion.--The settlement and clearing
    requirements of section 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C),
    2(h)(3)(C), or 4(c)(1) shall not apply to an agreement, contract, or
    transaction of any cash commodity for immediate or deferred shipment or
    delivery, as defined by the Commission.''.
      (c) Additional Requirements Applicable to Applicants for Registration
    as a Derivative Clearing Organization.--Section 5b(c)(2) of such Act (7
    U.S.C. 7a-1(c)(2)) is amended by adding at the end the following:
                      ``(O) Disclosure of general information.--The
                    applicant shall disclose publicly and to the Commission
                    information concerning--
                              ``(i) the terms and conditions of contracts,
                            agreements, and transactions cleared and
                            settled by the applicant;
                              ``(ii) the conventions, mechanisms, and
                            practices applicable to the contracts,
                            agreements, and transactions;
                              ``(iii) the margin-setting methodology and
                            the size and composition of the financial
                            resource package of the applicant; and
                              ``(iv) other information relevant to
                            participation in the settlement and clearing
                            activities of the applicant.
                      ``(P) Daily publication of trading information.--The
                    applicant shall make public daily information on
                    settlement prices, volume, and open interest for
                    contracts settled or cleared pursuant to the
                    requirements of section 2(d)(1)(C), 2(d)(2)(D),
                    2(g)(4), 2(h)(1)(C), 2(h)(3)(C) or 4(c)(1) of this Act
                    by the applicant if the Commission determines that the
                    contracts perform a significant price discovery
                    function for transactions in the cash market for the
                    commodity underlying the contracts.
                      ``(Q) Fitness standards.--The applicant shall
                    establish and enforce appropriate fitness standards for
                    directors, members of any disciplinary committee, and
                    members of the applicant, and any other persons with
                    direct access to the settlement or clearing activities
                    of the applicant, including any parties affiliated with
                    any of the persons described in this subparagraph.''.
      (d) Amendments.--
              (1) Section 409 of the Federal Deposit Insurance Corporation
            Improvement Act of 1991 (12 U.S.C. 4422) is amended by adding
            at the end the following:
      ``(c) Clearing Requirement.--A multilateral clearing organization
    described in subsections (a) or (b) of this section shall comply with
    requirements similar to the requirements of sections 5b and 5c of the
    Commodity Exchange Act.''.
              (2) Section 407 of the Legal Certainty for Bank Products Act
            of 2000 (7 U.S.C. 27e) is amended by inserting ``and the
            settlement and clearing requirements of sections 2(d)(1)(C),
            2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 2(h)(3)(C), and 4(c)(1) of
            such Act'' after ``the clearing of covered swap agreements''.
      (e) Effective Date.--The amendments made by this section shall take
    effect 150 days after the date of the enactment of this Act.
      (f) Transition Rule.--Any agreement, contract, or transaction entered
    into before the date of the enactment of this Act or within 150 days
    after such date of enactment, in reliance on subsection (d), (g),
    (h)(1), or (h)(3) of section 2 of the Commodity Exchange Act or any
    other exemption issued by the Commission Futures Trading Commission by
    rule, regulation, or order shall, within 90 days after such date of
    enactment, unless settled and cleared through an entity registered with
    the Commission as a derivatives clearing organization or another
    clearing entity pursuant to section 4(f) of such Act, be reported to
    the Commission in a manner designated by the Commission, or to such
    other entity as the Commission deems appropriate.

    SEC. 355. LIMITATION ON ELIGIBILITY TO PURCHASE A CREDIT DEFAULT SWAP.

      (a) In General.--Section 4c of the Commodity Exchange Act (7 U.S.C.
    6c) is amended by adding at the end the following:
      ``(h) Limitation on Eligibility to Purchase a Credit Default Swap.--
    It shall be unlawful for any person to enter into a credit default swap
    unless the person--
              ``(1) owns a credit instrument which is insured by the credit
            default swap;
              ``(2) would experience financial loss if an event that is the
            subject of the credit default swap occurs with respect to the
            credit instrument; and
              ``(3) meets such minimum capital adequacy standards as may be
            established by the Commission, in consultation with the Board
            of Governors of the Federal Reserve System, or such more
            stringent minimum capital adequacy standards as may be
            established by or under the law of any State in which the swap
            is originated or entered into, or in which possession of the
            contract involved takes place.''.
      (b) Elimination of Preemption of State Bucketing Laws Regarding Naked
    Credit Default Swaps.--Section 12(e)(2)(B) of such Act (7 U.S.C.
    16(e)(2)(B)) is amended by inserting ``(other than a credit default
    swap in which the purchaser of the swap would not experience financial
    loss if an event that is the subject of the swap occurred)'' before
    ``that is excluded''.
      (c) Definition of Credit Default Swap.--Section 1a of such Act (7
    U.S.C. 1a), as amended by section 351(a) of this Act, is amended by
    adding at the end the following:
              ``(37) Credit default swap.--The term `credit default swap'
            means a contract which insures a party to the contract against
            the risk that an entity may experience a loss of value as a
            result of an event specified in the contract, such as a default
            or credit downgrade. A credit default swap that is traded on or
            cleared by a registered entity shall be excluded from the
            definition of a security as defined in this Act and in section
            2(a)(1) of the Securities Act of 1933 or section 3(a)(10) of
            the Securities Exchange Act of 1934, except it shall be deemed
            a security solely for purpose of enforcing prohibitions against
            insider trading in sections 10 and 16 of the Securities
            Exchange Act of 1934.''.
      (d) Effective Date.--The amendments made by this section shall be
    effective for credit default swaps (as defined in section 1a(37) of the
    Commodity Exchange Act) entered into after 60 days after the date of
    the enactment of this section.

    SEC. 356. TRANSACTION FEES.

      (a) In General.--Section 12 of the Commodity Exchange Act (7 U.S.C.
    16) is amended by redesignating subsections (e), (f), and (g) as
    subsections (f), (g), and (h), respectively, and inserting after
    subsection (d) the following:
      ``(e) Clearing Fees.--
              ``(1) In general.--The Commission shall, in accordance with
            this subsection, charge and collect from each registered
            clearing organization, and each such organization shall pay to
            the Commission, transaction fees at a rate calculated to
            recover the costs to the Federal Government of the supervision
            and regulation of futures markets, except those directly
            related to enforcement.
              ``(2) Fees assessed per side of cleared contracts.--
                      ``(A) In general.--The Commission shall determine the
                    fee rate referred to in paragraph (1), and shall apply
                    the fee rate per side of any transaction cleared.
                      ``(B) Authority to delegate.-- The Commission may
                    determine the procedures by which the fee rate is to be
                    applied on the transactions subject to the fee, or
                    delegate the authority to make the determination to any
                    appropriate derivatives clearing organization.
              ``(3) Exemptions.--The Commission may not impose a fee under
            paragraph (1) on--
                      ``(A) a class of contracts or transactions if the
                    Commission finds that it is in the public interest to
                    exempt the class from the fee; or
                      ``(B) a contract or transaction cleared by a
                    registered derivatives clearing organization that is--
                              ``(i) subject to fees under section 31 of the
                            Securities Exchange Act of 1934; or
                              ``(ii) a security as defined in the
                            Securities Act of 1933 or the Securities
                            Exchange Act of 1934.
              ``(4) Dates for payment of fees.--The fees imposed under
            paragraph (1) shall be paid on or before--
                      ``(A) March 15 of each year, with respect to
                    transactions occurring on or after the preceding
                    September 1 and on or before the preceding December 31;
                    and
                      ``(B) September 15 of each year, with respect to
                    transactions occurring on or after the preceding
                    January 1 and on or before the preceding August 31.
              ``(5) Annual adjustment of fee rates.--
                      ``(A) In general.--Not later than April 30 of each
                    fiscal year , the Commission shall, by order, adjust
                    each fee rate determined under paragraph (2) for the
                    fiscal year to a uniform adjusted rate that, when
                    applied to the estimated aggregate number of cleared
                    sides of transactions for the fiscal year, is
                    reasonably likely to produce aggregate fee receipts
                    under this subsection for the fiscal year equal to the
                    target offsetting receipt amount for the fiscal year.
                      ``(B) Definitions.--In subparagraph (A):
                              ``(i) Estimated aggregate number of cleared
                            sides of transactions.--The term `estimated
                            aggregate number of cleared sides of
                            transactions' means, with respect to a fiscal
                            year, the aggregate number of cleared sides of
                            transactions to be cleared by registered
                            derivatives clearing organizations during the
                            fiscal year, as estimated by the Commission,
                            after consultation with the Office of
                            Management and Budget, using the methodology
                            required for making projections pursuant to
                            section 257 of the Balanced Budget and
                            Emergency Deficit Control Act of 1985.
                              ``(ii) Target offsetting receipt amount.--The
                            term `target offsetting receipt amount' means,
                            with respect to a fiscal year, the total level
                            of Commission budget authority for all non-
                            enforcement activities of the Commission, as
                            contained in the regular appropriations Acts
                            for the fiscal year.
                      ``(C) No judicial review.--An adjusted fee rate
                    prescribed under subparagraph (A) shall not be subject
                    to judicial review.
              ``(6) Publication.--Not later than April 30 of each fiscal
            year, the Commission shall cause to be published in the Federal
            Register notices of the fee rates applicable under this
            subsection for the succeeding fiscal year, and any estimate or
            projection on which the fee rates are based.
              ``(7) Inapplicability of certain procedural rules.--Section
            553 of title 5, United States Code, shall not apply with
            respect to any exercise of authority under this subsection.
              ``(8) Establishment of futures and options transaction fee
            account; deposit of fees.--There is established in the Treasury
            of the United States an account which shall be known as the
            `Futures and Options Transaction Fee Account'. All fees
            collected under this subsection for a fiscal year shall be
            deposited in the account. Amounts in the account are authorized
            to be appropriated to fund the expenditures of the
            Commission.''.
      (b) Effective Date.--The amendments made by subsection (a) shall
    apply to fiscal years beginning 30 or more days after the date of the
    enactment of this Act.
      (c) Transition Rule.--If this section becomes law after March 31 and
    before September 1 of a fiscal year, then paragraphs (5)(A) and (6) of
    section 12(e) of the Commodity Exchange Act shall be applied, in the
    case of the 1st fiscal year beginning after the date of the enactment
    of this Act, by substituting ``August 31'' for ``April 30''.

    SEC. 357. NO EFFECT ON AUTHORITY OF THE FEDERAL TRADE COMMISSION.

      Nothing in this subtitle shall be interpreted to affect or diminish
    the jurisdiction or authority of the Federal Trade Commission with
    respect to its authorities under the Federal Trade Commission Act (15
    U.S.C. 41 et seq.) or the Energy Independence and Security Act of 2007
    (Public Law 110-140) to obtain information, to carry out enforcement
    activities or otherwise carry out the responsibilities of the Federal
    Trade Commission.

    SEC. 358. REGULATION OF CARBON DERIVATIVES MARKETS.

      (a) Default Rule.--Section 2 of the Commodity Exchange Act (7 U.S.C.
    2), as amended by section 352 of this Act, is amended by adding at the
    end the following:
      ``(k) The Commission shall have jurisdiction over the establishment,
    operations, and oversight of markets for regulated allowance
    derivatives (as defined in section 401 of the Federal Power Act (16
    U.S.C. 791a and following)), and shall provide for the establishment,
    operation, and oversight of the markets in accordance with the same
    regulations that apply under this Act to included energy
    transactions.''.
      (b) Presidential Determinations.--To the extent that the President
    delegates the authority to promulgate regulations for the
    establishment, operation, and oversight of all markets for regulated
    allowance derivatives to a Federal agency other than the Commodity
    Futures Trading Commission pursuant to section 401 of the Federal Power
    Act, such determination shall supersede subsection (a). To the extent
    that the President determines that regulations promulgated pursuant to
    section 401(c)(2) of the Federal Power Act would provide for more
    stringent and effective market oversight, such regulations shall
    supersede subsection (a). Nothing in this section shall be construed to
    affect the operation of the default rules established in section
    401(c)(4) of the Federal Power Act.

    SEC. 359. CEASE-AND-DESIST AUTHORITY.

      (a) Natural Gas Act.--Section 20 of the Natural Gas Act (15 U.S.C.
    717s) is amended by adding the following at the end:
      ``(e) Cease-and-Desist Proceedings; Temporary Orders; Authority of
    the Commission.--
              ``(1) In general.--If the Commission finds, after notice and
            opportunity for hearing, that any entity may be violating, may
            have violated, or may be about to violate any provision of this
            Act, or any rule, regulation, restriction, condition, or order
            made or imposed by the Commission under the authority of this
            Act, the Commission may publish its findings and issue an order
            requiring such entity, and any other entity that is, was, or
            would be a cause of the violation, due to an act or omission
            the entity knew or should have known would contribute to such
            violation, to cease and desist from committing or causing such
            violation and any future violation of the same provision, rule,
            or regulation. Such order may, in addition to requiring an
            entity to cease and desist from committing or causing a
            violation, require such entity to comply, to provide an
            accounting and disgorgement, or to take steps to effect
            compliance, with such provision, rule, or regulation, upon such
            terms and conditions and within such time as the Commission may
            specify in such order. Any such order may, as the Commission
            deems appropriate, require future compliance or steps to effect
            future compliance, either permanently or for such period of
            time as the Commission may specify.
              ``(2) Timing of entry.--An order issued under this subsection
            shall be entered only after notice and opportunity for a
            hearing, unless the Commission determines that notice and
            hearing prior to entry would be impracticable or contrary to
            the public interest.
      ``(f) Hearing.--The notice instituting proceedings pursuant to
    subsection (e) shall fix a hearing date not earlier than 30 days nor
    later than 60 days after service of the notice unless an earlier or a
    later date is set by the Commission with the consent of any respondent
    so served.
      ``(g) Temporary Order.--Whenever the Commission determines that---
              ``(1) a respondent may take actions to dissipate or convert
            assets prior to the completion of the proceedings referred to
            in subsection (e), and such assets would be necessary to comply
            with or otherwise satisfy a final enforcement order of the
            Commission pursuant to alleged violations or threatened
            violations specified in the notice instituting proceedings; or
              ``(2) a respondent is engaged in actual or threatened
            violations of this Act or a Commission rule, regulation,
            restriction or order referred to in subsection (e),
    the Commission may issue a temporary order requiring the respondent to
    take such action to prevent dissipation or conversion of assets,
    significant harm to energy consumers, or substantial harm to the public
    interest, frustration of the Commission's ability to conduct the
    proceedings, or frustration of the Commission's ability to redress said
    violation at the conclusion of the proceedings, as the Commission deems
    appropriate pending completion of such proceedings.
      ``(h) Review of Temporary Orders.--
              ``(1) Commission review.--At any time after the respondent
            has been served with a temporary cease-and-desist order
            pursuant to subsection (g), the respondent may apply to the
            Commission to have the order set aside, limited, or suspended.
            If the respondent has been served with a temporary cease-and-
            desist order entered without a prior Commission hearing, the
            respondent may, within 10 days after the date on which the
            order was served, request a hearing on such application and the
            Commission shall hold a hearing and render a decision on such
            application at the earliest possible time.
              ``(2) Judicial review.--Within--
                      ``(A) 10 days after the date the respondent was
                    served with a temporary cease-and-desist order entered
                    with a prior Commission hearing; or
                      ``(B) 10 days after the Commission renders a decision
                    on an application and hearing under paragraph (1),
            with respect to any temporary cease-and-desist order entered
            without a prior Commission hearing, the respondent may apply to
            the United States district court for the district in which the
            respondent resides or has its principal place of business, or
            for the District of Columbia, for an order setting aside,
            limiting, or suspending the effectiveness or enforcement of the
            order, and the court shall have jurisdiction to enter such an
            order. A respondent served with a temporary cease-and-desist
            order entered without a prior Commission hearing may not apply
            to the court except after hearing and decision by the
            Commission on the respondent's application under paragraph (1)
            of this subsection.
              ``(3) No automatic stay of temporary order.--The commencement
            of proceedings under paragraph (2) of this subsection shall
            not, unless specifically ordered by the court, operate as a
            stay of the Commission's order.
              ``(4) Exclusive review.--Sections 19(d) and 24 shall not
            apply to a temporary order entered pursuant to this section.
      ``(i) Implementation.--The Commission is authorized to adopt rules,
    regulations, and orders as it deems appropriate to implement this
    section.''.
      (c) Natural Gas Policy Act of 1978.--Section 504 of the Natural Gas
    Policy Act of 1978 (15 U.S.C. 3414) is amended by adding the following
    at the end:
      ``(d) Cease-and-Desist Proceedings; Temporary Orders; Authority of
    the Commission.--
              ``(1) In general.--If the Commission finds, after notice and
            opportunity for hearing, that any entity may be violating, may
            have violated, or may be about to violate any provision of this
            Act, or any rule, regulation, restriction, condition, or order
            made or imposed by the Commission under the authority of this
            Act, the Commission may publish its findings and issue an order
            requiring such entity, and any other entity that is, was, or
            would be a cause of the violation, due to an act or omission
            the entity knew or should have known would contribute to such
            violation, to cease and desist from committing or causing such
            violation and any future violation of the same provision, rule,
            or regulation. Such order may, in addition to requiring an
            entity to cease and desist from committing or causing a
            violation, require such entity to comply, to provide an
            accounting and disgorgement, or to take steps to effect
            compliance, with such provision, rule, or regulation, upon such
            terms and conditions and within such time as the Commission may
            specify in such order. Any such order may, as the Commission
            deems appropriate, require future compliance or steps to effect
            future compliance, either permanently or for such period of
            time as the Commission may specify.
              ``(2) Timing of entry.--An order issued under this subsection
            shall be entered only after notice and opportunity for a
            hearing, unless the Commission determines that notice and
            hearing prior to entry would be impracticable or contrary to
            the public interest.
              ``(3) Hearing.--The notice instituting proceedings pursuant
            to paragraph (1) shall fix a hearing date not earlier than 30
            days nor later than 60 days after service of the notice unless
            an earlier or a later date is set by the Commission with the
            consent of any respondent so served.
              ``(4) Temporary order.--Whenever the Commission determines
            that--
                      ``(A) a respondent may take actions to dissipate or
                    convert assets prior to the completion of the
                    proceedings referred to in paragraph (1) and such
                    assets would be necessary to comply with or otherwise
                    satisfy a final enforcement order of the Commission
                    pursuant to alleged violations or threatened violations
                    specified in the notice instituting proceedings; or
                      ``(B) a respondent is engaged in actual or threatened
                    violations of this Act or a Commission rule,
                    regulation, restriction or order referred to in
                    paragraph (1),
            the Commission may issue a temporary order requiring the
            respondent to take such action to prevent dissipation or
            conversion of assets, significant harm to energy consumers, or
            substantial harm to the public interest, frustration of the
            Commission's ability to conduct the proceedings, or frustration
            of the Commission's ability to redress said violation at the
            conclusion of the proceedings, as the Commission deems
            appropriate pending completion of such proceedings.
              ``(5) Review of temporary orders.--
                      ``(A) Commission review.--At any time after the
                    respondent has been served with a temporary cease-and-
                    desist order pursuant to paragraph (4), the respondent
                    may apply to the Commission to have the order set
                    aside, limited, or suspended. If the respondent has
                    been served with a temporary cease-and-desist order
                    entered without a prior Commission hearing, the
                    respondent may, within 10 days after the date on which
                    the order was served, request a hearing on such
                    application and the Commission shall hold a hearing and
                    render a decision on such application at the earliest
                    possible time.
                      ``(B) Judicial review.--Within--
                              ``(i) 10 days after the date the respondent
                            was served with a temporary cease-and-desist
                            order entered with a prior Commission hearing;
                            or
                              ``(ii) 10 days after the Commission renders a
                            decision on an application and hearing under
                            subparagraph (A), with respect to any temporary
                            cease-and-desist order entered without a prior
                            Commission hearing, the respondent may apply to
                            the United States district court for the
                            district in which the respondent resides or has
                            its principal place of business, or for the
                            District of Columbia, for an order setting
                            aside, limiting, or suspending the
                            effectiveness or enforcement of the order, and
                            the court shall have jurisdiction to enter such
                            an order. A respondent served with a temporary
                            cease-and-desist order entered without a prior
                            Commission hearing may not apply to the court
                            except after hearing and decision by the
                            Commission on the respondent's application
                            under paragraph (1) of this subsection.
                      ``(C) No automatic stay of temporary order.--The
                    commencement of proceedings under subparagraph (B) of
                    this paragraph shall not, unless specifically ordered
                    by the court, operate as a stay of the Commission's
                    order.
              ``(6) Implementation.--The Commission is authorized to adopt
            rules, regulations, and orders as it deems appropriate to
            implement this subsection.''.

               TITLE IV--TRANSITIONING TO A CLEAN ENERGY ECONOMY

          Subtitle A--Ensuring Real Reductions in Industrial Emissions

    SEC. 401. ENSURING REAL REDUCTIONS IN INDUSTRIAL EMISSIONS.

      Title VII of the Clean Air Act is amended by inserting after part E
    the following new part:

           ``PART F--ENSURING REAL REDUCTIONS IN INDUSTRIAL EMISSIONS

    ``SEC. 761. PURPOSES.

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

    ``SEC. 762. INTERNATIONAL NEGOTIATIONS.

      ``(a) Finding.--Congress finds that the purposes of this part, as set
    forth in section 761, can be most effectively addressed and achieved
    through agreements negotiated between the United States and foreign
    countries.
      ``(b) Statement of Policy.--It is the policy of the United States to
    work proactively under the United Nations Framework Convention on
    Climate Change, and in other appropriate forums, to establish binding
    agreements, including sectoral agreements, committing all major
    greenhouse gas-emitting nations to contribute equitably to the
    reduction of global greenhouse gas emissions.
      ``(c) Notification of Foreign Countries.--Not later than January 1,
    2020, the President shall notify foreign countries that an
    International Reserve Allowance Program, as described in subpart 2, may
    apply to primary products produced in a foreign country by a sector for
    which the President has made a determination described in section
    767(c).

    ``SEC. 763. DEFINITIONS.

      ``In this part:
              ``(1) Carbon leakage.--The term `carbon leakage' means any
            substantial increase (as determined by the Administrator) in
            greenhouse gas emissions by industrial entities located in
            other countries if such increase is caused by an incremental
            cost of production increase in the United States resulting from
            the implementation of this title.
              ``(2) Eligible industrial sector.--The term `eligible
            industrial sector' means an industrial sector determined by the
            Administrator under section 764(b) to be eligible to receive
            emission allowance rebates under subpart 1.
              ``(3) Industrial sector.--The term `industrial sector' means
            any sector that is in the manufacturing sector (as defined in
            NAICS codes 31, 32, and 33).
              ``(4) NAICS.--The term `NAICS' means the North American
            Industrial Classification System of 2002.
              ``(5) Output.--The term `output' means the total tonnage or
            other standard unit of production (as determined by the
            Administrator) produced by an entity in an industrial sector.
            The output of the cement sector is hydraulic cement, and not
            clinker.
              ``(6) Primary product.--The term `primary product' means a
            product manufactured by an eligible industrial sector that is--
                      ``(A) iron, steel, steel mill products (including
                    pipe and tube), aluminum, cement, glass (including
                    flat, container, and specialty glass and fiberglass),
                    pulp, paper, chemicals, or industrial ceramics; or
                      ``(B) any other manufactured product that is sold in
                    bulk for purposes of further manufacture or inclusion
                    in a finished product.

                 ``Subpart 1--Emission Allowance Rebate Program

    ``SEC. 764. ELIGIBLE INDUSTRIAL SECTORS.

      ``(a) List.--
              ``(1) Initial list.--Not later than June 30, 2011, the
            Administrator shall publish in the Federal Register a list of
            eligible industrial sectors pursuant to subsection (b). Such
            list shall include the amount of the emission allowance rebate
            per unit of production that shall be provided to entities in
            each eligible industrial sector in the following two calendar
            years pursuant to section 765.
              ``(2) Subsequent lists.--Not later than February 1, 2013, and
            every four years thereafter, the Administrator shall publish in
            the Federal Register an updated version of the list published
            under paragraph (1).
      ``(b) Eligible Industrial Sectors.--
              ``(1) In general.--Not later than June 30, 2011, the
            Administrator shall promulgate a rule designating, based on the
            criteria under paragraph (2), the industrial sectors eligible
            for emission allowance rebates under this subpart.
              ``(2) Presumptively eligible industrial sectors.--
                      ``(A) Eligibility criteria.--An owner or operator of
                    an entity shall be eligible to receive emission
                    allowance rebates under this subpart if such entity is
                    in an industrial sector that is included in a six-digit
                    classification of the NAICS that meets the criteria in
                    both clauses (i) and (ii), or the criteria in clause
                    (iii).
                              ``(i) Energy or greenhouse gas intensity.--As
                            determined by the Administrator, the industrial
                            sector had--
                                      ``(I) an energy intensity of at least
                                    5 percent, calculated by dividing the
                                    cost of purchased electricity and fuel
                                    costs of the sector by the value of the
                                    shipments of the sector, based on data
                                    described in subparagraph (E); or
                                      ``(II) a greenhouse gas intensity of
                                    at least 5 percent, calculated by
                                    dividing--
                                              ``(aa) the number 20
                                            multiplied by the number of
                                            tons of carbon dioxide
                                            equivalent greenhouse gas
                                            emissions (including direct
                                            emissions from fuel combustion,
                                            process emissions, and indirect
                                            emissions from the generation
                                            of electricity used to produce
                                            the output of the sector) of
                                            the sector based on data
                                            described in subparagraph (E);
                                            by
                                              ``(bb) the value of the
                                            shipments of the sector, based
                                            on data described in
                                            subparagraph (E).
                              ``(ii) Trade intensity.--As determined by the
                            Administrator, the industrial sector had a
                            trade intensity of at least 15 percent,
                            calculated by dividing the value of the total
                            imports and exports of such sector by the value
                            of the shipments plus the value of imports of
                            such sector, based on data described in
                            subparagraph (E).
                              ``(iii) Very high energy or greenhouse gas
                            intensity.--As determined by the Administrator,
                            the industrial sector had an energy or
                            greenhouse gas intensity, as calculated under
                            clause (i)(I) or (II), of at least 20 percent.
                      ``(B) Iron and steel sector.--For purposes of this
                    subpart, in carrying out this section and section 765,
                    the Administrator shall consider as in different
                    industrial sectors--
                              ``(i) entities using integrated iron and
                            steelmaking technologies (including coke ovens,
                            blast furnaces, and other iron-making
                            technologies); and
                              ``(ii) entities using electric arc furnace
                            technologies.
                      ``(C) Metal and phosphate production classified under
                    more than one naics code.--For purposes of this
                    subpart, in carrying out this section and section 765,
                    the Administrator shall--
                              ``(i) aggregate data for the beneficiation or
                            other processing of iron and copper ores and
                            phosphate with subsequent steps in the process
                            of metal and phosphate manufacturing regardless
                            of the NAICS code under which such activity is
                            classified; and
                              ``(ii) aggregate data for the manufacturing
                            of steel with the manufacturing of steel pipe
                            and tube made from purchased steel in a
                            nonintegrated process.
                      ``(D) Exclusion.--The petroleum refining sector shall
                    not be an eligible industrial sector.
                      ``(E) Data sources.--
                              ``(i) Electricity and fuel costs, value of
                            shipments.--The Administrator shall determine
                            electricity and fuel costs and the value of
                            shipments under this subsection from data from
                            the United States Census of Mineral Industries
                            and the United States Census Annual Survey of
                            Manufacturers. The Administrator shall take the
                            average of data from as many of the years of
                            2004, 2005, and 2006 for which such data are
                            available. If such data are unavailable, the
                            Administrator shall make a determination based
                            upon 2002 or 2006 data from the most detailed
                            industrial classification level of Energy
                            Information Agency's Manufacturing Energy
                            Consumption Survey (using 2006 data if it is
                            available) and the 2002 or 2007 Economic Census
                            of the United States (using 2007 data if it is
                            available). If data from the Manufacturing
                            Energy Consumption Survey are unavailable for
                            any sector at the six-digit classification
                            level in the NAICS, then the Administrator may
                            extrapolate the information necessary to
                            determine the eligibility of a sector under
                            this paragraph from available Manufacturing
                            Energy Consumption Survey data pertaining to a
                            broader industrial category classified in the
                            NAICS. Fuel cost data shall not include the
                            cost of fuel used as feedstock by an industrial
                            sector.
                              ``(ii) Imports and exports.--The
                            Administrator shall base the value of imports
                            and exports under this subsection on United
                            States International Trade Commission data. The
                            Administrator shall take the average of data
                            from as many of the years of 2004, 2005, and
                            2006 for which such data are available.
                              ``(iii) Percentages.--The Administrator shall
                            round the energy intensity, greenhouse gas
                            intensity, and trade intensity percentages
                            under subparagraph (A) to the nearest whole
                            number.
                              ``(iv) Greenhouse gas emission
                            calculations.--When calculating the tons of
                            carbon dioxide equivalent greenhouse gas
                            emissions for each sector under subparagraph
                            (A)(i)(II)(aa), the Administrator--
                                      ``(I) shall use the best available
                                    data from as many of the years 2004,
                                    2005, and 2006 for which such data is
                                    available; and
                                      ``(II) may, to the extent necessary
                                    with respect to a sector, use economic
                                    and engineering models and the best
                                    available information on technology
                                    performance levels for such sector.
              ``(3) Administrative determination of additional eligible
            industrial sectors.--
                      ``(A) Individual showing petition.--
                              ``(i) Petition.--The owner or operator of an
                            entity in an industrial sector may petition the
                            Administrator to designate as eligible
                            industrial sectors under this subpart an entity
                            or a group of entities that--
                                      ``(I) represent a subsector of a six-
                                    digit section of the NAICS code; and
                                      ``(II) meet the eligibility criteria
                                    in both clauses (i) and (ii) of
                                    paragraph (2)(A), or the eligibility
                                    criteria in clause (iii) of paragraph
                                    (2)(A).
                              ``(ii) Data.--In making a determination under
                            this subparagraph, the Administrator shall
                            consider data submitted by the petitioner that
                            is specific to the entity, data solicited by
                            the Administrator from other entities in the
                            subsector, if such other entities exist, and
                            data specified in paragraph (2)(E).
                              ``(iii) Basis of subsector determination.--
                            The Administrator shall determine an entity or
                            group of entities to be a subsector of a six-
                            digit section of the NAICS code based only upon
                            the products manufactured and not the
                            industrial process by which the products are
                            manufactured, except that the Administrator may
                            determine an entity or group of entities that
                            manufacture a product from a virgin material to
                            be a separate subsector from another entity or
                            group of entities that manufacture the same
                            product from recycled material.
                              ``(iv) Final action.--The Administrator shall
                            take final action on such petition no later
                            than 6 months after the petition is received by
                            the Administrator.
                      ``(B) Updated trade intensity data.--The
                    Administrator shall designate as eligible to receive
                    emission allowance rebates under this subpart an
                    industrial sector that--
                              ``(i) met the energy or greenhouse gas
                            intensity criteria in paragraph (2)(A)(i) as of
                            the date of promulgation of the rule under
                            paragraph (1); and
                              ``(ii) meets the trade intensity criteria in
                            paragraph (2)(A)(ii), using data from any year
                            after 2006.
                      ``(C) Use of most recent data.--In determining
                    whether to designate a sector or subsector as an
                    eligible industrial sector under this paragraph, the
                    Administrator shall use the most recent data available
                    from the sources described in paragraph (2)(E), rather
                    than the data from the years specified in paragraph
                    (2)(E), to determine the trade intensity of such sector
                    or subsector, but only for determining such trade
                    intensity.

    ``SEC. 765. DISTRIBUTION OF EMISSION ALLOWANCE REBATES.

      ``(a) Distribution Schedule.--
              ``(1) In general.--For each vintage year, the Administrator
            shall distribute allowances pursuant to this section no later
            than October 31 of the preceding calendar year. The
            Administrator shall make such annual distributions to the
            owners and operators of each entity in an eligible industrial
            sector in the amount of emission allowances calculated under
            subsection (b), except that--
                      ``(A) for vintage years 2012 and 2013, the
                    distribution for a covered entity shall be the entity's
                    indirect carbon factor as calculated under subsection
                    (b)(3); and
                      ``(B) for vintage year 2026 and thereafter, the
                    distribution shall be the amount calculated under
                    subsection (b) multiplied by, except as modified by the
                    President pursuant to section 767(c)(3)(A) for a
                    sector--
                              ``(i) 90 percent for vintage year 2026;
                              ``(ii) 80 percent for vintage year 2027;
                              ``(iii) 70 percent for vintage year 2028;
                              ``(iv) 60 percent for vintage year 2029;
                              ``(v) 50 percent for vintage year 2030;
                              ``(vi) 40 percent for vintage year 2031;
                              ``(vii) 30 percent for vintage year 2032;
                              ``(viii) 20 percent for vintage year 2033;
                              ``(ix) 10 percent for vintage year 2034; and
                              ``(x) 0 percent for vintage year 2035 and
                            thereafter.
              ``(2) Resumption of reduction.--If the President has modified
            the percentage stated in paragraph (1)(B) under section
            767(c)(3)(A), and the President subsequently makes a
            determination under section 767(b) for an eligible industrial
            sector that more than 70 percent of global output for that
            sector is produced or manufactured in countries that have met
            at least one of the criteria in that subsection, then the
            reduction schedule set forth in paragraph (1)(B) of this
            subsection shall begin in the next vintage year, with the
            percentage reduction based on the amount of the distribution of
            emission allowances under this section in the previous year.
              ``(3) Newly eligible sectors.--In addition to receiving a
            distribution of emission allowances under this section in the
            first distribution occurring after an industrial sector is
            designated as eligible under section 764(b)(3), the owner or
            operator of an entity in that eligible industrial sector may
            receive a prorated share of any emission allowances made
            available for distribution under this section that were not
            distributed for the year in which the petition for eligibility
            was granted under section 764(b)(3)(A).
      ``(b) Calculation of Direct and Indirect Carbon Factors.--
              ``(1) In general.--
                      ``(A) Covered entities.--Except as provided in
                    subsection (a), for covered entities that are in
                    eligible industrial sectors, the amount of emission
                    allowance rebates shall be based on the sum of the
                    covered entity's direct and indirect carbon factors.
                      ``(B) Other eligible entities.--For entities that are
                    in eligible industrial sectors but are not covered
                    entities, the amount of emission allowance rebates
                    shall be based on the entity's indirect carbon factor.
                      ``(C) New entities.--Not later than 2 years after the
                    date of enactment of this title, the Administrator
                    shall issue regulations governing the distribution of
                    emission allowance rebates for the first and second
                    years of operation of a new entity in an eligible
                    industrial sector. These regulations shall provide
                    for--
                              ``(i) the distribution of emission allowance
                            rebates to such entities based on comparable
                            entities in the same sector; and
                              ``(ii) an adjustment in the third and fourth
                            years of operation to reconcile the total
                            amount of emission allowance rebates received
                            during the first and second years of operation
                            to the amount the entity would have received
                            during the first and second years of operation
                            had the appropriate data been available.
              ``(2) Direct carbon factor.--The direct carbon factor for a
            covered entity for a vintage year is the product of--
                      ``(A) the average output of the covered entity for
                    the two years preceding the year of the distribution;
                    and
                      ``(B) the most recent calculation of the average
                    direct greenhouse gas emissions (expressed in tons of
                    carbon dioxide equivalent) per unit of output for all
                    covered entities in the sector, as determined by the
                    Administrator under paragraph (4).
              ``(3) Indirect carbon factor.--
                      ``(A) In general.--The indirect carbon factor for an
                    entity for a vintage year is the product obtained by
                    multiplying the average output of the entity for the
                    two years preceding the years of the distribution by
                    both the electricity emissions intensity factor
                    determined pursuant to subparagraph (B) and the
                    electricity efficiency factor determined pursuant to
                    subparagraph (C) for the year concerned.
                      ``(B) Electricity emissions intensity factor.--Each
                    person selling electricity to the owner or operator of
                    an entity in any sector designated as an eligible
                    industrial sector under section 764(b) shall provide
                    the owner or operator of the entity and the
                    Administrator, on an annual basis, the electricity
                    emissions intensity factor for the entity. The
                    electricity emissions intensity factor for the entity,
                    expressed in tons of carbon dioxide equivalents per
                    kilowatt hour, is determined by dividing--
                              ``(i) the annual sum of the hourly product
                            of--
                                      ``(I) the electricity purchased by
                                    the entity from that person in each
                                    hour (expressed in kilowatt hours),
                                    multiplied by
                                      ``(II) the marginal or weighted
                                    average tons of carbon dioxide
                                    equivalent per kilowatt hour that the
                                    person selling the electricity charges
                                    to the entity, taking into account the
                                    entity's retail rate arrangements, by
                              ``(ii) the total kilowatt hours of
                            electricity purchased by the entity from that
                            person during that year.
                      ``(C) Electricity efficiency factor.--The electricity
                    efficiency factor is the average amount of electricity
                    (in kilowatt hours) used per unit of output for all
                    entities in the relevant sector, as determined by the
                    Administrator based on the best available data,
                    including data provided under paragraph (6).
                      ``(D) Indirect carbon factor reduction.--If an
                    electricity provider received a free allocation of
                    emission allowances pursuant to section 782(a), the
                    Administrator shall adjust the indirect carbon factor
                    to avoid rebates to the eligible entity for costs that
                    the Administrator determines were not incurred by the
                    industrial entity because the allowances were freely
                    allocated to the eligible entity's electricity provider
                    and used for the benefit of industrial consumers.
              ``(4) Greenhouse gas intensity calculations.--The
            Administrator shall calculate the average direct greenhouse gas
            emissions (expressed in tons of carbon dioxide equivalent) per
            unit of output for all covered entities in each eligible
            industrial sector every four years using an average of the two
            most recent years of the best available data.
              ``(5) Ensuring efficiency improvements.--When making
            greenhouse gas calculations, the Administrator shall--
                      ``(A) limit the average direct greenhouse gas
                    emissions per unit of output, calculated under
                    paragraph (4), for any eligible industrial sector to an
                    amount that is not greater than it was in any previous
                    calculation under this subsection; and
                      ``(B) limit the electricity emissions intensity
                    factor, calculated under paragraph (3)(B) and resulting
                    from a change in electricity supply, for any entity to
                    an amount that is not greater than it was during any
                    previous year.
              ``(6) Data sources.--For the purposes of this subsection--
                      ``(A) the Administrator shall use data from the
                    greenhouse gas registry, established under section 713,
                    where it is available; and
                      ``(B) each owner or operator of an entity in an
                    eligible industrial sector and each department, agency,
                    and instrumentality of the United States shall provide
                    the Administrator with such information as the
                    Administrator finds necessary to determine the direct
                    carbon factor and the indirect carbon factor for each
                    entity subject to this section.
      ``(c) Total Maximum Distribution.--Notwithstanding subsections (a)
    and (b), the Administrator shall not distribute more allowances for any
    vintage year pursuant to this section than are allocated for use under
    this part pursuant to section 782 for that vintage year. For any
    vintage year for which the total emission allowance rebates calculated
    pursuant to this section exceed the number of allowances allocated
    pursuant to section 782, the Administrator shall reduce each entity's
    distribution on a pro rata basis so that the total distribution under
    this section equals the number of allowances allocated under section
    782.

              ``Subpart 2--International Reserve Allowance Program

    ``SEC. 766. INTERNATIONAL RESERVE ALLOWANCE PROGRAM.

      ``(a) Establishment.--
              ``(1) In general.--If the President takes an action described
            in section 767(c)(3)(B) with respect to a sector then, not
            later than 24 months after that determination, the
            Administrator shall issue regulations--
                      ``(A) determining an appropriate price for and
                    offering for sale to United States importers
                    international reserve allowances;
                      ``(B) requiring the submission of appropriate amounts
                    of such allowances in conjunction with the importation
                    into the United States of a primary product produced or
                    manufactured by that sector;
                      ``(C) exempting from the requirements of subparagraph
                    (B) primary products produced in--
                              ``(i) foreign countries that the United
                            Nations has identified as among the least
                            developed of developing countries; or
                              ``(ii) foreign countries that the President
                            has determined to be responsible for less than
                            0.5 percent of total global greenhouse gas
                            emissions; and
                      ``(D) prohibiting the introduction into interstate
                    commerce of a primary product without submitting the
                    required number of international reserve allowances in
                    accordance with such regulations, unless the product
                    was produced by a covered entity under this title, or
                    by an entity that is or could be regulated under this
                    title.
              ``(2) Purpose of program.--The Administrator shall establish
            the program under paragraph (1) in a manner that addresses,
            consistent with international agreements to which the United
            States is a party, the competitive imbalance in the costs of
            producing or manufacturing primary products in industrial
            sectors resulting from the difference between--
                      ``(A) the direct and indirect costs of complying with
                    this title; and
                      ``(B) the direct and indirect costs, if any, of
                    complying in other countries with greenhouse gas
                    regulatory programs, requirements, export tariffs, or
                    other measures adopted or imposed to reduce greenhouse
                    gas emissions.
              ``(3) Emission allowance rebates.--The Administrator shall
            take into account the value of emission allowance rebates
            distributed under subpart 1 when making calculations under
            paragraph (2).
              ``(4) Limitation.--The International Reserve Allowance
            Program may not begin before January 1, 2025.
      ``(b) Covered Entities.--International reserve allowances may not be
    held by covered entities to comply with section 722.

                    ``Subpart 3--Presidential Determination

    ``SEC. 767. PRESIDENTIAL REPORTS AND DETERMINATIONS.

      ``(a) Report.--Not later than January 1, 2018, the President shall
    submit a report to Congress on the effectiveness of the distribution of
    emission allowance rebates under subpart 1 in mitigating carbon leakage
    in industrial sectors. Such report shall also include--
              ``(1) recommendations on how to better achieve the purposes
            of this part, including an assessment of the feasibility and
            usefulness of an International Reserve Allowance Program; and
              ``(2) an assessment of the amount and duration of assistance,
            including distribution of free allowances, being provided to
            eligible industrial sectors in other developed countries to
            mitigate costs of compliance with domestic greenhouse gas
            reduction programs in such countries.
      ``(b) Presidential Determination.--Not later than June 30, 2022, and
    every four years thereafter, the President, in consultation with the
    Administrator and other appropriate agencies, shall determine, for each
    eligible industrial sector, whether more than 70 percent of global
    output for that sector is produced or manufactured in countries that
    have met at least one of the following criteria:
              ``(1) The country is a party to an international agreement to
            which the United States is a party that includes a nationally
            enforceable greenhouse gas emissions reduction commitment for
            that country that is at least as stringent as that of the
            United States.
              ``(2) The country is a party to a multilateral or bilateral
            emission reduction agreement for that sector to which the
            United States is a party.
              ``(3) The country has an annual energy or greenhouse gas
            intensity, as described in section 764(b)(2)(A)(i), for the
            sector that is equal to or less than the energy or greenhouse
            gas intensity for such sector in the United States in the most
            recent calendar year for which data are available.
              ``(4) The country has implemented policies, including
            sectoral caps, export tariffs, production fees, electricity
            generation regulations, or greenhouse gas emissions fees, that
            individually or collectively impose an incremental increase on
            the cost of production associated with greenhouse gas emissions
            from the sector that is at least 60 percent of the cost of
            complying with this title in the United States for such sector,
            averaged over a two-year period.
      ``(c) Effect of Presidential Determination.--If the President makes a
    determination under subsection (b) with respect to an eligible
    industrial sector that 70 percent or less of the global output for the
    sector is produced or manufactured in countries that have met one or
    more of the criteria in subsection (b), then the President shall, not
    later than June 30, 2022, and every four years thereafter--
              ``(1) assess the extent to which the emission allowance
            rebates provided pursuant to subpart 1 have mitigated or
            addressed, or could mitigate or address, carbon leakage in that
            sector;
              ``(2) assess the extent to which an International Reserve
            Allowance Program has mitigated or addressed, or could mitigate
            or address, carbon leakage in that sector and the feasibility
            of establishing such a program; and
              ``(3) with respect to that sector--
                      ``(A) modify the percentage by which direct and
                    indirect carbon factors will be multiplied under
                    section 765(a)(1)(B);
                      ``(B) implement an International Reserve Allowance
                    Program under section 766 for the products of the
                    sector; or
                      ``(C) take the actions in both subparagraph (A) and
                    (B).
      ``(d) Report to Congress.--Not later than June 30, 2022, and every
    four years thereafter, the President shall transmit to the Congress a
    report providing notice of any determination made under subsection (b),
    explaining the reasons for such determination, and identifying the
    actions taken by the President under subsection (c).
      ``(e) Limitation.--The President may only implement an International
    Reserve Allowance Program for sectors producing primary products.
      ``(f) Iron and Steel Sector.--For the purposes of this subpart, the
    Administrator shall consider to be in the same industrial sector--
              ``(1) entities using integrated iron and steelmaking
            technologies (including coke ovens, blast furnaces, and other
            iron-making technologies); and
              ``(2) entities using electric arc furnace technologies.''.

                  Subtitle B--Green Jobs and Worker Transition

                               PART 1--GREEN JOBS

    SEC. 421. CLEAN ENERGY CURRICULUM DEVELOPMENT GRANTS.

      (a) Authorization.--The Secretary of Education is authorized to award
    grants, on a competitive basis, to eligible partnerships to develop
    programs of study (containing the information described in section
    122(c)(1)(A) of the Carl D. Perkins Career and Technical Education Act
    of 2006 (20 U.S.C. 2342), that are focused on emerging careers and jobs
    in renewable energy, energy efficiency, and climate change mitigation.
    The Secretary of Education shall consult with the Secretary of Labor
    and the Secretary of Energy prior to the issuance of a solicitation for
    grant applications.
      (b) Eligible Partnerships.--For purposes of this section, an eligible
    partnership shall include--
              (1) at least 1 local educational agency eligible for funding
            under section 131 of the Carl D. Perkins Career and Technical
            Education Act of 2006 (20 U.S.C. 2351) or an area career and
            technical education school or education service agency
            described in such section;
              (2) at least 1 postsecondary institution eligible for funding
            under section 132 of such Act (20 U.S.C. 2352); and
              (3) representatives of the community including business,
            labor organizations, and industry that have experience in clean
            energy.
      (c) Application.--An eligible partnership seeking a grant under this
    section shall submit an application to the Secretary at such time and
    in such manner as the Secretary may require. Applications shall
    include--
              (1) a description of the eligible partners and partnership,
            the roles and responsibilities of each partner, and a
            demonstration of each partner's capacity to support the
            program;
              (2) a description of the career area or areas within the
            field of clean energy to be developed, the reason for the
            choice, and evidence of the labor market need to prepare
            students in that area;
              (3) a description of the new or existing program of study and
            both secondary and postsecondary components;
              (4) a description of the students to be served by the new
            program of study;
              (5) a description of how the program of study funded by the
            grant will be replicable and disseminated to schools outside of
            the partnership, including urban and rural areas;
              (6) a description of applied learning that will be
            incorporated into the program of study and how it will
            incorporate or reinforce academic learning;
              (7) a description of how the program of study will be
            delivered;
              (8) a description of how the program will provide
            accessibility to students, especially economically
            disadvantaged, low performing, and urban and rural students;
              (9) a description of how the program will address placement
            of students in nontraditional fields as described in section
            3(20) of the Carl D. Perkins Career and Technical Education Act
            of 2006 (20 U.S.C. 2302(20)); and
              (10) a description of how the applicant proposes to consult
            or has consulted with a labor organization, labor management
            partnership, apprenticeship program, or joint apprenticeship
            and training program that provides education and training in
            the field of study for which the applicant proposes to develop
            a curriculum.
      (d) Priority.--The Secretary shall give priority to applications
    that--
              (1) use online learning or other innovative means to deliver
            the program of study to students, educators, and instructors
            outside of the partnership; and
              (2) focus on low performing students and special populations
            as defined in section 3(29) of the Carl D. Perkins Career and
            Technical Education Act of 2006 (20 U.S.C. 2302(29)).
      (e) Peer Review.--The Secretary shall convene a peer review process
    to review applications for grants under this section and to make
    recommendations regarding the selection of grantees. Members of the
    peer review committee shall include--
              (1) educators who have experience implementing curricula with
            comparable purposes; and
              (2) business and industry experts in clean energy-related
            fields.
      (f) Uses of Funds.--Grants awarded under this section shall be used
    for the development, implementation, and dissemination of programs of
    study (as described in section 122(c)(1)(A) of the Carl D. Perkins
    Career and Technical Education Act (20 U.S.C. 342(c)(1)(A))) in career
    areas related to clean energy, renewable energy, energy efficiency, and
    climate change mitigation.

    SEC. 422. INCREASED FUNDING FOR ENERGY WORKER TRAINING PROGRAM.

      Section 171(e)(8) of the Workforce Investment Act of 1998 (29 U.S.C.
    2916(e)(8)) is amended by striking ``$125,000,000'' and inserting
    ``$150,000,000''.

              PART 2--CLIMATE CHANGE WORKER ADJUSTMENT ASSISTANCE

    SEC. 425. PETITIONS, ELIGIBILITY REQUIREMENTS, AND DETERMINATIONS.

      (a) Petitions.--
              (1) Filing.--A petition for certification of eligibility to
            apply for adjustment assistance for a group of workers under
            this part may be filed by any of the following:
                      (A) The group of workers.
                      (B) The certified or recognized union or other duly
                    authorized representative of such workers.
                      (C) Employers of such workers, one-stop operators or
                    one-stop partners (as defined in section 101 of the
                    Workforce Investment Act of 1998 (29 U.S.C. 2801)),
                    including State employment security agencies, or the
                    State dislocated worker unit established under title I
                    of such Act, on behalf of such workers.
            The petition shall be filed simultaneously with the Secretary
            of Labor and with the Governor of the State in which such
            workers' employment site is located.
              (2) Action by governors.--Upon receipt of a petition filed
            under paragraph (1), the Governor shall--
                      (A) ensure that rapid response activities and
                    appropriate core and intensive services (as described
                    in section 134 of the Workforce Investment Act of 1998
                    (29 U.S.C. 2864)) authorized under other Federal laws
                    are made available to the workers covered by the
                    petition to the extent authorized under such laws; and
                      (B) assist the Secretary in the review of the
                    petition by verifying such information and providing
                    such other assistance as the Secretary may request.
              (3) Action by the secretary.--Upon receipt of the petition,
            the Secretary shall promptly publish notice in the Federal
            Register and on the website of the Department of Labor that the
            Secretary has received the petition and initiated an
            investigation.
              (4) Hearings.--If the petitioner, or any other person found
            by the Secretary to have a substantial interest in the
            proceedings, submits not later than 10 days after the date of
            the Secretary's publication under paragraph (3) a request for a
            hearing, the Secretary shall provide for a public hearing and
            afford such interested persons an opportunity to be present, to
            produce evidence, and to be heard.
      (b) Eligibility.--
              (1) In general.--A group of workers shall be certified by the
            Secretary as eligible to apply for adjustment assistance under
            this part pursuant to a petition filed under subsection (a)
            if--
                      (A) the group of workers is employed in--
                              (i) energy producing and transforming
                            industries;
                              (ii) industries dependent upon energy
                            industries;
                              (iii) energy-intensive manufacturing
                            industries;
                              (iv) consumer goods manufacturing; or
                              (v) other industries whose employment the
                            Secretary determines has been adversely
                            affected by any requirement of title VII of the
                            Clean Air Act;
                      (B) the Secretary determines that a significant
                    number or proportion of the workers in such workers'
                    employment site have become totally or partially
                    separated, or are threatened to become totally or
                    partially separated from employment; and
                      (C) the sales, production, or delivery of goods or
                    services have decreased as a result of any requirement
                    of title VII of the Clean Air Act, including--
                              (i) the shift from reliance upon fossil fuels
                            to other sources of energy, including renewable
                            energy, that results in the closing of a
                            facility or layoff of employees at a facility
                            that mines, produces, processes, or utilizes
                            fossil fuels to generate electricity;
                              (ii) a substantial increase in the cost of
                            energy required for a manufacturing facility to
                            produce items whose prices are competitive in
                            the marketplace, to the extent the cost is not
                            offset by allowance allocation to the facility
                            pursuant to title VII of the Clean Air Act; or
                              (iii) other documented occurrences that the
                            Secretary determines are indicators of an
                            adverse impact on an industry described in
                            subparagraph (A) as a result of any requirement
                            of title VII of the Clean Air Act.
              (2) Workers in public agencies.--A group of workers in a
            public agency shall be certified by the Secretary as eligible
            to apply for climate change adjustment assistance pursuant to a
            petition filed if the Secretary determines that a significant
            number or proportion of the workers in the public agency have
            become totally or partially separated from employment, or are
            threatened to become totally or partially separated as a result
            of any requirement of title VII of the Clean Air Act.
              (3) Adversely affected service workers.--A group of workers
            shall be certified as eligible to apply for climate change
            adjustment assistance pursuant to a petition filed if the
            Secretary determines that--
                      (A) a significant number or proportion of the service
                    workers at an employment site where a group of workers
                    has been certified by the Secretary as eligible to
                    apply for adjustment assistance under this part
                    pursuant to paragraph (1) have become totally or
                    partially separated from employment, or are threatened
                    to become totally or partially separated; and
                      (B) a loss of business in the firm providing service
                    workers to an employment site is directly attributable
                    to one or more of the documented occurrences listed in
                    paragraph (1)(C).
      (c) Authority to Investigate and Collect Information.--
              (1) In general.--The Secretary shall, in determining whether
            to certify a group of workers under subsection (d), obtain
            information the Secretary determines to be necessary to make
            the certification, through questionnaires and in such other
            manner as the Secretary determines appropriate from--
                      (A) the workers' employer;
                      (B) officials of certified or recognized unions or
                    other duly authorized representatives of the group of
                    workers; or
                      (C) one-stop operators or one-stop partners (as
                    defined in section 101 of the Workforce Investment Act
                    of 1998 (29 U.S.C. 2801)); or
              (2) Verification of information.--The Secretary shall require
            an employer, union, or one-stop operator or partner to certify
            all information obtained under paragraph (1) from the employer,
            union, or one-stop operator or partner (as the case may be) on
            which the Secretary relies in making a determination under
            subsection (d), unless the Secretary has a reasonable basis for
            determining that such information is accurate and complete
            without being certified.
              (3) Protection of confidential information.--The Secretary
            may not release information obtained under paragraph (1) that
            the Secretary considers to be confidential business information
            unless the employer submitting the confidential business
            information had notice, at the time of submission, that the
            information would be released by the Secretary, or the employer
            subsequently consents to the release of the information.
            Nothing in this paragraph shall be construed to prohibit the
            Secretary from providing such confidential business information
            to a court in camera or to another party under a protective
            order issued by a court.
      (d) Determination by the Secretary of Labor.--
              (1) In general.--As soon as possible after the date on which
            a petition is filed under subsection (a), but in any event not
            later than 40 days after that date, the Secretary, in
            consultation with the Secretary of Energy and the
            Administrator, as necessary, shall determine whether the
            petitioning group meets the requirements of subsection (b) and
            shall issue a certification of eligibility to apply for
            assistance under this part covering workers in any group which
            meets such requirements. Each certification shall specify the
            date on which the total or partial separation began or
            threatened to begin. Upon reaching a determination on a
            petition, the Secretary shall promptly publish a summary of the
            determination in the Federal Register and on the website of the
            Department of Labor, together with the Secretary's reasons for
            making such determination.
              (2) One year limitation.--A certification under this section
            shall not apply to any worker whose last total or partial
            separation from the employment site before the worker's
            application under section 426(a) occurred more than 1 year
            before the date of the petition on which such certification was
            granted.
              (3) Revocation of certification.--Whenever the Secretary
            determines, with respect to any certification of eligibility of
            the workers of an employment site, that total or partial
            separations from such site are no longer a result of the
            factors specified in subsection (b)(1), the Secretary shall
            terminate such certification and promptly have notice of such
            termination published in the Federal Register and on the
            website of the Department of Labor, together with the
            Secretary's reasons for making such determination. Such
            termination shall apply only with respect to total or partial
            separations occurring after the termination date specified by
            the Secretary.
      (e) Industry Notification of Assistance.--Upon receiving a
    notification of a determination under subsection (d) with respect to a
    domestic industry the Secretary of Labor shall notify the
    representatives of the domestic industry affected by the determination,
    employers publicly identified by name during the course of the
    proceeding relating to the determination, and any certified or
    recognized union or, to the extent practicable, other duly authorized
    representative of workers employed by such representatives of the
    domestic industry, of--
              (1) the adjustment allowances, training, and other benefits
            available under this part;
              (2) the manner in which to file a petition and apply for such
            benefits; and
              (3) the availability of assistance in filing such petitions;
              (4) notify the Governor of each State in which one or more
            employers in such industry are located of the Secretary's
            determination and the identity of the employers; and
              (5) upon request, provide any assistance that is necessary to
            file a petition under subsection (a).
      (f) Benefit Information to Workers, Providers of Training.--
              (1) In general.--The Secretary shall provide full information
            to workers about the adjustment allowances, training, and other
            benefits available under this part and about the petition and
            application procedures, and the appropriate filing dates, for
            such allowances, training and services. The Secretary shall
            provide whatever assistance is necessary to enable groups of
            workers to prepare petitions or applications for program
            benefits. The Secretary shall make every effort to insure that
            cooperating State agencies fully comply with the agreements
            entered into under section 426(a) and shall periodically review
            such compliance. The Secretary shall inform the State Board for
            Vocational Education or equivalent agency, the one-stop
            operators or one-stop partners (as defined in section 101 of
            the Workforce Investment Act of 1998 (29 U.S.C. 2801), and
            other public or private agencies, institutions, and employers,
            as appropriate, of each certification issued under subsection
            (d) and of projections, if available, of the needs for training
            under as a result of such certification.
              (2) Notice by mail.--The Secretary shall provide written
            notice through the mail of the benefits available under this
            part to each worker whom the Secretary has reason to believe is
            covered by a certification made under subsection (d)--
                      (A) at the time such certification is made, if the
                    worker was partially or totally separated from the
                    adversely affected employment before such
                    certification, or--
                      (B) at the time of the total or partial separation of
                    the worker from the adversely affected employment, if
                    subparagraph (A) does not apply.
              (3) Newspapers; website.--The Secretary shall publish notice
            of the benefits available under this part to workers covered by
            each certification made under subsection (d) in newspapers of
            general circulation in the areas in which such workers reside
            and shall make such information available on the website of the
            Department of Labor.

    SEC. 426. PROGRAM BENEFITS.

      (a) Climate Change Adjustment Allowance.--
              (1) Eligibility.--Payment of a climate change adjustment
            allowance shall be made to an adversely affected worker covered
            by a certification under section 425(b) who files an
            application for such allowance for any week of unemployment
            which begins on or after the date of such certification, if the
            following conditions are met:
                      (A) Such worker's total or partial separation before
                    the worker's application under this part occurred--
                              (i) on or after the date, as specified in the
                            certification under which the worker is
                            covered, on which total or partial separation
                            began or threatened to begin in the adversely
                            affected employment;
                              (ii) before the expiration of the 2-year
                            period beginning on the date on which the
                            determination under section 425(d) was made;
                            and
                              (iii) before the termination date, if any,
                            determined pursuant to section 425(d)(3).
                      (B) Such worker had, in the 52-week period ending
                    with the week in which such total or partial separation
                    occurred, at least 26 weeks of full-time employment or
                    1,040 hours of part time employment in adversely
                    affected employment, or, if data with respect to weeks
                    of employment are not available, equivalent amounts of
                    employment computed under regulations prescribed by the
                    Secretary. For the purposes of this paragraph, any week
                    in which such worker--
                              (i) is on employer-authorized leave for
                            purposes of vacation, sickness, injury,
                            maternity, or inactive duty or active duty
                            military service for training;
                              (ii) does not work because of a disability
                            that is compensable under a workmen's
                            compensation law or plan of a State or the
                            United States;
                              (iii) had his employment interrupted in order
                            to serve as a full-time representative of a
                            labor organization in such firm; or
                              (iv) is on call-up for purposes of active
                            duty in a reserve status in the Armed Forces of
                            the United States, provided such active duty is
                            ``Federal service'' as defined in section
                            8521(a)(1) of title 5, United States Code,
                    shall be treated as a week of employment.
                      (C) Such worker is enrolled in a training program
                    approved by the Secretary under subsection (b)(2).
              (2) Ineligibility for certain other benefits.--An adversely
            affected worker receiving a payment under this section shall be
            ineligible to receive any other form of unemployment insurance
            for the period in which such worker is receiving a climate
            change adjustment allowance under this section.
              (3) Revocation.--If--
                      (A) the Secretary determines that--
                              (i) the adversely affected worker--
                                      (I) has failed to begin participation
                                    in the training program the enrollment
                                    in which meets the requirement of
                                    paragraph (1)(C); or
                                      (II) has ceased to participate in
                                    such training program before completing
                                    such training program; and
                              (ii) there is no justifiable cause for such
                            failure or cessation; or
                      (B) the certification made with respect to such
                    worker under section 425(d) is revoked under paragraph
                    (3) of such section,
            no adjustment allowance may be paid to the adversely affected
            worker under this part for the week in which such failure,
            cessation, or revocation occurred, or any succeeding week,
            until the adversely affected worker begins or resumes
            participation in a training program approved by the Secretary
            under section (b)(2).
              (4) Waivers of training requirements.--The Secretary may
            issue a written statement to an adversely affected worker
            waiving the requirement to be enrolled in training described in
            subsection (b)(2) if the Secretary determines that it is not
            feasible or appropriate for the worker, because of 1 or more of
            the following reasons:
                      (A) Recall.--The worker has been notified that the
                    worker will be recalled by the employer from which the
                    separation occurred.
                      (B) Marketable skills.--
                              (i) In general.--The worker possesses
                            marketable skills for suitable employment (as
                            determined pursuant to an assessment of the
                            worker, which may include the profiling system
                            under section 303(j) of the Social Security Act
                            (42 U.S.C. 503(j)), carried out in accordance
                            with guidelines issued by the Secretary) and
                            there is a reasonable expectation of employment
                            at equivalent wages in the foreseeable future.
                              (ii) Marketable skills defined.--For purposes
                            of clause (i), the term ``marketable skills''
                            may include the possession of a postgraduate
                            degree from an institution of higher education
                            (as defined in section 102 of the Higher
                            Education Act of 1965 (20 U.S.C. 1002)) or an
                            equivalent institution, or the possession of an
                            equivalent postgraduate certification in a
                            specialized field.
                      (C) Retirement.--The worker is within 2 years of
                    meeting all requirements for entitlement to either--
                              (i) old-age insurance benefits under title II
                            of the Social Security Act (42 U.S.C. 401 et
                            seq.) (except for application therefor); or
                              (ii) a private pension sponsored by an
                            employer or labor organization.
                      (D) Health.--The worker is unable to participate in
                    training due to the health of the worker, except that a
                    waiver under this subparagraph shall not be construed
                    to exempt a worker from requirements relating to the
                    availability for work, active search for work, or
                    refusal to accept work under Federal or State
                    unemployment compensation laws.
                      (E) Enrollment unavailable.--The first available
                    enrollment date for the training of the worker is
                    within 60 days after the date of the determination made
                    under this paragraph, or, if later, there are
                    extenuating circumstances for the delay in enrollment,
                    as determined pursuant to guidelines issued by the
                    Secretary.
                      (F) Training not available.--Training described in
                    subsection (b)(2) is not reasonably available to the
                    worker from either governmental agencies or private
                    sources (which may include area career and technical
                    education schools, as defined in section 3 of the Carl
                    D. Perkins Career and Technical Education Act of 2006
                    (20 U.S.C. 2302), and employers), no training that is
                    suitable for the worker is available at a reasonable
                    cost, or no training funds are available.
              (5) Weekly amounts.--The climate change adjustment allowance
            payable to an adversely affected worker for a week of
            unemployment shall be an amount equal to 70 percent of the
            average weekly wage of such worker, but in no case shall such
            amount exceed the average weekly wage for all workers in the
            State where the adversely affected worker resides.
              (6) Maximum duration of benefits.--An eligible worker may
            receive a climate change adjustment allowance under this
            subsection for a period of not longer than 156 weeks.
      (b) Employment Services and Training.--
              (1) Information and employment services.--The Secretary shall
            make available, directly or through agreements with the States
            under section 427(a) to adversely affected workers covered by a
            certification under section 425(a) the following information
            and employment services:
                      (A) Comprehensive and specialized assessment of skill
                    levels and service needs, including through--
                              (i) diagnostic testing and use of other
                            assessment tools; and
                              (ii) in-depth interviewing and evaluation to
                            identify employment barriers and appropriate
                            employment goals.
                      (B) Development of an individual employment plan to
                    identify employment goals and objectives, and
                    appropriate training to achieve those goals and
                    objectives.
                      (C) Information on training available in local and
                    regional areas, information on individual counseling to
                    determine which training is suitable training, and
                    information on how to apply for such training.
                      (D) Information on training programs and other
                    services provided by a State pursuant to title I of the
                    Workforce Investment Act of 1998 and available in local
                    and regional areas, information on individual
                    counseling to determine which training is suitable
                    training, and information on how to apply for such
                    training.
                      (E) Information on how to apply for financial aid,
                    including referring workers to educational opportunity
                    centers described in section 402F of the Higher
                    Education Act of 1965 (20 U.S.C. 1070a-16), where
                    applicable, and notifying workers that the workers may
                    request financial aid administrators at institutions of
                    higher education (as defined in section 102 of such Act
                    (20 U.S.C. 1002)) to use the administrators' discretion
                    under section 479A of such Act (20 U.S.C. 1087tt) to
                    use current year income data, rather than preceding
                    year income data, for determining the amount of need of
                    the workers for Federal financial assistance under
                    title IV of such Act (20 U.S.C. 1070 et seq.).
                      (F) Short-term prevocational services, including
                    development of learning skills, communications skills,
                    interviewing skills, punctuality, personal maintenance
                    skills, and professional conduct to prepare individuals
                    for employment or training.
                      (G) Individual career counseling, including job
                    search and placement counseling, during the period in
                    which the individual is receiving a climate change
                    adjustment allowance or training under this part, and
                    after receiving such training for purposes of job
                    placement.
                      (H) Provision of employment statistics information,
                    including the provision of accurate information
                    relating to local, regional, and national labor market
                    areas, including--
                              (i) job vacancy listings in such labor market
                            areas;
                              (ii) information on jobs skills necessary to
                            obtain jobs identified in job vacancy listings
                            described in subparagraph (A);
                              (iii) information relating to local
                            occupations that are in demand and earnings
                            potential of such occupations; and
                              (iv) skills requirements for local
                            occupations described in subparagraph (C).
                      (I) Information relating to the availability of
                    supportive services, including services relating to
                    child care, transportation, dependent care, housing
                    assistance, and need-related payments that are
                    necessary to enable an individual to participate in
                    training.
              (2) Training.--
                      (A) Approval of and payment for training.--If the
                    Secretary determines, with respect to an adversely
                    affected worker that--
                              (i) there is no suitable employment (which
                            may include technical and professional
                            employment) available for an adversely affected
                            worker;
                              (ii) the worker would benefit from
                            appropriate training;
                              (iii) there is a reasonable expectation of
                            employment following completion of such
                            training;
                              (iv) training approved by the Secretary is
                            reasonably available to the worker from either
                            governmental agencies or private sources
                            (including area career and technical education
                            schools, as defined in section 3 of the Carl D.
                            Perkins Career and Technical Education Act of
                            2006, and employers);
                              (v) the worker is qualified to undertake and
                            complete such training; and
                              (vi) such training is suitable for the worker
                            and available at a reasonable cost,
                    the Secretary shall approve such training for the
                    worker. Upon such approval, the worker shall be
                    entitled to have payment of the costs of such training
                    (subject to the limitations imposed by this section)
                    paid on the worker's behalf by the Secretary directly
                    or through a voucher system.
                      (B) Distribution.--The Secretary shall establish
                    procedures for the distribution of the funds to States
                    to carry out the training programs approved under this
                    paragraph, and shall make an initial distribution of
                    the funds made available as soon as practicable after
                    the beginning of each fiscal year.
                      (C) Additional rules regarding approval of and
                    payment for training.--
                              (i) For purposes of applying subparagraph
                            (A)(iii), a reasonable expectation of
                            employment does not require that employment
                            opportunities for a worker be available, or
                            offered, immediately upon the completion of
                            training approved under such subparagraph.
                              (ii) If the costs of training an adversely
                            affected worker are paid by the Secretary under
                            subparagraph (A), no other payment for such
                            costs may be made under any other provision of
                            Federal law. No payment may be made under
                            subparagraph (A) of the costs of training an
                            adversely affected worker or an adversely
                            affected incumbent worker if such costs--
                                      (I) have already been paid under any
                                    other provision of Federal law; or
                                      (II) are reimbursable under any other
                                    provision of Federal law and a portion
                                    of such costs have already been paid
                                    under such other provision of Federal
                                    law.
                            The provisions of this clause shall not apply
                            to, or take into account, any funds provided
                            under any other provision of Federal law which
                            are used for any purpose other than the direct
                            payment of the costs incurred in training a
                            particular adversely affected worker, even if
                            such use has the effect of indirectly paying or
                            reducing any portion of the costs involved in
                            training the adversely affected worker.
                      (D) Training programs.--The training programs that
                    may be approved under subparagraph (A) include--
                              (i) employer-based training, including--
                                      (I) on-the-job training if approved
                                    by the Secretary under subsection (c);
                                    and
                                      (II) joint labor-management
                                    apprenticeship programs;
                              (ii) any training program provided by a State
                            pursuant to title I of the Workforce Investment
                            Act of 1998;
                              (iii) any training program approved by a
                            private industry council established under
                            section 102 of such Act;
                              (iv) any programs in career and technical
                            education described in section 3(5) of the Carl
                            D. Perkins Career and Technical Education Act
                            of 2006;
                              (v) any program of remedial education;
                              (vi) any program of prerequisite education or
                            coursework required to enroll in training that
                            may be approved under this paragraph;
                              (vii) any training program for which all, or
                            any portion, of the costs of training the
                            worker are paid--
                                      (I) under any Federal or State
                                    program other than this part; or
                                      (II) from any source other than this
                                    part;
                              (viii) any training program or coursework at
                            an accredited institution of higher education
                            (described in section 102 of the Higher
                            Education Act of 1965 (20 U.S.C. 1002)),
                            including a training program or coursework for
                            the purpose of--
                                      (I) obtaining a degree or
                                    certification; or
                                      (II) completing a degree or
                                    certification that the worker had
                                    previously begun at an accredited
                                    institution of higher education; and
                              (ix) any other training program approved by
                            the Secretary.
      (3) Supplemental assistance.--The Secretary may, as appropriate,
    authorize supplemental assistance that is necessary to defray
    reasonable transportation and subsistence expenses for separate
    maintenance in a case in which training for a worker is provided in a
    facility that is not within commuting distance of the regular place of
    residence of the worker.
      (c) On-the-Job Training Requirements.--
              (1) In general.--The Secretary may approve on-the-job
            training for any adversely affected worker if--
                      (A) the Secretary determines that on-the-job
                    training--
                              (i) can reasonably be expected to lead to
                            suitable employment with the employer offering
                            the on-the-job training;
                              (ii) is compatible with the skills of the
                            worker;
                              (iii) includes a curriculum through which the
                            worker will gain the knowledge or skills to
                            become proficient in the job for which the
                            worker is being trained; and
                              (iv) can be measured by benchmarks that
                            indicate that the worker is gaining such
                            knowledge or skills; and
                      (B) the State determines that the on-the-job training
                    program meets the requirements of clauses (iii) and
                    (iv) of subparagraph (A).
              (2) Monthly payments.--The Secretary shall pay the costs of
            on-the-job training approved under paragraph (1) in monthly
            installments.
              (3) Contracts for on-the-job training.--
                      (A) In general.--The Secretary shall ensure, in
                    entering into a contract with an employer to provide
                    on-the-job training to a worker under this subsection,
                    that the skill requirements of the job for which the
                    worker is being trained, the academic and occupational
                    skill level of the worker, and the work experience of
                    the worker are taken into consideration.
                      (B) Term of contract.--Training under any such
                    contract shall be limited to the period of time
                    required for the worker receiving on-the-job training
                    to become proficient in the job for which the worker is
                    being trained, but may not exceed 156 weeks in any
                    case.
              (4) Exclusion of certain employers.--The Secretary shall not
            enter into a contract for on-the-job training with an employer
            that exhibits a pattern of failing to provide workers receiving
            on-the-job training from the employer with--
                      (A) continued, long-term employment as regular
                    employees; and
                      (B) wages, benefits, and working conditions that are
                    equivalent to the wages, benefits, and working
                    conditions provided to regular employees who have
                    worked a similar period of time and are doing the same
                    type of work as workers receiving on-the-job training
                    from the employer.
      (d) Administrative and Employment Services Funding.--
              (1) Administrative funding.--In addition to any funds made
            available to a State to carry out this section for a fiscal
            year, the State shall receive for the fiscal year a payment in
            an amount that is equal to 15 percent of the amount of such
            funds and shall--
                      (A) use not more than \2/3\ of such payment for the
                    administration of the climate change adjustment
                    assistance for workers program under this part,
                    including for--
                              (i) processing waivers of training
                            requirements under subsection (a)(4); and
                              (ii) collecting, validating, and reporting
                            data required under this part; and
                      (B) use not less than \1/3\ of such payment for
                    information and employment services under subsection
                    (b)(1).
              (2) Employment services funding.--
                      (A) In general.--In addition to any funds made
                    available to a State to carry out subsection (b)(2) and
                    the payment under paragraph (1) for a fiscal year, the
                    Secretary shall provide to the State for the fiscal
                    year a reasonable payment for the purpose of providing
                    employment and services under subsection (b)(1).
                      (B) Voluntary return of funds.--A State that receives
                    a payment under subparagraph (A) may decline or
                    otherwise return such payment to the Secretary.
      (e) Job Search Allowances.--The Secretary of Labor may provide
    adversely affected workers a one-time job search allowance in
    accordance with regulations prescribed by the Secretary. Any job search
    allowance provided shall be available only under the following
    circumstances and conditions:
              (1) The worker is no longer eligible for the climate change
            adjustment allowance under subsection (a) and has completed the
            training program required by subsection (a)(1)(E).
              (2) The Secretary determines that the worker cannot
            reasonably be expected to secure suitable employment in the
            commuting area in which the worker resides.
              (3) An allowance granted shall provide reimbursement to the
            worker of all necessary job search expenses as prescribed by
            the Secretary in regulations. Such reimbursement under this
            subsection may not exceed $1,500 for any worker.
      (f) Relocation Allowance Authorized.--
              (1) In general.--Any adversely affected worker covered by a
            certification issued under section 425 may file an application
            for a relocation allowance with the Secretary, and the
            Secretary may grant the relocation allowance, subject to the
            terms and conditions of this subsection.
              (2) Conditions for granting allowance.--A relocation
            allowance may be granted if all of the following terms and
            conditions are met:
                      (A) Assist an adversely affected worker.--The
                    relocation allowance will assist an adversely affected
                    worker in relocating within the United States.
                      (B) Local employment not available.--The Secretary
                    determines that the worker cannot reasonably be
                    expected to secure suitable employment in the commuting
                    area in which the worker resides.
                      (C) Total separation.--The worker is totally
                    separated from employment at the time relocation
                    commences.
                      (D) Suitable employment obtained.--The worker--
                              (i) has obtained suitable employment
                            affording a reasonable expectation of long-term
                            duration in the area in which the worker wishes
                            to relocate; or
                              (ii) has obtained a bona fide offer of such
                            employment.
                      (E) Application.--The worker filed an application
                    with the Secretary at such time and in such manner as
                    the Secretary shall specify by regulation.
              (3) Amount of allowance.--The relocation allowance granted to
            a worker under paragraph (1) includes--
                      (A) all reasonable and necessary expenses (including,
                    subsistence and transportation expenses at levels not
                    exceeding amounts prescribed by the Secretary in
                    regulations) incurred in transporting the worker, the
                    worker's family, and household effects; and
                      (B) a lump sum equivalent to 3 times the worker's
                    average weekly wage, up to a maximum payment of $1,500.
              (4) Limitations.--A relocation allowance may not be granted
            to a worker unless--
                      (A) the relocation occurs within 182 days after the
                    filing of the application for relocation assistance; or
                      (B) the relocation occurs within 182 days after the
                    conclusion of training, if the worker entered a
                    training program approved by the Secretary under
                    subsection (b)(2).
      (g) Health Insurance Continuation.--Not later than 1 year after the
    date of enactment of this part, the Secretary of Labor shall prescribe
    regulations to provide, for the period in which an adversely affected
    worker is participating in a training program described in subsection
    (b)(2), 80 percent of the monthly premium of any health insurance
    coverage that an adversely affected worker was receiving from such
    worker's employer prior to the separation from employment described in
    section 425(b), to be paid to any health care insurance plan designated
    by the adversely affected worker receiving an allowance under this
    section.

    SEC. 427. GENERAL PROVISIONS.

      (a) Agreements With States.--
              (1) In general.--The Secretary is authorized on behalf of the
            United States to enter into an agreement with any State, or
            with any State agency (referred to in this section as
            ``cooperating States'' and ``cooperating States agencies''
            respectively). Under such an agreement, the cooperating State
            agency--
                      (A) as agent of the United States, shall receive
                    applications for, and shall provide, payments on the
                    basis provided in this part;
                      (B) in accordance with paragraph (6), shall make
                    available to adversely affected workers covered by a
                    certification under section 425(d) the employment
                    services described in section 426(b)(1);
                      (C) shall make any certifications required under
                    section 425(d);
                      (D) shall otherwise cooperate with the Secretary and
                    with other State and Federal agencies in providing
                    payments and services under this part.
            Each agreement under this section shall provide the terms and
            conditions upon which the agreement may be amended, suspended,
            or terminated.
              (2) Form and manner of data.--Each agreement under this
            section shall--
                      (A) provide the Secretary with the authority to
                    collect any data the Secretary determines necessary to
                    meet the requirements of this part; and
                      (B) specify the form and manner in which any such
                    data requested by the Secretary shall be reported.
              (3) Relationship to unemployment insurance.--Each agreement
            under this section shall provide that an adversely affected
            worker receiving a climate change adjustment allowance under
            this part shall not be eligible for unemployment insurance
            otherwise payable to such worker under the laws of the State.
              (4) Review.--A determination by a cooperating State agency
            with respect to entitlement to program benefits under an
            agreement is subject to review in the same manner and to the
            same extent as determinations under the applicable State law
            and only in that manner and to that extent.
              (5) Coordination.--Any agreement entered into under this
            section shall provide for the coordination of the
            administration of the provisions for employment services,
            training, and supplemental assistance under section 426 and
            under title I of the Workforce Investment Act of 1998 upon such
            terms and conditions as are established by the Secretary in
            consultation with the States and set forth in such agreement.
            Any agency of the State jointly administering such provisions
            under such agreement shall be considered to be a cooperating
            State agency for purposes of this part.
              (6) Responsibilities of cooperating agencies.--Each
            cooperating State agency shall, in carrying out paragraph
            (1)(B)--
                      (A) advise each worker who applies for unemployment
                    insurance of the benefits under this part and the
                    procedures and deadlines for applying for such
                    benefits;
                      (B) facilitate the early filing of petitions under
                    section 425(a) for any workers that the agency
                    considers are likely to be eligible for benefits under
                    this part;
                      (C) advise each adversely affected worker to apply
                    for training under section 426(b) before, or at the
                    same time, the worker applies for climate change
                    adjustment allowances under section 426(a);
                      (D) perform outreach to, intake of, and orientation
                    for adversely affected workers and adversely affected
                    incumbent workers covered by a certification under
                    section 426(a) with respect to assistance and benefits
                    available under this part;
                      (E) make employment services described in section
                    426(b)(1) available to adversely affected workers and
                    adversely affected incumbent workers covered by a
                    certification under section 425(d) and, if funds
                    provided to carry out this part are insufficient to
                    make such services available, make arrangements to make
                    such services available through other Federal programs;
                    and
                      (F) provide the benefits and reemployment services
                    under this part in a manner that is necessary for the
                    proper and efficient administration of this part,
                    including the use of state agency personnel employed in
                    accordance with a merit system of personnel
                    administration standards, including--
                              (i) making determinations of eligibility for,
                            and payment of, climate change readjustment
                            allowances and health care benefit replacement
                            amounts;
                              (ii) developing recommendations regarding
                            payments as a bridge to retirement and lump sum
                            payments to pension plans in accordance with
                            this subsection; and
                              (iii) the provision of reemployment services
                            to eligible workers, including referral to
                            training services.
              (7) In order to promote the coordination of workforce
            investment activities in each State with activities carried out
            under this part, any agreement entered into under this section
            shall provide that the State shall submit to the Secretary, in
            such form as the Secretary may require, the description and
            information described in paragraphs (8) and (14) of section
            112(b) of the Workforce Investment Act of 1998 (29 U.S.C.
            2822(b)) and a description of the State's rapid response
            activities under section 221(a)(2)(A).
              (8) Control measures.--
                      (A) In general.--The Secretary shall require each
                    cooperating State and cooperating State agency to
                    implement effective control measures and to effectively
                    oversee the operation and administration of the climate
                    change adjustment assistance program under this part,
                    including by means of monitoring the operation of
                    control measures to improve the accuracy and timeliness
                    of the data being collected and reported.
                      (B) Definition.--For purposes of subparagraph (A),
                    the term ``control measures'' means measures that--
                              (i) are internal to a system used by a State
                            to collect data; and
                              (ii) are designed to ensure the accuracy and
                            verifiability of such data.
              (9) Data reporting.--
                      (A) In general.--Any agreement entered into under
                    this section shall require the cooperating State or
                    cooperating State agency to report to the Secretary on
                    a quarterly basis comprehensive performance
                    accountability data, to consist of--
                              (i) the core indicators of performance
                            described in subparagraph (B)(i);
                              (ii) the additional indicators of performance
                            described in subparagraph (B)(ii), if any; and
                              (iii) a description of efforts made to
                            improve outcomes for workers under the climate
                            change adjustment assistance program.
                      (B) Core indicators described.--
                              (i) In general.--The core indicators of
                            performance described in this subparagraph
                            are--
                                      (I) the percentage of workers
                                    receiving benefits under this part who
                                    are employed during the second calendar
                                    quarter following the calendar quarter
                                    in which the workers cease receiving
                                    such benefits;
                                      (II) the percentage of such workers
                                    who are employed in each of the third
                                    and fourth calendar quarters following
                                    the calendar quarter in which the
                                    workers cease receiving such benefits;
                                    and
                                      (III) the earnings of such workers in
                                    each of the third and fourth calendar
                                    quarters following the calendar quarter
                                    in which the workers cease receiving
                                    such benefits.
                              (ii) Additional indicators.--The Secretary
                            and a cooperating State or cooperating State
                            agency may agree upon additional indicators of
                            performance for the climate change adjustment
                            assistance program under this part, as
                            appropriate.
                      (C) Standards with respect to reliability of data.--
                    In preparing the quarterly report required by
                    subparagraph (A), each cooperating State or cooperating
                    State agency shall establish procedures that are
                    consistent with guidelines to be issued by the
                    Secretary to ensure that the data reported are valid
                    and reliable.
              (10) Verification of eligibility for program benefits.--
                      (A) In general.--An agreement under this section
                    shall provide that the State shall periodically
                    redetermine that a worker receiving benefits under this
                    part who is not a citizen or national of the United
                    States remains in a satisfactory immigration status.
                    Once satisfactory immigration status has been initially
                    verified through the immigration status verification
                    system described in section 1137(d) of the Social
                    Security Act (42 U.S.C. 1320b-7(d)) for purposes of
                    establishing a worker's eligibility for unemployment
                    compensation, the State shall reverify the worker's
                    immigration status if the documentation provided during
                    initial verification will expire during the period in
                    which that worker is potentially eligible to receive
                    benefits under this part. The State shall conduct such
                    redetermination in a timely manner, utilizing the
                    immigration status verification system described in
                    section 1137(d) of the Social Security Act (42 U.S.C.
                    1320b-7(d)).
                      (B) Procedures.--The Secretary shall establish
                    procedures to ensure the uniform application by the
                    States of the requirements of this paragraph.
      (b) Administration Absent State Agreement.--
              (1) In any State where there is no agreement in force between
            a State or its agency under subsection (a), the Secretary shall
            promulgate regulations for the performance of all necessary
            functions under section 426, including provision for a fair
            hearing for any worker whose application for payments is
            denied.
              (2) A final determination under paragraph (1) with respect to
            entitlement to program benefits under section 426 is subject to
            review by the courts in the same manner and to the same extent
            as is provided by section 205(g) of the Social Security Act (42
            U.S.C. 405(g)).
      (c) Prohibition on Contracting With Private Entities.--Neither the
    Secretary nor a State may contract with any private for-profit or
    nonprofit entity for the administration of the climate change
    adjustment assistance program under this part.
      (d) Payment to the States.--
              (1) In general.--The Secretary shall from time to time
            certify to the Secretary of the Treasury for payment to each
            cooperating State the sums necessary to enable such State as
            agent of the United States to make payments provided for by
            this part.
              (2) Restriction.--All money paid a State under this
            subsection shall be used solely for the purposes for which it
            is paid; and money so paid which is not used for such purposes
            shall be returned, at the time specified in the agreement under
            this section, to the Secretary of the Treasury.
              (3) Bonds.--Any agreement under this section may require any
            officer or employee of the State certifying payments or
            disbursing funds under the agreement or otherwise participating
            in the performance of the agreement, to give a surety bond to
            the United States in such amount as the Secretary may deem
            necessary, and may provide for the payment of the cost of such
            bond from funds for carrying out the purposes of this part.
      (e) Labor Standards.--
              (1) Prohibition on displacement.--An individual in an
            apprenticeship program or on-the-job training program under
            this part shall not displace (including a partial displacement,
            such as a reduction in the hours of non-overtime work, wages,
            or employment benefits) any employed employee.
              (2) Prohibition on impairment of contracts.--An
            apprenticeship program or on-the-job raining program under this
            Act shall not impair an existing contract for services or
            collective bargaining agreement, and no such activity that
            would be inconsistent with the terms of a collective bargaining
            agreement shall be undertaken without the written concurrence
            of the labor organization and employer concerned.
              (3) Additional standards.--The Secretary, or a State acting
            under an agreement described in subsection (a) may pay the
            costs of on-the-job training, notwithstanding any other
            provision of this section, only if--
                      (A) in the case of training which would be
                    inconsistent with the terms of a collective bargaining
                    agreement, the written concurrence of the labor
                    organization concerned has been obtained;
                      (B) the job for which such adversely affected worker
                    is being trained is not being created in a promotional
                    line that will infringe in any way upon the promotional
                    opportunities of currently employed individuals;
                      (C) such training is not for the same occupation from
                    which the worker was separated and with respect to
                    which such worker's group was certified pursuant to
                    section 425(d);
                      (D) the employer is provided reimbursement of not
                    more than 50 percent of the wage rate of the
                    participant, for the cost of providing the training and
                    additional supervision related to the training; and
                      (E) the employer has not received payment under with
                    respect to any other on-the-job training provided by
                    such employer which failed to meet the requirements of
                    subparagraphs (A) through (D).
      (f) Definitions.--As used in this part the following definitions
    apply:
              (1) The term ``adversely affected employment'' means
            employment at an employment site, if workers at such site are
            eligible to apply for adjustment assistance under this part.
              (2) The term ``adversely affected worker'' means an
            individual who has been totally or partially separated from
            employment and is eligible to apply for adjustment assistance
            under this part.
              (3) The term ``average weekly wage'' means \1/13\ of the
            total wages paid to an individual in the quarter in which the
            individual's total wages were highest among the first 4 of the
            last 5 completed calendar quarters immediately before the
            quarter in which occurs the week with respect to which the
            computation is made. Such week shall be the week in which total
            separation occurred, or, in cases where partial separation is
            claimed, an appropriate week, as defined in regulations
            prescribed by the Secretary.
              (4) The term ``average weekly hours'' means the average hours
            worked by the individual (excluding overtime) in the employment
            from which he has been or claims to have been separated in the
            52 weeks (excluding weeks during which the individual was sick
            or on vacation) preceding the week specified in the last
            sentence of paragraph (4).
              (5) The term ``benefit period'' means, with respect to an
            individual--
                      (A) the benefit year and any ensuing period, as
                    determined under applicable State law, during which the
                    individual is eligible for regular compensation,
                    additional compensation, or extended compensation; or
                      (B) the equivalent to such a benefit year or ensuing
                    period provided for under the applicable Federal
                    unemployment insurance law.
              (6) The term ``consumer goods manufacturing'' means the
            electrical equipment, appliance, and component manufacturing
            industry and transportation equipment manufacturing.
              (7) The term ``employment site'' means a single facility or
            site of employment.
              (8) The term ``energy-intensive manufacturing industries''
            means all industrial sectors, entities, or groups of entities
            that meet the energy or greenhouse gas intensity criteria in
            section 765(b)(2)(A)(i) of the Clean Air Act based on the most
            recent data available.
              (9) The term ``energy producing and transforming industries''
            means the coal mining industry, oil and gas extraction,
            electricity power generation, transmission and distribution,
            and natural gas distribution.
              (10) The term ``industries dependent on energy industries''
            means rail transportation and pipeline transportation.
              (11) The term ``on-the-job training'' means training provided
            by an employer to an individual who is employed by the
            employer.
              (12) The terms ``partial separation'' and ``partially
            separated'' refer, with respect to an individual who has not
            been totally separated, that such individual has had--
                      (A) his or her hours of work reduced to 80 percent or
                    less of his average weekly hours in adversely affected
                    employment; and
                      (B) his or her wages reduced to 80 percent or less of
                    his average weekly wage in such adversely affected
                    employment.
              (13) The term ``public agency'' means a department or agency
            of a State or political subdivision of a State or of the
            Federal government.
              (14) The term ``Secretary'' means the Secretary of Labor.
              (15) The term ``service workers'' means workers supplying
            support or auxiliary services to an employment site.
              (16) The term ``State'' includes the District of Columbia and
            the Commonwealth of Puerto Rico: and the term ``United States''
            when used in the geographical sense includes such Commonwealth.
              (17) The term ``State agency'' means the agency of the State
            which administers the State law.
              (18) The term ``State law'' means the unemployment insurance
            law of the State approved by the Secretary of Labor under
            section 3304 of the Internal Revenue Code of 1954.
              (19) The terms ``total separation'' and ``totally separated''
            refer to the layoff or severance of an individual from
            employment with an employer in which adversely affected
            employment exists.
              (20) The term ``unemployment insurance'' means the
            unemployment compensation payable to an individual under any
            State law or Federal unemployment compensation law, including
            chapter 85 of title 5, United States Code, and the Railroad
            Unemployment Insurance Act. The terms ``regular compensation'',
            ``additional compensation'', and ``extended compensation'' have
            the same respective meanings that are given them in section
            205(2), (3), and (4) of the Federal-State Extended Unemployment
            Compensation Act of 1970 (26 U.S.C. 3304 note.)
              (21) The term ``week'' means a week as defined in the
            applicable State law.
              (22) The term ``week of unemployment'' means a week of total,
            part-total, or partial unemployment as determined under the
            applicable State law or Federal unemployment insurance law.
      (g) Special Rule With Respect to Military Service.--
              (1) In general.--Notwithstanding any other provision of this
            part, the Secretary may waive any requirement of this part that
            the Secretary determines is necessary to ensure that an
            adversely affected worker who is a member of a reserve
            component of the Armed Forces and serves a period of duty
            described in paragraph (2) is eligible to receive a climate
            change adjustment allowance, training, and other benefits under
            this part in the same manner and to the same extent as if the
            worker had not served the period of duty.
              (2) Period of duty described.--An adversely affected worker
            serves a period of duty described in this paragraph if, before
            completing training under this part, the worker--
                      (A) serves on active duty for a period of more than
                    30 days under a call or order to active duty of more
                    than 30 days; or
                      (B) in the case of a member of the Army National
                    Guard of the United States or Air National Guard of the
                    United States, performs full-time National Guard duty
                    under section 502(f) of title 32, United States Code,
                    for 30 consecutive days or more when authorized by the
                    President or the Secretary of Defense for the purpose
                    of responding to a national emergency declared by the
                    President and supported by Federal funds.
      (h) Fraud and Recovery of Overpayments.--
              (1) Recovery of payments to which an individual was not
            entitled.--If the Secretary or a court of competent
            jurisdiction determines that any person has received any
            payment under this part to which the individual was not
            entitled, such individual shall be liable to repay such amount
            to the Secretary, as the case may be, except that the Secretary
            shall waive such repayment if such agency or the Secretary
            determines that--
                      (A) the payment was made without fault on the part of
                    such individual; and
                      (B) requiring such repayment would cause a financial
                    hardship for the individual (or the individual's
                    household, if applicable) when taking into
                    consideration the income and resources reasonably
                    available to the individual (or household) and other
                    ordinary living expenses of the individual (or
                    household).
              (2) Means of recovery.--Unless an overpayment is otherwise
            recovered, or waived under paragraph (1), the Secretary shall
            recover the overpayment by deductions from any sums payable to
            such person under this part, under any Federal unemployment
            compensation law or other Federal law administered by the
            Secretary which provides for the payment of assistance or an
            allowance with respect to unemployment. Any amount recovered
            under this section shall be returned to the Treasury of the
            United States.
              (3) Penalties for fraud.--Any person who--
                      (A) makes a false statement of a material fact
                    knowing it to be false, or knowingly fails to disclose
                    a material fact, for the purpose of obtaining or
                    increasing for that person or for any other person any
                    payment authorized to be furnished under this part; or
                      (B) makes a false statement of a material fact
                    knowing it to be false, or knowingly fails to disclose
                    a material fact, when providing information to the
                    Secretary during an investigation of a petition under
                    section 425(c),
    shall be imprisoned for not more than one year, or fined under title
    18, United States Code, or both, and be ineligible for any further
    payments under this part.
      (i) Regulations.--The Secretary shall prescribe such regulations as
    may be necessary to carry out the provisions of this part.
      (j) Study on Older Workers.--The Secretary shall conduct a study
    examine the circumstances of older adversely affected workers and the
    ability of such workers to access their retirement benefits. The
    Secretary shall transmit a report to Congress not later than 2 years
    after the date of enactment of this part on the findings of the study
    and the Secretary's recommendations on how to ensure that adversely
    affected workers within 2 years of retirement are able to access their
    retirement benefits.
      [(k) Spending Limit.--For each fiscal year, the total amount of funds
    disbursed for the purposes described in section 426 shall not exceed
    the amount deposited in that fiscal year into the Climate Change Worker
    Assistance Fund established under section [782(j)] of the Clean Air
    Act. The annual spending limit for any succeeding year shall be
    increased by the difference, if any, between the amount of the prior
    year's disbursements and the spending limitation for that year. The
    Secretary shall promulgate rules to ensure that this spending limit is
    not exceeded. Such rules shall provide that workers who receive any of
    the benefits described in section 426 receive full benefits, and shall
    include the establishment of a waiting list for workers in the event
    that the requests for assistance exceed the spending limit.]

                        Subtitle C--Consumer Assistance

    SEC. 431. ENERGY TAX CREDIT.

      Subpart C of part IV of subchapter A of chapter 1 of the Internal
    Revenue Code of 1986 is amended by inserting after section 36A the
    following new section:

    ``SEC. 36B. ENERGY TAX CREDIT.

      ``(a) Allowance of Credit.--In the case of an eligible individual,
    there shall be allowed as a credit against the tax imposed by this
    subtitle for the taxable year an amount equal to--
              ``(1) for an eligible individual with applicable income of
            less than $6,000, the phase in rate times the applicable
            income;
              ``(2) for an eligible individual with applicable income that
            is greater than or equal to $6,000 and is less than or equal to
            the phase down amount, the maximum energy tax credit; and
              ``(3) for an individual with applicable income that exceeds
            the phase down amount, an amount equal to--
                      ``(A) the maximum energy tax credit minus; or
                      ``(B) the difference between the individual's
                    applicable income and the phase down amount multiplied
                    by .2.
      ``(b) Coordination With Energy Refund Received Through State Human
    Service Agencies.--The amount described in subsection (a) shall be
    reduced by \1/12\ for each month in which the individual or his or her
    spouse received a refund under section 432 of the American Clean Energy
    and Security Act of 2009.
              ``(1) The Secretary of the Treasury shall promulgate
            regulations that instruct States on how to inform adult
            individuals who receive a refund under section 432 of the
            American Clean Energy and Security Act of 2009 of the number of
            months he or she received a refund and how such information
            shall be provided to the Internal Revenue Service.
              ``(2) The Secretary of the Treasury shall establish a
            telephone and online system that allows an individual to
            inquire about the number of months she or he received such a
            refund.
              ``(3) In the case of an individual that does not report the
            number of months a refund was provided under section 432 of the
            American Clean Energy and Security Act of 2009 or recorded an
            incorrect number of months, the Secretary of the Treasury shall
            adjust the energy tax credit based on the information received
            from States, provided that the Secretary of the Treasury has
            made a determination that the information meets a sufficient
            standard for accuracy.
      ``(c) Definitions and Special Rules.--For purposes of this section:
              ``(1) Eligible individual.--
                      ``(A) In general.--The term `eligible individual'
                    means any individual other than--
                              ``(i) any nonresident alien individual;
                              ``(ii) any individual with respect to whom a
                            deduction under section 151 is allowable to
                            another taxpayer for a taxable year beginning
                            in the calendar year in which the individual's
                            taxable year begins; and
                              ``(iii) an estate or trust.
                      ``(B) Identification number requirement.--Such term
                    shall not include any individual who--
                              ``(i) in the case of a return that is not a
                            joint return, does not include the social
                            security number of the individual; and
                              ``(ii) in the case of joint return, does not
                            include the social security number of at least
                            one of the taxpayers on such return.
                    For purposes of the preceding sentence, the social
                    security number shall not include a TIN issued by the
                    Internal Revenue Service.
              ``(2) Applicable income.--Applicable income means the larger
            of--
                      ``(A) earned income as defined in section 32(c)(2),
                    except that such term shall not include net earnings
                    from self-employment which are not taken into account
                    in computing taxable income; and
                      ``(B) adjusted gross income.
              ``(3) Phase in rate.--The Secretary of the Treasury shall
            compute the phase in rates each year for the energy credit for
            joint returns and for returns that are not filed jointly with
            respect to each relevant number of qualifying individuals such
            that the phase in rate equals the maximum energy tax credit
            divided by $6,000.
              ``(4) Maximum energy tax credit.--
                      ``(A) In general.--
                              ``(i) The maximum energy tax credit shall
                            vary based on the number of individuals in the
                            tax filing unit.
                              ``(ii) The maximum energy tax credit for a
                            filing unit of a particular size shall be equal
                            to the average annual reduction in purchasing
                            power for low-income households of that
                            household size, as calculated by the
                            Environmental Protection Agency, that results
                            from the regulation of greenhouse gas emissions
                            under title VII of the Clean Air Act.
                              ``(iii) The Environmental Protection Agency,
                            in consultation with other appropriate Federal
                            agencies, shall calculate the maximum energy
                            tax credit by August 31 of each year for the
                            following calendar year using the most recent,
                            reliable data available.
                      ``(B) Energy tax credit calculation.--
                              ``(i) Distribution.--For each calendar year,
                            the Environmental Protection Agency shall
                            determine pursuant to subparagraph (B)(iii) the
                            aggregate reduction in purchasing power among
                            all United States households that results from
                            the regulation of greenhouse gas emissions
                            under title VII of the Clean Air Act and
                            distribute that aggregate reduction in
                            purchasing power among all United States
                            households based on--
                                      ``(I) households' share of total
                                    consumption by all households;
                                      ``(II) the carbon intensity and
                                    covered-emissions intensity of
                                    households' consumption; and
                                      ``(III) the share of households'
                                    carbon and covered-emissions
                                    consumption that is not financed by
                                    Federal benefits subject to a cost of
                                    living adjustment that offsets
                                    increased carbon costs.
                              ``(ii) Maximum energy tax credit.--The
                            maximum energy tax credit shall be equal to the
                            arithmetic mean value of the amount allocated
                            under clause (i) to households of a specified
                            household size in the lowest income quintile.
                            Tax filing units that include 5 or more
                            individuals shall be eligible for the
                            arithmetic mean value of the amount allocated
                            under clause (i) to households that includes 5
                            or more individuals.
                              ``(iii) Aggregate reduction in purchasing
                            power.--For purposes of this section, the
                            aggregate reduction in purchasing power shall
                            be based on the projected total market value of
                            the emissions allowances used to demonstrate
                            compliance with title VII of the Clean Air Act
                            in that year, adjusted to reflect costs that
                            were not incurred by households as a result of
                            allowances freely allocated pursuant to section
                            782 of the Clean Air Act, as estimated by the
                            Environmental Protection Agency, and calculated
                            in a way generally recognized as suitable by
                            experts in evaluating such purchasing power
                            impacts.
                              ``(iv) Income quintiles.--Income quintiles
                            shall be determined by ranking households
                            according to income adjusted for household
                            size, and shall be constructed so that each
                            quintile contains an equal number of people.
              ``(5) Phase down amount.--
                      ``(A) In the case of an eligible individual who has
                    no qualifying individuals, the phase down amount shall
                    be--
                              ``(i) $20,000 in the case of an individual
                            who does not file a joint return; and
                              ``(ii) $25,000 in the case of a joint return.
                      ``(B) In the case of an eligible individual who files
                    a joint return and has at least one qualifying
                    individual--
                              ``(i) If the eligible individual has one
                            qualifying individual, the lowest income level
                            that exceeds the phaseout amount as defined in
                            section 32(b)(2) at which a married couple with
                            one qualifying child is ineligible for the
                            earned income credit for the taxable year.
                              ``(ii) If the eligible individual has two
                            qualifying individuals, the lowest income level
                            that exceeds the phaseout amount as defined in
                            section 32(b)(2) at which a married couple with
                            two qualifying children is ineligible for the
                            earned income credit for the taxable year.
                              ``(iii) If the eligible individual claims
                            three or more qualifying individuals, the
                            lowest income level that exceeds the phaseout
                            amount as defined in section 32(b)(2) at which
                            a married couple with three or more qualifying
                            children is ineligible for the earned income
                            credit for the taxable year.
                      ``(C) In the case of an eligible individual who does
                    not file a joint return and has at least one individual
                    qualifying individual--
                              ``(i) If the eligible individual has one
                            qualifying individual, the lowest income level
                            that exceeds the phaseout amount as defined in
                            section 32(b)(2) at which a single individual
                            with one qualifying child is ineligible for the
                            earned income credit for the taxable year.
                              ``(ii) If the eligible individual has two
                            qualifying individuals, the lowest income level
                            that exceeds the phaseout amount as defined in
                            section 32(b)(2) at which a single individual
                            with two qualifying children is ineligible for
                            the earned income credit for the taxable year.
                              ``(iii) If the eligible individual has three
                            or more qualifying individuals, the lowest
                            income level that exceeds the phaseout amount
                            as defined in section 32(b)(2) at which a
                            single individual with three or more qualifying
                            children is ineligible for the earned income
                            credit for the taxable year.
              ``(6) Qualifying individual.--A qualifying individual is an
            individual whom the eligible individual claims as a dependent
            under section 151, or as a qualifying child for the earned
            income credit under section 32(c)(3) or the child tax credit
            under section 24, or both. The term qualifying individual does
            not include--
                      ``(A) someone claimed as a dependent under section
                    151 if that dependent is claimed as a qualifying child
                    for the earned income tax credit or the child tax
                    credit on a tax form by someone other than the eligible
                    individual; and
                      ``(B) the eligible individual and, if a joint return,
                    his or her spouse.
              ``(7) Number of people in the tax filing unit.--The number of
            people in the tax filing unit shall equal the sum of the number
            of qualifying individuals plus--
                      ``(A) in the case of a joint return, 2; and
                      ``(B) in the case of a return that is not filed
                    jointly, 1.
      ``(d) Treatment of Possessions.--
              ``(1) Payments to possessions.--
                      ``(A) Mirror code possession.--The Secretary of the
                    Treasury shall pay to each possession of the United
                    States with a mirror code tax system amounts equal to
                    the loss to that possession by reason of the amendments
                    made by this section. Such amounts shall be determined
                    by the Secretary of the Treasury based on information
                    provided by the Government of the respective
                    possession.
                      ``(B) Other possessions.--The Secretary of the
                    Treasury shall pay to each possession of the United
                    States which does not have a mirror code tax system
                    amounts estimated by the Secretary of the Treasury as
                    being equal to the aggregate benefits that would have
                    been provided to residents of such possession by reason
                    of the amendments made by this section if a mirror code
                    tax system had been in effect in such possession. The
                    preceding sentence shall not apply for a given taxable
                    year with respect to any possession of the United
                    States unless such possession has a plan, which has
                    been approved by the Secretary of the Treasury, under
                    which such possession will promptly distribute such
                    payments to residents of such possession.
              ``(2) Coordination with credit allowed against united states
            income taxes.--No credit shall be allowed against United States
            income taxes for any taxable year under this section to any
            person--
                      ``(A) to whom a credit is allowed against taxes
                    imposed by the possession by reason of the amendments
                    made by this section for such taxable year; or
                      ``(B) who is eligible for a payment under a plan
                    described in paragraph (1)(B) with respect to such
                    taxable year.
      ``(e) Amount of Credit to Be Determined Under Tables.--The amount of
    the credit allowed by this section shall be determined under tables
    prescribed by the Secretary.
      ``(f) Inflation Adjustments.-- In the case of any taxable year
    beginning after 2009, dollar amounts in subsection (c)(4)(A) shall be
    increased by an amount equal to such dollar amount, multiplied by the
    cost-of-living adjustment determined under section 1(f)(3) of the
    Internal Revenue Code of 1986.
      ``(g) Treatment in Other Programs.--The energy tax credit provided
    under this section shall not be considered income or resources for any
    purpose under any Federal, State, or local laws, including, but not
    limited to, laws relating to an income tax or public assistance program
    (including, but not limited to, health care, cash aid, child care,
    nutrition programs, and housing assistance), and no participating State
    or political subdivision thereof shall decrease any assistance
    otherwise provided an individual or individuals because of the receipt
    of an energy tax credit under this Act.''.

    SEC. 432. ENERGY REFUND PROGRAM FOR LOW-INCOME CONSUMERS.

      (a) Energy Refund Program.--
              (1) The Administrator of the Environmental Protection Agency,
            or the agency designated by the Administrator shall formulate
            and administer the ``Energy Refund Program''.
              (2) At the request of the State agency, eligible low-income
            households within the State shall receive a monthly cash energy
            refund equal to the estimated loss in purchasing power
            resulting from this Act.
      (b) Eligibility.--
              (1) Eligible households.--Participation in the Energy Refund
            Program shall be limited to a household that--
                      (A) the State agency determines to be participating
                    in (i) the Supplemental Nutrition Assistance Program
                    authorized by the Food and Nutrition Act of 2008 (7
                    U.S.C. 2011 et seq.); (ii) the Food Distribution
                    Program on Indian Reservations authorized by section
                    4(b) of such Act (7 U.S.C. 2013(b)); or (iii) the
                    program for nutrition assistance in Puerto Rico or
                    American Samoa under section 19 of the such Act (7
                    U.S.C. 2028);
                      (B) has gross income that does not exceed 150 percent
                    of the poverty line; or
                      (C) consists of a single individual or a married
                    couple and (i) receives the subsidy described in
                    section 1860D-14 of the Social Security Act (42 U.S.C.
                    1395w-114); or (ii)(I) participates in the program
                    under section XVIII of the Social Security Act; and
                    (II) meets the income requirements described in section
                    1860D-14(a)(1) or (a)(2) of such Act (42 U.S.C. 1395w-
                    114(a)(1) or (a)(2)).
              (2) Streamlined eligibility for certain beneficiaries.--The
            Administrator, in consultation with the Secretary of Health and
            Human Services, the Commissioner of Social Security, the
            Railroad Retirement Board, the Secretary of Veterans Affairs,
            and the State agencies shall develop procedures to ensure that
            low-income beneficiaries of the benefit programs they
            administer receive the energy refund for which they are
            eligible.
              (3) Limitation.--Notwithstanding any provision of law, the
            Administrator shall establish procedures to ensure that
            individuals that qualify for the refund under paragraph (1)(B)
            and that do not participate in the Supplemental Nutrition
            Assistance Program are United States citizens, United States
            nationals, or individuals lawfully residing in the United
            States.
              (4) National standards.--The Administrator shall establish
            uniform national standards of eligibility in accordance with
            the provisions of this section. No State agency shall impose
            any other standard or requirement as a condition of eligibility
            or refund receipt under the program. Assistance in the Energy
            Refund Program shall be furnished promptly to all eligible
            households who make application for such participation.
      (c) Monthly Energy Refund Amount.--
              (1) Monthly energy refund.--The monthly refund under this
            subsection for households of 1, 2, 3, 4, and 5 or more members
            shall be equal to the maximum energy tax credit amount
            calculated under section 36B(c)(4) of the Internal Revenue Code
            of 1986 for each household size, divided by 12 and rounded to
            the nearest whole dollar amount.
              (2) Monthly eligibility.--A household shall not be eligible
            for the refund under this section for months that the household
            has not established eligibility under subsection (b).
      (d) Delivery Mechanism.--
              (1) Subject to standards and an implementation schedule set
            by the Administrator, the energy refund shall be provided in
            monthly installments via--
                      (A) direct deposit into the eligible household's
                    designated bank account;
                      (B) the State's electronic benefit transfer system;
                    or
                      (C) another Federal or State mechanism, if such a
                    mechanism is approved by the Administrator.
              (2) Such standards shall include--
                      (A)(i) defining the required level of recipient
                    protection regarding privacy;
                      (ii) guidance on how recipients are offered choices,
                    when relevant, about the delivery mechanism;
                      (iii) guidance on ease of use and access to the
                    refund, including the prohibition of fees charged to
                    recipients for withdrawals or other services; and
                      (iv) cost-effective protections against improper
                    accessing of the energy refund;
                      (B) operating standards that provide for
                    interoperability between States and law enforcement
                    monitoring; and
                      (C) other standards, as determined by the
                    Administrator or the Administrator's designee.
      (e) Information About Refund Provided to Households and Internal
    Revenue Service.--
              (1) By January 31 of each year, for each adult that was a
            member of a household that received an energy refund under this
            section in the State during the prior calendar year, each State
            shall issue a form that conforms to standards established by
            the Secretary of the Treasury under section 36B(b) of the
            Internal Revenue Code of 1986, containing--
                      (A) the name, address, and social security number of
                    the adult household member; and
                      (B) the number of months the individual was a member
                    of a household that received an energy refund under
                    this section.
              (2) States shall provide this information to the Internal
            Revenue Service in accordance to standards and regulations set
            forth by the Secretary of the Treasury.
      (f) Administration.--
              (1) In general.--The State agency of each participating State
            shall assume responsibility for the certification of applicant
            households and for the issuance of refunds and the control and
            accountability thereof.
              (2) Procedures.--Under standards established by the
            Administrator, the State agency shall establish procedures
            governing the administration of the Energy Refund Program that
            the State agency determines best serve households in the State,
            including households with special needs, such as households
            with elderly or disabled members, households in rural areas,
            homeless individuals, and households residing on reservations
            as defined in the Indian Child Welfare Act of 1978 and the
            Indian Financing Act of 1974. In carrying out this paragraph, a
            State agency--
                      (A) shall provide timely, accurate, and fair service
                    to applicants for, and participants in, the Energy
                    Refund Program;
                      (B) shall permit an applicant household to apply to
                    participate in the program at the time that the
                    household first contacts the State agency, and shall
                    consider an application that contains the name,
                    address, and signature of the applicant to be
                    sufficient to constitute an application for
                    participation;
                      (C) shall screen any applicant household for the
                    Supplemental Nutrition Assistance Program, the State's
                    medical assistance program under section XIX of the
                    Social Security Act, State Childrens Health Insurance
                    Program under section XXI of the Social Security Act,
                    and a State program that provides basic assistance
                    under a State program funded under title IV of the
                    Social Security Act or with qualified State
                    expenditures as defined in section 409(a)(7) of the
                    Social Security Act for eligibility for the Energy
                    Refund Program and, if eligible, shall enroll such
                    applicant household in the Energy Refund Program;
                      (D) shall complete certification of and provide a
                    refund to any eligible household not later than thirty
                    days following its filing of an application;
                      (E) shall use appropriate bilingual personnel and
                    materials in the administration of the program in those
                    portions of the State in which a substantial number of
                    members of low-income households speak a language other
                    than English; and
                      (F) shall utilize State agency personnel who are
                    employed in accordance with the current standards for a
                    Merit System of Personnel Administration or any
                    standards later prescribed by the Office of Personnel
                    Management pursuant to section 208 of the
                    Intergovernmental Personnel Act of 1970 (42 U.S.C.
                    4728) modifying or superseding such standards relating
                    to the establishment and maintenance of personnel
                    standards on a merit basis to make all tentative and
                    final determinations of eligibility and ineligibility.
              (3) Regulations.--
                      (A) Except as provided in subparagraph (B) the
                    Administrator shall issue such regulations consistent
                    with this section as the Administrator deems necessary
                    or appropriate for the effective and efficient
                    administration of the Energy Refund Program and shall
                    promulgate all such regulations in accordance with the
                    procedures set forth in section 553 of title 5, United
                    States Code.
                      (B) Without regard to section 553 of title 5 of such
                    Code, the Administrator may, during the period
                    beginning with the effective date of this section and
                    ending two years after such date, by rule promulgate as
                    final any procedures that are substantially the same as
                    the procedures governing the Supplemental Nutrition
                    Assistance Program at 7 C.F.R. 273.2, 273.12.273.15.
      (g) Treatment.--The value of the refund provided under this Act shall
    not be considered income or resources for any purpose under any
    Federal, State, or local laws, including, but not limited to, laws
    relating to an income tax, or public assistance programs (including,
    but not limited to, health care, cash aid, child care, nutrition
    programs, and housing assistance) and no participating State or
    political subdivision thereof shall decrease any assistance otherwise
    provided an individual or individuals because of the receipt of a
    refund under this Act.
      (h) Program Integrity.--For purposes of ensuring program integrity
    and complying with the requirements of the Improper Payment Information
    Act of 2002, the Administrator shall--
              (1) to the maximum extent possible rely on and coordinate
            with the quality control sample and review procedures of
            section 16(c)(2), (3), (4), and (5) of the Supplemental
            Nutrition Assistance Program; and
              (2) develop procedures to monitor the compliance with and
            accuracy of State agencies in providing forms to household
            members and the Internal Revenue Service under subsection (f).
      (i) Definitions.--
              (1) Administrator.--The term ``Administrator'' means the
            Administrator of the Environmental Protection Agency or the
            head of another agency designated by the Administrator.
              (2) Electronic benefit transfer system.--The term
            ``electronic benefit transfer system'' means a system by which
            household benefits or refunds defined under subsection (d) are
            issued from and stored in a central databank via electronic
            benefit transfer cards.
              (3) Gross income.--The term ``gross income'' means the gross
            income of a household that is determined in accordance with
            standards and procedures established under section 5 of the
            Food and Nutrition Act of 2008 (7 U.S.C. 2014) and its
            implementing regulations.
              (4) Household.--The term ``household'' means--
                      (A)(i) except as provided in subparagraph (C), an
                    individual or a group of individuals who are a
                    household under section 3(n) of the Food and Nutrition
                    Act of 2008 (7 U.S.C. 2012(n)); and
                      (ii) a single individual or married couple that
                    receive benefits under section 1860D-14 of the Social
                    Security Act (42 U.S.C. 1395w-114).
                      (B) The Administrator shall establish rules for
                    providing the energy refund in an equitable and
                    administratively simple manner to households where the
                    group of individuals who live together includes a
                    combination of members described in clauses (i) and
                    (ii) of subparagraph (A), or includes additional
                    members not described in clause (i) or clause (ii) of
                    subparagraph (A).
                      (C) The Administrator shall establish rules regarding
                    the eligibility and delivery of the energy refund to
                    groups of individuals described in section 3(n)(4) or
                    (5) of the Food and Nutrition Act of 2008 (7 U.S.C.
                    2012(n)).
              (5) Poverty line.--The term ``poverty line'' has the meaning
            given the term in section 673(2) of the Community Services
            Block Grant Act (42 U.S.C. 9902(2)), including any revision
            required by that section.
              (6) State.--The term ``State'' means the 50 States, the
            District of Columbia, the Commonwealth of Puerto Rico, American
            Samoa, the United States Virgin Islands, Guam, and the
            Commonwealth of the Northern Mariana Islands.
              (7) State agency.--The term ``State agency'' means an agency
            of State government, including the local offices thereof, that
            has responsibility for administration of the 1 or more
            federally aided public assistance programs within the State,
            and in those States where such assistance programs are operated
            on a decentralized basis, the term shall include the
            counterpart local agencies administering such programs.
              (8) Other terms.--Other terms not defined in this Act shall
            have the same meaning applied in the Supplemental Nutrition
            Assistance Program unless the Administrator finds for good
            cause that application of a particular definition would be
            detrimental to the purposes of the Energy Refund Program.

                     Subtitle D--Exporting Clean Technology

    SEC. 441. FINDINGS AND PURPOSES.

      (a) Findings.--Congress finds the following:
              (1) Protecting Americans from the impacts of climate change
            requires global reductions in greenhouse gas emissions.
              (2) Although developing countries are historically least
            responsible for the cumulative greenhouse gas emissions that
            are causing climate change and continue to have very low per
            capita greenhouse gas emissions, their overall greenhouse gas
            emissions are increasing as they seek to grow their economies
            and reduce energy poverty for their populations.
              (3) Many developing countries lack the financial and
            technical resources to adopt clean energy technologies and
            absent assistance their greenhouse gas emissions will continue
            to increase.
              (4) Investments in clean energy technology cooperation can
            substantially reduce global greenhouse gas emissions while
            providing developing countries with incentives to adopt
            policies that will address competitiveness concerns related to
            regulation of United States greenhouse gas emissions.
              (5) Investments in clean technology in developing countries
            will increase demand for clean energy products, open up new
            markets for United States companies, spur innovation, and lower
            costs.
              (6) Under Article 4 of the United Nations Framework
            Convention on Climate Change, developed country parties,
            including the United States, committed to ``take all
            practicable steps to promote, facilitate, and finance, as
            appropriate, the transfer of, or access to, environmentally
            sound technologies and know-how to other parties, particularly
            developing country parties, to enable them to implement the
            provisions of the Convention''.
              (7) Under the Bali Action Plan, developed country parties to
            the United Nations Framework Convention on Climate Change,
            including the United States, committed to ``enhanced action on
            the provision of financial resources and investment to support
            action on mitigation and adaptation and technology
            cooperation,'' including, inter alia, consideration of
            ``improved access to adequate, predictable, and sustainable
            financial resources and financial and technical support, and
            the provision of new and additional resources, including
            official and concessional funding for developing country
            parties''.
      (b) Purposes.--The purposes of this subtitle are--
              (1) to provide United States assistance and leverage private
            resources to encourage widespread implementation, in developing
            countries, of activities that reduce, sequester, or avoid
            greenhouse gas emissions; and
              (2) to provide such assistance in a manner that--
                      (A) encourages such countries to adopt policies and
                    measures, including sector-based and cross-sector
                    policies and measures, that substantially reduce,
                    sequester, or avoid greenhouse gas emissions; and
                      (B) promotes the successful negotiation of a global
                    agreement to reduce greenhouse gas emissions under the
                    United Nations Framework Convention on Climate Change.

    SEC. 442. DEFINITIONS.

      In this subtitle:
              (1) Allowance.--The term ``allowance'' means an emission
            allowance established under section 721 of the Clean Air Act.
              (2) Appropriate congressional committees.--The term
            ``appropriate congressional committees'' means--
                      (A) the Committees on Energy and Commerce, Foreign
                    Affairs, and Financial Services of the House of
                    Representatives; and
                      (B) the Committees on Environment and Public Works,
                    Energy and Natural Resources, and Foreign Relations of
                    the Senate.
              (3) Convention.--The term ``Convention'' means the United
            Nations Framework Convention on Climate Change, done at New
            York on May 9, 1992, and entered into force on March 21, 1994.
              (4) Developing country.--The term ``developing country''
            means a country eligible to receive official development
            assistance according to the income guidelines of the
            Development Assistance Committee of the Organization for
            Economic Cooperation and Development.
              (5) Eligible country.--The term ``eligible country'' means a
            developing country that is determined by the interagency group
            under section 444 to be eligible to receive assistance from the
            International Clean Technology Account.
              (6) Interagency group.--The term ``interagency group'' means
            the group established by the President under section 443 to
            administer distributions from the International Clean
            Technology Account.
              (7) International clean technology account.--The term
            ``International Clean Technology Account'' means the account to
            which the Administrator allocates allowances under section
            782(o) of the Clean Air Act.
              (8) Least developed country.--The term ``least developed
            country'' means a foreign country the United Nations has
            identified as among the least developed of developing
            countries.
              (9) Qualifying activity.--The term ``qualifying activity''
            means an activity that meets the criteria in section 445.
              (10) Qualifying entity.--The term ``qualifying entity'' means
            a national, regional, or local government in, or a
            nongovernmental organization or private entity located or
            operating in, an eligible country.

    SEC. 443. GOVERNANCE.

      (a) Oversight.--The Secretary of State, or such other Federal agency
    head as the President may designate, in consultation with the
    interagency group established under subsection (b), shall oversee
    distributions of allowances from the International Clean Technology
    Account.
      (b) Interagency Group.--The President shall establish an interagency
    group to administer the International Clean Technology Account. The
    Members of the interagency group shall include--
              (1) the Secretary of State;
              (2) the Administrator of the Environmental Protection Agency;
              (3) the Secretary of Energy;
              (4) the Secretary of the Treasury;
              (5) the Administrator of the United States Agency for
            International Development; and
              (6) any other head of a Federal agency or executive branch
            appointee that the President may designate.
      (c) Chairperson.--The Secretary of State shall serve as the
    chairperson of the interagency group.
      (d) Supplement Not Supplant.--Allowances distributed from the
    International Clean Technology Account shall be used to supplement, and
    not to supplant, any other Federal, State, or local resources available
    to carry out activities that are qualifying activities under this
    subtitle.

    SEC. 444. DETERMINATION OF ELIGIBLE COUNTRIES.

      (a) In General.--The interagency group shall determine a country to
    be an eligible country for the purposes of this subtitle if a country
    meets the following criteria:
              (1) The country is a developing country that--
                      (A) has entered into an international agreement to
                    which the United States is a party, under which such
                    country agrees to take actions to produce measurable,
                    reportable, and verifiable greenhouse gas emissions
                    mitigation; or
                      (B) is determined by the interagency group to have in
                    force national policies and measures that are capable
                    of producing measurable, reportable, and verifiable
                    greenhouse gas emissions mitigation.
              (2) The country has developed a nationally appropriate
            mitigation strategy that seeks to achieve substantial
            reductions, sequestration, or avoidance of greenhouse gas
            emissions, relative to business-as-usual levels.
              (3) Subject to subsection (b)(1), such other criteria as the
            President determines will serve the purposes of this subtitle
            or other United States national security, foreign policy,
            environmental, or economic objectives.
      (b) Exceptions.--
              (1) Subsection (a)(3) applies only to bilateral assistance
            under section 446(c).
              (2) The eligibility criteria in this section do not apply in
            the case of least developed countries receiving assistance
            under section 445(7) for the purpose of building capacity to
            meet such eligibility criteria.

    SEC. 445. QUALIFYING ACTIVITIES.

      Assistance under this subtitle may be provided only to qualifying
    entities for clean technology activities (including building relevant
    technical and institutional capacity) that contribute to substantial,
    measurable, reportable, and verifiable reductions, sequestration, or
    avoidance of greenhouse gas emissions including--
              (1) deployment of technologies to capture and sequester
            carbon dioxide emissions from electric generating units or
            large industrial sources (except that assistance under this
            subtitle for such deployment shall be limited to the cost of
            retrofitting existing facilities with such technologies or the
            incremental cost of purchasing and installing such technologies
            at new facilities);
              (2) deployment of renewable electricity generation from wind,
            solar, sustainably-produced biomass, geothermal, marine, or
            hydrokinetic sources;
              (3) substantial increases in the efficiency of electricity
            transmission, distribution, and consumption;
              (4) deployment of low- or zero emissions technologies that
            are facing financial or other barriers to their widespread
            deployment which could be addressed through support under this
            subtitle in order to reduce, sequester, or avoid emission;
              (5) reduction in transportation sector emissions through
            increased transportation system and vehicle efficiency or use
            of transportation fuels that have lifecycle greenhouse gas
            emissions that are substantially lower than those attributable
            to fossil fuel-based alternatives;
              (6) reduction in black carbon emissions; or
              (7) capacity building activities, including--
                      (A) developing and implementing methodologies and
                    programs for measuring and quantifying greenhouse gas
                    emissions and verifying emissions mitigation;
                      (B) assessing, developing, and implementing
                    technology and policy options for greenhouse gas
                    emissions mitigation and avoidance of future emissions,
                    including sector and cross-sector mitigation
                    strategies; and
                      (C) providing other forms of technical assistance to
                    facilitate the qualification for, and receipt of,
                    assistance under this Act.

    SEC. 446. ASSISTANCE.

      (a) In General.--The Secretary of State, or such other Federal agency
    head as the President may designate, is authorized to provide
    assistance, through the distribution of allowances, from the
    International Clean Technology Account for qualifying activities that
    take place in eligible countries.
      (b) Distribution of Allowances.--
              (1) In general.--The Secretary of State, or such other
            Federal agency head as the President may designate, after
            consultation with the interagency group, shall distribute
            allowances from the International Clean Technology Account--
                      (A) in the form of bilateral assistance in accordance
                    with paragraph (4);
                      (B) to multilateral funds or institutions pursuant to
                    the Convention or an agreement negotiated under the
                    Convention; or
                      (C) through some combination of the mechanisms
                    identified in subparagraphs (A) and (B).
              (2) Global environment facility.--For any allowances provided
            to the Global Environment Facility pursuant to paragraph
            (1)(B), the President shall designate the Secretary of the
            Treasury to distribute those allowances to the Global
            Environment Facility.
              (3) Distribution through international fund or institution.--
            If allowances are distributed to a multilateral fund or
            institution, as authorized in paragraph (1), the Secretary of
            State, or such other Federal agency head as the President may
            designate, shall seek to ensure the establishment and
            implementation of adequate mechanisms to--
                      (A) apply and enforce the criteria for determination
                    of eligible countries and qualifying activities under
                    sections 444 and 445, respectively; and
                      (B) require public reporting describing the process
                    and methodology for selecting the ultimate recipients
                    of assistance and a description of each activity that
                    received assistance, including the amount of
                    obligations and expenditures for assistance.
              (4) Bilateral assistance.--
                      (A) In general.--Bilateral assistance under paragraph
                    (1) shall be carried out by the Administrator of the
                    United States Agency for International Development, in
                    consultation with the interagency group.
                      (B) Limitations.--Not more than 15 percent of
                    allowances made available to carry out bilateral
                    assistance under this subtitle in any year shall be
                    distributed to support activities in any single
                    country.
                      (C) Selection criteria.--Not later than 2 years after
                    the date of enactment of this subtitle, the
                    Administrator of the United States Agency for
                    International Development, after consultation with the
                    interagency group, shall develop and publish a set of
                    criteria to be used in evaluating activities within
                    eligible countries for bilateral assistance under this
                    subtitle.
                      (D) Criteria requirements.--The criteria under
                    subparagraph (C) shall require that--
                              (i) the activity is a qualifying activity;
                              (ii) the activity will be conducted as part
                            of an eligible country's nationally appropriate
                            mitigation strategy or as part of an eligible
                            country's actions towards providing a
                            nationally appropriate mitigation strategy to
                            reduce, sequester, or avoid emissions being
                            implemented by the eligible country;
                              (iii) the activity will not have adverse
                            effects on human health, safety, or welfare,
                            the environment, or natural resources;
                              (iv) any technologies deployed through
                            bilateral assistance under this subtitle will
                            be properly implemented and maintained;
                              (v) the activity will not cause any net loss
                            of United States jobs or displacement of United
                            States production;
                              (vi) costs of the activity will be shared by
                            the host country government, private sector
                            parties, or a multinational development bank,
                            except that this clause does not apply to least
                            developed countries; and
                              (vii) the activity meets such other
                            requirements as the interagency group
                            determines appropriate to further the purposes
                            of this subtitle.
                      (E) Criteria preferences.--The criteria under
                    subparagraph (C) shall give preference to activities
                    that--
                              (i) promise to achieve large-scale greenhouse
                            gas reductions, sequestration, or avoidance at
                            a national, sectoral or cross-sectoral level;
                              (ii) have the potential to catalyze a shift
                            within the host country towards widespread
                            deployment of low- or zero-carbon energy
                            technologies;
                              (iii) build technical and institutional
                            capacity and other activities that are unlikely
                            to be attractive to private sector funding; or
                              (iv) maximize opportunities to leverage other
                            sources of assistance and catalyze private-
                            sector investment.
      (c) Monitoring, Evaluation, and Enforcement.--The Secretary of State,
    or such other Federal agency head as the President may designate, in
    consultation with the interagency group, shall establish and implement
    a system to monitor and evaluate the performance of activities
    receiving assistance under this subtitle. The Secretary of State, or
    such other Federal agency head as the President may designate, shall
    have the authority to suspend or terminate assistance in whole or in
    part for an activity if it is determined that the activity is not
    operating in compliance with the approved proposal.
      (d) Coordination With U.S. Foreign Assistance.--Subject to the
    direction of the President, the Secretary of State shall, to the extent
    practicable, seek to align activities under this section with broader
    development, poverty alleviation, or natural resource management
    objectives and initiatives in the recipient country.
      (e) Annual Reports.--Not later than March 1, 2012, and annually
    thereafter, the President shall submit to the appropriate congressional
    committees a report on the assistance provided under this subtitle
    during the prior fiscal year. Such report shall include--
              (1) a description of the amount and value of allowances
            distributed during the prior fiscal year;
              (2) a description of each activity that received assistance
            during the prior fiscal year, and a description of the
            anticipated and actual outcomes;
              (3) an assessment of any adverse effects to human health,
            safety, or welfare, the environment, or natural resources as a
            result of activities supported under this subtitle;
              (4) an assessment of the success of the assistance provided
            under this subtitle to improving the technical and
            institutional capacity to implement substantial emissions
            reductions; and
              (5) an estimate of the greenhouse gas emissions reductions,
            sequestration, or avoidance achieved by assistance provided
            under this subtitle during the prior fiscal year.

                     Subtitle E--Adapting to Climate Change

                          PART 1--DOMESTIC ADAPTATION

             Subpart A--National Climate Change Adaptation Program

    SEC. 451. NATIONAL CLIMATE CHANGE ADAPTATION PROGRAM.

      The President shall establish within the United States Global Change
    Research Program a National Climate Change Adaptation Program for the
    purpose of increasing the overall effectiveness of Federal climate
    change adaptation efforts.

    SEC. 452. CLIMATE SERVICES.

      The Secretary of Commerce, acting through the Administrator of the
    National Oceanic and Atmospheric Administration (NOAA), shall establish
    within NOAA a National Climate Service to develop climate information,
    data, forecasts, and warnings at national and regional scales, and to
    distribute information related to climate impacts to State, local, and
    tribal governments and the public to facilitate the development and
    implementation of strategies to reduce society's vulnerability to
    climate variability and change.

    SEC. 453. STATE PROGRAMS TO BUILD RESILIENCE TO CLIMATE CHANGE IMPACTS.

      (a) Distribution of Allowances.--
              (1) In general.--Not later than September 30, 2012, and
            annually thereafter through 2050, the Administrator shall
            distribute allowances allocated for purposes of this subpart
            pursuant to section 782 of the Clean Air Act ratably among the
            State governments based on the product of--
                      (A) each State's population; and
                      (B) each State's allocation factor as determined
                    under paragraph (2).
              (2) State allocation factors.--
                      (A) In general.--Except as provided in subparagraph
                    (B), the allocation factor for a State shall be the
                    quotient of--
                              (i) the per capita income of all individuals
                            in the United States, divided by
                              (ii) the per capita income of all individuals
                            in such State.
                      (B) Limitation.--If the allocation factor for a State
                    as calculated under subparagraph (A) would exceed 1.2,
                    then the allocation factor for such State shall be 1.2.
                    If the allocation factor for a State as calculated
                    under subparagraph (A) would be less than 0.8, then the
                    allocation factor for such State shall be 0.8.
                      (C) Per capita income.--For purposes of this
                    paragraph, per capita income shall be--
                              (i) determined at 2-year intervals; and
                              (ii) subject to subparagraph (D), equal to
                            the average of the annual per capita incomes
                            for the most recent period of 3 consecutive
                            years for which satisfactory data are available
                            from the Department of Commerce at the time
                            such determination is made.
                      (D) Revenue directly resulting from a presidentially
                    declared major disaster.--For purposes of this
                    paragraph, per capita income from one or more of the
                    following sources shall be reduced or excluded if the
                    Secretary of Commerce (in consultation with the
                    Administrator and the secretaries or administrators of
                    the departments or agencies involved) determines that
                    the income accrues to persons as the result of a Major
                    Disaster (as declared by the President of the United
                    States) and if the Secretary finds that the inclusion
                    of one or more of these income sources, in whole or in
                    part, results in a transitory, rather than a
                    sustainable, increase in a State's per capita income
                    level relative to the national average:
                              (i) Property and casualty insurance
                            (including homeowners and renters insurance).
                              (ii) The National Flood Insurance Program of
                            the Federal Emergency Management Agency .
                              (iii) The Individual and Family Grants
                            Program of the Federal Emergency Management
                            Agency.
                              (iv) The Disaster Housing Program of the
                            Federal Emergency Management Agency.
                              (v) The Community Development Block Grant
                            Program of the Department of Housing and Urban
                            Development.
                              (vi) The Disaster Unemployment Assistance
                            Program of the Department of Labor.
                              (vii) Any other source determined appropriate
                            by the Administrator.
      (b) Sale of Allowances.--Each State receiving emission allowances
    under this section shall sell such allowances within 1 year of receipt,
    either directly or through consignment to the Administrator for
    auction. States shall deposit the proceeds of such sales within the
    State Energy and Environment Development (SEED) Fund established
    pursuant to section 131 of this Act . Emission allowances distributed
    under this section that are not sold within 1 year of receipt by a
    State shall be returned to the Administrator, who shall distribute such
    allowances to the remaining States ratably in accordance with the
    formula in subsection (a).
      (c) Use of Proceeds.--States shall, in accordance with a State
    climate adaptation plan approved pursuant to subsection (e), use the
    proceeds of sales of emission allowances distributed under this section
    exclusively for the implementation of projects, programs, or measures
    to build resilience to the impacts of climate change, including--
              (1) extreme weather events such as flooding and tropical
            cyclones;
              (2) more frequent heavy precipitation events;
              (3) water scarcity and adverse impacts on water quality;
              (4) stronger and longer heat waves;
              (5) more frequent and severe droughts;
              (6) rises in sea level;
              (7) ecosystem disruption;
              (8) increased air pollution; and
              (9) effects on public health.
      (d) Priority in Projects to Reduce Flood Events.--When implementing
    any project, program, or measure funded under this section and designed
    to reduce flood events, a State should consider prioritizing projects
    that seek to--
              (1) mitigate the destructive impacts of climate-related
            increases in the duration, frequency, or magnitude of rainfall
            or runoff, including snowmelt runoff, as well as hurricanes;
              (2) improve flood protection for densely populated urban
            areas; and
              (3) mitigate the destructive impact of ocean-related climate
            change effects, including effects on bays, estuaries, populated
            barrier islands and other ocean-related features, through a
            variety of means and measures, including the construction of
            jetties, levies, and other coastal structures in densely
            populated coastal areas impacted by climate change.
      (e) State Climate Adaptation Plans.--
              (1) In general.--Not later than 2 years after the date of
            enactment of this Act, the Administrator, or such other Federal
            agency head or heads as the President may designate, shall
            promulgate regulations establishing requirements for submission
            and approval of State climate adaptation plans under this
            section. Receipt of emission allowances pursuant to this
            section shall be contingent on approval of a State climate
            adaptation plan meeting the requirements of such guidelines.
              (2) Requirements.--Regulations promulgated under this
            subsection shall require, at minimum, that--
                      (A) State climate adaptation plans assess and
                    prioritize the State's vulnerability to a broad range
                    of impacts of climate change, based on the best
                    available science;
                      (B) State climate adaptation plans include an
                    assessment of potential for carbon reduction through
                    changes to land management policies (including
                    enhancement, or protection, of forest carbon sinks);
                      (C) State climate adaptation plans identify and
                    prioritize specific cost-effective projects, programs,
                    and measures to build resilience to predicted impacts
                    of climate change;
                      (D) State climate adaptation plans ensure that the
                    State fully considers and undertakes, to the maximum
                    extent practicable, initiatives that--
                              (i) protect or enhance natural ecosystem
                            functions, including protection, maintenance,
                            or restoration of natural infrastructure such
                            as wetlands, reefs, and barrier islands to
                            buffer communities from floodwaters or storms,
                            watershed protection to maintain water quality
                            and groundwater recharge, or floodplain
                            restoration to improve natural flood control
                            capacity; or
                              (ii) use non-structural approaches including
                            practices that utilize, enhance, or mimic the
                            natural hydrologic cycle processes of
                            infiltration, evapotranspiration, and reuse;
                      (E) in order to be eligible to receive emission
                    allowances under this section, a State shall submit a
                    revised State climate adaptation plan for approval not
                    less frequently than every 5 years; and
                      (F) State climate adaptation plans be consistent with
                    Federal conservation and environmental laws and, to the
                    maximum extent practicable, avoid environmental
                    degradation.
              (3) Coordination with prior planning efforts.--In
            promulgating regulations under this subsection, the
            Administrator, or such other Federal agency head or heads as
            the President may designate, shall--
                      (A) draw upon lessons learned and best practices from
                    preexisting State climate adaptation planning efforts;
                      (B) seek to avoid duplication of such efforts; and
                      (C) ensure that the plans developed under this
                    section reflect and are fully consistent with State
                    natural resources adaptation plans developed under
                    section 479.
      (f) Reporting.--Each State receiving emission allowances under this
    section shall submit to the Administrator, or such other Federal agency
    head or heads as the President may designate, within 12 months after
    each receipt of such allowances and once every 2 years thereafter until
    the proceeds from the sale of emission allowances received under this
    section are fully expended, a report that--
              (1) provides a full accounting for the State's use of
            proceeds of sales of emission allowances distributed under this
            section, including a description of the projects, programs, or
            measures funded through such proceeds;
              (2) includes a report prepared by an independent third party,
            in accordance with such regulations as are promulgated by the
            Administrator or such other Federal agency head or heads as the
            President may designate, evaluating the performance of the
            projects, programs, or measures funded under this section; and
              (3) identifies any use by the State of proceeds of sales of
            emission allowances distributed under this section for the
            reduction of flood and storm damage and the effects of climate
            change on water and flood protection infrastructure.
      (g) Enforcement.--If the Administrator, or such other Federal agency
    head or heads as the President may designate, determines that a State
    is not in compliance with this section, the Administrator may withhold
    a portion of the allowances, the value of which is equal to up to twice
    the value of the allowances that the State failed to use in accordance
    with the requirements of this section, that such State would otherwise
    be eligible to receive under this section in 1 or more later years.
    Allowances withheld pursuant to this subsection shall be distributed
    among the remaining States ratably in accordance with the formula in
    subsection (a).
      (h) Supplement, Not Supplant.--It is the intent of the Congress that
    emission allowances distributed to carry out this subpart should be
    used to supplement, and not replace, existing sources of funding used
    to build resilience to the impacts of climate change identified in
    subsection (c).

                  Subpart B--Public Health and Climate Change

    SEC. 461. SENSE OF CONGRESS ON PUBLIC HEALTH AND CLIMATE CHANGE.

      It is the sense of the Congress that the Federal Government, in
    cooperation with international, State, tribal, and local governments,
    concerned public and private organizations, and citizens, should use
    all practicable means and measures--
              (1) to assist the efforts of public health and health care
            professionals, first responders, States, tribes,
            municipalities, and local communities to incorporate measures
            to prepare health systems to respond to the impacts of climate
            change;
              (2) to ensure--
                      (A) that the Nation's health professionals have
                    sufficient information to prepare for and respond to
                    the adverse health impacts of climate change;
                      (B) the utility and value of scientific research in
                    advancing understanding of--
                              (i) the health impacts of climate change; and
                              (ii) strategies to prepare for and respond to
                            the health impacts of climate change;
                      (C) the identification of communities vulnerable to
                    the health effects of climate change and the
                    development of strategic response plans to be carried
                    out by health professionals for those communities;
                      (D) the improvement of health status and health
                    equity through efforts to prepare for and respond to
                    climate change; and
                      (E) the inclusion of health policy in the development
                    of climate change responses;
              (3) to encourage further research, interdisciplinary
            partnership, and collaboration among stakeholders in order to--
                      (A) understand and monitor the health impacts of
                    climate change; and
                      (B) improve public health knowledge and response
                    strategies to climate change;
              (4) to enhance preparedness activities, and public health
            infrastructure, relating to climate change and health;
              (5) to encourage each and every American to learn about the
            impacts of climate change on health; and
              (6) to assist the efforts of developing nations to
            incorporate measures to prepare health systems to respond to
            the impacts of climate change.

    SEC. 462. RELATIONSHIP TO OTHER LAWS.

      Nothing in this subpart in any manner limits the authority provided
    to or responsibility conferred on any Federal department or agency by
    any provision of any law (including regulations) or authorizes any
    violation of any provision of any law (including regulations),
    including any health, energy, environmental, transportation, or any
    other law or regulation.

    SEC. 463. NATIONAL STRATEGIC ACTION PLAN.

      (a) Requirement.--
              (1) In general.--The Secretary of Health and Human Services,
            within 2 years after the date of the enactment of this Act, on
            the basis of the best available science, and in consultation
            pursuant to paragraph (2), shall publish a strategic action
            plan to assist health professionals in preparing for and
            responding to the impacts of climate change on public health in
            the United States and other nations, particularly developing
            nations.
              (2) Consultation.--In developing or making any revision to
            the national strategic action plan, the Secretary shall--
                      (A) consult with the Director of the Centers for
                    Disease Control and Prevention, the Administrator of
                    the Environmental Protection Agency, the Director of
                    the National Institutes of Health, the Secretary of
                    Energy, other appropriate Federal agencies, Indian
                    tribes, State and local governments, public health
                    organizations, scientists, and other interested
                    stakeholders; and
                      (B) provide opportunity for public input.
      (b) Contents.--
              (1) In general.--The Secretary, acting through the Director
            of the Centers for Disease Control and Prevention and other
            appropriate Federal agencies, shall assist health professionals
            in preparing for and responding effectively and efficiently to
            the health effects of climate change through measures
            including--
                      (A) developing, improving, integrating, and
                    maintaining domestic and international disease
                    surveillance systems and monitoring capacity to respond
                    to health-related effects of climate change, including
                    on topics addressing--
                              (i) water, food, and vector borne infectious
                            diseases and climate change;
                              (ii) pulmonary effects, including responses
                            to aeroallergens;
                              (iii) cardiovascular effects, including
                            impacts of temperature extremes;
                              (iv) air pollution health effects, including
                            heightened sensitivity to air pollution;
                              (v) hazardous algal blooms;
                              (vi) mental and behavioral health impacts of
                            climate change;
                              (vii) the health of refugees, displaced
                            persons, and vulnerable communities;
                              (viii) the implications for communities
                            vulnerable to health effects of climate change,
                            as well as strategies for responding to climate
                            change within these communities; and
                              (ix) local and community-based health
                            interventions for climate-related health
                            impacts;
                      (B) creating tools for predicting and monitoring the
                    public health effects of climate change on the
                    international, national, regional, State, and local
                    levels, and providing technical support to assist in
                    their implementation;
                      (C) developing public health communications
                    strategies and interventions for extreme weather events
                    and disaster response situations;
                      (D) identifying and prioritizing communities and
                    populations vulnerable to the health effects of climate
                    change, and determining actions and communication
                    strategies that should be taken to inform and protect
                    these communities and populations from the health
                    effects of climate change;
                      (E) developing health communication, public
                    education, and outreach programs aimed at public health
                    and health care professionals, as well as the general
                    public, to promote preparedness and response strategies
                    relating to climate change and public health, including
                    the identification of greenhouse gas reduction
                    behaviors that are health-promoting; and
                      (F) developing academic and regional centers of
                    excellence devoted to--
                              (i) researching relationships between climate
                            change and health;
                              (ii) expanding and training the public health
                            workforce to strengthen the capacity of such
                            workforce to respond to and prepare for the
                            health effects of climate change;
                              (iii) creating and supporting academic
                            fellowships focusing on the health effects of
                            climate change; and
                              (iv) training senior health ministry
                            officials from developing nations to strengthen
                            the capacity of such nations to--
                                      (I) prepare for and respond to the
                                    health effects of climate change; and
                                      (II) build an international network
                                    of public health professionals with the
                                    necessary climate change knowledge
                                    base;
                      (G) using techniques, including health impact
                    assessments, to assess various climate change public
                    health preparedness and response strategies on
                    international, national, State, regional, tribal, and
                    local levels, and make recommendations as to those
                    strategies that best protect the public health;
                      (H)(i) assisting in the development, implementation,
                    and support of State, regional, tribal, and local
                    preparedness, communication, and response plans
                    (including with respect to the health departments of
                    such entities) to anticipate and reduce the health
                    threats of climate change; and
                      (ii) pursuing collaborative efforts to develop,
                    integrate, and implement such plans;
                      (I) creating a program to advance research as it
                    relates to the effects of climate change on public
                    health across Federal agencies, including research to--
                              (i) identify and assess climate change health
                            effects preparedness and response strategies;
                              (ii) prioritize critical public health
                            infrastructure projects related to potential
                            climate change impacts that affect public
                            health; and
                              (iii) coordinate preparedness for climate
                            change health impacts, including the
                            development of modeling and forecasting tools;
                      (J) providing technical assistance for the
                    development, implementation, and support of
                    preparedness and response plans to anticipate and
                    reduce the health threats of climate change in
                    developing nations; and
                      (K) carrying out other activities determined
                    appropriate by the Secretary to plan for and respond to
                    the impacts of climate change on public health.
      (c) Revision.--The Secretary shall revise the national strategic
    action plan not later than July 1, 2014, and every 4 years thereafter,
    to reflect new information collected pursuant to implementation of the
    national strategic action plan and otherwise, including information
    on--
              (1) the status of critical environmental health parameters
            and related human health impacts;
              (2) the impacts of climate change on public health; and
              (3) advances in the development of strategies for preparing
            for and responding to the impacts of climate change on public
            health.
      (d) Implementation.--
              (1) Implementation through hhs.--The Secretary shall exercise
            the Secretary's authority under this subpart and other
            provisions of Federal law to achieve the goals and measures of
            the national strategic action plan.
              (2) Other public health programs and initiatives.--The
            Secretary and Federal officials of other relevant Federal
            agencies shall administer public health programs and
            initiatives authorized by provisions of law other than this
            subpart, subject to the requirements of such statutes, in a
            manner designed to achieve the goals of the national strategic
            action plan.
              (3) CDC.--In furtherance of the national strategic action
            plan, the Secretary, acting through the Director of the Centers
            for Disease Control and Prevention and the head of any other
            appropriate Federal agency, shall--
                      (A) conduct scientific research to assist health
                    professionals in preparing for and responding to the
                    impacts of climate change on public health; and
                      (B) provide funding for--
                              (i) research on the health effects of climate
                            change; and
                              (ii) preparedness planning on the
                            international, national, State, regional, and
                            local levels to respond to or reduce the burden
                            of health effects of climate change; and
                      (C) carry out other activities determined appropriate
                    by the Director or the head of such agency to prepare
                    for and respond to the impacts of climate change on
                    public health.

    SEC. 464. ADVISORY BOARD.

      (a) Establishment.--The Secretary shall establish a permanent science
    advisory board comprised of not less than 10 and not more than 20
    members.
      (b) Appointment of Members.--The Secretary shall appoint the members
    of the science advisory board from among individuals--
              (1) who have expertise in public health and human services,
            climate change, and other relevant disciplines; and
              (2) at least \1/2\ of whom are recommended by the President
            of the National Academy of Sciences.
      (c) Functions.--The science advisory board shall--
              (1) provide scientific and technical advice and
            recommendations to the Secretary on the domestic and
            international impacts of climate change on public health,
            populations and regions particularly vulnerable to the effects
            of climate change, and strategies and mechanisms to prepare for
            and respond to the impacts of climate change on public health;
            and
              (2) advise the Secretary regarding the best science available
            for purposes of issuing the national strategic action plan.

    SEC. 465. REPORTS.

      (a) Needs Assessment.--
              (1) In general.--The Secretary shall seek to enter into, by
            not later than 6 months after the date of the enactment of this
            Act, an agreement with the National Research Council and the
            Institute of Medicine to complete a report that--
                      (A) assesses the needs for health professionals to
                    prepare for and respond to climate change impacts on
                    public health; and
                      (B) recommends programs to meet those needs.
              (2) Submission.--The agreement under paragraph (1) shall
            require the completed report to be submitted to the Congress
            and the Secretary and made publicly available not later than 1
            year after the date of the agreement.
      (b) Climate Change Health Protection and Promotion Reports.--
              (1) In general.--The Secretary, in consultation with the
            advisory board established under section 464, shall ensure the
            issuance of reports to aid health professionals in preparing
            for and responding to the adverse health effects of climate
            change that--
                      (A) review scientific developments on health impacts
                    of climate change; and
                      (B) recommend changes to the national strategic
                    action plan.
              (2) Submission.--The Secretary shall submit the reports
            required by paragraph (1) to the Congress and make such reports
            publicly available not later than July 1, 2013, and every 4
            years thereafter.

    SEC. 466. DEFINITIONS.

      In this subpart:
              (1) Health impact assessment.--The term ``health impact
            assessment'' means a combination of procedures, methods, and
            tools by which a policy, program, or project may be judged as
            to its potential effects on the health of a population, and the
            distribution of those effects within the population.
              (2) National strategic action plan.--The term ``national
            strategic action plan'' means the plan issued and revised under
            section 463.
              (3) Secretary.--Unless otherwise specified, the term
            ``Secretary'' means the Secretary of Health and Human Services.

    SEC. 467. CLIMATE CHANGE HEALTH PROTECTION AND PROMOTION FUND.

      (a) Establishment of Fund.--There is hereby established in the
    Treasury a separate account that shall be known as the Climate Change
    Health Protection and Promotion Fund.
      (b) Availability of Amounts.--All amounts deposited into the Climate
    Change Health Protection and Promotion Fund shall be available to the
    Secretary to carry out this subpart subject to further appropriation.
      (c) Distribution of Funds by HHS.--In carrying out this subpart, the
    Secretary may make funds deposited in the Climate Change Health
    Protection and Promotion Fund available to--
              (1) other departments, agencies, and offices of the Federal
            Government;
              (2) foreign, State, tribal, and local governments; and
              (3) such other entities as the Secretary determines
            appropriate.
      (d) Supplement, Not Replace.--It is the intent of Congress that funds
    made available to carry out this subpart should be used to supplement,
    and not replace, existing sources of funding for public health.

                     Subpart C--Natural Resource Adaptation

    SEC. 471. PURPOSES.

      The purposes of this subpart are to--
              (1) establish an integrated Federal program to protect,
            restore, and conserve the Nation's natural resources in
            response to the threats of climate change and ocean
            acidification; and
              (2) provide financial support and incentives for programs,
            strategies, and activities that protect, restore, and conserve
            the Nation's natural resources in response to the threats of
            climate change and ocean acidification.

    SEC. 472. NATURAL RESOURCES CLIMATE CHANGE ADAPTATION POLICY.

      It is the policy of the Federal Government, in cooperation with State
    and local governments, Indian tribes, and other interested stakeholders
    to use all practicable means and measures to protect, restore, and
    conserve natural resources to enable them to become more resilient,
    adapt to, and withstand the impacts of climate change and ocean
    acidification.

    SEC. 473. DEFINITIONS.

      In this subpart:
              (1) Coastal state.--The term ``coastal State'' has the
            meaning given the term in section 304 of the Coastal Zone
            Management Act of 1972 (16 U.S.C. 1453).
              (2) Corridors.--The term ``corridors'' means areas that
            provide connectivity, over different time scales (including
            seasonal or longer), of habitat or potential habitat and that
            facilitate the ability of terrestrial, marine, estuarine, and
            freshwater fish, wildlife, or plants to move within a landscape
            as needed for migration, gene flow, or dispersal, or in
            response to the impacts of climate change and ocean
            acidification or other impacts.
              (3) Ecological processes.--The term ``ecological processes''
            means biological, chemical, or physical interaction between the
            biotic and abiotic components of an ecosystem and includes--
                      (A) nutrient cycling;
                      (B) pollination;
                      (C) predator-prey relationships;
                      (D) soil formation;
                      (E) gene flow;
                      (F) disease epizootiology;
                      (G) larval dispersal and settlement;
                      (H) hydrological cycling;
                      (I) decomposition; and
                      (J) disturbance regimes such as fire and flooding.
              (4) Habitat.--The term ``habitat'' means the physical,
            chemical, and biological properties that are used by fish,
            wildlife, or plants for growth, reproduction, survival, food,
            water, and cover, on a tract of land, in a body of water, or in
            an area or region.
              (5) Indian tribe.--The term ``Indian tribe'' has the meaning
            given the term in section 4 of the Indian Self-Determination
            and Education Assistance Act (25 U.S.C. 450b).
              (6) Natural resources.--The term ``natural resources'' means
            the terrestrial, freshwater, estuarine, and marine fish,
            wildlife, plants, land, water, habitats, and ecosystems of the
            United States.
              (7) Natural resources adaptation.--The term ``natural
            resources adaptation'' means the protection, restoration, and
            conservation of natural resources to enable them to become more
            resilient, adapt to, and withstand the impacts of climate
            change and ocean acidification.
              (8) Resilience.--Each of the terms ``resilience'' and
            ``resilient'' means the ability to resist or recover from
            disturbance and preserve diversity, productivity, and
            sustainability.
              (9) State.--The term ``State'' means--
                      (A) a State of the United States;
                      (B) the District of Columbia; and
                      (C) the Commonwealth of Puerto Rico, Guam, the United
                    States Virgin Islands, the Northern Mariana Islands,
                    and American Samoa.

    SEC. 474. COUNCIL ON ENVIRONMENTAL QUALITY.

      The Chair of the Council on Environmental Quality shall--
              (1) advise the President on implementation and development
            of--
                      (A) a Natural Resources Climate Change Adaptation
                    Strategy required under section 476; and
                      (B) Federal natural resource agency adaptation plans
                    required under section 478;
              (2) serve as the Chair of the Natural Resources Climate
            Change Adaptation Panel established under section 475; and
              (3) coordinate Federal agency strategies, plans, programs,
            and activities related to protecting, restoring, and
            maintaining natural resources to become more resilient, adapt
            to, and withstand the impacts of climate change and ocean
            acidification.

    SEC. 475. NATURAL RESOURCES CLIMATE CHANGE ADAPTATION PANEL.

      (a) Establishment.--Not later than 90 days after the date of the
    enactment of this subpart, the President shall establish a Natural
    Resources Climate Change Adaptation Panel, consisting of--
              (1) the head, or their designee, of each of--
                      (A) the National Oceanic and Atmospheric
                    Administration;
                      (B) the Forest Service;
                      (C) the National Park Service;
                      (D) the United States Fish and Wildlife Service;
                      (E) the Bureau of Land Management;
                      (F) the United States Geological Survey;
                      (G) the Bureau of Reclamation;
                      (H) the Bureau of Indian Affairs;
                      (I) the Environmental Protection Agency; and
                      (J) the Army Corps of Engineers;
              (2) the Chair of the Council on Environmental Quality; and
              (3) the heads of such other Federal agencies or departments
            with jurisdiction over natural resources of the United States,
            as determined by the President.
      (b) Functions.--The Panel shall serve as a forum for interagency
    consultation on and the coordination of the development and
    implementation of a national Natural Resources Climate Change
    Adaptation Strategy required under section 476.
      (c) Chair.--The Chair of the Council on Environmental Quality shall
    serve as the Chair of the Panel.

    SEC. 476. NATURAL RESOURCES CLIMATE CHANGE ADAPTATION STRATEGY.

      (a) In General.--Not later than one year after the date of the
    enactment of this subpart, the President, through the Natural Resources
    Climate Change Adaptation Panel established under section 475, shall
    develop a Natural Resources Climate Change Adaptation Strategy to
    protect, restore, and conserve natural resources to enable them to
    become more resilient, adapt to, and withstand the impacts of climate
    change and ocean acidification and to identify opportunities to
    mitigate those impacts.
      (b) Development and Revision.--In developing and revising the
    Strategy, the Panel shall--
              (1) base the strategy on the best available science;
              (2) develop the strategy in close cooperation with States and
            Indian tribes;
              (3) coordinate with other Federal agencies as appropriate;
              (4) consult with local governments, conservation
            organizations, scientists, and other interested stakeholders;
              (5) provide public notice and opportunity for comment; and
              (6) review and revise the Strategy every 5 years to
            incorporate new information regarding the impacts of climate
            change and ocean acidification on natural resources and
            advances in the development of strategies for becoming more
            resilient and adapting to those impacts.
      (c) Contents.--The National Resources Adaptation Strategy shall
    include--
              (1) an assessment of the vulnerability of natural resources
            to climate change and ocean acidification, including the short-
            term, medium-term, long-term, cumulative, and synergistic
            impacts;
              (2) a description of current research, observation, and
            monitoring activities at the Federal, State, tribal, and local
            level related to the impacts of climate change and ocean
            acidification on natural resources, as well as identification
            of research and data needs and priorities;
              (3) identification of natural resources that are likely to
            have the greatest need for protection, restoration, and
            conservation because of the adverse effects of climate change
            and ocean acidification;
              (4) specific protocols for integrating climate change and
            ocean acidification adaptation strategies and activities into
            the conservation and management of natural resources by Federal
            departments and agencies to ensure consistency across agency
            jurisdictions and resources;
              (5) specific actions that Federal departments and agencies
            shall take to protect, conserve, and restore natural resources
            to become more resilient, adapt to, and withstand the impacts
            of climate change and ocean acidification, including a timeline
            to implement those actions;
              (6) specific mechanisms for ensuring communication and
            coordination among Federal departments and agencies, and
            between Federal departments and agencies and State natural
            resource agencies, United States territories, Indian tribes,
            private landowners, conservation organizations, and other
            nations that share jurisdiction over natural resources with the
            United States;
              (7) specific actions to develop and implement consistent
            natural resources inventory and monitoring protocols through
            interagency coordination and collaboration; and
              (8) a process for guiding the development of detailed agency-
            and department-specific adaptation plans required under section
            478 to address the impacts of climate change and ocean
            acidification on the natural resources in the jurisdiction of
            each agency.
      (d) Implementation.--Consistent with its authorities under other laws
    and with Federal trust responsibilities with respect to Indian lands,
    each Federal department or agency with representation on the National
    Resources Climate Change Adaptation Panel shall consider the impacts of
    climate change and ocean acidification and integrate the elements of
    the strategy into agency plans, environmental reviews, programs, and
    activities related to the conservation, restoration, and management of
    natural resources.

    SEC. 477. NATURAL RESOURCES ADAPTATION SCIENCE AND INFORMATION.

      (a) Coordination.--Not later than 90 days after the date of the
    enactment of this subpart, the Secretary of Commerce, acting through
    the Administrator of the National Oceanic and Atmospheric
    Administration, and the Secretary of the Interior, acting through the
    Director of the United States Geological Survey, shall establish a
    coordinated process for developing and providing science and
    information needed to assess and address the impacts of climate change
    and ocean acidification on natural resources. The process shall be led
    by the National Climate Change and Wildlife Science Center established
    within the United States Geological Survey under subsection (d) and the
    National Climate Service of the National Oceanic and Atmospheric
    Administration.
      (b) Functions.--The Secretaries shall ensure that such process avoids
    duplication and that the National Oceanic and Atmospheric
    Administration and the United States Geological Survey shall--
              (1) provide technical assistance to Federal departments and
            agencies, State and local governments, Indian tribes, and
            interested private landowners in their efforts to assess and
            address the impacts of climate change and ocean acidification
            on natural resources;
              (2) conduct and sponsor research and provide Federal
            departments and agencies, State and local governments, Indian
            tribes, and interested private landowners with research
            products, decision and monitoring tools and information, to
            develop strategies for assisting natural resources to become
            more resilient, adapt to, and withstand the impacts of climate
            change and ocean acidification; and
              (3) assist Federal departments and agencies in the
            development of the adaptation plans required under section 478.
      (c) Survey.--Not later than one year after the date of enactment of
    this subpart and every 5 years thereafter, the Secretary of Commerce
    and the Secretary of the Interior shall undertake a climate change and
    ocean acidification impact survey that--
              (1) identifies natural resources considered likely to be
            adversely affected by climate change and ocean acidification;
              (2) includes baseline monitoring and ongoing trend analysis;
              (3) uses a stakeholder process to identify and prioritize
            needed monitoring and research that is of greatest relevance to
            the ongoing needs of natural resource managers to address the
            impacts of climate change and ocean acidification; and
              (4) identifies decision tools necessary to develop strategies
            for assisting natural resources to become more resilient and
            adapt to and withstand the impacts of climate change and ocean
            acidification.
      (d) National Climate Change and Wildlife Science Center.--
              (1) Establishment.--The Secretary of the Interior shall
            establish the National Climate Change and Wildlife Science
            Center within the United States Geological Survey.
              (2) Functions.--The Center shall, in collaboration with
            Federal and State natural resources agencies and departments,
            Indian tribes, universities, and other partner organizations--
                      (A) assess and synthesize current physical and
                    biological knowledge and prioritize scientific gaps in
                    such knowledge in order to forecast the ecological
                    impacts of climate change on fish and wildlife at the
                    ecosystem, habitat, community, population, and species
                    levels;
                      (B) develop and improve tools to identify, evaluate,
                    and, where appropriate, link scientific approaches and
                    models for forecasting the impacts of climate change
                    and adaptation on fish, wildlife, plants, and their
                    habitats, including monitoring, predictive models,
                    vulnerability analyses, risk assessments, and decision
                    support systems to help managers make informed
                    decisions;
                      (C) develop and evaluate tools to adaptively manage
                    and monitor the effects of climate change on fish and
                    wildlife at national, regional, and local scales; and
                      (D) develop capacities for sharing standardized data
                    and the synthesis of such data.
      (e) Science Advisory Board.--
              (1) Establishment.--Not later than 180 days after the date of
            enactment of this subpart, the Secretary of Commerce and the
            Secretary of the Interior shall establish and appoint the
            members of a Science Advisory Board, to be comprised of not
            fewer than 10 and not more than 20 members--
                      (A) who have expertise in fish, wildlife, plant,
                    aquatic, and coastal and marine biology, ecology,
                    climate change, ocean acidification, and other relevant
                    scientific disciplines;
                      (B) who represent a balanced membership among
                    Federal, State, Indian tribes, and local
                    representatives, universities, and conservation
                    organizations; and
                      (C) at least \1/2\ of whom are recommended by the
                    President of the National Academy of Sciences.
              (2) Duties.--The Science Advisory Board shall--
                      (A) advise the Secretaries on the state-of-the-
                    science regarding the impacts of climate change and
                    ocean acidification on natural resources and scientific
                    strategies and mechanisms for protecting, restoring,
                    and conserving natural resources to enable them to
                    become more resilient, adapt to, and withstand the
                    impacts of climate change and ocean acidification; and
                      (B) identify and recommend priorities for ongoing
                    research needs on such issues.
              (3) Collaboration.--The Science Advisory Board shall
            collaborate with other climate change and ecosystem research
            entities in other Federal agencies and departments.
              (4) Availability to the public.--The advice and
            recommendations of the Science Advisory Board shall be made
            available to the public.

    SEC. 478. FEDERAL NATURAL RESOURCE AGENCY ADAPTATION PLANS.

      (a) Development.--Not later than 1 year after the date of the
    development of a Natural Resources Climate Change Adaptation Strategy
    under section 476, each department or agency that has a representative
    on the Natural Resources Climate Change Adaptation Panel established
    under section 475 shall--
              (1) complete an adaptation plan for that department or
            agency, respectively, implementing the Natural Resources
            Climate Change Adaptation Strategy under section 476 and
            consistent with the Natural Resources Climate Change Adaptation
            Policy under section 472, detailing the department's or
            agency's current and projected efforts to address the potential
            impacts of climate change and ocean acidification on natural
            resources within the department's or agency's jurisdiction and
            necessary additional actions, including a timeline for
            implementation of those actions;
              (2) provide opportunities for review and comment on that
            adaptation plan by the public, including in the case of a plan
            by the Bureau of Indian Affairs, review by Indian tribes; and
              (3) submit such plan to the President for approval.
      (b) Review by President and Submission to Congress.--
              (1) Review by president.--The President shall--
                      (A) approve an adaptation plan submitted under
                    subsection (a)(3) if the plan meets the requirements of
                    subsection (c) and is consistent with the strategy
                    developed under section 476;
                      (B) decide whether to approve the plan within 60 days
                    after submission; and
                      (C) if the President disapproves a plan, direct the
                    department or agency to submit a revised plan to the
                    President under subsection (a)(3) within 60 days after
                    such disapproval.
              (2) Submission to congress.--Not later than 30 days after the
            date of approval of such adaptation plan by the President, the
            department or agency shall submit the approved plan to the
            Committee on Natural Resources of the House of Representatives,
            the Committee on Energy and Natural Resources of the Senate,
            and the committees of the House of Representatives and the
            Senate with principal jurisdiction over the department or
            agency.
      (c) Requirements.--Each adaptation plan shall--
              (1) establish programs for assessing the current and future
            impacts of climate change and ocean acidification on natural
            resources within the department's or agency's, respectively,
            jurisdiction, including cumulative and synergistic effects, and
            for identifying and monitoring those natural resources that are
            likely to be adversely affected and that have need for
            conservation;
              (2) identify and prioritize the department's or agency's
            strategies and specific conservation actions to address the
            current and future impacts of climate change and ocean
            acidification on natural resources within the scope of the
            department's or agency's jurisdiction and to develop and
            implement strategies to protect, restore, and conserve such
            resources to become more resilient, adapt to, and better
            withstand those impacts, including--
                      (A) the protection, restoration, and conservation of
                    terrestrial, marine, estuarine, and freshwater habitats
                    and ecosystems;
                      (B) the establishment of terrestrial, marine,
                    estuarine, and freshwater habitat linkages and
                    corridors;
                      (C) the restoration and conservation of ecological
                    processes;
                      (D) the protection of a broad diversity of native
                    species of fish, wildlife, and plant populations across
                    their range; and
                      (E) the protection of fish, wildlife, and plant
                    health, recognizing that climate can alter the
                    distribution and ecology of parasites, pathogens, and
                    vectors;
              (3) describe how the department or agency will integrate such
            strategies and conservation activities into plans, programs,
            activities, and actions of the department or agency, related to
            the conservation and management of natural resources and
            establish new plans, programs, activities, and actions as
            necessary;
              (4) establish methods for assessing the effectiveness of
            strategies and conservation actions taken to protect, restore,
            and conserve natural resources to enable them to become more
            resilient, adapt to, and withstand the impacts of climate
            change and ocean acidification, and for updating those
            strategies and actions to respond to new information and
            changing conditions;
              (5) include a description of current and proposed mechanisms
            to enhance cooperation and coordination of natural resources
            adaptation efforts with other Federal agencies, State and local
            governments, Indian tribes, and nongovernmental stakeholders;
              (6) include specific written guidance to resource managers
            to--
                      (A) explain how managers are expected to address the
                    effects of climate change and ocean acidification;
                      (B) identify how managers are to obtain any site-
                    specific information that may be necessary; and
                      (C) reflect best practices shared among relevant
                    agencies, while also recognizing the unique missions,
                    objectives, and responsibilities of each agency; and
              (7) identify and assess data and information gaps necessary
            to develop natural resources adaptation plans and strategies.
      (d) Implementation.--
              (1) In general.--Upon approval by the President, each
            department or agency that serves on the Natural Resources
            Climate Change Adaptation Panel shall implement its adaptation
            plan through existing and new plans, policies, programs,
            activities, and actions to the extent not inconsistent with
            existing authority.
              (2) Consideration of impacts.--
                      (A) In general.--To the maximum extent practicable
                    and consistent with applicable law, every natural
                    resource management decision made by the department or
                    agency shall consider the impacts of climate change and
                    ocean acidification on those natural resources.
                      (B) Guidance.--The Council on Environmental Quality
                    shall issue guidance for Federal departments and
                    agencies for considering those impacts.
      (e) Revision and Review.--Not less than every 5 years, each
    adaptation plan under this section shall be reviewed and revised to
    incorporate the best available science and other information regarding
    the impacts of climate change and ocean acidification on natural
    resources.

    SEC. 479. STATE NATURAL RESOURCES ADAPTATION PLANS.

      (a) Requirement.--In order to be eligible for funds under section
    480, not later than 1 year after the development of a Natural Resources
    Climate Change Adaptation Strategy required under section 476 each
    State shall prepare a State natural resources adaptation plan detailing
    the State's current and projected efforts to address the potential
    impacts of climate change and ocean acidification on natural resources
    and coastal areas within the State's jurisdiction.
      (b) Review or Approval.--
              (1) In general.--Each State adaptation plan shall be reviewed
            and approved or disapproved by the Secretary of the Interior
            and, as applicable, the Secretary of Commerce. Such approval
            shall be granted if the plan meets the requirements of
            subsection (c) and is consistent with the Natural Resources
            Climate Change Adaptation Strategy required under section 476.
              (2) Approval or disapproval.--Within 180 days after
            transmittal of such a plan, or a revision to such a plan, the
            Secretary of the Interior and, as applicable, the Secretary of
            Commerce shall approve or disapprove the plan by written
            notice.
              (3) Resubmittal.--Within 90 days after transmittal of a
            resubmitted adaptation plan as a result of disapproval under
            paragraph (3), the Secretary of the Interior and, as
            applicable, the Secretary of Commerce, shall approve or
            disapprove the plan by written notice.
      (c) Contents.--A State natural resources adaptation plan shall--
              (1) include a strategy for addressing the impacts of climate
            change and ocean acidification on terrestrial, marine,
            estuarine, and freshwater fish, wildlife, plants, habitats,
            ecosystems, wildlife health, and ecological processes, that--
                      (A) describes the impacts of climate change and ocean
                    acidification on the diversity and health of the fish,
                    wildlife and plant populations, habitats, ecosystems,
                    and associated ecological processes;
                      (B) establishes programs for monitoring the impacts
                    of climate change and ocean acidification on fish,
                    wildlife, and plant populations, habitats, ecosystems,
                    and associated ecological processes;
                      (C) describes and prioritizes proposed conservation
                    actions to assist fish, wildlife, plant populations,
                    habitats, ecosystems, and associated ecological
                    processes in becoming more resilient, adapting to, and
                    better withstanding those impacts;
                      (D) includes strategies, specific conservation
                    actions, and a time frame for implementing conservation
                    actions for fish, wildlife, and plant populations,
                    habitats, ecosystems, and associated ecological
                    processes;
                      (E) establishes methods for assessing the
                    effectiveness of strategies and conservation actions
                    taken to assist fish, wildlife, and plant populations,
                    habitats, ecosystems, and associated ecological
                    processes in becoming more resilient, adapt to, and
                    better withstand the impacts of climate changes and
                    ocean acidification and for updating those strategies
                    and actions to respond appropriately to new information
                    or changing conditions;
                      (F) is incorporated into a revision of the State
                    wildlife action plan (also known as the State
                    comprehensive wildlife strategy)--
                              (i) that has been submitted to the United
                            States Fish and Wildlife Service; and
                              (ii) that has been approved by the Service or
                            on which a decision on approval is pending; and
                      (G) is developed--
                              (i) with the participation of the State fish
                            and wildlife agency, the State coastal agency,
                            the State agency responsible for administration
                            of Land and Water Conservation Fund grants, the
                            State Forest Legacy program coordinator, and
                            other State agencies considered appropriate by
                            the Governor of such State; and
                              (ii) in coordination with the Secretary of
                            the Interior, and where applicable, the
                            Secretary of Commerce and other States that
                            share jurisdiction over natural resources with
                            the State; and
              (2) include, in the case of a coastal State, a strategy for
            addressing the impacts of climate change and ocean
            acidification on the coastal zone that--
                      (A) identifies natural resources that are likely to
                    be impacted by climate change and ocean acidification
                    and describes those impacts;
                      (B) identifies and prioritizes continuing research
                    and data collection needed to address those impacts
                    including--
                              (i) acquisition of high resolution coastal
                            elevation and nearshore bathymetry data;
                              (ii) historic shoreline position maps,
                            erosion rates, and inventories of shoreline
                            features and structures;
                              (iii) measures and models of relative rates
                            of sea level rise or lake level changes,
                            including effects on flooding, storm surge,
                            inundation, and coastal geological processes;
                              (iv) habitat loss, including projected losses
                            of coastal wetlands and potentials for inland
                            migration of natural shoreline habitats;
                              (v) ocean and coastal species and ecosystem
                            migrations, and changes in species population
                            dynamics;
                              (vi) changes in storm frequency, intensity,
                            or rainfall patterns;
                              (vii) saltwater intrusion into coastal rivers
                            and aquifers;
                              (viii) changes in chemical or physical
                            characteristics of marine and estuarine
                            systems;
                              (ix) increased harmful algal blooms; and
                              (x) spread of invasive species;
                      (C) identifies and prioritizes adaptation strategies
                    to protect, restore, and conserve natural resources to
                    enable them to become more resilient, adapt to, and
                    withstand the impacts of climate change and ocean
                    acidification, including--
                              (i) protection, maintenance, and restoration
                            of ecologically important coastal lands,
                            coastal and ocean ecosystems, and species
                            biodiversity and the establishment of habitat
                            buffer zones, migration corridors, and climate
                            refugia; and
                              (ii) improved planning, siting policies, and
                            hazard mitigation strategies;
                      (D) establishes programs for the long-term monitoring
                    of the impacts of climate change and ocean
                    acidification on the ocean and coastal zone and to
                    assess and adjust, when necessary, such adaptive
                    management strategies;
                      (E) establishes performance measures for assessing
                    the effectiveness of adaptation strategies intended to
                    improve resilience and the ability of natural resources
                    in the coastal zone to adapt to and withstand the
                    impacts of climate change and ocean acidification and
                    of adaptation strategies intended to minimize those
                    impacts on the coastal zone and to update those
                    strategies to respond to new information or changing
                    conditions; and
                      (F) is developed with the participation of the State
                    coastal agency and other appropriate State agencies and
                    in coordination with the Secretary of Commerce and
                    other appropriate Federal agencies.
      (d) Public Input.--States shall provide for solicitation and
    consideration of public and independent scientific input in the
    development of their plans.
      (e) Coordination With Other Plans.--The State plan shall take into
    consideration research and information contained in, and coordinate
    with and integrate the goals and measures identified in, as
    appropriate, other natural resources conservation strategies,
    including--
              (1) the national fish habitat action plan;
              (2) plans under the North American Wetlands Conservation Act
            (16 U.S.C. 4401 et seq.);
              (3) the Federal, State, and local partnership known as
            ``Partners in Flight'';
              (4) federally approved coastal zone management plans under
            the Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et
            seq.);
              (5) federally approved regional fishery management plants and
            habitat conservation activities under the Magnuson-Stevens
            Fishery Conservation and Management Act (16 U.S.C. 1801 et
            seq.);
              (6) the national coral reef action plan;
              (7) recovery plans for threatened species and endangered
            species under section 4(f) of the Endangered Species Act of
            1973 (16 U.S.C. 1533(f));
              (8) habitat conservation plans under section 10 of that Act
            (16 U.S.C. 1539);
              (9) other Federal, State, and tribal plans for imperiled
            species;
              (10) State or tribal hazard mitigation plans;
              (11) State or tribal water management plans; and
              (12) other State-based strategies that comprehensively
            implement adaptation activities to remediate the effects of
            climate change and ocean acidification on terrestrial, marine,
            and freshwater fish, wildlife, plants, and other natural
            resources.
      (f) Updating.--Each State plan shall be updated not less than every 5
    years.
      (g) Funding.--
              (1) In general.--Funds allocated to States under section 480
            shall be used only for activities that are consistent with a
            State natural resources adaptation plan that has been approved
            by the Secretaries of Interior and Commerce.
              (2) Funding prior to the approval of a state plan.--Until the
            earlier of the date that is 3 years after the date of the
            enactment of this subpart or the date on which a State receives
            approval for the State strategy, a State shall be eligible to
            receive funding under section 480 for adaptation activities
            that are--
                      (A) consistent with the comprehensive wildlife
                    strategy of the State and, where appropriate, other
                    natural resources conservation strategies; and
                      (B) in accordance with a workplan developed in
                    coordination with--
                              (i) the Secretary of the Interior; and
                              (ii) the Secretary of Commerce, for any
                            coastal State subject to the condition that
                            coordination with the Secretary of Commerce
                            shall be required only for those portions of
                            the strategy relating to activities affecting
                            the coastal zone.
              (3) Pending approval.--During the period for which approval
            by the applicable Secretary of a State plan is pending, the
            State may continue receiving funds under section 480 pursuant
            to the workplan described in paragraph (2)(B).

    SEC. 480. NATURAL RESOURCES CLIMATE CHANGE ADAPTATION FUND.

      (a) Allocations to States.--100 percent of the emission allowances
    made available for each year to carry out this subpart shall be
    provided to States to carry out natural resources adaptation activities
    in accordance with State natural resources adaptation plans approved
    under section 479. Specifically--
              (1) 84.4 percent shall be available to State wildlife
            agencies in accordance with the apportionment formula
            established under the second subsection (c) of section 4 of the
            Pittman-Robertson Wildlife Restoration Act (16 U.S.C. 669c), as
            added by section 902(e) of H.R. 5548 as introduced in the 106th
            Congress and enacted into law by section 1(a)(2) of Public Law
            106-553 (114 Stat. 2762A-119); and
              (2) 15.6 percent shall be available to State coastal agencies
            pursuant to the formula established by the Secretary of
            Commerce under section 306(c) of the Coastal Management Act of
            1972 (16 U.S.C. 1455(c)).
      (b) Establishment of Fund.--
              (1) Establishment.--There is hereby established in the
            Treasury a separate account that shall be known as the Natural
            Resources Climate Change Adaptation Fund.
              (2) Authorization of appropriations.--There are authorized to
            be appropriated for section 480(c) such sums as are deposited
            in the Natural Resources Climate Change Fund, and the amounts
            appropriated for section 480(c) shall be no less than the total
            estimated annual deposits in the Natural Resources Climate
            Change Adaptation Fund. Such appropriations shall be offset by
            the amounts deposited in such fund pursuant to section 782(m).
      (c) Allocations to Federal Agencies.--
              (1) Department of the interior.--Of the amounts made
            available for each fiscal year to carry out this subpart--
                      (A) 27.6 percent shall be allocated to the Secretary
                    of the Interior for use in funding--
                              (i) natural resources adaptation activities
                            carried out--
                                      (I) under endangered species,
                                    migratory species, and other fish and
                                    wildlife programs administered by the
                                    National Park Service, the United
                                    States Fish and Wildlife Service, the
                                    Bureau of Indian Affairs, and the
                                    Bureau of Land Management;
                                      (II) on wildlife refuges, National
                                    Park Service land, and other public
                                    land under the jurisdiction of the
                                    United States Fish and Wildlife
                                    Service, the Bureau of Land Management,
                                    the Bureau of Indian Affairs, or the
                                    National Park Service; or
                                      (III) within Federal water managed by
                                    the Bureau of Reclamation and the
                                    National Park Service; and
                              (ii) for the implementation of the National
                            Fish and Wildlife Habitat and Corridors
                            Identification Program pursuant to section 481;
                      (B) 8.1 percent shall be allocated to the Secretary
                    of the Interior for natural resources adaptation
                    activities carried out under cooperative grant
                    programs, including--
                              (i) the cooperative endangered species
                            conservation fund authorized under section 6 of
                            the Endangered Species Act of 1973 (16 U.S.C.
                            1535);
                              (ii) programs under the North American
                            Wetlands Conservation Act (16 U.S.C. 4401 et
                            seq.);
                              (iii) the Neotropical Migratory Bird
                            Conservation Fund established by section 478(a)
                            of the Neotropical Migratory Bird Conservation
                            Act (16 U.S.C. 6108(a));
                              (iv) the Coastal Program of the United States
                            Fish and Wildlife Service;
                              (v) the National Fish Habitat Action Plan;
                              (vi) the Partners for Fish and Wildlife
                            Program;
                              (vii) the Landowner Incentive Program;
                              (viii) the Wildlife Without Borders Program
                            of the United States Fish and Wildlife Service;
                            and
                              (ix) the Migratory Species Program and Park
                            Flight Migratory Bird Program of the National
                            Park Service; and
                      (C) 4.9 percent shall be allocated to the Secretary
                    of the Interior to provide financial assistance to
                    Indian tribes to carry out natural resources adaptation
                    activities through the Tribal Wildlife Grants Program
                    of the United States Fish and Wildlife Service.
              (2) Land and water conservation fund.--
                      (A) Deposits.--
                              (i) In general.--Of the amounts made
                            available for each fiscal year to carry out
                            this subpart, 19.5 percent shall be deposited
                            into the Land and Water Conservation Fund
                            established under section 2 of the Land and
                            Water Conservation Fund Act of 1965 (16 U.S.C.
                            460l-5).
                              (ii) Use of deposits.-- (I) Deposits into the
                            Land and Water Conservation Fund under this
                            paragraph shall be supplemental to
                            authorizations provided under section 3 of the
                            Land and Water Conservation Fund Act of 1965
                            (16 U.S.C. 460l-6), which shall remain
                            available for nonadaptation needs.
                              (II) There are authorized to be appropriated
                            for activities in this subpart such sums as are
                            deposited in the Land and Water Conservation
                            Fund pursuant to section 480(c)(3)(A)(ii), and
                            the amounts appropriated for this paragraph
                            shall be no less than the total estimated
                            annual deposits in the Land and Water
                            Conservation Fund. Such appropriations shall be
                            offset by the amounts deposited in such Fund
                            pursuant to section 782(m).
                      (B) Allocations.--Of the amounts deposited under this
                    paragraph into the Land and Water Conservation Fund--
                              (i) \1/6\ shall be allocated to the Secretary
                            of the Interior and made available on a
                            competitive basis to carry out natural
                            resources adaptation activities through the
                            acquisition of land and interests in land under
                            section 6 of the Land and Water Conservation
                            Fund Act of 1965 (16 U.S.C. 460l-8)--
                                      (I) to States in accordance with
                                    their natural resources adaptation
                                    plans, and to Indian tribes;
                                      (II) notwithstanding section 5 of
                                    that Act (16 U.S.C. 460l-7); and
                                      (III) in addition to any funds
                                    provided pursuant to annual
                                    appropriations Acts, the Energy Policy
                                    Act of 2005 (42 U.S.C. 15801 et seq.),
                                    or any other authorization for
                                    nonadaptation needs;
                              (ii) \1/3\ shall be allocated to the
                            Secretary of the Interior to carry out natural
                            resources adaptation activities through the
                            acquisition of lands and interests in land
                            under section 7 of the Land and Water
                            Conservation Fund Act of 1965 (16 U.S.C. 460l-
                            9);
                              (iii) \1/6\ shall be allocated to the
                            Secretary of Agriculture and made available to
                            the States and Indian tribes to carry out
                            natural resources adaptation activities through
                            the acquisition of land and interests in land
                            under section 7 of the Forest Legacy Program
                            under the Cooperative Forestry Assistance Act
                            of 1978 (16 U.S.C. 2103c); and
                              (iv) \1/3\ shall be allocated to the
                            Secretary of Agriculture to carry out natural
                            resources adaptation activities through the
                            acquisition of land and interests in land under
                            section 7 of the Land and Water Conservation
                            Fund Act of 1965 (16 U.S.C. 460l-9).
                      (C) Expenditure of funds.--In allocating funds under
                    subparagraph (B), the Secretary of the Interior and the
                    Secretary of Agriculture shall take into consideration
                    factors including--
                              (i) the availability of non-Federal
                            contributions from State, local, or private
                            sources;
                              (ii) opportunities to protect fish and
                            wildlife corridors or otherwise to link or
                            consolidate fragmented habitats;
                              (iii) opportunities to reduce the risk of
                            catastrophic wildfires, drought, extreme
                            flooding, or other climate-related events that
                            are harmful to fish and wildlife and people;
                            and
                              (iv) the potential for conservation of
                            species or habitat types at serious risk due to
                            climate change, ocean acidification, and other
                            stressors.
              (3) Forest service.--Of the amounts made available for each
            fiscal year to carry out this subpart, 8.1 percent shall be
            allocated to the Secretary of Agriculture for use in funding
            natural resources adaptation activities carried out on national
            forests and national grasslands under the jurisdiction of the
            Forest Service.
              (4) Department of commerce.--Of the amounts made available
            for each fiscal year to carry out this subpart, 11.5 percent
            shall be allocated to the Secretary of Commerce for use in
            funding natural resources adaptation activities to protect,
            maintain, and restore coastal, estuarine, and marine resources,
            habitats, and ecosystems, including such activities carried out
            under--
                      (A) the coastal and estuarine land conservation
                    program;
                      (B) the community-based restoration program;
                      (C) the Coastal Zone Management Act of 1972 (16
                    U.S.C. 1451 et seq.), that are specifically designed to
                    strengthen the ability of coastal, estuarine, and
                    marine resources, habitats, and ecosystems to adapt to
                    and withstand the impacts of climate change and ocean
                    acidification;
                      (D) the Open Rivers Initiative;
                      (E) the Magnuson-Stevens Fishery Conservation and
                    Management Act (16 U.S.C. 1801 et seq.);
                      (F) the Marine Mammal Protection Act of 1972 (16
                    U.S.C. 1361 et seq.);
                      (G) the Endangered Species Act of 1973 (16 U.S.C.
                    1531 et seq.);
                      (H) the Marine Protection, Research, and Sanctuaries
                    Act of 1972 (33 U.S.C. 1401 et seq.);
                      (I) the Coral Reef Conservation Act of 2000 (16
                    U.S.C. 6401 et seq.); and
                      (J) the Estuary Restoration Act of 2000 (33 U.S.C.
                    2901 et seq.).
              (5) Environmental protection agency.--Of the amounts made
            available each fiscal year to carry out this section, 12.2
            percent shall be allocated to the Administrator for use in
            natural resources adaptation activities restoring and
            protecting--
                      (A) large-scale freshwater aquatic ecosystems, such
                    as the Everglades, the Great Lakes, Flathead Lake, the
                    Missouri River, the Mississippi River, the Colorado
                    River, the Sacramento-San Joaquin Rivers, the Ohio
                    River, the Columbia-Snake River System, the
                    Apalachicola, Chattahoochee, and Flint River System,
                    the Connecticut River, and the Yellowstone River;
                      (B) large-scale estuarine ecosystems, such as
                    Chesapeake Bay, Long Island Sound, Puget Sound, the
                    Mississippi River Delta, the San Francisco Bay Delta,
                    Narragansett Bay, and Albemarle-Pamlico Sound; and
                      (C) freshwater and estuarine ecosystems, watersheds,
                    and basins identified as priorities by the
                    Administrator, working in cooperation with other
                    Federal agencies, States, Indian tribes, local
                    governments, scientists, and other conservation
                    partners.
              (6) Corps of engineers.--Of the amounts made available each
            fiscal year to carry out this section, 8.1 percent shall be
            available to the Secretary of the Army for use by the Corps of
            Engineers to carry out natural resources adaptation activities
            restoring--
                      (A) large-scale freshwater aquatic ecosystems, such
                    as the ecosystems described in paragraph (5)(A);
                      (B) large-scale estuarine ecosystems, such as the
                    ecosystems described in paragraph (5)(B);
                      (C) freshwater and estuarine ecosystems, watersheds,
                    and basins identified as priorities by the Corps of
                    Engineers, working in cooperation with other Federal
                    agencies, States, Indian tribes, local governments,
                    scientists, and other conservation partners; and
                      (D) habitats and ecosystems through the
                    implementation of estuary habitat restoration projects
                    authorized by the Estuary Restoration Act of 2000 (33
                    U.S.C. 2901 et seq.), project modifications for
                    improvement of the environment, aquatic restoration and
                    protection projects authorized by section 206 of the
                    Water Resources Development Act of 1996 (33 U.S.C.
                    2330), and other appropriate programs and activities.
      (d) Use of Funds by Federal Departments and Agencies.--Funds
    allocated to Federal departments and agencies under this section shall
    only be used for natural resources adaptation activities that are
    consistent with an adaptation plan developed and approved by the
    President under section 478.
      (e) State Cost Sharing.--Notwithstanding any other provision of law,
    a State that receives a grant with amounts allocated under this section
    shall use funds from non-Federal sources to pay 10 percent of the costs
    of each activity carried out using amounts provided under the grant.

    SEC. 481. NATIONAL WILDLIFE HABITAT AND CORRIDORS INFORMATION PROGRAM.

       (a) Establishment.--Within 6 months of the date of enactment of this
    subpart, the Secretary of the Interior, in cooperation with the States
    and Indian tribes, shall establish a National Fish and Wildlife Habitat
    and Corridors Information Program in accordance with the requirements
    of this section.
      (b) Purpose.--The purpose of this program is to--
              (1) support States and Indian tribes in the development of a
            geographic information system database of fish and wildlife
            habitat and corridors that would inform planning and
            development decisions within each State, enable each State to
            model climate impacts and adaptation, and provide
            geographically specific enhancements of State wildlife action
            plans;
              (2) ensure the collaborative development, with the States and
            Indian tribes, of a comprehensive, national geographic
            information system database of maps, models, data, surveys,
            informational products, and other geospatial information
            regarding fish and wildlife habitat and corridors, that--
                      (A) is based on consistent protocols for sampling and
                    mapping across landscapes that take into account
                    regional differences; and
                      (B) that utilizes--
                              (i) existing and planned State- and tribal-
                            based geographic information system databases;
                            and
                              (ii) existing databases, analytical tools,
                            metadata activities, and other information
                            products available through the National
                            Biological Information Infrastructure
                            maintained by the Secretary and nongovernmental
                            organizations; and
              (3) facilitate the use of such databases by Federal, State,
            local, and tribal decisionmakers to incorporate qualitative
            information on fish and wildlife habitat and corridors at the
            earliest possible stage to--
                      (A) prioritize and target natural resources
                    adaptation strategies and activities;
                      (B) avoid, minimize, and mitigate the impacts on fish
                    and wildlife habitat and corridors in siting energy
                    development, water, transmission, transportation, and
                    other land use projects;
                      (C) assess the impacts of existing development on
                    habitats and corridors; and
                      (D) develop management strategies to enhance the
                    ability of fish, wildlife, and plant species to migrate
                    or respond to shifting habitats within existing
                    habitats and corridors.
      (c) Habitat and Corridors Information System.--
              (1) In general.--The Secretary, in cooperation with the
            States and Indian tribes, shall develop a Habitat and Corridors
            Information System.
              (2) Contents.--The System shall--
                      (A) include maps, data, and descriptions of fish and
                    wildlife habitat and corridors, that--
                              (i) have been developed by Federal agencies,
                            State wildlife agencies and natural heritage
                            programs, Indian tribes, local governments,
                            nongovernmental organizations, and industry;
                              (ii) meet accepted Geospatial
                            Interoperability Framework data and metadata
                            protocols and standards;
                      (B) include maps and descriptions of projected shifts
                    in habitats and corridors of fish and wildlife species
                    in response to climate change;
                      (C) assure data quality and make the data, models,
                    and analyses included in the System available at scales
                    useful to decisionmakers--
                              (i) to prioritize and target natural
                            resources adaptation strategies and activities;
                              (ii) to assess the impacts of proposed energy
                            development, water, transmission,
                            transportation, and other land use projects and
                            avoid, minimize, and mitigate those impacts on
                            habitats and corridors;
                              (iii) to assess the impacts of existing
                            development on habitats and corridors; and
                              (iv) to develop management strategies to
                            enhance the ability of fish, wildlife, and
                            plant species to migrate or respond to shifting
                            habitats within existing habitats and
                            corridors;
                      (D) establish a process for updating maps and other
                    information as landscapes, habitats, corridors, and
                    wildlife populations change or as other information
                    becomes available;
                      (E) encourage the development of collaborative plans
                    by Federal and State agencies and Indian tribes to
                    monitor and evaluate the efficacy of the System to meet
                    the needs of decisionmakers;
                      (F) identify gaps in habitat and corridor
                    information, mapping, and research that should be
                    addressed to fully understand and assess current data
                    and metadata, and to prioritize research and future
                    data collection activities for use in updating the
                    System and provide support for those activities;
                      (G) include mechanisms to support collaborative
                    research, mapping, and planning of habitats and
                    corridors by Federal and State agencies, Indian tribes,
                    and other interested stakeholders;
                      (H) incorporate biological and geospatial data on
                    species and corridors found in energy development and
                    transmission plans, including renewable energy
                    initiatives, transportation, and other land use plans;
                      (I) be based on the best scientific information
                    available; and
                      (J) identify, prioritize, and describe key parcels of
                    non-Federal land located within the boundaries of units
                    of the National Park System, National Wildlife Refuge
                    System, National Forest System, or National Grassland
                    System that are critical to maintenance of wildlife
                    habitat and migration corridors.
      (d) Financial and Other Support.--The Secretary may provide support
    to the States and Indian tribes, including financial and technical
    assistance, for activities that support the development and
    implementation of the System.
      (e) Coordination.--The Secretary, in cooperation with the States and
    Indian tribes, shall make recommendations on how the information
    developed in the System may be incorporated into existing relevant
    State and Federal plans affecting fish and wildlife, including land
    management plans, the State Comprehensive Wildlife Conservation
    Strategies, and appropriate tribal conservation plans, to ensure that
    they--
              (1) prevent unnecessary habitat fragmentation and disruption
            of corridors;
              (2) promote the landscape connectivity necessary to allow
            wildlife to move as necessary to meet biological needs, adjust
            to shifts in habitat, and adapt to climate change; and
              (3) minimize the impacts of energy, development, water,
            transportation, and transmission projects and other activities
            expected to impact habitat and corridors.
      (f) Definitions.--In this section:
              (1) Geospatial interoperability framework.--The term
            ``Geospatial Interoperability Framework'' means the strategy
            utilized by the National Biological Information Infrastructure
            that is based upon accepted standards, specifications, and
            protocols adopted through the International Standards
            Organization, the Open Geospatial Consortium, and the Federal
            Geographic Data Committee, to manage, archive, integrate,
            analyze, and make accessible geospatial and biological data and
            metadata.
              (2) Secretary.--The term ``Secretary'' means the Secretary of
            the Interior.

    SEC. 482. ADDITIONAL PROVISIONS REGARDING INDIAN TRIBES.

      (a) Federal Trust Responsibility.--Nothing in this subpart is
    intended to amend, alter, or give priority over the Federal trust
    responsibility to Indian tribes.
      (b) Exemption From FOIA.--If a Federal department or agency receives
    any information related to sacred sites or cultural activities
    identified by an Indian tribe as confidential, such information shall
    be exempt from disclosure under section 552 of title 5, United States
    Code, popularly known as the Freedom of Information Act (5 U.S.C. 552).
      (c) Application of Other Law.--The Secretary of the Interior may
    apply the provisions of Public Law 93-638 where appropriate in the
    implementation of this subpart.

            PART 2--INTERNATIONAL CLIMATE CHANGE ADAPTATION PROGRAM

    SEC. 491. FINDINGS AND PURPOSES.

      (a) Findings.--Congress finds the following:
              (1) Global climate change is a potentially significant
            national and global security threat multiplier and is likely to
            exacerbate competition and conflict over agricultural,
            vegetative, marine, and water resources and to result in
            increased displacement of people, poverty, and hunger within
            developing countries.
              (2) The strategic, social, political, economic, cultural, and
            environmental consequences of global climate change are likely
            to have disproportionate adverse impacts on developing
            countries, which have less economic capacity to respond to such
            impacts.
              (3) The countries most vulnerable to climate change, due both
            to greater exposure to harmful impacts and to lower capacity to
            adapt, are developing countries with very low industrial
            greenhouse gas emissions that have contributed less to climate
            change than more affluent countries.
              (4) To a much greater degree than developed countries,
            developing countries rely on the natural and environmental
            systems likely to be affected by climate change for sustenance,
            livelihoods, and economic growth and stability.
              (5) Within developing countries there may be varying climate
            change adaptation and resilience needs among different
            communities and populations, including impoverished
            communities, children, women, and indigenous peoples.
              (6) The consequences of global climate change, including
            increases in poverty and destabilization of economies and
            societies, are likely to pose long-term challenges to the
            national security, foreign policy, and economic interests of
            the United States.
              (7) It is in the national security, foreign policy, and
            economic interests of the United States to recognize, plan for,
            and mitigate the international strategic, social, political,
            cultural, environmental, health, and economic effects of
            climate change and to assist developing countries to increase
            their resilience to those effects.
              (8) Under Article 4 of the United Nations Framework
            Convention on Climate Change, developed country parties,
            including the United States, committed to ``assist the
            developing country parties that are particularly vulnerable to
            the adverse effects of climate change in meeting costs of
            adaptation to those adverse effects''.
              (9) Under the Bali Action Plan, developed country parties to
            the United Nations Framework Convention on Climate Change,
            including the United States, committed to ``enhanced action on
            the provision of financial resources and investment to support
            action on mitigation and adaptation and technology
            cooperation,'' including, inter alia, consideration of
            ``improved access to adequate, predictable, and sustainable
            financial resources and financial and technical support, and
            the provision of new and additional resources, including
            official and concessional funding for developing country
            parties''.
      (b) Purposes.--The purposes of this part are--
              (1) to provide new and additional assistance from the United
            States to the most vulnerable developing countries, including
            the most vulnerable communities and populations therein, in
            order to support the development and implementation of climate
            change adaptation programs and activities that reduce the
            vulnerability and increase the resilience of communities to
            climate change impacts, including impacts on water
            availability, agricultural productivity, flood risk, coastal
            resources, timing of seasons, biodiversity, economic
            livelihoods, health and diseases, and human migration; and
              (2) to provide such assistance in a manner that protects and
            promotes the national security, foreign policy, environmental,
            and economic interests of the United States to the extent such
            interests may be advanced by minimizing, averting, or
            increasing resilience to climate change impacts.

    SEC. 492. DEFINITIONS.

      In this part:
              (1) Allowance.--The term ``allowance'' means an emission
            allowance established under section 721 of the Clean Air Act.
              (2) Appropriate congressional committees.--The term
            ``appropriate congressional committees'' means--
                      (A) the Committees on Energy and Commerce, Financial
                    Services, and Foreign Affairs of the House of
                    Representatives; and
                      (B) the Committees on Environment and Public Works
                    and Foreign Relations of the Senate.
              (3) Developing country.--The term ``developing country''
            means a country eligible to receive official development
            assistance according to the income guidelines of the
            Development Assistance Committee of the Organization for
            Economic Cooperation and Development.
              (4) Most vulnerable developing countries.--The term ``most
            vulnerable developing countries'' means, as determined by the
            Administrator of USAID, developing countries that are at risk
            of substantial adverse impacts of climate change and have
            limited capacity to respond to such impacts, considering the
            approaches included in any international treaties and
            agreements.
              (5) Most vulnerable communities and populations.--The term
            ``most vulnerable communities and populations'' means
            communities and populations that are at risk of substantial
            adverse impacts of climate change and have limited capacity to
            respond to such impacts, including impoverished communities,
            children, women, and indigenous peoples.
              (6) Program.--The term ``Program'' means the International
            Climate Change Adaptation Program established under section
            493.
              (7) USAID.--The term ``USAID'' means the United States Agency
            for International Development.
              (8) United nations framework convention on climate change.--
            The term ``United Nations Framework Convention on Climate
            Change'' or ``Convention'' means the United Nations Framework
            Convention on Climate Change done at New York on May 9, 1992,
            and entered into force on March 21, 1994.

    SEC. 493. INTERNATIONAL CLIMATE CHANGE ADAPTATION PROGRAM.

      (a) Establishment.--The Secretary of State, in consultation with the
    Administrator of USAID, the Secretary of the Treasury, and the
    Administrator of the Environmental Protection Agency, shall establish
    an International Climate Change Adaptation Program in accordance with
    the requirements of this part.
      (b) Allowance Account.--Allowances allocated pursuant to section
    782(n) of the Clean Air Act shall be available for distribution to
    carry out the Program established under subsection (a).
      (c) Supplement Not Supplant.--Assistance provided under this part
    shall be used to supplement, and not to supplant, any other Federal,
    State, or local resources available to carry out activities of the type
    carried out under the Program.

    SEC. 494. DISTRIBUTION OF ALLOWANCES.

      (a) In General.--The Secretary of State, or such other Federal agency
    head as the President may designate, after consultation with the
    Secretary of the Treasury, the Administrator of USAID, and the
    Administrator of the Environmental Protection Agency, shall direct the
    distribution of allowances to carry out the Program--
              (1) in the form of bilateral assistance pursuant to the
            requirements under section 495;
              (2) to multilateral funds or international institutions
            pursuant to the Convention or an agreement negotiated under the
            Convention; or
              (3) through a combination of the mechanisms identified under
            paragraphs (1) and (2).
      (b) Limitation.--
              (1) Conditional distribution to multilateral funds or
            international institutions.--In any fiscal year, the Secretary
            of State, or such other Federal agency head as the President
            may designate, in consultation with the Administrator of USAID,
            the Secretary of the Treasury, and the Administrator of the
            Environmental Protection Agency, shall distribute at least 40
            percent and up to 60 percent of the allowances available to
            carry out the Program to one or more multilateral funds or
            international institutions that meet the requirements of
            paragraph (2), if any such fund or institution exists, and
            shall annually certify in a report to the appropriate
            congressional committees that any multilateral fund or
            international institution receiving allowances under this
            section meets the requirements of paragraph (2) or that no
            multilateral fund or international institution that meets the
            requirements of paragraph (2) exists, as the case may be. The
            Secretary of State shall notify the appropriate congressional
            committees not less than 15 days prior to any transfer of
            allowances to a multilateral fund or international institution
            pursuant to this section.
              (2) Multilateral fund or international institution
            eligibility.--A multilateral fund or international institution
            is eligible to receive allowances available to carry out the
            Program--
                      (A) if--
                              (i) such fund or institution is established
                            pursuant to--
                                      (I) the Convention; or
                                      (II) an agreement negotiated under
                                    the Convention; or
                              (ii) the allowances are directed to one or
                            more multilateral development banks or
                            international development institutions,
                            pursuant to an agreement negotiated under such
                            Convention; and
                      (B) if such fund or institution--
                              (i) specifies the terms and conditions under
                            which the United States is to provide
                            allowances to the fund or institution, and
                            under which the fund or institution is to
                            provide assistance to recipient countries;
                              (ii) ensures that assistance from the United
                            States to the fund or institution and the
                            principal and income of the fund or institution
                            are disbursed only for purposes that are
                            consistent with those described in section
                            491(b)(1);
                              (iii) requires a regular meeting of a
                            governing body of the fund or institution that
                            includes representation from countries among
                            the most vulnerable developing countries and
                            provides public access;
                              (iv) requires that local communities and
                            indigenous peoples in areas where any
                            activities or programs are planned are engaged
                            through adequate disclosure of information,
                            public participation, and consultation; and
                              (v) prepares and makes public an annual
                            report that--
                                      (I) describes the process and
                                    methodology for selecting the
                                    recipients of assistance from the fund
                                    or institution, including assessments
                                    of vulnerability;
                                      (II) describes specific programs and
                                    activities supported by the fund or
                                    institution and the extent to which the
                                    assistance is addressing the adaptation
                                    needs of the most vulnerable developing
                                    countries, and the most vulnerable
                                    communities and populations therein;
                                      (III) describes the performance goals
                                    for assistance authorized under the
                                    fund or institution and expresses such
                                    goals in an objective and quantifiable
                                    form, to the extent practicable;
                                      (IV) describes the performance
                                    indicators to be used in measuring or
                                    assessing the achievement of the
                                    performance goals described in
                                    subclause (III);
                                      (V) provides a basis for
                                    recommendations for adjustments to
                                    assistance authorized under this part
                                    to enhance the impact of such
                                    assistance; and
                                      (VI) describes the participation of
                                    other nations and international
                                    organizations in supporting and
                                    governing the fund or institution.
      (c) Oversight.--
              (1) Distribution to multilateral funds or international
            institutions.--The Secretary of State, or such other Federal
            agency head as the President may designate, in consultation
            with the Administrator of USAID, shall oversee the distribution
            of allowances available to carry out the Program to a
            multilateral fund or international institution under subsection
            (b).
              (2) Bilateral assistance.--The Administrator of USAID, in
            consultation with the Secretary of State, shall oversee the
            distribution of allowances available to carry out the Program
            for bilateral assistance under section 495.

    SEC. 495. BILATERAL ASSISTANCE.

      (a) Activities and Foreign Aid.--
              (1) In general.--In order to achieve the purposes of this
            part, the Administrator of USAID may carry out programs and
            activities and distribute allowances to any private or public
            group (including international organizations and faith-based
            organizations), association, or other entity engaged in
            peaceful activities to--
                      (A) provide assistance to the most vulnerable
                    developing countries for--
                              (i) the development of national or regional
                            climate change adaptation plans, including a
                            systematic assessment of socioeconomic
                            vulnerabilities in order to identify the most
                            vulnerable communities and populations;
                              (ii) associated national policies; and
                              (iii) planning, financing, and execution of
                            adaptation programs and activities;
                      (B) support investments, capacity-building
                    activities, and other assistance, to reduce
                    vulnerability and promote community-level resilience
                    related to climate change and its impacts in the most
                    vulnerable developing countries, including impacts on
                    water availability, agricultural productivity, flood
                    risk, coastal resources, timing of seasons,
                    biodiversity, economic livelihoods, health, human
                    migration, or other social, economic, political,
                    cultural, or environmental matters;
                      (C) support climate change adaptation research in or
                    for the most vulnerable developing countries;
                      (D) reduce vulnerability and provide increased
                    resilience to climate change for local communities and
                    livelihoods in the most vulnerable developing countries
                    by encouraging--
                              (i) the protection and rehabilitation of
                            natural systems;
                              (ii) the enhancement and diversification of
                            agricultural, fishery, and other livelihoods;
                            and
                              (iii) the reduction of disaster risks;
                      (E) support the deployment of technologies to help
                    the most vulnerable developing countries respond to the
                    destabilizing impacts of climate change and encourage
                    the identification and adoption of appropriate
                    renewable and efficient energy technologies that are
                    beneficial in increasing community-level resilience to
                    the impacts of global climate change in those
                    countries; and
                      (F) encourage the engagement of local communities
                    through disclosure of information, consultation, and
                    the communities' informed participation relating to the
                    development of plans, programs, and activities to
                    increase community-level resilience to climate change
                    impacts.
              (2) Limitations.--Not more than 10 percent of the allowances
            made available to carry out bilateral assistance under this
            part in any year shall be distributed to support activities in
            any single country.
              (3) Prioritizing assistance.--In providing assistance under
            this section, the Administrator of USAID shall give priority to
            countries, including the most vulnerable communities and
            populations therein, that are most vulnerable to the adverse
            impacts of climate change, determined by the likelihood and
            severity of such impacts and the country's capacity to adapt to
            such impacts.
      (b) Community Engagement.--
              (1) In general.--The Administrator of USAID shall ensure that
            local communities, including the most vulnerable communities
            and populations therein, in areas where any programs or
            activities are carried out pursuant to this section are engaged
            in, through disclosure of information, public participation,
            and consultation, the design, implementation, monitoring, and
            evaluation of such programs and activities.
              (2) Consultation and disclosure.--For each country receiving
            assistance under this section, the Administrator of USAID shall
            establish a process for consultation with, and disclosure of
            information to, local, national, and international stakeholders
            regarding any programs and activities carried out pursuant to
            this section.
      (c) Coordination.--
              (1) Alignment of activities.--Subject to the direction of the
            President and the Secretary of State, the Administrator of
            USAID shall, to the extent practicable, seek to align
            activities under this section with broader development, poverty
            alleviation, or natural resource management objectives and
            initiatives in the recipient country.
              (2) Coordination of activities.--The Administrator of USAID
            shall ensure that there is coordination among the activities
            under this section, subtitle D of this title, and part E of
            title VII of the Clean Air Act, in order to maximize the
            effectiveness of United States assistance to developing
            countries.
      (d) Reporting.--
              (1) Initial report.--Not later than 180 days after the date
            of enactment of this part, the Administrator of USAID, in
            consultation with the Secretary of State, shall submit to the
            President and the appropriate congressional committees an
            initial report that--
                      (A) based on the most recent information available
                    from reliable public sources or knowledge obtained by
                    USAID on a reliable basis, as determined by the
                    Administrator of USAID, identifies the developing
                    countries, including the most vulnerable communities
                    and populations therein, that are most vulnerable to
                    climate change impacts and in which assistance may have
                    the greatest and most sustainable benefit in reducing
                    vulnerability to climate change; and
                      (B) describes the process and methodology for
                    selecting the recipients of assistance under subsection
                    (a)(1).
              (2) Annual reports.--Not later than 18 months after the date
            on which the initial report is submitted pursuant to paragraph
            (1), and annually thereafter, the Administrator of USAID, in
            consultation with the Secretary of State, shall submit to the
            President and the appropriate congressional committees a report
            that--
                      (A) describes the extent to which global climate
                    change, through its potential negative impacts on
                    sensitive populations and natural resources in the most
                    vulnerable developing countries, may threaten, cause,
                    or exacerbate political, economic, environmental,
                    cultural, or social instability or international
                    conflict in those regions;
                      (B) describes the ramifications of any potentially
                    destabilizing impacts climate change may have on the
                    national security, foreign policy, and economic
                    interests of the United States, including--
                              (i) the creation of environmental migrants
                            and internally displaced peoples;
                              (ii) international or internal armed
                            conflicts over water, food, land, or other
                            resources;
                              (iii) loss of agricultural and other
                            livelihoods, cultural stability, and other
                            causes of increased poverty and economic
                            destabilization;
                              (iv) decline in availability of resources
                            needed for survival, including water;
                              (v) increased impact of natural disasters
                            (including droughts, flooding, and other severe
                            weather events);
                              (vi) increased prevalence or virulence of
                            climate-related diseases; and
                              (vii) intensified urban migration;
                      (C) describes how allowances available under this
                    section were distributed during the previous fiscal
                    year to enhance the national security, foreign policy,
                    and economic interests of the United States and assist
                    in avoiding the economically, politically,
                    environmentally, culturally, and socially destabilizing
                    impacts of climate change in most vulnerable developing
                    countries;
                      (D) identifies and recommends the developing
                    countries, including the most vulnerable communities
                    and populations therein, that are most vulnerable to
                    climate change impacts and in which assistance may have
                    the greatest and most sustainable benefit in reducing
                    vulnerability to climate change, including in the form
                    of deploying technologies, investments, capacity-
                    building activities, and other types of assistance for
                    adaptation to climate change impacts and approaches to
                    reduce greenhouse gases in ways that may also provide
                    community-level resilience to climate change impacts;
                    and
                      (E) describes cooperation undertaken with other
                    nations and international organizations to carry out
                    this part.
      (e) Monitoring and Evaluation.--
              (1) In general.--The Administrator of USAID shall establish
            and implement a system to monitor and evaluate the
            effectiveness and efficiency of assistance provided under this
            section in order to maximize the long-term sustainable
            development impact of such assistance, including the extent to
            which such assistance is meeting the purposes of this part and
            addressing the adaptation needs of developing countries.
              (2) Requirements.--In carrying out paragraph (1), the
            Administrator of USAID shall--
                      (A) in consultation with national governments in
                    recipient countries, establish performance goals for
                    assistance authorized under this section and express
                    such goals in an objective and quantifiable form, to
                    the extent practicable;
                      (B) establish performance indicators to be used in
                    measuring or assessing the achievement of the
                    performance goals described in subparagraph (A),
                    including an evaluation of--
                              (i) the extent to which assistance under this
                            section provided for disclosure of information
                            to, consultation with, and informed
                            participation by local communities;
                              (ii) the extent to which local communities
                            participated in the design, implementation, and
                            evaluation of programs and activities
                            implemented pursuant to this section; and
                              (iii) the impacts of such participation on
                            the goals and objectives of the programs and
                            activities implemented under this section;
                      (C) provide a basis for recommendations for
                    adjustments to assistance authorized under this section
                    to enhance the impact of such assistance; and
                      (D) include, in the annual report to the appropriate
                    congressional committees and other relevant agencies
                    required under subsection (d)(2), findings resulting
                    from the monitoring and evaluation of programs and
                    activities under this section.

                              Purpose and Summary

        H.R. 2454, the ``American Clean Energy and Security Act of
    2009'' (ACES) was introduced by Rep. Henry A. Waxman and Rep.
    Edward J. Markey on May 15, 2009. The purpose of the
    legislation is to create clean energy jobs, achieve energy
    independence, reduce global warming pollution and transition to
    a clean energy economy.
        Key provisions in the bill:
         Require electric utilities to meet 20 percent of
    their electricity demand through renewable energy sources and
    energy efficiency by 2020.
         Invest in new clean energy technologies and energy
    efficiency, including energy efficiency and renewable energy,
    carbon capture and sequestration, electric and other advanced
    technology vehicles, and basic scientific research and
    development.
         Mandate new energy-saving standards for buildings
    and appliances, as well as promote efficiency in the industrial
    sectors.
         Reduce carbon emissions from major U.S. sources by
    17 percent by 2020 and over 80 percent by 2050 compared to 2005
    levels. Complementary measures in the legislation, such as
    investments in preventing tropical deforestation, will achieve
    significant additional reductions in carbon emissions.
         Protect consumers from energy price increases.

                      Background and Need for Legislation

        This may prove to be a watershed moment in the history of
    energy production and consumption. Between now and 2030, an
    estimated $1.5 trillion will be invested in energy
    infrastructure in the United States and more than $26 trillion
    will be invested worldwide.\1\ How these investments are made
    will have dramatic and consequential effects on the national
    security and economic future of the United States. How these
    investments are made may also determine the fate of our
    planet's climate.
    ---------------------------------------------------------------------------
        \1\International Energy Agency, World Energy Outlook 2008:
    Executive Summary, at 5 (2008).
    ---------------------------------------------------------------------------

                                    ECONOMY

        The U.S. economy is not doing well. In April 2009, the
    national unemployment rate rose to 8.9 percent, with a loss of
    5.7 million jobs since the recession began.\2\ Foreclosure
    filings in 2008 rose 81 percent to 2.3 million.\3\ Congress has
    taken steps to help the economy recover, but more aid is
    needed.
    ---------------------------------------------------------------------------
        \2\Bureau of Labor Statistics, Employment Situation Summary (May 8,
    2009) (online at http://www.bls.gov/news.release/empsit.nr0.htm).
        \3\Foreclosures in U.S. Rose 81 percent, Topping 2.3 Million Last
    Year, Bloomberg News (Jan. 15, 2009) (online at http://
    www.bloomberg.com/apps/news?pid=20601110&sid=asgBXeQ.u5Lg).
    ---------------------------------------------------------------------------
        Investments in clean energy offer an important opportunity
    to spur economic growth. However, uncertainty about federal
    policies regarding energy and global warming pollution is
    impeding investors and CEOs in making investments in the energy
    sector. The Committee received testimony from numerous CEOs on
    this topic. Jim Rogers, Chairman, President and Chief Executive
    Officer of Duke Energy testified

              And let me quickly say, for our company, we plan to
            invest $25 billion in infrastructure over the next 5
            years. It is critical we know the rules of the road of
            climate change as soon as possible to make sure that we
            are making the right investments. Regulatory
            uncertainty is postponing investments and renewables in
            other green technologies. It's postponing the creation
            of jobs from apprentices to engineers to Ph.Ds. Our one
            fear--and I will leave this with you--is that many in
            Congress will look for reasons to postpone action on
            climate legislation this year.\4\
    ---------------------------------------------------------------------------
        \4\House Committee on Energy and Commerce, Hearing on the U.S.
    Climate Action Partnership (Jan. 15, 2009).

    Jeffrey Immelt, Chairman and Chief Executive Officer of General
    ---------------------------------------------------------------------------
    Electric, similarly testified that

            Certainty in the investment world is critical to
            success. And what we lack today is certainty in terms
            of what is going to happen and when it is going to
            happen . . . [T]oday, we have almost the worst of all
            worlds. We have 17 States that are developing their own
            programs. We have RPS in some areas, not in others. The
            fact is that the last 40-plus coal plants haven't been
            permitted. You know, so we have an energy policy, it is
            just that nobody knows what it is. And it shows up in
            terms of those consequences. So, look, I am not--I say
            this with great respect to my colleagues--I didn't come
            to this as an environmentalist. I come to it as an
            industrialist. I am a capitalist, pure, plain and
            simple. And I just think the system we have today is
            untenable over the long term, insofar as, you know, the
            science is so compelling on global warming.\5\
    ---------------------------------------------------------------------------
        \5\House Committee on Energy and Commerce, Hearing on the U.S.
    Climate Action Partnership, 111th Cong. (Jan. 15, 2009).

    David Crane, President and Chief Executive Officer of NRG
    ---------------------------------------------------------------------------
    Energy, informed the Committee that

            If climate change legislation is passed . . . the first
            thing it will do is it will unleash additional
            investment by us in various technologies designed to
            prepare for the cap-and-trade system that is coming.
            So, you know, this may be counterintuitive, but I think
            quite the contrary, in the near term it will actually
            unleash investment and create jobs. And we and many of
            the companies that sit here, we have very substantial
            capital. I think my company and Jeff's are the two
            smallest at this panel. We sit with $1.5 billion in
            investment capital ready to invest, but we need to know
            in what direction.\6\
    ---------------------------------------------------------------------------
        \6\House Committee on Energy and Commerce, Hearing on the U.S.
    Climate Action Partnership, 111th Cong. (Jan. 15, 2009).

    Steve Kline, vice president of corporate environmental and
    federal affairs for PG&E Corporation stated
              We also see an incredible lost opportunity if we
            don't act now . . . there are these amazing, developing
            new technology centers across the United States, and we
            see those jobs going overseas and that technology
            superiority going overseas. And so, in terms of our
            service territory, where Silicon Valley is putting a
            lot of time and energy into these technologies, we are
            going to lose that if we don't act now.\7\
    ---------------------------------------------------------------------------
        \7\House Committee on Energy and Commerce, Hearing on the U.S.
    Climate Action Partnership, 111th Cong. (Jan. 15, 2009).

        By establishing an energy policy that provides certainty
    with respect to both support for clean energy and regulatory
    obligations for global warming pollution, we can free up
    investments that have been on hold. By unleashing billions of
    dollars of private and public investment in new power
    generation, retrofits of existing capacity, energy efficiency,
    and offsets for global warming pollution, clean energy
    legislation can be an engine for both economic growth and job
    creation.
        Recent experience and economic analyses indicate the scope
    of the economic opportunities that these investments could
    create. Over the last few years, renewable electricity projects
    and companies have created tens of thousands of high-paying
    jobs. The wind industry in particular has been an engine of job
    growth. Last year, there were about 35,000 new wind jobs.\8\
    Many of these jobs involve the construction of wind turbines
    and turbine components, and these new manufacturing jobs are
    located here in the United States.\9\
    ---------------------------------------------------------------------------
        \8\American Wind Energy Association, Wind Energy Grows by Record
    8,300 MW in 2008 (Jan. 27, 2009) (online at http://www.awea.org/
    newsroom/releases/wind_energy_growth2008_27Jan09.html).
        \9\American Wind Energy Association, U.S. Wind Energy Industry
    Praises Congress and President for Adopting Stimulus Bill (Feb. 17,
    2009) (online at http://www.awea.org/newsroom/releases/
    awea_statement_on_stimulus_bill_17Feb09.html).
    ---------------------------------------------------------------------------
        The solar industry is also producing clean energy jobs.
    More than 3,000 companies employ between 25,000 and 35,000
    workers.\10\ As demand for solar power increases, there are
    more jobs for solar panel installers, manufacturers,
    distributors, and material suppliers. The Solar Energy
    Industries Association predicts that the United States solar
    sector will be employing more than 110,000 American workers by
    2016.\11\
    ---------------------------------------------------------------------------
        \10\Up on the Roof, New Jobs in Solar, New York Times (Dec. 13,
    2008) (online at http://www.nytimes.com/2008/12/14/jobs/
    14starts.html?_r=3&8dpc).
        \11\Solar Energy Industries Association, Solar Industry Recommends
    Steps to Implement Economic Stimulus, Continue to Grow Solar Industry
    (May 6, 2009) (online at http://www.seia.org/cs/
    news_detail?pressrelease.id=407).
    ---------------------------------------------------------------------------
        Applying new technologies to traditional fuels can also
    drive job creation. It has been estimated that construction of
    the first 20 gigawatts of coal plants with carbon capture and
    storage will generate 1.4 million job-years of construction
    work and 47,500 jobs for operations and maintenance.
    Construction of 65 gigawatts of plants using CCS could create
    4.5 million job-years of construction work and 152,500 jobs
    running those plants.\12\ Promotion of clean power construction
    and deployment of energy efficiency measures also does not risk
    making investments in jobs that will later be shifted to other
    countries, as these activities must be done domestically.
    ---------------------------------------------------------------------------
        \12\BBC Research and Consulting, Employment and Other Economic
    Benefits from AdvancedCoal Electric Generation with Carbon Capture and
    Storage, (Feb. 2009).
    ---------------------------------------------------------------------------
        Clean energy solutions, developed by American workers,
    present an unprecedented opportunity for innovation-driven
    economic revival. The clean technology sector is booming
    despite the economic downturn. Venture capital investments in
    the clean energy sector rose to more than $4 billion in 2008, a
    54 percent increase from 2007 levels.\13\ Globally, about 56%
    of investment dollars in new power capacity went to renewable
    sources, about $140 billion in 2008. Again, investment grew
    even as the global economic crisis drove markets down;
    investments in clean energy rose 5% in 2008 from 2007
    levels.\14\
    ---------------------------------------------------------------------------
        \13\National Venture Capital Association, Venture Capital Industry
    Joins President Obama in Support of Investing In Clean Energy Economy
    (Mar. 24, 2009) (online at http://www.nvca.org/
    index.php?option=com_docman&task=doc_download&gid=414&Itemid=93_).
        \14\Clean Energy Funding Trumps Fossil Fuels, New York Times (June
    3, 2009) (online at http://greeninc.blogs.nytimes.com/2009/06/03/clean-
    energy-funding-trumps-fossil-fuels/?ref=global).
    ---------------------------------------------------------------------------
        The renewable energy and energy efficiency technology
    sectors have already become a major engine of job creation, and
    numerous studies confirm that adoption of public policies to
    support these sectors will yield substantial job growth.
    Research commissioned by the American Solar Energy Society
    found that in 2007 the energy efficiency and renewable energy
    industries had revenues of $1 trillion and created more than 9
    million jobs. Aggressive investment in energy efficiency would
    result in the creation of 37 million new jobs and nearly $4.3
    trillion in revenues by 2030.\15\ Investments in renewable
    energy create, on average, three to five times as many jobs as
    similar investments in fossil-fuel energy systems. A Union of
    Concerned Scientists analysis found that if utilities generated
    an average of 20 percent of their electricity from renewable
    sources, 185,000 new jobs would be created by 2020.\16\ The
    Center for American Progress and the University of
    Massachusetts--Amherst's Political Economy Research Institute
    have found that $100 billion targeted investment in five energy
    efficiency and renewable energy production strategies could
    generate 2 million new jobs, roughly 800,000 of which would be
    in the construction sector.\17\ Such an approach would
    outperform an economic stimulus approach focused on increasing
    household spending, such as through rebate checks, which would
    create only 300,000 more jobs.
    ---------------------------------------------------------------------------
        \15\American Solar Energy Society, Green Collar Jobs in the U.S.
    and Colorado: Economic Drivers for the 21st Century (Jan. 2009) (online
    at http://www.ases.org/images/stories/ASES/pdfs/
    CO_Jobs_Rpt_Jan2009_summary.pdf).
        \16\Union of Concerned Scientists, Cashing in on Clean Energy (July
    2007) (online at http://ucsusa.org/assets/documents/clean_energy/
    cashing-in-national.pdf).
        \17\Center for American Progress and Political Economy Research
    Institute, Green Recovery: A Program to Create Good Jobs and Start
    Building a Low-Carbon Economy (Sept. 2008) (online at http://
    www.americanprogress.org/issues/2008/09/pdf/green_recovery.pdf).
    ---------------------------------------------------------------------------
        The long-term health of the economy also depends upon the
    leadership of the United States in the technology sector. The
    United States risks losing its leadership in clean energy
    technology. Federal funding for energy research and development
    has fallen to $3-4 billion a year, which is one-third of the
    funding levels in the late 1970s, in constant dollars. In the
    1990s, the United States was the world leader in solar energy
    technology, but the leading manufacturers are now China, Japan
    and Europe.\18\ Similarly, China is expected to take the lead
    in the production of wind turbines in 2009.\19\
    ---------------------------------------------------------------------------
        \18\World Watch Institute, Another Sunny Year for Solar Power, (May
    8, 2008) (online at http://www.worldwatch.org/node/5449).
        \19\China Seen Surging to Top Wind Turbine Maker in 09, Reuters
    (Jan. 8 2009).
    ---------------------------------------------------------------------------
        Other nations are taking aggressive steps to lead on clean
    energy technology. China's proposed stimulus plan will invest
    $221 billion over two years in clean energy and other
    environmentally friendly technologies. As a percentage of GDP,
    this is six times the level of investments made in the American
    Recovery and Reinvestment Act.\20\ The United States must take
    aggressive steps if we want to maintain leadership on the
    development and production of clean energy technologies and
    seize the economic opportunities presented by the global shift
    to cleaner forms of energy.
    ---------------------------------------------------------------------------
        \20\Center for American Progress, We Must Seize the Energy
    Opportunity or Slip Further Behind (Apr. 2009) (online at http://
    www.americanprogress.org/issues/2009/04/pdf/china_energy.pdf).
    ---------------------------------------------------------------------------

                                     ENERGY

        The United States is facing a deepening energy crisis. The
    most critical aspect of that crisis is our growing dependence
    on foreign oil, coupled with the volatility of oil and gasoline
    prices. But in a range of other key areas, including natural
    gas and electricity generation and transmission, the United
    States is facing challenges arising from growing demand, limits
    on supply, and rising global prices. At the same time, we find
    ourselves on the cusp of an unprecedented wave of investment in
    infrastructure and technology, which will benefit those workers
    and companies positioned to answer the challenge. Between now
    and 2030, more than $26 trillion will be invested in energy
    infrastructure worldwide, and an estimated $1.5 trillion will
    be invested in the United States power sector alone. This
    places us at a critical decision point in the development of
    the United States and global energy economies.

                               DEPENDENCE ON OIL

        The single greatest energy security challenge facing the
    United States in the 21st century is our growing dependence on
    foreign oil. The United States imported more than 4 billion
    barrels of oil in 2008, or 57 percent of its total oil
    consumption. This represents an increase in imports compared to
    2000, when the U.S. imported 53 percent of the oil it consumed
    and 1990, when imports stood at 42 percent.\21\ Our dependence
    on oil makes us vulnerable to price spikes and market
    manipulation. Because oil accounts for nearly a third of
    domestic global warming pollution, oil dependence is also a
    cause of significant environmental harm.
    ---------------------------------------------------------------------------
        \21\Energy Information Administration, Table 3.3a, Petroleum Trade:
    Overview (May 2009) (online at http://www.eia.doe.gov/emeu/mer/pdf/
    pages/sec3_7.pdf).
    ---------------------------------------------------------------------------
        Oil and gasoline prices have been extremely volatile over
    the past several years. The price of oil rose from $18 per
    barrel in January 2002 to $147 per barrel in July 2008, an
    increase of more than 700 percent.\22\ Prices doubled in just
    12 months between July 2007 and July 2008 before declining in
    the face of an expanding global financial crisis.\23\
    Similarly, gasoline prices soared from under $1.50 per gallon
    in January 2001 to more than $4.11 in July 2008.\24\ By June
    2009, oil prices had more than doubled from their December lows
    and were back around $70 per barrel, while average gasoline
    prices had climbed back to more than $2.50 per gallon. The EIA
    projects oil prices will climb from $61 per barrel in 2009 to
    $110 per barrel in 2015.\25\
    ---------------------------------------------------------------------------
        \22\Energy Information Administration, Daily Cushing, OK WTI Spot
    Price FOB (online at http://tonto.eia.doe.gov/dnav/pet/hist/rwtcd.htm).
        \23\Energy Information Administration, Daily Cushing, OK WTI Spot
    Price FOB (online at http://tonto.eia.doe.gov/dnav/pet/hist/rwtcd.htm).
        \24\Energy Information Administration, Weekly U.S. Regular All
    Formulations Retail Gasoline Prices (online at http://
    tonto.eia.doe.gov/dnav/pet/hist/mg_rt_usw.htm).
        \25\Energy Information Administration, International Energy
    Outlook: Highlights (May 27, 2009) (online at http://www.eia.doe.gov/
    oiaf/ieo/pdf/highlights.pdf).
    ---------------------------------------------------------------------------
        By 2030, global demand for oil is expected to grow to 107
    million barrels per day (mbd) compared to current levels of 84
    mbd,\26\ largely due to demand increases in the developing
    world. And, despite significant petroleum savings that will
    result from the fuel economy standard increases and biofuel
    mandates included in the Energy Independence and Security Act
    of 2007 (EISA), demand for oil in the United States is expected
    to continue to grow, from 20.8 mbd today to 21.6 mbd in
    2030.\27\
    ---------------------------------------------------------------------------
        \26\Energy Information Administration, International Energy
    Outlook: Highlights (May 27, 2009) (online at http://www.eia.doe.gov/
    oiaf/ieo/pdf/highlights.pdf).
        \27\Energy Information Administration, Annual Energy Outlook 2009,
    at 139 (Mar. 2009) online at http://www.eia.doe.gov/oiaf/aeo/pdf/
    0383(2009).pdf).
    ---------------------------------------------------------------------------
        Oil dependence imposes a significant cost on the United
    States economy. Oil imports cost the United States a staggering
    $342 billion in 2008.\28\ Dr. David L. Greene of the Oak Ridge
    National Laboratory estimates that the full cost of dependence
    on foreign oil to the United States economy is much higher--
    $750 billion in 2008, including a loss of potential GDP of $352
    billion (about 2 percent of total GDP).\29\
    ---------------------------------------------------------------------------
        \28\U.S. Census Bureau, FT 900: U.S. International Trade in Goods
    and Services, Exhibit 17 (Imports of Energy-Related Petroleum Products,
    Including Crude Oil) (July 2008) (online at http://www.census.gov/
    foreign-trade/Press-Release/current_press_release/exh17.pdf); U.S.
    Census Bureau, FT 900: U.S. International Trade in Goods and Services,
    Exhibit 17 (Imports of Energy-Related Petroleum Products, Including
    Crude Oil) (July 2003) (online at http://www.census.gov/foreign-trade/
    Press-Release/2003pr/07/exh17.pdf).
        \29\Oak Ridge National Laboratory, Costs of Oil Dependence Update
    2008: Summary (Aug. 8, 2008).
    ---------------------------------------------------------------------------
        This growing dependence on foreign oil has dire
    implications for United States national security and economic
    stability. Dependence on imported oil makes the United States
    increasingly vulnerable to foreign governments' manipulation of
    supply and prices. Although Canada and Mexico supply a
    substantial proportion of United States imports, OPEC countries
    control virtually all of the world's marginal production
    capacity and therefore have the ability to set the global price
    for this commodity.
        While many are calling for increased domestic production as
    the solution, the facts make clear that we cannot drill our way
    out of this problem. More drilling will have minimal impact on
    prices consumers pay for oil or gasoline and will not
    substantially reduce U.S. dependence on foreign oil. While
    nearly 83 percent of technically recoverable offshore oil
    reserves in the United States are located in areas already
    available for leasing and drilling prior to the October 1, 2008
    expiration of the Congressional moratoria,\30\ the Department
    of Energy's Energy Information Administration (EIA) estimates
    that, even if drilling were permitted in the OCS of the entire
    continental United States, this would increase cumulative U.S.
    oil production by only 1.6 percent by 2030 and would have an
    ``insignificant'' impact on prices.\31\ EIA estimates that if
    the Arctic National Wildlife Refuge were opened for drilling,
    production would likely peak in 2027 at just 0.78 million
    barrels per day--reducing world oil prices by 75 cents per
    barrel in EIA's average price and resource case.\32\ In
    addition, EIA notes that ``the Organization of Petroleum
    Exporting Countries (OPEC) could neutralize any potential price
    impact of ANWR oil production by reducing its oil exports by an
    equal amount.''\33\
    ---------------------------------------------------------------------------
        \30\U.S. Mineral Management Service, Report to Congress:
    Comprehensive Inventory of U.S. OCS Oil and Natural Gas Resources (Feb.
    2006) (online at http://www.mms.gov/revaldiv/PDFs/
    FinalInvRptToCongress050106.pdf). Figures are adjusted to account for
    the estimated 1.26 billion barrels of oil and 79.96 trillion cubic feet
    of gas in the Gulf of Mexico that were made accessible following this
    inventory by the Gulf of Mexico Energy Security Act of 2006.
        \31\U.S. Mineral Management Service, Report to Congress:
    Comprehensive Inventory of U.S. OCS Oil and Natural Gas Resources (Feb.
    2006) (online at http://www.mms.gov/revaldiv/PDFs/
    FinalInvRptToCongress050106.pdf).
        \32\Energy Information Administration, Analysis of Crude Oil
    Production in the Arctic National Wildlife Refuge (May 2008) (online at
    http://www.eia.doe.gov/oiaf/servicerpt/anwr/index.html).
        \33\Energy Information Administration, Analysis of Crude Oil
    Production in the Arctic National Wildlife Refuge, at 11 (May 2008)
    (online at http://www.eia.doe.gov/oiaf/servicerpt/anwr/index.html).
    ---------------------------------------------------------------------------
        Finally, regardless of U.S. oil production trends there are
    serious questions about whether increasing global demand can be
    met. Estimates of the total petroleum resource currently in the
    ground--both conventional and unconventional\34\--vary from 14
    to 24 trillion barrels.\35\ However, ``proven reserves,'' those
    that have already been discovered and are expected to be
    economically producible are only estimated to produce between
    1.1 trillion and 1.4 trillion barrels worldwide. At the same
    time, generating new oil supply is proving increasingly
    difficult. New oil fields are generally in expensive and hard-
    to-reach places like deep water areas in the Gulf of
    Mexico.\36\ Even with advances in technology, the average size
    of discoveries per exploratory well is around 10 million
    barrels, which is half the output of wells dug between 1965 and
    1979.\37\
    ---------------------------------------------------------------------------
        \34\Conventional oil is crude oil and natural gas liquids produced
    from underground reservoirs by means of conventional wells. Non-
    conventional oil includes oil shales, oil sands, and extra-heavy crude.
        \35\Energy Information Administration, Long-term Global Oil
    Scenarios: Looking Beyond 2030 (Presentation to the EIA 2008 Energy
    Conference, Apr. 7, 2008). EIA uses 20.6 trillion barrels as its base
    case.
        \36\Simmons & Company International, The 21st Century Energy Crisis
    Has Arrived (Presentation to the CFA Society of Atlanta, Apr. 16,
    2008).
        \37\International Energy Agency, World Energy Outlook 2006 at 90
    (2006).
    ---------------------------------------------------------------------------
        The shrinking margin between stagnant supply and soaring
    demand provides yet another reason that the United States and
    the world need to begin to look beyond oil to meet our growing
    energy needs.

                        SOLUTIONS TO THE OIL DEPENDENCE

        Addressing our dependence on oil is primarily a
    transportation challenge. The U.S. transportation sector
    produces roughly a third of total U.S. greenhouse gas
    emissions, accounts for approximately 69 percent of total U.S.
    oil consumption, and is 95 percent dependent upon petroleum.
    Reducing both oil consumption and global warming pollution in
    the transportation sector will require the United States to
    address three interrelated issues--the efficiency of our
    vehicles, the fuels that power them, and how much we drive
    them.

      VEHICLES AND FUEL--INCREASE FUEL ECONOMY AND TRANSITION TO ELECTRIC
                                     DRIVE

        Implementing higher fuel economy standards is one of the
    most important means to increase energy independence of the
    United States. The Energy Independence and Security Act of 2007
    (EISA) mandated that fuel economy standards increase by at
    least 40 percent, to 35 mpg, by 2020. On May 19, 2009,
    President Obama announced his Administration's intent to
    harmonize fuel economy standards set by the U.S. Department of
    Transportation, tailpipe standards set by the Environmental
    Protection Agency and California's clean car regulations, such
    that the automotive fleet would achieve the equivalent of 35.5
    miles per gallon by 2016.
        EISA also authorized a number of research, development,
    demonstration, and deployment programs for plug-in hybrid,
    advanced vehicle battery, and other advanced vehicle
    technologies. Section 136 of EISA authorized $25 billion in
    loans to support retooling of U.S. auto manufacturing
    facilities to produce more fuel efficient vehicles--a program
    that was fully funded under H.R. 2638, the continuing
    resolution enacted September 30, 2008.
        The development of plug-in hybrid electric vehicles (PHEVs)
    and all-electric vehicles holds great potential to enhance
    America's energy independence and reduce greenhouse gas
    emissions. Electric motors are three to four times more
    efficient at turning their fuel into useful work than either
    gasoline or diesel engines. They also consume no energy while
    idling and utilize regenerative braking to recharge the
    vehicle's battery. Every major automaker has announced plans to
    produce all-electric vehicles or PHEVs for the U.S. market, to
    be made available as soon as 2010.
        The electric grid is an important and readily available
    piece of infrastructure that could power the transport sector
    in the United States. The electricity infrastructure is
    currently designed to meet the highest expected demand for
    power, which only occurs for a few hundred hours a year. During
    the night more than 50 percent of generating capacity lies
    idle. By utilizing this idle generating capacity, the
    Department of Energy's Pacific Northwest National Laboratory
    found that up to 84 percent of U.S. cars, pickup trucks, and
    sport utility vehicles can be transitioned to electricity
    without building a single new power plant.\38\ An 84 percent
    level of electric vehicle penetration is estimated to eliminate
    the consumption of 6.5 million barrels of oil equivalent per
    day, more than all the oil currently imported from OPEC
    countries.\39\ With the national average cost of electricity of
    8.5 cents per kilowatt hour, an electric vehicle runs on an
    equivalent of around 75 cents per gallon.\40\
    ---------------------------------------------------------------------------
        \38\Pacific Northwest National Laboratory, Impacts Assessment of
    Plug-In Hybrid Vehicles on Electric Utilities and Regional U.S. Power
    Grids, Part 1: Technical Analysis, (2006) (online at http://
    energytech.pnl.gov/publications/pdf/
    PHEV_Feasibility_Analysis_Part1.pdf).
        \39\Electric Cars--How Much Does It Cost per Charge?, Scientific
    American (March 13, 2009) (online at http://www.scientificamerican.com/
    article.cfm?id=electric-cars-cost-per-charge).
        \40\Id.
    ---------------------------------------------------------------------------
        PHEVs slash greenhouse gas emissions, even with our current
    electricity fuel mix. Even given the current U.S. electricity
    generation profile, almost half of which is comprised of
    carbon-intensive coal combustion, the nationwide deployment of
    battery-powered electric vehicles would still reduce greenhouse
    gas emissions by as much as 27 percent as compared to
    equivalent gasoline-powered vehicles.\41\ Greenhouse gas
    benefits will improve in the future as renewable and other low-
    or no-carbon electricity generation increases.
    ---------------------------------------------------------------------------
        \41\Pacific Northwest National Laboratory, Impacts Assessment of
    Plug-in Hybrid Vehicles on Electric Utilities and Regional U.S. Power
    Grids Part I: Technical Analysis, at 13 (2007).
    ---------------------------------------------------------------------------
        The American Recovery and Reinvestment Act included
    substantial funding to advance the development of batteries for
    electric vehicles.

         REDUCE VEHICLE MILES TRAVELED WHILE IMPROVING QUALITY OF LIFE

        To meet our energy security and global warming pollution
    reduction goals, we must provide options for individuals who
    wish to get from place to place without driving. Americans
    drive much more than individuals in other advanced industrial
    countries--5,700 miles a year compared with 2,368 in Japan and
    3,961 in Germany as of 1997.\42\ The number of vehicle miles
    traveled (VMT) nearly quadrupled between 1960 and 2000\43\ and
    is projected to increase another 60 percent by 2030.\44\ If
    left unchecked, this projected VMT growth will substantially
    reduce the oil consumption and global warming pollution
    benefits of increased fuel economy and cleaner fuels.
    ---------------------------------------------------------------------------
        \42\Federal Highway Administration, Our Nation's Highways--2000
    (2000) (online at http://www.fhwa.dot.gov/ohim/onh00/bar4.htm).
        \43\Federal Highway Administration, Our Nation's Highways--2000, at
    24 (2000) (online at http://www.fhwa.dot.gov/ohim/onh00/bar4.htm).
        \44\U.S. Department of Transportation, Transportation Vision 2030
    at 5 (Jan. 2008) (online at http://www.rita.dot.gov/publications/
    transportation_vision_2030/pdf/entire.pdf).
    ---------------------------------------------------------------------------
        A broad array of policies can help communities to ``grow
    smarter,'' while reducing VMT. Increasing public transit and
    creating more pedestrian and bicycle-friendly infrastructure
    can encourage people to travel without using a car. Planning
    roads and pathways to create shorter, direct links to
    destinations can limit car distances. Communities that
    implement such improvements reduce global warming pollution,
    balance local budgets by avoiding infrastructure costs, and
    reduce family gasoline bills.\45\
    ---------------------------------------------------------------------------
        \45\The Brookings Institution, Investing in a Better Future: A
    Review of the Fiscal and Competitive Advantages of Smarter Growth
    Development Patterns (March 2004) (online at http://www.brookings.edu//
    media/Files/rc/reports/2004/03metropolitanpolicy_muro/
    200403_smartgrowth.pdf).
    ---------------------------------------------------------------------------
        Although most of these policies are implemented at the
    local, State, or regional level, federal policy can play a
    substantial role in supporting them.

                           THE ELECTRICITY CHALLENGE

        The overall fuel mix for power generation in the United
    States has remained relatively stable over the past decade. In
    2007, coal remained the leading fuel source, accounting for 49
    percent of generation, followed by natural gas with 21 percent,
    and nuclear with 19 percent. Hydroelectric power accounted for
    6 percent, and non-hydro renewables provided 3 percent.\46\ New
    capacity is shifting from reliance on coal to natural gas and
    wind energy. In 2008, natural gas accounted for 48 percent of
    all new generating capacity, wind accounted for 42 percent, and
    coal accounted for less than 6 percent--with solar, biomass,
    and geothermal making up most of the balance.\47\
    ---------------------------------------------------------------------------
        \46\Energy Information Administration, Annual Energy Review 2007,
    at 224-26 (2008).
        \47\Energy Information Administration, Electric Power Annual with
    data for 2007, Table 2.4 (Planned Nameplate Capacity Additions from New
    Generators, by Energy Source, 2008 through 2012) (2009) (online at
    http://www.eia.doe.gov/cneaf/electricity/epa/epat2p4.html).
    ---------------------------------------------------------------------------

                                      COAL

        Coal is a key fuel for the electric power sector, both for
    the United States and the rest of the world. The United States
    has the largest coal reserves in the world (28% of global
    reserves) and produces more than a billion short tons of coal
    annually.\48\ More than 90% of U.S. coal consumption is used
    for electricity generation, and coal powers nearly 50% of all
    U.S. electricity generation.\49\ China and India, two of the
    largest, fastest growing economies in the world, both have
    large coal reserves and rely on coal for the majority of their
    electricity generation (78% for China and 69% for India).\50\
    ---------------------------------------------------------------------------
        \48\Energy Information Administration, Annual Coal Report (2007)
    (online at www.eia.doe.gov/neic/infosheets/coalreserves.html and
    www.eia.doe.gov/cneaf/coal/page/acr/acr_sum.html).
        \49\U.S. Environmental Protection Agency, Draft U.S. Greenhouse Gas
    Inventory Report (2009) (online at www.epa.gov/climatechange/emissions/
    downloads09/07ES.pdf).
        \50\World Coal Institute, Coal Facts 2008 (online at http://
    www.worldcoal.org/pages/content/index.asp?PageID=188).
    ---------------------------------------------------------------------------
        Greenhouse gas emissions from coal use present a serious
    challenge in addressing global climate change. Because of
    coal's high carbon content, coal-fired power plants emit
    roughly twice as much carbon dioxide (CO2) per unit
    of electricity as natural gas-fired plants. Existing coal-fired
    plants account for almost a third of U.S. CO2
    emissions. Globally, CO2 emissions from coal have
    grown from 39% in 1990 to 41% in 2005, and are projected to
    reach 44% by 2030 absent an international agreement to limit
    emissions.\51\
    ---------------------------------------------------------------------------
        \51\Energy Information Administration, International Energy Outlook
    (2008) (online at www.eia.doe.gov/oiaf/ieo/emissions.html).
    ---------------------------------------------------------------------------
        Regulatory uncertainty concerning both State and federal
    approaches to controlling greenhouse gas emissions has already
    had an impact on the construction of new coal-fired electric
    generating capacity. Multiple coal-based projects have been
    canceled or delayed over the past two years, and uncertainty
    over climate policy has played a role.\52\ With respect to
    future capacity expansion, the Energy Information
    Administration (EIA), in its preliminary 2009 Annual Energy
    Outlook, projects that a total of 46,000 megawatts of coal-
    fired generating capacity will be added in the United States
    from 2007 to 2030.\53\ This represents less than half of the
    projected expansion (103,000 megawatts) forecast in the 2008
    reference case. EIA states:

        \52\National Energy Technology Laboratory, Tracking New Coal-Fired
    Power Plants (Jan. 5, 2009) (online at www.netl.doe.gov/coal/refshelf/
    ncp.pdf).
        \53\Energy Information Administration, Annual Energy Outlook Early
    Release Overview (2009) (online at www.eia.doe.gov/oiaf/aeo/
    overview.html).
    ---------------------------------------------------------------------------
             Beyond the well-known uncertainties with respect to
            future demand growth and fuel, labor, and new plant
            costs, [energy companies] also must consider the
            potential impact of concerns surrounding energy-related
            GHG [greenhouse gas] emissions. Even without the
            enactment of Federal laws and policies limiting U.S.
            GHG emissions, regulators and the investment community
            are beginning to push energy companies to shift their
            investments towards less GHG-intensive
            technologies.\54\
    ---------------------------------------------------------------------------
        \54\Energy Information Administration, Annual Energy Outlook Early
    Release Overview (2009) (online at www.eia.doe.gov/oiaf/aeo/
    overview.html).

        A central element in discussions concerning federal climate
    change policy is how to reconcile the continued use of coal
    with the objective of achieving significant reductions in
    greenhouse gas emissions. While multiple strategies exist to
    reduce coal-related greenhouse gas emissions, a consensus has
    emerged that carbon capture and storage (CCS) technologies,
    involving physical capture of CO2 at power plants
    and other major point sources and compression and injection of
    CO2 into deep geological reservoirs, provide a
    likely path forward.

                        CARBON CAPTURE AND SEQUESTRATION

        There are three principal technology options for capturing
    CO2 emissions at coal-based power plants: (1) pre-
    combustion capture using integrated gasification combined cycle
    (``IGCC'') technology; (2) pre-combustion capture using oxy-
    fuel combustion; and (3) post-combustion capture using solvents
    or membranes.\55\
    ---------------------------------------------------------------------------
        \55\See, e.g., Intergovernmental Panel on Climate Change, Special
    Report on Carbon Capture and Storage (IPCC CCS Report)(2005) (online at
    http://arch.rivm.nl/env/int/ipcc/pages_media/SRCCS-final/
    IPCCSpecialReportonCarbondioxideCaptureandStorage.htm).
    ---------------------------------------------------------------------------
        In an IGCC plant, coal is processed in a reactor with steam
    and oxygen before combustion to produce a mixture consisting
    mainly of carbon monoxide and hydrogen known as ``synthesis
    gas'' or ``syngas.'' The carbon monoxide is then mixed with
    steam to produce CO2 and more hydrogen. The hydrogen
    becomes a carbon-free fuel to power the plant, while the
    CO2 can be compressed for transport and ultimate
    storage. There are four IGCC plants in operation worldwide,
    including two in the United States.
        Oxy-fuel combustion eliminates nitrogen from exhaust gases
    by burning the fuel in pure oxygen or a mixture of pure oxygen
    and CO2-rich recycled flue gas. The main emissions
    from this process are CO2 and water. Once
    compressed, dried, and purified, the CO2 is ready
    for transport and storage. Although the key elements of oxy-
    fuel combustion technology are currently in commercial use, it
    has not yet been deployed for CO2 capture on a
    commercial scale.
        Post-combustion capture systems use a solvent or a membrane
    to separate CO2 from the power plant's flue gases.
    Post-combustion capture technologies are already commercially
    available and are used to capture CO2 from coal- and
    gas-fired plants in the food and beverage and chemical-
    production industries. They would have to be significantly
    scaled up from current applications to be used in large
    commercial power plants.
        After CO2 is captured, it is compressed into a
    dense fluid (supercritical) state for transport via pipeline to
    an injection site. Three types of geologic formations are well-
    suited to long-term storage of injected CO2:
    depleted oil and gas fields, saline formations, and deep coal
    seams. Surveys indicate that both global and U.S. storage
    capacity is potentially vast.\56\ The Department of Energy
    projects that U.S. domestic geologic formations ``have at least
    enough capacity to store several centuries' worth of point
    source emissions'' from the United States.\57\ There appears to
    be a good correlation between emissions sources and geological
    basins suitable for long-term storage, and preliminary
    assessments suggest that risks to human health and the
    environment from large-scale injection of CO2 are
    limited.\58\ Underground injection of naturally produced
    CO2 has been used since the early 1970s as part of
    enhanced oil recovery projects, and there are several major
    commercial projects around the world that inject captured
    CO2 for underground storage. A variety of new
    projects are now under development.
    ---------------------------------------------------------------------------
        \56\See, e.g., National Energy Technology Laboratory, Carbon
    Sequestration Atlas of the United States and Canada (2007) (online at
    www.netl.doe.gov/technologies/carbon_seq/refshelf/atlas/).
        \57\U.S. Department of Energy, Carbon Sequestration: Technology
    Roadmap and Program Plan 2005, at 4 (2005) available at http://
    fossil.energy.gov/programs/sequestration/publications/programplans/
    2005/sequestration_roadmap_2005.pdf.
        \58\IPCC CCS Report; Massachusetts Institute of Technology, The
    Future of Coal: Options for a Carbon-Constrained Economy (2007) (online
    at http://web.mit.edu/coal/) (MIT Future of Coal Report).
    ---------------------------------------------------------------------------
        Although most of the technologies on which CCS is based are
    already demonstrated, they have not yet been integrated or
    implemented at the scale needed to mitigate power plant
    emissions. Applying CCS to a single 500 megawatt coal-fired
    plant, for example, could involve capture and injection of 2-3
    million metric tons of CO2 annually.
        In addition to technical concerns, there are economic
    obstacles to widespread deployment of CCS. For example, carbon
    capture technologies typically require significant amounts of
    power to operate; the energy penalty imposed and consequent
    requirement for ``makeup'' power carry a cost. The overall
    capital and operating costs to capture and sequester carbon are
    also substantial, though such costs are expected to decrease
    over time as technologies mature.
        Such costs, in the absence of appropriate regulatory
    drivers, will impede commercial-scale deployment of CCS
    technologies. While current cost estimates for CCS are highly
    uncertain, they provide some sense of the point at which CCS
    will become a feasible mitigation strategy for coal-fired
    plants and other industrial emitters. A 2008 McKinsey study
    estimated between $38-57 per ton of CO2 abated for
    its reference plants, though it put the cost for early
    demonstration projects at $77-115 per ton.\59\ Other studies
    estimate that CO2 allowance prices would have to
    range anywhere from $30-60 per ton in order to make CCS
    economically viable.\60\ Because State utility regulation would
    likely prevent recovery of this cost differential between
    controlled and uncontrolled plants, utilities are unlikely to
    invest in CCS in the absence of a regulatory requirement to do
    so.
    ---------------------------------------------------------------------------
        \59\McKinsey & Company, Carbon Capture & Storage: Assessing the
    Economics (Sept. 2008) (online at www.mckinsey.com/clientservice/ccsi/
    pdf/CCS_Assessing_ the_Economics.pdf).
        \60\See, e.g., MIT Future of Coal Report; and McKinsey & Company,
    Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost? (Dec.
    2007) (online at www.mckinsey.com/clientservice/ccsi/pdf/
    US_ghg_final_report.pdf).
    ---------------------------------------------------------------------------
        Large-scale underground injection and storage of
    CO2 also presents a series of legal and regulatory
    questions. EPA has issued a proposed rulemaking addressing the
    subsurface aspects of sequestration under the Safe Drinking
    Water Act's Underground Injection Control program, but as yet
    there is no comprehensive regulatory regime for commercial-
    scale injection either at the federal or State level.\61\ Some
    of these questions--such as those related to subsurface
    property rights--will likely be answered at the State level.
    ---------------------------------------------------------------------------
        \61\Environmental Protection Agency, Federal Requirements Under the
    Underground Injection Control Program for Carbon Dioxide Geologic
    Sequestration Wells (Jul. 25, 2008) (online at www.epa.gov/fedrgstr/
    EPA-WATER/2008/July/Day-25/w16626.htm).
    ---------------------------------------------------------------------------
        Congress has taken some steps to promote development of
    CCS-related technologies. The Energy Independence and Security
    Act of 2007 authorized a research, development, and
    demonstration program for CCS technologies and directed the
    Department of the Interior to gather detailed data on potential
    geologic storage capacity. The American Recovery and
    Reinvestment Act of 2009 provided funds of $3.4 billion to the
    Department of Energy for use in fossil energy projects,
    portions of which will likely be used to support CCS
    demonstration projects.

                                  NATURAL GAS

        The United States accounts for more than 22 percent of
    global consumption of natural gas, but has only 3.4 percent of
    global reserves. Domestic production satisfies 80 percent of
    U.S. demand--and more than 80 percent of U.S. imports come from
    Canada.\62\
    ---------------------------------------------------------------------------
        \62\Energy Information Administration, International Energy Outlook
    2008, at 44 (Table 6) (June 2008) (online at http://www.eia.doe.gov/
    oiaf/ieo/pdf/nat_gas.pdf).
    ---------------------------------------------------------------------------
        Natural gas has become the fuel of choice for new power
    plants in the United States. Natural gas accounted for nearly
    half of new generating capacity built in the United States in
    2008. In addition, natural gas is a critical feedstock and fuel
    for U.S. manufacturing, accounting for 29 percent of U.S.
    natural gas use. Natural gas prices have been highly volatile
    in recent years, with large swings driven by high demand in
    some years, and more recently, downward pressure on prices due
    to reduced demand and increased domestic production.

                                 NUCLEAR POWER

        Electric utilities have recently filed 17 applications with
    the Nuclear Regulatory Commission for 26 new reactor operating
    licenses. In recent years, the projected cost of a new 1,000
    megawatt reactor has increased from approximately $2 billion to
    $6-8 billion.\63\ In light of these costs and risks, it is
    unclear whether private financing would be available for new
    nuclear facilities without the assurance of federal government
    loan guarantees.
    ---------------------------------------------------------------------------
        \63\Letter from the Nuclear Energy Institute to Rep. Edward J.
    Markey (Oct. 21, 2008).
    ---------------------------------------------------------------------------
        The existing Department of Energy Title XVII loan guarantee
    program has authority to provide up to $51 billion in loan
    guarantees, $18.5 billion of which is specifically set aside
    for nuclear power. The Department has received applications for
    federal loan guarantees from 21 proposed nuclear power plants,
    totaling $122 billion in requested assistance.\64\
    ---------------------------------------------------------------------------
        \64\Nuclear Power: 17 Apply for DOE Loan Guarantees, Far Exceeding
    Available Cash, Greenwire (Oct. 2, 2008).
    ---------------------------------------------------------------------------
        Nuclear power faces a challenge in remaining competitive in
    electricity markets where low cost generation has priority
    dispatch to the grid. While the operating costs of nuclear
    power are comparatively low, it continues to be an expensive
    investment for electricity ratepayers due to large up-front
    capital costs.

                                RENEWABLE ENERGY

        Renewable electricity currently generates 8.4 percent of
    the country's electricity, with non-hydroelectric renewables
    responsible for just 2.5 percent.\65\ Reaching 20 percent of
    total generation by 2020 is an ambitious, but achievable,
    target for renewable electricity.
    ---------------------------------------------------------------------------
        \65\Energy Information Administration, Annual Energy Review 2007:
    Table 8.2b Electricity Net Generation: Electric Power Sector, Selected
    Years, 1949-2007 (June 23, 2008).
    ---------------------------------------------------------------------------
        The Committee believes that adoption of a national
    renewable electricity standard (RES) should be a centerpiece of
    our national energy strategy. State-level RES requirements have
    been a key driver of renewable energy growth in the U.S.
    Seventy-one percent of the population now lives in one of the
    28 states with these mandatory policies in place. More than
    half of the non-hydroelectric renewable electricity capacity
    added in the U.S. over the last decade has occurred in States
    with RES programs, with little or no impact on consumer
    electricity rates.\66\ During the 110th Congress, the House
    twice passed a national RES of 15 percent by 2020--with the
    option to meet up to 4 percent with efficiency--but the measure
    failed to pass the Senate.
    ---------------------------------------------------------------------------
        \66\Lawrence Berkeley National Laboratory, Renewables Portfolio
    Standards in the United States: A Status Report with Data Through 2007
    (Apr. 2008) (online at http://eetd.lbl.gov/ea/EMS/reports/lbnl_154e-
    revised.pdf).
    ---------------------------------------------------------------------------
        The renewable resources outlined below are among the most
    likely to contribute significantly to the U.S. and global
    electricity supply over the next two to three decades.

                                      WIND

        More than 27,000 megawatts of new wind capacity was
    installed worldwide in 2008, nearly a quarter of which was
    installed in the United States.\67\ Department of Energy
    research suggests generating 20 percent of electricity from
    wind in the United States is an ambitious yet feasible scenario
    if certain challenges are overcome.\68\ With policy support,
    the United States is projected to have more than 60,000
    megawatts of wind installed by 2012 and by 2016 it could reach
    112,000 megawatts, surpassing nuclear capacity in the United
    States.
    ---------------------------------------------------------------------------
        \67\World Wind Energy Association, World Wind Energy Report 2008
    (Feb. 2009) (online at http://www.wwindea.org/home/images/stories/
    worldwindenergyreport2008_s.pdf).
        \68\U.S. Department of Energy, 20 percent Wind Energy By 2030:
    Increasing Wind Energy's Contribution to the U.S. Electricity Supply
    (July 2008) (online at http://www1.eere.energy.gov/windandhydro/pdfs/
    41869.pdf).
    ---------------------------------------------------------------------------
        As wind technology continues to improve, prices are falling
    and capacity factors are increasing. The cost of wind energy
    over the past 20 years has dropped from 40 cents per kWh to 4
    to 6 cents per kWh at good sites. While most new wind turbines
    in the United States produce 1.5 to 2 megawatts of power,
    superconducting materials may enable the construction of 10
    megawatt turbines in the near future. Increases in the capacity
    factor of the turbines or the percentage of time in which they
    are producing at their full capacity--have grown 11 percent
    over the past two years and will continue to increase as the
    technology improves.

                                     SOLAR

        With more energy in the form of solar radiation striking
    the Earth's surface in an hour than humanity uses in an entire
    year, the available solar energy resource is enormous.
    Capturing this energy and converting it into electricity is
    primarily done through photovoltaic cells that convert sunlight
    into direct electrical current and concentrating solar power,
    which concentrates the sun's energy using huge mirrors or
    lenses and then uses this heat to run a conventional turbine.
        Solar photovoltaics (PV) have experienced explosive growth
    over the last several years. World capacity grew 62 percent in
    2007 alone\69\ and solar PV installations in the United States
    grew by more than 80 percent in 2007.\70\ Over the next two
    decades, solar PV will become a major source of power--both
    here in the United States and globally. Solar PV is projected
    to grow from a $20 billion industry in 2007 to a $74 billion
    industry within a decade. A study from the National Renewable
    Energy Laboratory found that installed capacity in the United
    States could climb to 10,000 megawatts by 2015, 26,000
    megawatts by 2020, and ultimately more than 100,000 megawatts
    by 2030 with the passage of the critical 8-year extension of
    the investment tax credits included in the financial rescue
    package enacted in October, 2008.\71\
    ---------------------------------------------------------------------------
        \69\Solarbuzz, Marketbuzz 2008: Annual World Solar Photovoltaic
    industry Report (2008).
        \70\Earth Policy Institute, Solar Cell Production Jumps 50 Percent
    in 2007 (Dec. 27, 2007) (online at http://www.earth-policy.org/
    Indicators/Solar/2007.htm).
        \71\National Renewable Energy Laboratory, Quantifying the Benefits
    of Extending the Solar ITC (Feb. 2008).
    ---------------------------------------------------------------------------
        Concentrating solar power (CSP) systems deliver large-
    scale, centralized electricity generation from solar energy.
    CSP systems are generally utility-scale projects with many
    acres of mirrors and lenses that can produce dozens to hundreds
    of megawatts of electrical power. The National Renewable Energy
    Laboratory has identified the potential for nearly 7,000,000
    megawatts of solar thermal power generation in the southwestern
    United States, roughly seven times current U.S. electric
    generating capacity. More than 4,000 megawatts of solar thermal
    projects are currently in development nationwide, and
    Environment America has projected 80,000 megawatts could be
    built by 2030 with investment tax credit support.\72\ The cost
    of energy from solar thermal power plants is estimated to be
    approximately 14 to 16 cents/kWh.\73\
    ---------------------------------------------------------------------------
        \72\Solar Energy Industries Association, U.S. Solar Industry: 2007
    Year in Review (2007) (online at http://seia.org/galleries/pdf/
    Year_in_Review_2007_sm.pdf).
        \73\Environment America Research and Policy Center, On the Rise:
    Solar Thermal Power and the Fight Against Global Warming (Spring 2008)
    (online at http://www.environmentcalifornia.org/uploads/EX/qu/
    EXqur2dJBZQbJESwUtulZA/On-The-Rise.pdf).
    ---------------------------------------------------------------------------

                                   GEOTHERMAL

        The United States has about 35 percent of the world's
    installed capacity of geothermal energy, with about 2,500
    megawatts connected to the grid across six States. While
    several new facilities are in construction around the country,
    the amount of electricity produced from geothermal energy has
    essentially been flat for the past two decades. New facilities
    are estimated to be able to produce base load electricity for 5
    to 7 cents/kWh.\74\
    ---------------------------------------------------------------------------
        \74\California Energy Commission, Comparative Cost of California
    Central Station Electricity Generation Technologies: Final Staff Report
    (June 2003) (online at http://www.energy.ca.gov/reports/2003-06-06_100-
    03-001F.PDF).
    ---------------------------------------------------------------------------
        The United States has massive, untapped geothermal energy
    resources. Scientists with the U.S. Geological Survey (USGS)
    recently found that the electric generation potential from
    currently identified geothermal systems distributed over 13
    U.S. states is more than 9,000 megawatts. Their estimated power
    production potential from yet to be discovered geothermal
    resources is more than 30,000 megawatts. An additional 500,000
    megawatts may be available by harnessing geothermal reservoirs
    characterized by high temperature, but low permeability, rock
    formations.\75\
    ---------------------------------------------------------------------------
        \75\U.S. Geological Survey, Fact Sheet: Assessment of Moderate- and
    High-Temperature Geothermal Resources of the United States (2008)
    (online at http://pubs.usgs.gov/fs/2008/3082/pdf/fs2008-3082.pdf).
    ---------------------------------------------------------------------------
        An MIT study estimated that recovering a small fraction of
    the available resources using conventional geothermal as well
    as enhanced (or engineered) geothermal systems, could feasibly
    yield 100,000 megawatts of electrical power in the United
    States by 2050.\76\ And a study sponsored by the Western
    Governors Association found 5,600 megawatts of new geothermal
    capacity could be added through 2015 and 13,000 megawatts
    within the next 20 years in their 13-State region.\77\
    ---------------------------------------------------------------------------
        \76\Massachusetts Institute of Technology, The Future of Geothermal
    Energy: Impact of Enhanced Geothermal Systems on the United States in
    the 21st Century, at 1-3 (2006) (online at http://www1.eere.energy.gov/
    geothermal/pdfs/future_geo_energy.pdf).
        \77\American Solar Energy Society, Tackling Climate Change in the
    U.S., at 153 (Jan. 2007) (online at http://ases.org/images/stories/
    file/ASES/climate_change.pdf).
    ---------------------------------------------------------------------------

                                    BIOMASS

        Biomass currently supplies more electricity in the United
    States than wind, solar, and geothermal power combined, and the
    potential for additional generation from this energy source is
    vast. Biomass available for electricity generation includes
    residues from forests, primary mills, and agriculture, as well
    as dedicated energy crops and urban wood wastes. Biomass can be
    used as the sole fuel source for power plants, or it can be
    used in conventional power plants to substitute for a portion
    of the traditional fuel, typically coal, in a process called
    co-firing. While most co-firing plants use biomass for between
    1 and 8 percent of heat input,\78\ biomass can effectively
    substitute for up to 20 percent of the coal used in the
    boiler.\79\ Certain biomass can have important greenhouse gas
    benefits, and co-firing with biomass also lowers fuel costs,
    avoids landfilling, and reduces emissions of sulfur oxide and
    nitrogen oxide.
    ---------------------------------------------------------------------------
        \78\Energy Information Administration, Biomass for Electricity
    Generation (online at http://www.eia.doe.gov/oiaf/analysispaper/
    biomass/).
        \79\Federal Energy Management Program, Biomass Cofiring in Coal-
    fired Boilers (May 2004) (online at http://www1.eere.energy.gov/femp/
    pdfs/fta_biomass_cofiring.pdf).
    ---------------------------------------------------------------------------
        An EIA analysis of the impacts of a 15 percent national
    renewable electricity requirement found that electricity
    production from biomass could grow by a factor of eight between
    2005 and 2030.\80\ Most of this generation would come in the
    southeastern United States, where nearly a third of the
    country's biomass feedstock potential exists.\81\ The EIA found
    that the Southeast region could meet nearly its entire 15
    percent renewable requirement through 2020 with indigenous
    biomass resources.\82\
    ---------------------------------------------------------------------------
        \80\Energy Information Administration, Impacts of a 15-Percent
    Renewable Portfolio Standard (Table 2: Summary Results), at 9 (June
    2007) (online at http://www.eia.doe.gov/oiaf/servicerpt/prps/pdf/
    sroiaf(2007)03.pdf).
        \81\Oak Ridge National Laboratory, Biomass Feedstock Availability
    in the United States: 1999 State Level Analysis (Jan. 2000) (online at
    http://bioenergy.ornl.gov/resourcedata/index.html).
        \82\Energy Information Administration, Regional Generation Impacts
    of a 15-Percent Renewable Portfolio Standard (June 2007) (online at
    http://www.eia.doe.gov/oiaf/servicerpt/prps/pdf/
    regional_generation.pdf).
    ---------------------------------------------------------------------------

                             TRANSMISSION PLANNING

        Lack of adequate transmission capacity is a barrier to the
    wide-scale deployment of renewable electricity. Transmission
    lines must be constructed to move renewable electricity from
    rural areas and offshore, where it is most abundant and most
    reliably generated, to population centers where it can be used.
    Federal leadership will be critical in helping to ensure that
    efficient transmission is built.

                              BOOSTING EFFICIENCY

        The largest and least expensive way to expand energy
    resources and reduce global warming pollution is by improving
    energy efficiency. Numerous studies have confirmed the basic
    notion that the best and cheapest power plant is the one we
    never have to build--because greater efficiency reduces demand
    for power. These efficiency investments would yield positive
    economic returns over their lifecycles because savings on the
    cost of energy would exceed the cost of the initial investment.
        Historically, energy efficiency has been an important
    positive factor in the U.S. energy situation. The amount of
    energy consumed per dollar of gross domestic product (GDP) fell
    to about 58 per cent in 2006 of the amount of energy required
    per dollar of GDP in 1980.\83\ A recent study by the American
    Council for an Energy-Efficient Economy (ACEEE) found that
    approximately three-quarters of the incremental energy demand
    projected in the 1970s was met by greater energy efficiency
    rather than actual energy supply increases.\84\
    ---------------------------------------------------------------------------
        \83\Energy Information Administration, Annual Energy Review 2007
    (2008); U.S. Department of Commerce, Gross Domestic Product Data (in
    constant 2000 dollars) from Bureau of Economic Analysis, (May, 2009).
        \84\Ehrhardt-Martinez, Karen, and Laitner, John A. ``Skip'', The
    Size of the U.S. Energy Efficiency Market: Generating a More Complete
    Picture, ACEEE Report Number E083 (May 2008).
    ---------------------------------------------------------------------------
        Efficiency measures can reduce demand for electricity by
    nearly 25 percent over the next 20 years. A 2004 survey by the
    American Council for an Energy Efficiency Economy (ACEEE) of 11
    different studies showed that the median achievable potential
    for electricity efficiency gains was 24 percent over the next
    20 years (an average improvement of 1.2 percent per year).\85\
    The same study found that a 9 percent reduction of natural gas
    consumption is achievable through efficiency measures in the
    next 15 to 20 years.\86\
    ---------------------------------------------------------------------------
        \85\Steven Nadel et al., The Technical, Economic and Achievable
    Potential for Energy-Efficiency in the U.S.--A Meta-Analysis of Recent
    Studies, Proceedings of the 2004 ACEEE Summer Study on Energy
    Efficiency in Buildings (2004).
        \86\Steven Nadel et al., The Technical, Economic and Achievable
    Potential for Energy-Efficiency in the U.S.--A Meta-Analysis of Recent
    Studies, Proceedings of the 2004 ACEEE Summer Study on Energy
    Efficiency in Buildings (2004).
    ---------------------------------------------------------------------------
        Efficiency is the cheapest way of meeting demand for
    electricity. Efficiency measures are already available at a
    cost of roughly $0.03/kWh, compared to nearly $0.07/kWh for
    coal- or gas-fired generation. This differential will only grow
    when generators of fossil fuel-powered electricity must pay to
    emit global warming pollution. Energy efficiency also offers a
    number of other advantages compared to meeting demand through
    additional generation, including shorter lead-times, no energy
    conversion losses, a greatly reduced environmental footprint,
    and economic stimulus and job creation benefits.
        Several studies have shown that investment in complementary
    efficiency programs can substantially reduce the overall cost
    of climate legislation. A 2006 ACEEE analysis of the Northeast
    Regional Greenhouse Gas Initiative (RGGI) showed that, by
    doubling current efficiency investments in the region,
    wholesale power market prices could be kept flat through
    2020.\87\ A doubling of energy efficiency investment would also
    reduce carbon allowance prices by about one-third below
    baseline allowance prices in 2024, and would increase regional
    economic growth by 0.6 percent in 2021 relative to the base
    case. Modeling by Resources for the Future predicted that
    devoting 100 percent of RGGI auction proceeds to energy
    efficiency measures, instead of 25 percent, would reduce
    allowance prices by 25 to 30 percent.
    ---------------------------------------------------------------------------
        \87\Steven Nadel et al., The Technical, Economic and Achievable
    Potential for Energy-Efficiency in the U.S.--A Meta-Analysis of Recent
    Studies, Proceedings of the 2004 ACEEE Summer Study on Energy
    Efficiency in Buildings (2004).
    ---------------------------------------------------------------------------
        Market barriers prevent optimal adoption of energy
    efficiency measures. For example, the buildings and appliances
    sectors are characterized by split incentives. While home
    buyers or users of appliances would achieve lifecycle cost
    savings from more efficient homes or appliances, builders and
    manufacturers avoid energy efficiency improvements that would
    increase up-front costs. In addition, consumers generally lack
    adequate information to distinguish among buildings and
    products on the basis of efficiency. In addition, consumers may
    apply irrationally high discount rates in making purchasing
    decisions--requiring that a more efficient home or product
    ``pay back'' the increased cost within a very short time frame,
    even though the consumer would be financially better off in the
    medium- to long-term with the more efficient home or product.
    In the power sector, electric utilities often are the actor
    best positioned to increase demand-side efficiency, but have a
    disincentive to do so because revenues are based on the volume
    of electricity sold. Because a price on global warming
    pollution does not address these and other market barriers,
    additional policies are necessary to achieve the full cost-
    saving benefits of efficiency measures.

               INCREASING EFFICIENCY OF BUILDINGS AND APPLIANCES

        Buildings and appliances represent the areas of greatest
    emission abatement and energy- and cost-saving potential.
    Efficiency improvements in this category include lighting
    retrofits, higher performance for appliances, improvements in
    heating, ventilation and air conditioning systems, as well as
    better building envelopes and building control systems. Over
    the next 30 years, the built environment in the United States
    is expected to increase by an amount roughly equal to 70
    percent of today's existing building stock--providing a crucial
    opportunity for energy savings and emission reductions.\88\
    ---------------------------------------------------------------------------
        \88\Pew Center on Global Climate Change, Toward a Climate Friendly
    Built Environment, at 3-4 (June 2005).
    ---------------------------------------------------------------------------
        Buildings contribute up to 48 percent of U.S. global
    warming pollution, the single largest source of emissions.\89\
    In 2007 more than three-quarters of the electricity generated
    by U.S. power plants was used in commercial, residential, and
    industrial buildings,\90\ and roughly one-third of the natural
    gas consumed was used for residential and commercial use.\91\
    Most of this energy consumption, and resulting emissions, stem
    from the energy used to operate lighting, heating, and cooling
    in buildings, and could be considerably decreased.
    ---------------------------------------------------------------------------
        \89\American Institute of Architects, Architects and Climate Change
    (online at http://www.aia.org/aiaucmp/groups/aia/documents/pdf/
    aias078740.pdf).
        \90\Energy Information Administration, Annual Energy Review 2007,
    Table 2.1a (Energy Consumption by Sector, Selected Years, 1949-2007)
    (June 23, 2008) (online at http://www.eia.doe.gov/aer/pdf/aer.pdf).
    Approximately 40 percent of energy consumed in 2007 was used in
    residential and commercial buildings alone.
        \91\Energy Information Administration, Natural Gas Consumption by
    End Use 2007 (online at http://tonto.eia.doe.gov/dnav/ng/
    ng_cons_sum_dcu_nus_a.htm).
    ---------------------------------------------------------------------------
        Building codes are critically important in driving energy
    efficiency. In the 110th Congress, the House passed H.R. 6899,
    which included provisions to encourage states and localities to
    adopt updated codes that include requirements for increased
    energy efficiency. Specifically, these provisions would have
    required DOE and States to adopt energy codes for new buildings
    that improve efficiency by 30 percent by 2010 and 50 percent by
    2020. Incentive funding would have been offered for adopting
    the code and training officials to implement the codes. Such
    codes are estimated to avoid 1.5 billion metric tons of
    CO2 per year by 2030 and reduce the need to build
    more than 30 new large coal-fired power plants over the coming
    decades. The Senate did not act on this legislation before the
    110th Congress adjourned.

                                   SMART GRID

        Modernization of the electricity transmission and
    distribution system--particularly through Smart Grid
    investments--promises substantial benefits in increased system
    efficiency, reliability, and flexibility, and reduced peak
    loads and electricity prices. Smart Grid technologies pair
    digital communications and information technology with a
    variety of grid functions, including monitoring, measuring, and
    responding to electricity demand and congestion; sensing and
    locating system disruptions or security threats and deploying
    automated protective responses; implementing ``smart'' meters
    in homes and businesses that allow consumers to receive time-
    of-use pricing information and to communicate consumer
    preferences to the grid; and installing ``smart'' appliances
    that can be programmed to respond to communications from the
    grid regarding pricing or load. Collectively, these
    technologies can substantially increase the efficiency of the
    grid and can reduce peak load demand, both of which reduce the
    need for construction of new generation.\92\ In addition, an
    array of other grid modernization technologies--such as the
    deployment of high-efficiency superconductor power distribution
    cables--can further enhance grid efficiency and reliability.
    ---------------------------------------------------------------------------
        \92\See, e.g, House Committee on Energy and Commerce, Hearing on
    Facilitating the Transition to a Smart Electric Grid (110th Cong.) (May
    3, 2007).
    ---------------------------------------------------------------------------

                                 GLOBAL WARMING

        A clear scientific consensus now holds that global warming
    is happening, that manmade greenhouse gas emissions are largely
    responsible, and that the consequences of failing to reduce
    such emissions will be catastrophic.

                   THE SCIENTIFIC CONSENSUS ON CLIMATE CHANGE

        Global warming refers to the global temperature rise and
    subsequent impacts from the increase of heat-trapping pollution
    in the atmosphere as a result of human activities, primarily
    the combustion of fossil fuels. This additional pollution
    enhances the so-called ``greenhouse effect'' and warms the
    Earth. The IPCC declared in its Fourth Assessment Report,
    released in 2007, that the evidence for warming is
    ``unequivocal''\93\ and that most of the observed warming is
    very likely--greater than 90 percent certainty--due to the
    increase of global warming pollution from human activities.\94\
    Over the last century, the global average temperature has
    increased 1.4 +F, with almost 90 percent of the warming
    occurring over the last 50 years.\95\
    ---------------------------------------------------------------------------
        \93\Intergovernmental Panel on Climate Change, Climate Change 2007:
    The Physical Science Basis, Summary for Policymakers, at 5 (2007).
        \94\Intergovernmental Panel on Climate Change, Climate Change 2007:
    The Physical Science Basis, Summary for Policymakers, at 3 (2007).
        \95\Intergovernmental Panel on Climate Change, Climate Change 2007:
    The Physical Science Basis, Summary for Policymakers, at 5 (2007).
    ---------------------------------------------------------------------------
        Certain gases in the atmosphere trap heat that would
    otherwise escape into space. There are a number of such
    anthropogenic greenhouse gases: carbon dioxide
    (CO2), methane (CH4), nitrous oxide
    (N2O), high-altitude ozone, and certain man-made
    industrial gases, including chlorofluorocarbons,
    hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur
    hexafluoride (SF6), and nitrogen trifluoride
    (NF3).
        The impact of each gas on global warming is a combination
    of its ability to trap heat, its concentration in the
    atmosphere, and how long it stays in the atmosphere. For
    example, while one molecule of methane traps more heat than one
    molecule of CO2, the higher concentration and longer
    atmospheric lifetime of CO2 means it has contributed
    more to global warming than methane has. Most efforts to
    control global warming pollution have focused on the
    CO2 emissions from the burning of fossil fuels
    because they have the greatest effect and we have the greatest
    control over them.
        Since the Industrial Revolution, the concentration of
    CO2 in the atmosphere has increased from 280 parts
    per million (ppm) to more than 380 ppm.\96\ This 100 ppm change
    is the same increase as the world experienced from the last ice
    age about 20,000 years ago until just before the 1800s.\97\
    Human activities have changed the atmosphere as much in 200
    years as natural variations changed it over 20,000 years. The
    current level is higher than any level seen in the last 650
    thousand years.\98\
    ---------------------------------------------------------------------------
        \96\The total CO2-equivalent concentration of all
    greenhouse gases is 455 ppm. Intergovernmental Panel on Climate Change,
    Climate Change 2007: Mitigation of Climate Change, Summary for
    Policymakers, at 27 (2007).
        \97\Intergovernmental Panel on Climate Change, Climate Change 2007:
    The Physical Science Basis, Summary for Policymakers, at 112 (2007).
        \98\Urs Siegenthaler, et al., Stable Carbon Cycle--Climate
    Relationship During the Late Pleistocene, 310 Science 1313 (2005).
    ---------------------------------------------------------------------------
        Scientists can model the temperature effects of natural and
    human-induced, or anthropogenic, changes in the global
    temperature. The results show that natural variations alone
    cannot explain the observed temperature rise of the last
    decades. The changes from human activities are necessary to
    fully explain the observed warming. Indeed, the IPCC has
    estimated that of the processes that can change global
    temperature, what they call ``radiative forcings,'' the
    components from human activities are cumulatively ten times
    larger than the best estimates of the changes from solar
    activity.\99\ A 2007 study found that all the trends in the
    sun's activity that could influence the temperature of the
    Earth have been in the opposite direction needed to explain the
    rise in temperature over the last 20 years.\100\
    ---------------------------------------------------------------------------
        \99\Intergovernmental Panel on Climate Change, Climate Change 2007:
    The Physical Science Basis, Summary for Policymakers, at 4 (2007).
        \100\Lockwood and Froehlich, Recent Oppositely Directed Trends in
    Solar Climate Forcings and the Global Mean Surface Air Temperature, 463
    Proceedings of the Royal Society, 24427 (2007).
    ---------------------------------------------------------------------------
        Scientists predict that if global warming pollution
    continues to grow unchecked, climate changes will accelerate.
    The IPCC's estimate of the likely increase in global average
    surface temperature by 2100 ranges from 2 +F to 11.5 +F above
    2000 levels, depending on the scenario for greenhouse gas
    emissions growth.\101\ It should be emphasized, however, that
    current trends in emissions growth are consistent with or
    higher than the scenarios on the high end of this range.
    Business-as-usual emissions growth could result in atmospheric
    CO2 concentrations of well above 700 ppm by
    2100,\102\ yielding a likely temperature increase of 8.8 +F to
    11 +F.\103\ These levels of warming will result in disastrous
    impacts for the planet.
    ---------------------------------------------------------------------------
        \101\Intergovernmental Panel on Climate Change, 2007, Climate
    Change 2007: The Physical Science Basis, Summary for Policymakers, at
    13, 69-70 (2007).
        \102\See, e.g., Environmental Protection Agency, EPA Analysis of
    Bingaman-Specter Request on Global CO2 Concentrations, at 7
    (Oct. 1, 2007) (online at http://www.epa.gov/climatechange/downloads/
    s1766analysispart1.pdf).
        \103\See Intergovernmental Panel on Climate Change, Climate Change
    2007: Mitigation of Climate Change, Summary for Policymakers, at 39
    (Table TS.2) (2007).
    ---------------------------------------------------------------------------
        Many scientists are increasingly concerned that, because of
    ``positive feedback'' mechanisms associated with climate
    change, we are approaching a ``tipping point'' beyond which
    climate change will accelerate and will become increasingly
    difficult to reverse. For example, the global warming potential
    of the methane stored in frozen arctic soils likely exceeds by
    five times the amount of global warming pollution that humans
    have released into the atmosphere from the burning of fossil
    fuels since the Industrial Revolution.\104\ As these soils warm
    and release this stored methane, temperatures will increase,
    causing more melting and increased methane releases.
    ---------------------------------------------------------------------------
        \104\Sergey A. Zimov, et al., Permafrost and the Global Carbon
    Budget, 312 Science 1612 (2006).
    ---------------------------------------------------------------------------

                  GREENHOUSE GAS EMISSIONS SOURCES AND TRENDS

        The United States accounts for roughly 20 percent of global
    CO2 emissions, and U.S. emissions have grown over
    the past two decades at a rate of roughly 1 percent per year.
    In 2007 (the most recent year for which data is available), the
    United States emitted 7,150 million metric tons CO2
    equivalent in greenhouse gases--a 17 percent increase since
    1990. Net emissions, including sources and sinks, similarly
    increased from 1990 to 2007, from 5,257 to 6,088 million metric
    tons CO2 equivalent.\105\ Absent policy
    interventions, U.S. emissions are expected to increase between
    20 and 52 percent by 2025 from 2000 levels.\106\
    ---------------------------------------------------------------------------
        \105\Environmental Protection Agency, Inventory of U.S. Greenhouse
    Gas Emissions and Sinks:1990-2007, at ES-3 to ES-6 (April 2009) (online
    at http://www.epa.gov/climatechange/emissions/downloads09/
    ExecutiveSummary.pdf).
        \106\World Resources Institute, Navigating the Numbers: Greenhouse
    Gas Data and International Policy, at 18 (2005) (online at http://
    pdf.wri.org/navigating_numbers.pdf).
    ---------------------------------------------------------------------------
        In 2007, U.S. emissions were dominated by emissions from
    the electric power sector (comprising 34 percent of total U.S.
    emissions), transportation sector (28 percent), and industrial
    sector (20 percent). The remaining emissions were due to the
    agricultural (7 percent), commercial (6 percent), and
    residential (5 percent) sectors. Emissions from the electric
    power, transportation, and agricultural sectors have increased
    since1990, while emissions from the industrial, commercial, and
    residential sectors have held steady or declined over the same
    period. If emissions from the generation of electric power are
    instead attributed to the end-use sectors, these proportions
    shift somewhat: the industrial (30 percent), commercial (17
    percent), and residential (17 percent) sectors play an
    increasing role, while contributions from the transportation
    (28 percent) and agriculture (7 percent) sectors remain
    relatively constant.\107\
    ---------------------------------------------------------------------------
        \107\Environmental Protection Agency, Inventory of U.S. Greenhouse
    Gas Emissions and Sinks: 1990-2007, at ES-3 to ES-6 (April 2009)
    (online at http://www.epa.gov/climatechange/emissions/downloads09/
    ExecutiveSummary.pdf).
    ---------------------------------------------------------------------------
        In 2007, roughly 80 percent of U.S. emissions were
    CO2 from the combustion of fossil fuels. Additional
    CO2 emissions (representing 5 percent total U.S.
    emissions) were generated from other activities, such as the
    manufacture of iron and steel and cement. Remaining emissions
    were comprised of methane (8 percent) and nitrous oxide (4
    percent)--largely from agricultural activities, landfills,
    natural gas systems, and coal mines--and HFCs (2 percent) used
    as a substitute for ozone-depleting substances. PFCs and
    SF6 each comprised less than 1 percent of U.S.
    emissions. Net carbon sequestration (primarily in U.S. forests
    and agricultural soils) was 1063 million metric tons
    CO2 equivalent--offsetting 15 percent of total U.S.
    emissions.\108\
    ---------------------------------------------------------------------------
        \108\Environmental Protection Agency, Inventory of U.S. Greenhouse
    Gas Emissions and Sinks: 1990-2007, at ES-3 to ES-6 (April 2009)
    (online at http://www.epa.gov/climatechange/emissions/downloads09/
    ExecutiveSummary.pdf).
    ---------------------------------------------------------------------------
        Global greenhouse gas emissions increased by 24 percent
    between 1990 and 2004.\109\ Emissions growth has accelerated
    since then, and is now above the IPCC's high emissions (A1F1)
    scenario.\110\ In 2006, China and the United States each
    emitted more than 20 percent of total global warming
    pollution.\111\ The EU-25 countries accounted for 15 percent of
    emissions. When the United Nations Framework Convention on
    Climate Change was drafted in 1992, the 38 countries initially
    agreeing to limit their greenhouse gas emissions were
    responsible for 62 percent of all carbon dioxide emissions.
    Rapid emissions growth occurring in the developing world has
    reduced these developed nations contribution to global warming
    pollution to only 47 percent of the global total.\112\
    ---------------------------------------------------------------------------
        \109\Intergovernmental Panel on Climate Change, Climate Change
    2007: Mitigation of Climate Change, Summary for Policymakers at 27
    (2007).
        \110\Global Carbon Project, Carbon budget and trends 2007 (Sept.
    26, 2008), (online at http://www.globalcarbonproject.org/carbontrends/
    index.htm).
        \111\International Energy Agency, Key World Energy Statistics 2008,
    at 45, 50, 56 (2008) (online at http://www.iea.org/textbase/nppdf/free/
    2008/key_stats_2008.pdf).
        \112\International Energy Agency, Key World Energy Statistics 2008,
    at 45, 50, 56 (2008) (online at http://www.iea.org/textbase/nppdf/free/
    2008/key_stats_2008.pdf).
    ---------------------------------------------------------------------------
        Electricity and heat account for 25 percent of global
    emissions, followed by industry (21 percent), land use change
    and forestry (18 percent), buildings (15 percent), agriculture
    (15 percent), transport (14 percent), and waste (4
    percent).\113\ The International Energy Agency's (IEA's)
    Reference Scenario projects global greenhouse gas emissions to
    increase 45 percent between 2006 and 2030. Emissions from China
    and India are expected to grow by 86 and104 percent,
    respectively, while emissions from the United States are
    expected to grow by 25 percent over the same time period.\114\
    Emissions from the EU have stayed relatively flat since 1990,
    and the EU has unilaterally committed to reduce emissions by 20
    percent by 2020--and up to 30 percent with cooperation from the
    international community.
    ---------------------------------------------------------------------------
        \113\World Resources Institute, Navigating the Numbers: Greenhouse
    Gas Data and International Policy, at 57 (2005) (online at http://
    pdf.wri.org/navigating_numbers.pdf).
        \114\International Energy Agency, World Energy Outlook 2008 (2008);
    and International Energy Agency, Key World Energy Statistics 2008
    (2008).
    ---------------------------------------------------------------------------
        While China has now overtaken the United States as the
    largest greenhouse gas emitter on an annual basis, the United
    States continues to have one of the highest per capita emission
    rates. In 2005, the United States emitted 20 tons of
    CO2 per capita annually, compared to 12 tons per
    capita in Russia, 10 tons in Japan and the United Kingdom, and
    8 tons per capita for the EU. The worldwide average per capita
    CO2 emissions level is 4.3 tons, and the average
    person in China and India is responsible for 4 tons and 1 ton
    of CO2 emissions per year, respectively.\115\
    ---------------------------------------------------------------------------
        \115\Energy Information Administration, International Energy Annual
    2005, Table H.1cco2 World Per Capita Carbon Dioxide Emissions from the
    Consumption and Flaring of Fossil Fuels,1980-2005 (2007) (online at
    http://www.eia.doe.gov/pub/international/iealf/tableh1cco2.xls).
    ---------------------------------------------------------------------------
        Moreover, the United States is responsible for nearly a
    third of the cumulative greenhouse gas emissions in the
    atmosphere--nearly four times as much as China and more than 14
    times as much as India. Developing countries with 80 percent of
    the world's population still account for only 20 percent of the
    cumulative emissions since 1751. The poorest countries in the
    world--where 800 million people live--have contributed less
    than 1 percent of these cumulative emissions.\116\ For most
    industrialized countries, their historic (i.e., cumulative)
    share of global emissions is much higher than their current
    (i.e., annual) share. For the period between 1850 and 2002, the
    United States contributed 29 percent world's CO2
    emissions, leading all other countries. EU-25 follows closely
    behind, with a contribution of 27 percent world's
    CO2 emissions, but no other country contributes more
    than 10 percent. For example, China's cumulative contribution
    is 8 percent, and India's is only 2 percent.\117\
    ---------------------------------------------------------------------------
        \116\Global Carbon Project, Carbon budget and trends 2007 (Sept.
    26, 2008), (online at http://www.globalcarbonproject.org/carbontrends/
    index.htm).
        \117\World Resources Institute, Navigating the Numbers: Greenhouse
    Gas Data and International Policy, at 32 (2005) (online at http://
    pdf.wri.org/navigating_numbers.pdf).
    ---------------------------------------------------------------------------
        The IPCC has concluded that, to have even a 50-50 chance of
    avoiding the dangerous climate change associated with a 3.6+ F
    increase in global average surface temperature, global
    emissions must be reduced by 50-85 percent by 2050. This
    requires the United States and other developed countries to
    reduce emissions by at least 80 percent by 2050.\118\ Given the
    current trajectory of rapidly rising greenhouse gas emissions,
    both in the United States and globally, a substantial change of
    course is required in the very near term to avoid the
    catastrophic impacts outlined below.
    ---------------------------------------------------------------------------
        \118\Intergovernmental Panel on Climate Change, Climate Change
    2007: Mitigation of Climate Change, Summary for Policymakers, at 38-39
    (Table TS.2) (2007); Union of Concerned Scientists, How to Avoid
    Dangerous Climate Change: A Target for U.S. Emission Reductions (Sept.
    2007) (online at http://www.ucsusa.org/global_warming/solutions/
    big_picture_solutions/a-target-for-us-emissions.html).
    ---------------------------------------------------------------------------

                         THE IMPACTS OF CLIMATE CHANGE

        The current and anticipated impacts of climate change have
    been increasingly well documented in the scientific
    literature.\119\ These impacts include effects on water
    scarcity and quality, the Arctic and Antarctic, warming and
    acidification of the world's oceans, sea level rise and coastal
    impacts, extreme weather events, public health, forests and
    wildfires, wildlife and endangered species, and national
    security.
    ---------------------------------------------------------------------------
        \119\In addition to the other sources cited in this report, the
    Committee considered the following sources that provide information
    regarding effects of global warming: Environmental Protection Agency,
    Technical support Document for Endangerment and Cause or Contribute
    findings for Greenhouse Gases (Apr.17, 2009); Intergovernmental Panel
    on Climate Change, IPCC Special Report: The Regional Impacts of Climate
    Change: An Assessment of Vulnerability (1997); National Assessment
    Synthesis Team, Climate Change Impacts on the United States: The
    Potential Consequences of Climate Variability and Change (2001);
    Committee on Environment and Natural Resources, National Science and
    Technology Council, Scientific assessment of the effects of global
    change in the United States (2008); U.S. Climate Change Science
    Program, Abrupt Climate Change, Synthesis and Assessment Product 3.4
    (2008); U.S. Climate Change Science Program, Thresholds of Climate
    Change in Ecosystems, Synthesis and Assessment Product 4.2 (2009); U.S.
    Climate Change Science Program, Coastal Sensitivity to Sea Level Rise:
    a Focus on the Mid-Atlantic Region, Synthesis and Assessment Product
    4.1 (2009); U.S. Climate Change Science Program, Effects of Climate
    Change on Energy Production and Use in the United States, Synthesis and
    Assessment Product 4.5. (2008); National Academy of Sciences, National
    Academy of Engineering, Institute of Medicine National Research
    Council, Understanding & Responding to Climate Change (2008);
    Environmental Protection Agency, Preliminary Review of Adaptation
    Options for Climate-sensitive Ecosystems and Resources, Synthesis and
    Assessment Product 4.4 (2008); Environmental Protection Agency, Climate
    Ready Estuaries Program, Synthesis of Adaptation Options for Coastal
    Areas (2009); Environmental Protection Agency, Analyses of the Effects
    of Global Change on Human Health and Welfare and Human System,
    Synthesis and Assessment Product 4.6 (2008); National Research Council,
    Potential Impacts of Climate Change on U.S. Transportation,
    Transportation Research Board Special Report (2008); United Nations
    Foundation, Confronting Climate Change: Avoiding the Unmanageable and
    Managing the Unavoidable, Scientific Expert Group Report (2007);
    Congressional Budget Office, Potential Impacts of Climate Change in the
    United States (2009); U.S. Department of State, Fourth U.S. Climate
    Action Report (2006); U.S. Climate Change Science Program, The Effects
    of Climate Change on Agriculture, Land Resources, Water Resources, and
    Biodiversity in the United States, Synthesis and Assessment Product 4.3
    (2008); National Academy of Sciences, Board on Life Sciences, Division
    on Earth and Life Studies, National Research Council, Ecological
    Impacts of Climate Change (2008); National Academy of Sciences,
    National Research Council, Abrupt Climate Change: Inevitable Surprises
    (2002); Arctic Climate Impact Assessment, Arctic Climate Impact
    Assessment (2005); Government of Canada, From Impacts to Adaptation:
    Canada in a Changing Climate 2007 (2008). Note that this list includes
    scientific sources relied upon in whole or in part.
    ---------------------------------------------------------------------------

             INCREASING WATER SCARCITY AND DECLINING WATER QUALITY

        One of the most dramatic impacts of global warming in the
    21st century will be the exacerbation of already severe water
    scarcity--both in the United States and abroad. Freshwater
    scarcity and threats to water quality are increasing
    dramatically both in the United States and across the world.
    More than a billion people currently lack access to safe
    drinking water.\120\ By 2025, 1.8 billion people are expected
    to be living in regions experiencing water scarcity and ``two-
    thirds of the world's population could be living under water
    stressed conditions.''\121\ Climate change will greatly
    exacerbate current and future water stress. For example, the
    IPCC projects that by 2020, between 75 and 250 million people
    in Africa alone will experience an increase of water stress due
    to climate change.\122\ For Asia, the number is between 120
    million and 1.2 billion people, and for Latin American it is 12
    to 81 million.\123\
    ---------------------------------------------------------------------------
        \120\German Advisory Council on Global Change, Climate Change as a
    Security Risk Summary for Policy-makers, at 2 (2007).
        \121\United Nations Commission on Sustainable Development, The Food
    Crisis and Sustainable Development (May 2008) (online at http://
    www.un.org/esa/sustdev/csd/csd16/documents/bgrounder_foodcrisis.pdf).
        \122\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adaptation and Vulnerability, Summary for Policy Makers,
    at 13 (2007).
        \123\Intergovernmental Panel on Climate Change, Climate Change and
    Water, at 36 (2008).
    ---------------------------------------------------------------------------
        Global warming is leading to rapid melting of land ice,
    glaciers, ice caps, and snow fields which over time will
    exacerbate water scarcity in many regions of the globe. One-
    sixth of the world population currently relies on meltwater
    from glaciers and snow cover for drinking water and irrigation
    for agriculture.\124\ The IPCC's 2008 Climate Change and Water
    report projects widespread reductions in snow cover throughout
    the 21st Century, and a 60 percent volume loss in glaciers in
    various regions.\125\ The melting of these ice reservoirs,
    which store 75 percent of the world's freshwater, will
    exacerbate water scarcity conditions.\126\ While melting will
    temporarily increase freshwater supply, more winter
    precipitation falling as rain rather than snow, and an earlier
    snowmelt season will deplete frozen freshwater reserves.
    ---------------------------------------------------------------------------
        \124\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adaptation, and Vulnerability, Summary for Policymakers,
    at 11 (2007).
        \125\Intergovernmental Panel on Climate Change, Climate Change and
    Water, at 28 (2008).
        \126\Intergovernmental Panel on Climate Change, Climate Change and
    Water, at 19-26 (2008).
    ---------------------------------------------------------------------------
        Increased water stress due to climate change will
    disproportionately affect the dry tropics and dry regions at
    lower mid-latitudes--notably Southeast Asia, southern Africa,
    Brazil, and the American Southwest.\127\ According to the 2008
    IPCC Climate Change and Water Report, semi-arid and arid areas
    in Southeast Asia, Southern Africa, Brazil, and the western
    United States are ``projected to suffer a decrease of water
    resources due to climate change.''\128\ In Asia, decreasing
    precipitation and rising temperatures result in increasing
    frequency and intensity of droughts.\129\ In northwestern China
    and Mongolia, snow and glacier melt will cause floods in the
    spring in the near term but result in freshwater shortages by
    the end of the century.\130\ Global warming of 5.4 +F to 7.2 +F
    may result in more persistent El Nino conditions that would
    shift the Amazon rainforest from ``tropical forest to dry
    savannah''\131\--imperiling an ecosystem that sustains
    thousands of people and is one of the greatest concentrations
    of biodiversity on Earth.\132\
    ---------------------------------------------------------------------------
        \127\Intergovernmental Panel on Climate Change, Climate Change and
    Water, at 3 (2008).
        \128\Intergovernmental Panel on Climate Change, Climate Change and
    Water, at 88 (2008).
        \129\Intergovernmental Panel on Climate Change, Climate Change and
    Water, at 86 (2008).
        \130\Intergovernmental Panel on Climate Change, Climate Change and
    Water, at 87 (2008).
        \131\Timothy M. Lenton et al., Tipping Elements in the Earth's
    climate system, 105 Proceedings of the National Academy of Sciences
    1790 (2008).
        \132\WWF Climate Change Programme, Climate Change Impacts in the
    Amazon: Review of Scientific Literature (online at
    ---------------------------------------------------------------------------
        The United States is already experiencing water stress,
    which will worsen severely in the coming decades due to climate
    change. In the American West, the Sierra Nevada snowpack is at
    its lowest level in 20 years and threatens most of the water
    supply to Northern California.\133\ Experts warn that ``even
    the most optimistic climate models for the second half of this
    century suggest that 30 to 70 percent of this snowpack will
    disappear.''\134\ The Southwest is already experiencing a
    severely reduced flow in the Colorado River--upon which 30
    million people depend for water--as a consequence to decreasing
    snowmelt from the Rocky Mountains.\135\ The Midwest is expected
    to experience ``drought-like conditions resulting from elevated
    temperatures, which increases levels of evaporation,
    contributing to decreases in soil moisture and reductions in
    lake and river beds'' as a result of climate change.\136\ In
    addition to a range of other costs, agriculture in the Great
    Plains and the Southwest is likely to suffer massive economic
    losses due to increasing water scarcity.\137\ A recent study
    led by NOAA found that if CO2 is allowed to peak
    above 450 parts per million, the impacts would include
    ``irreversible dry season rainfall reductions . . . comparable
    to those of the `dust bowl' era'' in the southwestern U.S.\138\
    ---------------------------------------------------------------------------
        \133\The Future is Drying Up, New York Times (Oct. 21, 2008)
    (online at http://www.nytimes.com/2007/10/21/magazine/21water-
    t.html?_r=1&ref=todayspaper&oref=slogin).
        \134\The Future is Drying Up, New York Times (Oct. 21, 2008)
    (online at http://www.nytimes.com/2007/10/21/magazine/21water-
    t.html?_r=1&ref=todayspaper&oref=slogin).
        \135\The Future is Drying Up, New York Times (Oct. 21, 2008)
    (online at http://www.nytimes.com/2007/10/21/magazine/21water-
    t.html?_r=1&ref=todayspaper&oref=slogin).
        \136\The Future is Drying Up, New York Times (Oct. 21, 2008)
    (online at http://www.nytimes.com/2007/10/21/magazine/21water-
    t.html?_r=1&ref=todayspaper&oref=slogin).
        \137\University of Maryland Center for Integrative Environmental
    Research, The U.S. Economic Impacts of Climate Change and the Costs of
    Inaction at 24, 27 (October 2007) (online at http://dl.klima2008.net/
    ccsl/us_economic.pdf).
        \138\Susan Solomon et al., Irreversible climate change due to
    carbon dioxide emissions, Proceedings of the National Academy of
    Sciences 1704 (2009).
    ---------------------------------------------------------------------------
        Climate change will also negatively impact the quality of
    freshwater resources. For example, reduced flows will reduce
    rivers' ability to dilute effluent, leading to increased
    pathogen or chemical loading.\139\ In addition, increased heavy
    precipitation events due to climate change--discussed below--
    ``may increase the total microbial load in watercourses and
    drinking-water reservoirs.''\140\ And warmer water temperature
    combined with higher phosphorus concentrations will increase
    the occurrence of freshwater algal blooms, with adverse impacts
    on freshwater ecosystems and fisheries. Fish habitat may also
    be compromised because altered water chemistry will promote the
    intrusion of invasive species.\141\ These impacts will
    exacerbate the precarious state of freshwater fish species in
    North America, nearly 40 percent of which are already at
    risk.\142\
    ---------------------------------------------------------------------------
        \139\Intergovernmental Panel on Climate Change, Climate Change and
    Water, at 67 (2008).
        \140\Intergovernmental Panel on Climate Change, Climate Change and
    Water, at 68 (2008).
        \141\Environmental Protection Agency, National Water Program
    Strategy: Response to Climate Change, at ii (Mar. 2008) (online at
    http://www.epa.gov/water/climatechange/docs/TO5_DRAFT_CCR_Revised_10-
    16.pdf).
        \142\Fisheries: Freshwater species in steep decline--USGS,
    Greenwire (Sept. 10, 2008).
    ---------------------------------------------------------------------------

                      IMPACTS ON THE ARCTIC AND ANTARCTIC

        The Arctic is one of the hotspots of global warming. Over
    the past 50 years average temperatures in the Arctic have
    increased as much as 7 +F, five times the global average.\143\
    In the next 100 years, some areas in the Arctic may see an
    increase in average temperatures as high as 13 +F.\144\
    ---------------------------------------------------------------------------
        \143\Arctic Climate Impact Assessment, Impacts of a Warming Arctic:
    Highlights, at 4 (2004) (online at http://www.amap.no/acia/
    Highlights.pdf).
        \144\Arctic Climate Impact Assessment, Impacts of a Warming Arctic:
    Highlights, at 4 (2004) (online at http://www.amap.no/acia/
    Highlights.pdf).
    ---------------------------------------------------------------------------
        As temperatures rise in the Arctic, sea ice and glaciers
    are melting at an unprecedented and alarming rate. In 2007, a
    record 386,000 square miles of Arctic sea ice melted away, an
    area larger than Texas and Arizona combined and as big a
    decline in one year as has occurred over the last decade.\145\
    In 2008, the sea ice extent was only slightly greater than in
    2007, but the sea ice volume is likely the lowest on record due
    to the decline in multiyear old ice and the thinness of the
    remaining ice.\146\ Recent observations suggest that Arctic sea
    ice could completely disappear during the summer as early as
    2020.\147\
    ---------------------------------------------------------------------------
        \145\European Space Agency, Satellites Witness Lowest Arctic Ice
    Coverage in History (Sept. 14, 2007) (online at http://www.esa.int/
    esaCP/SEMYTC13J6F_index_0.html).
        \146\National Snow and Ice Data Center, Arctic Sea Ice Down to
    Second-Lowest Extent; Likely Record-Low Volume (Oct. 2, 2008) (online
    at http://nsidc.org/news/press/20081002_seaice_pressrelease.html).
        \147\Julienne Stroeve et al. Arctic Sea Ice Decline: Faster Than
    Forecast, 34 Geophysical Research Letters L09501 (2007).
    ---------------------------------------------------------------------------
        The Greenland ice sheet is melting at an alarming rate.
    Between 1979 and 2002, the extent of melting in Greenland has
    increased on average by 16 percent--an area roughly the size of
    Sweden.\148\ In the record-breaking year of 2005, parts of
    Greenland melted that have never melted during the 27-year-long
    satellite record.\149\
    ---------------------------------------------------------------------------
        \148\Arctic Climate Impact Assessment, Impacts of a Warming Arctic:
    Highlights, at 6 (2004) (online at http://www.amap.no/acia/
    Highlights.pdf).
        \149\Sebastian H. Mernild et al., Surface Melt Area and Water
    Balance Modeling on the Greenland Ice Sheet 1995-2005, Journal of
    Hydrometeorology: In Press (2008).
    ---------------------------------------------------------------------------
        A complete melting of Greenland would result in a rise in
    global sea level of more than 20 feet,\150\ with catastrophic
    consequences for coastal regions around the world. Furthermore,
    melting Arctic glaciers would contribute large amounts of fresh
    water into the ocean, potentially changing oceanic currents,
    damaging eco-systems and altering current weather conditions.
    ---------------------------------------------------------------------------
        \150\United States Geological Survey, Sea Level and Climate (2000)
    (online at http://pubs.usgs.gov/fs/fs2-00/).
    ---------------------------------------------------------------------------
        At the opposite end of world, massive amounts of water are
    stored in the two ice sheets of Antarctica. The larger East
    Antarctic ice sheet covers the majority of the continent, while
    the West Antarctic ice sheet has significant ice shelves
    partially floating in the ocean. In the spring of 2002,
    scientists were shocked to discover that an ice shelf the size
    of Rhode Island had disintegrated from the West Antarctica ice
    sheet in just over a month,\151\ rather than the millennium
    previously assumed. Until recently, it was believed that only
    coastal areas of the West Antarctic were vulnerable to melting.
    Satellite analysis has now revealed that large inland regions
    are also showing signs of the impacts of warming. NASA and
    university researchers have found clear evidence that an area
    the size of California melted in January 2005 in response to
    warm temperatures.\152\
    ---------------------------------------------------------------------------
        \151\N. F. Glasser & T.A. Scambos, A structural glaciological
    analysis of the 2002 Larsen B ice shelf collapse, 54 Journal of
    Glaciology 316 (2008).
        \152\S. V. Nghiem et al., Snow Accumulation and Snowmelt Monitoring
    in Greenland and Antarctica, in Dynamic Planet (2007).
    ---------------------------------------------------------------------------

                WARMING AND ACIDIFICATION OF THE WORLD'S OCEANS

        The world's oceans will suffer devastating impacts as a
    result of global climate change.
        The oceans are already warming due to climate change. The
    oceans cover 70 percent of the Earth's surface and are critical
    components of the climate system for redistributing heat around
    the world and absorbing CO2 from the atmosphere.
    According to the IPCC, global ocean temperature has risen by
    0.18+ F from 1961 to 2003.\153\ Since the ocean has a heat
    capacity 1,000 times greater than that of the atmosphere, it
    has taken up 20 times more heat than the atmosphere during this
    same period.\154\ As a result of the ocean's relatively large
    heat capacity, it has a great effect on the Earth's heat
    balance and how energy from solar radiation is distributed
    throughout the global environment.
    ---------------------------------------------------------------------------
        \153\Intergovernmental Panel on Climate Change, Climate Change
    2007: The Physical Science Basis at 387 (2007).
        \154\Intergovernmental Panel on Climate Change, Climate Change
    2007: The Physical Science Basis, at 389 (2007).
    ---------------------------------------------------------------------------
        Increasing atmospheric CO2 concentrations are
    causing acidification of the oceans. Elevated atmospheric
    CO2 concentrations lead to higher absorption of
    CO2 into the upper ocean, which makes the surface
    waters more acidic and reduces the concentration of carbonate
    ions. According to the National Oceanic and Atmospheric
    Administration (NOAA), ocean chemistry currently is changing at
    least 100 times more rapidly than it has changed during the
    650,000 years preceding our industrial era.\155\ If current
    emission trends continue, the ocean will experience
    acidification to an extent and at rates that have not occurred
    for tens of millions of years. Ocean acidification has serious
    implications for the calcification rates of organisms living at
    all levels within the global ocean, from corals to zooplankton
    that serve as the foundation of many ocean food chains.
    According to NOAA, when dissolved carbon dioxide was increased
    to two times pre-industrial levels, a decrease in the
    calcification rate by 5 to 50 percent was observed.\156\
    ---------------------------------------------------------------------------
        \155\Pacific Marine Environmental Laboratory, National Oceanic and
    Atmospheric Administration, Carbon Dioxide and Our Ocean Legacy (April
    2006) (online at http://www.pmel.noaa.gov/pubs/PDF/feel2899/
    feel2899.pdf).
        \156\National Oceanic and Atmospheric Administration, Impacts of
    Anthropogenic CO2 on Ocean Chemistry and Biology (Oct. 20,
    2008) (online at http://www.oar.noaa.gov/spotlite/spot_gcc.html).
    ---------------------------------------------------------------------------
        Warming and acidification of ocean waters due to climate
    change are contributing to the collapse of coral reefs around
    the globe. Coral reefs are habitat for about a quarter of
    marine species, are the most diverse among marine ecosystems,
    and are already in a state of decline. Recent studies indicate
    that more than a third of all coral species are already
    endangered.\157\ When key temperature thresholds are exceeded,
    mass bleaching and complete coral mortality often result. By
    mid-century, these temperature thresholds are expected to be
    exceeded on an annual or bi-annual basis for the majority of
    reefs worldwide. After bleaching, algae quickly colonize dead
    corals and may make future coral growth and restoration more
    difficult. Other factors that influence the health of reefs are
    impacted by climate change, including sea level rise, storm
    severity and dust and mineral aerosols.\158\ These, together
    with non-climate factors such as over-fishing, invasion of non-
    native species, pollution, and increased nutrient and sediment
    loads, add multiple stresses, increasing coral reefs'
    vulnerability to climate change. Corals could become rare on
    tropical and subtropical reefs by 2050 due to the combined
    effects of acidification and increasing frequency of extreme
    temperature events that cause bleaching.
    ---------------------------------------------------------------------------
        \157\One-Third of Reef-Building Corals Face Elevated Extinction
    Risk from Climate Change and Local Impacts, Science Express (July 10,
    2008).
        \158\R.A. Cropp and A.J. Gabric, Evidence for Global Coupling of
    Phytoplankton and Atmospheric Aerosols, 4 Oceans 2003. Proceedings 2341
    (2003).
    ---------------------------------------------------------------------------
        NOAA estimates the commercial value of United States
    fisheries from coral reefs is more than $100 million,\159\ and
    the total economic value of coral is estimated to be $30
    billion.\160\ Coastal states, like Florida, would be especially
    harmed where reef-based tourism in the Florida Keys generates
    $1.2 billion in annual revenue.\161\ Healthy coral reefs
    provide other benefits, as well, including shoreline
    protection, beach sand supply, potential pharmaceuticals,
    biodiversity, and fish habitat.
    ---------------------------------------------------------------------------
        \159\National Oceanic and Atmospheric Administration, Importance of
    Coral Reefs (March 25, 2008) (online at http://oceanservice.noaa.gov/
    education/kits/corals/coral07_importance.html).
        \160\Scientists: Global Warming could kill coral reefs by 2050, USA
    Today (Dec. 13, 2007) (online at http://www.usatoday.com/weather/
    climate/globalwarming/2007-12-13-coral-reefs_N.htm).
        \161\World Resources Institute, The Value of Ecosystems (Dec. 5,
    2006) (online at http://www.wri.org/stories/2006/12/value-coastal-
    ecosystems).
    ---------------------------------------------------------------------------
        Climate change threatens global fisheries. Warmer water and
    acidification not only harm coral reefs that function as fish
    hatcheries, but could also change the circulation of the
    world's ocean currents. Most fish species have a fairly narrow
    range of optimum temperatures due to temperature effects on
    their basic metabolism and the availability of food sources
    that have their own optimum temperature ranges.\162\ A given
    species' geographic range may expand, shrink, or be relocated
    with changes in ocean conditions caused by climate change.\163\
    The United Nations Environment Programme found that ``climate
    change may slow down ocean thermohaline circulation crucial to
    coastal water quality and nutrient cycling in more than 75
    percent of the world's fishing grounds.''\164\ Less hospitable
    waters would have a significant effect on the global fishing
    industry. In the United States alone, commercial and
    recreational fisheries contribute $60 billion to the economy
    each year and employ more than 500,000 people.\165\
    ---------------------------------------------------------------------------
        \162\Pacific Fisheries and Environmental Laboratory, National
    Oceanic and Atmospheric Administration, Climate Variability and Marine
    Fisheries: How Does Climate Affect Fish Populations? (online at http://
    www.pfeg.noaa.gov/research/climatemarine/cmffish/cmffishery.html).
        \163\James R. McGoodwin, Effects of Climate Variability on Three
    Fisheries Economies in High-Altitude Regions: Implications for
    Fisheries Policies, 31 Marine Policy 40-55 (2007).
        \164\United Nations Environmental Programme, Warmer World May Mean
    Less Fish (Feb. 22, 2008) (online at http://www.unep.org/
    Documents.Multilingual/Default.asp?DocumentID=528&ArticleID=5751).
        \165\Senate Committee on Commerce, Science, and Transportation,
    Testimony of James L. Connaughton, Hearing on Magnuson-Stevens
    Reauthorization (109th Cong.) (Nov. 16, 2005).
    ---------------------------------------------------------------------------

                       SEA LEVEL RISE AND COASTAL IMPACTS

        Sea levels are already rising, and are predicted to rise by
    at least 1-2 feet by 2100--with the potential for a nearly 40-
    foot rise in sea level if the Greenland and West Antarctica ice
    sheets were to melt completely. The IPCC predicts that sea
    levels will rise by 8 to 24 inches above current levels by
    2100, primarily due to thermal expansion from rising ocean
    temperatures\166\--with current emissions trends more
    consistent with the higher end of this range. However, how much
    and how quickly the polar ice sheets will melt in response to
    global warming is a critical question. Many scientists are
    increasingly concerned that the Greenland and West Antarctic
    ice sheets are melting at a greater rate than previously
    predicted. Because scientists do not fully understand the
    dynamics of ice sheet melting, the IPCC found that larger
    values of sea level rise could not be excluded.\167\ A complete
    melting of the Greenland ice sheet alone would cause a 20-foot
    rise in sea level, and complete melting of the West Antarctic
    ice sheet would cause a 16-foot sea level rise.\168\
    ---------------------------------------------------------------------------
        \166\Intergovernmental Panel on Climate Change, Climate Change
    2007: The Physical Science Basis, Summary for Policymakers, at 70
    (2007).
        \167\Intergovernmental Panel on Climate Change, Climate Change
    2007: The Physical Science Basis, Summary for Policymakers, at 14
    (2007).
        \168\United States Geological Survey, Sea Level and Climate (2000)
    (online at http://pubs.usgs.gov/fs/fs2-00/); United States Geological
    Survey, Coastal Change and Glaciological Maps of Antarctica (2007)
    (online at http://pubs.usgs.gov/fs/2005/3055/index.html).
    ---------------------------------------------------------------------------
        Sea level rise will have severe impacts on the world's
    coastal populations, including in the United States. Rising sea
    levels are already causing inundation of low-lying lands,
    erosion of wetlands and beaches, exacerbation of storm surges
    and flooding, and increases in the salinity of coastal
    estuaries and aquifers. The most dramatic near-term effects of
    sea level rise are being felt by inhabitants of small island
    states, the very existence of which is now endangered. Further,
    about one billion people live in areas within 75 feet elevation
    of today's sea level, including many U.S. cities on the East
    Coast and Gulf of Mexico, almost all of Bangladesh, and areas
    occupied by more than 250 million people in China.\169\ In
    total, more than 70 percent of the world's population lives on
    coastal plains, and 11 of the world's 15 largest cities are on
    the coast.
    ---------------------------------------------------------------------------
        \169\Intergovernmental Panel on Climate Change, Climate Change
    2007: The Physical Science Basis, Summary for Policymakers, at 12
    (2007).
    ---------------------------------------------------------------------------
        In addition, rising sea level due to climate change will
    threaten drinking water supplies in coastal areas--causing
    intrusion of saltwater into both surface water and ground
    water.\170\ If sea level rise pushes salty water further
    upstream, existing water intakes might draw on salty water
    during dry periods. The freshwater Everglades currently
    recharge Florida's Biscayne aquifer, the primary water supply
    to the most populous counties in South Florida, including the
    cities of Miami and Fort Lauderdale. As rising water levels
    submerge low-lying portions of the Everglades, portions of the
    aquifer would become saline.\171\ Aquifers in New Jersey east
    of Philadelphia are recharged by the Delaware River which also
    may become saline in parts in the future, leading to a
    degradation of drinking water quality.\172\
    ---------------------------------------------------------------------------
        \170\Environmental Protection Agency, Coastal Zones and Sea Level
    Rise (Feb. 20, 2009) (online at http://www.epa.gov/climatechange/
    effects/coastal/index.html).
        \171\Environmental Protection Agency, Coastal Zones and Sea Level
    Rise (Feb. 20, 2009) (online at http://www.epa.gov/climatechange/
    effects/coastal/index.html).
        \172\Environmental Protection Agency, Coastal Zones and Sea Level
    Rise (Feb. 20, 2009) (online at http://www.epa.gov/climatechange/
    effects/coastal/index.html).
    ---------------------------------------------------------------------------

                             EXTREME WEATHER EVENTS

        Global warming has already changed the intensity, duration,
    frequency, and geographic range of a variety of weather
    patterns and will continue to do so--with potentially severe
    impacts on the United States and the world.\173\ There is a
    broad scientific consensus that the United States is vulnerable
    to weather hazards that will be exacerbated by climate change.
    The cost of damages from weather disasters has increased
    markedly from the 1980s, rising to more than 100 billion
    dollars in 2007. In addition to a rise in total cost, the
    frequency of weather disasters costing more than one billion
    dollars has increased.\174\
    ---------------------------------------------------------------------------
        \173\Intergovernmental Panel on Climate Change, Climate Change
    2007: The Physical Science Basis, at 8 (2007); see generally U.S.
    Climate Change Science Program, Synthesis Assessment Product 3.3,
    Weather and Climate Extremes in a Changing Climate: Regions of Focus:
    North America, Hawaii, Caribbean, and U.S. Pacific Islands, at 8 (June
    2008).
        \174\See National Climatic Data Center, Billion Dollar U.S. Weather
    Disasters, (Jan. 29, 2009) (online at http://www.ncdc.noaa.gov/oa/
    reports/billionz.html).
    ---------------------------------------------------------------------------
        Global warming will lead to more extreme precipitation
    events and flooding. The IPCC has found that ``[t]he frequency
    of heavy precipitation events has increased over most land
    areas, consistent with warming and observed increases of
    atmospheric water vapor.''\175\ The U.S. Climate Change Science
    Program has concluded that heavy precipitation events averaged
    over North America have increased over the past 50 years.\176\
    ---------------------------------------------------------------------------
        \175\Intergovernmental Panel on Climate Change, Climate Change
    2007: The Physical Science Basis, Summary for Policymakers, at 8
    (2007).
        \176\U.S. Climate Change Science Program, Synthesis Assessment
    Product 3.3, Weather and Climate Extremes in a Changing Climate:
    Regions of Focus: North America, Hawaii, Caribbean, and U.S. Pacific
    Islands, at 4 (June 2008).
    ---------------------------------------------------------------------------
        Flooding and extreme precipitation events cost lives and
    can cause massive damages to infrastructure, property, and
    agricultural lands, as was highlighted by the flooding in the
    Midwestern United States in the summer of 2008. Those floods
    washed away nearly 2 percent of the nation's corn crop. The
    American Farm Bureau Federation estimated there were crop
    losses in excess of $8 billion across the Midwest, with half of
    the total occurring in Iowa.\177\ An additional $1.5 billion in
    property damage occurred in Iowa\178\ and $1 billion in
    Indiana.\179\
    ---------------------------------------------------------------------------
        \177\National Climatic Data Center, Climate of 2008: Midwestern
    U.S. Flood Overview (July 9, 2008) (online at http://www.ncdc.noaa.gov/
    oa/climate/research/2008/flood08.html#impacts).
        \178\National Climatic Data Center, Climate of 2008: Midwestern
    U.S. Flood Overview (July 9, 2008) (online at http://www.ncdc.noaa.gov/
    oa/climate/research/2008/flood08.html#impacts).
        \179\Purdue researchers to assess damage from Midwestern floods,
    Lafayette Online (Sept. 29, 2008) (online at http://www.lafayette-
    online.com/purdue-news/2008/09/purdue-researchers-assess-flood-impact/
    ).
    ---------------------------------------------------------------------------
        Increased sea surface temperatures are a critical
    determining factor in the strength of hurricanes, and some
    scientists predict that global warming will result in an
    increase in hurricane and tropical cyclone frequency and
    intensity. The IPCC has found observational evidence for the
    increase in intense hurricanes in the North Atlantic since the
    1970s, correlated with increasing sea surface
    temperatures.\180\ Some researchers have argued that there is
    evidence for increased hurricane intensity around the world and
    emerging evidence for an increase in frequency of hurricanes in
    the Atlantic.\181\ Stronger hurricanes lead to more destructive
    winds and higher storm surges, increasing the risk to coastal
    communities in their paths. As sea level rises and storm surges
    increase, the vulnerability of cities to flooding, and the
    related impacts, increases significantly.
    ---------------------------------------------------------------------------
        \180\Intergovernmental Panel on Climate Change, Climate Change
    2007: The Physical Science Basis, Summary for Policymakers, at 9
    (2007).
        \181\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adapatation, and Vulnerability, at 110 (2007).
    ---------------------------------------------------------------------------
        Severe thunderstorms, hail, tornados, and winter storms may
    also increase. The current observational record for these
    smaller scale storms is insufficient to determine whether there
    are trends correlated to warming temperatures.\182\ However,
    these phenomena are often associated with heavy precipitation
    events and hurricanes; as the latter storms become more
    frequent and possibly increase in intensity, then the
    probability of thunderstorms, hail, and tornadoes should also
    increase. Warming temperatures may also expand the range over
    which tornados occur. Over the last few years, tornados have
    occurred earlier in the year and further north than what is
    typically thought of as ``tornado alley.''\183\ Finally, strong
    cold season storms are also likely to become more frequent,
    with stronger winds and more extreme wave heights.\184\
    ---------------------------------------------------------------------------
        \182\Intergovernmental Panel on Climate Change, Climate Change
    2007: The Physical Science Basis, Summary for Policymakers, at 9
    (2007); U.S. Climate Change Science Program, Synthesis Assessment
    Product 3.3, Weather and Climate Extremes in a Changing Climate:
    Regions of Focus: North America, Hawaii, Caribbean, and U.S. Pacific
    Islands, at 7 (June 2008)..
        \183\Twisters `on a record pace', L.A. Times (May 13, 2008) (online
    at http://articles.latimes.com/2008/may/13/nation/na-tornado13).
        \184\U.S. Climate Change Science Program, Synthesis Assessment
    Product 3.3, Weather and Climate Extremes in a Changing Climate:
    Regions of Focus: North America, Hawaii, Caribbean, and U.S. Pacific
    Islands, at 7 (June 2008)
    ---------------------------------------------------------------------------

                                 PUBLIC HEALTH

        There is a broad consensus among experts within the
    worldwide public health community that climate change poses a
    serious risk to public health. The IPCC's Fourth Assessment
    report concluded that climate change's likely impacts on public
    health include:
         More frequent and more intense heat waves, leading
    to marked short-term increases in mortality.
         Increased numbers of people suffering from death,
    disease, and injury from floods, storms, fires and droughts.
         Increased cardio-respiratory morbidity and
    mortality associated with ground-level ozone pollution.
         Changes in the range of some infectious disease
    vectors.
         Increased malnutrition and consequent disorders,
    including those relating to child growth and development.\185\
    ---------------------------------------------------------------------------
        \185\Intergovernmental Panel on Climate Change, Climate Change
    2007: Synthesis Report, Summary for Policymakers, at 48 (2007).
    ---------------------------------------------------------------------------
        This assessment included a specific analysis of regional
    impacts to health, including in the United States.\186\ In
    addition, EPA,\187\ the Centers for Disease Control and
    Prevention (CDC),\188\ and NOAA have all concluded climate
    change poses a serious public health risk. The World Health
    Organization (WHO) released a quantitative assessment
    concluding that the effects of climate change may have caused
    more than 150,000 deaths in 2000 and that these impacts are
    likely to increase in the future.\189\ According to the IPCC,
    climate change contributes to the global burden of disease,
    premature death and other adverse health impacts.\190\
    ---------------------------------------------------------------------------
        \186\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adaptation and Vulnerability, at 617-652 (2007).
        \187\Environmental Protection Agency, Climate Change--Health and
    Environmental Effects (Feb. 18, 2009) (online at http://www.epa.gov/
    climatechange/effects/health.html).
        \188\Centers for Disease Control and Prevention, CDC Policy on
    Climate Change and Public Health (online at http://www.cdc.gov/
    climatechange/pubs/Climate_Change_Policy.pdf).
        \189\World Health Organization, Climate and Health (Aug. 2007)
    (online at http://www.who.int/globalchange/en/).
        \190\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adaptation and Vulnerability, at 391-431 (2007).
    ---------------------------------------------------------------------------
        There is consensus that heat waves ``have become more
    frequent over most land areas'' and there is confidence that
    climate change will result in the ``very likely increase in
    frequency of hot extremes.''\191\ There is evidence that
    present day heat waves over Europe and North America ``coincide
    with a specific atmospheric circulation pattern that is
    intensified by ongoing increases in greenhouse gasses.''\192\
    The intensity, duration and frequency of heat waves will
    increase in western and southern regions of the United States
    and in the Mediterranean region.\193\ Other areas not currently
    as susceptible, such as northwest North America, France,
    Germany, and the Balkans will also experience ``increased heat
    wave severity in the 21st century.''\194\ With continued
    warming by 2100, Washington, D.C. will experience the
    temperatures that Houston does today, Denver will be as warm as
    Memphis is today, and Anchorage will be as warm as New York
    City is today.\195\ The populations most at risk of dying in a
    heat wave are the elderly and people in underserved
    communities, and as growth in the U.S. population over the age
    of 65 coincides with warmer temperatures, more deaths can be
    anticipated.
    ---------------------------------------------------------------------------
        \191\Intergovernmental Panel on Climate Change, Climate Change
    2007: Synthesis Report, Summary for Policymakers, at 2, 8 (2007).
        \192\Gerald A. Meehl & Claudia Tebaldi, More Intense, More
    Frequent, and Longer Lasting Heat Waves in the 21st Century, 305
    Science 994 (2004).
        \193\Gerald A. Meehl & Claudia Tebaldi, More Intense, More
    Frequent, and Longer Lasting Heat Waves in the 21st Century, 305
    Science 994 (2004).
        \194\Gerald A. Meehl & Claudia Tebaldi, More Intense, More
    Frequent, and Longer Lasting Heat Waves in the 21st Century, 305
    Science 994 (2004).
        \195\Natural Resources Defense Council, The Cost of Climate Change:
    What We'll Pay if Global Warming Continues Unchecked at vi (May 2008)
    (online at http://www.nrdc.org/globalwarming/cost/cost.pdf).
    ---------------------------------------------------------------------------
        Global warming will exacerbate ground-level ozone
    pollution, leading to substantial increases in deaths and
    respiratory illness. The ozone forming reaction occurs at a
    higher rate with more intense sunlight and higher temperatures.
    Thus, as temperatures rise from global warming, ground level
    ozone is expected to increase. Ozone is a known public health
    threat that can damage lung tissue causing respiratory illness,
    and exacerbate pre-existing respiratory conditions. The IPCC
    predicts increased levels of ozone across the eastern United
    States, ``with the cities most polluted today experiencing the
    greatest increase in ozone pollution.''\196\ The increase in
    temperature in urban areas specifically and increases in ozone
    can increase rates of cardiovascular and pulmonary illnesses as
    well as temperature-related morbidity and mortality for
    children and the elderly.\197\ Similar impacts will be felt in
    urban areas around the globe. By mid-century, ozone related
    deaths from climate change are predicted to increase by
    approximately 4.5 percent from the 1990s levels.\198\ Even
    modest exposure to ozone may encourage the development of
    asthma in children.\199\ Recently, an analysis linking
    CO2 emissions to mortality revealed that for each
    increase of 1.8 +F caused by CO2, the resulting air
    pollution would lead annually to about a thousand additional
    deaths and many more cases of respiratory illness and asthma in
    the United States.\200\
    ---------------------------------------------------------------------------
        \196\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adaptation and Vulnerability at 632 (2007).
        \197\U.S. Climate Change Science Program, Analyses of the Effects
    of Global Change on Human Health and Welfare and Human Systems at ES-6
    (Sept. 2008) (online at http://downloads.climatescience.gov/sap/sap4-6/
    sap4-6-final-report-all.pdf).
        \198\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adaptation and Vulnerability at 632 (2007).
        \199\R. K. McConnell et al., Asthma in exercising children exposed
    to ozone: A cohort study, 359 The Lancet 386 (2002); J.F. Gent et al.,
    Association of low-level ozone and fine particles with respiratory
    symptoms in children with asthma, 29 J. Am. Med. Assoc. 1859 (2003).
        \200\Mark Jacobson, On the Causal Link Between Carbon Dioxide and
    Air Pollution Mortality, 35 Geophysical Research Letters L03809 (2008).
    ---------------------------------------------------------------------------
        Climate change is predicted to lead to changes in
    geographic distribution of infectious diseases, with
    potentially serious impacts on public health in the United
    States and globally. According to EPA, ``Climate change may
    increase the risk of some infectious diseases, particularly
    those diseases that appear in warm areas and are spread by
    mosquitoes and other insects.''\201\ For example, the IPCC has
    concluded that the global population at risk from vector-borne
    malaria will increase by between 220 million and 400 million in
    the next century.\202\ Similarly, the IPCC predicts that
    climate change is likely to increase risk and geographic spread
    of the West Nile virus--another mosquito-borne disease.\203\
    West Nile virus was first identified in the United States
    during the summer of 1999, and has since killed 1,112
    people.\204\ Shifting patterns of temperature may also
    redistribute ticks that transmit pathogens causing Lyme
    disease.\205\
    ---------------------------------------------------------------------------
        \201\Environmental Protection Agency, Climate Change Health and
    Environment Effects: Health, (online at http://www.epa.gov/
    climatechange/effects/health.html#climate).
        \202\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adaptation and Vulnerability at 409 (2007).
        \203\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adaptation and Vulnerability at 619 (2007).
        \204\Centers for Disease Control and Prevention, West Nile Virus
    Human Case Counts for 1999-2008, (online at http://www.cdc.gov/ncidod/
    dvbid/westnile/surv&control.htm).
        \205\U.S. Climate Change Science Program, Analyses of the Effects
    of Global Change on Human Health and Welfare and Human Systems, at 53
    (Sept. 2008) (online at http://downloads.climatescience.gov/sap/sap4-6/
    sap4-6-final-report-all.pdf).
    ---------------------------------------------------------------------------

                             FORESTS AND WILDFIRES

        The clearing and degradation of tropical forests is a major
    driver of global climate change. Forests cover about 30 percent
    of the Earth's land surface and hold almost half of the world's
    terrestrial carbon.\206\ They can act both as a source of
    carbon emissions to the atmosphere when cut, burned, or
    otherwise degraded and as a sink when they grow, removing
    carbon dioxide from the air through photosynthesis.
    ---------------------------------------------------------------------------
        \206\Richard A. Houghton, ``Tropical Deforestation as a source of
    greenhouse gas emissions,'' in Tropical Deforestation and Climate
    Change at 13 (2005) (online at http://www.edf.org/documents/
    4930_TropicalDeforestation_and_ClimateChange.pdf).
    ---------------------------------------------------------------------------
        Since the 1950s, greenhouse gas emissions from land use
    change, including deforestation and degradation, have been
    significant, on the order of 20 to 50 percent of fossil fuel
    emissions.\207\ Deforestation and degradation currently account
    for 20 to 25 percent of global anthropogenic greenhouse gas
    emissions, roughly equivalent to the total fossil fuel
    emissions from the United States.\208\ These emissions come
    predominantly from deforestation of tropical rainforests.
    ---------------------------------------------------------------------------
        \207\Richard A. Houghton, Carbon Flux to the Atmosphere from Land-
    Use Changes: 1850-2005 in TRENDS: A Compendium of Data on Global Change
    (2008) (online at http://cdiac.ornl.gov/trends/landuse/houghton/
    houghton.html).
        \208\Richard A. Houghton, ``Tropical Deforestation as a source of
    greenhouse gas emissions,'' in Tropical Deforestation and Climate
    Change at 13 (2005) (online at http://www.edf.org/documents/
    4930_TropicalDeforestation_and_ClimateChange.pdf).
    ---------------------------------------------------------------------------
        Tropical forests play an especially crucial role. When
    forests are destroyed by fire, much of the carbon they store
    returns to the atmosphere, enhancing global warming. When a
    forest is cleared for crop or grazing land, the soils can
    become a large source of global warming emissions, depending on
    how farmers and ranchers manage the land. In places such as
    Indonesia, the soils of swampy lowland forests are rich in
    partially decayed organic matter, known as peat. During
    extended droughts, such as during El Nino events, the forests
    and the peat become flammable, especially if they have been
    degraded by logging or accidental fire. When they burn, they
    release huge volumes of CO2 and other greenhouse
    gases.
        There is growing scientific consensus that climate change
    is already increasing the frequency and intensity of wildfires
    in the United States, and this trend is likely to worsen in the
    coming decades. Scientists have concluded that from 1986 to
    2006, longer, warmer summers have resulted in a four-fold
    increase in major wildfires and a six-fold increase in the area
    of forest burned, compared to the period from 1970-1986.\209\
    Similar results were published regarding wildfire activity in
    Canada from 1920-1999.\210\ In addition to more intense and
    more frequent fires, the length of the fire season and the burn
    duration of large fires have also increased. Models of future
    climate have consistently concluded that the areas burned will
    increase in the coming years and decades. For example, wildfire
    burn areas in Canada are expected to increase by 74 to 118
    percent in the next century,\211\ and similar increases are
    predicted for the western United States. With more wildfires
    come more greenhouse gas emissions. Although estimates vary
    widely, wildfires may represent up to 10 percent of total U.S.
    greenhouse gas emissions.\212\
    ---------------------------------------------------------------------------
        \209\Anthony L. Westerling et al., Warming and Earlier Spring
    Increase Western U.S. Forest Wildfire Activity, 313 Science 940 (2006).
        \210\N. P. Gillett et al., Detecting the Effect of Climate Change
    on Canadian Forest Fires, 31 Geophysical Research Letters L18211
    (2004).
        \211\M. D. Flannigan et al., Future Area Burned in Canada, 72
    Climatic Change 1 (2005).
        \212\Guido R. Van der Werf et al, Continental-Scale Partitioning of
    Fire Emissions During the 1997 to 2001 El Nino/La Nina Period, 303
    Science 73 (2004).
    ---------------------------------------------------------------------------
        Global warming is also exacerbating insect infestations
    (most notably bark beetles), which in turn make forests more
    susceptible to wildfire. Drought stress makes trees and
    vegetation more susceptible to attack by insects, and warmer
    winter temperatures allow a higher number of insects to survive
    and increase their populations. Warmer temperatures can also
    increase reproductive rates of insects, resulting in two
    generations in a single year. Finally, warmer temperatures
    allow insects to invade areas previously outside their natural
    range, as has happened with the mountain pine beetle in the
    western United States.\213\ Research has also demonstrated
    links between warmer temperatures and drought on extensive
    insect outbreaks in southwestern forests and Alaska.\214\
    ---------------------------------------------------------------------------
        \213\U.S. Climate Change Science Program, Synthesis and Assessment
    Product 4.3, The Effects of Climate Change on Agriculture, Land
    Resources, Water Resources, and Biodiversity in the United States, at
    81-82 (May 2008).
        \214\U.S. Global Change Research Program, The Potential
    Consequences of Climate Variability and Change: Foundation Report, at
    620 (2001) (online at http://www.usgcrp.gov/usgcrp/Library/
    nationalassessment/foundation.htm).
    ---------------------------------------------------------------------------

                        WILDLIFE AND ENDANGERED SPECIES

        If climate change goes unchecked, it could lead to the
    extinction of up to 40 percent of the world's species by the
    latter half of this century. The International Union for the
    Conservation of Nature's 2008 annual report lists 38 percent of
    catalogued species as already threatened with extinction--
    including nearly 25 percent of all mammals.\215\ According to
    the IPCC's Fourth Assessment Report, ``the resilience of many
    ecosystems is likely to be exceeded this century by an
    unprecedented combination of climate change, associated
    disturbances, (e.g. flooding, drought, wildfire, insects, ocean
    acidification), and other global change drivers.''\216\
    ---------------------------------------------------------------------------
        \215\International Union for the Conservation of Nature, IUCN Red
    List Reveals World's Mammals in Crisis (Oct. 6, 2008) (online at http:/
    /www.iucn.org/news_events/events/congress/index.cfm?uNewsID=1695).
        \216\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adaptation and Vulnerability, Summary for Policy Makers
    at 11 (2007).
    ---------------------------------------------------------------------------
        According to the IPCC: ``Approximately 20-30 percent of
    plant and animal species assessed so far are likely to be at an
    increased risk of extinction if increases in global average
    temperature exceed 1.5 - 2.5 +C [2.7 - 4.5 +F].''\217\
    Additional warming could lead to ``significant extinctions
    around the globe,'' including the loss of more than 40 percent
    of all plant and animal species.\218\
    ---------------------------------------------------------------------------
        \217\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adaptation and Vulnerability, Summary for Policy Makers
    at 11 (2007).
        \218\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adaptation and Vulnerability, Summary for Policy Makers
    at 16 (2007).
    ---------------------------------------------------------------------------
        The species most vulnerable to climate change have a
    specialized habitat, a narrow environmental tolerance that is
    likely to be exceeded due to climate change, and dependence on
    specific environmental triggers or interactions that are likely
    to be disrupted by climate change. The IPCC identifies ``coral
    reefs, the sea-ice biome, and other high-latitude ecosystems
    (e.g. boreal forests), mountain ecosystems and mediterranean-
    climate ecosystems'' as the systems most vulnerable to the
    impacts of climate change.\219\ One tragic and iconic example
    is the polar bear. Polar bear populations are expected to
    decline by 30 percent in the next 35 to 50 years--and to
    disappear from Alaska altogether--due to disappearing habitat
    resulting from global warming.\220\
    ---------------------------------------------------------------------------
        \219\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adaptation and Vulnerability, Summary for Policymakers
    at 214 (2007).
        \220\See, e.g., Experts Predict Polar Bear Decline, Washington Post
    (July 7, 2005) (online at http://www.washingtonpost.com/wp-dyn/content/
    article/2005/07/06/AR2005070601899.html).
    ---------------------------------------------------------------------------

                           NATIONAL SECURITY IMPACTS

        The current and projected impacts of global warming have
    serious national security consequences for the United States
    and our allies, in many cases acting as ``threat multipliers.''
    The security issues raised by global warming have received
    increasing scrutiny in the last few years both in Congress and
    in international venues, including a debate at the UN Security
    Council in April 2007. The first-ever U.S. government analysis
    of the security threats posed by global climate change was
    issued in June 2008 as the National Intelligence Assessment
    (NIA), National Security Implications of Global Climate Change
    to 2030. The 2008 NIA was the result of a process initiated, in
    part, by the introduction of H.R. 1961, the ``Climate Change
    Security Oversight Act,'' which required the U.S. Intelligence
    Community to analyze the national security implications of
    global climate change. In addition, U.S. and European military
    and security policy analysts have issued a number of public
    reports exploring the security consequences of global warming
    and potential responses. All of these reports emphasize
    concerns over a few key security impacts, including migration,
    water scarcity, infrastructure at risk from extreme weather,
    and new economic routes and access to new energy resources. In
    most cases, global warming is not creating ``new'' security
    threats, but rather is acting as a ``threat multiplier.''\221\
    ---------------------------------------------------------------------------
        \221\House Committee on Energy and Commerce, Subcommittee on Energy
    and Environment, Hearing on The American Clean Energy and Security Act
    of 2009 (111th Cong.) (April 24, 2009) (online at http://
    energycommerce.house.gov/Press_111/20090424/testimony_warner.pdf ).
    ---------------------------------------------------------------------------
        Numerous impacts of global warming could ultimately
    increase both the temporary and permanent migration of people
    inside and across existing national borders--increasing risks
    of geopolitical instability. Nations dealing with an influx may
    have neither the resources nor the desire to support climate
    migrants. As in the past, movement of people into new territory
    can increase the likelihood of conflict and the potential need
    for intervention from U.S. and allied military forces.
        Rising sea levels threaten low-lying island nations and
    populous coastal areas. Even if not totally inundated, rising
    sea levels can render these areas uninhabitable due to sea
    water incursion into fresh water resources and increased
    exposure to storms. For example, the risk of coastal flooding
    in Bangladesh is growing and could force 30 million people to
    search for higher ground in a country already known for
    political violence. India is already building a wall along its
    border with Bangladesh.\222\ The densely-populated and oil-rich
    Niger Delta is already the scene of conflict over the sharing
    of oil revenues. Land loss and increased risk of storms will
    exacerbate these tensions as well as the challenge of
    maintaining the existing oil infrastructure. Other important
    economic and agricultural coastal areas, like Egypt's Nile
    Delta and China's southeast coast, are also threatened from
    rising sea-levels and severe storms. Similar impacts in Central
    America and the Caribbean could add pressure to pre-existing
    migration patterns from those areas to the United States.
    ---------------------------------------------------------------------------
        \222\The Gathering Storm, OnEarth (Summer 2008) (online at http://
    www.onearth.org/article/the-gathering-storm?page=all).
    ---------------------------------------------------------------------------
        Increased water scarcity due to climate change exacerbates
    the risk of conflict over water resources. As discussed above,
    changing precipitation patterns and increasing temperatures are
    likely to increase the risk of water scarcity and degraded
    water quality in many areas. Security experts have long been
    concerned about the prospects for conflict over water resources
    in many regions of the developing world, which will be
    exacerbated by climate change. Water scarcity will also
    increase the pressure on groups to migrate to areas perceived
    to have more resources.
        Global warming is predicted to directly impact U.S.
    military infrastructure at risk of damage from extreme weather
    and melting permafrost. Infrastructure upgrades, repair and
    replacement to increase resilience to global warming impacts,
    and rebuilding after extreme weather events will be costly. For
    example, the East and Gulf Coasts will be at increased risk
    from storm surge, and U.S. naval shipbuilding facilities have
    already been damaged by Hurricanes Katrina and Rita. Many
    active U.S. coastal military installations around the world are
    at a significant and increasing risk of damage from storm
    surges and associated flooding and damages. For example, the
    U.S. airbase at Diego Garcia in the Indian Ocean, which is
    critical to operations in Iraq and the surrounding region, is
    an average of four feet above sea level and is threatened by
    sea level rise and storm surges.\223\
    ---------------------------------------------------------------------------
        \223\The CNA Corporation, National Security and the Threat of
    Climate Change at 37 (2007) (online at http://
    securityandclimate.cna.org/report/National percent20Security
    percent20and percent20the percent20Threat percent20of percent20Climate
    percent20Change.pdf).
    ---------------------------------------------------------------------------
        Changes in severe weather can also threaten energy
    supplies, as demonstrated in the devastating hurricane season
    in 2005. The paths of Hurricane Katrina and Hurricane Rita
    passed through three-quarters of the oil platforms and two-
    thirds of the natural gas platforms in the Gulf of Mexico and a
    major concentration of refining capacity on land. Together they
    destroyed more than a hundred offshore platforms and damaged
    183 pipelines. More than 1.5 million barrels of oil and 10
    billion cubic feet of natural gas production per day were taken
    off-line for both hurricanes. Katrina also significantly
    affected electricity supply with 2.7 million customers and
    other critical infrastructure losing power.\224\ In Alaska,
    melting permafrost and fewer days with
    ---------------------------------------------------------------------------
        \224\Senate Committee on Energy and Natural Resources, Testimony of
    Secretary of Energy Samuel Bodman, Hurricanes Katrina and Rita, 109th
    Cong. (Oct. 27, 2005). an adequate amount of snow for exploration
    purposes could hinder oil production and transport of oil from fields
    on the North Slope.
    ---------------------------------------------------------------------------
        Finally, accelerating melting of Arctic sea ice is
    impacting the United States' strategic interests in the region.
    Russia has moved to stake claim to more than 460,000 square
    miles of territory, including areas with potential oil and
    natural gas resources.\225\ With the opening of the Northwest
    Passage for the first time in recorded history, the Prime
    Minister of Canada announced his intention to increase his
    country's military presence in the Arctic.\226\ Other
    circumpolar nations, including the United States, have begun to
    examine their potential claims on Arctic territory and identify
    necessary preparations for increased maritime traffic in the
    area.
    ---------------------------------------------------------------------------
        \225\Scott Borgerson, Arctic Meltdown: The Economic and Security
    Implications of Global Warming, Foreign Affairs (Mar./Apr. 2008).
        \226\Scott Borgerson, Arctic Meltdown: The Economic and Security
    Implications of Global Warming, Foreign Affairs (Mar./Apr. 2008).
    ---------------------------------------------------------------------------

                      THE ECONOMIC COSTS OF CLIMATE CHANGE

        Climate change impacts of the types described above will
    have staggering economic impacts in the United States and the
    rest of the world in the coming decades. Measuring these
    impacts in dollars is a unique challenge, requiring analysis of
    local and global impacts, long time horizons, quantification of
    risk and uncertainty, and capturing the possibility of tipping
    points that induce major, catastrophic change. While the
    variables are many and complex, estimates of potential economic
    impacts are massive. The Stern Review--one of the most in-depth
    and respected economic impact analyses on climate change
    conducted thus far--used formal economic models to estimate
    that unabated climate change will cost at least 5 percent of
    global gross domestic product (GDP) each year.\227\ This
    amounts to around $3.3 trillion per year at the current value
    of the global economy.\228\ If a wider range of risks and
    impacts is taken into account, the damages could rise to 20
    percent of GDP or more annually over the next two centuries.
    ---------------------------------------------------------------------------
        \227\Nicholas Stern, Stern Review on The Economics of Climate
    Change (2007) (online at http://www.hm-treasury.gov.uk/
    stern_review_report.htm).
        \228\CIA World Fact Book (online at https://www.cia.gov/library/
    publications/the-world-factbook/geos/xx.html#Econ).
    ---------------------------------------------------------------------------
        In the United States, the economic impacts of climate
    change are predicted to be felt throughout the country and
    within all sectors of the economy. The greatest economic
    impacts are predicted to stem from stress to fresh water supply
    networks, changes to the agricultural sector, threats to
    coastal infrastructure from storms and sea level rise, effects
    on energy supply and demand, increased risk to human health,
    and more frequent and extensive forest fires.\229\ Tourism and
    other weather-dependent industries may be hit especially hard.
    Modeling results from a recent Tufts University and Natural
    Resources Defense Council study show that if present trends
    continue, the total cost of four global warming impacts alone--
    hurricane damage, real estate losses, energy costs, and water
    costs--could cost the United States nearly $1.9 trillion
    annually by 2100 (in constant 2008 dollars), or 1.8 percent of
    U.S. GDP. Factoring in a wider range of harms such as health
    impacts and wildlife damages, these costs could reach 3.6
    percent of GDP annually in the United States by 2100.\230\
    ---------------------------------------------------------------------------
        \229\University of Maryland Center for Integrative Environmental
    Research, The U.S. Economic Impacts of Climate Change and the Costs of
    Inaction at 10-15 (October 2007) (online at http://dl.klima2008.net/
    ccsl/us_economic.pdf).
        \230\Natural Resources Defense Council, The Cost of Climate Change:
    What We'll Pay if Global Warming Continues Unchecked at vi (May 2008)
    (online at http://www.nrdc.org/globalwarming/cost/cost.pdf).
    ---------------------------------------------------------------------------

                       IMPACTS ON VULNERABLE COMMUNITIES

        Climate change is predicted to have devastating impacts on
    the developing world, reversing gains in poverty reduction,
    food security and nutrition, health, and basic services and
    putting millions of lives at risk. Poor communities are
    especially vulnerable because they have less capacity to adapt
    to changes in climate and are more dependent on climate-
    sensitive resources such as local water and food supplies.\231\
    Increased exposure to drought and water scarcity, more intense
    storms, floods, and other environmental pressures are projected
    to reverse many of the recent gains in poverty alleviation
    around the world, adding to the total of 2.6 billion people now
    living on $2 a day or less. By the end of the century, an
    additional 145-220 million people in South Asia and Sub Saharan
    Africa could fall below the $2 per day poverty level as a
    result of climate change impacts.\232\
    ---------------------------------------------------------------------------
        \231\Intergovernmental Panel on Climate Change, Climate Change
    2007: Impacts, Adaptation and Vulnerability, Summary for Policymakers
    at 7, 22 (2007).
        \232\Nicholas Stern, Stern Review on The Economics of Climate
    Change at 55 (2007) (online at http://www.hm-treasury.gov.uk/
    stern_review_report.htm).
    ---------------------------------------------------------------------------
        Poor communities and communities of color within the United
    States are vulnerable to climate change impacts as well, and
    suffer disproportionately from illnesses due to the social
    determinants of health. As Hurricane Katrina demonstrated,
    poorer communities are especially vulnerable to extreme weather
    events. Poorer communities and communities of color are also
    more vulnerable to public health impacts of climate change.
    Today, more than 70 percent of African Americans live in
    counties in violation of federal air pollution standards.\233\
    As a result, African Americans are nearly three times as likely
    to be hospitalized or killed by asthma.\234\ In Harlem, New
    York, 25 percent of children now have asthma.\235\ Latinos--66
    percent of whom live in areas that violate federal air quality
    standards--face disproportionate health impacts as well.\236\
    These impacts are exacerbated by their disproportionate lack of
    health insurance and lower utilization of health services
    compared with both non-Hispanic whites and African Americans.
    ---------------------------------------------------------------------------
        \233\Congressional Black Caucus Foundation, Climate Change and
    Extreme Weather Events: An Unequal Burden on African Americans (Sept.
    2005) (online at http://www.cbcfinc.org/pdf/
    climatechange_issuebrf.pdf).
        \234\Environmental Justice and Climate Change Initiative, Climate
    of Change: African Americans, Global Warming, and a Just Climate Policy
    for the U.S. at 2 (2008) (online at http://www.ejcc.org/
    climateofchange.pdf).
        \235\Study Finds Asthma in 25 percent of Children in Central
    Harlem, New York Times (April 19, 2003).
        \236\Natural Resources Defense Council, Hidden Danger:
    Environmental Health Threats in the Latino Community, at vii, 14 (Oct.
    2004) (online at http://www.nrdc.org/health/effects/latino_english/
    latino--en.pdf).
    ---------------------------------------------------------------------------
        Vulnerable Alaskans are already dealing with the harsh
    reality of global warming. According to the U.S. Army Corps of
    Engineers, at least three Alaskan villages--Shishmaref,
    Kivalina, and Newtok--will be lost to coastal erosion due to
    rising sea levels in the next 8 to 13 years.\237\ With flooding
    and erosion currently affecting 184 out of 213, or 86 percent,
    of Alaska Native villages to some extent,\238\ the number of
    villages needing major assistance is likely to increase. The
    cost of saving these villages through either man-made erosion
    protection or total community relocation could be up to $200
    million or more per village.\239\
    ---------------------------------------------------------------------------
        \237\U.S. Army Corps of Engineers, Alaska Village Erosion Technical
    Assistance Program (April 2006) (online at http://housemajority.org/
    coms/cli/AVETA_Report.pdf).
        \238\Government Accountability Office, Alaska Native Villages (June
    29, 2004) (GAO-04-895T) (online at http://www.gao.gov/new.items/
    d04895t.pdf).
        \239\U.S. Army Corps of Engineers, Alaska Village Erosion Technical
    Assistance Program (April 2006) (online at http://housemajority.org/
    coms/cli/AVETA_Report.pdf).
    ---------------------------------------------------------------------------

                       International Climate Negotiations

        Because a global effort will be required to protect the
    planet from the looming climate crisis, the Committee crafted
    this legislation with an international treaty in mind. A
    December 2007 meeting in Bali, Indonesia in December 2007
    established a ``roadmap'' for future negotiations, which calls
    for the completion of such an agreement to govern international
    global warming pollution reduction efforts at the Fifteenth
    Conference of the Parties to the United Nations Framework
    Convention on Climate Change at Copenhagen in December 2009.

             UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE

        In 1992, the United Nations convened 172 nations at the
    Earth Summit in Rio de Janeiro for the first attempt of
    governments to fundamentally address global warming. From the
    summit, the United Nations Framework Convention on Climate
    Change (UNFCCC) emerged. It came into effect in 1994 and was
    ultimately ratified by 192 nations, including the United
    States. The Convention set the ultimate objective of
    stabilizing atmospheric greenhouse gas concentrations at safe
    levels and incorporated a voluntary initial goal that
    industrialized countries should take the lead in tackling the
    problem by cutting their emissions to 1990 levels by 2000.

                               THE KYOTO PROTOCOL

        In 1995, the first meeting of the Conference of the Parties
    (COP) to the UNFCCC adopted the Berlin Mandate, which called
    for the negotiation of a new agreement that would augment the
    UNFCCC with stricter demands for reducing emissions. This led
    to the development of the Kyoto Protocol, which was signed in
    1997 by 84 countries. The Protocol set mandatory targets for
    the reduction of greenhouse gas emissions from the world's
    developed countries by an average of 5.2 percent below 1990
    levels between 2008 and 2012. Ultimately 175 countries--
    including virtually all developed countries other than the
    United States and Australia--ratified the Protocol, which
    officially entered into force in February 2005. Australia
    ratified the Protocol in December 2007, leaving the United
    States as the only industrialized country that has not done so.
        Kyoto establishes a cap-and-trade system that allows
    developed countries to meet their commitments through trading
    of marketable credits under the International Emissions Trading
    System (IET). Kyoto's other ``flexibility mechanisms''--Joint
    Implementation (JI) and the Clean Development Mechanism (CDM)--
    allow developed countries to meet their emissions targets in
    part through the purchase of tradable offset credits generated
    by emission reduction projects in other countries. Through this
    array of market-based mechanisms, the Kyoto Protocol laid the
    groundwork for what has become known as the global ``carbon
    market.''

          UNITED NATIONS CLIMATE CHANGE CONFERENCE IN BALI, INDONESIA

        From December 3-15, 2007, representatives from more than
    180 countries met in Bali, Indonesia for the thirteenth
    conference of the parties to the UNFCCC. The principal item on
    the agenda was the development of a ``roadmap'' for the
    negotiation of a new global climate change agreement governing
    the period after 2012, when the Kyoto Protocol's commitment
    period ends.
        The Bali Action Plan--the ``roadmap'' agreement reached at
    the conference--calls upon the parties to negotiate a new
    agreement to be adopted at the Fifteenth Conference of the
    Parties, to be held in Copenhagen, Denmark in December
    2009.\240\ The roadmap recognizes the findings of the IPCC's
    2007 Fourth Assessment Report that global warming is
    unequivocal and that delay in reducing emissions increases the
    risk of severe climate change impacts and decreases the
    opportunity to achieve lower stabilization levels of greenhouse
    gases. The agreement further recognizes that ``deep cuts in
    global emissions will be required'' to avoid dangerous impacts
    from climate change and emphasizes the IPCC's findings
    regarding the ``urgency to address climate change''--referring
    in a footnote to the IPCC's conclusions regarding the range of
    emission reductions required to meet certain atmospheric
    greenhouse gas stabilization targets.
    ---------------------------------------------------------------------------
        \240\Decision 1/CP.13, ``Bali Action Plan,'' available at http://
    unfccc.int/resource/docs/2007/cop13/eng/06a01.pdf#page=3.
    ---------------------------------------------------------------------------
        The roadmap identifies four major pillars of climate policy
    as the basis for future negotiations: mitigation, adaptation,
    technology development and transfer, and financial resources
    and investment. With regard to mitigation, the agreement calls
    for consideration of actions by both developed and developing
    countries. For developed countries, the roadmap calls for
    consideration of ``measurable, reportable, and verifiable
    nationally appropriate mitigation commitments or actions,
    including quantified emission limitation and reduction
    objectives.'' The roadmap also included developing countries in
    the mitigation agreement for the first time. Developing nations
    agreed to consider ``nationally appropriate mitigation
    actions'' that are ``measurable, reportable and verifiable'' so
    long as they are supported by ``measurable, reportable and
    verifiable'' support in the form of technology transfer,
    financing, and capacity-building. In addition, the roadmap
    calls, among other things, for consideration of enhanced action
    on adaptation to climate change, technology transfer to
    developing countries, and financial support for mitigation and
    adaptation activities in developing countries.

                              Legislative History

        During the 110th Congress, the House Committee on Energy
    and Commerce held dozens of hearings on energy and climate
    change policy that have built a detailed, factual record
    regarding the need for energy and climate change legislation.
    These hearings examined the scientific understanding of climate
    change, the views of various stakeholders, promising clean
    energy and environmental technologies and other policy-relevant
    issues.\241\ The Committee also released four white papers
    discussing various aspects of climate legislation.\242\ In
    October 2008, Chairman John D. Dingell and Subcommittee on
    Environment and Air Quality Chairman Rick Boucher released a
    discussion draft of climate legislation.
    ---------------------------------------------------------------------------
        \241\Subcommittee on Energy and Air Quality, Hearing on Addressing
    Climate Change--Views from Private Sector Panels (Feb. 13, 2007);
    Subcommittee on Energy and Air Quality, Hearing on A Review of the
    Administration's Proposal for the Transportation Sector (Feb. 28,
    2007); Subcommittee on Energy and Air Quality, Hearing on Carbon
    Capture and Sequestration: An Overview (Mar. 6, 2007); Subcommittee on
    Energy and Air Quality, Hearing on Climate Change: Are Greenhouse Gas
    Emissions from Human Activities Contributing to a Warming of the
    Planet? (Mar. 7, 2007); Subcommittee on Energy and Air Quality, The
    Environmental Protection Agency's Fiscal Year 2008 Budget Request (Mar.
    8, 2007); Subcommittee on Energy and Air Quality, Hearing on Climate
    Change and Energy Security: Perspectives from the Automobile Industry
    (Mar. 14, 2007); Subcommittee on Energy and Air Quality, Hearing on
    Climate Change: State and Local Perspectives (Mar. 15, 2007);
    Subcommittee on Energy and Air Quality, Hearing on Climate Change:
    Perspectives of Utility CEOs (Mar. 20, 2007); Subcommittee on Energy
    and Air Quality, Hearing on Perspectives on Climate Change (Mar. 21,
    2007); Subcommittee on Energy and Air Quality, Hearing on Climate
    Change--International Issues, Engaging Developing Countries (Mar. 27,
    2007); Subcommittee on Energy and Air Quality, Hearing on Climate
    Change--Lessons Learned from Existing Cap-and-Trade Programs (Mar. 29,
    2007); Subcommittee on Energy and Air Quality, Hearing on Alternative
    Transportation Fuels: An Overview (Apr. 18, 2007); Subcommittee on
    Energy and Air Quality, Hearing on Implementation of the EPACT 2005
    Loan Guarantee Programs by the Department of Energy (Apr. 24, 2007);
    Subcommittee on Energy and Air Quality, Hearing on Achieving--At Long
    Last--Appliance Efficiency Standards (May 1, 2007); Subcommittee on
    Energy and Air Quality, Hearing on Facilitating the Transition to a
    Smart Electric Grid (May 3, 2007); Subcommittee on Energy and Air
    Quality, Hearing on Alternative Fuels: Current Status, Proposals for
    New Standards, and Related Infrastructure Issues (May 8, 2007);
    Subcommittee on Energy and Air Quality, Hearing on Legislative Hearing
    on Discussion Drafts concerning Energy Efficiency, Smart Electricity
    Grid, Energy Policy Act of 2005 Title XVII Loan Guarantees, and Standby
    Loans for Coal-to-Liquids Projects (May 24, 2007); Subcommittee on
    Energy and Air Quality, Hearing on Legislative Hearing on Discussion
    Draft Concerning Alternative Fuels, Infrastructure, and Vehicles (June
    7, 2007); Subcommittee on Energy and Air Quality, Hearing on
    Administration Perspectives on United Nations Climate Change Conference
    in Bali (Jan. 17, 2008); Subcommittee on Energy and Air Quality,
    Hearing on Climate Change: Competitiveness Concerns and Prospects for
    Engaging Developing Countries (Mar. 5, 2008); Subcommittee on Energy
    and Air Quality, Hearing on Strengths and Weaknesses of Regulating
    Greenhouse Gas Emissions Using Existing Clean Air Act Authorities (Apr.
    10, 2008); Subcommittee on Energy and Air Quality, Hearing on The
    Renewable Fuels Standard: Issues, Implementation, and Opportunities
    (May 6, 2008); Subcommittee on Energy and Air Quality, Hearing on
    Legislative Proposals to Reduce Greenhouse Gas Emissions: An Overview
    (June 19, 2008); Subcommittee on Energy and Air Quality, Hearing on
    Climate Change: Costs of Inaction (June 26, 2008); Subcommittee on
    Energy and Air Quality, Hearing on H.R. 6258, the Carbon Capture and
    Storage Early Deployment Act (July 10, 2008); Subcommittee on Energy
    and Air Quality, Hearing on Climate Benefits of Improved Building
    Energy Efficiency (July 17, 2008); Subcommittee on Environment and
    Hazardous Materials, Carbon Sequestration: Risks, Opportunities, and
    Protection of Drinking Water (July 24, 2008).
        \242\Committee on Energy and Commerce, Scope of a Cap-and-Trade
    Program (Oct. 3, 2007); Committee on Energy and Commerce,
    Competitiveness Concerns/Engaging Developing Countries (Jan. 31, 2008);
    Committee on Energy and Commerce, Appropriate Roles for Different
    Levels of Government (Feb. 25, 2008); Committee on Energy and Commerce,
    Getting the Most Greenhouse Gas Reductions for Our Money (May 27,
    2008).
    ---------------------------------------------------------------------------
        The first hearing held by the Committee in the 111th
    Congress focused on climate change and a legislative proposal
    put forward by the U.S. Climate Action Partnership, a coalition
    of industry and environmental organizations.\243\ The
    Subcommittee on Energy and Environment had an aggressive
    hearing schedule--holding eight hearings in a six-week period:
    ---------------------------------------------------------------------------
        \243\Committee on Energy and Commerce, Hearing on the U.S. Climate
    Action Partnership (Jan. 15, 2009).
    ---------------------------------------------------------------------------
         Subcommittee on Energy and the Environment,
    Hearing on The Climate Crisis: National Security, Economic, and
    Public Health Threats (Feb. 12, 2009);
         Subcommittee on Energy and the Environment,
    Hearing on Energy Efficiency: Complementary Policies for
    Climate Legislation (Feb. 24, 2009);
         Subcommittee on Energy and the Environment,
    Hearing on Renewable Energy: Complementary Policies for Climate
    Legislation (Feb. 26, 2009);
         Subcommittee on Energy and the Environment,
    Hearing on the Role of Offsets in Climate Legislation (Mar. 5,
    2009);
         Subcommittee on Energy and the Environment,
    Hearing on the Future of Coal Under Climate Legislation (Mar.
    10, 2009);
         Subcommittee on Energy and the Environment,
    Hearing on Consumer Protection Provisions in Climate
    Legislation (Mar. 12, 2009);
         Subcommittee on Energy and the Environment,
    Hearing on Competitiveness and Climate Policy: Avoiding Leakage
    of Jobs and Emissions (Mar. 18, 2009); and
         Subcommittee on Energy and the Environment,
    Hearing on Preparing for Climate Change: Adaptation Policies
    and Programs (Mar. 25, 2009).
        The Subcommittee also convened informal sessions to engage
    in discussion with leaders from the international community. On
    March 4, 2009, the Subcommittee held a briefing on
    international climate negotiations and policy with the U.K.
    Minister of Energy and Climate Change Ed Miliband and the
    Danish Minister of Climate and Energy Connie Hedegaard. Also,
    on March 18, 2009, the Subcommittee hosted a briefing by the
    Secretary-General of the United Nations Ban Ki-moon. The
    Secretary-General informed the Subcommittee about his views on
    the importance of addressing climate change and the status of
    the international climate negotiations.
        On March 31, 2009, Chairman Henry A. Waxman and
    Subcommittee Chairman Edward J. Markey released a discussion
    draft of the American Clean Energy and Security Act of 2009.
    Committee staff subsequently briefed more than 300 diverse
    entities and organizations about the legislation. Participants
    in Committee briefings represented the broad array of
    stakeholders interested in and affect by energy and climate
    legislation, including representatives of the electricity
    industry, manufacturers, refiners, agricultural and forestry
    interests, labor, environmental advocacy groups, faith groups,
    and state and local governments.
        From April 21 to 24, 2009, the Committee held four days of
    legislative hearings on the discussion draft. Nearly 70
    witnesses testified, including former Vice President Al Gore
    and former Speaker of the House Newt Gingrich. The legislation
    was available for review by both majority and minority
    Committee members, as well as outside experts and the public,
    for nearly seven weeks prior to Committee markup. On May 15,
    2009, Chairman Waxman and Subcommittee Chairman Markey
    introduced H.R. 2454, the ``American Clean Energy and Security
    Act of 2009''.

                            Committee Consideration

        On Monday, May 18, 2009, Tuesday, May 19, 2009, Wednesday,
    May 20, 2009, and Thursday, May 21, 2009, the full Committee
    met in open markup session to consider H.R. 2454. During the 4
    days of markup, there were 96 amendments offered of which 36
    amendments were adopted. On May 21, 2009, the Committee ordered
    H.R. 2454 favorably reported to the House, amended.

                                Committee Votes

        Clause 3(b) of rule XIII of the Rules of the House of
    Representatives requires the Committee to list the record votes
    on the motion to report legislation and amendments thereto. A
    motion by Mr. Markey to order H.R. 2454 favorably reported to
    the House, amended, was agreed to by a record vote of 33 yeas
    and 25 nays. The following is the recorded votes taken during
    Committee consideration, including the names of those Members
    voting for and against:

                  Application of Law to the Legislative Branch

        The Committee finds that the legislation does not relate to
    the terms and conditions of employment or access to public
    services or accommodations within the meaning of section
    102(b)(3) of the Congressional Accountability Act of 1985.

      Statement of Oversight Findings and Recommendations of the Committee

        In accordance with clause 3(c)(1) of rule XIII and clause
    (2)(b)(1) of rule X of the Rules of the House of
    Representatives, the Committee's oversight findings and
    recommendations are reflected in the descriptive portions of
    this report.

             Statement of General Performance Goals and Objectives

        In accordance with clause 3(c)(4) of rule XIII of the Rules
    of the House of Representatives, the Committee's performance
    goals and objectives are reflected in the descriptive portions
    of this report.

                       Constitutional Authority Statement

        Pursuant to 3(d)(1) of rule XIII of the Rules of the House
    of Representatives, the Committee finds that the constitutional
    authority for this legislation is provided in Article I,
    Section 8, Clause 18 of the Constitution of the United States.

                          Advisory Committee Statement

        The Committee finds that the legislation establishes or
    authorizes the establishment of advisory committees within the
    definition of 5 U.S.C. App., Section 5(b). Section 186 of the
    bill establishes an Energy Technology Advisory Council to
    advise the Clean Energy Deployment Administration established
    by the bill. The Committee finds this advisory committee is
    needed to assist the CEDA in evaluating clean energy technology
    issues and deployment goals. Section 194 establishes a consumer
    advocacy advisory board. The Committee finds this advisory
    committee is needed to make recommendations on rates, services,
    and disputes to the Director of the Federal Energy Regulatory
    Commission Office of Consumer Advocacy. Section 464 establishes
    a science advisory board that the Committee finds is necessary
    to advise the Secretary of Health and Human Services on public
    health issues relating to climate change and the best science
    available for purposes of issuing a national strategic action
    plan. Section 477 establishes a science advisory board that the
    Committee finds is necessary to advise the Secretaries of
    Commerce and the Interior on state of the science regarding the
    impacts of climate change and ocean acidification on natural
    resources.

                           Federal Mandates Statement

        The Committee adopts as its own the estimate of Federal
    mandates prepared by the Director of the Congressional Budget
    Office pursuant to section 423 of the Unfunded Mandates Reform
    Act.

                      Earmarks and Tax and Tariff Benefits

        H.R. 2454 does not include any congressional earmarks,
    limited tax benefits, or limited tariff benefits as defined in
    clause 9(d), 9(e), or 9(f) of rule XXI.

                            Committee Cost Estimate

        The Committee adopts as its own the cost estimate on H.R.
    2454 prepared by the Director of the Congressional Budget
    Office pursuant to section 402 of the Congressional Budget Act.

       New Budget Authority, Entitlement Authority, and Tax Expenditures

        Regarding compliance with clause 3(c)(2) of rule XIII of
    the Rules of the House of Representatives, the Committee adopts
    as its own the estimate prepared by the Director of the
    Congressional Budget Office pursuant to section 402 of the
    Congressional Budget Act of 1974.

                   Congressional Budget Office Cost Estimate

        Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
    House of Representatives, the following is the cost estimate on
    H.R. 2454 provided by the Congressional Budget Office pursuant
    to section 402 of the Congressional Budget Act of 1974:
                                         U.S. Congress,
                                   Congressional Budget Office,
                                          Washington, DC, June 5, 2009.
    Hon. Henry A. Waxman,
    Chairman, Committee on Energy and Commerce,
    House of Representatives, Washington, DC.
        Dear Mr. Chairman: The Congressional Budget Office has
    prepared the enclosed cost estimate for H.R. 2454, the American
    Clean Energy and Security Act of 2009.
        If you wish further details on these estimates, we will be
    pleased to provide them. The CBO staff contact is Susanne S.
    Mehlman.
                Sincerely,
                                                  Douglas W. Elmendorf.
        Enclosure.

    H.R. 2454--American Clean Energy and Security Act of 2009

        Summary: H.R. 2454 would make a number of changes in energy
    and environmental policies largely aimed at reducing emissions
    of gases that contribute to global warming. The bill would
    limit or cap the quantity of certain greenhouse gases (GHGs)
    emitted from facilities that generate electricity and from
    other industrial activities over the 2012-2050 period. The
    Environmental Protection Agency (EPA) would establish two
    separate regulatory initiatives known as cap-and-trade
    programs--one covering emissions of most types of GHGs and one
    covering hydrofluorocarbons (HFCs). EPA would issue allowances
    to emit those gases under the cap-and-trade programs. Some of
    those allowances would be auctioned by the federal government,
    and the remainder would be distributed at no charge.
        Other major provisions of the legislation would:
               Provide energy tax credits or energy rebates
            to certain low-income families to offset the impact of
            higher energy-related prices from the cap-and-trade
            programs;
               Require certain retail electricity suppliers
            to satisfy a minimum percentage of their electricity
            sales with electricity generated by facilities that use
            qualifying renewable fuels or energy sources;
               Establish a Carbon Storage Research
            Corporation to support research and development of
            technologies related to carbon capture and
            sequestration;
               Increase, by $25 billion, the aggregate
            amount of loans DOE is authorized to make to automobile
            manufacturers and component suppliers under the
            existing Advanced Technology Vehicle Manufacturing Loan
            Program;
               Establish a Clean Energy Deployment
            Administration (CEDA) within the Department of Energy
            (DOE), which would be authorized to provide direct
            loans, loan guarantees, and letters of credit for clean
            energy projects;
               Authorize the Department of Transportation
            (DOT) to provide individuals with vouchers to acquire
            new vehicles that achieve greater fuel efficiency than
            the existing qualifying vehicles owned by the
            individuals; and
               Authorize appropriations for various
            programs under EPA, DOE, and other agencies.
        CBO and the Joint Committee on Taxation (JCT) estimate that
    over the 2010-2019 period enacting this legislation would:
               Increase federal revenues by about $846
            billion; and
               Increase direct spending by about $821
            billion.
        In total, those changes would reduce budget deficits (or
    increase future surpluses) by about $24 billion over the 2010-
    2019 period.
        In addition, assuming appropriation of the necessary
    amounts, CBO estimates that implementing H.R. 2454 would
    increase discretionary spending by about $50 billion over the
    2010-2019 period. Most of that funding would stem from spending
    auction proceeds from various funds established under this
    legislation.
        CBO has determined that the non-tax provisions of H.R. 2454
    contain intergovernmental and private-sector mandates as
    defined in the Unfunded Mandates Reform Act (UMRA). Several of
    those mandates would require utilities, manufacturers, and
    other entities to reduce greenhouse gas emissions through cap-
    and-trade programs and performance standards. CBO estimates
    that the cost of mandates in the bill would well exceed the
    annual thresholds established in UMRA for intergovernmental and
    private-sector mandates (in 2009, $69 million and $139 million
    respectively, adjusted annually for inflation).

            PAGE REFERENCE GUIDE TO CBO COST ESTIMATE FOR H.R. 2454
                                    Sections

                                                                       Page
    Major Provisions.................................................   360
    Basis of Estimate
        Budgetary Treatment of Allowances, RECs, and Offset Credits..   366
        Revenues Resulting from Cap-and-Trade Programs...............   367
        Other Revenues...............................................   374
        Direct Spending..............................................   377
        Spending Subject to Appropriation............................   382
    Provisions with Budgetary Impacts That Begin After 2019..........   388
    Intergovernmental and Private-Sector Impact......................   388

                                     Tables

    1. GHG Emission Allowances Under H.R. 2454 and the Percentage
      Auctioned and Freely Allocated.................................   362
    2. Estimated Budgetary Impact of H.R. 2454.......................   365
    3. CBO Estimates of Allowance Prices Under H.R. 2454.............   368
    4. Estimated Changes in Revenues and Direct Spending Under H.R.
      2454...........................................................   379
    5. Estimated Spending Subject to Appropriation Under H.R. 2454...   383

                 Common Abbreviations Used in the Cost Estimate

    CCS = Carbon capture and sequestration
    CO2 = Carbon dioxide
    CEDA = Clean Energy Development Administration
    CFC = Chlorofluorocarbon
    mtCO2e = Metric ton of carbon dioxide equivalent
    GHG = Greenhouse gas
    HFC = Hydrofluorocarbon
    MWh = Megawatt hour
    REC = Renewable electricity credit
    RES = Renewable electricity standard

                                MAJOR PROVISIONS

        The major provisions of H.R. 2454 are described in the
    following sections.

                  CAP-AND-TRADE PROGRAMS FOR GREENHOUSE GASES

        This legislation would designate as GHGs: carbon dioxide,
    methane, nitrous oxide, sulfur hexafluoride, perfluorocarbons,
    nitrogen trifluoride, and HFCs from a chemical manufacturing
    process at a stationary industrial source. EPA would be
    required to establish two cap-and-trade programs aimed at
    reducing the emission of GHGs in the United States over the
    2012-2050 period. One program would cover emissions of GHGs
    other than HFCs. A second program would cover the production
    and importation of HFCs and the importation of products
    containing HFCs. (Although HFCs are considered to be greenhouse
    gases, this cost estimate will subsequently refer to the larger
    program as the GHG cap-and-trade program and the smaller
    program specific to HFCs as the HFC cap-and-trade program).
        A cap-and-trade program is a regulatory policy aimed at
    controlling pollution emissions from specific sources. The
    legislation would set a limit on total emissions for each year
    and would require regulated entities to hold rights, or
    allowances, to the emissions permitted under that cap. Each
    allowance would entitle companies to emit the equivalent of one
    metric ton of carbon dioxide equivalent (mtCO2e).\1\
    After the allowances for a given period were distributed,
    entities would be free to buy and sell allowances.
    ---------------------------------------------------------------------------
        \1\A carbon dioxide equivalent is defined for each GHG as the
    quantity of that gas that makes the same contribution to global warming
    as one metric ton of carbon dioxide, as determined by EPA.
    ---------------------------------------------------------------------------

                   ENTITIES COVERED BY CAP-AND-TRADE PROGRAMS

        Based on information from EPA, CBO estimates that about
    7,400 facilities would be affected by the cap-and-trade
    programs established by the bill. The specific details
    regarding coverage, attribution of emissions to covered
    entities, and the timing of implementation vary by type of
    entity and sector of the economy:
               Beginning in 2012, all electricity
            generators would be required to submit allowances for
            all GHG emissions from their sites, with the exception
            of emissions from the combustion of liquid fuels, coke,
            and renewable biomass;
               Also beginning in 2012, any facility or
            entity that produces or imports petroleum- or coal-
            based liquids, petroleum coke, or natural gas liquids
            would be required to submit allowances for the GHG
            emissions that would result from the combustion of
            those fuels, if combustion of the fuel resulted in the
            emission of more than 25,000 mtCO2e per
            year. Similarly, all facilities or entities that
            produce or import GHGs for direct use would be required
            to submit allowances for the emissions that would
            result when those gases were released into the
            atmosphere. Emissions from sites that geologically
            sequester CO2 also would be covered
            beginning in 2012;
               Beginning in 2014, industrial facilities
            that manufacture a wide variety of products or that
            burn fossil fuels would be required to submit
            allowances for all GHG emissions from their sites--with
            the exception of emissions from the combustion of
            various types of liquid fuels, coke, and renewable
            biomass--if their activities result in more than 25,000
            mtCO2e of emissions;
               Beginning in 2016, natural gas distributors
            that deliver at least 460 million cubic feet of natural
            gas to customers that are not covered by the cap-and-
            trade provisions of the bill would need to submit
            allowances for the GHG emissions that would result from
            the combustion of the gas delivered to those customers;
            and
               Under a separate cap, beginning in 2012,
            producers and importers of HFCs, and importers of
            products containing HFCs, would be required to submit
            allowances for the carbon dioxide-equivalent tons of
            HFC they produce or import.
        According to CBO's estimates, the programs would cover
    about 72 percent of U.S. emissions of GHGs in 2012, about 78
    percent in 2015, and about 86 percent in 2020.

                   OPERATION OF THE GHG CAP-AND-TRADE PROGRAM

        H.R. 2454 would not restrict the types of entities or
    individuals who could purchase, hold, exchange, or retire
    emission allowances under the GHG cap-and-trade program. An
    unlimited number of allowances obtained in one year could be
    saved or ``banked'' by market participants indefinitely to be
    used or sold in future years. Limited borrowing of allowances
    (that is, the use in one year of an allowance that has been
    established for use in a future year) also would be permitted.
    The program would allocate to covered entities 4,627 million
    mtCO2e allowances in 2012--about 97 percent of the
    amount of such emissions by covered entities in 2005. The
    number of allowances would increase to as high as 5,482 million
    mtCO2e in 2016 to account for certain covered
    entities that would not begin compliance until that time, and
    then decline by 100 million to 150 million mtCO2e
    per year--falling to 1,035 million mtCO2e in 2050,
    about 14 percent of projected emissions from covered entities
    in the absence of and regulation of such emissions.
        The legislation also would require EPA to create a
    ``strategic reserve'' of about 2.7 billion allowances by
    setting aside a small number of allowances authorized to be
    issued each year. EPA would auction allowances from its
    strategic reserve only if the market price of allowances rose
    to unexpectedly high levels.
        A portion of an entity's compliance obligation under the
    bill could be met by purchasing domestic or international
    ``offsets'' in lieu of purchasing an allowance. An offset would
    be created by activities (as certified by EPA) that are not
    directly related to the emissions of the facilities covered
    under the bill, but would reduce GHG emissions or increase the
    amount of such gases that are captured from the atmosphere and
    stored (this process is referred to as sequestration). Examples
    of such offset activities include reducing emissions of methane
    gas from solid waste landfills, sequestering GHGs on
    agricultural lands, rangelands, and forests, altering
    agricultural tillage practices, planting winter crops, and
    reducing the use of nitrogen fertilizer. Under the bill, such
    offsets could occur domestically or in another country if the
    United States is a party to a bilateral or multilateral
    agreement or arrangement with the relevant country. Those
    international agreements or arrangements would specify the
    types of qualifying projects and methods for verifying the
    validity of offset activities. Covered entities could also
    purchase GHG emission allowances established by other countries
    or international organizations if approved by EPA.
        The cap for the GHG cap-and-trade program would take effect
    in 2012. Of the emission allowances established for this
    program less the amount set aside for the strategic reserve
    (4,581 million mtCO2e in 2012), 29.6 percent would
    initially be auctioned for sale from that vintage year (that
    is, the calendar year for which an allowance is established) to
    covered industries and other entities that wish to purchase
    them. Auctions would occur four times a year, with the first
    auction occurring no later than March 31, 2011. Emission
    allowances not specified for auction in the bill would be
    distributed free of charge to covered entities, states, and
    other specified recipients, who could then retire, sell, or use
    such allowances to meet the annual obligation for their own
    emissions. The percentage of emission allowances auctioned and
    freely allocated by vintage years 2012 through 2019 is provided
    in Table 1. By 2022, the percentage of allowances auctioned
    would increase to 18.4 percent and gradually increase to about
    70 percent in 2031 and remain at that level through 2050.

           TABLE 1--GHG EMISSION ALLOWANCES UNDER H.R. 2454 AND THE PERCENTAGE AUCTIONED AND FREELY ALLOCATED
    ----------------------------------------------------------------------------------------------------------------
                                                                             By vintage year--
                                                     ---------------------------------------------------------------
                                                       2012    2013    2014    2015    2016    2017    2018    2019
    ----------------------------------------------------------------------------------------------------------------
    Quantity of Emission Allowances Less Amount        4,581   4,499   5,048   4,953   5,427   5,321   5,216   5,110
     Available for Strategic Reserve (In millions of
     metric tons)...................................
    Percentage Auctioned............................    29.6    29.6    17.9    17.9    17.5    17.5    17.5    17.5
    Percentage Freely Allocated.....................    70.4    70.4    82.1    82.1    82.5    82.5    82.5   82.5
    ----------------------------------------------------------------------------------------------------------------
    Note: Vintage year is the calendar year for which an allowance is established.

    Operation of the HFC cap-and-trade program

        Beginning in 2012, producers and importers of HFCs as well
    as importers of products containing HFCs would be required to
    submit to EPA a consumption allowance or a destruction offset
    credit for each carbon dioxide-equivalent ton of HFC. EPA would
    be authorized to issue destruction offset credits to producers
    and importers of HFCs if those entities perform or arrange for
    the recovery and destruction of chlorofluorocarbons (CFCs) from
    products or equipment already in use in the United States. The
    allowances available would steadily decline from 90 percent of
    the baseline use of HFCs (defined in the legislation as the
    average annual consumption of HFCs plus the average annual
    quantity of HFCs contained in imported products over the 2004-
    2006 period) to 15 percent of that baseline after 2032.
    Destruction offset credits could be used by producers and
    importers to satisfy a portion of the requirement to submit
    consumption allowances.
        The bill would allow entities to bank an unlimited number
    of HFC allowances for future use. In contrast to the GHG cap-
    and-trade program, only those entities that produce and import
    HFCs or import products containing HFCs would be permitted to
    purchase an allowance directly from EPA, although EPA would
    have the authority to establish certain exceptions. (The
    legislation, however, would not restrict which entities could
    hold, sell, transfer, exchange, or retire consumption
    allowances in any secondary market for HFC allowances.)
        All of the consumption allowances established for the HFC
    cap-and-trade program would be either auctioned or offered
    through a fixed-price sale to producers and importers of HFCs
    and products containing HFCs. The legislation specifies how the
    HFC allowance price would be calculated for certain auctions
    and for all fixed-price sales.

    Refundable low-income energy tax credit and energy rebate program

        The bill would create a new refundable energy tax credit
    and rebate program aimed at offsetting the impact of the GHG
    cap-and-trade program on energy prices faced by low-income
    families. The credit would be based on the average loss of
    purchasing power for the poorest fifth of people caused by
    higher prices for energy and other goods. The credit would vary
    with family size, based on the average spending for families of
    different sizes at the bottom of the income scale. The credit
    amount would be calculated using the share of total
    expenditures made by those families, the GHG intensity of that
    spending, the amount of other relief provided to consumers
    under the bill, and how much of recipients' reduced purchasing
    power would be automatically offset by federal cost-of-living
    adjustments in other federal benefit programs.

    Combined energy efficiency and renewable electricity standard (RES)

        H.R. 2454 would require that, starting in 2012, certain
    retail electricity suppliers provide a minimum percentage of
    their electricity sales from electricity generated by
    facilities that use qualifying renewable fuels or energy
    sources. That percentage would be measured relative to the
    portion of a supplier's base sales of electricity generated
    from sources specified in the bill and would need to equal or
    exceed 6 percent of such sales by each covered supplier in 2012
    and increase to 20 percent by 2020. To meet the RES
    requirement, suppliers would have to generate their own
    qualifying renewable power, purchase renewable energy credits
    (RECs) from other firms, or make alternative compliance
    payments to the state in which they operate. Upon request from
    a state government, electricity suppliers in that state could
    satisfy up to 40 percent of their RES compliance obligation by
    demonstrating a reduction in their customers' electricity
    consumption through qualified energy-efficiency projects
    initiated after the date of the bill's enactment.
        Under the bill, one federal REC would be created for each
    megawatt hour (MWh) of electricity generated from a renewable
    energy source (for example, wind, solar, or geothermal). RECs
    could be traded on a secondary market, enabling firms in
    regions where renewable energy sources are scarce or relatively
    expensive to purchase credits generated in regions with an
    excess supply of RECs. In the event an electricity supplier
    does not have the requisite number of RECs or sufficient
    reductions in customers' electricity consumption to comply with
    the proposed standard, such entities could choose to remit, to
    the state in which they operate, alternative compliance
    payments equal to $25 per MWh needed to meet the suppliers'
    compliance requirement (those payments would be adjusted
    annually for inflation). The legislation would require states
    to use any amounts received from alternative compliance
    payments to support the deployment of technologies to generate
    renewable energy and the implementation of energy-efficiency
    programs.

    Carbon Storage Research Corporation

        The legislation would authorize utilities that distribute
    electricity generated from fossil fuels to establish, subject
    to approval in a referendum by members of the electricity
    distribution industry, a Carbon Storage Research Corporation.
    The corporation would levy annual assessments on distribution
    utilities based on certain electricity deliveries to retail
    consumers. Assessments would total between $1.0 billion and
    $1.1 billion annually and would support research and
    development of technologies related to carbon capture and
    sequestration (CCS). Although formation of the corporation
    would be voluntary, once it was created, assessments would be
    compulsory, enforced by the federal government's sovereign
    authority. Therefore, CBO believes the corporation should be
    considered governmental in nature and all of its activities
    should be included in the federal budget.

    Loans to manufacturers of advanced technology vehicles

        H.R. 2454 would increase the amount of direct loans the DOE
    is authorized to provide under section 136 of the Energy
    Independence and Security Act (EISA). That act authorizes DOE
    to provide up to $25 billion in loans to automobile
    manufacturers and component suppliers to support capital
    investments in facilities designed to produce vehicles with
    greater fuel efficiency and reduced emissions. H.R. 2454 would
    amend EISA to authorize DOE to provide up to $50 billion in
    loans. Under the Credit Reform Act of 1990, any spending for
    the additional $25 billion in loans authorized under H.R. 2454
    would be subject to appropriation.

    Clean Energy Deployment Administration

        H.R. 2454 would establish a Clean Energy Deployment
    Administration (CEDA) within DOE, which would be authorized to
    provide direct loans, loan guarantees, and letters of credit
    for privately sponsored projects using clean energy
    technologies. Such assistance would be available for
    investments in the energy, transportation, manufacturing,
    commodities, residential, commercial, and financial services
    sectors. The bill also would modify the terms of an existing
    loan-guarantee program administered by DOE.
        Implementing this provision would affect discretionary
    spending. Under the Credit Reform Act, commitments for direct
    loans, loan guarantees, and similar credit assistance would be
    contingent on future appropriation action.

    Fuel-efficient vehicle vouchers

        The bill would authorize a program within DOT that would
    provide vouchers for the purchase or lease of a new car or
    truck to individuals who trade in an eligible vehicle for one
    that is more fuel efficient. The bill defines an eligible
    vehicle as one that averages 18-miles-per-gallon or less and
    would set minimum fuel-economy requirements for vehicles
    purchased or leased with a voucher. The eligible vehicle would
    have to be subsequently dismantled. The vouchers would range in
    value from $3,500 to $4,500 depending on the characteristics of
    both the old and the new vehicles. CBO estimates that this
    provision would accelerate the rate at which some older, less
    fuel-efficient vehicles are replaced, and cause the fleet of
    new vehicles purchased under the program to be more fuel
    efficient than it would otherwise be. As a result, fewer taxes
    would be collected on the sale of fuel, reducing federal
    revenues.
        Estimated cost to the Federal Government: The estimated
    budgetary impact of H.R. 2454 is shown in Table 2. The costs of
    this legislation fall within budget functions 270 (energy), 300
    (natural resources and environment), 350 (agriculture), 370
    (commerce and housing credit), 400 (transportation), 500
    (education, training, employment, and social services), 550
    (health), and 600 (income security). For this estimate, CBO
    assumes that H.R. 2454 will be enacted near the end of fiscal
    year 2009, that the amounts necessary to implement the bill
    will be appropriated each year, and that outlays will follow
    historical spending patterns for similar programs.

                                                        TABLE 2.--ESTIMATED BUDGETARY IMPACT OF H.R. 2454
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      By fiscal year, in billions of dollars--
                                                       -----------------------------------------------------------------------------------------------------
                                                         2010    2011    2012    2013    2014    2015    2016    2017    2018    2019   2010-2014  2010-2019
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       CHANGES IN REVENUES

    Total Estimated Revenues..........................     0.9    39.1    59.1    63.5    90.6   104.0   112.3   117.6   126.1   132.3     253.2      845.6

                                                                   CHANGES IN DIRECT SPENDING

    Estimated Budget Authority........................     1.0    33.4    51.9    67.5    88.7   102.1   110.0   116.1   122.9   128.8     242.6      822.6
    Estimated Outlays.................................     0.3    32.9    51.6    67.7    88.8   102.2   110.0   116.1   122.9   128.8     241.3      821.2

                                                              NET CHANGE IN THE BUDGET DEFICIT FROM
                                                             CHANGES IN REVENUES AND DIRECT SPENDING

    Impact on Deficit\1\..............................     0.6     6.1     7.5    -4.2     1.8     1.8     2.4     1.5     3.2     3.5      12.0       24.4

                                                          CHANGES IN SPENDING SUBJECT TO APPROPRIATION

    Estimated Authorization Level.....................     5.5     9.3     3.0     3.6     4.4     5.4     6.0     6.9     8.2     8.7      25.8       61.1
    Estimated Outlays.................................     3.4     1.6     2.7     3.8     4.9     5.8     6.6     6.5     6.8     7.8      16.4      49.9
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Note: Components may not sum to totals because of rounding.

    \1\Positive numbers indicate decreases in deficits; negative numbers indicate increases in deficits.

        Basis of estimate: CBO estimates that implementing this
    legislation would result in additional revenues, net of income
    and payroll tax offsets, of $253.2 billion over the 2010-2014
    period and $845.6 billion over the 2010-2019 period. We
    estimate that direct spending would increase by $241.3 billion
    and $821.2 billion over the same periods, respectively. Those
    changes in revenues and direct spending would mainly stem from
    the process of auctioning and freely distributing allowances
    under the cap-and-trade programs established under this
    legislation. In addition, CBO estimates that implementing this
    legislation would increase discretionary federal spending by
    $49.9 billion over the 2010-2019 period, assuming appropriation
    of the amounts estimated to be necessary.

    Budgetary treatment of allowances, RECs, and offset credits

        Efforts to control GHG emissions in this legislation would
    be enforced through the federal government's sovereign powers
    and would alter the use of scarce economic resources. While
    similar in some ways to command-and-control approaches for
    regulating economic activities, the cap-and-trade system that
    would be established by the bill for GHG and HFC emissions is
    fundamentally different because it would create cash-like
    assets (allowances) whose supply and distribution would be
    determined by the federal government. As such, CBO believes it
    is appropriate to include all transactions involving GHG and
    HFC allowances (including those distributed at no cost) in the
    budget.
        Under H.R. 2454, both firms and individuals would be
    eligible to trade GHG and HFC allowances acquired from the
    federal government in a secondary market that would exceed $60
    billion in value in 2012, CBO estimates. Within such a large
    and liquid market, allowances could be easily and immediately
    traded for cash. In addition, the legislation would allow the
    federal government to determine the supply of allowances by
    defining the scope of covered emissions and limiting the number
    of allowances to be issued. Under those circumstances, the free
    distribution of allowances by the federal government would be
    essentially equivalent to the distribution of cash grants, so
    CBO believes that such transactions should be treated as
    additional outlays. At the same time, those allowances would be
    valuable financial instruments, so CBO thinks that the creation
    of allowances by the federal government should be recorded as
    an increase in revenues.
        That logic does not hinge on whether the federal government
    sells or, instead, gives away the allowances. Allowances would
    have significant value even if given away because the
    recipients could sell them or, in the case of a covered entity,
    use them to avoid incurring the cost of compliance. In either
    case, the recipient receives an asset of equivalent value with
    no estimated change in the policy effect (i.e., total GHG
    emissions). For example, the government could either raise $100
    by selling allowances and then give that amount in cash to an
    entity, or it could simply give $100 worth of allowances to
    that same entity, which could immediately and easily transform
    the allowances into cash through the secondary market. Sound
    budgeting requires that the budget treat equivalent
    transactions in the same way, in CBO's view. Therefore, this
    estimate treats the creation of 11 allowances and their
    disposition as budgetary transactions, regardless of whether
    the allowances would be sold or distributed at no cost.
        In contrast, CBO believes the creation and subsequent
    allocation of federal RECs under the legislation's combined
    efficiency and renewable electricity standard should not be
    included within the federal budget. While a large and liquid
    secondary market for RECs would make them cash-like in nature,
    the supply of credits would be determined by the amount of
    renewable energy generated, not by the federal government.
    Unlike a GHG or HFC allowance, the creation of an REC, and thus
    its value, would stem from actions undertaken by private
    entities. The federal government would be unable to achieve the
    same policy effect (in this case, a target percentage of energy
    generation from renewable sources) through the sale of RECs
    since the quantity of RECs needed to meet this target would be
    a function of business decisions about how much electricity to
    produce.
        Domestic and international offset credits authorized to be
    used within the GHG cap-and-trade program have similar
    characteristics similar to those of RECs. Once created, such
    credits would have value because the firms that are covered by
    the cap could use them in lieu of allowances for a share of
    their compliance obligation. Unlike allowances, however, the
    government would not determine the supply of offsets; that
    supply would depend on the actions of private entities.
    Therefore, CBO believes offset credits should not be accounted
    for in the federal budget.

    Revenues resulting from cap-and-trade programs

        The impact of H.R. 2454 on net federal revenues would
    largely be determined by the value of allowances created by the
    bill less the resulting reductions in receipts from income and
    payroll taxes. Penalties for noncompliance and fees collected
    to administer the legislation would add a small amount to total
    revenues, and tax credits available to low-income individuals
    would reduce federal revenues. The following sections discuss
    how CBO estimated the allowance prices for GHG and HFC cap-and-
    trade programs and detail other revenue impacts of the bill.
        Estimating the Prices for Emission Allowances. CBO
    estimates that the price of GHG allowances would rise from
    about $15 per mtCO2e of emissions in 2011 to about
    $26 per mtCO2e in 2019. Table 3 provides CBO's
    estimate of annual allowance prices for the separate GHG and
    HFC cap-and-trade programs that would be created by the bill.

                               TABLE 3.--CBO ESTIMATES OF ALLOWANCE PRICES UNDER H.R. 2454
    ----------------------------------------------------------------------------------------------------------------
                                                                   By fiscal year, in dollars--
                                             -----------------------------------------------------------------------
                                               2011    2012    2013    2014    2015    2016    2017    2018    2019
    ----------------------------------------------------------------------------------------------------------------
    Estimated GHG Allowance Price...........      15      16      17      18      19      21      22      24      26
    Estimated HFC Allowance Price\1\........    n.a.       2       3       4      10      12      13      19     20
    ----------------------------------------------------------------------------------------------------------------
    Note: n.a. = not applicable.
    \1\Prices provided are the weighted average of the estimated auction prices and fixed-price sales.

        To estimate the marginal cost of reducing GHG emissions--
    which ultimately would determine the price of allowances--CBO
    took several steps:
               First, CBO constructed a base case that
            includes projections of future GHG emissions in the
            absence of any federal policies to control them, as
            well as projections of future prices of fossil fuels,
            electricity, and other products and services closely
            associated with such emissions;
               Next, we developed estimates of how firms
            and households would respond to increases in prices for
            fossil fuels and other sources of GHG emissions;
               Finally, CBO assessed the impact of other
            features of the legislation that would influence the
            market price of allowances. Such other provisions
            include regulations that would influence GHG emissions
            and electricity consumption, subsidies for various GHG
            emission-reducing activities, opportunities for firms
            to bank allowances in one year and use them in another,
            and the availability of domestic or international
            offsets.\2\
    ---------------------------------------------------------------------------
        \2\For a more detailed discussion of the methods CBO used to
    estimate the price for carbon allowances for previous legislation, see
    How CBO Estimates the Costs of Reducing Greenhouse-Gas Emissions, CBO
    Background Paper (April 2009).
    ---------------------------------------------------------------------------
        CBO began with its estimate of the emissions that would
    occur in the absence of the bill and lowered that baseline to
    reflect the extent to which the bill would require particular
    methods of reducing emissions (such as using renewable energy
    sources or increasing energy efficiency) to be used to a
    greater extent than they otherwise would have under the cap-
    and-trade program. We then estimate the price of allowances
    that would be necessary to generate the remaining reduction in
    emissions necessary to meet the cap. This estimate uses a
    ``middle of the road'' estimate of price responsiveness, which
    indicates how much firms and households would reduce their
    emissions for any given allowance price (and its implied effect
    of fossil fuel energy prices). In making that calculation CBO
    simultaneously estimated the extent to which firms would comply
    by purchasing domestic or international offsets (in lieu of
    purchasing allowances or reducing their emissions). Our
    estimate of the allowance price accounts for the fact that
    firms might find it profitable to exceed their emission
    reductions in the early years of the policy and bank their
    excess allowances to use in later years. To do so, we estimate
    emissions reductions and allowance prices during the full
    duration of the program through 2050.
        Base Case Emission Projections. For its base case of GHG
    emissions, CBO relied primarily on projections of energy use,
    fossil fuel prices, and GHG emissions from the April 2009
    update of the Annual Energy Outlook 2009 (AEO 2009) published
    by the Energy Information Administration (EIA). EIA's inventory
    of emissions is based on a slightly different methodology than
    used by EPA, whose inventory is considered the official U.S.
    estimate for purposes of international negotiations and
    agreements.\3\ CBO adjusted the EIA data to align with EPA
    estimates for the most recent year where actual data is
    published, while retaining EIA's projected growth rates. CBO
    assumes that emissions per dollar of the nation's gross
    domestic product (GDP) will grow (or decline) at the same rate
    beyond 2030 as they are projected to grow in the preceding
    decade.\4\
    ---------------------------------------------------------------------------
        \3\See U.S. Environmental Protection Agency, Inventory of U.S.
    Greenhouse Gas Emissions and Sinks: 1990-2007 (EPA 430-R-09-004, April
    2009). CBO also used information provided by EPA to project the
    consumption of HFCs.
        \4\EIA reports projections of GHG emissions in the AEO 2009 only
    through 2030.
    ---------------------------------------------------------------------------
        Response by Firms and Households. A key factor in
    determining the price of an allowance is how quickly and
    cheaply firms and households can decrease CO2
    emissions by reducing their use of fossil fuels (either
    directly or indirectly via the goods and services that they
    consume). The easier it is for firms and households to cut
    their emissions, the lower the allowance price would need to be
    to reach a given cap. Available economic models differ
    considerably in their estimates of how much emissions would
    decrease for a given allowance price (and its implied effect on
    fossil fuel prices) because they make different assumptions
    about the long-run ability of businesses to substitute low-
    carbon fuels and more efficient technology for high-carbon
    fuels; the long-run sensitivity of energy usage to higher
    energy prices; and the speed at which those responses unfold.
    CBO generated a ``middle of the road'' response to allowance
    prices by examining available peer-reviewed models and
    calculating an average response, measured across multiple
    models and across different types of end users (households,
    electric utilities, and manufacturers, for example).\5\
    ---------------------------------------------------------------------------
        \5\The models analyzed include the EIA's National Energy Modeling
    System (NEMS), the Emissions Prediction and Policy Analysis (EPPA)
    model used by climate researchers at the Massachusetts Institute of
    Technology, the Applied Dynamic Analysis of the Global Economy (ADAGE)
    model developed at RTI International and used by EPA, the Second
    Generation Model (SGM) and MiniCAM models developed and used by the
    Joint Global Change Research Institute, the Model for Evaluating the
    Regional and Global Effects of GHG Reduction Policies (MERGE) developed
    by Stanford University and EPRI, and the Multi-region National-North
    American Electricity and Environment (MRN-NEEM) model developed and
    used by CRA International.
    ---------------------------------------------------------------------------
        Using those models, CBO concludes that the response to
    price increases (that is the decrease in emissions that would
    result from any given allowance price) would rise substantially
    over time as firms and households replace existing vehicles,
    equipment, structures, and electricity-generating capacity with
    newer items that use less energy or emit smaller quantities of
    carbon emissions.\6\ CBO's approach provides an estimate of the
    quantity of emission reductions that would occur at various
    allowance prices but does not specify how they would occur.
    That is, it does not provide detail about the timing or
    magnitude of the adoption of specific technologies, such as
    nuclear power or CCS, or the quantity of reductions in specific
    parts of the economy, such as the transportation sector.
    ---------------------------------------------------------------------------
        \6\For a more detailed discussion of the techniques CBO used to
    develop this assessment, see Mark Lasky, The Economic Costs of Reducing
    Emissions of Greenhouse Gases: A Survey of Economic Models, CBO
    Technical Paper (May 2003). See also How CBO Estimates the Costs of
    Reducing Greenhouse-Gas Emissions, CBO Background Paper (April 2009).
    ---------------------------------------------------------------------------
        CBO estimates that, in 2015, a price on emissions of
    CO2 that raised the average price of end-use energy
    produced from fossil fuels by 10 percent would induce about a 5
    percent reduction in such emissions. By 2025, a similar
    increase in price would result in a 9 percent reduction in
    emissions, with the response continuing to increase over time
    at a gradually decreasing rate.
        Response to Opportunities for Banking of Emission
    Allowances. If covered entities were required to use all of
    their emission allowances in the year for which they were
    originally designated, the price of allowances would rise at a
    rate that was dictated by the speed at which the cap became
    more stringent (relative to the growth of emissions in the
    absence of the policy). Given the rate at which the cap on
    emissions would become more stringent over time under H.R.
    2454, the inflation-adjusted price of allowances would rise at
    a rate that is significantly greater than CBO's estimate of the
    rate of return that firms might obtain on alternative
    investments, which CBO assumed to be the after-tax long-run
    inflation-adjusted rate of return to capital in the U.S.
    nonfinancial corporate sector (5.6 percent) that CBO is
    currently using to project the long-run budget outlook.
        If firms were allowed to bank unlimited amounts of
    allowances, as they are under H.R. 2454, then profit-maximizing
    behavior by firms would cause the price of an allowance to
    increase at the same rate as the return that firms might
    receive on alternative investments. Specifically, firms would
    have an incentive to exceed their emission reduction
    requirements in the initial years of the program (when the cost
    of meeting the annual caps would be relatively low) and to bank
    their excess allowances to use in future years when the cost of
    meeting the cap would be much higher. Because banking would
    increase the demand for allowances in the early years (pushing
    up the allowance price) and increase the supply of allowances
    in later years (pushing down the allowance price), it would
    reduce the rate of increase in the price of allowances. Firms
    would continue to bank allowances up to the point where the
    rate of increase in the price of allowances was 5.6 percent,
    the rate of return that they might receive by making
    alternative investments.
        In the early years of the cap-and-trade program, the
    banking provision included in the bill would have a significant
    impact on the amount of emissions reductions, and thus on the
    allowance price. CBO estimates that by 2019, covered entities
    would undertake significantly more mitigation than necessary to
    meet their annual emission caps, banking about 2 billion
    mtCO2e of allowances and raising the allowance price
    by 13 percent, compared with a policy that prohibited banking.
        Response to Offset Credits. H.R. 2454 would allow covered
    entities to substitute offset credits in lieu of up to two
    billion GHG allowances each year. CBO expects covered entities
    would take advantage of this provision when costs are less than
    other methods of compliance. CBO finds that this provision
    would have a significant effect on allowance prices. As
    discussed below, by reducing the cost of complying with the
    cap, offsets are likely to lower the price of allowances by a
    substantial amount.
        Under the bill, domestic offset credits could be used in
    lieu of up to one billion allowances per year. Based on EPA
    data on the available supply of domestic offsets at different
    prices, CBO estimates that covered entities would use domestic
    offsets to substitute for about 230 million allowances in 2012
    and about 300 million allowances in 2020.
        Covered entities may use international offsets in lieu of
    either one billion allowances, or depending on whether or not
    domestic offsets are used up to their full potential, up to 1.5
    billion allowances in a given year. In no case could domestic
    and international offsets substitute for more than two billion
    allowances.
        To calculate the supply of offsets from international
    sources, CBO used information from EPA and made adjustments
    based on provisions in the legislation, assumptions about
    demand from other countries, and an estimate of the
    transactions costs associated with creating and verifying
    offsets. Based on information from the Department of State,
    EPA, and outside experts, CBO expects that the agreements
    necessary to generate offsets with certain countries would take
    significant time to negotiate. Over the period covered by this
    bill, the number of agreements and the scope of their coverage
    is assumed to increase. CBO also assumed that other developed
    countries (for example, those in the European Union) would seek
    offsets for their own emissions reduction programs, thereby
    reducing the supply available to U.S. entities.
        CBO estimates that covered entities would use international
    offsets in lieu of about 190 million allowances in 2012 and in
    lieu of about 425 million allowances in 2020. Together, the
    provisions allowing the use of domestic and international
    offsets would decrease the price of GHG allowances by $35 (69
    percent) in 2012.
        Response to Emissions Allowances from Other Markets. H.R.
    2454 also would allow covered entities to submit an unlimited
    number of emissions allowances obtained from 16 other cap-and-
    trade markets of ``comparable stringency'' in lieu of GHG
    allowances issued by EPA. For this estimate, CBO assumed that a
    market of ``comparable stringency'' would essentially be
    equivalent to a cap-and-trade market where allowances sell for
    a comparable price. Therefore, this provision would have no
    effect on the U.S. GHG allowance price.
        Sensitivity of the GHG Allowance Price Estimates to Changes
    in Assumptions. In cap-and-trade systems such as the one
    established by this legislation, the most important assumptions
    affecting the price of allowances involve:
               Base-case projections of GHG emissions and
            energy prices;
               The responsiveness of households and firms
            to changes in the prices of goods and services
            associated with emissions;
               The discount rate that allowance holders
            apply to decisions about whether to bank allowances and
            how many to bank;
               The availability of offsets from domestic
            and international sources and the extent to which they
            are allowed to meet compliance obligations; and
               Other regulatory programs included as part
            of an overall emissions-reduction policy.
        CBO examined each of those parameters to evaluate how
    sensitive the estimated allowance prices might be to
    alternative assumptions about how the program might operate
    into the future. Changes in the allowance prices under those
    alternative assumptions are made by holding the other
    parameters constant. (Note: it is not possible to determine the
    effect of changing multiple parameters simultaneously by simply
    adding together the independent effects of changing one
    parameter assumption while keeping other parameters constant.)
        Base-Case Projections. Energy-related emissions from the
    U.S. economy are projected in the AEO 2009 to be almost 3
    percent lower in 2012 and 7 percent lower in 2030 compared with
    those made by EIA last year.\7\ All else constant, a lower
    baseline for emissions from a covered sector will result in
    lower allowance prices.
    ---------------------------------------------------------------------------
        \7\See discussion of the differences in the EIA Annual Energy
    Outlook (2009), available online at: http://www.eia.doe.gov/oiaf/aeo/
    forecast.html.
    ---------------------------------------------------------------------------
        Responsiveness. CBO's estimates of the responsiveness of
    firms and households to changes in energy prices strongly
    influences its estimates. If that responsiveness were 10
    percent stronger (or weaker), on average, allowance prices
    would be roughly 8 percent lower or 9 percent higher.\8\
    ---------------------------------------------------------------------------
        \8\EPA's analysis of S. 2191 showed that initial allowance prices
    were 80 percent higher when nuclear, biomass, and CCS technologies were
    constrained. Such an effect would be equivalent to lowering the
    projected sensitivity of the U.S. economy by more than 50 percent.
    ---------------------------------------------------------------------------
        Discount Rate. The discount rate that firms would use when
    deciding whether or not to bank allowances is important in
    determining the allowance price because it affects the supply
    and demand for allowances in a given year. A higher discount
    rate would suggest that a firm would be more willing to put off
    expenses in the near term and pay them in the future, causing
    firms to bank fewer allowances. Assuming a lower discount rate
    of 5 percent (the rate used by EPA), firms would choose to
    lower emissions more in the near term (that is, bank more
    allowances) and less in future years. Use of a 5 percent rate
    would increase CBO's estimate of initial year prices by 13
    percent and decrease projected prices in 2050 by 9 percent.
        Availability of Offsets. Allowance prices would be lower if
    firms were allowed to use more offset credits to meet the
    bill's compliance obligations and if those offsets were cheaper
    than the costs of lowering emissions. Under the bill, the use
    of international offsets lowers the allowance price by about 70
    percent. Doubling the extent to which international offsets
    could be used in lieu of allowances in each year would decrease
    the allowance price by about 30 percent more.
        Regulatory Programs. Other programs or standards that
    influence GHG emissions would affect the price of allowances by
    affecting the magnitude of the emission reductions necessary to
    meet the cap. For example, a regulatory program that requires
    increasing amounts of electricity generation to come from
    renewable energy sources (for example, wind, solar, and
    biomass) could lower emissions from the electricity sector that
    would be subject to the cap-and-trade program. Allowances
    prices could therefore be lower than they otherwise might have
    been in the absence of that regulation.
        The effect that such programs and standards would have on
    emissions will vary with the base price of allowances and the
    stringency of those standards. If allowance prices are high,
    consumers and firms would have more incentives to undertake
    actions to lower emissions. In that case, it is less likely
    that a separate regulatory program would affect the allowance
    price because the behavior that the regulatory program is
    intended to achieve would occur in any event as a result of the
    relatively high allowance price. Conversely, when allowance
    prices are relatively low, and/or regulatory standards are
    relatively stringent, those standards would be more likely to
    motivate additional emission reductions through the use of the
    regulated technology (by using renewable energy, for example)
    beyond those that would result under the cap. In that case, the
    standards would reduce the emissions reductions that must be
    achieved to meet the cap and the price of allowances would be
    lower. Using one example from the legislation, CBO finds that
    distributing allowances to those facilities that invest in CCS
    technology, the price of allowances is reduced by 9 percent. In
    other cases, such as the RES, CBO estimates that the response
    to the GHG cap-and-trade program would result in enough
    renewable electricity generation on a national level to satisfy
    the new RES.
        Estimating the Price of Consumption Allowances for HFCs.
    CBO estimates that the average price of consumption allowances
    for HFCs would be in the vicinity of $2 beginning in 2012 and
    would rise to approximately $20 by 2019. The cap would reduce
    HFC emissions by about 50 percent by 2020 from about 500
    million mtCO2e to about 250 million
    mtCO2e.
        For this estimate, CBO constructed a base-case projection
    of HFC consumption through 2025 similar to a base case produced
    by EPA. After consulting with industry sources, CBO concluded
    that the growth in HFC consumption after 2025 would be equal to
    the population growth rate in the United States, an assumption
    similar to that made by the International Panel on Climate
    Change. Using engineering cost data for HFC alternatives
    provided by EPA, CBO estimated the supply of HFC reductions as
    a function of price and year. From this data, CBO concluded
    that the ability to replace HFCs with lower-cost chemical
    alternatives would increase over time.
        As prices for HFC allowances increase, firms would find it
    more profitable to recycle those chemicals and develop
    alternatives to these products. To the extent those changes
    occur, the price of HFC allowances would be different than
    would otherwise occur.
        Net Revenue Calculation. CBO estimates that gross receipts
    to the federal government from the auction and free allocation
    of allowances under the bill would total $298 billion over the
    2010-2014 period and $973 billion over the 2010-2019 period.
    This estimate is based on the projected prices of allowances
    for both the GHG and HFC cap-and-trade programs.
        However, the cost of purchasing allowances, whether from
    the government or from other entities that would receive
    allowances under the bill, would become an additional business
    expense for companies that would have to comply with that cap
    on emissions. Those additional expenses would result in a
    decrease in taxable income, resulting in a loss of government
    revenue from income and payroll taxes referred to as a
    ``revenue offset''. The amount of this revenue offset would be
    equal to 25 percent--an approximate marginal tax rate on
    overall economic activity--of the gross receipts from the
    auction and free allocation of allowances.\9\
    ---------------------------------------------------------------------------
        \9\Two previous letters on this subject can be found on CBO's
    website at: http://www.cbo.gov/ftpdocs/102xx/doc10236/
    BartonCapnTradeLtr.pdf and http://www.cbo.gov/ftpdocs/102xx/doc10232/5-
    15-WaxmanLetter.pdf.
    ---------------------------------------------------------------------------
        Depending on the manner in which the proceeds or allowances
    are used by the government or conveyed to private entities,
    this reduction in taxable income (the revenue offset) might be
    accompanied by a matching increase in taxable income elsewhere
    in the economy. In such cases, CBO views the distribution of
    allowances or allowance proceeds as offsetting the revenue
    offset--that is, compensating for the initial loss of tax
    revenues associated with the acquisition of the allowances. In
    those cases, the distribution and use of the allowances or the
    auction proceeds would be budget neutral. For this estimate,
    CBO applied this offsetting offset to some of the revenues
    arising from the distribution of allowances, depending on who
    would receive those allowances (or auction proceeds) and what
    they would be used for.
        In general, allowances provided under section 321 to
    businesses (merchant coal generators, generators with long-term
    power purchase agreements, petroleum refiners), and some of the
    allowances provided to natural gas distributors would fit in
    the category of transactions that would be budget neutral
    because they would generate taxable income. In contrast,
    allowances provided to nonbusiness entities--such as states to
    support specific activities, or to other countries to support
    efforts to reduce greenhouse gases--would not be budget neutral
    because they would not generate taxable income.
        On balance, CBO estimates that the auction of GHG and HFC
    allowances and distribution of GHG allowances at no cost would
    generate revenues, net of income and payroll tax offsets, of
    about $254 billion over the 2010-2014 period and $858 billion
    over the next 10 years (see Table 4).

                                 OTHER REVENUES

        Refundable Low-Income Energy Tax Credit. H.R. 2454 would
    create a refundable energy tax credit, aimed at offsetting the
    impact of higher energy prices on low-income families. The
    credit would be based on the average loss of purchasing power
    for the poorest fifth of people caused by higher prices for
    energy and other goods under the bill. The credit would vary
    with family size, based on the average spending of different
    size families at the bottom of the income scale. The credit
    amount would be based on the share of total expenditures made
    by those families, the GHG intensity of that spending, the
    amount of other relief provided under the bill, and how much of
    their reduced purchasing power would be automatically offset
    with federal cost-of-living adjustments. In 2012, CBO estimates
    that the credit would range from $161 for a single person to
    $359 for a five-person household. By 2019, those credit amounts
    would rise by roughly 75 percent.
        Only taxpayers with income below certain levels would
    receive the credit. The level at which a family would become
    ineligible for the credit depends on the family structure. In
    2012, CBO estimates that single people with no children would
    be ineligible if their income exceeded $23,000, while families
    with at least two children would be ineligible if their income
    exceeded $42,000. The credit would be refundable, meaning that
    taxpayers would not need to owe any tax in order to receive the
    credit. Taxpayers who would participate in the energy rebate
    program for low-income consumers would not be eligible for that
    credit.
        The Joint Committee on Taxation estimates that the credit
    would cost $83 billion over the 2009-2019 period. Of that
    amount, about $22 billion would be recorded in the budget as a
    reduction in tax receipts and about $61 billion as an increase
    in direct spending in the amount in excess of taxes owed.
        In addition, people who participate in other federal
    benefits programs could receive a cash rebate under another
    provision (see Direct Spending section below).
        Increased Use of Production Tax Credits. By increasing
    electricity production through renewable sources, H.R. 2454
    would result in businesses claiming increased business tax
    credits for the renewable electricity production credit
    (section 45 of the Internal Revenue Code) and the energy credit
    which applies primarily to investments in solar and geothermal
    energy production (section 48 of the Internal Revenue Code).
    JCT estimates that increased use of those credits would reduce
    revenues by $1.1 billion over the 2010-2019 period. This
    estimate reflects one aspect of the revenue consequences of a
    shift in economic activity away from use of fossil fuels.
        Carbon Storage Research Corporation. Section 114 would
    authorize utilities that distribute fossil fuels to establish,
    by a referendum involving members of the electricity
    distribution industry, a Carbon Storage Research Corporation.
    The corporation would levy annual assessments on distribution
    utilities based on the volume of certain electricity deliveries
    to retail consumers. Assessments would amount to at least $1
    billion, but not more than $1.1 billion each year. While
    formation of the corporation would be voluntary, once it was
    created, assessments would be compulsory, enforced by the
    federal government's sovereign authority. As such, CBO believes
    the corporation should be considered governmental in nature,
    and all of its activities should be included in the federal
    budget.
        For this estimate, CBO assumes that the corporation would
    be created and would collect assessments totaling $1 billion in
    2010 and $1.1 billion each year thereafter through 2019. Those
    amounts should be recorded in the budget as revenues, and
    subsequent expenditures should be considered direct spending.
        Additionally, the cost of those assessments would become an
    additional business expense for utilities, resulting in a loss
    of other federal tax revenue (primarily income and payroll
    taxes). The amount of this revenue loss would be equal to about
    25 percent of the assessments. However, half of the funds
    collected by the corporation would go back to electric
    utilities in the form of grants to subsidize the operations of
    existing electricity generation units that use integrated CCS
    or conversion. Those grants would generate new taxable income
    which would increase federal revenues. Consequently, the net
    loss in tax revenue would equal about one-eighth of the income
    from the assessments, resulting in an overall increase in
    revenues from this provision of $4.7 billion over the 2010-2014
    period and $9.5 billion over the next 10 years.
        Commodity Futures Trading Commission. H.R. 2454 would
    authorize the Commodity Futures Trading Commission (CFTC) to
    charge and collect fees on transactions executed on certain
    exchanges. The fee would be calculated to recover the annual
    cost of the commission's supervision and regulation of futures
    markets (the cost of CFTC's enforcement activities would not be
    included in this amount). Fees would be deposited into a
    special account and would be authorized to be appropriated to
    fund the commission's activities. CBO estimates that enacting
    these provisions would increase revenues by about $400 million
    over the 2010-2014 period, and by about $800 million over the
    2010-2019 period, net of income and payroll tax losses.
        Alternative Compliance Payments for the Renewable
    Electricity Standard (RES). Section 101 would establish a new
    federal standard requiring an increasing percentage of
    electricity sold by certain retail electricity suppliers to be
    generated from renewable sources beginning in 2012. Covered
    suppliers of retail electricity would meet this requirement by
    submitting a federal renewable energy credit (REC) or by making
    an alternative compliance payment equal to $25 (in 2009,
    adjusted for inflation) for each megawatt hour of renewable
    electricity necessary to comply with the standard. Under the
    bill, alternative compliance payments would be paid directly to
    states; nevertheless, because they would result from an
    exercise of the federal government's sovereign power to
    regulate industry, CBO believes that collections and subsequent
    expenditures of alternative compliance payments should be
    considered governmental in nature and included in the federal
    budget.
        CBO estimates that the response to the GHG cap-and-trade
    program would result in the generation of enough renewable
    electricity, on a national level, to satisfy the federal
    standard. However, based on information from DOE, CBO expects
    that some regions of the country--particularly the southeast--
    would probably not generate sufficient RECs to satisfy the
    federal standard. Thus, covered electricity suppliers in those
    areas would have to either purchase RECs generated elsewhere or
    make alternative compliance payments to the states in which
    they operate.
        CBO expects that, in some cases, covered electricity
    suppliers would choose to make alternative compliance payments
    rather than purchase RECs. H.R. 2454 would require states to
    use any alternative compliance payments received pursuant to
    the federal RES to promote the development of renewable energy
    resources. To the extent that electricity suppliers that are
    subject to the RES would benefit from states' spending of
    alternative compliance payments, H.R. 2454 might provide an
    incentive for suppliers to favor those payments over REC
    purchases as a means of complying with the federal RES.
        CBO believes that this incentive would most likely affect
    the behavior of electricity suppliers in instances where the
    price of a REC is at or only slightly below the compliance
    payment. Based on information from DOE about estimated prices
    of RECs under H.R. 2454, however, CBO expects that most
    suppliers would use RECs to comply with the federal RES. We
    estimate that alternative compliance payments would probably
    not exceed $500 million over the 2012-2019 period. The volume
    of electricity associated with estimated payments is small--
    less than one-tenth of one percent of all electricity
    generation.
        In addition, the cost of the alternative compliance
    payments would become an additional business expense for
    utilities, thus reducing federal tax revenue. The amount of
    this revenue offset would be equal to 25 percent of the
    payments, resulting in an overall increase in revenues from
    this provision of about $100 million over the 2010-2014 period
    and nearly $400 million over the next 10 years.
        Fuel-Efficient Vehicle Vouchers. CBO expects that the
    issuance of vouchers to individuals who replace existing
    vehicles with new ones of greater fuel efficiency would result
    in a slight increase in the overall fuel efficiency of the
    domestic vehicle fleet. New vehicles purchased as a result of
    the program would generally be more fuel efficient than ones
    that would otherwise be purchased as replacements. This
    increase in fuel efficiency would cause a slight decline in
    gasoline consumption, thereby reducing federal revenues
    generated by excise taxes on motor fuels. CBO estimates that
    this provision of the legislation would reduce federal revenues
    by $16 million over the 2010-2014 period and $28 million over
    the 2010-2019 period.
        Penalties. Under H.R. 2454, civil penalties would be
    assessed on those owners and operators who fail to meet their
    compliance obligation on time. The penalty would equal the
    emissions generated by an entity in excess of the allowances
    they held multiplied by twice the fair market value of emission
    allowances in the relevant year. In addition, the covered
    entities would be required to submit, in the following year or
    other time period determined by EPA, emission allowances to
    cover excess emissions from the previous year. The legislation
    also would establish penalties for those entities that violate
    any of the rules associated with the regulation of the
    allowance market. Such penalties could be as high $1 million
    per day under certain circumstances. This legislation also
    includes various other penalties, including penalties for
    nonpayment of allowances and for fraud.
        Because many of the penalties could be substantial, CBO
    expects most firms would comply with the requirements of the
    bill. However, the number of entities covered by this
    legislation is large, and thus it is likely that some entities
    would not comply. Penalties collected on emissions of sulfur
    dioxide and nitrogen oxides in excess of submitted allowances
    under EPA's Acid Rain Program, a similar program, are usually
    small, though there have been two large collections over the
    past few years totaling about $4 million. Based on that
    information, CBO estimates that penalty collections under H.R.
    2454 would total between $25 million and $50 million dollars
    annually, beginning in 2012.
        Effect on Unemployment Compensation. The bill would create
    a program to compensate workers who lose their jobs as a result
    of the bill's provisions. That program would provide cash
    benefits, job training, and a subsidy for health care costs.
    Individuals who collect benefits under that program would not
    be eligible to receive unemployment compensation; consequently,
    outlays of that program would be reduced. Because such outlays
    are paid from state employment taxes, CBO estimates that states
    would reduce their taxes (which are recorded as revenues on the
    federal budget) accordingly. Over the 2012-2019 period, CBO
    estimates that the reduction in tax revenues to be less than
    $100 million.

                                DIRECT SPENDING

        CBO estimates that enacting this legislation would increase
    direct spending by $821 billion over the 2010-2019 period.
    Outlays would primarily stem from spending of auction proceeds
    and giving GHG allowances to states and other entities free of
    charge. Also, substantial amounts of auction proceeds would be
    available for other spending programs that would be subject to
    appropriation action. A more detailed description of those
    programs is included under the discussion of spending subject
    to appropriation.
        Worker Assistance. A portion of the revenues from the
    auction of emission allowances for the GHG cap-and-trade
    program would fund a program for Climate Change Worker
    Adjustment Assistance (CCWAA), which would be administered by
    the Department of Labor (DOL). Under that program, workers who
    lose their jobs as a result of measures their employers take to
    comply with provisions of the bill could be certified to
    receive up to 156 weeks of benefits, including cash benefits
    equal to 70 percent of their average weekly wage, job training
    and employment search assistance, and an 80 percent subsidy of
    the cost of continuing health insurance. Funding for the
    program would be capped at a specified portion of auction
    proceeds actually received, which CBO estimates would total
    $4.3 billion over the 2011-2019 period. Gross outlays for CCWAA
    would total $4.2 billion over that period, CBO estimates.
        Individuals receiving CCWAA would not be eligible to
    receive unemployment compensation. Thus, CBO estimates outlays
    for unemployment benefits would drop by about $0.1 billion over
    the 2011-2012 period. (That drop in outlays would be offset
    over time by a corresponding reduction in unemployment tax
    revenues, as discussed in the revenue section of this
    estimate.)

                                           TABLE 4.--ESTIMATED CHANGES IN REVENUES AND DIRECT SPENDING UNDER H.R. 2454
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      By fiscal year, in billions of dollars--
                                                       -----------------------------------------------------------------------------------------------------
                                                                                                                                          2010-      2010-
                                                         2010    2011    2012    2013    2014    2015    2016    2017    2018    2019      2014       2019
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       CHANGES IN REVENUES

    Net Revenues Resulting from Cap-and-Trade                0    38.0    58.6    64.8    92.2   105.9   114.4   120.1   128.6   134.9      253.6      857.6
     Programs\a\......................................
    Refundable Low-Income Energy Tax Credit...........       0       0    -0.6    -2.3    -2.5    -2.9    -3.1    -3.4    -3.5    -3.6       -5.5      -22.0
    Increased Production Tax Credit Use...............       0       0       *    -0.1    -0.1    -0.1    -0.1    -0.2    -0.2    -0.2       -0.2       -1.1
    Carbon Storage Research Corporation...............     0.9     1.0     1.0     1.0     1.0     1.0     1.0     1.0     1.0     1.0        4.7        9.5
    Alternative Compliance Payments for the RES.......       0       0       *       *       *       *       *       *     0.1     0.1        0.1        0.4
    Commodity Futures Trading Commission..............     0.1     0.1     0.1     0.1     0.1     0.1     0.1     0.1     0.1     0.1        0.4        0.8
    Fuel-Efficient Vehicle Vouchers...................       *       *       *       *       *       *       *       *       *       *          *          *
    Penalties and Other Revenue Changes...............       0       0       *       *       *       *       *       *       *       *        0.1        0.2
        Total Changes in Revenues.....................     0.9    39.1    59.1    63.5    90.6   104.0   112.3   117.6   126.1   132.3      253.2      845.6

                                                                   CHANGES IN DIRECT SPENDING

    Worker Assistance:\b\
        Estimated Budget Authority....................       0     0.2     0.3     0.4     0.4     0.5     0.5     0.6     0.6     0.6        1.3        4.2
        Estimated Outlays.............................       0       0     0.1     0.6     0.5     0.5     0.6     0.6     0.6     0.6        1.3        4.1
    Outlays Associated with Emission Allowances Freely
     Allocated:
        Estimated Budget Authority....................       0    32.2    46.3    54.4    74.5    86.0    92.7    96.4   102.7   107.5      207.4      692.7
        Estimated Outlays.............................       0    32.2    46.3    54.4    74.5    86.0    92.7    96.4   102.7   107.5      207.4      692.7
    Refundable Low-Income Energy Tax Credit Payments:
        Estimated Budget Authority....................       0       0       0     6.1     6.5     8.0     8.4    10.4    10.5    11.2       12.6       61.1
        Estimated Outlays.............................       0       0       0     6.1     6.5     8.0     8.4    10.4    10.5    11.2       12.6       61.1
    Low-Income Energy Rebates:
        Estimated Budget Authority....................       0       0     4.1     5.4     6.1     6.4     7.2     7.5     7.8     8.2       15.7       52.8
        Estimated Outlays.............................       0       0     4.1     5.4     6.1     6.4     7.2     7.5     7.8     8.2       15.7       52.8
    Carbon Storage Research Corporation:
        Estimated Budget Authority....................     1.0     1.1     1.1     1.2     1.2     1.2     1.2     1.2     1.2     1.2        5.6       11.4
        Estimated Outlays.............................     0.3     0.7     1.0     1.1     1.1     1.2     1.2     1.2     1.2     1.2        4.3       10.1
    Spending of Alternative Compliance Payments:
        Estimated Budget Authority....................       0       0       *       *       *       *     0.1     0.1     0.1     0.1        0.1        0.5
        Estimated Outlays.............................       0       0       *       *       *       *     0.1     0.1     0.1     0.1        0.1        0.5
            Total Changes in Direct Spending:
                Estimated Budget Authority............     1.0    33.4    51.9    67.5    88.7   102.1   110.0   116.1   122.9   128.8      242.6      822.6
                Estimated Outlays.....................     0.3    32.9    51.6    67.7    88.8   102.2   110.0   116.1   122.9   128.8      241.3      821.2

                                                                Net Change in the Budget Deficit
                                                          from Changes in Revenues and Direct Spending

    Impact on Deficit:\c\.............................     0.6     6.1     7.5    -4.2     1.8     1.8     2.4     1.5     3.2     3.5       12.0       24.4
    Memorandum--Details on Auction Revenues:
    Gross Revenues from Auctioned Allowances..........       0     9.9    21.5    19.7    30.1    33.7    37.0    39.6    42.9    45.4       81.2      279.9
    Net Revenues from Auctioned Allowances............       0     7.4    16.2    14.8    22.6    25.3    27.7    29.7    32.2    34.1       60.9      209.9
    Gross Revenues from Allowances Freely Allocated...       0    32.2    46.3    54.4    74.5    86.0    92.7    96.4   102.7   107.5      207.4      692.7
    Net Revenues from Allowances Freely Allocated.....       0    30.6    42.5    50.1    69.6    80.6    86.7    90.4    96.4   100.8      192.7     647.7
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Notes: RES = renewable electricity standard, * = between -$50 million and $50 million.
    Numbers may not sum to totals because of rounding.
    \a.\Revenues are net of income and payroll tax offsets.
    \b.\Includes $0.1 billion reduction in other unemployment benefits over the 2010-2019 period.
    \c.\Positive numbers indicate decreases in deficits; negative numbers indicate increases in deficits.

        Outlays Associated with Emission Allowances Freely
    Allocated. CBO estimates that direct spending would increase by
    about $693 billion over the 2010-2019 period when the
    government distributes emission allowances free of charge to
    various recipients. Most of this distribution would begin in
    2012. Recipients, such as states, natural gas distributers, and
    federal agencies, would use the allowances to fund programs to
    encourage energy efficiency and other types of government
    initiatives.
        Refundable Low-Income Energy Tax Credit Payments. H.R. 2454
    would create a refundable energy tax credit for low-income
    families. (See section on ``Other Revenues.'') Taxpayers would
    receive any credit amount in excess of their income tax
    liability as a direct payment. The JCT estimates that direct
    spending would increase by $61 billion over the 2010-2019
    period.
        Low-Income Energy Rebates. The bill would create a new
    energy rebate, aimed at offsetting the impact of the GHG cap-
    and-trade program on energy prices for low-income families. The
    rebate would complement the low-income energy tax credit
    program, reaching families who may not file tax returns. The
    rebate amount would be the same as the tax credit amount,
    equaling the average loss of purchasing power caused by higher
    prices for energy and other goods for the poorest fifth of
    people. Like the credit, the rebate would vary with family
    size. In 2012, CBO estimates the rebate would be $161 for a
    single person, ranging up to $359 for a five-person household.
    By 2019, those credit amounts would rise by roughly 75 percent.
        Families who participate in the Supplemental Nutrition
    Assistance Program or the Medicare Part D low-income subsidy
    would automatically be enrolled in the rebate program. Other
    families with income below 150 percent of the poverty level
    could apply for the rebates through their state benefit
    agencies. Enrolled families would receive one-twelfth of the
    annual rebate amount each month. Families would not be eligible
    to receive both the rebate and the tax credit. State benefit
    agencies would notify both credit recipients and the Internal
    Revenue Service of the amounts of rebate received each year,
    and the amount of the tax credit a family receives would be
    reduced by any rebate they receive.
        CBO estimates that this rebate program would increase
    direct spending by $53 billion over the 2012-2019 period. CBO
    expects that all families receiving the low-income subsidy or
    participating in the Supplemental Nutrition Assistance Program
    would receive the rebate. CBO expects minimal participation
    from eligible families not enrolled in those programs, as the
    rebate amounts are not large enough to induce many to
    participate in a new program. CBO also expects that the
    coordination mechanism between the state benefit agencies and
    the Internal Revenue Service would be effective in minimizing
    the number of families that receive both the tax credit and the
    rebate.
        Carbon Storage Research Corporation. As previously
    discussed in the section on revenues, H.R. 2454 would authorize
    a governmental corporation to levy and spend assessments on
    distribution utilities totaling between $1.0 billion and $1.1
    billion a year over the 2010-2019 period. Under the bill, the
    corporation could invest those assessments in interest-bearing
    securities, thereby generating additional funding for its
    activities. Expenditures of assessments and interest, which
    would be considered direct spending, would support research and
    development of technologies related to CCS. Based on historical
    spending patterns for similar activities, CBO estimates that
    expenditures by the proposed corporation would total about $300
    million in 2010 and $10.1 billion over the 2010-2019 period.
        Spending of Alternative Compliance Payments Under the RES.
    The legislation would require states to use any amounts
    received from alternative compliance payments under the
    proposed RES to support the deployment of technologies to
    generate renewable energy and to implement energy-efficiency
    programs. Based on historical spending patterns for similar
    activities, CBO estimates that such spending would total about
    $500 million over the 2012-2019 period.

                       SPENDING SUBJECT TO APPROPRIATION

        Assuming appropriation of the necessary amounts, CBO
    estimates that implementing this legislation would increase
    discretionary spending by $49.9 billion over the 2010-2019
    period (see Table 5). Most of that amount would stem from
    provisions that authorize spending of revenues from the auction
    of emission and consumption allowances. These funds would be
    used to support a variety of programs by federal agencies.
    Additional spending would support:
               Certain credit-related activities of the
            proposed Clean Energy Deployment Administration;
               Federal loans to manufacturers of certain
            types of vehicles;
               Federal agencies' costs to administer
            programs established under the bill;
               A wide array of activities to improve energy
            efficiency throughout the nation;
               Federal costs to provide vouchers to
            individuals who purchase or lease certain fuel-
            efficient vehicles; and
               Programs to promote clean energy
            technologies.

                                              Table 5.--ESTIMATED SPENDING SUBJECT TO APPROPRIATION UNDER H.R. 2454
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      By fiscal year, in billions of dollars--
                                                       -----------------------------------------------------------------------------------------------------
                                                         2010    2011    2012    2013    2014    2015    2016    2017    2018    2019   2010-2014  2010-2019
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          CHANGES IN SPENDING SUBJECT TO APPROPRIATION

    Spending of Auction Proceeds:
        Estimated Authorization Level.................       0     0.2     0.9     1.4     1.8     2.9     3.5     4.0     5.1     5.6       4.4       25.5
        Estimated Outlays.............................       0       *     0.3     0.8     1.3     2.1     2.9     3.5     4.3     5.1       2.3       20.1
    Clean Energy Deployment Administration:
        Estimated Authorization Level.................       *       *     0.1     0.2     0.4     0.6     1.0     1.5     1.5     1.6       0.8        6.9
        Estimated Outlays.............................       *       *       *     0.1     0.1     0.2     0.4     0.6     0.9     1.2       0.3        3.6
    DOE Loans to Manufacturers of Advanced Technology
     Vehicles:
        Estimated Authorization Level.................       0     7.5       *       *       *       *       *       *       *       *       7.5        7.6
        Estimated Outlays.............................       0     0.4     0.8     1.1     1.5     1.5     1.5     0.8       *       *       3.8        7.5
    Administrative Costs to Federal Agencies:
        Estimated Authorization Level.................     0.5     0.5     0.8     0.8     0.8     0.8     0.9     0.9     0.9     1.0       3.3        7.8
        Estimate Outlays..............................     0.4     0.5     0.7     0.8     0.8     0.8     0.8     0.9     0.9     0.9       3.1        7.5
    Energy-Efficiency Programs:
        Estimated Authorization Level.................     0.7     0.8     0.8     0.9     1.1     0.8     0.4     0.4     0.4     0.4       4.3        6.7
        Estimated Outlays.............................     0.3     0.6     0.7     0.8     0.9     0.9     0.7     0.5     0.5     0.4       3.2        6.2
    Vouchers to Purchase or Lease Fuel-Efficient
     Vehicles:
        Authorization Level...........................     4.0       0       0       0       0       0       0       0       0       0       4.0        4.0
        Estimated Outlays.............................     2.6       *       0       0       0       0       0       0       0       0       2.6        2.6
    Clean Energy Programs:
        Estimated Authorization Level.................     0.3     0.3     0.3     0.3     0.3     0.3     0.2     0.2     0.2     0.2       1.5        2.6
        Estimated Outlays.............................     0.1     0.2     0.3     0.3     0.3     0.3     0.3     0.2     0.2     0.2       1.1        2.4
        Total Changes:
        Estimated Authorization Level.................     5.5     9.3     3.0     3.6     4.4     5.4     6.0     6.9     8.2     8.7      25.8       61.1
        Estimated Outlays.............................     3.4     1.6     2.7     3.8     4.9     5.8     6.6     6.5     6.8     7.8      16.4      49.9
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Note. DOE = Department of Energy; * = between -$50 million and $50 million.
    Numbers may not sum to totals because of rounding.

        Spending of Auction Proceeds. Under the legislation, about
    $25.5 billion in revenues from the auction of emission and
    consumption allowances over the 2011-2019 period would be
    deposited into three funds established by the Department of the
    Treasury. Spending from those funds would require further
    appropriation action. None of the amounts subject to
    appropriation would be directly offset by revenues generated
    under the bill. CBO's estimate of the spending by funds over
    the 2010-2019 period is as follows:
             $5.3 billion would be credited to the Natural
            Resources Climate Change Adaptation Fund and used to
            support adaptation activities, such as activities to
            assist fish and wildlife in adapting to the impacts of
            climate change, by various federal agencies, including
            the Department of the Interior, the Department of
            Commerce, and EPA;
             $900 million would be credited to the Climate
            Change Health Protection and Promotion Fund and would
            primarily support efforts by the Department of Health
            and Human Services to assist health professionals in
            preparing for and responding to the impacts of climate
            change on public health; and
             $19.3 billion would be credited to the
            Stratospheric Ozone and Climate Protection Fund and
            would be used to support DOE's best-in-class appliances
            deployment program, an EPA program to encourage the
            recovery, recycling, and reclamation of HFCs, and any
            multilateral agreement related to HFCs that includes
            the United States.
        Assuming appropriation of amounts estimated to be credited
    to the proposed funds, CBO estimates that discretionary
    spending of revenues from auctions would total $20.1 billion
    over the 2010-2019 period. That estimate is based on historical
    spending patterns in agencies that would administer the new
    programs funded with auction proceeds.
        Clean Energy Deployment Administration. The bill would
    establish a Clean Energy Deployment Administration (CEDA)
    within DOE, which would be authorized to provide direct loans,
    loan guarantees, and letters of credit for clean energy
    projects. Such assistance would be available for investments in
    the energy, transportation, manufacturing, commodities,
    residential, commercial, and financial services sectors.
        The budgetary accounting for CEDA's activities would be
    largely governed by the Federal Credit Reform Act of 1990,
    which requires appropriations for subsidy costs in advance of
    commitments for loans and loan guarantees. Under that act, the
    subsidy cost is the estimated long-term cost to the government
    of the transactions (excluding administrative expenses),
    calculated on a present-value basis. Subsidy costs are
    typically expressed as a percentage of the loan principal (the
    subsidy rate) multiplied by the amounts being loaned or
    guaranteed.
        The potential budgetary impact of CEDA programs is
    difficult to predict for several reasons. The amount and timing
    of any spending would depend on investment decisions made by
    private firms and nonfederal entities in response to market and
    other conditions. The subsidy rate for participating projects
    would vary depending on their particular technological and
    market risks. Finally, some of the activities eligible for
    assistance under this bill may also be eligible for federal
    loan guarantees under existing law, especially those involving
    advanced energy and automotive technologies.
        CBO estimates that implementing this provision would
    increase discretionary spending by $3.6 billion over the 2010-
    2019 period, assuming appropriation of the amounts necessary to
    cover the program's subsidy and administrative costs. According
    to the Conference Board and other private-sector analysts,
    approximately $1 trillion could be invested over the 2010-2030
    period to achieve cost-effective reductions in carbon emissions
    in the United States, over half of which could be spent by the
    energy and transportation sectors. For this estimate, CBO
    assumes that CEDA would provide direct loans or loan guarantees
    for about 5 percent of those projected investments or a total
    volume of about $50 billion through 2019. (Those amounts would
    be in addition to the tens of billions of dollars authorized to
    be guaranteed under existing law.) CBO estimates that the
    subsidy rate for CEDA's portfolio would average 13 percent,
    which is similar to the credit risk posed by speculative-grade
    bonds.
        Although certain letters of credit and changes to DOE's
    existing loan guarantee program could affect direct spending,
    CBO estimates that the net effect of those provisions would be
    negligible over the 2010-2019 period.
        DOE Loans to Manufacturers of Advanced Technology Vehicles.
    Under the existing Advanced Technology Vehicles Manufacturing
    (ATVM) loan program, DOE is currently authorized to provide up
    to $25 billion in direct loans to automobile manufacturers and
    component suppliers to support capital investments in
    manufacturing facilities designed to produce vehicles with
    greater fuel efficiency and reduced emissions. The agency
    currently has $7.5 billion available to cover the anticipated
    subsidy cost of such loans.
        H.R. 2454 would increase, to $50 billion, the amount of
    loans DOE is authorized to make under the ATVM loan program.
    CBO estimates that funding an additional $25 billion in such
    loans under that program would require appropriations totaling
    $7.6 billion over the 2010-2019 period. That amount includes
    $7.5 billion to cover anticipated subsidy costs of loans and
    $0.1 billion for the agency's administrative costs. Estimated
    subsidy costs take into account the financial condition of
    borrowers and reflect factors such as default risk, anticipated
    recoveries in the case of a default, and statutorily specified
    terms and conditions of ATVM loans.
        Based on information from DOE about the anticipated rate of
    disbursement for ATVM loans that the agency can support with
    existing funding as well as historical spending patterns for
    other federal credit programs, CBO expects that DOE would not
    approve any new loans pursuant to H.R. 2454 before 2011.
    Starting in 2011, CBO estimates that expenditures for ATVM
    loans would occur gradually, over several years, as loans are
    disbursed. We further estimate that DOE's administrative costs
    associated with additional loans authorized under the
    legislation would amount to about $10 million annually over the
    2011-2019 period.
        Administrative Costs to Federal Agencies. Several federal
    agencies, including EPA, the Federal Energy Regulatory
    Commission (FERC), the Department of State, DOE, and others
    would be responsible for administering programs under H.R.
    2454. Major new initiatives--particularly the proposed GHG cap-
    and-trade program and related activities, the proposed energy-
    efficiency and renewable electricity standard, and rebates for
    low-income individuals--would significantly expand agencies'
    workloads. In addition, many other provisions of H.R. 2454
    would require federal agencies to undertake a variety of
    rulemakings, conduct studies and assessments, prepare reports,
    and carry out other activities related to new programs
    authorized under the bill. Finally, under the bill certain
    agencies, particularly EPA and the Department of Labor, would
    have to establish and administer programs to distribute
    proceeds from auctions of emissions and consumption allowances
    to state and local governments, private-sector firms, and
    certain individuals.
        In total, CBO estimates that fully funding federal
    agencies' administrative costs would require gross
    appropriations totaling $540 million in 2010 and $8.2 billion
    over the 2010-2019 period. That estimate is based on historical
    information on how large regulatory programs have been
    implemented and on information provided by EPA, FERC, and other
    agencies with significant administrative responsibilities under
    the bill. Assuming appropriation of the necessary amounts, we
    estimate that gross spending by affected agencies would total
    $430 million in 2010 and $7.9 billion over the next 10 years.
        In some cases, agencies would charge fees to offset a
    portion of their administrative costs. In particular, FERC,
    which has authority to offset 100 percent of its administrative
    costs through fees on regulated entities, would levy additional
    fees sufficient to offset any increased administrative costs
    incurred under H.R. 2454. Based on information from FERC, CBO
    estimates that increased user fees to that agency would offset
    roughly $40 million of annual estimated costs under H.R. 2454.
    Consistent with current budgetary treatment, such fees would be
    recorded as offsetting collections, thus reducing the net
    appropriations that would be necessary to implement the
    legislation to roughly $7.8 billion over the next 10 years. CBO
    estimates that net outlays resulting from that amount of
    funding would total $390 million in 2010 and $7.5 billion over
    the 2010-2019 period.
        Energy-Efficiency Programs. H.R. 2454 would establish new
    programs and requirements aimed at improving the energy
    efficiency of major sectors of the economy. Most of those
    activities would be administered by DOE and EPA. (Those
    agencies' costs to implement energy-efficiency programs are
    included in our estimate of funding for administrative costs.)
    CBO estimates that fully funding programmatic elements of
    energy efficiency programs under the bill--including a wide
    array of grants and other forms of assistance to nonfederal
    entities--would require $6.7 billion over the 2010-2019 period.
    That amount includes:
               $3.1 billion for activities to increase
            lighting efficiency;
               $2.1 billion to improve the energy
            efficiency of federal and nonfederal buildings; and
               $1.5 billion for energy-efficiency programs
            aimed at industry and certain state and local
            governments and for other related activities.
        Assuming appropriation of the necessary amounts, CBO
    estimates that implementing energy-efficiency programs under
    H.R. 2454 would cost about $300 million in 2010 and $6.2
    billion over the 2010-2019 period.
        Vouchers to Purchase or Lease Fuel-Efficient Vehicles. H.R.
    2454 would authorize the appropriation of $4 billion for DOT to
    operate a one-year program to provide vouchers for the purchase
    or lease of a new car or truck to individuals who trade in an
    eligible vehicle for one that is more fuel efficient. The
    eligible vehicle would have to be subsequently dismantled. The
    vouchers would range in value from $3,500 to $4,500 depending
    on the type of vehicle being purchased and the difference in
    the fuel economy from the eligible vehicle.
        Based on information from DOT, CBO estimates that up to 77
    million vehicles sold over the 1990-2006 period could fall
    below the 18-mile-per-gallon threshold specified in the bill.
    Of those, CBO expects that fewer than 25 million would both
    still be registered and be worth less than the voucher amounts.
    The vast majority of those vehicles are trucks. Information
    from the automotive industry suggests that most owners of those
    vehicles are not currently in the market for a new vehicle and
    that a relatively small voucher--the average light-duty truck
    costs more than $25,000--is unlikely to induce them to purchase
    or lease new vehicles. Current cash incentives from
    manufacturers and dealers have not significantly increased car
    sales. Sales of new vehicles in the United States are projected
    to total about 10 million in calendar year 2009, down from 16
    million in 2007, a portion of which are fleet sales and would
    not be eligible for the program. In addition, financial
    constraints in the form of credit availability and additional
    monthly payments by the consumer would play a role in limiting
    the use of the vouchers. At the same time, it is likely that
    most vouchers would be used by individuals with eligible
    vehicles who are currently in the market for a new vehicle or
    soon will be.
        Further, CBO does not expect a significant number of
    vouchers to be used on purchases that occurred before the
    enactment of the bill. As a result of the combination of these
    factors and the limited time that the program would be
    available, CBO estimates that about 625,000 vouchers would be
    used, that it would cost DOT about $55 million to administer
    the program, and that the program would cost about $2.6 billion
    in 2010 and the same amount over the 2010-2014 period.
        Clean Energy Programs. H.R. 2454 would establish new
    programs and requirements aimed at promoting clean energy. CBO
    estimates that fully funding those activities, which would be
    implemented primarily by DOE, EPA, and the Department of
    Education, would require appropriations totaling $2.6 billion
    over the 2010-2019 period. That amount includes:
               $1.5 billion for activities related to
            modernizing the nation's electricity infrastructure,
            including $550 million for rebates on purchases of
            certain appliances;
               $870 million to establish centers to focus
            on research and development of clean energy
            technologies;
               $250 million for the Department of Education
            to award grants to educational agencies, postsecondary
            institutions, and representatives from the community to
            develop programs of study focusing on emerging careers
            and jobs in renewable energy, energy efficiency, and
            climate-change mitigation; and
               $22 million for other activities.
        Assuming appropriation of the necessary amounts, CBO
    estimates that implementing clean energy programs under H.R.
    2454 would cost $92 million in 2010 and $2.4 billion over the
    2010-2019 period, with additional spending occurring in later
    years.

         PROVISIONS WITH MAJOR BUDGETARY IMPACTS THAT BEGIN AFTER 2019

        No later than 2022, the President would be required to
    assess the extent to which the distribution of emission
    allowances has mitigated or addressed carbon leakage. (Carbon
    leakage is defined in the legislation as any substantial
    increase in GHG emissions by industrial entities located in
    other countries if such increase is caused by an incremental
    cost of production increase in the United States resulting from
    the implementation of the GHG cap-and-trade program.)
    Specifically, if the President determines that more than 70
    percent of global output for each eligible sector is produced
    or manufactured in countries that meet certain criteria, such
    as being a party to an international agreement to which the
    United States is a party, then the President may implement an
    International Reserve Allowance Program within two years of
    that determination. Under such a program, foreign manufacturers
    and importers would be required to pay for and hold allowances
    to cover the carbon contained in U.S.-bound products. CBO
    expects that revenues generated from this program could be
    significant.
        Under this legislation, starting in 2025 proceeds from
    auctions of allowances would be deposited into the Climate
    Change Consumer Rebate Fund. The Secretary of the Treasury
    would provide tax refunds on a per-capita basis to each
    household in the United States that would collectively equal
    the amount deposited into that fund.

                  INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

        CBO has determined that the non-tax provisions of H.R. 2454
    contain intergovernmental and private-sector mandates as
    defined in the Unfunded Mandates Reform Act. Several of those
    mandates would require utilities, manufacturers, and other
    entities to reduce greenhouse gas emissions through cap-and-
    trade programs and performance standards. CBO estimates that
    the aggregate cost of mandates in the bill would well exceed
    the annual thresholds established in UMRA for intergovernmental
    and private-sector mandates (in 2009, $69 million and $139
    million respectively, adjusted annually for inflation). In some
    cases, because of a lack of information about future
    regulations, CBO has no basis for estimating the costs of the
    mandates.

            MANDATES THAT APPLY TO BOTH PUBLIC AND PRIVATE ENTITIES

        Cap-and-Trade Program for Greenhouse Gases. The cap-and-
    trade program for GHG emissions (excluding HFCs) would require
    covered facilities to submit one allowance per metric ton of
    carbon dioxide equivalent emitted beginning in 2012. The
    compliance costs for covered facilities would be the
    expenditures made in acquiring allowances, the cost of
    purchasing offset credits, and the cost of directly reducing
    their emissions of GHGs. Based on estimates of those costs and
    accounting for the initial allocation of free allowances, CBO
    estimates that the cost of this requirement would amount to
    tens of billions of dollars annually for private-sector
    entities and about $1 billion annually for public entities.
        Although not available to cover the mandate costs of the
    cap-and-trade requirements, about $50 billion in allowances
    would be provided to states over the 2012-2016 period for
    specific purposes, including programs for improving energy
    efficiency, implementing regulations, and supporting other
    climate change programs (see additional discussion under
    ``Other Impacts on State and Local Governments'' below).
        Reporting Requirements. Public and private entities also
    would be required to report information on greenhouse gases to
    a federal registry. Assuming EPA's proposed rule for a federal
    registry of greenhouse gases is adopted under current law, CBO
    expects that most public entities and some private entities
    would already be required to report, and therefore the public
    sector would incur minimal costs. However, CBO expects that
    additional private-sector entities would be required to report
    information to the registry under the bill. Based on
    information about compliance costs from EPA's impact analysis
    of the proposed rule, CBO estimates that the reporting
    requirements could increase costs to private entities by about
    $50 million per year.
        The bill also would impose reporting requirements on public
    and private entities to assist with implementing the cap-and-
    trade program. CBO expects that the cost to comply with those
    mandates would be small.
        Carbon Capture and Sequestration Assessments. Section 114
    would authorize the Carbon Storage Research Corporation to
    collect annual assessments on public and private utilities
    following a referendum by the affected utilities. The funds
    collected along with an allocation of emission allowances would
    be used to support the development of technologies related to
    CCS. The bill also would require state regulatory authorities
    to indicate whether they support or oppose the creation of the
    corporation. Assuming that the referendum is approved, all
    utilities would be required to pay the assessments. The
    assessments would be based on the amount of electricity
    delivered to retail customers, and would generate between $1.0
    billion and $1.1 billion annually. CBO estimates the annual
    cost to be between $150 million and $175 million for public
    utilities and $850 million and $925 million for private
    utilities. The cost of the requirement to regulatory
    authorities would be small.
        Performance Standards for Coal-fueled Power Plants. Section
    116 would establish performance standards for new sources of
    power from coal power plants. Those requirements would compel
    owners and operators of new units of electric generation (EGUs)
    to reduce annual CO2 emissions and would apply to
    both public and private power plants. Beginning in 2020 or
    2025, at the latest, EGUs would be required to reduce annual
    emissions of CO2 by 50 percent or 65 percent,
    depending on when the EGU received a preconstruction permit.
    The cost of the mandate would be either the cost of adopting
    CCS or switching to a different fuel source. Because EGUs would
    likely use CCS technology, along with other measures, to comply
    with the cap-and-trade program established in the bill, CBO
    cannot determine the extent to which EGUs would adopt
    additional CCS technology due to the performance standard
    alone. Consequently, the cost of the mandate is uncertain.
        Emission Reduction Standards. Section 331 would direct EPA
    to publish an inventory of stationary sources that emit
    greenhouse gases that are not covered by the federal cap-and-
    trade program. The inventory would include categories of
    sources responsible for a certain percentage of uncapped
    emissions. Based on information from EPA, those categories
    could include landfills, natural gas systems, and small fuel
    combustion sources. The bill would require EPA to establish
    performance standards for those categories, which could include
    standards for work practices as well as technological
    standards. Section 333 would authorize EPA to propose
    regulations to reduce emissions of black carbon or to publish a
    finding that existing regulations adequately control such
    emissions. Because the costs to comply with the new standards
    established by sections 331 and 333 would depend on future
    regulatory action, CBO has no basis for estimating the cost of
    these mandates.
        Limitations on Transactions in Commodities. Subtitle E of
    Title III would impose several mandates on participants in
    certain commodities markets. Those mandates would include
    limits on the number of contracts that can be held (known as
    ``position limits'') as well as transaction and reporting
    requirements, with respect to energy commodities, on public and
    private entities such as pension funds and swap dealers. The
    bill would impose other requirements on transactions, including
    fees for transactions executed on certain exchanges. Because of
    limited information about the transactions in the affected
    markets, the position limits that would be established, and the
    extent to which position limits would result in lower returns,
    CBO has no basis for estimating the cost of the mandates to
    public or private-sector entities.
        Combined Energy Efficiency and Renewable Electricity
    Standard. Section 101 would create a renewable portfolio
    standard for certain electricity suppliers. Covered entities
    would have to submit credits to certify that a minimum
    percentage of their base sales came from renewable sources.
    Approximately 21 public and 105 private utilities would be
    subject to those requirements. As noted earlier in the
    discussion of federal effects, CBO anticipates electricity
    generated from renewable sources on a national level to be
    greater than the amount that would be required by the standard
    in the first five years that mandate is in effect. Therefore,
    CBO expects the costs associated with this mandate to be small
    in those years.
        Other Mandates. The bill contains several mandates that
    would affect both public and private entities, but CBO
    estimates that the costs of those mandates would be small:
               Sections 121 and 152 would require state
            regulatory authorities and nonregulated utilities to
            consider implementing certain standards relating to
            electric vehicle infrastructure and the ability of
            federal agencies to generate electricity and sell it
            back to utilities;
               Section 144 would require both public and
            private electric utilities to publish goals for
            reducing peak demand reduction and to prepare a plan
            that demonstrates their ability to meet those goals;
            and
               Section 332 would authorize EPA to establish
            new requirements governing the repair of air
            conditioners in motor vehicles.

                  MANDATES THAT APPLY TO PUBLIC ENTITIES ONLY

        The bill would impose some mandates solely on public
    entities, some of which would be preemptions of state and local
    authority. CBO estimates that the costs of those
    intergovernmental mandates would be small:
               Section 216 would require the District of
            Columbia to purchase certain products and services
            designated to be water efficient by EPA or DOE.
               Section 224 would direct the Secretary of
            Energy to revise the list of vehicles available for
            states to comply with an existing mandate that a
            certain percentage of fleet purchases be alternative
            fueled vehicles.
        Preemptions of State and Local Authority. In addition to
    the mandates discussed above, H.R. 2454 contains several
    preemptions of state and local authority. Because preemptions
    limit the authority of state and local governments, they are
    considered intergovernmental mandates under UMRA, but CBO
    estimates that those preemptions would not impose significant
    additional costs on state, local, or tribal governments as
    regulators.
               Section 161 would expand an existing
            preemption of state laws that set energy standards for
            appliances to include walk-in coolers and freezers as
            well as commercial refrigerators, freezers, and ice
            makers.
               Section 211 would preempt state and local
            laws governing the energy efficiency of certain outdoor
            luminaires.
               Section 619 would preempt state laws
            relating to the production and import of certain
            hydrofluorocarbons.
               Section 861 would preempt state authority to
            enforce a cap-and-trade program that covers any capped
            emissions during the years 2012 through 2017.

                  OTHER IMPACTS ON STATE AND LOCAL GOVERNMENTS

        The bill would provide allowances to states for a number of
    specific purposes. States would create State Energy and
    Environment Development (SEED) accounts for implementing
    building regulations and programs to retrofit buildings. SEED
    accounts could also be used to provide rebates to low-income
    individuals for the purchase of energy efficient homes and to
    fund grants to community development organizations for energy
    efficiency programs. States could also use SEED allowances for
    transportation planning, smart grid development, and financial
    incentives to convert or construct manufacturing facilities and
    expand renewable energy. Other allowance allocations would be
    available for natural resource adaptation, infrastructure
    improvements, and programs to benefit low-income consumers of
    home heating oil or propane. CBO estimates that the allowances
    would total about $50 billion through 2016.
        In addition, the bill would authorize several grant
    programs for workforce training, transportation planning,
    environmental protection, research initiatives, and energy
    efficiency. Those grant programs would benefit participating
    state, local, and tribal governments, and any costs would be
    incurred voluntarily as a condition of receiving federal
    assistance.

                  MANDATES THAT APPLY TO PRIVATE ENTITIES ONLY

        Hydrofluorocarbon Restrictions. The cap-and-trade program
    for HFCs would require any entity that produces or imports
    HFCs, or imports a product containing HFCs, to hold one
    consumption allowance or destruction offset credit per metric
    ton of carbon dioxide equivalent beginning in 2012. The direct
    cost would be equal to the cost of purchasing allowances and
    offset credits, and the cost of reducing the use of HFCs. The
    bill also would impose several other requirements for the use
    of HFCs including restrictions on HFCs used in refrigeration
    and labeling and reporting requirements.
        Based on the price of a consumption allowances established
    in the bill, CBO estimates that the cost of this requirement
    would amount to about $600 million in the first year the
    mandates are in effect.
        Lighting and Appliance Efficiency Standards. The bill would
    establish new requirements for lighting and appliances. CBO
    estimates that the aggregate cost of those mandates would
    exceed the threshold in at least one of the first five years
    the mandates are in effect. Those requirements include:
               Efficiency standards for outdoor luminaries,
            portable light fixtures, art work fixtures,
            incandescent reflector lamps, and certain base lamps;
               Efficiency standards for appliances
            including commercial hot food holding cabinets, water
            dispensers, portable electric spas, and commercial
            furnaces; and
               Inclusion of Smart Grid capability on Energy
            Guide labels for appliances, if required by the Federal
            Trade Commission.
        Allowances for Carbon-Intensive Goods. The bill would
    establish two programs to mitigate the costs to manufacturers
    of carbon-intensive goods. The bill would provide rebates in
    the form of allowances to those manufacturers and authorize EPA
    to implement an international reserve allowance program. If
    implemented, that program would require importers of carbon-
    intensive goods to purchase and submit international reserve
    allowances for those goods beginning in 2025. The cost of the
    mandate would depend on the price of an international reserve
    allowance and the number of international reserve allowances
    required to be submitted for those goods.
        Motor Vehicle Standards. The bill would authorize the
    Secretary of Transportation to establish a standard for the
    manufacture of vehicles capable of using alternative fuels such
    as ethanol, methanol, and biodiesel. The bill also would direct
    the EPA to establish emissions standards for new heavy-duty
    vehicles and engines. Because both standards would depend on
    future regulatory action, the costs of the mandates are
    uncertain.
        Estimate prepared by: Federal Revenues: Mark Booth, David
    Weiner, Pamela Greene, Edward Harris, Kevin Perese, and Grant
    Driessen. Federal Costs: Susanne S. Mehlman and Daniel Hoople
    (cap-and-trade programs), Megan Carroll (RES, clean energy
    programs, energy efficiency programs), Kathleen Gramp (CEDA),
    Christi Hawley Anthony (Department of Labor), Sarah Puro and
    Matthew Pickford (vouchers for fuel-efficient vehicles), and
    Susan Willie (CFTC); Allowance Prices: Robert G. Shackleton
    Jr., Rob Johansson, Terry Dinan, and Natalie Tawil; Impact on
    state, local, and tribal governments: Ryan Miller; impact on
    the private sector: Amy Petz.
        Estimate approved by: Theresa Gullo, Deputy Assistant
    Director for Budget Analysis; Frank J. Sammartino, Acting
    Assistant Director for Tax Analysis; Joseph Kile, Assistant
    Director for Microeconomic Studies; Robert A. Dennis, Assistant
    Director for Macroeconomic Analysis.

                               Section-by-Section

                             TITLE I--CLEAN ENERGY

       SUBTITLE A--COMBINED EFFICIENCY AND RENEWABLE ELECTRICITY STANDARD

        Section 101, Combined Efficiency and Renewable Electricity
    Standard: Amends the Public Utility Regulatory Policies Act to
    require retail electric suppliers--defined as utilities that
    sell more than 4 million megawatt hours (MWh) of electricity to
    consumers for purposes other than resale--to meet a certain
    percentage of their load with electricity generated from
    renewable resources and electricity savings. The combined
    renewable electricity and electricity savings requirement
    begins at 6 percent in 2012 and gradually rises to 20 percent
    in 2020. Up to one quarter of the 20 percent requirement
    automatically may be met with electricity savings. Upon
    petition of the governor of any state, the Federal Energy
    Regulatory Commission is authorized to increase the proportion
    of the requirement that can be met with electricity savings to
    up to two fifths for electric suppliers located within that
    state. This would reduce the renewable requirement for such
    suppliers to a minimum of 12 percent renewables by 2020, with
    the remaining 8 percent of the combined target satisfied
    through electricity savings.
        Defines renewable energy resources to include wind,
    biomass, solar, geothermal, certain hydropower projects, marine
    and hydrokinetic renewable energy, and biogas and biofuels
    derived exclusively from eligible biomass. Other qualifying
    energy resources include landfill gas, wastewater treatment
    gas, coal mine methane, and qualified waste-to-energy. An
    electric supplier's requirement is reduced in proportion to any
    portion of its electricity sales that is generated from certain
    existing hydroelectric facilities, new nuclear generating
    units, and fossil-fueled units that capture and geologically
    sequester greenhouse gas emissions.
        Requires retail electric suppliers to submit Federal
    renewable electricity credits and electricity savings each year
    equal to the combined target for that year times the supplier's
    retail sales. One renewable electricity credit is given for
    each MWh of electricity produced from a renewable or other
    qualifying energy resource. To encourage greater deployment of
    distributed generation, like small wind and rooftop solar,
    these projects meeting certain criteria are eligible for three
    credits for each MWh produced. Retail electric suppliers may
    submit, in lieu of a renewable electricity credits and
    demonstrated electricity savings, an alternative compliance
    payment equal to $25 per MWh (2.5 cents per kilowatt hour).
        Electric suppliers choosing to use efficiency for a portion
    of their compliance are required to demonstrate achievement of
    electricity savings relative to business-as-usual projections
    through efficiency measures, including savings achieved through
    reductions in end-use electricity consumption attributable to
    measures or technologies such as equipment or facility
    upgrades, combined heat and power, energy recycling (waste heat
    recovery), and fuel cells. Electric suppliers may meet the
    efficiency standards either by achieving electricity savings
    directly or by using bilateral contracts to acquire savings
    achieved within the same state by other suppliers or
    distribution companies, states, or third-party efficiency
    providers.
        Section 102, Clarifying State Authority to Adopt Renewable
    Energy Incentives: Provides that, notwithstanding any provision
    to the contrary in the Public Utility and Regulatory Policies
    Act of 1978 (PURPA), any State may establish rates to be paid
    by state-regulated utilities intended to provide incentives for
    development of renewable energy. In the past, some have
    interpreted PURPA to bar such incentive rates to the extent
    they exceed the ``avoided cost'' of power a utility could
    generate or procure from any other source, denying States the
    ability to account for the additional benefits of renewable
    energy.

                  SUBTITLE B--CARBON CAPTURE AND SEQUESTRATION

        Section 111, National Strategy: Requires the EPA
    Administrator, in consultation with the heads of other relevant
    federal agencies, to submit to Congress a report setting forth
    a unified and comprehensive strategy to address the key legal
    and regulatory barriers to the commercial-scale deployment of
    carbon capture and sequestration.
        Section 112, Regulations for Geologic Sequestration Sites:
    Amends the Clean Air Act to require the Administrator to
    establish a coordinated approach to the certification and
    permitting of sites where geologic sequestration of carbon
    dioxide will occur. Requires the Administrator to promulgate
    regulations to minimize the risk of escape to the atmosphere of
    carbon dioxide injected for geologic sequestration and details
    the requirements of such regulations. Such regulations will
    apply in tandem with regulations promulgated under the Safe
    Drinking Water Act. Together, these regulations will provide a
    comprehensive, multi-media regulatory framework for geologic
    sequestration activities.
        Section 112 also amends the Safe Drinking Water Act to
    establish a deadline for promulgation of regulations for carbon
    dioxide geologic sequestration wells and to clarify financial
    responsibility requirements to be established under such
    regulations.
        Injection of carbon dioxide for geologic sequestration can
    take place either solely for the purpose of storing carbon
    dioxide, or for the dual purposes of storing carbon dioxide and
    conducting enhanced hydrocarbon recovery activities. For
    example, carbon dioxide can be injected for permanent storage
    in a saline aquifer, or it can be injected as part of enhanced
    oil recovery operations and then be permanently stored in a
    depleted oil field. Regulations promulgated under Section 112,
    and under the Safe Drinking Water Act as amended, should apply
    to all instances where carbon dioxide is injected for geologic
    sequestration, regardless of whether or not the injection also
    serves the purposes of enhancing hydrocarbon recovery
    activities.
        Section 113, Studies and Reports: Section 113(a) requires
    the Administrator to establish a multi-stakeholder task force
    to conduct a study of the legal framework for geologic
    sequestration sites. Section 113(b) directs the Administrator
    to conduct a study that examines how the multiple environmental
    statutes that EPA administers, including but not limited to the
    Comprehensive Environmental Response, Compensation, and
    Liability Act and the Resource Conservation and Recovery Act,
    would apply to geologic sequestration activities.
        Section 114, Carbon Capture and Sequestration Demonstration
    and Early Deployment Program: Establishes a program for the
    demonstration and early deployment of carbon capture and
    sequestration (CCS) technologies. Authorizes fossil-based
    electricity distribution utilities to hold a referendum on the
    establishment of a Carbon Storage Research Corporation. If
    approved by entities representing two-thirds of the nation's
    fossil fuel-based delivered electricity, the Corporation would
    be established and would be authorized to collect assessments
    on distribution utilities for all fossil fuel-based electricity
    delivered directly to retail consumers. The Corporation would
    be operated as a division or affiliate of the Electric Power
    Research Institute and would assess fees totaling approximately
    $1 billion annually for ten years, to be used by the
    Corporation to fund the large-scale demonstration of CCS
    technologies in order to accelerate the commercial availability
    of the technologies.
        Section 115, Commercial Deployment of Carbon Capture and
    Sequestration Technologies: Amends the Clean Air Act to direct
    the EPA Administrator to establish an incentive program to
    distribute allowances to support the commercial deployment of
    CCS technologies in both electric power generation and
    industrial applications. Establishes eligibility requirements
    for facilities to receive allowances based on the number of
    tons of carbon dioxide sequestered. The allowance disbursement
    program is structured to provide greater incentives for
    facilities to deploy CCS technologies early in the program and
    for facilities to capture and sequester larger amounts of
    carbon dioxide.
        Section 116, Performance Standards for Coal-Fueled Power
    Plants: Amends the Clean Air Act to establish performance
    standards for new coal-fired power plants permitted in 2009 or
    thereafter. Describes eligibility criteria, applicable emission
    standards, and the schedule upon which such standards must be
    met. Plants permitted in 2020 or thereafter are required to
    meet specified standards upon commencement of operations.
    Plants permitted from 2009-2020 are required to meet the
    specified standard within four years after certain technology
    deployment criteria are met but no later than 2025.

                        SUBTITLE C--CLEAN TRANSPORTATION

        Section 121, Electric Vehicle Infrastructure: Amends the
    Public Utility Regulatory Policies Act to require utilities to
    consider developing plans to support electric vehicle
    infrastructure and to consider establishing protocols for
    integration with smart grid systems.
        Section 122, Large-Scale Vehicle Electrification Program:
    Authorizes the Secretary of Energy to provide financial
    assistance for regional deployment and integration of grid-
    connected vehicles. Funds may be used for offsetting the
    incremental cost of purchasing new plug-in electric drive
    vehicles, deployment of electric charging stations or battery
    exchange locations, or facilitating the integration of smart
    grid equipment with plug-in electric drive vehicles. Makes data
    and results from the regional deployments publicly available.
        Section 123, Plug-In Electric Drive Vehicle Manufacturing:
    Authorizes the Secretary of Energy to provide financial
    assistance for retooling existing factories for the manufacture
    of electric vehicles. Authorizes the Secretary of Energy to
    provide financial assistance to help auto manufacturers
    purchase batteries for first production vehicles.
        Section 124, Investment in Clean Vehicles: Provides for
    distribution of allowances for plug-in electric drive vehicle
    manufacturing and deployment and advanced technology vehicles.
        Section 125, Advanced Technology Vehicle Manufacturing
    Incentive Loans: Increases the authorization for loan
    guarantees under section 136 of the Energy Independence and
    Security Act of 2007 to $50,000,000,000. Loan guarantees are
    for reequipping, expanding or establishing manufacturing
    facilities for advanced technology vehicles or their
    components, as well as the engineering integration work for
    such vehicles.
        Section 126, Amendment to Renewable Fuels Standard: Amends
    the definition of ``renewable biomass'' in section 211 of the
    Clean Air Act to increase the types of biomass from Federal and
    non-Federal lands that may be used to make renewable fuel the
    qualifies for the Renewable Fuels Standard.
        Section 127, Open Fuel Standard: Provides the Secretary of
    Transportation with the authority to require light-duty
    automobile manufacturers to make vehicles capable of operating
    on ethanol and methanol-based fuels if the Secretary determines
    that such requirements are a cost-effective way to achieve the
    nation's energy independence and environmental objectives.
        Section 128, Temporary Vehicle Trade-In Program:
    Establishes a ``Cash for Clunkers'' program. Under this
    program, consumers may trade in their old, gas-guzzling
    vehicles and receive vouchers worth up to $4,500 to help pay
    for new, more fuel efficient cars and trucks. The program is
    authorized for $4 billion for one year, and providing for
    approximately one million new car or truck purchases.
        New passenger cars which achieve at least 22 mpg are
    eligible for a $3,500 voucher if the performance of the new car
    is at least 4 mpg higher than the old vehicle and a $4,500
    voucher if the performance of the new car is at least 10 mpg
    higher than the old vehicle. Light duty trucks which achieve at
    least 18 mpg are eligible for a $3,500 voucher if the
    performance of the new truck is at least 2 mpg higher than the
    old vehicle and a $4,500 voucher if the performance of the new
    truck is at least 5 mpg higher than the old vehicle. Large
    light duty trucks which achieve at least 15 mpg are eligible
    for a $3,500 voucher if the performance of the new truck is at
    least 1 mpg higher than the old vehicle and a $4,500 voucher if
    the performance of the new truck is at least 2 mpg higher than
    the old vehicle. Consumers can also trade in a pre-2002 work
    truck (defined as a pick-up truck or cargo van weighing from
    8,500-10,000 pounds) and receive a voucher worth $3,500 for a
    new work truck in the same or smaller weight class. Consumers
    can also ``trade down,'' receiving a $3,500 voucher for trading
    in an older work truck and purchasing a smaller light-duty
    truck weighing from 6,000 8,500 pounds. Work truck purchases
    are capped such that the total funds used to purchase work
    trucks cannot exceed 7.5 percent of all program funds. The
    section also includes important consumer protections and
    protections against program fraud.
        Section 129, Diesel Emissions Reduction: Amends the diesel
    emission reduction grant program established by Subtitle G of
    title VII of the Energy Policy Act of 2005 (42 U.S.C. 16131 et
    seq.) by adding American Samoa, Guam, the Commonwealth of the
    Northern Mariana Islands, Puerto Rico, and the Virgin Islands
    to the list of States eligible to receive grants, and by
    adjusting the grant distribution formula accordingly.
        Section 130, Loan Guarantees for Projects to Construct
    Renewable Fuel Pipelines: Amends title XXII of the Energy
    Policy Act of 2005 to add renewable fuel pipelines to the list
    of projects and technologies available for loan guarantees
    under the title.

         SUBTITLE D--STATE ENERGY AND ENVIRONMENT DEVELOPMENT ACCOUNTS

        Section 131, Establishment of SEED Accounts: Creates a
    program for each state to establish a State Energy and
    Environment Development (SEED) Account, to serve as a state-
    level repository for managing and accounting for all emission
    allowances designated primarily for renewable energy and energy
    efficiency purposes.
        Section 132, Support of State Renewable Energy and Energy
    Efficiency Programs: Distributes emission allowances among
    states for energy efficiency programs and renewable energy
    deployment and manufacturing support. At least 12.5 percent of
    the allowances are distributed to local governments for these
    purposes.

                       SUBTITLE E--SMART GRID ADVANCEMENT

        Section 141, Definitions: Provides relevant definitions.
        Section 142, Assessment of Smart Grid Cost Effectiveness in
    Products: Instructs the Department of Energy and the
    Environmental Protection Agency to assess products evaluated
    for Energy Star ratings for benefits of Smart Grid capability.
        Section 143, Inclusions of Smart Grid Capability on
    Appliance ENERGY GUIDE Labels: Instructs Federal Trade
    Commission to include relevant information on the ENERGY GUIDE
    labels for those products that include cost-effective Smart
    Grid capability.
        Section 144, Smart Grid Peak Demand Reduction Goals:
    Requires the Federal Energy Regulatory Commission to coordinate
    and support a national program to reduce peak electric demand
    for load-serving electric utilities with peak loads in excess
    of 250 megawatts.
        Section 145, Reauthorization of Energy Efficiency Public
    Information Program to Include Smart Grid Information: Amends
    the Energy Policy Act of 2005 to reauthorize the joint
    Department of Energy and Environmental Protection Agency energy
    efficiency public information initiative and expands the
    initiative to include information on smart grid technologies,
    practices, and benefits.
        Section 146, Inclusion of Smart Grid Features in Appliance
    Rebate Program: Amends the Energy Policy Act of 2005 to expand
    energy efficient appliance rebate program to include rebates
    for efficient appliances with smart grid features and
    capability. Clarifies program cost-sharing requirements from
    states.

                       SUBTITLE F--TRANSMISSION PLANNING

        Section 151, Transmission Planning: Amends the Federal
    Power Act to establish a federal policy on electric grid
    planning that recognizes the need for new transmission capacity
    to deploy renewable energy as well as the potential for more
    efficient operation of the current grid through new technology,
    demand-side management, and storage capacity. Enhances existing
    regional transmission planning processes by incorporating this
    federal policy. Charges the Federal Energy Regulatory
    Commission with supporting, coordinating, and integrating
    regional planning efforts.
        Section 152, Net Metering for Federal Agencies: Adopts a
    standard requiring utilities (that sell in excess of 4,000,000
    megawatt hours of electricity) to interconnect with and to
    provide net metering of power deliveries to and receipts from
    Federal agencies that own, operate or site facilities
    generating renewable energy. The net metering service is to be
    offered to such Federal agencies on the basis of non-
    discriminatory time-sensitive rates.
        Section 153, Support for Qualified Advanced Electric
    Transmission Manufacturing Plants, Qualified High Efficiency
    Transmission Property, and Qualified Advanced Electric
    Transmission Property: Amends Title XVII of the Energy Policy
    Act of 2005 to extend the loan guarantee authority in that
    Title to cover the development, construction, or integration of
    high-efficiency or superconductive high-voltage electricity
    transmission technologies. It also provides such loan
    guarantees for manufacturing plants producing such
    technologies. It separately authorizes the Secretary of Energy
    to make grants for up to 50 percent of the cost of the first
    project incorporating such technologies, up to a maximum of
    $100,000,000.

                SUBTITLE G--TECHNICAL CORRECTIONS TO ENERGY LAWS

        Sections 161-162, Technical Corrections to Energy
    Independence and Security Act of 2007 and Energy Policy Act of
    2005: Makes technical corrections to the Energy Independence
    and Security Act of 2007 and the Energy Policy Act of 2005.

                  SUBTITLE H--CLEAN ENERGY INNOVATION CENTERS

        Section 171, Clean Energy Innovation Centers: Establishes a
    program to support development and commercialization of clean
    energy technologies through eight regional Clean Energy
    Innovation Centers selected competitively by the Secretary of
    Energy. Emission allowances to support the establishment of
    Centers may be awarded to consortiums consisting of research
    universities, private research entities, industry, and relevant
    state institutions. Each Center has a unique technology focus
    to which at least 40 percent of support would be directed.
        Section 172, Building Assessment Centers: Requires the
    Secretary of Energy to create building assessment centers at
    institutions of higher education to identify opportunities to
    optimize the energy and environmental performance of buildings.
    The centers would also promote emerging technologies and
    research and development to improve buildings' energy and
    environmental performance. Additionally, the centers would
    train engineers, architects, and building technicians in energy
    efficient building design and operation.
        Section 173, Centers for Energy and Environmental Knowledge
    and Outreach: Provides for the establishment of not more than
    10 regional centers for energy and environmental knowledge and
    outreach (CEEKO) to coordinate various energy-related research
    centers. Operating in coordination with each CEEKO would be one
    or more industrial research and assessment center, building
    assessment center, and clean energy application center located
    in that CEEKO's region. Institutions of higher education would
    compete to house such centers and would operate internship
    programs to train students in energy efficiency with Federal
    funding supporting up to 50 percent of the costs.

                 SUBTITLE I--NUCLEAR AND ADVANCED TECHNOLOGIES

        Section 181-189: Establishes a self-sustaining Clean Energy
    Deployment Administration (CEDA) within the Department of
    Energy to promote the domestic development and deployment of
    clean energy technologies. The Clean Energy Deployment
    Administration would partner with and support private capital
    markets to promote access to affordable financing for a range
    of clean energy technologies that might otherwise be unable to
    secure financing. CEDA ensures support for a variety of next
    generation technologies by limiting to 30 percent the amount of
    financial assistance provided to any one technology. This
    subtitle also reforms the loan guarantee program established by
    Title 17 of the Energy Policy Act of 2005.

                           SUBTITLE J--MISCELLANEOUS

        Section 191, Study of Ocean Renewable Energy and
    Transmission Planning and Siting: Requires the Federal Energy
    Regulatory Commission, the Department of the Interior, and the
    National Oceanic and Atmospheric Administration to jointly
    recommend an approach for the development of regional marine
    spatial plans for the siting of offshore renewable energy
    facilities. The Council on Environmental Quality determines
    whether the recommended approach should be implemented and
    coordinates the implementation. The Committee intends that the
    relevant agencies will continue to implement their existing
    leasing, licensing, and permitting programs while the study is
    underway and while marine spatial plans are being developed.
        Section 192, Clean Technology Business Competition Grant
    Program: Provides for grants by the Secretary of Energy to
    nonprofit organizations that conduct competitive programs to
    identify and support start-up businesses proposing products or
    services in areas of energy efficiency, renewable energy, air
    quality, water quality and conservation, transportation, smart
    grid, green building, and waste management.
        Section 193, National Bioenergy Partnership: Requires the
    Secretary of Energy to establish a National Bioenergy
    Partnership to support the institutional and physical
    infrastructure necessary to promote the deployment of
    sustainable biomass fuels and bioenergy technologies.
        Section 194, Office of Consumer Advocacy: Establishes an
    Office of Consumer Advocacy at the Federal Energy Regulatory
    Commission to identify and defend the consumer interest in
    proceedings before the Commission. The office would be headed
    by a Presidentially-appointed Director, and would represent
    energy customers through investigations of rates, in
    complaints, and on appeal of Commission decisions concerning
    such matters.

                          TITLE II--ENERGY EFFICIENCY

                SUBTITLE A--BUILDING ENERGY EFFICIENCY PROGRAMS

        Section 201, Greater Energy Efficiency in Building Codes:
    Amends the Energy Conservation and Production Act to establish
    upon enactment and in 2014 (or 2015 for new commercial
    buildings), respectively, targets for improved energy
    efficiency building codes to achieve 30 percent and 50 percent
    reductions in energy use in new buildings. The Secretary of
    Energy is required to support consensus code-setting
    organizations in developing and publishing codes meeting those
    targets; to adopt such codes directly if such organizations
    fail to do so; to include cool roofs standards; to support
    state and local adoption of such advanced codes by supporting
    training and funding for energy efficiency code enforcement;
    and to provide direct federal enforcement of such codes if
    states and local governments decline to do so.
        Section 202, Building Retrofit Program: Establishes a
    program under which the Administrator of EPA, in consultation
    with the Secretary of Energy, supports development of standards
    and processes for retrofitting existing residential and
    nonresidential buildings. Authorizes the Secretary of Energy to
    provide funding to states to conduct cost-effective building
    retrofits, using local governments, other agencies or entities
    to carry out the work, through flexible forms of financial
    assistance up to 50 percent of the costs of retrofits, with
    funding increasing in proportion to efficiency achievement.
    Also supports retrofits of historic buildings.
        Section 203, Energy Efficient Manufactured Homes:
    Establishes a program to provide federal rebates of up to
    $7,500 toward purchases of new Energy Star-rated manufactured
    homes for low-income families residing in pre-1976 manufactured
    homes.
        Section 204, Building Energy Performance Labeling Program:
    Establishes an EPA program to develop procedures to label
    buildings for their energy performance characteristics, using
    building type and consumption data to be developed by the
    Energy Information Administration. The program would be
    implemented by states in a manner suited to increasing public
    knowledge of building energy performance without hindering real
    estate transactions.
        Section 205, Tree Planting Programs: Authorizes a grant
    program through the Department of Energy to provide technical
    and financial assistance to retail power providers that carry
    out targeted tree planting programs, which reduce energy use
    and demand peaks in residential and small office settings.
        Section 206, Energy Efficiency for Data Center Buildings:
    Establishes a deadline for the designation by the Secretary of
    Energy and the Administrator of the Environmental Protection
    Agency of an information technology organization to consult and
    coordinate with them on data center energy efficiency, as
    called for--but without a deadline--in Section 453(c)(1) of the
    Energy Independence and Security Act of 2007. The deadline
    would effectively be set at December 19, 2009.

         SUBTITLE B--LIGHTING AND APPLIANCE ENERGY EFFICIENCY PROGRAMS

        Section 211, Lighting Efficiency Standards: Amends the
    Energy Policy and Conservation Act to adopt negotiated
    agreements on technical standards for lighting, including
    outdoor lighting--street lights, parking lot lights, and
    parking structure lights--and portable light fixtures such as
    typical household and commercial plug-in lamps.
        Section 212, Other Appliance Efficiency Standards: Amends
    the Energy Policy and Conservation Act to adopt consensus
    agreements on technical standards for hot food holding
    cabinets, bottle-type drinking water dispensers, portable spas
    (hot tubs), and commercial-grade natural gas furnaces.
        Section 213, Appliance Efficiency Determinations and
    Procedures: Amends the Energy Policy and Conservation Act to
    improve the Department of Energy process for setting energy-
    efficiency standards by enabling adoption of consensus testing
    procedures; requiring the adoption of a new television
    standard; improving standard-setting cost-effectiveness
    formula; authorizing the Secretary to obtain product-specific
    information as needed; authorizing state injunctive enforcement
    of standards violations; changing the role of appliance
    efficiency in building codes; and including greenhouse gas
    emissions, smart grid capability, and availability of more-
    efficient models among factors affecting efficiency standard
    ratings.
        Section 214, Best-in-Class Appliances Deployment Program:
    Creates a Department of Energy program to provide rewards to
    retailers for successful marketing of high-efficiency
    appliances, designating top performers as ``best-in-class,''
    and providing bonuses based on efficiency improvement compared
    to average product. Provides additional rewards to retailers
    when best-in-class sale includes return and recycling of
    inefficient appliances. Creates program to reward manufacturers
    of new high-efficiency best-in-class models representing
    significant incremental energy efficiency gain.
        The rewards programs for products in this section should
    not in any way interfere with, discourage, or prevent DOE from
    adopting minimum standards under the Energy Policy and
    Conservation Act (42 U.S.C. 6291-6317) that require all
    products to achieve the same or better efficiency levels as
    products eligible for awards under this section, where such
    standards are technologically feasible and economically
    justified.
        Section 215, Water Sense: Authorizes the EPA's WaterSense
    program, a voluntary labeling program that labels water-
    efficient high-performance products and services. This will
    provide the same type of labeling for water efficient products
    and services as is already done for energy efficient products
    under the existing Energy Star program.
        Section 216, Federal Procurement of Water Efficient
    Products: Directs federal agencies to make cost-effective
    water-efficient procurement decisions by purchasing WaterSense
    or Federal Energy Management Program certified products
    whenever possible.
        Section 217, Water Efficient Product Rebate Programs:
    Authorizes grants to state governments that establish programs
    that offer financial incentives to consumers who purchase and
    install water-efficient products and services such as those
    labeled by WaterSense.
        Section 218, Certified Stoves: This section directs the
    Environmental Protection Agency (EPA) to establish a program to
    assist in the replacement of old polluting inefficient wood
    stoves or pellet stoves with cleaner burning units. It would
    build on the successes of the EPA's voluntary partnership
    program, known as the Great American Wood Stove Changeout
    Program, by providing grants, incentives and loans for people
    who rely on wood as a source of heat. It would improve air
    quality in many communities and save money for those who heat
    their homes with wood. Climate change benefits would occur from
    reductions in methane and carbon dioxide from improved
    combustion efficiency.
        The Committee intends that, under section 218(a)(3), all
    ``certified stoves'' under the program will have been tested by
    an EPA-accredited laboratory specified by the methods required
    under the standards of performance for new residential wood
    heaters under subpart AAA of part 60 of subchapter C of chapter
    I of title 40, Code of Federal Regulations (or successor
    regulations).
        Section 218(b)(1) is meant to apply to sales of new wood
    stoves or pellet stoves. Although the standards of performance
    for new residential wood heaters under subpart AAA of part 60
    of subchapter C of chapter I of title 40, Code of Federal
    Regulations (or successor regulations) already apply to new
    wood stoves, section 218(b)(1) additionally addresses pellet
    stoves.
        The requirement in section 218(b)(2) that ``no wood stove
    or pellet stove replaced under this program is sold or returned
    to active service, but that it is instead destroyed and
    recycled to the maximum extent feasible'' should be implemented
    as part of the Certified Stoves Program. This provision does
    not require the promulgation of regulations.
        Section 219, Energy Star Standards: Adds new requirements
    to the administration by the Department of Energy and the
    Environmental Protection Agency of the Energy Star program,
    including consideration of prototype products, consideration of
    ways of providing more detailed comparative information among
    Energy Star products, review of product qualifications on a
    regular basis, updating qualifications as necessary, and
    providing proof of performance through testing of products
    purchased in the market.

                     SUBTITLE C--TRANSPORTATION EFFICIENCY

        Section 221, Emissions Standards: Amends Title VIII of the
    Clean Air Act to require EPA to establish greenhouse gas
    emissions standards for new heavy-duty vehicles and engines,
    for nonroad vehicles and engines, and for aircraft and aircraft
    engines.
        Section 222, Greenhouse Gas Emissions Reductions through
    Transportation Efficiency: Amends Title VIII of the Clean Air
    Act to require states to establish goals for greenhouse gas
    reductions from the transportation sector and requires the
    submission of transportation plans to meet those goals by
    Metropolitan Planning Organizations for areas with populations
    exceeding 200,000 people. Imposes sanctions on states that fail
    to submit goals or plans. Authorizes a competitive grant
    program for development and implementation of plans.
        Section 223, SmartWay Transportation Efficiency Program:
    Amends Title VIII of the Clean Air Act to expand an existing
    EPA loan and fuel saving technology deployment program, the
    SmartWay Transport Partnership, to help American truckers
    upgrade to more fuel efficient and less polluting vehicles.
        Section 224, State Vehicle Fleets: Requires the Secretary
    of Energy to update state fleet rules to be consistent with
    current law.

               SUBTITLE D--INDUSTRIAL ENERGY EFFICIENCY PROGRAMS

        Section 241, Industrial Plant Energy Efficiency Standards:
    Requires the Secretary of Energy to establish standards for
    industrial energy efficiency and to seek recognition of result
    by American National Standards Institute.
        Section 242, Electric and Thermal Waste Energy Recovery
    Award Programs: Creates an award program for innovation in
    increasing the efficiency of thermal electric generation
    processes, including encouragement for utilities to capture and
    separately market excess thermal energy.
        Section 243, Clarifying Election of Waste Heat Recovery
    Financial Incentives: Clarifies Section 451 of the Energy
    Independence and Security Act of 2007 to ensure that those who
    recover waste energy can elect to receive the incentive grants
    provided in that section, or tax credits provided for combined
    heat and power, but not both.
        Section 244, Motor Market Assessment and Commercial
    Awareness Program: Provides for the Secretary of Energy to
    conduct an assessment of the stock and usage of electric motors
    and motor-driven equipment from an energy efficiency
    perspective, and to identify opportunities for upgrading such
    motors to improve energy efficiency. The Secretary is then
    instructed to establish a national program targeted at motor
    end-users to make them aware of the potential energy efficiency
    gains that could be realized by using more efficient motors and
    motor control equipment.
        Section 245, Motor Efficiency Rebate Program: Establishes a
    rebate program for replacement of low efficiency industrial-
    scale electric motors with high-efficiency motors. The rebate
    amount is $25 per unit of nameplate horsepower of the new motor
    to the purchaser of that motor, and $5 to the distributor of
    that motor.

       SUBTITLE E--IMPROVEMENTS IN ENERGY SAVINGS PERFORMANCE CONTRACTING

        Section 251, Energy Savings Performance Contracts: Amends
    the National Energy Conservation Policy Act to establish
    competition requirements for specific energy savings
    performance contract task orders.

                        SUBTITLE F--PUBLIC INSTITUTIONS

        Section 261, Public Institutions: Amends the Energy
    Independence and Security Act to include non-profit hospitals
    and public health facilities among public institutions eligible
    for grants and loans and clarifies loan and cost-share
    conditions.
        Section 262, Community Energy Efficiency Flexibility:
    Amends the Energy Independence and Security Act to remove
    limits on funds received by communities through the Energy
    Efficiency and Conservation Block Grant program that can be
    used to fund revolving loan accounts or through sub-grants for
    purposes of the program.
        Section 263, Small Community Joint Participation: Amends
    the Energy Independence and Security Act to allow small
    communities to join with other neighboring small communities in
    a joint program of sufficient size to be defined as an eligible
    local government recipient under the Energy Efficiency and
    Conservation Block Grant program.
        Section 264, Low-Income Community Energy Efficiency
    Program: Authorizes grants to community development
    organizations to provide financing to improve energy
    efficiency, develop alternative, renewable, and distributed
    energy supplies, promote opportunities for low-income
    residents, and increase energy conservation in low income rural
    and urban communities.

                           SUBTITLE G--MISCELLANEOUS

        Section 271, Energy Efficient Information and
    Communications Technologies: Requires the Director of the
    Office of Management and Budget to collaborate with each
    Federal agency to create an implementation strategy for the
    purchase and use of energy efficiency information and
    communication technologies and practices, establishing
    performance goals for each agency within 6 months of enactment.
    Such technologies and practices include advanced metering,
    efficient data center strategies, updated applications,
    building systems, and telework.
        Section 272, National Energy Efficiency Goals: Declares a
    national energy efficiency goal of improving overall energy
    productivity of the United States by 2.5 percent per year
    beginning in 2012 and continuing through 2030. Instructs the
    Secretary of Energy, the Administrator of the Environmental
    Protection Agency, and other relevant federal agencies, with
    public input, to collaborate on a strategic plan to achieve
    such a national goal, detailing the regulatory, funding, and
    policy priorities required to do so, and to update that plan
    biennially.
        Section 273, Affiliated Island Energy Independence Team:
    Requires the Secretary of Energy to establish a team of
    technical, policy, and financial experts to address the energy
    needs of the islands that make up U.S. territories or otherwise
    affiliated with the U.S. The team will assess the means of
    reducing these islands' reliance on imported fossil energy,
    increasing the use of indigenous energy, and increasing the
    efficiency of energy use on the islands. The team will also
    develop an energy action plan for each island based on that
    assessment.
        Section 274, Product Carbon Disclosure Program: Creates a
    new product carbon disclosure program at EPA. Not later than 18
    months after the date of enactment, EPA would be required to
    issue a report to Congress regarding whether a national product
    carbon disclosure program and labeling program would be
    effective in reducing greenhouse gas emissions and other
    related matters. No later than 36 months after the date of
    enactment, EPA would be required to establish a national
    product carbon disclosure program, participation in which shall
    be voluntary. The national product carbon disclosure program
    may include a product carbon labeling program.

                       TITLE III--REDUCING GLOBAL WARMING

        Section 301, Short Title: Title III and sections 112, 115,
    116, 221, 222, 223, and 401 of the American Clean Energy and
    Security Act shall be known as the Safe Climate Act.

                 SUBTITLE A--REDUCING GLOBAL WARMING POLLUTION

        Section 311, Section 312, and Section 321, Reducing Global
    Warming Pollution: Establishes Title VII of the Clean Air Act
    to provide a declining limit on global warming pollution and to
    hold industries accountable for reducing global warming
    pollution pursuant to this limit.

             TITLE VII--GLOBAL WARMING POLLUTION REDUCTION PROGRAM

          PART A--GLOBAL WARMING POLLUTION REDUCTION GOALS AND TARGETS

        Section 701, Findings and Purposes.
        Section 702, Economy-wide Reduction Goals: States that the
    goals of Title VII and Title VIII are to reduce economy-wide
    global warming pollution to 97 percent of 2005 levels by 2012,
    80 percent by 2020, 58 percent by 2030, and 17 percent by 2050.
        Section 703, Reduction Targets for Specified Sources:
    Requires that the regulations issued under section 721 reduce
    emissions of covered sources to 97 percent of 2005 levels by
    2012, 83 percent by 2020, 58 percent by 2030, and 17 percent by
    2050.
        Section 704, Supplemental Pollution Reductions: Directs the
    Administrator to achieve additional low-cost reductions in
    global warming pollution by using a small portion of the
    emissions allowances to provide incentives to reduce emissions
    from international deforestation.
        Section 705, Review and Program Recommendations: Directs
    the Administrator to submit a report to Congress every four
    years. These reports will include: an analysis of the latest
    science relevant to climate change, an analysis of capacity to
    monitor and verify greenhouse gas reductions, and an analysis
    of worldwide and domestic progress in reducing global warming
    pollution. The reports will identify steps that could be taken
    to better improve our understanding of climate impacts, improve
    monitoring and verification, and any additional reductions in
    emissions that may be needed to avoid dangerous climate change.
        Section 706, National Academy Review: Directs the
    Administrator to commission reports from the National Academy
    of Sciences every four years. These reports will include: an
    update on the progress of various clean technologies, and an
    evaluation of the most recent EPA report submitted under
    Section 705. The reports will identify steps that could be
    taken to better improve our understanding of climate impacts,
    improve monitoring and verification, speed the deployment of
    clean technology, and any additional reductions in emissions
    that may be needed to avoid dangerous climate change.
        Section 707, Presidential Response and Recommendations:
    Directs the President to use existing authority to respond to
    recommendations in the reports. If the National Academy review
    confirms that further emissions reductions are needed, either
    domestically or globally, the President must submit a report to
    Congress recommending steps (including legislation) to achieve
    those reductions.

            PART B--DESIGNATION AND REGISTRATION OF GREENHOUSE GASES

        Section 711, Designation of Greenhouse Gases: Establishes a
    list of greenhouse gases regulated under this title: carbon
    dioxide, methane, nitrous oxide, sulfur hexafluoride,
    hydrofluorocarbons (HFCs) emitted as a byproduct,
    perfluorocarbons, and nitrogen trifluoride. Section 711(a)(5)
    is intended to address hydrofluorocarbons (HFCs) that are
    emitted from a chemical manufacturing process at an industrial
    stationary source. HFCs that are sold for an industrial or
    commercial purpose after their initial production or
    importation are covered under Title VI. This section includes
    provisions for listing other anthropogenic gases as greenhouse
    gases if 1 metric ton of the gas contributes as much as or more
    to global warming over 100 years than does one metric ton of
    carbon dioxide. Water vapor cannot be listed as a greenhouse
    gas under this title because one metric ton of water vapor in
    the troposphere does not contribute as much as or more to
    global warming over 100 years than does one metric ton of
    carbon dioxide.
        Section 712, Carbon Dioxide Equivalent Value of Greenhouse
    Gases: Lists carbon dioxide equivalents for each gas. Requires
    periodic review of equivalence values by the Administrator.
        Section 713, Greenhouse Gas Registry: Directs EPA to
    establish a federal greenhouse gas registry and comprehensive
    reporting system for greenhouse gas emissions.

                             PART C--PROGRAM RULES

        Section 721, Emission Allowances: Establishes an annual
    tonnage limit on greenhouse gas emissions from specified
    activities. Directs the Administrator to establish allowances
    equal to the tonnage limit for each year (with one allowance
    representing the permission to emit one ton of greenhouse
    gases, measured in tons of carbon dioxide equivalent).
        Protecting the environmental integrity and economic value
    of emission allowances and offsets are fundamental to achieving
    the American Clean Energy and Security Act's broad economic,
    energy, national security, environmental, and health objectives
    and requirements. Consistent with this broad set of objectives
    and requirements, ``the zone of interests to be protected or
    regulated'' by the Act is broad and inclusive. See, e.g., Ass'n
    of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150,
    153-56 (1970). For the Act to serve its purposes, the ``zone of
    interests'' under this Act includes, among others, persons with
    economic interests or competitive injury, such as holders of
    allowances, holders of offsets, and entities engaged in
    renewable energy, energy efficiency, or other advanced energy
    or pollution control technologies.
        Section 722, Prohibition of Excess Emissions: Prohibits
    covered entities from emitting or having attributable
    greenhouse gases in excess of their allowable emissions level,
    which is determined by the number of emission allowances and
    offset credits they hold on the specified date. Electricity
    generators, refiners and importers of petroleum-based and other
    specified liquid fuels, fluorinated gas manufacturers, and
    emitters of nitrogen trifluoride are covered entities starting
    with emissions in 2012. Specified industrial sources are
    covered starting with emissions in 2014. Local distribution
    companies that deliver natural gas are covered starting with
    emissions in 2016.
        Section 722(a) prohibits a covered entity from emitting
    greenhouse gases, or having attributable greenhouse gas
    emissions, in excess of its allowable emissions level in a
    given year. The allowable emissions level is determined by the
    number of allowances and offset credits a covered entity holds
    on April 1 (or such other date as set by the Administrator).
    Section 722(b) sets forth the number of emission allowances
    that each type of covered entity must hold to demonstrate
    compliance with title VII of the Clean Air Act.
        Section 722(b)(9) provides that where carbon dioxide is
    used as an input in the production of algae-based fuels, the
    Administrator shall ensure that emission allowances are held
    either for the carbon dioxide used to grow the algae or for the
    carbon dioxide emitted from combustion of the fuel used to
    produce the algae, but not for both. For example, a power plant
    could capture its carbon dioxide and transfer it to an entity
    that uses the carbon dioxide in the production of algae-based
    transportation fuel. The carbon captured at the power plant
    would not be emitted at the plant's stack, but would ultimately
    be emitted to the atmosphere when the fuel is combusted. Under
    this scenario, and pursuant to section 722(b)(9), EPA could
    designate either the power plant or the fuel producer as the
    entity with compliance obligations under Section 722 (to
    require both would be double-counting).
        Section 722(d) allows covered entities to use offset
    credits in lieu of allowances to demonstrate compliance for a
    portion of their emissions. Under this section, offset credits
    may be used to demonstrate compliance for a maximum of two
    billion tons of emissions from all covered entities combined. A
    large number of offset credits are projected to be less
    expensive than allowances for compliance in any given year. To
    meet the twin goals of ensuring that offset credits are used to
    demonstrate compliance for no more than two billion tons of
    emissions and that all covered entities have an equal
    opportunity to use this cheaper method of compliance, the bill
    distributes the ability to use offset credits on a pro rata
    basis among all covered entities. It does so by allowing each
    covered entity to use offset credits to meet a specified
    percentage of the allowances it must hold to demonstrate
    compliance. For each year, the percentage is calculated by
    dividing two billion by the sum of two billion plus the annual
    tonnage limit for that year. For example, in 2012, when the
    annual tonnage limit is 4.627 billion tons, the percentage
    would be 30.20 percent (2 divided by 6.627 times 100 percent).
    In that year, a source that emitted 100,000 tons of carbon
    dioxide equivalent could use offset credits to demonstrate
    compliance for 30,200 tons of emissions. In 2030, when the
    annual tonnage limit is 3.533 billion tons, the percentage
    would be 36.15 percent; and a source that emitted 100,000 tons
    of carbon dioxide equivalent could use offset credits to
    demonstrate compliance for 36,150 tons of emissions. (Although
    these examples use percentages rounded to the second decimal
    point, the Administrator has discretion to round to a different
    decimal point.)
        Section 722(d) also sets separate limits on the ability to
    use domestic and international offsets. System-wide, compliance
    can be demonstrated for up to one billion tons of emissions
    using domestic offsets and up to one billion tons of emissions
    using international offsets. This is accomplished by splitting
    each covered entity's ability to use offsets equally between
    international and domestic offsets. Using the example from
    above, the source in 2030 could offset up to 18,075 tons of its
    emissions with domestic offsets and up to the same amount with
    international offsets. However, to address the concern that
    there may be an insufficient supply of domestic offset credits
    in any given year to offset 1 billion tons of emissions,
    section 722(d)(1)(C) allows up to 1.5 billion tons of emissions
    to be offset with international credits under certain
    circumstances. This is accomplished by directing the
    Administrator to change the balance between the percentages of
    international and domestic offsets that may be used to
    demonstrate compliance in certain circumstances. If, for
    example, the Administrator determines that only 0.5 billion
    tons of domestic offset credits will be available in any given
    year, the Administrator shall allow a maximum of 1.5 billion
    tons of emissions to be offset through international projects.
    Using the 2030 example from above, this would mean that a
    covered entity with 100,000 tons of emissions could use
    international offsets to demonstrate compliance for \3/4\ of
    36,150 tons of emissions (or 27,112 tons) and domestic offsets
    for \1/4\ (or 9,038 tons). In assessing the availability of
    domestic offset credits for purposes of determining whether to
    increase the percentage that can be met using international
    offsets, the Administrator shall only consider domestic offset
    credits that are projected to cost no more than the projected
    allowance price.
        Section 722(d) requires that, starting with the 2018
    compliance obligation, for every 4 tons of emissions that are
    offset with international reductions, 5 international offset
    credits must be used. This 5:4 turn-in ratio provides
    greenhouse gas reductions and environmental benefits in
    addition to those provided by the annual tonnage limits. Thus,
    using the 2030 example from above in the situation where the
    ability to offset emissions is split evenly between domestic
    and international offsets, to demonstrate compliance for 36,150
    tons of its emissions, the covered entity could rely on 18,075
    domestic offset credits and 22,594 international offset
    credits. (The Administrator has discretion to set appropriate
    rounding conventions for fractions of allowances.)
        Section 722(l) explains that the year of a compliance
    obligation, as used in Title VII, refers to the year in which
    compliance is determined. Thus, for emissions in 2013, the year
    of the compliance obligation would be 2014.
        Section 723, Penalty for Noncompliance: Establishes
    penalties for parties that fail to comply with the requirements
    of Title VII.
        Section 724, Trading: Clarifies that the legislation does
    not restrict who can hold an allowance, nor does it restrict
    the purchase, sale, or other transaction involving allowances.
        Section 725, Banking and Borrowing: Section 725 explains
    the extent to which allowances may be banked or borrowed from
    the future. Under section 725(a) and (b), allowances can be
    banked for use at any time in the future, subject to
    limitations set by the Administrator in a rulemaking pursuant
    to section 725(b). Offset credits, once issued by the
    Administrator pursuant to Part D of Title VII, may be banked
    for future use. Neither allowances nor offset credits expire
    unless retired, except pursuant to rules issued by the
    Administrator necessary to ensure the authenticity and
    integrity of allowances, credits, or the allowance tracking
    system. Under section 725(c)(1), a covered entity can
    ``borrow'' an allowance from one year in the future (i.e., an
    allowance with a vintage year one year greater than the
    calendar year in which the emissions occurred), providing that
    it is an allowance that the entity holds. Under section
    725(c)(2), a covered entity can ``borrow'' an allowance that it
    holds from two to six years in the future (i.e., an allowance
    with a vintage year two to six years greater than the calendar
    year in which the emissions occurred, or a vintage year one to
    five years greater than the calendar year of the compliance
    obligation), provided that it is an allowance the entity holds
    and that the covered entity prepays a specified amount of
    interest. A covered entity can only demonstrate compliance for
    up to 15 percent of its emissions by using allowances borrowed
    pursuant to section 725(c)(2). This section addresses borrowing
    from the future, it does not address borrowing current or
    earlier year vintage allowances from a private entity (which is
    allowed).
        As an example, under section 725, compliance for emissions
    in 2016 could be demonstrated by holding on April 1 of 2017 (or
    such later date as set by the Administrator), a sufficient
    number of:
         allowances with vintage years 2012 through 2016
    (pursuant to section 725(a)); or
         2017 vintage year allowances (under section
    725(c)(1)).
        In addition, compliance for up to 15 percent of emissions
    in 2016 could be demonstrated by holding allowances with
    vintage years 2018 through 2022 (pursuant to section
    725(c)(2)).
        Section 726, Strategic Reserve: Directs the Administrator
    to create a ``strategic reserve'' of emission allowances that
    will be available to help contain the costs of meeting the
    annual tonnage limits.
        At the start of the program, the Administrator is required
    to fill the reserve with allowances that are taken from each
    year of the program in amounts specified in section 726(b)(1).
        Every quarter, the Administrator shall auction a specified
    number of allowances from the reserve with a minimum reserve
    price specified in the bill. Proceeds from such auctions, if
    any, shall be used to refill the reserve. The Administrator
    shall accomplish this by using any such proceeds to purchase
    international offset credits for reduced deforestation. The
    Administrator shall then retire those offset credits and
    establish four new allowances (in addition to those established
    under section 721) for every five tons of offset credits
    retired. The Administrator shall then refill the strategic
    reserve to its original level by placing the newly-established
    allowances into the strategic reserve to the extent necessary
    to return the reserve to its original size. Once the reserve
    reaches its original size, if there are remaining newly-
    established allowances, the Administrator shall use such
    allowances to replace the allowances that were originally taken
    (pursuant to section 726(b)(1)) from current or future vintage
    years. Newly-established allowances shall be retired if they
    are not needed to refill the reserve or to replace the
    allowances taken from current or future years. For example, if
    the Administrator sells 1,000,000 allowances in the strategic
    reserve auction in 2018, and prices are such that the
    Administrator uses the proceeds to buy 1,600,000 offset
    credits, the Administrator would then be required to retire
    those 1,600,000 offset credits and establish 1,280,000 newly-
    established allowances. The Administrator would be required to
    place 1,000,000 of the newly-established allowances into the
    strategic reserve. The Administrator would then take the
    remaining 600,000 newly-established allowances and use them to
    replace allowances that had been used to fill the strategic
    reserve initially. For example, the Administrator could
    designate all of the 280,000 allowances as vintage year 2018
    and add them to auctions of 2018 (or later) allowances. If the
    Administrator had already returned to 2018 the same number of
    allowances that was taken from 2018 to fill the reserve, the
    Administrator could designate the allowances as 2019 vintage
    and auction them with the 2019 allowances. The Administrator
    has discretion to determine the best way to replace the
    allowances that were taken to fill the reserve, except that the
    Administrator cannot replace allowances that were taken from
    years that have already ended (e.g., in 2018, the Administrator
    could not replace allowances that were taken from 2017 or
    earlier).
        At the request of an international deforestation offset
    credit holder, the Administrator can auction such credits in a
    strategic reserve auction if specified criteria are met.
        Section 727, Permits: Clarifies the obligations of
    stationary sources under the Clean Air Act's Title V operating
    permit program under the newly-established Title VII program.
        Section 728, International Emission Allowances: Establishes
    criteria that must be met before allowances from foreign
    programs can be used for compliance by covered entities.

                                PART D--OFFSETS

        Section 731, Offsets Integrity Advisory Board: Establishes
    an independent Offsets Integrity Advisory Board composed of
    scientists and others with relevant expertise. The Advisory
    Board is charged with providing recommendations to the
    Administrator on: the types of offset project types that should
    be listed by EPA as eligible; potential levels of scientific
    uncertainty associated with certain offset types; appropriate
    quantification or other methodologies; and other areas of the
    offsets and deforestation provisions in the draft. The Board is
    also charged with conducting a regular review of all relevant
    areas.
        Section 732, Establishment of Offsets Program: Directs the
    EPA Administrator to establish an offsets program and requires
    that regulations ensure offsets are verifiable, additional, and
    permanent.
        Section 733, Eligible Project Types: Requires the
    Administrator to establish a list of offset project types that
    are eligible under the program, taking into account the
    recommendations of the Offsets Integrity Advisory Board.
    Provides guidelines for establishing and updating the list.
        In implementing this provision, the Committee expects the
    Administrator to fully evaluate each of the following
    categories of activities for potential inclusion as eligible
    offset project types:
        (1) agricultural, grassland, and rangeland sequestration
    and management practices, including--
              (A) altered tillage practices;
              (B) winter cover cropping, diversified rotations and
            other means to increase biomass returned to soil in
            lieu of planting followed by fallowing;
              (C) conversion of cropland to rangeland or grassland,
            on the condition that the land has been in nonforest
            use for at least 10 years before the date of initiation
            of the project;
              (D) reduction of nitrogen use or increase in nitrogen
            use efficiency;
              (E) reduction in the frequency and duration of
            flooding of rice paddies;
              (F) reduction in carbon emissions from organic soils;
              (G) reduction in greenhouse gas emissions from manure
            and effluent; and
              (H) reduction in greenhouse gas emissions due to
            changes in animal management practices, including
            dietary modifications;
        (2) changes in carbon stocks attributed to land use change
    and forestry activities, including--
              (A) afforestation or reforestation of acreage not
            forested as of January 1, 2007;
              (B) forest management resulting in an increase in
            forest carbon stores including but not limited to
            harvested wood products;
              (C) management of peatland or wetland;
              (D) conservation of grassland and forested land;
              (E) improved forest management, including accounting
            for carbon stored in wood products;
              (F) reduced deforestation or avoided forest
            conversion;
              (G) urban tree-planting and maintenance;
              (H) agroforestry; and
              (I) adaptation of plant traits or new technologies
            that increase sequestration by forests;
        (3) manure management and disposal, including--
              (A) waste aeration; and
              (B) biogas capture and combustion; and
        (4) non-agriculture and forestry project types, including--
              (A) recycling, reuse, and waste minimization;
              (B) methane collection and combustion projects at
            mines;
              (C) methane collection and combustion projects at
            landfills;
              (D) methane collection and combustion projects at
            natural gas systems;
              (E) projects to reduce emissions from municipal or
            industrial wastewater treatment systems;
              (F) projects that capture and geologically sequester
            uncapped greenhouse gas emissions with or without
            enhanced oil or methane recovery in active or depleted
            oil, carbon dioxide, or natural gas reservoirs; and
              (G) projects to capture and destroy or avoid
            emissions of greenhouse gases from industrial sources
            for which entities do not have compliance obligations
            under section 722 or other provisions of Title III.
        In considering these potential project types, the
    Administrator must take into account recommendations of the
    Offsets Integrity Advisory Board.
        The Committee expects the Administrator to issue an initial
    list of offset project types and their associated methodologies
    under section 734 as expeditiously as practicable, but in no
    case later than one year from the date of enactment. The
    Administrator should add additional project types, along with
    their associated methodologies, to the list as expeditiously as
    practicable, but in no case later than two years from the date
    of enactment. In developing baselines, measurement, and
    monitoring methodologies for a broad range of offset project
    types as quickly as possible, EPA should build on its
    experience in programs such as Natural Gas STAR, Climate
    Leaders, and the Landfill Methane Outreach Program. The
    Committee understands that EPA is already working with USDA and
    DOE on the AgSTAR program to encourage the use of methane
    recovery from manure digesters and is working on afforestation,
    reforestation, and forest management protocols under the
    Climate Leaders program.
        The Committee strongly encourages the Administrator to
    consult closely with the Secretary of Agriculture on all
    elements of the offsets program related to agricultural and
    forestry practices.
        Section 734, Requirements for Offset Projects: Section
    734(a) requires that for each offset project type, the
    Administrator establish standardized methodologies for
    determining additionality; establishing activity baselines;
    measuring performance; accounting for and mitigating potential
    leakage. It is the Committee's intent that the Administrator,
    in establishing standardized methodologies for determining
    additionality, may adopt an approach based on performance
    standards. Section 734(b) requires that for each offsets
    project type the Administrator establish requirements to
    account for and address reversals from offset projects.
        Sections 735, Approval of Offset Projects: Establishes
    procedures to approve offset projects. It is the expectation of
    the Committee that the requirements for standardized
    methodologies under section 734 will result in a simple and
    efficient approval process.
        Section 736, Verification of Offset Projects: Directs the
    Administrator to establish requirements for the verification of
    offset project performance, and requires that verification
    reports be prepared by accredited third-party verifiers.
        Section 737, Issuance of Offset Credits: Establishes
    procedures for the issuance of offset credits and directs the
    Administrator to issue offset credits only if the emissions
    reduction or sequestration has already occurred and other
    specified conditions are met.
        Section 738, Audits: Requires the Administrator to conduct,
    on an on-going basis, random audits of offset projects, offset
    credits, and practices of third-party verifiers.
        Section 739, Program Review and Revision: Requires the
    periodic evaluation and updating of specified areas and
    components of the offsets program.
        Section 740, Early Offset Supply: To ensure a supply of
    offset credits in the early years of the program, allows for
    the issuance of offset credits for offsets from programs that
    meet specified criteria. Such credits may only be issued for a
    limited timeframe and only for reductions achieved for a
    specified time period.
        Section 741, Environmental Considerations: Provides
    requirements for additional environmental considerations for
    forestry and other land management-related projects.
        Section 742, Trading: Provides that the trading provisions
    applicable to allowances are also applicable to offset credits.
        Section 743, International Offset Credits: Allows the
    Administrator to issue international offset credits for
    activities that take place in developing countries. Requires
    that all international offset credits meet the criteria
    established for all offsets under sections 732-742, as well as
    the requirements specific to international offsets established
    under section 743. In addition, requires that the United States
    be a party to a bilateral or multilateral agreement or
    arrangement with the country where an offset activity would
    take place before any international offset credits can be
    issued.
        Subsections 743(c), (d) and (e) provide additional
    specifications for three potential categories of international
    offset credits that are distinct from the issuance of
    international offset credits for international offset project
    types listed under section 733. Subsection 743(c) requires the
    Administrator, in consultation with the Secretary of State, to
    identify sectors in specific countries for which the issuance
    of international offset credits on a sector-wide, rather than
    project-specific, basis is appropriate.
        Subsection 743(d) Establishes the terms under which the
    Administrator may issue international offset credits in
    exchange for other international instruments. These include a
    requirement that the Administrator has determined that the
    issuing international body has implemented substantive and
    procedural requirements for the relevant project type that
    provide equal or greater assurance of environmental integrity
    as the requirements established under Part D.
        Subsection 743(e) establishes procedures and requirements
    regarding the issuance of international offset credits for
    activities that reduce deforestation. For major emitting
    nations, international offset credits may only be issued for
    national-scale activities, or for state or province-level
    activities in states or provinces that would themselves be
    considered major emitters. Smaller-scale offset projects are
    only allowed in countries that generate less than 1 percent of
    global greenhouse gas emissions as well as less than 3 percent
    of global forest sector and land use change emissions. After an
    initial period, all countries must transition to national
    baselines to continue generating credits.

      PART E--SUPPLEMENTAL EMISSIONS REDUCTIONS FROM REDUCED DEFORESTATION

        Section 751-752, Definitions and Findings: Defines forest
    carbon activities and finds that land use change, primarily
    deforestation, accounts for roughly 20 percent of global
    greenhouse gas emissions.
        Section 753, Supplemental Emissions Reductions through
    Reduced Deforestation: Directs the Administrator of EPA, in
    consultation with the Administrator of the U.S. Agency for
    International Development (USAID), to establish a program to
    build capacity in developing countries to reduce emissions from
    deforestation (including preparation to participate in
    international markets for deforestation reduction offset
    credits), to achieve emissions reductions in addition to those
    achieved under the domestic emissions limit, and to protect
    intact forest from any shifts in land use as a result of
    reduced deforestation in other areas. By building capacity and
    providing powerful incentives to develop national efforts to
    reduce deforestation, the Committee intends that this program
    will both achieve significant reductions in emissions from
    deforestation (more than 6 billion metric tons of emissions)
    and allow many forest nations to participate in carbon markets,
    which will expand the supply of available offset credits.
        Section 754, Requirements for International Deforestation
    Reduction Program: Directs the Administrators of EPA and USAID
    to support a broad range of activities to reduce deforestation,
    build capacity to measure, monitor and enforce reductions in
    deforestation generate for sale deforestation reduction offset
    credits for sale, and reduce the leakage of emissions.
    Activities supported through this program must be
    environmentally sound and should protect the rights of
    indigenous peoples and local communities. Support for emissions
    reductions must ensure that countries are transitioning to
    nationwide accounting of reduced deforestation.
        Section 755, Reports and Reviews: Directs the
    Administrators of EPA and USAID to report annually to Congress
    on progress in reducing deforestation through this program and
    perform a review of the program every four years.
        Section 756, Legal Effect of Part: Clarifies that this
    program does not supersede or limit any other federal or
    international law.

    Section 312, Definitions

        Section 700, Definitions: Defines key terms for Titles VII
    and VIII of the Clean Air Act.
        Section 700(13)(B) defines one type of covered entity as
    ``any stationary source that produces . . . petroleum-based or
    coal-based liquid fuel, petroleum coke, or natural gas
    liquid.'' Because there are multiple steps in the production of
    natural gas liquids, additional language on natural gas liquid
    regulation is included elsewhere in Title III to specify the
    covered entity with respect to natural gas liquid production or
    importation.
        The term ``natural gas liquid'' is defined in section
    700(36) to mean ``ethane, butane, isobutane, natural gasoline
    and propane which is ready for commercial sale or use.'' The
    Committee's intent in including the phrase ``ready for
    commercial sale or use'' in the definition is to indicate that
    the point of regulation for natural gas liquids is at the point
    of fractionation. This step in the production of natural gas
    liquids, where a mixture of multiple natural gas liquids is
    separated (fractionated) into its constituent parts, occurs
    after the separation of natural gas liquids from natural gas
    (often done by natural gas processing facilities), but prior to
    the sale or transfer of the individual natural gas liquids to
    the petrochemical, refining, or propane sectors. Some natural
    gas processing plants also fractionate; in other cases natural
    gas processing facilities are separate from fractionating
    facilities, and are owned by different entities.
        The owner or operator of the covered entity that produces
    or imports natural gas liquids under section 700(13)(B) in some
    cases will own the natural gas liquids, but in other cases may
    not. Section 722(b)(12) requires that in situations where the
    covered entity described in section 700(13)(B) does not take
    ownership of the liquids, the owner of the liquids shall be the
    entity with compliance obligations under section 722, section
    723, and other relevant sections of the title.
        Section 700(45) defines the terms ``sequestered'' and
    ``sequestration'' to mean ``the separation, isolation, or
    removal of greenhouse gases from the atmosphere, as determined
    by the Administrator. The terms include biological, geologic,
    and mineral sequestration, but do not include ocean
    fertilization techniques.'' The Committee recognizes that new
    sequestration technologies that do not exist today may develop
    in the future, and the Committee intends the Administrator to
    have discretion to define the types of sequestration
    technologies or processes that are appropriate to include
    within the definition, in light of the purposes of the Act.

                     SUBTITLE B--DISPOSITION OF ALLOWANCES

        Section 321, Disposition of Allowances for Global Warming
    Pollution Reduction Program: Provides for emission allowances
    to be distributed for three primary goals: to protect consumers
    from energy price increases, to assist industry in the
    transition to a clean energy, and to spur energy efficiency and
    the deployment of clean energy technology. Also allocates
    allowances to prevent deforestation and support national and
    international adaptation efforts and for other purposes.

                       PART H--DISPOSITION OF ALLOWANCES

        Section 781, Allocation of Allowances for Supplemental
    Reductions: Directs the Administrator to allocate allowances
    for the program under part E to achieve supplemental emissions
    reductions from reduced deforestation. Allocates 5 percent of
    allowances for the years 2012-2025, 3 percent for 2026-2030,
    and 2 percent for 2031-2050.
        Section 782, Allocation of Emission Allowances: Provides
    for allocation of allowances to electricity consumers; natural
    gas consumers; home heating oil and propane consumers; low-
    income consumers; trade-vulnerable industries; investment in
    carbon capture and sequestration technologies; investment in
    energy efficiency and renewable energy; Clean Energy Innovation
    Centers; clean vehicle technology; domestic fuel production;
    workers; domestic, wildlife, and natural resources adaptation;
    international adaptation; international clean technology
    transfer; deficit reduction; and consumer refunds.
        Section 783, Electricity Consumers: Directs the
    Administrator on how to distribute the approximately 30 percent
    of allowances allocated for the benefit of consumers to local
    electricity distribution companies, whose retail rates are
    regulated by states or other entities. Directs the
    Administrator on how to distribute the approximately 5 percent
    of allowances for merchant coal generators and certain
    generators with long-term power purchase agreements.
        Section 784, Natural Gas Consumers: Directs the
    Administrator on how to distribute the approximately 9 percent
    allocated for the benefit of consumers to local natural gas
    distribution companies, whose retail rates are regulated by
    states or other entities.
        Section 785, Home Heating Oil and Propane Consumers:
    Directs the Administrator on how to distribute the
    approximately 1.5 percent of allowances to states for programs
    to benefit residential and commercial users of home heating oil
    and propane.
        Section 787, Allocations to Refineries: Directs the
    Administrator on how to distribute the approximately 2 percent
    of allowances to domestic refiners.
        Section 786-788 [Reserved]
        Section 789, Climate Change Consumer Refunds: Directs the
    Secretary of the Treasury to use proceeds from the sales of
    specified 2026 and later year allowances to provide rebates to
    consumers.
        Section 790, Exchange for State-Issued Allowances: Provides
    for fair compensation and exchange of allowances issued by the
    State of California, the Regional Greenhouse Gas Initiative and
    the Western Climate Initiative prior to commencement of federal
    program.
        Section 791, Auction Procedures: Establishes single-round,
    sealed-bid, uniform-price auction procedures, which may be
    modified by the Administrator.
        Section 792, Auctioning Allowances for Other Entities:
    Establishes rules by which the Administrator may auction
    allowances on behalf of other entities.
        Section 793, Establishment of Funds: Establishes the
    Strategic Reserve Fund and the Climate Change Consumer Rebate
    Fund in the U.S. Treasury.
        Section 794, Oversight of Allocations: Requires the
    Comptroller General to prepare biannual reviews of the programs
    administered by the Federal Government that distribute emission
    allowances or funds from Federal auctions of allowances.

                SUBTITLE C--ADDITIONAL GREENHOUSE GAS STANDARDS

        Section 331, Greenhouse Gas Standards: Establishes Title
    VIII of the Clean Air Act to achieve additional greenhouse gas
    reductions outside of Title VII.

                Title VIII--ADDITIONAL GREENHOUSE GAS STANDARDS

                            SECTION 801, DEFINITIONS

                      PART A--STATIONARY SOURCE STANDARDS

        Section 811, Standards of Performance: Section 811 directs
    the Administrator to establish minimum standards of performance
    under section 111 of the Clean Air Act as an means of achieving
    reductions of greenhouse gas emissions from certain stationary
    sources of air pollution not subject to title III of the Clean
    Air Act.
        When authorizing the Administrator to consider greenhouse
    gas emissions as ``nonair quality health and environmental
    impacts'' under section 811(b), it is the Committee's intent to
    allow the Administrator to require controls on non-greenhouse
    gases that maximize greenhouse gas reduction benefits and to
    allow, but not require, the Administrator to limit controls on
    other pollutants that interfere significantly with greenhouse
    gas control effectiveness. Thus where additional reductions in
    emissions of non-greenhouse gases resulting from the use of
    certain technologies may be relatively small, while associated
    energy penalties may be significant, the Administrator would
    have the discretion not to require such controls. However, any
    such decisions must be wholly consistent with other health and
    welfare considerations; where these considerations associated
    with other non-greenhouse gas pollutants are found to outweigh
    impacts on greenhouse gas emissions, the Administrator is
    permitted to require further reductions of those pollutants
    notwithstanding resulting energy penalties or greenhouse gas
    emissions impacts.
        Section 811(c)(2) allows the Administrator to establish
    work practice standards without regard to any determination of
    the feasibility of other forms of emissions control that would
    otherwise be required under section 111(h) of the Clean Air
    Act. Congress intends to allow the Administrator to require
    improvements in process or energy efficiency that would reduce
    greenhouse gas emissions directly or indirectly without first
    having to find that other forms of capture or control are
    infeasible. The Administrator is also allowed to require
    efficiency improvements in lieu of capture or control
    technologies that exceed the bill's cost limitations and may
    also require such energy efficiency improvements in addition to
    controls that meet the cost limiting criteria.
        The cost-containment provisions provided in section
    811(c)(3) are intended to keep the costs of requirements for
    uncapped sources roughly in line with or below the costs of
    requirements for those of capped sources when viewed on a
    source category basis. That is, so long as costs are acceptable
    when viewed on average for the source category, the provisions
    do not provide a bar to enforcement of performance standards on
    any individual source where the cost of compliance may exceed
    the projected price of allowances during the applicable period.
    The Administrator's analysis of selected technologies must
    reflect a reasonable expectation that costs will not exceed
    projected allowance prices, but is not required to provide
    absolute certainty, nor shall actual costs in any individual
    case provide a basis for exemption from any standards, as noted
    above.
        Under section 811(a), the Administrator may list under
    section 111(b) the source categories identified in the
    inventory without making an endangerment finding. The inventory
    called for in this subsection is intended to identify the
    specific source categories that meet the specific criteria
    identified by Congress, and Congress has determined that the
    Administrator must establish standards of performance for
    greenhouse gas emissions from these categories. Therefore, the
    Administrator may list new source categories under section
    111(b), without making the required endangerment finding, as
    necessary to ensure that every source category on the inventory
    is properly listed under 111(b). Such listings may be
    necessary, for example, if the category is not already listed
    under section 111(b) or if the scope of the source category
    identified in the inventory does not correspond with the scope
    of the source category currently listed under section 111(b).

                     PART C--EXEMPTIONS FROM OTHER PROGRAMS

        Section 831, Criteria Pollutants: Provides that greenhouse
    gases may not be added to the list of criteria air pollutants
    on the basis of their effect on climate change.
        Section 832, International Air Pollution: Provides that
    section 115 of the Clean Air Act shall not apply to an air
    pollutant with respect to that pollutant's contribution to
    global warming.
        Section 833, Hazardous Air Pollutants: Provides that
    greenhouse gases may not be listed as hazardous air pollutants
    on the basis of their effect on climate change.
        Section 834, New Source Review: Provides that New Source
    Review shall not apply to a major emitting facility that is
    initially permitted or modified after January 1, 2009, on the
    basis of its emissions of any greenhouse gases. This language
    is intended to make clear on a going forward basis that New
    Source Review does not apply to greenhouse gases. It is not an
    expression of congressional intent with respect to the
    application of New Source Review to greenhouse gases prior to
    that date.
        Section 835, Title V Permits: Provides that greenhouse
    gases shall not be considered when determining whether a
    stationary source is required to operate pursuant to a permit
    under Title V. Where sources are required to have a Title V
    permit due to the sources' emissions of any pollutant that is
    regulated for any reason other than its effect on global
    climate change, this section does not alter the applicability
    of title V for such sources, nor does it provide any exclusion
    from any of the requirements of Title V (including but not
    limited to reporting requirements and certification
    requirements, as they would apply to such sources). Any
    applicable requirements of the Safe Climate Act would be
    considered applicable requirements of the Clean Air Act and
    must be incorporated into Title V permits for such sources.
    Additional provisions governing how the requirements of title
    VII of this bill are to be addressed in title V permits for
    such sources may be found in section 727.
        Section 332, HFC Regulation: Section 332 amends Title VI of
    the Clean Air Act by adding a new section 619 to phase down the
    consumption of hydrofluorocarbons (HFCs), many of which are
    extremely potent greenhouse gases, under a separate limit and
    reduction schedule. Using a market-based regulatory approach
    similar to the one that continues to be successful in
    addressing substances that deplete the stratospheric ozone
    layer, the bill requires HFC consumption to be phased-down to
    15 percent of the baseline by 2032. Allowances would be
    distributed through a combination of annual auctions and non-
    auction sales.
        This new section 619 includes numerous references to
    existing sections of Title VI. Except as otherwise provided in
    this section, EPA is expected to treat class II, group II
    substances similarly to the way in which it has treated ozone
    depleting substances in implementing and interpreting these
    existing sections of Title VI.
        In section 619, production of class II, group II substances
    refers to production of such substances in the United States.
    Importation of class II, group II substances refers to the
    importation of such substances in bulk into the United States.
    Importation of products containing any class II, group II
    substances refers to the importation of such products into the
    United States.
        The bill provides for bidding limits in 2014 and beyond to
    be based in part on the highest number of allowances required
    to be held by the participant in the prior three years. The
    number of allowances actually held by a participant may be
    higher or lower than the number of allowances required to be
    held (if allowances were banked or if destruction offset
    credits were used to meet a portion of the compliance
    obligation), but the number of allowances actually held by a
    participant will not be used in determining the bidding limits.
        It is the intent of this section to provide a financial
    incentive for the recovery and destruction of
    chlorofluorocarbons (and potentially other ozone depleting
    substances that have been globally phased out of production
    under the Montreal Protocol). Generation of destruction offset
    credits through the destruction of CFCs (and potentially other
    ozone depleting substances) offers an additional path to meet
    compliance obligations under section 619(b). With the exception
    of offset credits issued under section 740, offsets generated
    pursuant to section 619(b)(9) may be used as offset credits
    under Title VII only if the Administrator extends their use to
    Title VII under section 619(b)(9)(E), pursuant to the
    requirements of Part D of Title VII, and based on the carbon
    dioxide equivalent value of the substance destroyed. In the
    event of such an extension, destruction offset credits for the
    destruction of a quantity of CFCs (or potentially other ozone
    depleting substances) may be issued under either Title VI or
    Title VII, but in no case may an offset credit be issued under
    both titles for the destruction of the same quantity of a
    substance.
        The specific reporting provisions in section 619(n) do not
    preclude EPA's use of the general authority under section 114
    to obtain information for the purpose of carrying out any
    provision of Title VI, including the provisions concerning
    class II, group II substances.
        Section 332(c)(4) amends section 605(a) of the Clean Air
    Act to allow introduction into interstate commerce or use of
    HCFCs that are listed as acceptable for use as fire suppression
    agents for nonresidential applications under section 612. The
    phrase ``listed as acceptable for use'' is intended to include
    substances listed as acceptable for use ``subject to use
    conditions'' or ``subject to narrowed use limits'' as well as
    those listed as acceptable without qualification.
        Section 333, Black Carbon: Directs the Administrator to
    report on existing efforts to reduce domestic black carbon
    pollution and use existing authority to achieve further
    reductions. Directs the Administrator, in coordination with the
    Secretary of State, to report to Congress on current and
    potential future assistance to foreign nations to help reduce
    black carbon pollution.
        Section 334, States: Preserves states' existing authority
    to adopt and enforce standards or limitations on air pollution
    under the Clean Air Act, including greenhouse gas emissions.
        Section 335, State Programs: Bars states from implementing
    or enforcing a cap-and-trade program to control on greenhouse
    gas emissions covered by Title VII between the years 2012 to
    2017, but allows regulation of such emissions by other means
    during this period.
        Section 336, Enforcement: Provides that for petitions for
    review under the Clean Air Act, the court may remand an action
    of the Administrator without vacatur under specified
    circumstances. Requires the Administrator to take final action
    on a petition for reconsideration under the Clean Air Act
    within 150 days of receipt.
        Section 337, Conforming Amendments: Provides for conforming
    amendments to Clean Air Act enforcement and administrative
    provisions to incorporate titles VII and VIII.
        Section 338, Davis-Bacon Compliance: Requires that
    recipients of emission allowances or funding under this Act
    provide reasonable assurances that all laborers and mechanics
    employed by contractors and subcontractors on projects funded
    directly by or assisted in whole or in part by the Federal
    Government pursuant to this Act will be paid at least
    prevailing wages as determined by the Secretary of Labor in
    accordance with what is commonly known as the Davis-Bacon Act
    (subchapter IV of chapter 31 of title 40, United States Code).
    The provisions would not apply, however, to retrofitting of any
    residential building or of specified nonresidential buildings.

                      SUBTITLE D--CARBON MARKET ASSURANCE

        Section 341, Carbon Market Assurance: Amends the Federal
    Power Act to provide for strict oversight and regulation of the
    new markets for emission allowances, offset credits, and
    Federal renewable electricity credits (RECs). Ensures market
    transparency and liquidity and allows trading in allowance,
    offset credit, and REC futures so that regulated entities can
    protect themselves against future cost increases and obtain the
    allowances or credits they need for compliance at a fair price.
    The Federal Energy Regulatory Commission is charged with
    regulating the cash market in allowances, offsets, and RECs.
    The President is empowered to delegate regulatory
    responsibility for the markets in derivatives if these
    instruments to an appropriate agency, based on the advice of an
    interagency working group. Protects market participants from
    speculation and market manipulation, by including default
    position limits of 10 percent on allowance, offset credit and
    REC derivatives and a default ban on over-the-counter trading
    of such derivatives, and other regulatory requirements for both
    the cash and derivatives markets.

                    SUBTITLE E--ADDITIONAL MARKET ASSURANCE

        Sections 351 through 358: Amends the Commodity Exchange Act
    to provide greater oversight of energy commodity derivatives
    and credit default swaps. Establishes default Commodity Futures
    Trading Commission regulatory authority over and regulations of
    allowance derivative markets.
        Section 359, Cease-and-desist authority: Amends the Natural
    Gas Act and Natural Gas Policy Act to grant the Federal Energy
    Regulatory Commission cease-and-desist authority to prevent
    violations of these Acts.

               TITLE IV--TRANSITIONING TO A CLEAN ENERGY ECONOMY

          SUBTITLE A--ENSURING REAL REDUCTIONS IN INDUSTRIAL EMISSIONS

        Section 401, Ensuring Real Reductions in Industrial
    Emissions: Creates a program within Title VII of the Clean Air
    Act, as established by this Act, to ensure real reductions in
    industrial greenhouse gas emissions through emission allowance
    rebates and international reserve allowances.

    Part F--Ensuring Real Reductions in Industrial Emissions

        Section 761, Purposes: Outlines the purposes of Subtitle A
    and the additional purposes of Part 1 of Subtitle A. The
    purposes of Subtitle A include: promoting a strong global
    effort to significantly reduce greenhouse gas emissions and
    preventing an increase in greenhouse gas emissions in foreign
    countries as a result of compliance costs incurred under title
    VII of the Clean Air Act, as added by ACES of 2009. The
    additional purposes of Part 1 include: compensating eligible
    domestic industrial sectors and subsectors for costs incurred
    under Title VII; limiting such compensation to amounts that
    meet the goals of the program; and rewarding innovation and
    facility-level investments in efficiency upgrades and
    performance improvements.
        Section 762, International Negotiations: Finds that the
    purposes of this subtitle can be most effectively achieved
    through international agreements and states that it is the
    policy of the United States to work proactively under the
    UNFCCC and in other forums to establish binding agreements
    committing all major-emitting countries to contribute equitably
    to the reduction of global greenhouse gas emissions.
        Section 763, Definitions: Provides relevant definitions.
                Subpart 1--Emission Allowance Rebate Program
        Section 764, 765, Eligible Industrial Sectors, Distribution
    of Emission Allowance Rebates: Establishes a program that
    rebates allowances to eligible industrial sectors and
    subsectors in an amount intended to compensate entities in
    those sectors for the costs they incur as a result of complying
    with the pollution limit established by Title VII.
        Instructs the EPA Administrator to annually distribute
    rebates to the owners and operators of entities in eligible
    industrial sectors. The Administrator is required to determine
    which facilities should be eligible for rebates through a rule
    based on an assessment of economic factors, including (1) the
    energy or greenhouse gas intensity in a sector and (2) the
    trade intensity in such sectors. Sectors meeting the listed
    criteria for both factors would be deemed eligible to receive
    rebates.
        Subsection (b)(3)(A) is designed to address an anomaly that
    arises when an industrial subsector meets the eligibility
    criteria of paragraph (2)(A), but its 6-digit NAICS code fails
    to meet the eligibility criteria. The result is that an
    otherwise eligible subsector does not presumptively qualify to
    receive emission allowance rebates. For example, the industrial
    subsector that manufactures ceramic substrates for mobile
    source emissions control equipment may fall within a NAICS code
    that includes manufacturers of a wide variety of products, and
    the entire 6-digit NAICS code may not presumptively be eligible
    for emission allowance rebates, even though the specific
    industrial subsector would, if it was classified in its own
    NAICS code, presumptively qualify for rebates. Recognizing this
    anomaly, the Committee included Subsection (b)(3)(A) to give
    firms in such subsectors an opportunity to petition the
    Administrator for relief based upon evidence demonstrating that
    the industrial subsector meets the criteria of paragraph (2)(A)
    to be eligible to receive emission allowance rebates.
        Rebates are distributed to eligible facilities on a product
    output basis, with compensation provided for both direct and
    indirect compliance costs. For direct compliance costs,
    allowance distribution is calculated by multiplying a
    facility's product output by the sector average tonnage of
    greenhouse gas emissions per unit of product output. For
    indirect costs passed on by electric utilities, allowance
    distribution is calculated by multiplying a covered or
    uncovered facility's product output (1) by the ``emissions
    intensity'' of each facility's electric power supplier and (2)
    by the sector average electricity use per unit of product
    output.
                Subpart 2--International Reserve Allowance Program
        Section 766, International Reserve Allowance Program:
    Establishes an international reserve allowance program, which
    may be implemented by the President beginning in 2025 pursuant
    to a determination under Part 3.
                Subpart 3--Presidential Determination
        Section 767, Presidential Reports and Determinations:
    Requires the President to submit a report to Congress no later
    than January 1, 2018, regarding the effectiveness of the
    distribution of emission allowance rebates under Part 1 in
    mitigating the risk of increased greenhouse gas emissions in
    foreign countries resulting from compliance costs incurred
    under title VII.
        Requires the President to make a determination, no later
    than June 30, 2022, and every four years thereafter, for each
    sector eligible for rebates under Part 1, of whether more than
    70 percent of global output of that sector is produced in
    countries that meet at least one of the following criteria: (1)
    party to an international treaty to which the U.S. is a party
    that includes a nationally enforceable emissions reduction
    commitment that is at least as stringent as that of the U.S.;
    (2) party to an international sectoral agreement for that
    sector to which the U.S. is a party; (3) energy or greenhouse
    gas intensity for that sector that is equal or less than that
    of the U.S.; or (4) implemented emissions reduction policies
    that together impose a cost on that sector that is at least 60
    percent of the cost of complying with Title VII for that sector
    in the United States.
        If the President determines that less than 70 percent of
    global output of a sector is produced in countries that meet
    one or more of the above criteria, then the President shall
    continue emission allowance rebate program under Part 1 or
    implement the International Reserve Allowance Program under
    Part 2 or a combination of the two for that sector. In the
    absence of such a determination, the emission allowance rebates
    for entities in the sector will decline by 10 percent per year.

                  SUBTITLE B--GREEN JOBS AND WORKER TRANSITION

    Part 1--Green Jobs

        Section 421, Clean Energy Curriculum Development Grants:
    Amends the Carl. D. Perkins Career and Technical Education Act
    of 2006 to authorize the Secretary of Education to award grants
    to universities and colleges to develop programs of study that
    prepare students for careers in renewable energy, energy
    efficiency, and other forms of global warming mitigation. These
    grants are peer reviewed by experts with relevant experience in
    the areas being considered for funding.
        Section 422, Increased Funding for Energy Worker Training
    Program: Increases the authorization for the Green Jobs Act,
    authorized in the Energy Independence and Security Act, from
    $125 million to $150 million.

    Part 2--Climate Change Worker Adjustment Assistance

        Section 425-427, Petitions, Eligibility Requirements, and
    Determinations; Program Benefits; General Provisions:
    Establishes a program pursuant to which any worker displaced as
    a result of the Title VII of the Clean Air Act would be
    entitled to 156 weeks of income supplement, 80 percent of their
    monthly health care premium, up to $1,500 for job search
    assistance, up to $1,500 for moving assistance, and additional
    employment services for skills assessment, job counseling,
    training, and other services. Payments under the program cannot
    exceed the proceeds from the auction of allowances set aside
    for this purpose.

                        SUBTITLE C--CONSUMER ASSISTANCE

        Section 431, Energy Tax Credit: In the event of any reduced
    purchasing power as a result of Title VII of the Clean Air Act,
    provides tax credits to the lowest-income households to
    compensate for such losses.
        Section 432, Energy Refund Program for Low-Income
    Consumers: Directs the EPA Administrator to administer an
    ``Energy Refund Program'' to provide monthly cash energy
    refunds to low-income individuals to compensate for any reduced
    purchasing power resulting from Title VII of this Act. Provides
    that energy refunds shall not be considered taxable income.
        The cost of this subtitle--including both the energy refund
    program and the refundable tax credit--are offset by the set
    aside of the proceeds from the auction sale of 15 percent of
    the emission allowances. The proceeds from these allowances are
    deposited into the U.S. Treasury. The amount of assistance
    provided is not, however, limited by the auction proceeds
    deposited into the Treasury.

                     SUBTITLE D--EXPORTING CLEAN TECHNOLOGY

        Sections 441-443, Findings and Purposes, Definitions,
    Governance: States that the purpose of this subtitle is to
    provide U.S. resources to encourage widespread deployment of
    clean technologies to developing countries. Establishes a Clean
    Technology Account administered by the State Department in
    consultation with an interagency group. The Account will
    supplement and not supplant other federal funding.
        Section 444, Determination of Eligible Countries:
    Generally, only developing countries that have ratified an
    international treaty or agreement or have undertaken nationally
    appropriate mitigation activities achieving substantial
    greenhouse gas reductions are eligible for bilateral
    assistance. Least developed countries may use assistance to
    build capacity toward meeting eligibility criteria.
        Sections 445, Qualifying Activities: Eligible projects must
    achieve substantial greenhouse gas reductions that are
    substantial, measurable, reportable, and verifiable. Eligible
    activities include deployment of carbon capture and storage,
    renewable electricity, efficiency projects, deployment of low-
    emissions technology, transportation reductions, black carbon
    reductions, and capacity building activities.
        Section 446, Assistance: The Secretary of State is
    authorized to provide assistance through the distribution of
    allowances bilaterally, through an international fund, or
    through a multilateral institution pursuant to the UNFCCC.
    Preference is given to projects that promise to achieve large-
    scale greenhouse gas reductions, may catalyze widespread
    deployment of clean technology, build institutional capacity,
    and leverage private resources. To the extent practicable,
    assistance should reinforce other foreign policy goals.

                     SUBTITLE E--ADAPTING TO CLIMATE CHANGE

    Part 1--Domestic Adaptation

                Subpart A--National Climate Change Adaptation Program
        Section 451, National Climate Change Adaptation Program.
    Establishes a climate change adaptation program within the U.S.
    Global Change Research Program.
        Section 452, Climate Services. Establishes a National
    Climate Service within NOAA to develop climate information,
    data, forecasts, and warnings at national and regional scales
    and to distribute information on climate impacts to state and
    local decisionmakers.
        Section 453, State Programs to Build Resilience to Climate
    Change Impacts: Distributes emission allowances to states for
    implementation of adaptation projects, programs, or measures to
    build resilience to the impacts of climate change, contingent
    on the completion of an approved State Adaptation Plan.
    Eligible projects include, but are not limited to, those
    designed to respond to extreme weather events such as flooding
    or hurricanes, changes in water availability, heat waves, sea
    level rise, ecosystem disruption, and air pollution.
                Subpart B--Public Health and Climate Change
        Sections 461. Sense of Congress on Public Health and
    Climate Change: States that it is the sense of Congress that
    the federal government should take all means and measures to
    prepare for and respond to the public health impacts of climate
    change.
        Section 462, Relationship to Other Laws: Clarifies that
    nothing in the subpart limits authorities or responsibilities
    conferred by other law.
        Section 463. National Strategic Action Plan: Requires the
    Secretary of Health and Human Services to prepare a strategic
    plan to assist health professionals in preparing for and
    responding to the impacts of climate change on public health
    with disease surveillance, research, communications, education,
    and training programs. Authorizes the Secretary to implement
    these programs using authorities under this subpart and other
    federal laws.
        Sections 464-465, Advisory Board, Reports: Establishes a
    science advisory board to advise the Secretary on science
    related to the health effects of climate change. Requires a
    needs assessment for health effects of climate change and
    periodic reports on scientific developments and recommendations
    for updating the national strategy.
        Sections 466-467. Definitions, Climate Change Health
    Protection and Promotion Fund: Establishes a fund in the
    Treasury for carrying out this subpart. Funding will be
    distributed by HHS but may be made available to other agencies
    and state and local governments. Funding will supplement, not
    replace other public health funding.
                Subpart C--Natural Resource Adaptation
        Section 471-475, Purposes, Policy, Definitions, CEQ,
    Resources Adaptation Panel: States that it is the policy of the
    federal government to use all practicable means and measures to
    assist natural resources to adapt to climate change.
    Establishes a Natural Resources Climate Change Adaptation
    Panel, chaired by the White House Council on Environmental
    Quality, as a forum for interagency coordination on natural
    resources adaptation.
        Section 476, Natural Resources Climate Change Adaptation
    Strategy: Requires the Panel to develop a strategy for making
    natural resources more resilient to the impacts of climate
    change and ocean acidification. The strategy must assess likely
    impacts to natural resources, strategies for helping wildlife
    adapt, and specific actions that federal agencies should take.
        Section 477, Natural Resources Adaptation Science and
    Information: Establishes a process through NOAA and the U.S.
    Geological Survey National Global Warming and Wildlife Science
    Center to provide technical assistance, conduct research, and
    furnish decision tools, monitoring, and strategies for
    adaptation. Requires a survey of resources that are likely to
    be adversely affected and the establishment of a Science
    Advisory Board to advise the science program and recommend
    research priorities.
        Section 478, Federal Natural Resource Agency Adaptation
    Plans: Requires federal agencies to develop natural resource
    adaptation plans, consistent with the National Strategy,
    including prioritized goals and a schedule for implementation
    of adaptation programs within their respective jurisdictions.
        Section 479, State Natural Resources Adaptation Plans:
    Requires states to develop Natural Resources Adaptation Plans
    as a condition for receiving funds under the programs in this
    subtitle.
        Section 480, Natural Resources Climate Change Adaptation
    Fund: Establishes a Natural Resources Climate Change Adaptation
    Fund. Allowances devoted to Natural Resources Adaptation are
    distributed to the States--84.4 percent to State wildlife
    agencies and 15.6 percent to State coastal agencies. Funds
    placed in the Natural Resources Climate Change Adaptation Fund
    are distributed to Federal agencies: 27.6 percent to the
    Department of the Interior (DOI) for endangered species, bird,
    and Fish and Wildlife Service programs, wildlife refuges, and
    the Bureau of Reclamation; 8.1 percent to DOI for cooperative
    grant programs; 4.9 percent to DOI for tribal programs; 19.5
    percent to the Land and Water Conservation Fund (\1/6\ to DOI
    for competitive grants, \1/3\ for land acquisition under Sec.
    1A7 of the Land and Water Conservation Fund Act, \1/3\ to the
    Department of Agriculture for land acquisition, \1/6\ to USDA
    for the Forestry Assistance Act); 5 percent to USDA for the
    Forest Service; 12.2 percent to EPA for freshwater ecosystems;
    8.1 percent to the Army Corps of Engineers for freshwater
    ecosystems; and 11.5 percent to NOAA for coastal and marine
    ecosystems. All funds authorized must be used for adaptation
    activities, consistent with federal plans.
        Section 481, National Wildlife Habitat and Corridors
    Information Program: Establishes a program in the Department of
    the Interior to support States and tribes in the development of
    a GIS database of fish and wildlife habitat corridors, and to
    facilitate the use of database tools in wildlife management
    programs.
        Section 482, Additional Provisions Regarding Indian Tribes:
    Clarifies that nothing in this subpart amends federal trust
    responsibilities to tribes, exempts information on Indian tribe
    sacred sites or cultural activities from FOIA, and clarifies
    that the Department of the Interior may apply the provisions of
    the Indian Self-Determination and Education Assistance Act as
    appropriate.

    Part 2--International Climate Change Adaptation Program

        Sections 491-493, Findings and Purposes, Definitions,
    International Climate Change Adaptation Program: Establishes an
    International Climate Change Adaptation Program within USAID to
    provide U.S. assistance to the most vulnerable developing
    countries for adaptation to climate change. Resources allocated
    to this program will supplement and not replace other
    international adaptation assistance.
        Section 494, Distribution of Allowances: The Administrator
    of USAID shall distribute allowances bilaterally and through
    multilateral funds or institutions pursuant to the UNFCCC.
    Multilateral institutions must receive between 40 and 60
    percent of allowances; multilateral fund eligibility is
    contingent on developing world participation, transparency
    requirements, and community engagement.
        Sections 495, Bilateral Assistance. The Administrator of
    USAID shall distribute allowances through public or private
    organizations to provide assistance to the most vulnerable
    developing countries for adaptation efforts. The Administrator
    must prioritize assistance based on vulnerability to climate
    change. The bilateral assistance program must ensure community
    engagement and consultation, and will seek to align broader
    U.S. foreign policy goals with its assistance. The program may
    use its assistance to support projects, policies, or programs,
    or to build program capacity in developing countries.

                           Explanation of Amendments

        During full Committee consideration of H.R. 2454, there
    were 94 amendments offered and 36 of those amendments were
    adopted. An amendment in the nature of a substitute offered by
    Mr. Waxman and Mr. Markey served as the markup vehicle for
    consideration of H.R. 2454. The amendments offered were to the
    Waxman-Markey substitute amendment, which was adopted by a
    voice vote, amended.
        The following is a brief explanation of each of the
    amendments adopted by the Committee to H.R. 2454:
        Tuesday, May 19, 2009. The Committee approved the following
    11 amendments during consideration of H.R. 2454:
        Amendment offered by Rep. Dingell: Agreed to by a recorded
    vote, 51-6. This amendment establishes a self-sustaining Clean
    Energy Deployment Administration within the Department of
    Energy to promote the domestic development and deployment of
    clean energy technologies. The Clean Energy Deployment
    Administration would partner with and support private capital
    markets to promote access to affordable financing for a range
    of clean energy technologies that might otherwise be unable to
    secure financing. The amendment ensures support for a variety
    of next generation technologies by limiting to 30 percent the
    amount of financial assistance provided to any one technology.
    It also includes reforms to the loan guarantee program
    established by Title 17 of the Energy Policy Act of 2005.
        Amendment offered by Rep. Sutton: Agreed to by a recorded
    vote, 50-4, 1 present. This amendment authorizes a new ``Cash
    for Clunkers'' program. Under this program, consumers may trade
    in their old, gas-guzzling vehicles and receive vouchers worth
    up to $4,500 to help pay for new, more fuel efficient cars and
    trucks. The program is authorized for $4 billion for one year,
    providing for approximately one million new car or truck
    purchases.
        New passenger cars which achieve at least 22 mpg are
    eligible for a $3,500 voucher if the performance of the new car
    is at least 4 mpg higher than the old vehicle and a $4,500
    voucher if the performance of the new car is at least 10 mpg
    higher than the old vehicle. Light duty trucks which achieve at
    least 18 mpg are eligible for a $3,500 voucher if the
    performance of the new truck is at least 2 mpg higher than the
    old vehicle and a $4,500 voucher if the performance of the new
    truck is at least 5 mpg higher than the old vehicle. Large
    light duty trucks which achieve at least 15 mpg are eligible
    for a $3,500 voucher if the performance of the new truck is at
    least 1 mpg higher than the old vehicle and a $4,500 voucher if
    the performance of the new truck is at least 2 mpg higher than
    the old vehicle. Consumers can also trade in a pre-2002 work
    truck (defined as a pick-up truck or cargo van weighing from
    8,500-10,000 pounds) and receive a voucher worth $3,500 for a
    new work truck in the same or smaller weight class. Consumers
    can also ``trade down,'' receiving a $3,500 voucher for trading
    in an older work truck and purchasing a smaller light-duty
    truck weighing from 6,000-8,500 pounds. Work truck purchases
    are capped such that the total funds used to purchase work
    trucks cannot exceed 7.5 percent of all program funds. The
    section also includes important consumer protections and
    protections against program fraud.
        Amendment offered by Rep. Eshoo: Agreed to by a voice vote.
    This amendment authorizes the Secretary of Energy to provide
    grants to nonprofit organizations that conduct competitive
    programs to identify and support start-up businesses proposing
    products or services in areas of energy efficiency, renewable
    energy, air quality, water quality and conservation,
    transportation, smart grid, green building, and waste
    management.
        Amendment offered by Rep. Baldwin: Agreed to by a recorded
    vote, 30-19. This amendment requires the Secretary of Energy to
    create building assessment centers at institutions of higher
    education to identify opportunities to optimize the energy and
    environmental performance of buildings. The centers would also
    promote emerging technologies and research and development to
    improve buildings' energy and environmental performance.
    Additionally, the centers would train engineers, architects,
    and building technicians in energy efficient building design
    and operation.
        This amendment also provides for the establishment of not
    more than 10 regional centers for energy and environmental
    knowledge and outreach (CEEKO) to coordinate various energy-
    related research centers. Operating in coordination with each
    CEEKO would be one or more industrial research and assessment
    center, building assessment center, and clean energy
    application center located in that CEEKO's region. Institutions
    of higher education would compete to house such centers and
    would operate internship programs to train students in energy
    efficiency with Federal funding supporting up to 50 percent of
    the costs.
        Amendment offered by Rep. Christensen: Agreed to by a voice
    vote.
        This amendment would amend the diesel emission reduction
    grant program established by Subtitle G of title VII of the
    Energy Policy Act of 2005 (42 U.S.C. 16131 et seq.) by adding
    American Samoa, Guam, the Commonwealth of the Northern Mariana
    Islands, Puerto Rico, and the Virgin Islands to the list of
    States eligible to receive grants, and by adjusting the grant
    distribution formula accordingly.
        Amendment offered by Rep. Space: Agreed to by a voice vote.
    This amendment modifies the eligibility criteria that owners or
    operators of certain electric generating projects must meet in
    order to receive allowances under section 786 (commercial
    deployment of carbon capture and sequestration technologies).
    The amendment establishes the conditions under which projects
    that retrofit carbon capture and sequestration (CCS) equipment
    onto a portion of a large, existing power plant's flue gas
    stream would be eligible to receive allowances. It is likely
    that at least some existing electric generating units would be
    unable, for technical reasons, to retrofit CCS technologies
    such that the entire flue gas stream of the electric generating
    unit is treated by those technologies. Early retrofit
    applications are likely only to treat a portion of a power
    plant's flue gas stream, rather than all of it. Under the
    amended language, retrofit projects that apply CCS technology
    to the flue gas of at least 200 megawatts of the plant's
    capacity would be eligible (though retrofits projects that
    treat the full stream would still qualify under
    786(b)(1)(A)(i)). Such projects would need to measure emission
    reductions only for the relevant portion of the flue gas, not
    for 100 percent of the plant's flue gas. The amendment limits
    the eligibility of retrofit projects to receive allowances
    under subsections (b)(1)(A)(ii) and ((b)(1)(A)(iv)(II) to the
    first 1 gigawatt of treated flue gas (that is, the retrofit of
    CCS technologies to the flue gas generated by 1 gigawatt in
    cumulative generating capacity), as reported by the
    Administrator.
        En Bloc Amendment offered by Rep. Baldwin: Rep. Baldwin
    offered en bloc an amendment offered by herself and Rep. Rush.
    The Baldwin en bloc amendment was considered and agreed to by
    voice vote.
        1. Amendment offered by Rep. Baldwin: This amendment
    requires Federal Energy Regulatory Commission regulations
    implementing the Combined Efficiency and Renewable Electricity
    Standard to include procedures for counting electricity savings
    achieved by solar water heating and solar light pipe
    technology.
        2. Amendment offered by Rep. Rush: This amendment makes two
    changes to section 132 of the Act, which governs the use of
    emission allowances distributed to States to support energy
    efficiency and renewable energy programs. First, the amendment
    makes low-income community energy efficiency programs that are
    consistent with the Department of Energy grant program
    established under section 264 of the Act eligible for receipt
    of support under section 132. Second, it requires that each
    State use at least 1 percent of the emission allowances that it
    receives under section 132 to support such programs.
        En Bloc Amendment offered by Rep. Baldwin: Rep. Baldwin
    offered en bloc an amendment offered by Reps. Inslee and
    Schakowsky. The Inslee and Schakowsky amendments were agreed to
    by a recorded vote, 36-20.
        3. Amendment offered by Rep. Inslee: This amendment
    requires the Secretary of Energy to establish a National
    Bioenergy Partnership to support the institutional and physical
    infrastructure necessary to promote the deployment of
    sustainable biomass fuels and bioenergy technologies.
        4. Amendment offered by Rep. Schakowsky: This amendment
    establishes an Office of Consumer Advocacy at the Federal
    Energy Regulatory Commission to identify and defend the
    consumer interest in proceedings before the Commission. The
    office would be headed by a Presidentially-appointed Director,
    and would represent energy customers through investigations of
    rates, in complaints, and on appeal of Commission decisions
    concerning such matters.
        Amendment offered by Rep. Castor: Agreed to by a recorded
    vote, 32-18. This amendment provides that, notwithstanding any
    provision in the Public Utility and Regulatory Policies Act of
    1978 (PURPA), any State may establish rates to be paid by
    state-regulated utilities intended to provide incentives for
    development of renewable energy. In the past, some have
    interpreted PURPA to bar such incentive rates to the extent
    they exceed the ``avoided cost'' of power a utility could
    generate or procure from any other source.
        Wednesday, May 20, 2009. The Committee approved the
    following 16 amendments during consideration of H.R. 2454:
        Amendment offered by Rep. Green: Agreed to by a voice vote.
    This amendment to section 786(b)(1)(B)(ii) changes the
    applicable point of application for eligible industrial
    projects under section 786 (commercial deployment of carbon
    capture and sequestration technologies). The original text
    referred to a ``50 percent reduction in emissions of the carbon
    dioxide produced by the source''; the amendment strikes the
    word ``source'' and replaces it with the term ``emission
    point.'' This modification reflects the recognition that an
    industrial facility may have many emission points, as opposed
    to one large emission source, such as the flue gas stack of a
    power plant. Under the amended language, a single emission
    point at an industrial facility--for example, a particular
    emission unit within a refinery, rather than the refinery as a
    whole--would be the relevant point against which to measure
    emission limits for an industrial source project under section
    786.
        Amendment offered by Rep. Shadegg: Modified by unanimous
    consent, agreed to as modified by a voice vote. This amendment
    requires the EPA Administrator, in consultation with the
    Department of State and the United States Trade Representative,
    to annually prepare a report to Congress on whether China and
    India have adopted greenhouse gas emissions standards at least
    as strict as the standards required under this Act. In the case
    of a determination that China and India have not adopted such
    standards, the Administrator is to notify the media and
    Congress of the determination.
        En Bloc Amendment offered by Rep. Matsui: Rep. Matsui
    offered en bloc an amendment offered by Reps. Baldwin and
    Eshoo. The amendments were agreed to by voice vote.
        1. Amendment offered by Rep. Baldwin: This amendment
    provides for the Secretary of Energy to conduct an assessment
    of the stock and usage of electric motors and motor-driven
    equipment from an energy efficiency perspective and to identify
    opportunities for upgrading such motors to improve energy
    efficiency. The Secretary is then instructed to establish a
    national program targeted at motor end-users to make them aware
    of the potential energy efficiency gains that could be realized
    by using more efficient motors and motor control equipment.
        2. Amendment offered by Rep. Eshoo: This amendment requires
    the Director of the Office of Management and Budget to
    collaborate with each Federal agency to create an
    implementation strategy for the purchase and use of energy
    efficient information and communication technologies and
    practices, establishing performance goals for each agency
    within 6 months of enactment. Such technologies and practices
    include advanced metering, efficient data center strategies,
    updated applications, building systems, and telework.
        En Bloc Amendment offered by Rep. Matsui: Rep. Matsui
    offered en bloc an amendment offered by herself and Reps.
    Baldwin and Welch. The amendments were agreed to by voice vote.
        3. Amendment offered by Rep. Baldwin: This amendment
    establishes a rebate program for replacement of low efficiency
    industrial-scale electric motors with high-efficiency motors.
    The rebate amount is $25 per unit of nameplate horsepower of
    the new motor to the purchaser of that motor, and $5 to the
    distributor of that motor.
        4. Amendment offered by Rep. Matsui: This amendment
    authorizes a grant program through the Department of Energy to
    provide technical and financial assistance to retail power
    providers that carry out targeted tree planting programs, which
    reduce energy use and demand peaks in residential and small
    office settings.
        5. Amendment offered by Rep. Welch: This amendment declares
    a national energy efficiency goal of improving overall energy
    productivity of the United States by 2.5 percent per year
    beginning in 2012 and continuing through 2030. It instructs the
    Secretary of Energy, the Administrator of the Environmental
    Protection Agency, and other relevant federal agencies, with
    public input, to collaborate on a strategic plan to achieve
    such a national goal, detailing the regulatory, funding, and
    policy priorities required to do so, and to update that plan
    biennially.
        Amendment offered by Rep. Matheson: Agreed to by a voice
    vote. This amendment modifies the violation and enforcement
    provisions of the building code provisions in section 201 of
    the Act. The amendment directs the Secretary of Energy to
    conduct a rulemaking to determine appropriate violations and
    penalties within three years of enactment, thus allowing for
    stakeholder input.
        En Bloc Amendment offered by Rep. McNerney: Rep. McNerney
    offered en bloc an amendment offered by Rep. Christensen. The
    Christensen amendment was considered was agreed to by voice
    vote.
        1. Amendment offered by Rep. Christensen: This amendment
    requires the Secretary of Energy to establish a team of
    technical, policy, and financial experts to address the energy
    needs of the islands that make up U.S. territories or are
    otherwise affiliated with the U.S. The team will assess the
    means of reducing these islands' reliance on imported fossil
    energy, increasing the use of indigenous energy, and increasing
    the efficiency of energy use on the islands. The team will also
    develop an energy action plan for each island based on that
    assessment.
        En Bloc Amendment offered by Rep. McNerney: Rep. McNerney
    offered en bloc an amendment offered by himself and Rep.
    Baldwin. The McNerney and Baldwin amendments were agreed to by
    a recorded vote, 34-21.
        2. Amendment offered by Rep. McNerney: This amendment
    authorizes the EPA's WaterSense program, a voluntary labeling
    program that labels water-efficient high-performance products
    and services. This will provide the same type of labeling for
    water efficient products and services as is already done for
    energy efficient products under the existing Energy Star
    program. It also directs federal agencies to make cost-
    effective water-efficient procurement decisions whenever
    possible. Finally, it authorizes grants to state governments
    that establish programs that offer financial incentives to
    consumers who purchase and install water-efficient products and
    services such as those labeled by WaterSense.
        3. Amendment offered by Rep. Baldwin: This amendment would
    create a new product carbon disclosure program at EPA. Not
    later than 18 months after the date of enactment, EPA would be
    required to issue a report to Congress regarding whether a
    national product carbon disclosure program and labeling program
    would be effective in reducing greenhouse gas emissions and
    other related matters. No later than 36 months after the date
    of enactment, EPA would be required to establish a national
    product carbon disclosure program, participation in which shall
    be voluntary. The national product carbon disclosure program
    may include a product carbon labeling program.
        Amendment offered by Rep. Sullivan: Agreed to by a voice
    vote. This amendment adds use of alternative fuel transit buses
    to the list of strategies to be considered when planning to
    reduce greenhouse gas emissions from the transportation sector,
    pursuant to section 222.
        Amendment offered by Rep. Welch: Agreed to by a division
    vote of, 25-4. This amendment would create and authorize funds
    for an EPA program to replace wood stoves or pellet stoves that
    do not meet specified EPA standards of performance for new
    residential wood heaters with ones that do meet those
    standards. The amendment would also allow EPA to continue to
    accept wood stove or pellet stove replacement projects as
    Supplemental Environmental Projects provided that certain
    conditions are met.
        Amendment offered by Rep. Eshoo: Agreed to by a division
    vote of, 26-10. This amendment adds a new subsection 721(h)
    that requires the Administrator to conduct, by no later than
    March 31, 2014, an assessment of how non-HFC
    (hydrofluorocarbon) fluorinated gases are regulated under Title
    III. H.R. 2454 regulates non-HFC fluorinated gases in either of
    two ways. Emissions of nitrogen trifluoride (NF3) are regulated
    at the point of emission (or ``downstream''), meaning the
    entity at which NF3 emissions occur is the same entity with
    compliance obligations for those emissions under section
    722(b)(4). Other non-HFC fluorinated gases are regulated at the
    point of manufacture or importation (``upstream''), meaning the
    entity that produces or imports the gas is the entity with
    compliance obligations under section 722(b)(3). Section 721(h)
    directs the Administrator to assess the regulation of non-HFC
    fluorinated gases (other than NF3, which is addressed
    separately) to determine whether regulation of such gases
    should be moved downstream to the point of emission. The
    Administrator is required to examine a number of factors,
    including the environmental effectiveness, cost effectiveness,
    and administrative feasibility of changing the point of
    regulation. The amendment gives the Administrator discretion to
    change the point of regulation for some or all non-HFC, non-NF3
    fluorinated gases by rule if, based on the assessment, the
    Administrator determines that such gases can be best regulated
    downstream. This would be accomplished by changing the
    definition of covered entity under section 700(13)(C) with
    respect to such fluorinated gases and establishing other
    requirements that may be necessary to ensure compliance by
    relevant entities. Section 721(h) does not give the
    Administrator authority to change the point of regulation with
    respect to emissions of NF3.
        Amendment offered by Rep. Stupak: Agreed to by a recorded
    vote, 33-20. This amendment grants cease-and-desist authority
    to the Federal Energy Regulatory Commission under the Federal
    Power Act, Natural Gas Act, and Natural Gas Policy Act to
    prevent violations of these Acts.
        Amendment offered by Rep. Hill: Agreed to by a voice vote.
    This amendment modifies new Clean Air Act section 711(d)
    regarding the procedure the Administrator would be required to
    follow in deciding whether to list a substance as a greenhouse
    gas. As amended, prior to making a determination regarding the
    listing of a substance as a greenhouse gas, section 711(d)
    would require the Administrator to notify the Science Advisory
    Board (SAB), consider written recommendations from the SAB, and
    consult with the SAB. The SAB would be required to formulate
    recommendations regarding such determination, subject to a peer
    review process, and submit those recommendations to the
    Administrator.
        Thursday, May 21, 2009. The Committee approved the
    following 9 amendments during consideration of H.R. 2454:
        Amendment offered by Rep. Space: Agreed to by a voice vote.
    This amendment modifies new Clean Air Act sections 783 and 784
    regarding the allocation of allowances to electricity and
    natural gas local distribution companies, clarifying and
    strengthening provisions to ensure that the allowances are used
    for the benefit of retail ratepayers. Changes to sections
    783(b)(1) and 784(b)(1) clarify that allowances are distributed
    to local distribution companies ``for the benefit of retail
    ratepayers.'' Changes to sections 783(b)(7) and 784(b)(7)
    require that the Administrator's audits of local distribution
    companies' use of allowances ensure that the allowances have
    been used exclusively for the benefit of retail ratepayers.
        Amendment offered by Rep. Butterfield: Agreed to by a voice
    vote. This amendment modifies the provisions governing emission
    standards for heavy-duty motor vehicles and engines and non-
    road vehicles and engines in section 221. With regard to heavy-
    duty vehicles and engines, the amendment provides adequate
    stability and lead-time for implementation of the standards,
    ensuring that standards apply for a period no less than 3 model
    years beginning no earlier than the model year commencing 4
    years after such regulations are promulgated. The amendment
    also included provisions to ensure that heavy-duty vehicles and
    engines are not doubly regulated. With regard to nonroad
    vehicles and engines, the amendment directs the Administrator
    to focus initially on classes or categories of new nonroad
    vehicles or engines that both contribute significantly to the
    total emissions of greenhouse gases from nonroad engines and
    vehicles and provide the greatest potential for significant and
    cost-effective reductions in emissions of greenhouse gases.
        Amendment offered by Rep. Braley: Agreed to by voice vote.
    This amendment adds renewable fuel pipelines to the list of
    projects and technologies available for loan guarantees under
    Title XXII of the Energy Policy Act of 2005.
        Amendment offered by Rep. Weiner: Agreed to by voice vote,
    as amended. This amendment directs the Department of Energy and
    the Environmental Protection Agency in carrying out the Energy
    Star program to include consideration of prototype products,
    consider ways of providing more detailed comparative
    information among Energy Star products, review product
    qualifications on a regular basis, update qualifications as
    necessary, and provide proof of performance through testing of
    products purchased in the market.
        Amendment offered by Rep. Buyer: Agreed to by voice vote.
    This amendment adopts a standard requiring utilities (that sell
    in excess of 4,000,000 megawatt hours of electricity) to
    interconnect with and to provide net metering of power
    deliveries to and receipts from Federal agencies that own,
    operate or site facilities generating renewable energy. The net
    metering service is to be offered to such Federal agencies on
    the basis of non-discriminatory time-sensitive rates.
        Amendment offered by Rep. Sutton: Agreed to by a recorded
    vote, 39-18. This amendment would require recipients of
    emission allowances or funding under the Act to provide
    reasonable assurances that all laborers and mechanics employed
    by contractors and subcontractors on projects funded directly
    by or assisted in whole or in part by the federal government
    pursuant to this Act will be paid at least prevailing wages as
    determined by the Secretary of Labor in accordance with what is
    commonly known as the Davis-Bacon Act (subchapter IV of chapter
    31 of title 40, United States Code). The provisions would not
    apply, however, to retrofitting of any residential building or
    of specified nonresidential buildings.
        Amendment offered by Rep. Inslee: Agreed to by voice vote.
    This amendment amends Title XVII of the Energy Policy Act of
    2005 to extend the loan guarantee authority in that Title to
    cover the development, construction, or integration of high-
    efficiency or superconductive high-voltage electricity
    transmission technologies. It also provides such loan
    guarantees for manufacturing plants producing such
    technologies. It separately authorizes the Secretary of Energy
    to make grants for up to 50 percent of the cost of the first
    project incorporating such technologies, up to a maximum of
    $100,000,000 during Fiscal Year 2010.
        Amendment offered by Rep. Space: Agreed to by voice vote.
    This amendment modifies the criteria for determining whether
    emissions reductions achieved by an offset project are
    additional. The underlying text provides in part that a
    reduction in greenhouse gas emissions or a sequestration of
    greenhouse gases would be considered additional only if it
    resulted from an activity that began after January 1, 2009, or
    began after January 1, 2001, and had been registered under an
    approved early offset program. The amendment adds a second
    exception to the January 1, 2009, date by providing that with
    respect to activities that are readily reversible, the
    Administrator may set an alternative date between January 1,
    2001, and January 1, 2009, if the Administrator determines that
    setting an alternative date may produce an environmental
    benefit by removing an incentive to cease and then reinitiate
    activities that began prior to January 1, 2009.
        Managers Amendment: Agreed to by voice vote. This amendment
    includes a number of changes. It changes the mechanism for
    distributing allowance proceeds to consumers by amending new
    section 789 of the Clean Air Act and directing the Secretary of
    the Treasury (rather than the President) to provide tax refunds
    on a per capita basis using funds deposited in the Climate
    Change Consumer Fund from the sale of allowances.
        This amendment strikes section 432(j).
        This amendment amends new section 782(m) of the Clean Air
    Act and section 480 of ACES Act by modifying the method of
    using allowance value to support Natural Resource Adaptation.
    Instead of auctioning all allowances allocated to this purpose,
    under the amendment, states will receive allowances directly
    for specified purposes. The changes in percentages reflect the
    division of allowance value into two components (direct
    allocation to states and auctioning of other allowances), but
    does not change the amount of total allowance value distributed
    to specific purposes under this section. This amendment also
    changes the provision in section 480 regarding appropriations.
        This amendment amends section 453 in several ways,
    including: adding a requirement for state climate adaptation
    plans; adding section 453(d) and other provisions regarding
    projects to reduce flood events; and adding section 453(g) to
    state Congress's intent that emission allowances distributed
    under subpart E of Title IV should be used to supplement, not
    replace, existing sources of funding.
        This amendment amends certain market oversight provisions
    added to the Federal Power Act by this bill.
        The amendment modifies the definition of ``distributed
    renewable generation facility'' in section 101 of the Act (the
    Combined Efficiency and Renewable Electricity Standard). The
    amendment expands the definition to include facilities that are
    no greater than 4 megawatts in capacity, are placed in service
    after the date of enactment, and generate electricity from a
    renewable energy resource other than by means of combustion.
        This amendment modifies new section 786(e) of the Clean Air
    Act regarding limitations on allowances provided for the
    commercial deployment of carbon capture and storage technology.
        This amendment makes technical modifications to new section
    619 of the Clean Air Act.
        This amendment makes technical modifications to new section
    764 of the Clean Air Act and adds phosphate to a provision
    regarding treatment of data for metals.
        This amendment makes technical corrections to new section
    782(e) regarding the allocation of allowances to trade-
    vulnerable industries.
        This amendment adds clarifying language to section
    144(d)(1).
        This amendment modifies new section 216A(a) of the Federal
    Power Act to provide greater specificity regarding the type of
    higher efficiency transmission conductors that should be
    considered in the transmission planning process.
        This amendment adds a new section 794 to the Clean Air Act
    that requires the Comptroller General to prepare biannual
    reviews of the programs administered by the Federal Government
    that distribute emission allowances or funds from Federal
    auctions of allowances.
        This amendment makes minor modifications to allowance
    allocation formulas in section 782(f) and (p).
        This amendment adds section 205, which amends section
    453(c)(1) of the Energy Independence and Security Act of 2007,
    regarding energy efficiency for data center buildings.
        This amendment makes technical corrections to new section
    821 of the Clean Air Act.
        This amendment modifies new section 32920 of title 49,
    U.S.C., regarding open fuel standard for vehicles.

             Changes in Existing Law Made by the Bill, as Reported

      In compliance with clause 3(e) of rule XIII of the Rules of
    the House of Representatives, changes in existing law made by
    the bill, as reported, are shown as follows (existing law
    proposed to be omitted is enclosed in black brackets, new
    matter is printed in italic, existing law in which no change is
    proposed is shown in roman):

                 PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978

    SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

      (a) * * *
      (b) Table of Contents.--
         * * * * * * *

                       TITLE VI--MISCELLANEOUS PROVISIONS

         * * * * * * *
    Sec. 610. Combined efficiency and renewable electricity standard.

               *       *       *       *       *       *       *

    TITLE I--RETAIL REGULATORY POLICIES FOR ELECTRIC UTILITIES

               *       *       *       *       *       *       *

                  Subtitle B--Standards For Electric Utilities

    SEC. 111. CONSIDERATION AND DETERMINATION RESPECTING CERTAIN RATEMAKING
                        STANDARDS.

      (a) * * *

               *       *       *       *       *       *       *

      (d) Establishment.--The following Federal standards are
    hereby established:
              (1) * * *

               *       *       *       *       *       *       *

              (20) Plug-in electric drive vehicle infrastructure.--
                      (A) Utility plan for infrastructure.--Each
                    electric utility shall develop a plan to
                    support the use of plug-in electric drive
                    vehicles, including heavy-duty hybrid electric
                    vehicles. The plan may provide for deployment
                    of electrical charging stations in public or
                    private locations, including street parking,
                    parking garages, parking lots, homes, gas
                    stations, and highway rest stops. Any such plan
                    may also include--
                              (i) battery exchange, fast charging
                            infrastructure and other services;
                              (ii) triggers for infrastructure
                            deployment based upon market
                            penetration of plug-in electric drive
                            vehicles; and
                              (iii) such other elements as the
                            State determines necessary to support
                            plug-in electric drive vehicles.
                    Each plan under this paragraph shall provide
                    for the deployment of the charging
                    infrastructure or other infrastructure
                    necessary to adequately support the use of
                    plug-in electric drive vehicles.
                      (B) Support requirements.--Each State
                    regulatory authority (in the case of each
                    electric utility for which it has ratemaking
                    authority) and each utility (in the case of a
                    nonregulated utility) shall--
                              (i) require that charging
                            infrastructure deployed is
                            interoperable with products of all auto
                            manufacturers to the extent possible;
                            and
                              (ii) consider adopting minimum
                            requirements for deployment of
                            electrical charging infrastructure and
                            other appropriate requirements
                            necessary to support the use of plug-in
                            electric drive vehicles.
                      (C) Cost recovery.--Each State regulatory
                    authority (in the case of each electric utility
                    for which it has ratemaking authority) and each
                    utility (in the case of a nonregulated utility)
                    shall consider whether, and to what extent, to
                    allow cost recovery for plans and
                    implementation of plans.
                      (D) Smart grid integration.--The State
                    regulatory authority (in the case of each
                    electric utility for which it has ratemaking
                    authority) and each utility (in the case of a
                    nonregulated utility) shall, in accordance with
                    regulations issued by the Federal Energy
                    Regulatory Commission pursuant to section
                    1305(d) of the Energy Independence and Security
                    Act of 2007--
                              (i) establish any appropriate
                            protocols and standards for integrating
                            plug-in electric drive vehicles into an
                            electrical distribution system,
                            including Smart Grid systems and
                            devices as described in title XIII of
                            the Energy Independence and Security
                            Act of 2007;
                              (ii) include, to the extent feasible,
                            the ability for each plug-in electric
                            drive vehicle to be identified
                            individually and to be associated with
                            its owner's electric utility account,
                            regardless of the location that the
                            vehicle is plugged in, for purposes of
                            appropriate billing for any electricity
                            required to charge the vehicle's
                            batteries as well as any crediting for
                            electricity provided to the electric
                            utility from the vehicle's batteries;
                            and
                              (iii) review the determination made
                            in response to section 1252 of the
                            Energy Policy Act of 2005 in light of
                            this section, including whether time-
                            of-use pricing should be employed to
                            enable the use of plug-in electric
                            drive vehicles to contribute to meeting
                            peak-load and ancillary service power
                            needs.

    SEC. 112. OBLIGATIONS TO CONSIDER AND DETERMINE.

      (a) * * *
      (b) Time Limitations.--(1) * * *

               *       *       *       *       *       *       *

      (7)(A) Not later than 3 years after the date of enactment of
    this paragraph, each State regulatory authority (with respect
    to each electric utility for which it has ratemaking authority)
    and each nonregulated utility shall commence the consideration
    referred to in section 111, or set a hearing date for
    consideration, with respect to the standard established by
    paragraph (20) of section 111(d).
      (B) Not later than 4 years after the date of enactment of the
    this paragraph, each State regulatory authority (with respect
    to each electric utility for which it has ratemaking
    authority), and each nonregulated electric utility, shall
    complete the consideration, and shall make the determination,
    referred to in section 111 with respect to the standard
    established by paragraph (20) of section 111(d).
      (c) Failure To Comply.--Each State regulatory authority (with
    respect to each electric utility for which it has ratemaking
    authority) and each nonregulated electric utility shall
    undertake the consideration, and make the determination,
    referred to in section 111 with respect to each standard
    established by section 111(d) in the first rate proceeding
    commenced after the date three years after the date of
    enactment of this Act respecting the rates of such utility if
    such State regulatory authority or nonregulated electric
    utility has not, before such date, complied with subsection
    (b)(2) with respect to such standard. In the case of each
    standard established by paragraphs (11) through (13) of section
    111(d), the reference contained in this subsection to the date
    of enactment of this Act shall be deemed to be a reference to
    the date of enactment of such paragraphs (11) through (13). In
    the case of the standard established by paragraph (14) of
    section 111(d), the reference contained in this subsection to
    the date of enactment of this Act shall be deemed to be a
    reference to the date of enactment of such paragraph (14). In
    the case of the standard established by paragraph (15), the
    reference contained in this subsection to the date of enactment
    of this Act shall be deemed to be a reference to the date of
    enactment of paragraph (15). In the case of the standards
    established by paragraphs (16) through (19) of section 111(d),
    the reference contained in this subsection to the date of
    enactment of this Act shall be deemed to be a reference to the
    date of enactment of such paragraphs. In the case of the
    standards established by paragraph (20) of section 111(d), the
    reference contained in this subsection to the date of enactment
    of this Act shall be deemed to be a reference to the date of
    enactment of such paragraph.
      (d) Prior State Actions.--Subsections (b) and (c) of this
    section shall not apply to the standards established by
    paragraphs (11) through (13) and paragraphs (16) through [(19)]
    (20) of section 111(d) in the case of any electric utility in a
    State if, before the enactment of this subsection--
              (1) * * *

               *       *       *       *       *       *       *

    SEC. 113. ADOPTION OF CERTAIN STANDARDS.

      (a) * * *
      (b) Establishment.--The following Federal standards are
    hereby established:
              (1) * * *

               *       *       *       *       *       *       *

              (6) Net metering for federal agencies.--Each electric
            utility shall offer to arrange (either directly or
            through a third party) to make interconnection and net
            metering available to Federal Government agencies,
            offices, or facilities in accordance with the
            requirements of section 115(j). The standard under this
            paragraph shall apply only to electric utilities that
            sold over 4,000,000 megawatt hours of electricity in
            the preceding year to the ultimate consumers thereof.
            In the case of a standard under this paragraph, a
            period of 1 year after the date of the enactment of
            this section shall be substituted for the 2-year period
            referred to in other provisions of this section.

               *       *       *       *       *       *       *

    SEC. 115. SPECIAL RULES FOR STANDARDS.

      (a) * * *

               *       *       *       *       *       *       *

      (j) Net Metering for Federal Agencies.--(1) The standard
    under paragraph (6) of section 113(b) shall require that rates
    and charges and contract terms and conditions for the sale of
    electric energy to the Federal Government or agency shall be
    the same as the rates and charges and contract terms and
    conditions that would be applicable if the agency did not own
    or operate a qualified generation unit and use a net metering
    system.
      (2)(A) The standard under paragraph (6) of section 113(b)
    shall require that each electric utility shall arrange to
    provide to the Government office or agency that qualifies for
    net metering an electrical energy meter capable of net metering
    and measuring, to the maximum extent practicable, the flow of
    electricity to or from the customer, using a single meter and
    single register, the cost of which shall be recovered from the
    customer.
      (B) In a case in which it is not practicable to provide a
    meter under subparagraph (A), the utility (either directly or
    through a third party) shall, at the expense of the utility
    install 1 or more of those electric energy meters.
      (3)(A) The standard under paragraph (6) of section 113(b)
    shall require that each electric utility shall calculate the
    electric energy consumption for the Government office or agency
    using a net metering system that meets the requirements of this
    subsection and paragraph (6) of section 113(b) and shall
    measure the net electricity produced or consumed during the
    billing period using the metering installed in accordance with
    this paragraph.
      (B) If the electricity supplied by the retail electric
    supplier exceeds the electricity generated by the Government
    office or agency during the billing period, the Government
    office or agency shall be billed for the net electric energy
    supplied by the retail electric supplier in accordance with
    normal billing practices.
      (C) If electric energy generated by the Government office or
    agency exceeds the electric energy supplied by the retail
    electric supplier during the billing period, the Government
    office or agency shall be billed for the appropriate customer
    charges for that billing period and credited for the excess
    electric energy generated during the billing period, with the
    credit appearing as a kilowatt-hour credit on the bill for the
    following billing period.
      (D) Any kilowatt-hour credits provided to the Government
    office or agency as provided in this subsection shall be
    applied to the Government office or agency electric energy
    consumption on the following billing period bill (except for a
    billing period that ends in the next calendar year). At the
    beginning of each calendar year, any unused kilowatt-hour
    credits remaining from the preceding year will carry over to
    the new year.
      (4) The standard under paragraph (6) of section 113(b) shall
    require that each electric utility shall offer a meter and
    retail billing arrangement that has time-differentiated rates.
    The kilowatt-hour credit shall be based on the ratio
    representing the difference in retail rates for each time-of-
    use rate, or the credits shall be reflected on the bill of the
    Government office or agency as a monetary credit reflecting
    retail rates at the time of generation of the electric energy
    by the customer-generator.
      (5) The standard under paragraph (6) of section 113(b) shall
    require that the qualified generation unit, interconnection
    standards, and net metering system used by the Government
    office or agency shall meet all applicable safety and
    performance and reliability standards established by the
    National Electrical Code, the Institute of Electrical and
    Electronics Engineers, Underwriters Laboratories, and the
    American National Standards Institute.
      (6) The standard under paragraph (6) of section 113(b) shall
    require that electric utilities shall not make additional
    charges, including standby charges, for equipment or services
    for safety or performance that are in addition to those
    necessary to meet the other standards and requirements of this
    subsection and paragraph (6) of section 113(b).
      (7) For purposes of this subsection and paragraph (6) of
    section 113(b):
              (A) The term ``Government'' means any office,
            facility, or agency of the Federal Government.
              (B) The term ``customer-generator'' means the owner
            or operator of a electricity generation unit.
              (C) The term ``electric generation unit'' means any
            renewable electric generation unit that is owned,
            operated, or sited on a Federal Government facility.
              (D) The term ``net metering'' means the process of--
                      (i) measuring the difference between the
                    electricity supplied to a customer-generator
                    and the electricity generated by the customer-
                    generator that is delivered to a utility at the
                    same point of interconnection during an
                    applicable billing period; and
                      (ii) providing an energy credit to the
                    customer-generator in the form of a kilowatt-
                    hour credit for each kilowatt-hour of
                    electricity produced by the customer-generator
                    from an electric generation unit.

               *       *       *       *       *       *       *

     TITLE II--CERTAIN FEDERAL ENERGY REGULATORY COMMISSION AND DEPARTMENT
    OF ENERGY AUTHORITIES

               *       *       *       *       *       *       *

    SEC. 210. COGENERATION AND SMALL, POWER PRODUCTION.

      (a) * * *

               *       *       *       *       *       *       *

      (o) Clarification of State Authority To Adopt Renewable
    Energy Incentives.--Notwithstanding any other provision of this
    Act or the Federal Power Act, a State legislature or regulatory
    authority may set the rates for a sale of electric energy by a
    facility generating electric energy from renewable energy
    sources pursuant to a State-approved production incentive
    program under which the facility voluntarily sells electric
    energy. For purposes of this subsection, ``State-approved
    production incentive program'' means a requirement imposed
    pursuant to State law, or by a State regulatory authority
    acting within its authority under State law, that an electric
    utility purchase renewable energy (as defined in section 609 of
    this Act) at a specified rate.

               *       *       *       *       *       *       *

    TITLE VI--MISCELLANEOUS PROVISIONS

               *       *       *       *       *       *       *

    SEC. 610. COMBINED EFFICIENCY AND RENEWABLE ELECTRICITY STANDARD.

      (a) Definitions.--For purposes of this section:
              (1) Chp savings.--The term ``CHP savings'' means--
                      (A) CHP system savings from a combined heat
                    and power system that commences operation after
                    the date of enactment of this section; and
                      (B) the increase in CHP system savings from,
                    at any time after the date of the enactment of
                    this section, upgrading, replacing, expanding,
                    or increasing the utilization of a combined
                    heat and power system that commenced operation
                    on or before the date of enactment of this
                    section.
              (2) Chp system savings.--The term ``CHP system
            savings'' means the electric output, and the
            electricity saved due to the mechanical output, of a
            combined heat and power system, adjusted to reflect any
            increase in fuel consumption by that system as compared
            to the fuel that would have been required to produce an
            equivalent useful thermal energy output in a separate
            thermal-only system.
              (3) Combined heat and power system.--The term
            ``combined heat and power system'' means a system that
            uses the same energy source both for the generation of
            electrical or mechanical power and the production of
            steam or another form of useful thermal energy,
            provided that--
                      (A) the system meets such requirements
                    relating to efficiency and other operating
                    characteristics as the Commission may
                    promulgate by regulation; and
                      (B) the net sales of electricity by the
                    facility to customers not consuming the thermal
                    output from that facility will not exceed 50
                    percent of total annual electric generation by
                    the facility.
              (4) Customer facility savings.--The term ``customer
            facility savings'' means a reduction in end-use
            electricity consumption (including recycled energy
            savings) at a facility of an end-use consumer of
            electricity served by a retail electric supplier, as
            compared to--
                      (A) in the case of a new facility,
                    consumption at a reference facility of average
                    efficiency;
                      (B) in the case of an existing facility,
                    consumption at such facility during a base
                    period, except as provided in subparagraphs (C)
                    and (D);
                      (C) in the case of new equipment that
                    replaces existing equipment with remaining
                    useful life, the projected consumption of the
                    existing equipment for the remaining useful
                    life of such equipment, and thereafter,
                    consumption of new equipment of average
                    efficiency of the same equipment type; and
                      (D) in the case of new equipment that
                    replaces existing equipment at the end of the
                    useful life of the existing equipment,
                    consumption by new equipment of average
                    efficiency of the same equipment type.
              (5) Distributed renewable generation facility.--The
            term ``distributed renewable generation facility''
            means a facility that--
                      (A) generates renewable electricity;
                      (B) primarily serves 1 or more electricity
                    consumers at or near the facility site; and
                      (C) is no greater than--
                              (i) 2 megawatts in capacity; or
                              (ii) 4 megawatts in capacity, in the
                            case of a facility that is placed in
                            service after the date of enactment of
                            this section and generates electricity
                            from a renewable energy resource other
                            than by means of combustion.
              (6) Electricity savings.--The term ``electricity
            savings'' means reductions in electricity consumption,
            relative to business-as-usual projections, achieved
            through measures implemented after the date of
            enactment of this section, limited to--
                      (A) customer facility savings of electricity,
                    adjusted to reflect any associated increase in
                    fuel consumption at the facility;
                      (B) reductions in distribution system losses
                    of electricity achieved by a retail electricity
                    distributor, as compared to losses attributable
                    to new or replacement distribution system
                    equipment of average efficiency;
                      (C) CHP savings; and
                      (D) fuel cell savings.
              (7) Federal land.--The term ``Federal land'' means
            land owned by the United States, other than land held
            in trust for an Indian or Indian tribe.
              (8) Federal renewable electricity credit.--The term
            ``Federal renewable electricity credit'' means a
            credit, representing one megawatt hour of renewable
            electricity, issued pursuant to subsection (e).
              (9) Fuel cell.--The term ``fuel cell'' means a device
            that directly converts the chemical energy of a fuel
            and an oxidant into electricity by electrochemical
            processes occurring at separate electrodes in the
            device.
              (10) Fuel cell savings.--The term ``fuel cell
            savings'' means the electricity saved by a fuel cell
            that is installed after the date of enactment of this
            section, or by upgrading a fuel cell that commenced
            operation on or before the date of enactment of this
            section, as a result of the greater efficiency with
            which the fuel cell transforms fuel into electricity as
            compared with sources of electricity delivered through
            the grid, provided that--
                      (A) the fuel cell meets such requirements
                    relating to efficiency and other operating
                    characteristics as the Commission may
                    promulgate by regulation; and
                      (B) the net sales of electricity from the
                    fuel cell to customers not consuming the
                    thermal output from the fuel cell, if any, do
                    not exceed 50 percent of the total annual
                    electricity generation by the fuel cell.
              (11) High conservation priority land.--The term
            ``high conservation priority land'' means land that is
            not Federal land and is--
                      (A) globally or State ranked as critically
                    imperiled or imperiled under a State Natural
                    Heritage Program; or
                      (B) old-growth or late-successional forest,
                    as identified by the office of the relevant
                    State Forester or relevant State agency with
                    regulatory jurisdiction over forestry
                    activities.
              (12) Other qualifying energy resource.--The term
            ``other qualifying energy resource'' means any of the
            following:
                      (A) Landfill gas.
                      (B) Wastewater treatment gas.
                      (C) Coal mine methane used to generate
                    electricity at or near the mine mouth.
                      (D) Qualified waste-to-energy.
              (13) Qualified hydropower.--The term ``qualified
            hydropower'' means--
                      (A) energy produced from increased efficiency
                    achieved, or additions of capacity made, on or
                    after January 1, 1992, at a hydroelectric
                    facility that was placed in service before that
                    date and does not include additional energy
                    generated as a result of operational changes
                    not directly associated with efficiency
                    improvements or capacity additions; or
                      (B) energy produced from generating capacity
                    added to a dam on or after January 1, 1992,
                    provided that the Commission certifies that--
                              (i) the dam was placed in service
                            before the date of the enactment of
                            this section and was operated for flood
                            control, navigation, or water supply
                            purposes and was not producing
                            hydroelectric power prior to the
                            addition of such capacity;
                              (ii) the hydroelectric project
                            installed on the dam is licensed (or is
                            exempt from licensing) by the
                            Commission and is in compliance with
                            the terms and conditions of the license
                            or exemption, and with other applicable
                            legal requirements for the protection
                            of environmental quality, including
                            applicable fish passage requirements;
                            and
                              (iii) the hydroelectric project
                            installed on the dam is operated so
                            that the water surface elevation at any
                            given location and time that would have
                            occurred in the absence of the
                            hydroelectric project is maintained,
                            subject to any license or exemption
                            requirements that require changes in
                            water surface elevation for the purpose
                            of improving the environmental quality
                            of the affected waterway.
              (14) Qualified waste-to-energy.--The term ``qualified
            waste-to-energy'' means energy from the combustion of
            municipal solid waste or construction, demolition, or
            disaster debris, or from the gasification or
            pyrolization of such waste or debris and the combustion
            of the resulting gas at the same facility, provided
            that--
                      (A) such term shall include only the energy
                    derived from the non-fossil biogenic portion of
                    such waste or debris;
                      (B) the Commission determines, with the
                    concurrence of the Administrator of the
                    Environmental Protection Agency, that the total
                    lifecycle greenhouse gas emissions attributable
                    to the generation of electricity from such
                    waste or debris are lower than those
                    attributable to the likely alternative method
                    of disposing of such waste or debris; and
                      (C) the owner or operator of the facility
                    generating electricity from such energy
                    provides to the Commission, on an annual
                    basis--
                              (i) a certification that the facility
                            is in compliance with all applicable
                            State and Federal environmental
                            permits;
                              (ii) in the case of a facility that
                            commenced operation before the date of
                            enactment of this section, a
                            certification that the facility meets
                            emissions standards promulgated under
                            sections 112 or 129 of the Clean Air
                            Act (42 U.S.C. 7412 or 7429) that apply
                            as of the date of enactment of this
                            section to new facilities within the
                            relevant source category; and
                              (iii) in the case of the combustion,
                            pyrolization, or gasification of
                            municipal solid waste, a certification
                            that each local government unit from
                            which such waste originates operates,
                            participates in the operation of,
                            contracts for, or otherwise provides
                            for, recycling services for its
                            residents.
              (15) Recycled energy savings.--The term ``recycled
            energy savings'' means a reduction in electricity
            consumption that results from a modification of an
            industrial or commercial system that commenced
            operation before the date of enactment of this section,
            in order to recapture electrical, mechanical, or
            thermal energy that would otherwise be wasted.
              (16) Renewable biomass.--The term ``renewable
            biomass'' means any of the following:
                      (A) Plant material, including waste material,
                    harvested or collected from actively managed
                    agricultural land that was in cultivation,
                    cleared, or fallow and nonforested on January
                    1, 2009.
                      (B) Plant material, including waste material,
                    harvested or collected from pastureland that
                    was nonforested on January 1, 2009.
                      (C) Nonhazardous vegetative matter derived
                    from waste, including separated yard waste,
                    landscape right-of-way trimmings, construction
                    and demolition debris or food waste (but not
                    municipal solid waste, recyclable waste paper,
                    painted, treated or pressurized wood, or wood
                    contaminated with plastic or metals).
                      (D) Animal waste or animal byproducts,
                    including products of animal waste digesters.
                      (E) Algae.
                      (F) Trees, brush, slash, residues, or any
                    other vegetative matter removed from within 600
                    feet of any building, campground, or route
                    designated for evacuation by a public official
                    with responsibility for emergency preparedness,
                    or from within 300 feet of a paved road,
                    electric transmission line, utility tower, or
                    water supply line.
                      (G) Residues from or byproducts of milled
                    logs.
                      (H) Any of the following removed from
                    forested land that is not Federal and is not
                    high conservation priority land:
                              (i) Trees, brush, slash, residues,
                            interplanted energy crops, or any other
                            vegetative matter removed from an
                            actively managed tree plantation
                            established--
                                      (I) prior to January 1, 2009;
                                    or
                                      (II) on land that, as of
                                    January 1, 2009, was cultivated
                                    or fallow and non-forested.
                              (ii) Trees, logging residue,
                            thinnings, cull trees, pulpwood, and
                            brush removed from naturally-
                            regenerated forests or other non-
                            plantation forests, including for the
                            purposes of hazardous fuel reduction or
                            preventative treatment for reducing or
                            containing insect or disease
                            infestation.
                              (iii) Logging residue, thinnings,
                            cull trees, pulpwood, brush and species
                            that are non-native and noxious, from
                            stands that were planted and managed
                            after January 1, 2009, to restore or
                            maintain native forest types.
                              (iv) Dead or severely damaged trees
                            removed within 5 years of fire,
                            blowdown, or other natural disaster,
                            and badly infested trees.
                      (I) Materials, pre-commercial thinnings, or
                    removed invasive species from National Forest
                    System land and public lands (as defined in
                    section 103 of the Federal Land Policy and
                    Management Act of 1976 (43 U.S.C. 1702)),
                    including those that are byproducts of
                    preventive treatments (such as trees, wood,
                    brush, thinnings, chips, and slash), that are
                    removed as part of a federally recognized
                    timber sale, or that are removed to reduce
                    hazardous fuels, to reduce or contain disease
                    or insect infestation, or to restore ecosystem
                    health, and that are--
                              (i) not from components of the
                            National Wilderness Preservation
                            System, Wilderness Study Areas,
                            Inventoried Roadless Areas, old growth
                            or mature forest stands, components of
                            the National Landscape Conservation
                            System, National Monuments, National
                            Conservation Areas, Designated
                            Primitive Areas, or Wild and Scenic
                            Rivers corridors;
                              (ii) harvested in environmentally
                            sustainable quantities, as determined
                            by the appropriate Federal land
                            manager; and
                              (iii) harvested in accordance with
                            Federal and State law and applicable
                            land management plans.
              (17) Renewable electricity.--The term ``renewable
            electricity'' means electricity generated (including by
            means of a fuel cell) from a renewable energy resource
            or other qualifying energy resources.
              (18) Renewable energy resource.--The term ``renewable
            energy resource'' means each of the following:
                      (A) Wind energy.
                      (B) Solar energy.
                      (C) Geothermal energy.
                      (D) Renewable biomass.
                      (E) Biogas derived exclusively from renewable
                    biomass.
                      (F) Biofuels derived exclusively from
                    renewable biomass.
                      (G) Qualified hydropower.
                      (H) Marine and hydrokinetic renewable energy,
                    as that term is defined in section 632 of the
                    Energy Independence and Security Act of 2007
                    (42 U.S.C. 17211).
              (19) Retail electric supplier.--
                      (A) In general.--The term ``retail electric
                    supplier'' means, for any given year, an
                    electric utility that sold not less than
                    4,000,000 megawatt hours of electric energy to
                    electric consumers for purposes other than
                    resale during the preceding calendar year.
                      (B) Inclusions and limitations.--For purposes
                    of determining whether an electric utility
                    qualifies as a retail electric supplier under
                    subparagraph (A)--
                              (i) the sales of any affiliate of an
                            electric utility to electric consumers,
                            other than sales to the affiliate's
                            lessees or tenants, for purposes other
                            than resale shall be considered to be
                            sales of such electric utility; and
                              (ii) sales by any electric utility to
                            an affiliate, lessee, or tenant of such
                            electric utility shall not be treated
                            as sales to electric consumers.
                      (C) Affiliate.--For purposes of this
                    paragraph, the term ``affiliate'' when used in
                    relation to a person, means another person that
                    directly or indirectly owns or controls, is
                    owned or controlled by, or is under common
                    ownership or control with, such person, as
                    determined under regulations promulgated by the
                    Commission.
              (20) Retail electric supplier's base amount.--The
            term ``retail electric supplier's base amount'' means
            the total amount of electric energy sold by the retail
            electric supplier, expressed in megawatt hours, to
            electric customers for purposes other than resale
            during the relevant calendar year, excluding--
                      (A) electricity generated by a hydroelectric
                    facility that is not qualified hydropower;
                      (B) electricity generated by a nuclear
                    generating unit placed in service after the
                    date of enactment of this section; and
                      (C) the proportion of electricity generated
                    by a fossil-fueled generating unit that is
                    equal to the proportion of greenhouse gases
                    produced by such unit that are captured and
                    geologically sequestered.
              (21) Retire and retirement.--The terms ``retire'' and
            ``retirement'' with respect to a Federal renewable
            electricity credit, means to disqualify such credit for
            any subsequent use under this section, regardless of
            whether the use is a sale, transfer, exchange, or
            submission in satisfaction of a compliance obligation.
              (22) Third-party efficiency provider.--The term
            ``third-party efficiency provider'' means any retailer,
            building owner, energy service company, financial
            institution or other commercial, industrial or
            nonprofit entity that is capable of providing
            electricity savings in accordance with the requirements
            of this section.
              (23) Total annual electricity savings.--The term
            ``total annual electricity savings'' means electricity
            savings during a specified calendar year from measures
            that were placed into service since the date of the
            enactment of this section, taking into account verified
            measure lifetimes or verified annual savings attrition
            rates, as determined in accordance with such
            regulations as the Commission may promulgate and
            measured in megawatt hours.
      (b) Annual Compliance Obligation.--
              (1) In general.--For each of calendar years 2012
            through 2039, not later than March 31 of the following
            calendar year, each retail electric supplier shall
            submit to the Commission an amount of Federal renewable
            electricity credits and demonstrated total annual
            electricity savings that, in the aggregate, is equal to
            such retail electric supplier's annual combined target
            as set forth in subsection (d), except as otherwise
            provided in subsection (g).
              (2) Demonstration of savings.--For purposes of this
            subsection, submission of demonstrated total annual
            electricity savings means submission of a report that
            demonstrates, in accordance with the requirements of
            subsection (f), the total annual electricity savings
            achieved by the retail electric supplier within the
            relevant compliance year.
              (3) Renewable electricity credits portion.--Except as
            provided in paragraph (4), each retail electric
            supplier must submit Federal renewable electricity
            credits equal to at least three quarters of the retail
            electric supplier's annual combined target.
              (4) State petition.--
                      (A) In general.--Upon written request from
                    the Governor of any State (including, for
                    purposes of this paragraph, the Mayor of the
                    District of Columbia), the Commission shall
                    increase, to not more than two fifths, the
                    proportion of the annual combined targets of
                    retail electric suppliers located within such
                    State that may be met through submission of
                    demonstrated total annual electricity savings,
                    provided that such increase shall be effective
                    only with regard to the portion of a retail
                    electric supplier's annual combined target that
                    is attributable to electricity sales within
                    such State.
                      (B) Contents.--A Governor's request under
                    this paragraph shall include an explanation of
                    the Governor's rationale for determining, after
                    consultation with the relevant State regulatory
                    authority and other retail electricity
                    ratemaking authorities within the State, to
                    make such request. The request shall specify
                    the maximum proportion of annual combined
                    targets (not more than two fifths) that can be
                    met through demonstrated total annual
                    electricity savings, and the period for which
                    such proportion shall be effective.
                      (C) Revision.--The Governor of any State may,
                    after consultation with the relevant State
                    regulatory authority and other retail
                    electricity ratemaking authorities within the
                    State, submit a written request for revocation
                    or revision of a previous request submitted
                    under this paragraph. The Commission shall
                    grant such request, provided that--
                              (i) any revocation or revision shall
                            not apply to the combined annual target
                            for any year that is any earlier than 2
                            calendar years after the calendar year
                            in which such request is submitted, so
                            as to provide retail electric suppliers
                            with adequate notice of such change;
                            and
                              (ii) any revision shall meet the
                            requirements of subparagraph (A).
      (c) Establishment of Program.--Not later than 1 year after
    the date of enactment of this section, the Commission shall
    promulgate regulations to implement and enforce the
    requirements of this section. In promulgating such regulations,
    the Commission shall, to the extent practicable--
              (1) preserve the integrity, and incorporate best
            practices, of existing State renewable electricity and
            energy efficiency programs;
              (2) rely upon existing and emerging State or regional
            tracking systems that issue and track non-Federal
            renewable electricity credits; and
              (3) cooperate with the States to facilitate
            coordination between State and Federal renewable
            electricity and energy efficiency programs and to
            minimize administrative burdens and costs to retail
            electric suppliers.
      (d) Annual Compliance Requirement.--
              (1) Annual combined targets.--For each of calendar
            years 2012 through 2039, a retail electric supplier's
            annual combined target shall be the product of--
                      (A) the required annual percentage for such
                    year, as set forth in paragraph (2); and
                      (B) the retail electric supplier's base
                    amount for such year.
              (2) Required annual percentage.--For each of calendar
            years 2012 through 2039, the required annual percentage
            shall be as follows:

                 Calendar year                  Required annual percentage

    2012...................................  6.0
    2013...................................  6.0
    2014...................................  9.5
    2015...................................  9.5
    2016...................................  13.0
    2017...................................  13.0
    2018...................................  16.5
    2019...................................  16.5
    2020...................................  20.0
    2021 through 2039......................  20.0

      (e) Federal Renewable Electricity Credits.--
              (1) In general.--The regulations promulgated under
            this section shall include provisions governing the
            issuance, tracking, and verification of Federal
            renewable electricity credits. Except as provided in
            paragraphs (2), (3), and (4) of this subsection, the
            Commission shall issue to each generator of renewable
            electricity, 1 Federal renewable electricity credit for
            each megawatt hour of renewable electricity generated
            by such generator after December 31, 2011. The
            Commission shall assign a unique serial number to each
            Federal renewable electricity credit.
              (2) Generation from certain state renewable
            electricity programs.--Where renewable electricity is
            generated with the support of payments from a retail
            electric supplier pursuant to a State renewable
            electricity program (whether through State alternative
            compliance payments or through payments to a State
            renewable electricity procurement fund or entity), the
            Commission shall issue Federal renewable electricity
            credits to such retail electric supplier for the
            proportion of the relevant renewable electricity
            generation that is attributable to the retail electric
            supplier's payments, as determined pursuant to
            regulations issued by the Commission. For any remaining
            portion of the relevant renewable electricity
            generation, the Commission shall issue Federal
            renewable electricity credits to the generator, as
            provided in paragraph (1), except that in no event
            shall more than 1 Federal renewable electricity credit
            be issued for the same megawatt hour of electricity. In
            determining how Federal renewable electricity credits
            will be apportioned among retail electric suppliers and
            generators in such circumstances, the Commission shall
            consider information and guidance furnished by the
            relevant State or States.
              (3) Certain power sales contracts.--When a generator
            has sold renewable electricity to a retail electric
            supplier under a contract for power from a facility
            placed in service before the date of enactment of this
            section, and the contract does not provide for the
            determination of ownership of the Federal renewable
            electricity credits associated with such generation,
            the Commission shall issue such Federal renewable
            electricity credits to the retail electric supplier for
            the duration of the contract.
              (4) Credit multiplier for distributed renewable
            generation.--
                      (A) In general.--Except as provided in
                    subparagraph (B), the Commission shall issue 3
                    Federal renewable electricity credits for each
                    megawatt hour of renewable electricity
                    generated by a distributed renewable generation
                    facility.
                      (B) Adjustment.--Except as provided in
                    subparagraph (C), not later than January 1,
                    2014, and not less frequently than every 4
                    years thereafter, the Commission shall review
                    the effect of this paragraph and shall, as
                    necessary, reduce the number of Federal
                    renewable electricity credits per megawatt hour
                    issued under this paragraph for any given
                    energy source or technology, but not below 1,
                    to ensure that such number is no higher than
                    the Commission determines is necessary to make
                    distributed renewable generation facilities
                    using such source or technology cost
                    competitive with other sources of renewable
                    electricity generation.
                      (C) Facilities placed in service after
                    enactment.--For any distributed renewable
                    generation facility placed in service after the
                    date of enactment of this section, subparagraph
                    (B) shall not apply for the first 10 years
                    after the date on which the facility is placed
                    in service. For each year during such 10-year
                    period, the Commission shall issue to the
                    facility the same number of Federal renewable
                    electricity credits per megawatt hour as are
                    issued to that facility in the year in which
                    such facility is placed in service. After such
                    10-year period, the Commission shall issue
                    Federal renewable electricity credits to the
                    facility in accordance with the current
                    multiplier as determined pursuant to
                    subparagraph (B).
              (5) Credits based on qualified hydropower.--For
            purposes of this subsection, the number of Federal
            renewable electricity credits issued for qualified
            hydropower shall be calculated--
                      (A) based solely on the increase in average
                    annual generation directly resulting from the
                    efficiency improvements or capacity additions
                    described in subsection (a)(13)(A); and
                      (B) using the same water flow information
                    used to determine a historic average annual
                    generation baseline for the hydroelectric
                    facility, as certified by the Commission.
              (6) Generation from mixed renewable and nonrenewable
            resources.--If electricity is generated using both a
            renewable energy resource or other qualifying energy
            resource and an energy source that is not a renewable
            energy resource or other qualifying energy resource
            (as, for example, in the case of co-firing of renewable
            biomass and fossil fuel), the Commission shall issue
            Federal renewable electricity credits based on the
            proportion of the electricity that is attributable to
            the renewable energy resource or other qualifying
            energy resource.
              (7) Prohibition against double-counting.--Except as
            provided in paragraph (4) of this subsection, the
            Commission shall ensure that no more than 1 Federal
            renewable electricity credit will be issued for any
            megawatt hour of renewable electricity and that no
            Federal renewable electricity credit will be used more
            than once for compliance with this section.
              (8) Trading.--The lawful holder of a Federal
            renewable electricity credit may sell, exchange,
            transfer, submit for compliance in accordance with
            subsection (b), or submit such credit for retirement by
            the Commission.
              (9) Banking.--A Federal renewable electricity credit
            may be submitted in satisfaction of the compliance
            obligation set forth in subsection (b) for the
            compliance year in which the credit was issued or for
            any of the 3 immediately subsequent compliance years.
            The Commission shall retire any Federal renewable
            electricity credit that has not been retired by April 2
            of the calendar year that is 3 years after the calendar
            year in which the credit was issued.
              (10) Retirement.--The Commission shall retire a
            Federal renewable electricity credit immediately upon
            submission by the lawful holder of such credit, whether
            in satisfaction of a compliance obligation under
            subsection (b) or on some other basis.
      (f) Electricity Savings.--
              (1) Standards for measurement of savings.--As part of
            the regulations promulgated under this section, the
            Commission shall prescribe standards and protocols for
            defining and measuring electricity savings and total
            annual electricity savings that can be counted towards
            the compliance obligation set forth in subsection (b).
            Such protocols and standards shall, at minimum--
                      (A) specify the types of energy efficiency
                    and energy conservation measures that can be
                    counted;
                      (B) require that energy consumption estimates
                    for customer facilities or portions of
                    facilities in the applicable base and current
                    years be adjusted, as appropriate, to account
                    for changes in weather, level of production,
                    and building area;
                      (C) account for the useful life of measures;
                      (D) include deemed savings values for
                    specific, commonly used measures;
                      (E) allow for savings from a program to be
                    estimated based on extrapolation from a
                    representative sample of participating
                    customers;
                      (F) include procedures for counting CHP
                    savings, recycled energy savings, and fuel cell
                    savings;
                      (G) include procedures for counting
                    electricity savings achieved by solar water
                    heating and solar light pipe technology that
                    has the capability to provide measureable data
                    on the amount of megawatt-hours displaced;
                      (H) avoid double-counting of savings used for
                    compliance with this section, including savings
                    that are transferred pursuant to paragraph (3);
                      (I) ensure that, except as provided in
                    subparagraph (K), the retail electric supplier
                    claiming the savings played a significant role
                    in achieving the savings (including through the
                    activities of a designated agent of the
                    supplier or through the purchase of transferred
                    savings);
                      (J) include savings from programs
                    administered by a retail electric supplier (or
                    a retail electricity distributor that is not a
                    retail electric supplier) that are funded by
                    State, Federal, or other sources;
                      (K) in any State in which the State
                    regulatory authority has designated 1 or more
                    entities to administer electric ratepayer-
                    funded efficiency programs approved by such
                    State regulatory authority, provide that
                    electricity savings achieved through such
                    programs shall be distributed equitably among
                    retail electric suppliers in accordance with
                    the direction of the relevant State regulatory
                    authority; and
                      (L) exclude savings achieved as a result of
                    compliance with mandatory appliance and
                    equipment efficiency standards or building
                    codes.
              (2) Standards for third-party verification of
            savings.--The regulations promulgated under this
            section shall establish procedures and standards
            requiring third-party verification of all reported
            electricity savings, including requirements for
            accreditation of third-party verifiers to ensure that
            such verifiers are professionally qualified and have no
            conflicts of interest.
              (3) Transfers of savings.--
                      (A) Bilateral contracts for savings
                    transfers.--Subject to the limitations of this
                    paragraph, a retail electric supplier may use
                    electricity savings transferred, pursuant to a
                    bilateral contract, from another retail
                    electric supplier, an owner of an electric
                    distribution facility that is not a retail
                    electric supplier, a State, or a third-party
                    efficiency provider to meet the applicable
                    compliance obligation under subsection (b).
                      (B) Requirements.--Electricity savings
                    transferred and used for compliance pursuant to
                    this paragraph shall be--
                              (i) measured and verified in
                            accordance with the procedures
                            specified under this subsection;
                              (ii) reported in accordance with
                            paragraph (4) of this subsection; and
                              (iii) achieved within the same State
                            as is served by the retail electric
                            supplier.
                      (C) Regulatory approval.--Nothing in this
                    paragraph shall limit or affect the authority
                    of a State regulatory authority to require a
                    retail electric supplier that is regulated by
                    such authority to obtain such authority's
                    authorization or approval of a contract for
                    transfer of savings under this paragraph.
              (4) Reporting savings.--
                      (A) Requirements.--The regulations
                    promulgated under this section shall establish
                    requirements governing the submission of
                    reports to demonstrate, in accordance with the
                    protocols and standards for measurement and
                    third-party verification established under this
                    subsection, the total annual electricity
                    savings achieved by a retail electric supplier
                    within the relevant year.
                      (B) Review and approval.--The Commission
                    shall review each report submitted to the
                    Commission by a retail electric supplier and
                    shall exclude any electricity savings that have
                    not been adequately demonstrated in accordance
                    with the requirements of this subsection.
              (5) State administration.--
                      (A) Delegation of authority.--Upon receipt of
                    an application from the Governor of a State
                    (including, for purposes of this subsection,
                    the Mayor of the District of Columbia), the
                    Commission may delegate to the State the
                    authority to review and verify reported
                    electricity savings for purposes of determining
                    demonstrated total annual electricity savings
                    that may be counted towards a retail electric
                    supplier's compliance obligation under
                    subsection (b). The Commission shall make a
                    substantive determination approving or
                    disapproving a State application under this
                    subparagraph, after notice and comment, within
                    180 days of receipt of a complete application.
                      (B) Alternative measurement and verification
                    procedures and standards.--As part of an
                    application submitted under subparagraph (A), a
                    State may request to use alternative
                    measurement and verification procedures and
                    standards to those specified in paragraphs (1)
                    and (2), provided the State demonstrates that
                    such alternative procedures and standards
                    provide a level of accuracy of measurement and
                    verification at least equivalent to the Federal
                    procedures and standards promulgated under
                    paragraphs (1) and (2).
                      (C) Review of state implementation.--The
                    Commission shall, not less frequently than once
                    every 4 years, review each State's
                    implementation of delegated authority under
                    this paragraph to ensure conformance with the
                    requirements of this section. The Commission
                    may, at any time, revoke the delegation of
                    authority under this section upon a finding
                    that the State is not implementing its
                    delegated responsibilities in conformity with
                    this paragraph. As a condition of maintaining
                    its delegated authority under this paragraph,
                    the Commission may require a State to submit a
                    revised application under subparagraph (A) if
                    the Commission has--
                              (i) promulgated new or substantially
                            revised measurement and verification
                            procedures and standards under this
                            subsection; or
                              (ii) otherwise substantially revised
                            the program established under this
                            section.
      (g) Alternative Compliance Payments.--
              (1) In general.--A retail electric supplier may
            satisfy the requirements of subsection (b) in whole or
            in part by submitting in accordance with this
            subsection, in lieu of each Federal renewable
            electricity credit or megawatt hour of demonstrated
            total annual electricity savings that would otherwise
            be due, a payment equal to $25, adjusted for inflation
            on January 1 of each year following calendar year 2009,
            in accordance with such regulations as the Commission
            may promulgate.
              (2) Payment to state funds.--Except as otherwise
            provided in this paragraph, payments made under this
            subsection shall be made directly to the State or
            States in which the retail electric supplier is
            located, in proportion to the portion of the retail
            electric supplier's base amount that is sold within
            each relevant State, provided that such payments are
            deposited directly into a fund in the State treasury
            established for this purpose and that the State uses
            such funds in accordance with paragraphs (3) and (4).
            If the Commission determines at any time that a State
            is in substantial noncompliance with paragraph (3) or
            (4), the Commission shall direct that any future
            alternative compliance payments that would otherwise be
            paid to such State under this subsection shall instead
            be paid to the Commission and deposited in the United
            States Treasury.
              (3) State use of funds.--As a condition of continued
            receipt of alternative compliance payments pursuant to
            this subsection, a State shall use such payments
            exclusively for the purposes of--
                      (A) deploying technologies that generate
                    electricity from renewable energy resources; or
                      (B) implementing cost-effective energy
                    efficiency programs to achieve electricity
                    savings.
              (4) Reporting.--As a condition of continued receipt
            of alternative compliance payments pursuant to this
            subsection, a State shall, within 12 months of receipt
            of any such payments and at 12-month intervals
            thereafter until such payments are expended, provide a
            report to the Commission, in accordance with such
            regulations as the Commission may prescribe, giving a
            full accounting of the use of such payments, including
            a detailed description of the activities funded
            thereby.
      (h) Information Collection.--The Commission may require any
    retail electric supplier, renewable electricity generator, or
    such other entities as the Commission deems appropriate, to
    provide any information the Commission determines appropriate
    to carry out this section. Failure to submit such information
    or submission of false or misleading information under this
    subsection shall be a violation of this section.
      (i) Enforcement and Judicial Review.--
              (1) Failure to submit credits or demonstrate
            savings.--If any person fails to comply with the
            requirements of subsection (b) or (g), such person
            shall be liable to pay to the Commission a civil
            penalty equal to the product of--
                      (A) double the alternative compliance payment
                    calculated under subsection (g)(1), and
                      (B) the aggregate quantity of Federal
                    renewable electricity credits, total annual
                    electricity savings, or equivalent alternative
                    compliance payments that the person failed to
                    submit in violation of the requirements of
                    subsections (b) and (g).
              (2) Enforcement.--The Commission shall assess a civil
            penalty under paragraph (1) in accordance with the
            procedures described in section 31(d) of the Federal
            Power Act (16 U.S.C. 823b(d)).
              (3) Violation of requirement of regulations or
            orders.--Any person who violates, or fails or refuses
            to comply with, any requirement of a regulation
            promulgated or order issued under this section shall be
            subject to a civil penalty under section 316A(b) of the
            Federal Power Act (16 U.S.C. 825o-1). Such penalty
            shall be assessed by the Commission in the same manner
            as in the case of a violation referred to in section
            316A(b) of such Act.
      (j) Judicial Review.--Any person aggrieved by a final action
    taken by the Commission under this section, other than the
    assessment of a civil penalty under subsection (i), may use the
    procedures for review described in section 313 of the Federal
    Power Act (16 U.S.C. 825l). For purposes of this paragraph,
    references to an order in section 313 of such Act shall be
    deemed to refer also to all other final actions of the
    Commission under this section other than the assessment of a
    civil penalty under subsection (i).
      (k) Savings Provisions.--Nothing in this section shall--
              (1) diminish or qualify any authority of a State or
            political subdivision of a State to--
                      (A) adopt or enforce any law or regulation
                    respecting renewable electricity or energy
                    efficiency, including any law or regulation
                    establishing requirements more stringent than
                    those established by this section, provided
                    that no such law or regulation may relieve any
                    person of any requirement otherwise applicable
                    under this section; or
                      (B) regulate the acquisition and disposition
                    of Federal renewable electricity credits by
                    retail electric suppliers within the
                    jurisdiction of such State or political
                    subdivision, including the authority to require
                    such retail electric supplier to acquire and
                    submit to the Secretary for retirement Federal
                    renewable electricity credits in excess of
                    those submitted under this section; or
              (2) affect the application of, or the responsibility
            for compliance with, any other provision of law or
            regulation, including environmental and licensing
            requirements.
      (l) Sunset.--This section expires on December 31, 2040.
                                  ----------

                                 CLEAN AIR ACT

                 TITLE I--AIR POLLUTION PREVENTION AND CONTROL

    Part A--Air Quality and Emission Limitations

               *       *       *       *       *       *       *

    SEC. 113. FEDERAL ENFORCEMENT.

      (a) In General.--
              (1) * * *

               *       *       *       *       *       *       *

              (3) EPA enforcement of other requirements.--Except
            for a requirement or prohibition enforceable under the
            preceding provisions of this subsection, whenever, on
            the basis of any information available to the
            Administrator, the Administrator finds that any person
            has violated, or is in violation of, any other
            requirement or prohibition of this title, section 303
            of title III, title IV, title V, [or title VI,] title
            VI, title VII, or title VIII including, but not limited
            to, a requirement or prohibition of any rule, plan,
            order, waiver, or permit promulgated, issued, or
            approved under those provisions or titles, or for the
            payment of any fee owed to the United States under this
            Act (other than title II), the Administrator may--
                      (A) * * *

               *       *       *       *       *       *       *

      (b) Civil Judicial Enforcement.--The Administrator shall, as
    appropriate, in the case of any person that is the owner or
    operator of an affected source, a major emitting facility, [or
    a major stationary source] a major stationary source, or a
    covered EGU under title VIII, and may, in the case of any other
    person, commence a civil action for a permanent or temporary
    injunction, or to assess and recover a civil penalty of not
    more than $25,000 per day for each violation, or both, in any
    of the following instances:
              (1) * * *
              (2) Whenever such person has violated, or is in
            violation of, any other requirement or prohibition of
            this title, section 303 of title III, title IV, title
            V, [or title VI] title VI, title VII, or title VIII,
            including, but not limited to, a requirement or
            prohibition of any rule, order, waiver or permit
            promulgated, issued, or approved under this Act, or for
            the payment of any fee owed the United States under
            this Act (other than title II).

               *       *       *       *       *       *       *

      (c) Criminal Penalties.--(1) Any person who knowingly
    violates any requirement or prohibition of an applicable
    implementation plan (during any period of federally assumed
    enforcement or more than 30 days after having been notified
    under subsection (a)(1) by the Administrator that such person
    is violating such requirement or prohibition), any order under
    subsection (a) of this section, requirement or prohibition of
    section 111(e) of this title (relating to new source
    performance standards), section 112 of this title, section 114
    of this title (relating to inspections, etc.), section 129 of
    this title (relating to solid waste combustion), section 165(a)
    of this title (relating to preconstruction requirements), an
    order under section 167 of this title (relating to
    preconstruction requirements), an order under section 303 of
    title III (relating to emergency orders), section 502(a) or
    503(c) of title V (relating to permits), or any requirement or
    prohibition of title IV (relating to acid deposition control),
    [or title VI (relating to stratospheric ozone control),] title
    VI, title VII, or title VIII, including a requirement of any
    rule, order, waiver, or permit promulgated or approved under
    such sections or titles, and including any requirement for the
    payment of any fee owed the United States under this Act (other
    than title II) shall, upon conviction, be punished by a fine
    pursuant to title 18 of the United States Code, or by
    imprisonment for not to exceed 5 years, or both. If a
    conviction of any person under this paragraph is for a
    violation committed after a first conviction of such person
    under this paragraph, the maximum punishment shall be doubled
    with respect to both the fine and imprisonment.

               *       *       *       *       *       *       *

      (3) Any person who knowingly fails to pay any fee owed the
    United States under this title, title III, IV, V, [or VI] VI,
    VII, or VIII shall, upon conviction, be punished by a fine
    pursuant to title 18 of the United States Code, or by
    imprisonment for not more than 1 year, or both. If a conviction
    of any person under this paragraph is for a violation committed
    after a first conviction of such person under this paragraph,
    the maximum punishment shall be doubled with respect to both
    the fine and imprisonment.

               *       *       *       *       *       *       *

      (d) Administrative Assessment of Civil Penalties.--(1) The
    Administrator may issue an administrative order against any
    person assessing a civil administrative penalty of up to
    $25,000, per day of violation, whenever, on the basis of any
    available information, the Administrator finds that such
    person--
              (A) * * *
              (B) has violated or is violating any other
            requirement or prohibition of title I, III, IV, V, [or
            VI] VI, VII, or VIII, including, but not limited to, a
            requirement or prohibition of any rule, order, waiver,
            permit, or plan promulgated, issued, or approved under
            this Act, or for the payment of any fee owed the United
            States under this Act (other than title II); or

               *       *       *       *       *       *       *

      (f) Awards.--The Administrator may pay an award, not to
    exceed $10,000, to any person who furnishes information or
    services which lead to a criminal conviction or a judicial or
    administrative civil penalty for any violation of this title or
    title III, IV, V, [or VI] VI, VII, or VIII of this Act enforced
    under this section. Such payment is subject to available
    appropriations for such purposes as provided in annual
    appropriation Acts. Any officer, or employee of the United
    States or any State or local government who furnishes
    information or renders service in the performance of an
    official duty is ineligible for payment under this subsection.
    The Administrator may, by regulation, prescribe additional
    criteria for eligibility for such an award.

               *       *       *       *       *       *       *

                       INSPECTIONS, MONITORING, AND ENTRY

      Sec. 114. (a) For the purpose (i) of developing or assisting
    in the development of any implementation plan under section 110
    or 111(d), any standard of performance under section 111, any
    emission standard under [section 112,, or any regulation of
    solid waste combustion under section 129, or any regulation
    under section 129 (relating to solid waste combustion), (ii)]
    section 112, or any regulation of greenhouse gas emissions
    under title VII or VIII, (ii) of determining whether any person
    is in violation of any such standard or any requirement of such
    a plan, or (iii) carrying out any provision of this Act (except
    a provision of title II with respect to a manufacturer of new
    motor vehicles or new motor vehicle engines)--
              (1) * * *

               *       *       *       *       *       *       *

                          RETENTION OF STATE AUTHORITY

      Sec. 116. Except as otherwise provided in sections 119 (c),
    (e), and (f) (as in effect before the date of the enactment of
    the Clean Air Act Amendments of 1977), 209, 211(c)(4), [and
    233] 233 (preempting certain State regulation [of moving
    sources)] of moving sources), and 861 (preempting certain State
    greenhouse gas programs for a limited time) nothing in this Act
    shall preclude or deny the right of any State or political
    subdivision thereof to adopt or enforce (1) any standard or
    limitation respecting emissions of air pollutants or (2) any
    requirement respecting control or abatement of air pollution;
    except that if an emission standard or limitation is in effect
    under an applicable implementation plan or under section 111 or
    112, such State or political subdivision may not adopt or
    enforce any emission standard or limitation which is less
    stringent than the standard or limitation under such plan or
    section. For the purposes of this section, the phrases
    ``standard or limitation respecting emissions of air
    pollutants'' and ``requirements respecting control or abatement
    of air pollution'' shall include any provision to: cap
    greenhouse gas emissions, require surrender to the State or a
    political subdivision thereof of emission allowances or offset
    credits established or issued under this Act, and require the
    use of such allowances or credits as a means of demonstrating
    compliance with requirements established by a State or
    political subdivision thereof.

               *       *       *       *       *       *       *

    TITLE II--EMISSION STANDARDS FOR MOVING SOURCES

               *       *       *       *       *       *       *

    Part A--Motor Vehicle Emission and Fuel Standards

               *       *       *       *       *       *       *

                              regulation of fuels

      Sec. 211. (a) * * *

               *       *       *       *       *       *       *

      (o) Renewable Fuel Program.--
              (1) Definitions.--In this section:
                      (A) * * *

               *       *       *       *       *       *       *

                      [(I) Renewable biomass.--The term ``renewable
                    biomass'' means each of the following:
                              [(i) Planted crops and crop residue
                            harvested from agricultural land
                            cleared or cultivated at any time prior
                            to the enactment of this sentence that
                            is either actively managed or fallow,
                            and nonforested.
                              [(ii) Planted trees and tree residue
                            from actively managed tree plantations
                            on non-federal land cleared at any time
                            prior to enactment of this sentence,
                            including land belonging to an Indian
                            tribe or an Indian individual, that is
                            held in trust by the United States or
                            subject to a restriction against
                            alienation imposed by the United
                            States.
                              [(iii) Animal waste material and
                            animal byproducts.
                              [(iv) Slash and pre-commercial
                            thinnings that are from non-federal
                            forestlands, including forestlands
                            belonging to an Indian tribe or an
                            Indian individual, that are held in
                            trust by the United States or subject
                            to a restriction against alienation
                            imposed by the United States, but not
                            forests or forestlands that are
                            ecological communities with a global or
                            State ranking of critically imperiled,
                            imperiled, or rare pursuant to a State
                            Natural Heritage Program, old growth
                            forest, or late successional forest.
                              [(v) Biomass obtained from the
                            immediate vicinity of buildings and
                            other areas regularly occupied by
                            people, or of public infrastructure, at
                            risk from wildfire.
                              [(vi) Algae.
                              [(vii) Separated yard waste or food
                            waste, including recycled cooking and
                            trap grease.]
                      (I) Renewable biomass.--The term ``renewable
                    biomass'' means any of the following:
                              (i) Plant material, including waste
                            material, harvested or collected from
                            actively managed agricultural land that
                            was in cultivation, cleared, or fallow
                            and nonforested on January 1, 2009.
                              (ii) Plant material, including waste
                            material, harvested or collected from
                            pastureland that was nonforested on
                            January 1, 2009.
                              (iii) Nonhazardous vegetative matter
                            derived from waste, including separated
                            yard waste, landscape right-of-way
                            trimmings, construction and demolition
                            debris or food waste (but not
                            recyclable waste paper, painted,
                            treated or pressurized wood, or wood
                            contaminated with plastic or metals).
                              (iv) Animal waste or animal
                            byproducts, including products of
                            animal waste digesters.
                              (v) Algae.
                              (vi) Trees, brush, slash, residues,
                            or any other vegetative matter removed
                            from within 600 feet of any building,
                            campground, or route designated for
                            evacuation by a public official with
                            responsibility for emergency
                            preparedness, or from within 300 feet
                            of a paved road, electric transmission
                            line, utility tower, or water supply
                            line.
                              (vii) Residues from or byproducts of
                            milled logs.
                              (viii) Any of the following removed
                            from forested land that is not Federal
                            and is not high conservation priority
                            land:
                                      (I) Trees, brush, slash,
                                    residues, interplanted energy
                                    crops, or any other vegetative
                                    matter removed from an actively
                                    managed tree plantation
                                    established--
                                              (aa) prior to January
                                            1, 2009; or
                                              (bb) on land that, as
                                            of January 1, 2009, was
                                            cultivated or fallow
                                            and non-forested.
                                      (II) Trees, logging residue,
                                    thinnings, cull trees,
                                    pulpwood, and brush removed
                                    from naturally-regenerated
                                    forests or other non-plantation
                                    forests, including for the
                                    purposes of hazardous fuel
                                    reduction or preventative
                                    treatment for reducing or
                                    containing insect or disease
                                    infestation.
                                      (III) Logging residue,
                                    thinnings, cull trees,
                                    pulpwood, brush and species
                                    that are non-native and
                                    noxious, from stands that were
                                    planted and managed after
                                    January 1, 2009, to restore or
                                    maintain native forest types.
                                      (IV) Dead or severely damaged
                                    trees removed within 5 years of
                                    fire, blowdown, or other
                                    natural disaster, and badly
                                    infested trees.
                              (ix) Materials, pre-commercial
                            thinnings, or removed invasive species
                            from National Forest System land and
                            public lands (as defined in section 103
                            of the Federal Land Policy and
                            Management Act of 1976 (43 U.S.C.
                            1702)), including those that are
                            byproducts of preventive treatments
                            (such as trees, wood, brush, thinnings,
                            chips, and slash), that are removed as
                            part of a federally recognized timber
                            sale, or that are removed to reduce
                            hazardous fuels, to reduce or contain
                            disease or insect infestation, or to
                            restore ecosystem health, and that
                            are--
                                      (I) not from components of
                                    the National Wilderness
                                    Preservation System, Wilderness
                                    Study Areas, Inventoried
                                    Roadless Areas, old growth or
                                    mature forest stands,
                                    components of the National
                                    Landscape Conservation System,
                                    National Monuments, National
                                    Conservation Areas, Designated
                                    Primitive Areas, or Wild and
                                    Scenic Rivers corridors;
                                      (II) harvested in
                                    environmentally sustainable
                                    quantities, as determined by
                                    the appropriate Federal land
                                    manager; and
                                      (III) harvested in accordance
                                    with Federal and State law and
                                    applicable land management
                                    plans.

               *       *       *       *       *       *       *

                      (M) High conservation priority land.--The
                    term ``high conservation priority land'' means
                    land that is not Federal land and is--
                              (i) globally or State ranked as
                            critically imperiled or imperiled under
                            a State Natural Heritage Program; or
                              (ii) old-growth or late-successional
                            forest, as identified by the office of
                            the State Forester or relevant State
                            agency with regulatory jurisdiction
                            over forestry activities.

               *       *       *       *       *       *       *

    TITLE III--GENERAL

               *       *       *       *       *       *       *

                                 CITIZEN SUITS

      Sec. 304. (a) * * *

               *       *       *       *       *       *       *

      (f) For purposes of this section, the term ``emission
    standard or limitation under this Act'' means--
              (1) * * *

               *       *       *       *       *       *       *

              (3) any condition or requirement of a permit under
            part C of title I (relating to significant
            deterioration of air quality) or part D of title I
            (relating to nonattainment),, section 119 (relating to
            primary nonferrous smelter orders), any condition or
            requirement under an applicable implementation plan
            relating to transportation control measures, air
            quality maintenance plans, vehicle inspection and
            maintenance programs or vapor recovery requirements,
            section 211 (e) and (f) (relating to fuels and fuel
            additives), section 169A (relating to visibility
            protection), any condition or requirement under title
            VI (relating to ozone protection), or any requirement
            under section 111 or 112 (without regard to whether
            such requirement is expressed as an emission standard
            or otherwise)[; or],
              (4) any other standard, limitation, or schedule
            established under any permit issued pursuant to title V
            or under any applicable State implementation plan
            approved by the Administrator, any permit term or
            condition, and any requirement to obtain a permit as a
            condition of operations[.], or
              (5) any requirement of title VII or VIII.

               *       *       *       *       *       *       *

    general provisions relating to administrative proceedings and judicial
                                     review

      Sec. 307. (a) In connection with any determination under
    section 110(f), or for purposes of obtaining information under
    section 202(b)(4) or 211(c)(3),, any investigation, monitoring,
    reporting requirement, entry, compliance inspection, or
    administrative enforcement proceeding under the Act (including
    but not limited to section 113, section 114, section 120,
    section 129, section 167, section 205, section 206, section
    208, section 303[, or section 306] section 306, or title VII or
    VIII), the Administrator may issue subpenas for the attendance
    and testimony of witnesses and the production of relevant
    papers, books, and documents, and he may administer oaths.
    Except for emission data, upon a showing satisfactory to the
    Administrator by such owner or operator that such papers,
    books, documents, or information or particular part thereof, if
    made public, would divulge trade secrets or secret processes of
    such owner or operator, the Administrator shall consider such
    record, report, or information or particular portion thereof
    confidential in accordance with the purposes of section 1905 of
    title 18 of the United States Code, except that such paper,
    book, document, or information may be discussed to other
    officers, employees, or authorized representatives of the
    United States concerned with carrying out this Act, to persons
    carrying out the National Academy of Sciences' study and
    investigation provided for in section 202(c), or when relevant
    in any proceeding under this Act. Witnesses summoned shall be
    paid the same fees and mileage that are paid witnesses in the
    courts of the United States. In cases of contumacy or refusal
    to obey a subpena served upon any person under this
    subparagraph, the district court of the United States for any
    district in which such person is found or resides or transacts
    business, upon application by the United States and after
    notice to such person, shall have jurisdiction to issue an
    order requiring such person to appear and give testimony before
    the Administrator to appear and produce papers, books, and
    documents before the Administrator, or both, and any failure to
    obey such order of the court may be punished by such court as a
    contempt thereof.
      (b)(1) A petition for review of action of the Administrator
    in promulgating any national primary or secondary ambient air
    quality standard, any emission standard or requirement under
    section 112, any standard of performance or requirement under
    section 111[,,], any standard under section 202 (other than a
    standard required to be prescribed under section 202(b)(1)),
    any determination under section 202(b)(5), any control or
    prohibition under section 211, any standard under section 231,
    any rule issued under section 113, 119, or under [section 120,]
    section 120, any final action under title VII or VIII, or any
    other nationally applicable regulations promulgated, or final
    action taken, by the Administrator under this Act may be filed
    only in the United States Court of Appeals for the District of
    Columbia. A petition for review of the Administrator's action
    in approving or promulgating any implementation plan under
    section 110 or section 111(d), any order under section 111(j),
    under section 112[,,], under section 119, or under section 120,
    or his action under section 119(c)(2) (A), (B), or (C) (as in
    effect before the date of enactment of the Clean Air Act
    Amendments of 1977) or under regulations thereunder, or
    revising regulations for enhanced monitoring and compliance
    certification programs under section 114(a)(3) of this Act, or
    any other final action of the Administrator under this Act
    (including any denial or disapproval by the Administrator under
    title I) which is local or regionally applicable may be filed
    only in the United States Court of Appeals for the appropriate
    circuit. Notwithstanding the preceding sentence a petition for
    review of any action referred to in such sentence may be filed
    only in the United States Court of Appeals for the District of
    Columbia if such action is based on a determination of
    nationwide scope or effect and if in taking such action the
    Administrator finds and publishes that such action is based on
    such a determination. Any petition for review under this
    subsection shall be filed within sixty days from the date
    notice of such promulgation, approval, or action appears in the
    Federal Register, except that if such petition is based solely
    on grounds arising after such sixtieth day, then any petition
    for review under this subsection shall be filed within sixty
    days after such grounds arise. The filing of a petition for
    reconsideration by the Administrator of any otherwise final
    rule or action shall not affect the finality of such rule or
    action for purposes of judicial review nor extend the time
    within which a petition for judicial review of such rule or
    action under this section may be filed, and shall not postpone
    the effectiveness of such rule or action.

               *       *       *       *       *       *       *

      (3) If the court determines that any action of the
    Administrator is arbitrary, capricious, or otherwise unlawful,
    the court may remand such action, without vacatur, if vacatur
    would impair or delay protection of the environment or public
    health or otherwise undermine the timely achievement of the
    purposes of this Act.

               *       *       *       *       *       *       *

      (d)(1) This subsection applies to--
              (A) * * *

               *       *       *       *       *       *       *

              [(S) the promulgation or revision of any regulation
            under title IV (relating to acid deposition),]
              (S) the promulgation or revision of any regulation
            under title VII or VIII,

               *       *       *       *       *       *       *

      (7)(A) * * *
      (B) Only an objection to a rule or procedure which was raised
    with reasonable specificity during the period for public
    comment (including any public hearing) may be raised during
    judicial review. If the person raising an objection can
    demonstrate to the Administrator that it was impracticable to
    raise such objection within such time or if the grounds for
    such objection arose after the period for public comment (but
    within the time specified for judicial review) and if such
    objection is of central relevance to the outcome of the rule,
    the Administrator shall convene a proceeding for
    reconsideration of the rule and provide the same procedural
    rights as would have been afforded had the information been
    available at the time the rule was proposed. [If the
    Administrator refuses to convene such a proceeding, such person
    may seek review of such refusal in the United States court of
    appeals for the appropriate circuit (as provided in subsection
    (b)).] If a petition for reconsideration is filed, the
    Administrator shall take final action on such petition,
    including promulgation of final action either revising or
    determining not to revise the action for which reconsideration
    is sought, within 150 days after the petition is received by
    the Administrator or the petition shall be deemed denied for
    the purpose of judicial review. Such person may seek judicial
    review of such denial, or of any other final action, by the
    Administrator, in response to a petition for reconsideration,
    in the United States court of appeals for the appropriate
    circuit (as provided in subsection (b)). Such reconsideration
    shall not postpone the effectiveness of the rule. The
    effectiveness of the rule may be stayed during such
    reconsideration, however, by the Administrator or the court for
    a period not to exceed three months.

               *       *       *       *       *       *       *

                    TITLE VI--STRATOSPHERIC OZONE PROTECTION

                               Table of Contents

    Sec. 601. Definitions.
         * * * * * * *
    Sec. 619. Hydrofluorocarbons (HFCs).

               *       *       *       *       *       *       *

    SEC. 605. PHASE-OUT OF PRODUCTION AND CONSUMPTION OF CLASS II
                        SUBSTANCES.

      (a) Restriction of Use of Class II Substances.--Effective
    January 1, 2015, it shall be unlawful for any person to
    introduce into interstate commerce or use any class II
    substance unless such substance--
              (1) * * *
              (2) is used and entirely consumed (except for trace
            quantities) in the production of other chemicals; [or]
              (3) is used as a refrigerant in appliances
            manufactured prior to January 1, 2020[.]; or
              (4) is listed as acceptable for use as a fire
            suppression agent for nonresidential applications in
            accordance with section 612(c).

               *       *       *       *       *       *       *

    SEC. 609. SERVICING OF MOTOR VEHICLE AIR CONDITIONERS.

      (a) * * *

               *       *       *       *       *       *       *

      (e) Small Containers of Class I or Class II, Group I
    Substances.--Effective 2 years after the date of the enactment
    of the Clean Air Act Amendments of 1990, it shall be unlawful
    for any person to sell or distribute, or offer for sale or
    distribution, in interstate commerce to any person (other than
    a person performing service for consideration on motor vehicle
    air-conditioning systems in compliance with this section) any
    class I or class II, group I substance that is suitable for use
    as a refrigerant in a motor vehicle air-conditioning system and
    that is in a container which contains less than 20 pounds of
    such refrigerant.
      (f) Class II, Group II Substances.--
              (1) Repair.--The Administrator may promulgate
            regulations establishing requirements for repair of
            motor vehicle air conditioners prior to adding a class
            II, group II substance.
              (2) Small containers.--(A) The Administrator may
            promulgate regulations establishing servicing practices
            and procedures for recovery of class II, group II
            substances from containers which contain less than 20
            pounds of such class II, group II substances.
              (B) Not later than 18 months after enactment of this
            subsection, the Administrator shall either promulgate
            regulations requiring that containers which contain
            less than 20 pounds of a class II, group II substance
            be equipped with a device or technology that limits
            refrigerant emissions and leaks from the container and
            limits refrigerant emissions and leaks during the
            transfer of refrigerant from the container to the motor
            vehicle air conditioner or issue a determination that
            such requirements are not necessary or appropriate.
              (C) Not later than 18 months after enactment of this
            subsection, the Administrator shall promulgate
            regulations establishing requirements for consumer
            education materials on best practices associated with
            the use of containers which contain less than 20 pounds
            of a class II, group II substance and prohibiting the
            sale or distribution, or offer for sale or
            distribution, of any class II, group II substance in
            any container which contains less than 20 pounds of
            such class II, group II substance, unless consumer
            education materials consistent with such requirements
            are displayed and available at point-of-sale locations,
            provided to the consumer, or included in or on the
            packaging of the container which contain less than 20
            pounds of a class II, group II substance.
              (D) The Administrator may, through rulemaking, extend
            the requirements established under this paragraph to
            containers which contain 30 pounds or less of a class
            II, group II substance if the Administrator determines
            that such action would produce significant
            environmental benefits.
              (3) Restriction of sales.--Effective January 1, 2014,
            no person may sell or distribute or offer to sell or
            distribute or otherwise introduce into interstate
            commerce any motor vehicle air conditioner refrigerant
            in any size container unless the substance has been
            found acceptable for use in a motor vehicle air
            conditioner under section 612.

               *       *       *       *       *       *       *

    SEC. 612. SAFE ALTERNATIVES POLICY.

      (a) * * *

               *       *       *       *       *       *       *

      (e) Studies and Notification.--The Administrator shall
    require any person who produces a chemical substitute for a
    class I or class II substance to provide the Administrator with
    such person's unpublished health and safety studies on such
    substitute and require producers to notify the Administrator
    not less than 90 days before new or existing chemicals are
    introduced into interstate commerce for significant new uses as
    substitutes for a class I or class II substance. This
    subsection shall be subject to section 114(c).

               *       *       *       *       *       *       *

    SEC. 619. HYDROFLUOROCARBONS (HFCS).

      (a) Treatment as Class II, Group II Substances.--Except as
    otherwise provided in this section, hydrofluorocarbons shall be
    treated as class II substances for purposes of applying the
    provisions of this title. The Administrator shall establish two
    groups of class II substances. Class II, group I substances
    shall include all hydrochlorofluorocarbons (HCFCs) listed
    pursuant to section 602(b). Class II, group II substances shall
    include each of the following:
              (1) Hydrofluorocarbon-23 (HFC-23).
              (2) Hydrofluorocarbon-32 (HFC-32).
              (3) Hydrofluorocarbon-41 (HFC-41).
              (4) Hydrofluorocarbon-125 (HFC-125).
              (5) Hydrofluorocarbon-134 (HFC-134).
              (6) Hydrofluorocarbon-134a (HFC-134a).
              (7) Hydrofluorocarbon-143 (HFC-143).
              (8) Hydrofluorocarbon-143a (HFC-143a).
              (9) Hydrofluorocarbon-152 (HFC-152).
              (10) Hydrofluorocarbon-152a (HFC-152a).
              (11) Hydrofluorocarbon-227ea (HFC-227ea).
              (12) Hydrofluorocarbon-236cb (HFC-236cb).
              (13) Hydrofluorocarbon-236ea (HFC-236ea).
              (14) Hydrofluorocarbon-236fa (HFC-236fa).
              (15) Hydrofluorocarbon-245ca (HFC-245ca).
              (16) Hydrofluorocarbon-245fa (HFC-245fa).
              (17) Hydrofluorocarbon-365mfc (HFC-365mfc).
              (18) Hydrofluorocarbon-43-10mee (HFC-43-10mee).
              (19) Hydrofluoroolefin-1234yf (HFO-1234yf).
              (20) Hydrofluoroolefin-1234ze (HFO-1234ze).
    Not later than 6 months after the date of enactment of this
    title, the Administrator shall publish an initial list of class
    II, group II substances, which shall include the substances
    listed in this subsection. The Administrator may add to the
    list of class II, group II substances any other substance used
    as a substitute for a class I or II substance if the
    Administrator determines that 1 metric ton of the substance
    makes the same or greater contribution to global warming over
    100 years as 1 metric ton of carbon dioxide. Within 24 months
    after the date of enactment of this section, the Administrator
    shall amend the regulations under this title (including the
    regulations referred to in sections 603, 608, 609, 610, 611,
    612, and 613) to apply to class II, group II substances.
      (b) Consumption and Production of Class II, Group II
    Substances.--
              (1) In general.--
                      (A) Consumption phase down.--In the case of
                    class II, group II substances, in lieu of
                    applying section 605 and the regulations
                    thereunder, the Administrator shall promulgate
                    regulations phasing down the consumption of
                    class II, group II substances in the United
                    States, and the importation of products
                    containing any class II, group II substance, in
                    accordance with this subsection within 18
                    months after the date of enactment of this
                    section. Effective January 1, 2012, it shall be
                    unlawful for any person to produce any class
                    II, group II substance, import any class II,
                    group II substance, or import any product
                    containing any class II, group II substance
                    without holding one consumption allowance or
                    one destruction offset credit for each carbon
                    dioxide equivalent ton of the class II, group
                    II substance. Any person who exports a class
                    II, group II substance for which a consumption
                    allowance was retired may receive a refund of
                    that allowance from the Administrator following
                    the export.
                      (B) Production.--If the United States becomes
                    a party or otherwise adheres to a multilateral
                    agreement, including any amendment to the
                    Montreal Protocol on Substances That Deplete
                    the Ozone Layer, that restricts the production
                    of class II, group II substances, the
                    Administrator shall promulgate regulations
                    establishing a baseline for the production of
                    class II, group II substances in the United
                    States and phasing down the production of class
                    II, group II substances in the United States,
                    in accordance with such multilateral agreement
                    and subject to the same exceptions and other
                    provisions as are applicable to the phase down
                    of consumption of class II, group II substances
                    under this section (except that the
                    Administrator shall not require a person who
                    obtains production allowances from the
                    Administrator to make payment for such
                    allowances if the person is making payment for
                    a corresponding quantity of consumption
                    allowances of the same vintage year). Upon the
                    effective date of such regulations, it shall be
                    unlawful for any person to produce any class
                    II, group II substance without holding one
                    consumption allowance and one production
                    allowance, or one destruction offset credit,
                    for each carbon dioxide equivalent ton of the
                    class II, group II substance.
                      (C) Integrity of cap.--To maintain the
                    integrity of the class II, group II cap, the
                    Administrator may, through rulemaking, limit
                    the percentage of each person's compliance
                    obligation that may be met through the use of
                    destruction offset credits or banked
                    allowances.
                      (D) Counting of violations.--Each emission
                    allowance or destruction offset credit not held
                    as required by this section shall be a separate
                    violation of this section.
              (2) Schedule.--Pursuant to the regulations
            promulgated pursuant to paragraph (1), the number of
            class II, group II consumption allowances established
            by the Administrator for each calendar year beginning
            in 2012 shall be the following percentage of the
            baseline, as established by the Administrator pursuant
            to paragraph (3):

    ----------------------------------------------------------------------------------------------------------------
                         Calendar Year                                         Percent of Baseline
    ----------------------------------------------------------------------------------------------------------------
    2012                                                     90
    2013                                                     87.5
    2014                                                     85
    2015                                                     82.5
    2016                                                     80
    2017                                                     77.5
    2018                                                     75
    2019                                                     71
    2020                                                     67
    2021                                                     63
    2022                                                     59
    2023                                                     54
    2024                                                     50
    2025                                                     46
    2026                                                     42
    2027                                                     38
    2028                                                     34
    2029                                                     30
    2030                                                     25
    2031                                                     21
    2032                                                     17
    after 2032                                               15
    ----------------------------------------------------------------------------------------------------------------

              (3) Baseline.--(A) Within 12 months after the date of
            enactment of this section, the Administrator shall
            promulgate regulations to establish the baseline for
            purposes of paragraph (2). The baseline shall be the
            sum, expressed in tons of carbon dioxide equivalents,
            of--
                      (i) the annual average consumption of all
                    class II substances in calendar years 2004,
                    2005, and 2006; plus
                      (ii) the annual average quantity of all class
                    II substances contained in imported products in
                    calendar years 2004, 2005, and 2006.
              (B) Notwithstanding subparagraph (A), if the
            Administrator determines that the baseline is higher
            than 370 million metric tons of carbon dioxide
            equivalents, then the Administrator shall establish the
            baseline at 370 million metric tons of carbon dioxide
            equivalents.
              (C) Notwithstanding subparagraph (A), if the
            Administrator determines that the baseline is lower
            than 280 million metric tons of carbon dioxide
            equivalents, then the Administrator shall establish the
            baseline at 280 million metric tons of carbon dioxide
            equivalents.
              (4) Distribution of allowances.--
                      (A) In general.--Pursuant to the regulations
                    promulgated under paragraph (1), for each
                    calendar year beginning in 2012, the
                    Administrator shall sell consumption allowances
                    in accordance with this paragraph.
                      (B) Establishment of pools.--The
                    Administrator shall establish two allowance
                    pools. Eighty percent of the consumption
                    allowances available for a calendar year shall
                    be placed in the producer-importer pool, and 20
                    percent of the consumption allowances available
                    for a calendar year shall be placed in the
                    secondary pool.
                      (C) Producer-importer pool.--
                              (i) Auction.--(I) For each calendar
                            year, the Administrator shall offer for
                            sale at auction the following
                            percentage of the consumption
                            allowances in the producer-importer
                            pool:

    ----------------------------------------------------------------------------------------------------------------
                         Calendar Year                                    Percent Available for Auction
    ----------------------------------------------------------------------------------------------------------------
    2012                                                     10
    2013                                                     20
    2014                                                     30
    2015                                                     40
    2016                                                     50
    2017                                                     60
    2018                                                     70
    2019                                                     80
    2020 and thereafter                                      90
    ----------------------------------------------------------------------------------------------------------------

                              (II) Any person who produced or
                            imported any class II substance during
                            calendar year 2004, 2005, or 2006 may
                            participate in the auction. No other
                            persons may participate in the auction
                            unless permitted to do so pursuant to
                            subclause (III).
                              (III) Not later than three years
                            after the date of the initial auction
                            and from time to time thereafter, the
                            Administrator shall determine through
                            rulemaking whether any persons who did
                            not produce or import a class II
                            substance during calendar year 2004,
                            2005, or 2006 will be permitted to
                            participate in future auctions. The
                            Administrator shall base this
                            determination on the duration,
                            consistency, and scale of such person's
                            purchases of consumption allowances in
                            the secondary pool under subparagraph
                            (D), as well as economic or technical
                            hardship and other factors deemed
                            relevant by the Administrator.
                              (IV) The Administrator shall set a
                            minimum bid per consumption allowance
                            of the following:
                                      (aa) For vintage year 2012,
                                    $1.00.
                                      (bb) For vintage year 2013,
                                    $1.20.
                                      (cc) For vintage year 2014,
                                    $1.40.
                                      (dd) For vintage year 2015,
                                    $1.60.
                                      (ee) For vintage year 2016,
                                    $1.80.
                                      (ff) For vintage year 2017,
                                    $2.00.
                                      (gg) For vintage year 2018
                                    and thereafter, $2.00 adjusted
                                    for inflation after vintage
                                    year 2017 based upon the
                                    producer price index as
                                    published by the Department of
                                    Commerce.
                              (ii) Non-auction sale.--(I) For each
                            calendar year, as soon as practicable
                            after auction, the Administrator shall
                            offer for sale the remaining
                            consumption allowances in the producer-
                            importer pool at the following prices:
                                      (aa) A fee of $1.00 per
                                    vintage year 2012 allowance.
                                      (bb) A fee of $1.20 per
                                    vintage year 2013 allowance.
                                      (cc) A fee of $1.40 per
                                    vintage year 2014 allowance.
                                      (dd) For each vintage year
                                    2015 allowance, a fee equal to
                                    the average of $1.10 and the
                                    auction clearing price for
                                    vintage year 2014 allowances.
                                      (ee) For each vintage year
                                    2016 allowance, a fee equal to
                                    the average of $1.30 and the
                                    auction clearing price for
                                    vintage year 2015 allowances.
                                      (ff) For each vintage year
                                    2017 allowance, a fee equal to
                                    the average of $1.40 and the
                                    auction clearing price for
                                    vintage year 2016 allowances.
                                      (gg) For each allowance of
                                    vintage year 2018 and
                                    subsequent vintage years, a fee
                                    equal to the auction clearing
                                    price for that vintage year.
                              (II) The Administrator shall offer to
                            sell the remaining consumption
                            allowances in the producer-importer
                            pool to producers of class II, group II
                            substances and importers of class II,
                            group II substances in proportion to
                            their relative allocation share.
                              (III) Such allocation share for such
                            sale shall be determined by the
                            Administrator using such producer's or
                            importer's annual average data on class
                            II substances from calendar years 2004,
                            2005, and 2006, on a carbon dioxide
                            equivalent basis, and--
                                      (aa) shall be based on a
                                    producer's production, plus
                                    importation, plus acquisitions
                                    and purchases from persons who
                                    produced class II substances in
                                    the United States during
                                    calendar years 2004, 2005, or
                                    2006, less exportation, less
                                    transfers and sales to persons
                                    who produced class II
                                    substances in the United States
                                    during calendar years 2004,
                                    2005, or 2006; and
                                      (bb) for an importer of class
                                    II substances that did not
                                    produce in the United States
                                    any class II substance during
                                    calendar years 2004, 2005, and
                                    2006, shall be based on the
                                    importer's importation less
                                    exportation.
                            For purposes of item (aa), the
                            Administrator shall account for 100
                            percent of class II, group II
                            substances and 60 percent of class II,
                            group I substances. For purposes of
                            item (bb), the Administrator shall
                            account for 100 percent of class II,
                            group II substances and 100 percent of
                            class II, group I substances.
                              (IV) Any consumption allowances made
                            available for nonauction sale to a
                            specific producer or importer of class
                            II, group II substances but not
                            purchased by the specific producer or
                            importer shall be made available for
                            sale to any producer or importer of
                            class II substances during calendar
                            years 2004, 2005, or 2006. If demand
                            for such consumption allowances exceeds
                            supply of such consumption allowances,
                            the Administrator shall develop and
                            utilize criteria for the sale of such
                            consumption allowances that may include
                            pro rata shares, historic production
                            and importation, economic or technical
                            hardship, or other factors deemed
                            relevant by the Administrator. If the
                            supply of such consumption allowances
                            exceeds demand, the Administrator may
                            offer such consumption allowances for
                            sale in the secondary pool as set forth
                            in subparagraph (D).
                      (D) Secondary pool.--(i) For each calendar
                    year, as soon as practicable after the auction
                    required in subparagraph (C), the Administrator
                    shall offer for sale the consumption allowances
                    in the secondary pool at the prices listed in
                    subparagraph (C)(ii).
                      (ii) The Administrator shall accept
                    applications for purchase of secondary pool
                    consumption allowances from--
                              (I) importers of products containing
                            class II, group II substances;
                              (II) persons who purchased any class
                            II, group II substance directly from a
                            producer or importer of class II, group
                            II substances for use in a product
                            containing a class II, group II
                            substance, a manufacturing process, or
                            a reclamation process;
                              (III) persons who did not produce or
                            import a class II substance during
                            calendar year 2004, 2005, or 2006, but
                            who the Administrator determines have
                            subsequently taken significant steps to
                            produce or import a substantial
                            quantity of any class II, group II
                            substance; and
                              (IV) persons who produced or imported
                            any class II substance during calendar
                            year 2004, 2005, or 2006.
                      (iii) If the supply of consumption allowances
                    in the secondary pool equals or exceeds the
                    demand for consumption allowances in the
                    secondary pool as presented in the applications
                    for purchase, the Administrator shall sell the
                    consumption allowances in the secondary pool to
                    the applicants in the amounts requested in the
                    applications for purchase. Any consumption
                    allowances in the secondary pool not purchased
                    in a calendar year may be rolled over and added
                    to the quantity available in the secondary pool
                    in the following year.
                      (iv) If the demand for consumption allowances
                    in the secondary pool as presented in the
                    applications for purchase exceeds the supply of
                    consumption allowances in the secondary pool,
                    the Administrator shall sell the consumption
                    allowances as follows:
                              (I) The Administrator shall first
                            sell the consumption allowances in the
                            secondary pool to any importers of
                            products containing class II, group II
                            substances in the amounts requested in
                            their applications for purchase. If the
                            demand for such consumption allowances
                            exceeds supply of such consumption
                            allowances, the Administrator shall
                            develop and utilize criteria for the
                            sale of such consumption allowances
                            among importers of products containing
                            class II, group II substances that may
                            include pro rata shares, historic
                            importation, economic or technical
                            hardship, or other factors deemed
                            relevant by the Administrator.
                              (II) The Administrator shall next
                            sell any remaining consumption
                            allowances to persons identified in
                            subclauses (II) and (III) of clause
                            (ii) in the amounts requested in their
                            applications for purchase. If the
                            demand for such consumption allowances
                            exceeds remaining supply of such
                            consumption allowances, the
                            Administrator shall develop and utilize
                            criteria for the sale of such
                            consumption allowances among subclauses
                            (II) and (III) applicants that may
                            include pro rata shares, historic use,
                            economic or technical hardship, or
                            other factors deemed relevant by the
                            Administrator.
                              (III) The Administrator shall then
                            sell any remaining consumption
                            allowances to persons who produced or
                            imported any class II substance during
                            calendar year 2004, 2005, or 2006 in
                            the amounts requested in their
                            applications for purchase. If demand
                            for such consumption allowances exceeds
                            remaining supply of such consumption
                            allowances, the Administrator shall
                            develop and utilize criteria for the
                            sale of such consumption allowances
                            that may include pro rata shares,
                            historic production and importation,
                            economic or technical hardship, or
                            other factors deemed relevant by the
                            Administrator.
                              (IV) Each person who purchases
                            consumption allowances in a non-auction
                            sale under this subparagraph shall be
                            required to disclose the person or
                            entity sponsoring or benefitting from
                            the purchases if such person or entity
                            is, in whole or in part, other than the
                            purchaser or the purchaser's employer.
                      (E) Discretion to withhold allowances.--
                    Nothing in this paragraph prevents the
                    Administrator from exercising discretion to
                    withhold and retire consumption allowances that
                    would otherwise be available for auction or
                    nonauction sale. Not later than 18 months after
                    the date of enactment of this section, the
                    Administrator shall promulgate regulations
                    establishing criteria for withholding and
                    retiring consumption allowances.
              (5) Banking.--A consumption allowance or destruction
            offset credit may be used to meet the compliance
            obligation requirements of paragraph (1) in--
                      (A) the vintage year for the allowance or
                    destruction offset credit; or
                      (B) any calendar year subsequent to the
                    vintage year for the allowance or destruction
                    offset credit.
              (6) Auctions.--
                      (A) Initial regulations.--Not later than 18
                    months after the date of enactment of this
                    section, the Administrator shall promulgate
                    regulations governing the auction of allowances
                    under this section. Such regulations shall
                    include the following requirements:
                              (i) Frequency; first auction.--
                            Auctions shall be held one time per
                            year at regular intervals, with the
                            first auction to be held no later than
                            October 31, 2011.
                              (ii) Auction format.--Auctions shall
                            follow a single-round, sealed-bid,
                            uniform price format.
                              (iii) Financial assurance.--The
                            Administrator may establish financial
                            assurance requirements to ensure that
                            auction participants can and will
                            perform on their bids.
                              (iv) Disclosure of beneficial
                            ownership.--Each bidder in the auction
                            shall be required to disclose the
                            person or entity sponsoring or
                            benefitting from the bidder's
                            participation in the auction if such
                            person or entity is, in whole or in
                            part, other than the bidder or the
                            bidder's employer.
                              (v) Publication of information.--
                            After the auction, the Administrator
                            shall, in a timely fashion, publish the
                            number of bidders, number of winning
                            bidders, the quantity of allowances
                            sold, and the auction clearing price.
                              (vi) Bidding limits in 2012.--In the
                            vintage year 2012 auction, no auction
                            participant may, directly or in concert
                            with another participant, bid for or
                            purchase more allowances offered for
                            sale at the auction than the greater
                            of--
                                      (I) the number of allowances
                                    which, when added to the number
                                    of allowances available for
                                    purchase by the participant in
                                    the producer-importer pool non-
                                    auction sale, would equal the
                                    participant's annual average
                                    consumption of class II, group
                                    II substances in calendar years
                                    2004, 2005, and 2006; or
                                      (II) the number of allowances
                                    equal to the product of--
                                              (aa) 1.20 multiplied
                                            by the participant's
                                            allocation share of the
                                            producer-importer pool
                                            non-auction sale as
                                            determined under
                                            paragraph (4)(C)(ii);
                                            and
                                              (bb) the number of
                                            vintage year 2012
                                            allowances offered at
                                            auction.
                              (vii) Bidding limits in 2013.--In the
                            vintage year 2013 auction, no auction
                            participant may, directly or in concert
                            with another participant, bid for or
                            purchase more allowances offered for
                            sale at the auction than the product
                            of--
                                      (I) 1.15 multiplied by the
                                    ratio of the total number of
                                    vintage year 2012 allowances
                                    purchased by the participant
                                    from the auction and from the
                                    producer-importer pool non-
                                    auction sale to the total
                                    number of vintage year 2012
                                    allowances in the producer-
                                    importer pool; and
                                      (II) the number of vintage
                                    year 2013 allowances offered at
                                    auction.
                              (viii) Bidding limits in subsequent
                            years.--In the auctions for vintage
                            year 2014 and subsequent vintage years,
                            no auction participant may, directly or
                            in concert with another participant,
                            bid for or purchase more allowances
                            offered for sale at the auction than
                            the product of--
                                      (I) 1.15 multiplied by the
                                    ratio of the highest number of
                                    allowances held by the
                                    participant in any of the three
                                    prior vintage years to meet its
                                    compliance obligation under
                                    paragraph (1) to the total
                                    number of allowances in the
                                    producer-importer pool for such
                                    vintage year; and
                                      (II) the number of allowances
                                    offered at auction for that
                                    vintage year.
                              (ix) Other requirements.--The
                            Administrator may include in the
                            regulations such other requirements or
                            provisions as the Administrator
                            considers necessary to promote
                            effective, efficient, transparent, and
                            fair administration of auctions under
                            this section.
                      (B) Revision of regulations.--The
                    Administrator may, at any time, revise the
                    initial regulations promulgated under
                    subparagraph (A) based on the Administrator's
                    experience in administering allowance auctions.
                    Such revised regulations need not meet the
                    requirements identified in subparagraph (A) if
                    the Administrator determines that an
                    alternative auction design would be more
                    effective, taking into account factors
                    including costs of administration,
                    transparency, fairness, and risks of collusion
                    or manipulation. In determining whether and how
                    to revise the initial regulations under this
                    paragraph, the Administrator shall not consider
                    maximization of revenues to the Federal
                    Government.
                      (C) Delegation or contract.--Pursuant to
                    regulations under this section, the
                    Administrator may, by delegation or contract,
                    provide for the conduct of auctions under the
                    Administrator's supervision by other
                    departments or agencies of the Federal
                    Government or by nongovernmental agencies,
                    groups, or organizations.
              (7) Payments for allowances.--
                      (A) Initial regulations.--Not later than 18
                    months after the date of enactment of this
                    section, the Administrator shall promulgate
                    regulations governing the payment for
                    allowances purchased in auction and non-auction
                    sales under this section. Such regulations
                    shall include the requirement that, in the
                    event that full payment for purchased
                    allowances is not made on the date of purchase,
                    equal payments shall be made one time per
                    calendar quarter with all payments for
                    allowances of a vintage year made by the end of
                    that vintage year.
                      (B) Revision of regulations.-- The
                    Administrator may, at any time, revise the
                    initial regulations promulgated under
                    subparagraph (A) based on the Administrator's
                    experience in administering collection of
                    payments. Such revised regulations need not
                    meet the requirements identified in
                    subparagraph (A) if the Administrator
                    determines that an alternative payment
                    structure or frequency would be more effective,
                    taking into account factors including cost of
                    administration, transparency, and fairness. In
                    determining whether and how to revise the
                    initial regulations under this paragraph, the
                    Administrator shall not consider maximization
                    of revenues to the Federal Government.
                      (C) Penalties for non-payment.--Failure to
                    pay for purchased allowances in accordance with
                    the regulations promulgated pursuant to this
                    paragraph shall be a violation of the
                    requirements of subsection (b). Section
                    113(c)(3) shall apply in the case of any person
                    who knowingly fails to pay for purchased
                    allowances in accordance with the regulations
                    promulgated pursuant to this paragraph.
              (8) Imported products.--If the United States becomes
            a party or otherwise adheres to a multilateral
            agreement, including any amendment to the Montreal
            Protocol on Substances That Deplete the Ozone Layer,
            which restricts the production and consumption of class
            II, group II substances--
                      (A) as of the date on which such agreement or
                    amendment enters into force, it shall no longer
                    be unlawful for any person to import from a
                    party to such agreement or amendment any
                    product containing any class II, group II
                    substance whose production and consumption are
                    regulated by such agreement or amendment
                    without holding one consumption allowance or
                    one destruction offset credit for each carbon
                    dioxide equivalent ton of the class II, group
                    II substance;
                      (B) the Administrator shall promulgate
                    regulations within 12 months of the date the
                    United States becomes a party or otherwise
                    adheres to such agreement or amendment, or the
                    date on which such agreement or amendment
                    enters into force, whichever is later, to
                    establish a new baseline for purposes of
                    paragraph (2), which new baseline shall be the
                    original baseline less the carbon dioxide
                    equivalent of the annual average quantity of
                    any class II substances regulated by such
                    agreement or amendment contained in products
                    imported from parties to such agreement or
                    amendment in calendar years 2004, 2005, and
                    2006;
                      (C) as of the date on which such agreement or
                    amendment enters into force, no person
                    importing any product containing any class II,
                    group II substance may, directly or in concert
                    with another person, purchase any consumption
                    allowances for sale by the Administrator for
                    the importation of products from a party to
                    such agreement or amendment that contain any
                    class II, group II substance restricted by such
                    agreement or amendment; and
                      (D) the Administrator may adjust the two
                    allowance pools established in paragraph (4)
                    such that up to 90 percent of the consumption
                    allowances available for a calendar year are
                    placed in the producer-importer pool with the
                    remaining consumption allowances placed in the
                    secondary pool.
              (9) Offsets.--
                      (A) Chlorofluorocarbon destruction.--Within
                    18 months after the date of enactment of this
                    section, the Administrator shall promulgate
                    regulations to provide for the issuance of
                    offset credits for the destruction, in the
                    calendar year 2012 or later, of
                    chlorofluorocarbons in the United States. The
                    Administrator shall establish and distribute to
                    the destroying entity a quantity of destruction
                    offset credits equal to 0.8 times the number of
                    tons of carbon dioxide equivalents of reduction
                    achieved through the destruction. No
                    destruction offset credits shall be established
                    for the destruction of a class II, group II
                    substance.
                      (B) Definition.--For purposes of this
                    paragraph, the term ``destruction'' means the
                    conversion of a substance by thermal, chemical,
                    or other means to another substance with little
                    or no carbon dioxide equivalent value and no
                    ozone depletion potential.
                      (C) Regulations.--The regulations promulgated
                    under this paragraph shall include standards
                    and protocols for project eligibility,
                    certification of destroyers, monitoring,
                    tracking, destruction efficiency,
                    quantification of project and baseline
                    emissions and carbon dioxide equivalent value,
                    and verification. The Administrator shall
                    ensure that destruction offset credits
                    represent real and verifiable destruction of
                    chlorofluorocarbons or other class I or class
                    II, group I, substances authorized under
                    subparagraph (D).
                      (D) Other substances.--The Administrator may
                    promulgate regulations to add to the list of
                    class I and class II, group I, substances that
                    may be destroyed for destruction offset
                    credits, taking into account a candidate
                    substance's carbon dioxide equivalent value,
                    ozone depletion potential, prevalence in banks
                    in the United States, and emission rates, as
                    well as the need for additional cost
                    containment under the class II, group II cap
                    and the integrity of the class II, group II
                    cap. The Administrator shall not add a class I
                    or class II, group I substance to the list if
                    the consumption of the substance has not been
                    completely phased-out internationally (except
                    for essential use exemptions or other similar
                    exemptions) pursuant to the Montreal Protocol.
                      (E) Extension of offsets.--(i) At any time
                    after the Administrator promulgates regulations
                    pursuant to subparagraph (A), the Administrator
                    may add the types of destruction projects
                    authorized to receive destruction offset
                    credits under this paragraph to the list of
                    types of projects eligible for offset credits
                    under section 733. Nothing in this paragraph
                    shall affect the issuance of offset credits
                    under section 740.
                      (ii) The Administrator shall not make the
                    addition under clause (i) unless the
                    Administrator finds that insufficient
                    destruction is occurring or is projected to
                    occur under this paragraph and that the
                    addition would increase destruction.
                      (iii) In no event shall more than one
                    destruction offset credit be issued under title
                    VII and this section for the destruction of the
                    same quantity of a substance.
              (10) Legal status of allowances and credits.--None of
            the following constitutes a property right:
                      (A) A production or consumption allowance.
                      (B) A destruction offset credit.
      (c) Deadlines for Compliance.--Notwithstanding the deadlines
    specified for class II substances in sections 608, 609, 610,
    612, and 613 that occur prior to January 1, 2009, the deadline
    for promulgating regulations under those sections for class II,
    group II substances shall be January 1, 2012.
      (d) Exceptions for Essential Uses.--Notwithstanding any phase
    down of production and consumption required by this section, to
    the extent consistent with any applicable multilateral
    agreement to which the United States is a party or otherwise
    adheres, the Administrator may provide the following exceptions
    for essential uses:
              (1) Medical devices.--The Administrator, after notice
            and opportunity for public comment, and in consultation
            with the Commissioner of the Food and Drug
            Administration, may provide an exception for the
            production and consumption of class II, group II
            substances solely for use in medical devices.
              (2) Aviation safety.--The Administrator, after notice
            and opportunity for public comment, may authorize the
            production and consumption of limited quantities of
            class II, group II substances solely for the purposes
            of aviation safety if the Administrator of the Federal
            Aviation Administration, in consultation with the
            Administrator, determines that no safe and effective
            substitute has been developed and that such
            authorization is necessary for aviation safety
            purposes.
      (e) Developing Countries.--Notwithstanding any phase down of
    production required by this section, the Administrator, after
    notice and opportunity for public comment, may authorize the
    production of limited quantities of class II, group II
    substances in excess of the amounts otherwise allowable under
    this section solely for export to, and use in, developing
    countries. Any production authorized under this subsection
    shall be solely for purposes of satisfying the basic domestic
    needs of such countries as provided in applicable international
    agreements, if any, to which the United States is a party or
    otherwise adheres.
      (f) National Security; Fire Suppression, etc.--The provisions
    of subsection (f) and paragraphs (1) and (2) of subsection (g)
    of section 604 shall apply to any consumption and production
    phase down of class II, group II substances in the same manner
    and to the same extent, consistent with any applicable
    international agreement to which the United States is a party
    or otherwise adheres, as such provisions apply to the
    substances specified in such subsection.
      (g) Accelerated Schedule.--In lieu of section 606, the
    provisions of paragraphs (1), (2), and (3) of this subsection
    shall apply in the case of class II, group II substances.
              (1) In general.--The Administrator shall promulgate
            initial regulations not later than 18 months after the
            date of enactment of this section, and revised
            regulations any time thereafter, which establish a
            schedule for phasing down the consumption (and, if the
            condition in subsection (b)(1)(B) is met, the
            production) of class II, group II substances that is
            more stringent than the schedule set forth in this
            section if, based on the availability of substitutes,
            the Administrator determines that such more stringent
            schedule is practicable, taking into account
            technological achievability, safety, and other factors
            the Administrator deems relevant, or if the Montreal
            Protocol, or any applicable international agreement to
            which the United States is a party or otherwise
            adheres, is modified or established to include a
            schedule or other requirements to control or reduce
            production, consumption, or use of any class II, group
            II substance more rapidly than the applicable schedule
            under this section.
              (2) Petition.--Any person may submit a petition to
            promulgate regulations under this subsection in the
            same manner and subject to the same procedures as are
            provided in section 606(b).
              (3) Inconsistency.--If the Administrator determines
            that the provisions of this section regarding banking,
            allowance rollover, or destruction offset credits
            create a significant potential for inconsistency with
            the requirements of any applicable international
            agreement to which the United States is a party or
            otherwise adheres, the Administrator may promulgate
            regulations restricting the availability of banking,
            allowance rollover, or destruction offset credits to
            the extent necessary to avoid such inconsistency.
      (h) Exchange.--Section 607 shall not apply in the case of
    class II, group II substances. Production and consumption
    allowances for class II, group II substances may be freely
    exchanged or sold but may not be converted into allowances for
    class II, group I substances.
      (i) Labeling.--(1) In applying section 611 to products
    containing or manufactured with class II, group II substances,
    in lieu of the words ``destroying ozone in the upper
    atmosphere'' on labels required under section 611 there shall
    be substituted the words ``contributing to global warming''.
      (2) The Administrator may, through rulemaking, exempt from
    the requirements of section 611 products containing or
    manufactured with class II, group II substances determined to
    have little or no carbon dioxide equivalent value compared to
    other substances used in similar products.
      (j) Nonessential Products.--For the purposes of section 610,
    class II, group II substances shall be regulated under section
    610(b), except that in applying section 610(b) the word
    ``hydrofluorocarbon'' shall be substituted for the word
    ``chlorofluorocarbon'' and the term ``class II, group II''
    shall be substituted for the term ``class I''. Class II, group
    II substances shall not be subject to the provisions of section
    610(d).
      (k) International Transfers.--In the case of class II, group
    II substances, in lieu of sections 616(a) and 616(b), this
    subsection shall apply. To the extent consistent with any
    applicable international agreement to which the United States
    is a party or otherwise adheres, including any amendment to the
    Montreal Protocol, the United States may engage in transfers
    with other parties to such agreement or amendment under the
    following conditions:
              (1) The United States may transfer production
            allowances to another party to such agreement or
            amendment if, at the time of the transfer, the
            Administrator establishes revised production limits for
            the United States accounting for the transfer in
            accordance with regulations promulgated pursuant to
            this subsection.
              (2) The United States may acquire production
            allowances from another party to such agreement or
            amendment if, at the time of the transfer, the
            Administrator finds that the other party has revised
            its domestic production limits in the same manner as
            provided with respect to transfers by the United States
            in the regulations promulgated pursuant to this
            subsection.
      (l) Relationship to Other Laws.--
              (1) State laws.--For purposes of section 116, the
            requirements of this section for class II, group II
            substances shall be treated as requirements for the
            control and abatement of air pollution.
              (2) Multilateral agreements.--Section 614 shall apply
            to the provisions of this section concerning class II,
            group II substances, except that for the words
            ``Montreal Protocol'' there shall be substituted the
            words ``Montreal Protocol, or any applicable
            multilateral agreement to which the United States is a
            party or otherwise adheres that restricts the
            production or consumption of class II, group II
            substances,'' and for the words ``Article 4 of the
            Montreal Protocol'' there shall be substituted ``any
            provision of such multilateral agreement regarding
            trade with non-parties''.
              (3) Federal facilities.--For purposes of section 118,
            the requirements of this section for class II, group II
            substances and corresponding State, interstate, and
            local requirements, administrative authority, and
            process and sanctions shall be treated as requirements
            for the control and abatement of air pollution within
            the meaning of section 118.
      (m) Carbon Dioxide Equivalent Value.--(1) In lieu of section
    602(e), the provisions of this subsection shall apply in the
    case of class II, group II substances. Simultaneously with
    establishing the list of class II, group II substances, and
    simultaneously with any addition to that list, the
    Administrator shall publish the carbon dioxide equivalent value
    of each listed class II, group II substance, based on a
    determination of the number of metric tons of carbon dioxide
    that makes the same contribution to global warming over 100
    years as 1 metric ton of each class II, group II substance.
      (2) Not later than February 1, 2017, and not less than every
    5 years thereafter, the Administrator shall--
              (A) review, and if appropriate, revise the carbon
            dioxide equivalent values established for class II,
            group II substances based on a determination of the
            number of metric tons of carbon dioxide that makes the
            same contributions to global warming over 100 years as
            1 metric ton of each class II, group II substance; and
              (B) publish in the Federal Register the results of
            that review and any revisions.
      (3) A revised determination published in the Federal Register
    under paragraph (2)(B) shall take effect for production of
    class II, group II substances, consumption of class II, group
    II substances, and importation of products containing class II,
    group II substances starting on January 1 of the first calendar
    year starting at least 9 months after the date on which the
    revised determination was published.
      (4) The Administrator may decrease the frequency of review
    and revision under paragraph (2) if the Administrator
    determines that such decrease is appropriate in order to
    synchronize such review and revisions with any similar review
    process carried out pursuant to the United Nations Framework
    Convention on Climate Change, an agreement negotiated under
    that convention, The Vienna Convention for the Protection of
    the Ozone Layer, or an agreement negotiated under that
    convention, except that in no event shall the Administrator
    carry out such review and revision any less frequently than
    every 10 years.
      (n) Reporting Requirements.--In lieu of subsections (b) and
    (c) of section 603, paragraphs (1) and (2) of this subsection
    shall apply in the case of class II, group II substances:
              (1) In general.--On a quarterly basis, or such other
            basis (not less than annually) as determined by the
            Administrator, each person who produced, imported, or
            exported a class II, group II substance, or who
            imported a product containing a class II, group II
            substance, shall file a report with the Administrator
            setting forth the carbon dioxide equivalent amount of
            the substance that such person produced, imported, or
            exported, as well as the amount that was contained in
            products imported by that person, during the preceding
            reporting period. Each such report shall be signed and
            attested by a responsible officer. If all other
            reporting is complete, no such report shall be required
            from a person after April 1 of the calendar year after
            such person permanently ceases production, importation,
            and exportation of the substance, as well as
            importation of products containing the substance, and
            so notifies the Administrator in writing. If the United
            States becomes a party or otherwise adheres to a
            multilateral agreement, including any amendment to the
            Montreal Protocol on Substances That Deplete the Ozone
            Layer, that restricts the production and consumption of
            class II, group II substances, then, if all other
            reporting is complete, no such report shall be required
            from a person with respect to importation from parties
            to such agreement or amendment of products containing
            any class II, group II substance restricted by such
            agreement or amendment, after April 1 of the calendar
            year following the year during which such agreement or
            amendment enters into force.
              (2) Baseline reports for class ii, group ii
            substances.--
                      (A) In general.--Unless such information has
                    been previously reported to the Administrator,
                    on the date on which the first report under
                    paragraph (1) of this subsection is required to
                    be filed, each person who produced, imported,
                    or exported a class II, group II substance, or
                    who imported a product containing a class II
                    substance, (other than a substance added to the
                    list of class II, group II substances after the
                    publication of the initial list of such
                    substances under this section), shall file a
                    report with the Administrator setting forth the
                    amount of such substance that such person
                    produced, imported, exported, or that was
                    contained in products imported by that person,
                    during each of calendar years 2004, 2005, and
                    2006.
                      (B) Producers.--In reporting under
                    subparagraph (A), each person who produced in
                    the United States a class II substance during
                    calendar years 2004, 2005, or 2006 shall--
                              (i) report all acquisitions or
                            purchases of class II substances during
                            each of calendar years 2004, 2005, and
                            2006 from all other persons who
                            produced in the United States a class
                            II substance during calendar years
                            2004, 2005, or 2006, and supply
                            evidence of such acquisitions and
                            purchases as deemed necessary by the
                            Administrator; and
                              (ii) report all transfers or sales of
                            class II substances during each of
                            calendar years 2004, 2005, and 2006 to
                            all other persons who produced in the
                            United States a class II substance
                            during calendar years 2004, 2005, or
                            2006, and supply evidence of such
                            transfers and sales as deemed necessary
                            by the Administrator.
                      (C) Added substances.--In the case of a
                    substance added to the list of class II, group
                    II substances after publication of the initial
                    list of such substances under this section,
                    each person who produced, imported, exported,
                    or imported products containing such substance
                    in calendar year 2004, 2005, or 2006 shall file
                    a report with the Administrator within 180 days
                    after the date on which such substance is added
                    to the list, setting forth the amount of the
                    substance that such person produced, imported,
                    and exported, as well as the amount that was
                    contained in products imported by that person,
                    in calendar years 2004, 2005, and 2006.
      (o) Stratospheric Ozone and Climate Protection Fund.--
              (1) In general.--There is established in the Treasury
            of the United States a Stratospheric Ozone and Climate
            Protection Fund.
              (2) Deposits.--The Administrator shall deposit all
            proceeds from the auction and non-auction sale of
            allowances under this section into the Stratospheric
            Ozone and Climate Protection Fund.
              (3) Use.--Amounts deposited into the Stratospheric
            Ozone and Climate Protection Fund shall be available,
            subject to appropriations, exclusively for the
            following purposes:
                      (A) Recovery, recycling, and reclamation.--
                    The Administrator may utilize funds to
                    establish a program to incentivize the
                    recovery, recycling, and reclamation of any
                    Class II substances in order to reduce
                    emissions of such substances.
                      (B) Multilateral fund.--If the United States
                    becomes a party or otherwise adheres to a
                    multilateral agreement, including any amendment
                    to the Montreal Protocol on Substances That
                    Deplete the Ozone Layer, which restricts the
                    production and consumption of class II, group
                    II substances, the Administrator may utilize
                    funds to meet any related contribution
                    obligation of the United States to the
                    Multilateral Fund for the Implementation of the
                    Montreal Protocol or similar multilateral fund
                    established under such multilateral agreement.
                      (C) Best-in-class appliances deployment
                    program.--The Secretary of Energy is authorized
                    to utilize funds to carry out the purposes of
                    section 214 of the American Clean Energy and
                    Security Act of 2009.
                      (D) Low global warming product transition
                    assistance program.--
                              (i) In general.--The Administrator,
                            in consultation with the Secretary of
                            Energy, may utilize funds in fiscal
                            years 2012 through 2022 to establish a
                            program to provide financial assistance
                            to manufacturers of products containing
                            class II, group II substances to
                            facilitate the transition to products
                            that contain or utilize alternative
                            substances with no or low carbon
                            dioxide equivalent value and no ozone
                            depletion potential.
                              (ii) Definition.--In this
                            subparagraph, the term ``products''
                            means refrigerators, freezers,
                            dehumidifiers, air conditioners, foam
                            insulation, technical aerosols, fire
                            protection systems, and semiconductors.
                              (iii) Financial assistance.--The
                            Administrator may provide financial
                            assistance to manufacturers pursuant to
                            clause (i) for--
                                      (I) the design and
                                    configuration of new products
                                    that use alternative substances
                                    with no or low carbon dioxide
                                    equivalent value and no ozone
                                    depletion potential; and
                                      (II) the redesign and
                                    retooling of facilities for the
                                    manufacture of products in the
                                    United States that use
                                    alternative substances with no
                                    or low carbon dioxide
                                    equivalent value and no ozone
                                    depletion potential.
                              (iv) Reports.--For any fiscal year
                            during which the Administrator provides
                            financial assistance pursuant to this
                            subparagraph, the Administrator shall
                            submit a report to the Congress within
                            3 months of the end of such fiscal year
                            detailing the amounts, recipients,
                            specific purposes, and results of the
                            financial assistance provided.

             TITLE VII--GLOBAL WARMING POLLUTION REDUCTION PROGRAM

    SEC. 700. DEFINITIONS.

      In this title:
              (1) Additional.--The term ``additional'', when used
            with respect to reductions or avoidance of greenhouse
            gas emissions, or to sequestration of greenhouse gases,
            means reductions, avoidance, or sequestration that
            result in a lower level of net greenhouse gas emissions
            or atmospheric concentrations than would occur in the
            absence of an offset project.
              (2) Additionality.--The term ``additionality'' means
            the extent to which reductions or avoidance of
            greenhouse gas emissions, or sequestration of
            greenhouse gases, are additional.
              (3) Advisory board.--The term ``Advisory Board''
            means the Offsets Integrity Advisory Board established
            under section 731.
              (4) Affiliated.--The term ``affiliated''--
                      (A) when used in relation to an entity means
                    owned or controlled by, or under common
                    ownership or control with, another entity, as
                    determined by the Administrator; and
                      (B) when used in relation to a natural gas
                    local distribution company, means owned or
                    controlled by, or under common ownership or
                    control with, another natural gas local
                    distribution company, as determined by the
                    Administrator.
              (5) Allowance.--The term ``allowance'' means a
            limited authorization to emit, or have attributable
            greenhouse gas emissions in an amount of, 1 ton of
            carbon dioxide equivalent of a greenhouse gas in
            accordance with this title; it includes an emission
            allowance, a compensatory allowance, or an
            international emission allowance.
              (6) Attributable greenhouse gas emissions.--The term
            ``attributable greenhouse gas emissions'' means--
                      (A) for a covered entity that is a fuel
                    producer or importer described in paragraph
                    (13)(B), greenhouse gases that would be emitted
                    from the combustion of any petroleum-based or
                    coal-based liquid fuel, petroleum coke, or
                    natural gas liquid, produced or imported by
                    that covered entity for sale or distribution in
                    interstate commerce, assuming no capture and
                    sequestration of any greenhouse gas emissions;
                      (B) for a covered entity that is an
                    industrial gas producer or importer described
                    in paragraph (13)(C), the tons of carbon
                    dioxide equivalent of fossil fuel-based carbon
                    dioxide, nitrous oxide, any fluorinated gas,
                    other than nitrogen trifluoride, that is a
                    greenhouse gas, or any combination thereof--
                              (i) produced or imported by such
                            covered entity during the previous
                            calendar year for sale or distribution
                            in interstate commerce; or
                              (ii) released as fugitive emissions
                            in the production of fluorinated gas;
                            and
                      (C) for a natural gas local distribution
                    company described in paragraph (13)(J),
                    greenhouse gases that would be emitted from the
                    combustion of the natural gas, and any other
                    gas meeting the specifications for commingling
                    with natural gas for purposes of delivery, that
                    such entity delivered during the previous
                    calendar year to customers that are not covered
                    entities, assuming no capture and sequestration
                    of that greenhouse gas.
              (7) Biological sequestration; biologically
            sequestered.--The terms ``biological sequestration''
            and ``biologically sequestered'' mean the removal of
            greenhouse gases from the atmosphere by terrestrial
            biological means, such as by growing plants, and the
            storage of those greenhouse gases in plants or soils.
              (8) Capped emissions.--The term ``capped emissions''
            means greenhouse gas emissions to which section 722
            applies, including emissions from the combustion of
            natural gas, petroleum-based or coal-based liquid fuel,
            petroleum coke, or natural gas liquid to which section
            722(b)(2) or (8) applies.
              (9) Capped source.--The term ``capped source'' means
            a source that directly emits capped emissions.
              (10) Carbon dioxide equivalent.--The term ``carbon
            dioxide equivalent'' means the unit of measure,
            expressed in metric tons, of greenhouse gases as
            provided under section 711 or 712.
              (11) Carbon stock.--The term ``carbon stock'' means
            the quantity of carbon contained in a biological
            reservoir or system which has the capacity to
            accumulate or release carbon.
              (12) Compensatory allowance.--The term ``compensatory
            allowance'' means an allowance issued under section
            721(f).
              (13) Covered entity.--The term ``covered entity''
            means each of the following:
                      (A) Any electricity source.
                      (B) Any stationary source that produces, and
                    any entity that (or any group of two or more
                    affiliated entities that, in the aggregate)
                    imports, for sale or distribution in interstate
                    commerce in 2008 or any subsequent year,
                    petroleum-based or coal-based liquid fuel,
                    petroleum coke, or natural gas liquid, the
                    combustion of which would emit more than 25,000
                    tons of carbon dioxide equivalent, as
                    determined by the Administrator.
                      (C) Any stationary source that produces, and
                    any entity that (or any group of two or more
                    affiliated entities that, in the aggregate)
                    imports, for sale or distribution in interstate
                    commerce, in bulk, or in products designated by
                    the Administrator, in 2008 or any subsequent
                    year more than 25,000 tons of carbon dioxide
                    equivalent of--
                              (i) fossil fuel-based carbon dioxide;
                              (ii) nitrous oxide;
                              (iii) perfluorocarbons;
                              (iv) sulfur hexafluoride;
                              (v) any other fluorinated gas, except
                            for nitrogen trifluoride, that is a
                            greenhouse gas, as designated by the
                            Administrator under section 711(b) or
                            (c); or
                              (vi) any combination of greenhouse
                            gases described in clauses (i) through
                            (vi).
                      (D) Any stationary source that has emitted
                    25,000 or more tons of carbon dioxide
                    equivalent of nitrogen trifluoride in 2008 or
                    any subsequent year.
                      (E) Any geologic sequestration site.
                      (F) Any stationary source in the following
                    industrial sectors:
                              (i) Adipic acid production.
                              (ii) Primary aluminum production.
                              (iii) Ammonia manufacturing.
                              (iv) Cement production, excluding
                            grinding-only operations.
                              (v) Hydrochlorofluorocarbon
                            production.
                              (vi) Lime manufacturing.
                              (vii) Nitric acid production.
                              (viii) Petroleum refining.
                              (ix) Phosphoric acid production.
                              (x) Silicon carbide production.
                              (xi) Soda ash production.
                              (xii) Titanium dioxide production.
                              (xiii) Coal-based liquid or gaseous
                            fuel production.
                      (G) Any stationary source in the chemical or
                    petrochemical sector that, in 2008 or any
                    subsequent year--
                              (i) produces acrylonitrile, carbon
                            black, ethylene, ethylene dichloride,
                            ethylene oxide, or methanol; or
                              (ii) produces a chemical or
                            petrochemical product if producing that
                            product results in annual combustion
                            plus process emissions of 25,000 or
                            more tons of carbon dioxide equivalent.
                      (H) Any stationary source that--
                              (i) is in one of the following
                            industrial sectors: ethanol production;
                            ferroalloy production; fluorinated gas
                            production; food processing; glass
                            production; hydrogen production; iron
                            and steel production; lead production;
                            pulp and paper manufacturing; and zinc
                            production; and
                              (ii) has emitted 25,000 or more tons
                            of carbon dioxide equivalent in 2008 or
                            any subsequent year.
                      (I) Any fossil fuel-fired combustion device
                    (such as a boiler) or grouping of such devices
                    that--
                              (i) is all or part of an industrial
                            source not specified in subparagraph
                            (D), (F), (G), or (H); and
                              (ii) has emitted 25,000 or more tons
                            of carbon dioxide equivalent in 2008 or
                            any subsequent year.
                      (J) Any natural gas local distribution
                    company that (or any group of 2 or more
                    affiliated natural gas local distribution
                    companies that, in the aggregate) in 2008 or
                    any subsequent year, delivers 460,000,000 cubic
                    feet or more of natural gas to customers that
                    are not covered entities.
              (14) Crediting period.--The term ``crediting period''
            means the period with respect to which an offset
            project is eligible to earn offset credits under part
            D, as determined under section 734(c).
              (15) Designated representative.--The term
            ``designated representative'' means, with respect to a
            covered entity, a reporting entity, an offset project
            developer, or any other entity receiving or holding
            allowances or offset credits under this title, an
            individual authorized, through a certificate of
            representation submitted to the Administrator by the
            owners and operators or similar entity official, to
            represent the owners and operators or similar entity
            official in all matters pertaining to this title
            (including the holding, transfer, or disposition of
            allowances or offset credits), and to make all
            submissions to the Administrator under this title.
              (16) Developing country.--The term ``developing
            country'' means a country eligible to receive official
            development assistance according to the income
            guidelines of the Development Assistance Committee of
            the Organization for Economic Cooperation and
            Development.
              (17) Domestic offset credit.--The term ``domestic
            offset credit'' means an offset credit issued under
            part D, other than an international offset credit.
              (18) Electricity source.--The term ``electricity
            source'' means a stationary source that includes one or
            more utility units.
              (19) Emission.--The term ``emission'' means the
            release of a greenhouse gas into the ambient air. Such
            term does not include gases that are captured and
            sequestered, except to the extent that they are later
            released into the atmosphere, in which case compliance
            must be demonstrated pursuant to section 722(b)(5).
              (20) Emission allowance.--The term ``emission
            allowance'' means an allowance established under
            section 721(a) or section 726(g)(2) or (h)(1)(C).
              (21) Fair market value.--The term ``fair market
            value'' means the average daily closing price on
            registered exchanges or, if such a price is
            unavailable, the average price as determined by the
            Administrator, during a specified time period, of an
            emission allowance.
              (22) Federal land.--The term ``Federal land'' means
            land that is owned by the United States, other than
            land held in trust for an Indian or Indian tribe.
              (23) Fossil fuel.--The term ``fossil fuel'' means
            natural gas, petroleum, or coal, or any form of solid,
            liquid, or gaseous fuel derived from such material,
            including consumer products that are derived from such
            materials and are combusted.
              (24) Fossil fuel-fired.--The term ``fossil fuel-
            fired'' means powered by combustion of fossil fuel,
            alone or in combination with any other fuel, regardless
            of the percentage of fossil fuel consumed.
              (25) Fugitive emissions.--The term ``fugitive
            emissions'' means emissions from leaks, valves, joints,
            or other small openings in pipes, ducts, or other
            equipment, or from vents.
              (26) Geologic sequestration; geologically
            sequestered.--The terms ``geologic sequestration'' and
            ``geologically sequestered'' mean the sequestration of
            greenhouse gases in subsurface geologic formations for
            purposes of permanent storage.
              (27) Geologic sequestration site.--The term
            ``geologic sequestration site'' means a site where
            carbon dioxide is geologically sequestered.
              (28) Greenhouse gas.--The term ``greenhouse gas''
            means any gas described in section 711(a) or designated
            under section 711(b), (c), or (e), except to the extent
            that it is regulated under title VI.
              (29) High conservation priority land.--The term
            ``high conservation priority land'' means land that is
            not Federal land and is--
                      (A) globally or State ranked as critically
                    imperiled or imperiled under a State Natural
                    Heritage Program; or
                      (B) old-growth or late-successional forest,
                    as identified by the office of the State
                    Forester or relevant State agency with
                    regulatory jurisdiction over forestry
                    activities.
              (30) Hold.--The term ``hold'' means, with respect to
            an allowance or offset credit, to have in the
            appropriate account in the allowance tracking system,
            or submit to the Administrator for recording in such
            account.
              (31) Industrial source.--The term ``industrial
            source'' means any stationary source that--
                      (A) is not an electricity source; and
                      (B) is in--
                              (i) the manufacturing sector (as
                            defined in North American Industrial
                            Classification System codes 31, 32, and
                            33); or
                              (ii) the natural gas processing or
                            natural gas pipeline transportation
                            sector (as defined in North American
                            Industrial Classification System codes
                            211112 or 486210).
              (32) International emission allowance.--The term
            ``international emission allowance'' means a tradable
            authorization to emit 1 ton of carbon dioxide
            equivalent of greenhouse gas that is issued by a
            national or supranational foreign government pursuant
            to a qualifying international program designated by the
            Administrator pursuant to section 728(a).
              (33) International offset credit.--The term
            ``international offset credit'' means an offset credit
            issued by the Administrator under section 743.
              (34) Leakage.--The term ``leakage'' means a
            significant increase in greenhouse gas emissions, or
            significant decrease in sequestration, which is caused
            by an offset project and occurs outside the boundaries
            of the offset project.
              (35) Mineral sequestration.--The term ``mineral
            sequestration'' means sequestration of carbon dioxide
            from the atmosphere by capturing carbon dioxide into a
            permanent mineral, such as the aqueous precipitation of
            carbonate minerals that results in the storage of
            carbon dioxide in a mineral form.
              (36) Natural gas liquid.--The term ``natural gas
            liquid'' means ethane, butane, isobutane, natural
            gasoline, and propane which is ready for commercial
            sale or use.
              (37) Natural gas local distribution company.--The
            term ``natural gas local distribution company'' has the
            meaning given the term ``local distribution company''
            in section 2(17) of the Natural Gas Policy Act of 1978
            (15 U.S.C. 3301(17)).
              (38) Offset credit.--The term ``offset credit'' means
            a credit issued under part D.
              (39) Offset project.--The term ``offset project''
            means a project or activity that reduces or avoids
            greenhouse gas emissions, or sequesters greenhouse
            gases, and for which offset credits are issued under
            part D.
              (40) Offset project developer.--The term ``offset
            project developer'' means the individual or entity
            designated as the offset project developer in an offset
            project approval petition under section 735(c)(1).
              (41) Petroleum.--The term ``petroleum'' includes
            crude oil, tar sands, oil shale, and heavy oils.
              (42) Renewable biomass.--The term ``renewable
            biomass'' means any of the following:
                      (A) Plant material, including waste material,
                    harvested or collected from actively managed
                    agricultural land that was in cultivation,
                    cleared, or fallow and nonforested on January
                    1, 2009.
                      (B) Plant material, including waste material,
                    harvested or collected from pastureland that
                    was nonforested on January 1, 2009.
                      (C) Nonhazardous vegetative matter derived
                    from waste, including separated yard waste,
                    landscape right-of-way trimmings, construction
                    and demolition debris or food waste (but not
                    municipal solid waste, recyclable waste paper,
                    painted, treated or pressurized wood, or wood
                    contaminated with plastic or metals).
                      (D) Animal waste or animal byproducts,
                    including products of animal waste digesters.
                      (E) Algae.
                      (F) Trees, brush, slash, residues, or any
                    other vegetative matter removed from within 600
                    feet of any building, campground, or route
                    designated for evacuation by a public official
                    with responsibility for emergency preparedness,
                    or from within 300 feet of a paved road,
                    electric transmission line, utility tower, or
                    water supply line.
                      (G) Residues from or byproducts of milled
                    logs.
                      (H) Any of the following removed from
                    forested land that is not Federal and is not
                    high conservation priority land:
                              (i) Trees, brush, slash, residues,
                            interplanted energy crops, or any other
                            vegetative matter removed from an
                            actively managed tree plantation
                            established--
                                      (I) prior to January 1, 2009;
                                    or
                                      (II) on land that, as of
                                    January 1, 2009, was cultivated
                                    or fallow and non-forested.
                              (ii) Trees, logging residue,
                            thinnings, cull trees, pulpwood, and
                            brush removed from naturally-
                            regenerated forests or other non-
                            plantation forests, including for the
                            purposes of hazardous fuel reduction or
                            preventative treatment for reducing or
                            containing insect or disease
                            infestation.
                              (iii) Logging residue, thinnings,
                            cull trees, pulpwood, brush and species
                            that are non-native and noxious, from
                            stands that were planted and managed
                            after January 1, 2009, to restore or
                            maintain native forest types.
                              (iv) Dead or severely damaged trees
                            removed within 5 years of fire,
                            blowdown, or other natural disaster,
                            and badly infested trees.
                      (I) Materials, pre-commercial thinnings, or
                    removed invasive species from National Forest
                    System land and public lands (as defined in
                    section 103 of the Federal Land Policy and
                    Management Act of 1976 (43 U.S.C. 1702)),
                    including those that are byproducts of
                    preventive treatments (such as trees, wood,
                    brush, thinnings, chips, and slash), that are
                    removed as part of a federally recognized
                    timber sale, or that are removed to reduce
                    hazardous fuels, to reduce or contain disease
                    or insect infestation, or to restore ecosystem
                    health, and that are--
                              (i) not from components of the
                            National Wilderness Preservation
                            System, Wilderness Study Areas,
                            Inventoried Roadless Areas, old growth
                            or mature forest stands, components of
                            the National Landscape Conservation
                            System, National Monuments, National
                            Conservation Areas, Designated
                            Primitive Areas; or Wild and Scenic
                            Rivers corridors;
                              (ii) harvested in environmentally
                            sustainable quantities, as determined
                            by the appropriate Federal land
                            manager; and
                              (iii) are harvested in accordance
                            with Federal and State law, and
                            applicable land management plans.
              (43) Retire.--The term ``retire'', with respect to an
            allowance or offset credit established or issued under
            this title, means to disqualify such allowance or
            offset credit for any subsequent use under this title,
            regardless of whether the use is a sale, exchange, or
            submission of the allowance or offset credit to satisfy
            a compliance obligation.
              (44) Reversal.--The term ``reversal'' means an
            intentional or unintentional loss of sequestered
            greenhouse gases to the atmosphere.
              (45) Sequestered and sequestration.--The terms
            ``sequestered'' and ``sequestration'' mean the
            separation, isolation, or removal of greenhouse gases
            from the atmosphere, as determined by the
            Administrator. The terms include biological, geologic,
            and mineral sequestration, but do not include ocean
            fertilization techniques.
              (46) Stationary source.--The term ``stationary
            source'' means any integrated operation comprising any
            plant, building, structure, or stationary equipment,
            including support buildings and equipment, that is
            located within one or more contiguous or adjacent
            properties, is under common control of the same person
            or persons, and emits or may emit a greenhouse gas.
              (47) Strategic reserve allowance.--The term
            ``strategic reserve allowance'' means an emission
            allowance reserved for, transferred to, or deposited in
            the strategic reserve, or established, under section
            726.
              (48) Uncapped emissions.--The term ``uncapped
            emissions'' means emissions of greenhouse gases emitted
            after December 31, 2011, that are not capped emissions.
              (49) United states greenhouse gas emissions.--The
            term ``United States greenhouse gas emissions'' means
            the total quantity of annual greenhouse gas emissions
            from the United States, as calculated by the
            Administrator and reported to the United Nations
            Framework Convention on Climate Change Secretariat.
              (50) Utility unit.--The term ``utility unit'' means a
            combustion device that, on January 1, 2009, or any date
            thereafter, is fossil fuel-fired and serves a generator
            that produces electricity for sale, unless such
            combustion device, during the 12-month period starting
            the later of January 1, 2009, or the commencement of
            commercial operation and each calendar year starting
            after such later date--
                      (A) is part of an integrated cycle system
                    that cogenerates steam and electricity during
                    normal operation and that supplies one-third or
                    less of its potential electric output capacity
                    and 25 MW or less of electrical output for
                    sale; or
                      (B) combusts materials of which more than 95
                    percent is municipal solid waste on a heat
                    input basis.
              (51) Vintage year.--The term ``vintage year'' means
            the calendar year for which an emission allowance is
            established under section 721(a) or which is assigned
            to an emission allowance under section 726(g)(3)(A),
            except that the vintage year for a strategic reserve
            allowance shall be the year in which such allowance is
            purchased at auction.

          PART A--GLOBAL WARMING POLLUTION REDUCTION GOALS AND TARGETS

    SEC. 701. FINDINGS AND PURPOSE.

      (a) Findings.--The Congress finds as follows:
              (1) Global warming poses a significant threat to the
            national security, economy, public health and welfare,
            and environment of the United States, as well as of
            other nations.
              (2) Reviews of scientific studies, including by the
            Intergovernmental Panel on Climate Change and the
            National Academy of Sciences, demonstrate that global
            warming is the result of the combined anthropogenic
            greenhouse gas emissions from numerous sources of all
            types and sizes. Each increment of emission, when
            combined with other emissions, causes or contributes
            materially to the acceleration and extent of global
            warming and its adverse effects for the lifetime of
            such gas in the atmosphere. Accordingly, controlling
            emissions in small as well as large amounts is
            essential to prevent, slow the pace of, reduce the
            threats from, and mitigate global warming and its
            adverse effects.
              (3) Because they induce global warming, greenhouse
            gas emissions cause or contribute to injuries to
            persons in the United States, including--
                      (A) adverse health effects such as disease
                    and loss of life;
                      (B) displacement of human populations;
                      (C) damage to property and other interests
                    related to ocean levels, acidification, and ice
                    changes;
                      (D) severe weather and seasonal changes;
                      (E) disruption, costs, and losses to
                    business, trade, employment, farms,
                    subsistence, aesthetic enjoyment of the
                    environment, recreation, culture, and tourism;
                      (F) damage to plants, forests, lands, and
                    waters;
                      (G) harm to wildlife and habitat;
                      (H) scarcity of water and the decreased
                    abundance of other natural resources;
                      (I) worsening of tropospheric air pollution;
                      (J) substantial threats of similar damage;
                    and
                      (K) other harm.
              (4) That many of these effects and risks of future
            effects of global warming are widely shared does not
            minimize the adverse effects individual persons have
            suffered, will suffer, and are at risk of suffering
            because of global warming.
              (5) That some of the adverse and potentially
            catastrophic effects of global warming are at risk of
            occurring and not a certainty does not negate the harm
            persons suffer from actions that increase the
            likelihood, extent, and severity of such future
            impacts.
              (6) Nations of the world look to the United States
            for leadership in addressing the threat of and harm
            from global warming. Full implementation of the Safe
            Climate Act is critical to engage other nations in an
            international effort to mitigate the threat of and harm
            from global warming.
              (7) Global warming and its adverse effects are
            occurring and are likely to continue and increase in
            magnitude, and to do so at a greater and more harmful
            rate, unless the Safe Climate Act is fully implemented
            and enforced in an expeditious manner.
      (b) Purpose.--It is the general purpose of the Safe Climate
    Act to help prevent, reduce the pace of, mitigate, and remedy
    global warming and its adverse effects. To fulfill such
    purpose, it is necessary to--
              (1) require the timely fulfillment of all
            governmental acts and duties, both substantive and
            procedural, and the prompt compliance of covered
            entities with the requirements of the Safe Climate Act;
              (2) establish and maintain an effective, transparent,
            and fair market for emission allowances and preserve
            the integrity of the cap on emissions and of offset
            credits;
              (3) advance the production and deployment of clean
            energy and energy efficiency technologies; and
              (4) ensure effective enforcement of the Safe Climate
            Act by citizens, States, Indian tribes, and all levels
            of government because each violation of the Safe
            Climate Act is likely to result in an additional
            increment of greenhouse gas emission and will slow the
            pace of implementation of the Safe Climate Act and
            delay the achievement of the goals set forth in section
            702, and cause or contribute to global warming and its
            adverse effects.

    SEC. 702. ECONOMY-WIDE REDUCTION GOALS.

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

    SEC. 703. REDUCTION TARGETS FOR SPECIFIED SOURCES.

      (a) In General.--The regulations issued under section 721
    shall cap and reduce annually the greenhouse gas emissions of
    capped sources each calendar year beginning in 2012 such that--
              (1) in 2012, the quantity of greenhouse gas emissions
            from capped sources does not exceed 97 percent of the
            quantity of greenhouse gas emissions from such sources
            in 2005;
              (2) in 2020, the quantity of greenhouse gas emissions
            from capped sources does not exceed 83 percent of the
            quantity of greenhouse gas emissions from such sources
            in 2005;
              (3) in 2030, the quantity of greenhouse gas emissions
            from capped sources does not exceed 58 percent of the
            quantity of greenhouse gas emissions from such sources
            in 2005; and
              (4) in 2050, the quantity of greenhouse gas emissions
            from capped sources does not exceed 17 percent of the
            quantity of greenhouse gas emissions from such sources
            in 2005.
      (b) Definition.--For purposes of this section, the term
    ``greenhouse gas emissions from such sources in 2005'' means
    emissions to which section 722 would have applied if the
    requirements of this title for the specified year had been in
    effect for 2005.

    SEC. 704. SUPPLEMENTAL POLLUTION REDUCTIONS.

      For the purposes of decreasing the likelihood of catastrophic
    climate change, preserving tropical forests, building capacity
    to generate offset credits, and facilitating international
    action on global warming, the Administrator shall set aside the
    percentage specified in section 781 of the quantity of emission
    allowances established under section 721(a) for each year, to
    be used to achieve a reduction of greenhouse gas emissions from
    deforestation in developing countries in accordance with part
    E. In 2020, activities supported under part E shall provide
    greenhouse gas reductions in an amount equal to an additional
    10 percentage points of reductions from United States
    greenhouse gas emissions in 2005. The Administrator shall
    distribute these allowances with respect to activities in
    countries that enter into and implement agreements or
    arrangements relating to reduced deforestation as described in
    section 754(a)(2).

    SEC. 705. REVIEW AND PROGRAM RECOMMENDATIONS.

      (a) In General.--The Administrator shall, in consultation
    with appropriate Federal agencies, submit to Congress a report
    not later than July 1, 2013, and every 4 years thereafter, that
    includes--
              (1) an analysis of key findings based on the latest
            scientific information and data relevant to global
            climate change;
              (2) an analysis of capabilities to monitor and verify
            greenhouse gas reductions on a worldwide basis,
            including for the United States, as required under the
            Safe Climate Act; and
              (3) an analysis of the status of worldwide greenhouse
            gas reduction efforts, including implementation of the
            Safe Climate Act and other policies, both domestic and
            international, for reducing greenhouse gas emissions,
            preventing dangerous atmospheric concentrations of
            greenhouse gases, preventing significant irreversible
            consequences of climate change, and reducing
            vulnerability to the impacts of climate change.
      (b) Exception.--Paragraph (3) of subsection (a) shall not
    apply to the first report submitted under such subsection.
      (c) Latest Scientific Information.--The analysis required
    under subsection (a)(1) shall--
              (1) address existing scientific information and
            reports, considering, to the greatest extent possible,
            the most recent assessment report of the
            Intergovernmental Panel on Climate Change, reports by
            the United States Global Change Research Program, the
            Natural Resources Climate Change Adaptation Panel
            established under section 475 of the American Clean
            Energy and Security Act of 2009, and Federal agencies,
            and the European Union's global temperature data
            assessment; and
              (2) review trends and projections for--
                      (A) global and country-specific annual
                    emissions of greenhouse gases, and cumulative
                    greenhouse gas emissions produced between 1850
                    and the present, including--
                              (i) global cumulative emissions of
                            anthropogenic greenhouse gases;
                              (ii) global annual emissions of
                            anthropogenic greenhouse gases; and
                              (iii) by country, annual total,
                            annual per capita, and cumulative
                            anthropogenic emissions of greenhouse
                            gases for the top 50 emitting nations;
                      (B) significant changes, both globally and by
                    region, in annual net non-anthropogenic
                    greenhouse gas emissions from natural sources,
                    including permafrost, forests, or oceans;
                      (C) global atmospheric concentrations of
                    greenhouse gases, expressed in annual
                    concentration units as well as carbon dioxide
                    equivalents based on 100-year global warming
                    potentials;
                      (D) major climate forcing factors, such as
                    aerosols;
                      (E) global average temperature, expressed as
                    seasonal and annual averages in land, ocean,
                    and land-plus-ocean averages; and
                      (F) sea level rise;
              (3) assess the current and potential impacts of
            global climate change on--
                      (A) human populations, including impacts on
                    public health, economic livelihoods,
                    subsistence, human infrastructure, and
                    displacement or permanent relocation due to
                    flooding, severe weather, extended drought,
                    erosion, or other ecosystem changes;
                      (B) freshwater systems, including water
                    resources for human consumption and agriculture
                    and natural and managed ecosystems, flood and
                    drought risks, and relative humidity;
                      (C) the carbon cycle, including impacts
                    related to the thawing of permafrost, the
                    frequency and intensity of wildfire, and
                    terrestrial and ocean carbon sinks;
                      (D) ecosystems and animal and plant
                    populations, including impacts on species
                    abundance, phenology, and distribution;
                      (E) oceans and ocean ecosystems, including
                    effects on sea level, ocean acidity, ocean
                    temperatures, coral reefs, ocean circulation,
                    fisheries, and other indicators of ocean
                    ecosystem health;
                      (F) the cryosphere, including effects on ice
                    sheet mass balance, mountain glacier mass
                    balance, and sea-ice extent and volume;
                      (G) changes in the intensity, frequency, or
                    distribution of severe weather events,
                    including precipitation, tropical cyclones,
                    tornadoes, and severe heat waves;
                      (H) agriculture and forest systems; and
                      (I) any other indicators the Administrator
                    deems appropriate;
              (4) summarize any significant socio-economic impacts
            of climate change in the United States, including the
            territories of the United States, drawing on work by
            Federal agencies and the academic literature, including
            impacts on--
                      (A) public health;
                      (B) economic livelihoods and subsistence;
                      (C) displacement or permanent relocation due
                    to flooding, severe weather, extended drought,
                    or other ecosystem changes;
                      (D) human infrastructure, including coastal
                    infrastructure vulnerability to extreme events
                    and sea level rise, river floodplain
                    infrastructure, and sewer and water management
                    systems;
                      (E) agriculture and forests, including
                    effects on potential growing season,
                    distribution, and yield;
                      (F) water resources for human consumption,
                    agriculture and natural and managed ecosystems,
                    flood and drought risks, and relative humidity;
                      (G) energy supply and use; and
                      (H) transportation;
              (5) in assessing risks and impacts, use a risk
            management framework, including both qualitative and
            quantitative measures, to assess the observed and
            projected impacts of current and future climate change,
            accounting for--
                      (A) both monetized and non-monetized losses;
                      (B) potential nonlinear, abrupt, or
                    essentially irreversible changes in the climate
                    system;
                      (C) potential nonlinear increases in the cost
                    of impacts;
                      (D) potential low-probability, high impact
                    events; and
                      (E) whether impacts are transitory or
                    essentially permanent; and
              (6) based on the findings of the Administrator under
            this section, as well as assessments produced by the
            Intergovernmental Panel on Climate Change, the United
            States Global Change Research program, and other
            relevant scientific entities--
                      (A) describe increased risks to natural
                    systems and society that would result from an
                    increase in global average temperature 3.6
                    degrees Fahrenheit (2 degrees Celsius) above
                    the pre-industrial average or an increase in
                    atmospheric greenhouse gas concentrations above
                    450 parts per million carbon dioxide
                    equivalent; and
                      (B) identify and assess--
                              (i) significant residual risks not
                            avoided by the thresholds described in
                            subparagraph (A);
                              (ii) alternative thresholds or
                            targets that may more effectively limit
                            the risks identified pursuant to clause
                            (i); and
                              (iii) thresholds above those
                            described in subparagraph (A) which
                            significantly increase the risk of
                            certain impacts or render them
                            essentially permanent.
      (d) Status of Monitoring and Verification Capabilities To
    Evaluate Greenhouse Gas Reduction Efforts.--The analysis
    required under subsection (a)(2) shall evaluate the
    capabilities of the monitoring, reporting, and verification
    systems used to quantify progress in achieving reductions in
    greenhouse gas emissions both globally and in the United States
    (as described in section 702), including--
              (1) quantification of emissions and emission
            reductions by entities participating in the cap and
            trade program under this title;
              (2) quantification of emissions and emission
            reductions by entities participating in the offset
            program under this title;
              (3) quantification of emission and emissions
            reductions by entities regulated by performance
            standards;
              (4) quantification of aggregate net emissions and
            emissions reductions by the United States; and
              (5) quantification of global changes in net emissions
            and in sources and sinks of greenhouse gases.
      (e) Status of Greenhouse Gas Reduction Efforts.--The analysis
    required under subsection (a)(3) shall address--
              (1) whether the programs under Safe Climate Act and
            other Federal statutes are resulting in sufficient
            United States greenhouse gas emissions reductions to
            meet the emissions reduction goals described in section
            702, taking into account the use of offsets; and
              (2) whether United States actions, taking into
            account international actions, commitments, and trends,
            and considering the range of plausible emissions
            scenarios, are sufficient to avoid--
                      (A) atmospheric greenhouse gas concentrations
                    above 450 parts per million carbon dioxide
                    equivalent;
                      (B) global average surface temperature 3.6
                    degrees Fahrenheit (2 degrees Celsius) above
                    the pre-industrial average, or such other
                    temperature thresholds as the Administrator
                    deems appropriate; and
                      (C) other temperature or greenhouse gas
                    thresholds identified pursuant to subsection
                    (c)(6)(B).
      (f) Recommendations.--
              (1) Latest scientific information.--Based on the
            analysis described in subsection (a)(1), each report
            under subsection (a) shall identify actions that could
            be taken to--
                      (A) improve the characterization of changes
                    in the earth-climate system and impacts of
                    global climate change;
                      (B) better inform decision making and actions
                    related to global climate change;
                      (C) mitigate risks to natural and social
                    systems; and
                      (D) design policies to better account for
                    climate risks.
              (2) Monitoring, reporting and verification.--Based on
            the analysis described in subsection (a)(2), each
            report under subsection (a) shall identify key gaps in
            measurement, reporting, and verification capabilities
            and make recommendations to improve the accuracy and
            reliability of those capabilities.
              (3) Status of greenhouse gas reduction efforts.--
            Based on the analysis described in subsection (a)(3),
            taking into account international actions, commitments,
            and trends, and considering the range of plausible
            emissions scenarios, each report under subsection (a)
            shall identify--
                      (A) the quantity of additional reductions
                    required to meet the emissions reduction goals
                    in section 702;
                      (B) the quantity of additional reductions in
                    global greenhouse gas emissions needed to avoid
                    the concentration and temperature thresholds
                    identified in subsection (e); and
                      (C) possible strategies and approaches for
                    achieving additional reductions.
      (g) Authorization of Appropriations.--There are authorized to
    be appropriated to carry out this section such sums as may be
    necessary.

    SEC. 706. NATIONAL ACADEMY REVIEW.

      (a) In General.--Not later than 1 year after the date of
    enactment of this title, the Administrator shall offer to enter
    into a contract with the National Academy of Sciences (in this
    section referred to as the ``Academy'') under which the Academy
    shall, not later than July 1, 2014, and every 4 years
    thereafter, submit to Congress and the Administrator a report
    that includes--
              (1) a review of the most recent report and
            recommendations issued under section 705; and
              (2) an analysis of technologies to achieve reductions
            in greenhouse gas emissions.
      (b) Failure To Issue a Report.--In the event that the
    Administrator has not issued all or part of the most recent
    report required under section 705, the Academy shall conduct
    its own review and analysis of the required information.
      (c) Technological Information.--The analysis required under
    subsection (a)(2) shall--
              (1) review existing technological information and
            reports, including the most recent reports by the
            Department of Energy, the United States Global Change
            Research Program, the Intergovernmental Panel on
            Climate Change, and the International Energy Agency and
            any other relevant information on technologies or
            practices that reduce or limit greenhouse gas
            emissions;
              (2) include the participation of technical experts
            from relevant private industry sectors;
              (3) review the current and future projected
            deployment of technologies and practices in the United
            States that reduce or limit greenhouse gas emissions,
            including--
                      (A) technologies for capture and
                    sequestration of greenhouse gases;
                      (B) technologies to improve energy
                    efficiency;
                      (C) low- or zero-greenhouse gas emitting
                    energy technologies;
                      (D) low- or zero-greenhouse gas emitting
                    fuels;
                      (E) biological sequestration practices and
                    technologies; and
                      (F) any other technologies the Academy deems
                    relevant; and
              (4) review and compare the emissions reduction
            potential, commercial viability, market penetration,
            investment trends, and deployment of the technologies
            described in paragraph (3), including--
                      (A) the need for additional research and
                    development, including publicly funded research
                    and development;
                      (B) the extent of commercial deployment,
                    including, where appropriate, a comparison to
                    the cost and level of deployment of
                    conventional fossil fuel-fired energy
                    technologies and devices; and
                      (C) an evaluation of any substantial
                    technological, legal, or market-based barriers
                    to commercial deployment.
      (d) Recommendations.--
              (1) Latest scientific information.--Based on the
            review described in subsection (a)(1), the Academy
            shall identify actions that could be taken to--
                      (A) improve the characterization of changes
                    in the earth-climate system and impacts of
                    global climate change;
                      (B) better inform decision making and actions
                    related to global climate change;
                      (C) mitigate risks to natural and social
                    systems;
                      (D) design policies to better account for
                    climate risks; and
                      (E) improve the accuracy and reliability of
                    capabilities to monitor, report, and verify
                    greenhouse gas emissions reduction efforts.
              (2) Technological information.--Based on the analysis
            described in subsection (a)(2), the Academy shall
            identify--
                      (A) additional emissions reductions that may
                    be possible as a result of technologies
                    described in the analysis;
                      (B) barriers to the deployment of such
                    technologies; and
                      (C) actions that could be taken to speed
                    deployment of such technologies.
              (3) Status of greenhouse gas reduction efforts.--
            Based on the review described in subsection (a)(1), the
            Academy shall identify--
                      (A) the quantity of additional reductions
                    required to meet the emissions reduction goals
                    described in section 702; and
                      (B) the quantity of additional reductions in
                    global greenhouse gas emissions needed to avoid
                    the concentration and temperature thresholds
                    described in section 705(c)(6)(A) or identified
                    pursuant to section 705(c)(6)(B).
      (e) Authorization of Appropriations.--There are authorized to
    be appropriated to carry out this section such sums as may be
    necessary.

    SEC. 707. PRESIDENTIAL RESPONSE AND RECOMMENDATIONS.

      Not later than July 1, 2015, and every 4 years thereafter--
              (1) the President shall direct relevant Federal
            agencies to use existing statutory authority to take
            appropriate actions identified in the reports submitted
            under sections 705 and 706 and to address any
            shortfalls identified in such reports; and
              (2) in the event that the National Academy of
            Sciences has concluded, in the most recent report
            submitted under section 706, that the United States
            will not achieve the necessary domestic greenhouse gas
            emissions reductions, or that global actions will not
            maintain safe global average surface temperature and
            atmospheric greenhouse gas concentration thresholds,
            the President shall submit to Congress a plan
            identifying domestic and international actions that
            will achieve necessary additional greenhouse gas
            reductions, including any recommendations for
            legislative action.

            PART B--DESIGNATION AND REGISTRATION OF GREENHOUSE GASES

    SEC. 711. DESIGNATION OF GREENHOUSE GASES.

      (a) Greenhouse Gases.--For purposes of this title, the
    following are greenhouse gases:
              (1) Carbon dioxide.
              (2) Methane.
              (3) Nitrous oxide.
              (4) Sulfur hexafluoride.
              (5) Hydrofluorocarbons from a chemical manufacturing
            process at an industrial stationary source.
              (6) Any perfluorocarbon.
              (7) Nitrogen trifluoride.
              (8) Any other anthropogenic gas designated as a
            greenhouse gas by the Administrator under this section.
      (b) Determination on Administrator's Initiative.--The
    Administrator shall, by rule--
              (1) determine whether 1 metric ton of another
            anthropogenic gas makes the same or greater
            contribution to global warming over 100 years as 1
            metric ton of carbon dioxide;
              (2) determine the carbon dioxide equivalent value for
            each gas with respect to which the Administrator makes
            an affirmative determination under paragraph (1);
              (3) for each gas with respect to which the
            Administrator makes an affirmative determination under
            paragraph (1) and that is used as a substitute for a
            class I or class II substance under title VI, determine
            the extent to which to regulate that gas under section
            619 and specify appropriate compliance obligations
            under section 619;
              (4) designate as a greenhouse gas for purposes of
            this title each gas for which the Administrator makes
            an affirmative determination under paragraph (1), to
            the extent that it is not regulated under section 619;
            and
              (5) specify the appropriate compliance obligations
            under this title for each gas designated as a
            greenhouse gas under paragraph (4).
      (c) Petitions to Designate a Greenhouse Gas.--
              (1) In general.--Any person may petition the
            Administrator to designate as a greenhouse gas any
            anthropogenic gas 1 metric ton of which makes the same
            or greater contribution to global warming over 100
            years as 1 metric ton of carbon dioxide.
              (2) Contents of petition.--The petitioner shall
            provide sufficient data, as specified by rule by the
            Administrator, to demonstrate that the gas is likely to
            be a greenhouse gas and is likely to be produced,
            imported, used, or emitted in the United States. To the
            extent practicable, the petitioner shall also identify
            producers, importers, distributors, users, and emitters
            of the gas in the United States.
              (3) Review and action by the administrator.--Not
            later than 90 days after receipt of a petition under
            paragraph (2), the Administrator shall determine
            whether the petition is complete and notify the
            petitioner and the public of the decision.
              (4) Additional information.--The Administrator may
            require producers, importers, distributors, users, or
            emitters of the gas to provide information on the
            contribution of the gas to global warming over 100
            years compared to carbon dioxide.
              (5) Treatment of petition.--For any substance used as
            a substitute for a class I or class II substance under
            title VI, the Administrator may elect to treat a
            petition under this subsection as a petition to list
            the substance as a class II, group II substance under
            section 619, and may require the petition to be amended
            to address listing criteria promulgated under that
            section.
              (6) Determination.--Not later than 2 years after
            receipt of a complete petition, the Administrator
            shall, after notice and an opportunity for comment--
                      (A) issue and publish in the Federal
                    Register--
                              (i) a determination that 1 metric ton
                            of the gas does not make a contribution
                            to global warming over 100 years that
                            is equal to or greater than that made
                            by 1 metric ton of carbon dioxide; and
                              (ii) an explanation of the decision;
                            or
                      (B) determine that 1 metric ton of the gas
                    makes a contribution to global warming over 100
                    years that is equal to or greater than that
                    made by 1 metric ton of carbon dioxide, and
                    take the actions described in subsection (b)
                    with respect to such gas.
              (7) Grounds for denial.--The Administrator may not
            deny a petition under this subsection solely on the
            basis of inadequate Environmental Protection Agency
            resources or time for review.
      (d) Science Advisory Board Consultation.--
              (1) Consultation.--The Administrator shall--
                      (A) give notice to the Science Advisory Board
                    prior to making a determination under
                    subsection (b)(1), (c)(6), or (e)(2)(B);
                      (B) consider the written recommendations of
                    the Science Advisory Board under paragraph (2)
                    regarding the determination; and
                      (C) consult with the Science Advisory Board
                    regarding such determination, including
                    consultation subsequent to receipt of such
                    written recommendations.
              (2) Formulation of recommendations.--Upon receipt of
            notice under paragraph (1)(A) regarding a pending
            determination under subsection (b)(1), (c)(6), or
            (e)(2)(B), the Science Advisory Board shall--
                      (A) formulate recommendations regarding such
                    determination, subject to a peer review
                    process; and
                      (B) submit such recommendations in writing to
                    the Administrator.
      (e) Manufacturing and Emission Notices.--
              (1) Notice requirement.--
                      (A) In general.--Effective 24 months after
                    the date of enactment of this title, no person
                    may manufacture or introduce into interstate
                    commerce a fluorinated gas, or emit a
                    significant quantity, as determined by the
                    Administrator, of any fluorinated gas that is
                    generated as a byproduct during the production
                    or use of another fluorinated gas, unless--
                              (i) the gas is designated as a
                            greenhouse gas under this section or is
                            an ozone-depleting substance listed as
                            a class I or class II substance under
                            title VI;
                              (ii) the Administrator has determined
                            that 1 metric ton of such gas does not
                            make a contribution to global warming
                            that is equal to or greater than that
                            made by 1 metric ton of carbon dioxide;
                            or
                              (iii) the person manufacturing or
                            importing the gas for distribution into
                            interstate commerce, or emitting the
                            gas, has submitted to the
                            Administrator, at least 90 days before
                            the start of such manufacture,
                            introduction into commerce, or
                            emission, a notice of such person's
                            manufacture, introduction into
                            commerce, or emission of such gas, and
                            the Administrator has not determined
                            that notice or a substantially similar
                            notice is incomplete.
                      (B) Alternative compliance.--For a gas that
                    is a substitute for a class I or class II
                    substance under title VI and either has been
                    listed as acceptable for use under section 612
                    or is currently subject to evaluation under
                    section 612, the Administrator may accept the
                    notice and information provided pursuant to
                    that section as fulfilling the obligation under
                    clause (iii) of subparagraph (A).
              (2) Review and action by the administrator.--
                      (A) Completeness.--Not later than 90 days
                    after receipt of notice under paragraph
                    (1)(A)(iii) or (B), the Administrator shall
                    determine whether the notice is complete.
                      (B) Determination.-- If the Administrator
                    determines that the notice is complete, the
                    Administrator shall, after notice and an
                    opportunity for comment, not later than 12
                    months after receipt of the notice--
                              (i) issue and publish in the Federal
                            Register a determination that 1 metric
                            ton of the gas does not make a
                            contribution to global warming over 100
                            years that is equal to or greater than
                            that made by 1 metric ton of carbon
                            dioxide and an explanation of the
                            decision; or
                              (ii) determine that 1 metric ton of
                            the gas makes a contribution to global
                            warming over 100 years that is equal to
                            or greater than that made by 1 metric
                            ton of carbon dioxide, and take the
                            actions described in subsection (b)
                            with respect to such gas.
      (f) Regulations.--Not later than one year after the date of
    enactment of this title, the Administrator shall promulgate
    regulations to carry out this section. Such regulations shall
    include--
              (1) requirements for the contents of a petition
            submitted under subsection (c);
              (2) requirements for the contents of a notice
            required under subsection (e); and
              (3) methods and standards for evaluating the carbon
            dioxide equivalent value of a gas.
      (g) Gases Regulated Under Title VI.--The Administrator shall
    not designate a gas as a greenhouse gas under this section to
    the extent that the gas is regulated under title VI.
      (h) Savings Clause.--Nothing in this section shall be
    interpreted to relieve any person from complying with the
    requirements of section 612.

    SEC. 712. CARBON DIOXIDE EQUIVALENT VALUE OF GREENHOUSE GASES.

      (a) Measure of Quantity of Greenhouse Gases.--Any provision
    of this title or title VIII that refers to a quantity or
    percentage of a quantity of greenhouse gases shall mean the
    quantity or percentage of the greenhouse gases expressed in
    carbon dioxide equivalents.
      (b) Initial Value.--Except as provided by the Administrator
    under this section or section 711--
              (1) the carbon dioxide equivalent value of greenhouse
            gases for purposes of this Act shall be as follows:

                              CARBON DIOXIDE EQUIVALENT OF 1 TON OF LISTED GREENHOUSE GASES
    ----------------------------------------------------------------------------------------------------------------
                 Greenhouse gas (1 metric ton)                       Carbon dioxide equivalent (metric tons)
    ----------------------------------------------------------------------------------------------------------------
    Carbon dioxide                                           1
    ----------------------------------------------------------------------------------------------------------------
    Methane                                                  25
    ----------------------------------------------------------------------------------------------------------------
    Nitrous oxide                                            298
    ----------------------------------------------------------------------------------------------------------------
    HFC-23                                                   14,800
    ----------------------------------------------------------------------------------------------------------------
    HFC-125                                                  3,500
    ----------------------------------------------------------------------------------------------------------------
    HFC-134a                                                 1,430
    ----------------------------------------------------------------------------------------------------------------
    HFC-143a                                                 4,470
    ----------------------------------------------------------------------------------------------------------------
    HFC-152a                                                 124
    ----------------------------------------------------------------------------------------------------------------
    HFC-227ea                                                3,220
    ----------------------------------------------------------------------------------------------------------------
    HFC-236fa                                                9,810
    ----------------------------------------------------------------------------------------------------------------
    HFC-4310mee                                              1,640
    ----------------------------------------------------------------------------------------------------------------
    CF4                                                      7,390
    ----------------------------------------------------------------------------------------------------------------
    C2F6                                                     12,200
    ----------------------------------------------------------------------------------------------------------------
    C4F10                                                    8,860
    ----------------------------------------------------------------------------------------------------------------
    C6F14                                                    9,300
    ----------------------------------------------------------------------------------------------------------------
    SF6                                                      22,800
    ----------------------------------------------------------------------------------------------------------------
    NF3                                                      17,200
    ----------------------------------------------------------------------------------------------------------------

            ; and
              (2) the carbon dioxide equivalent value for purposes
            of this Act for any greenhouse gas not listed in the
            table under paragraph (1) shall be the 100-year Global
            Warming Potentials provided in the Intergovernmental
            Panel on Climate Change Fourth Assessment Report.
      (c) Periodic Review.--
              (1) Not later than February 1, 2017, and (except as
            provided in paragraph (3)) not less than every 5 years
            thereafter, the Administrator shall--
                      (A) review and, if appropriate, revise the
                    carbon dioxide equivalent values established
                    under this section or section 711(b)(2), based
                    on a determination of the number of metric tons
                    of carbon dioxide that makes the same
                    contribution to global warming over 100 years
                    as 1 metric ton of each greenhouse gas; and
                      (B) publish in the Federal Register the
                    results of that review and any revisions.
              (2) A revised determination published in the Federal
            Register under paragraph (1)(B) shall take effect for
            greenhouse gas emissions starting on January 1 of the
            first calendar year starting at least 9 months after
            the date on which the revised determination was
            published.
              (3) The Administrator may decrease the frequency of
            review and revision under paragraph (1) if the
            Administrator determines that such decrease is
            appropriate in order to synchronize such review and
            revision with any similar review process carried out
            pursuant to the United Nations Framework Convention on
            Climate Change, done at New York on May 9, 1992, or to
            an agreement negotiated under that convention, except
            that in no event shall the Administrator carry out such
            review and revision any less frequently than every 10
            years.
      (d) Methodology.--In setting carbon dioxide equivalent
    values, for purposes of this section or section 711, the
    Administrator shall take into account publications by the
    Intergovernmental Panel on Climate Change or a successor
    organization under the auspices of the United Nations
    Environmental Programme and the World Meteorological
    Organization.

    SEC. 713. GREENHOUSE GAS REGISTRY.

      (a) Definitions.--For purposes of this section:
              (1) Climate registry.--The term ``Climate Registry''
            means the greenhouse gas emissions registry jointly
            established and managed by more than 40 States and
            Indian tribes in 2007 to collect high-quality
            greenhouse gas emission data from facilities,
            corporations, and other organizations to support
            various greenhouse gas emission reporting and reduction
            policies for the member States and Indian tribes.
              (2) Reporting entity.--The term ``reporting entity''
            means--
                      (A) a covered entity;
                      (B) an entity that--
                              (i) would be a covered entity if it
                            had emitted, produced, imported,
                            manufactured, or delivered in 2008 or
                            any subsequent year more than the
                            applicable threshold level in the
                            definition of covered entity in
                            paragraph (13) of section 700; and
                              (ii) has emitted, produced, imported,
                            manufactured, or delivered in 2008 or
                            any subsequent year more than the
                            applicable threshold level in the
                            definition of covered entity in
                            paragraph (13) of section 700, provided
                            that the figure of 25,000 tons of
                            carbon dioxide equivalent is read
                            instead as 10,000 tons of carbon
                            dioxide equivalent and the figure of
                            460,000,000 cubic feet is read instead
                            as 184,000,000 cubic feet;
                      (C) any other entity that emits a greenhouse
                    gas, or produces, imports, manufactures, or
                    delivers material whose use results or may
                    result in greenhouse gas emissions if the
                    Administrator determines that reporting under
                    this section by such entity will help achieve
                    the purposes of this title or title VIII;
                      (D) any vehicle fleet with emissions of more
                    than 25,000 tons of carbon dioxide equivalent
                    on an annual basis, if the Administrator
                    determines that the inclusion of such fleet
                    will help achieve the purposes of this title or
                    title VIII; or
                      (E) any entity that delivers electricity to
                    an energy-intensive facility in an industrial
                    sector that meets the energy or greenhouse gas
                    intensity criteria in section 764(b)(2)(A)(i).
      (b) Regulations.--
              (1) In general.--Not later than 6 months after the
            date of enactment of this title, the Administrator
            shall issue regulations establishing a Federal
            greenhouse gas registry. Such regulations shall--
                      (A) require reporting entities to submit to
                    the Administrator data on--
                              (i) greenhouse gas emissions in the
                            United States;
                              (ii) the production and manufacture
                            in the United States, importation into
                            the United States, and, at the
                            discretion of the Administrator,
                            exportation from the United States, of
                            fuels and industrial gases the uses of
                            which result or may result in
                            greenhouse gas emissions;
                              (iii) deliveries in the United States
                            of natural gas, and any other gas
                            meeting the specifications for
                            commingling with natural gas for
                            purposes of delivery, the combustion of
                            which result or may result in
                            greenhouse gas emissions; and
                              (iv) the capture and sequestration of
                            greenhouse gases;
                      (B) require covered entities and, where
                    appropriate, other reporting entities to submit
                    to the Administrator data sufficient to ensure
                    compliance with or implementation of the
                    requirements of this title;
                      (C) require reporting of electricity
                    delivered to industrial sources in energy-
                    intensive industries;
                      (D) ensure the completeness, consistency,
                    transparency, accuracy, precision, and
                    reliability of such data;
                      (E) take into account the best practices from
                    the most recent Federal, State, tribal, and
                    international protocols for the measurement,
                    accounting, reporting, and verification of
                    greenhouse gas emissions, including protocols
                    from the Climate Registry and other mandatory
                    State or multistate authorized programs;
                      (F) take into account the latest scientific
                    research;
                      (G) require that, for covered entities with
                    respect to greenhouse gases to which section
                    722 applies, and, to the extent determined to
                    be appropriate by the Administrator, for
                    covered entities with respect to other
                    greenhouse gases and for other reporting
                    entities, submitted data are based on--
                              (i) continuous monitoring systems for
                            fuel flow or emissions, such as
                            continuous emission monitoring systems;
                              (ii) alternative systems that are
                            demonstrated as providing data with the
                            same precision, reliability,
                            accessibility, and timeliness, or, to
                            the extent the Administrator determines
                            is appropriate for reporting small
                            amounts of emissions, the same
                            precision, reliability, and
                            accessibility and similar timeliness,
                            as data provided by continuous
                            monitoring systems for fuel flow or
                            emissions; or
                              (iii) alternative methodologies that
                            are demonstrated to provide data with
                            precision, reliability, accessibility,
                            and timeliness, or, to the extent the
                            Administrator determines is appropriate
                            for reporting small amounts of
                            emissions, precision, reliability, and
                            accessibility, as similar as is
                            technically feasible to that of data
                            generally provided by continuous
                            monitoring systems for fuel flow or
                            emissions, if the Administrator
                            determines that, with respect to a
                            reporting entity, there is no
                            continuous monitoring system or
                            alternative system described in clause
                            (i) or (ii) that is technically
                            feasible;
                      (H) require that the Administrator, in
                    determining the extent to which the requirement
                    to use systems or methodologies in accordance
                    with subparagraph (G) is appropriate for
                    reporting entities other than covered entities
                    or for greenhouse gases to which section 722
                    does not apply, consider the cost of using such
                    systems and methodologies, and of using other
                    systems and methodologies that are available
                    and suitable, for quantifying the emissions
                    involved in light of the purposes of this
                    title, including the goal of collecting
                    consistent entity-wide data;
                      (I) include methods for minimizing double
                    reporting and avoiding irreconcilable double
                    reporting of greenhouse gas emissions;
                      (J) establish measurement protocols for
                    carbon capture and sequestration systems,
                    taking into consideration the regulations
                    promulgated under section 813;
                      (K) require that reporting entities provide
                    the data required under this paragraph in
                    reports submitted electronically to the
                    Administrator, in such form and containing such
                    information as may be required by the
                    Administrator;
                      (L) include requirements for keeping records
                    supporting or related to, and protocols for
                    auditing, submitted data;
                      (M) establish consistent policies for
                    calculating carbon content and greenhouse gas
                    emissions for each type of fossil fuel with
                    respect to which reporting is required;
                      (N) subsequent to implementation of policies
                    developed under subparagraph (M), provide for
                    immediate dissemination, to States, Indian
                    tribes, and on the Internet, of all data
                    reported under this section as soon as
                    practicable after electronic audit by the
                    Administrator and any resulting correction of
                    data, except that data shall not be
                    disseminated under this subparagraph if--
                              (i) its nondissemination is vital to
                            the national security of the United
                            States, as determined by the President;
                            or
                              (ii) it is confidential business
                            information that cannot be derived from
                            information that is otherwise publicly
                            available and that would cause
                            significant calculable competitive harm
                            if published, except that--
                                      (I) data relating to
                                    greenhouse gas emissions,
                                    including any upstream or
                                    verification data from
                                    reporting entities, shall not
                                    be considered to be
                                    confidential business
                                    information; and
                                      (II) data that is
                                    confidential business
                                    information shall be provided
                                    to a State or Indian tribe
                                    within whose jurisdiction the
                                    reporting entity is located, if
                                    the Administrator determines
                                    that such State or Indian tribe
                                    has in effect protections for
                                    confidential business
                                    information that are equivalent
                                    to protections applicable to
                                    the Federal Government;
                      (O) prescribe methods by which the
                    Administrator shall, in cases in which
                    satisfactory data are not submitted to the
                    Administrator for any period of time, estimate
                    emission, production, importation, manufacture,
                    or delivery levels--
                              (i) for covered entities with respect
                            to greenhouse gas emissions,
                            production, importation, manufacture,
                            or delivery regulated under this title
                            to ensure that emissions, production,
                            importation, manufacture, or deliveries
                            are not underreported, and to create a
                            strong incentive for meeting data
                            monitoring and reporting requirements--
                                      (I) with a conservative
                                    estimate of the highest
                                    emission, production,
                                    importation, manufacture, or
                                    delivery levels that may have
                                    occurred during the period for
                                    which data are missing; or
                                      (II) to the extent the
                                    Administrator considers
                                    appropriate, with an estimate
                                    of such levels assuming the
                                    unit is emitting, producing,
                                    importing, manufacturing, or
                                    delivering at a maximum
                                    potential level during the
                                    period, in order to ensure that
                                    such levels are not
                                    underreported and to create a
                                    strong incentive for meeting
                                    data monitoring and reporting
                                    requirements; and
                              (ii) for covered entities with
                            respect to greenhouse gas emissions to
                            which section 722 does not apply and
                            for other reporting entities, with a
                            reasonable estimate of the emission,
                            production, importation, manufacture,
                            or delivery levels that may have
                            occurred during the period for which
                            data are missing;
                      (P) require the designation of a designated
                    representative for each reporting entity;
                      (Q) require an appropriate certification, by
                    the designated representative for the reporting
                    entity, of accurate and complete accounting of
                    greenhouse gas emissions, as determined by the
                    Administrator; and
                      (R) include requirements for other data
                    necessary for accurate and complete accounting
                    of greenhouse gas emissions, as determined by
                    the Administrator, including data for quality
                    assurance of monitoring systems, monitors and
                    other measurement devices, and other data
                    needed to verify reported emissions,
                    production, importation, manufacture, or
                    delivery.
              (2) Timing.--
                      (A) Calendar years 2007 through 2010.--For a
                    base period of calendar years 2007 through
                    2010, each reporting entity shall submit annual
                    data required under this section to the
                    Administrator not later than March 31, 2011.
                    The Administrator may waive or modify reporting
                    requirements for calendar years 2007 through
                    2010 for categories of reporting entities to
                    the extent that the Administrator determines
                    that the reporting entities did not keep data
                    or records necessary to meet reporting
                    requirements. The Administrator may, in
                    addition to or in lieu of such requirements,
                    collect information on energy consumption and
                    production.
                      (B) Subsequent calendar years.--For calendar
                    year 2011 and each subsequent calendar year,
                    each reporting entity shall submit quarterly
                    data required under this section to the
                    Administrator not later than 60 days after the
                    end of the applicable quarter, except when the
                    data is already being reported to the
                    Administrator on an earlier timeframe for
                    another program.
              (3) Waiver of reporting requirements.--The
            Administrator may waive reporting requirements under
            this section for specific entities to the extent that
            the Administrator determines that sufficient and
            equally or more reliable verified and timely data are
            available to the Administrator and the public on the
            Internet under other mandatory statutory requirements.
              (4) Alternative threshold.--The Administrator may, by
            rule, establish applicability thresholds for reporting
            under this section using alternative metrics and
            levels, provided that such metrics and levels are
            easier to administer and cover the same size and type
            of sources as the threshold defined in this section.
      (c) Interrelationship With Other Systems.--In developing the
    regulations issued under subsection (b), the Administrator
    shall take into account the work done by the Climate Registry
    and other mandatory State or multistate programs. Such
    regulations shall include an explanation of any major
    differences in approach between the system established under
    the regulations and such registries and programs.

                             PART C--PROGRAM RULES

    SEC. 721. EMISSION ALLOWANCES.

      (a) In General.--The Administrator shall establish a separate
    quantity of emission allowances for each calendar year starting
    in 2012, in the amounts prescribed under subsection (e).
      (b) Identification Numbers.--The Administrator shall assign
    to each emission allowance established under subsection (a) a
    unique identification number that includes the vintage year for
    that emission allowance.
      (c) Legal Status of Emission Allowances.--
              (1) In general.--An allowance established by the
            Administrator under this title does not constitute a
            property right.
              (2) Termination or limitation.--Nothing in this Act
            or any other provision of law shall be construed to
            limit or alter the authority of the United States,
            including the Administrator acting pursuant to
            statutory authority, to terminate or limit allowances
            or offset credits.
              (3) Other provisions unaffected.--Except as otherwise
            specified in this Act, nothing in this Act relating to
            allowances or offset credits established or issued
            under this title shall affect the application of any
            other provision of law to a covered entity, or the
            responsibility for a covered entity to comply with any
            such provision of law.
      (d) Savings Provision.--Nothing in this part shall be
    construed as requiring a change of any kind in any State law
    regulating electric utility rates and charges, or as affecting
    any State law regarding such State regulation, or as limiting
    State regulation (including any prudency review) under such a
    State law. Nothing in this part shall be construed as modifying
    the Federal Power Act or as affecting the authority of the
    Federal Energy Regulatory Commission under that Act. Nothing in
    this part shall be construed to interfere with or impair any
    program for competitive bidding for power supply in a State in
    which such program is established.
      (e) Allowances for Each Calendar Year.--
              (1) In general.--Except as provided in paragraph (2),
            the number of emission allowances established by the
            Administrator under subsection (a) for each calendar
            year shall be as provided in the following table:

    ----------------------------------------------------------------------------------------------------------------
                         Calendar year                                  Emission allowances (in millions)
    ----------------------------------------------------------------------------------------------------------------
    2012                                                     4,627
    2013                                                     4,544
    2014                                                     5,099
    2015                                                     5,003
    2016                                                     5,482
    2017                                                     5,375
    2018                                                     5,269
    2019                                                     5,162
    2020                                                     5,056
    2021                                                     4,903
    2022                                                     4,751
    2023                                                     4,599
    2024                                                     4,446
    2025                                                     4,294
    2026                                                     4,142
    2027                                                     3,990
    2028                                                     3,837
    2029                                                     3,685
    2030                                                     3,533
    2031                                                     3,408
    2032                                                     3,283
    2033                                                     3,158
    2034                                                     3,033
    2035                                                     2,908
    2036                                                     2,784
    2037                                                     2,659
    2038                                                     2,534
    2039                                                     2,409
    2040                                                     2,284
    2041                                                     2,159
    2042                                                     2,034
    2043                                                     1,910
    2044                                                     1,785
    2045                                                     1,660
    2046                                                     1,535
    2047                                                     1,410
    2048                                                     1,285
    2049                                                     1,160
    2050 and each year thereafter                            1,035
    ----------------------------------------------------------------------------------------------------------------

              (2) Revision.--
                      (A) In general.--The Administrator may
                    adjust, in accordance with subparagraph (B),
                    the number of emission allowances established
                    pursuant to paragraph (1) if, after notice and
                    an opportunity for public comment, the
                    Administrator determines that--
                              (i) United States greenhouse gas
                            emissions in 2005 were other than 7,206
                            million metric tons carbon dioxide
                            equivalent;
                              (ii) if the requirements of this
                            title for 2012 had been in effect in
                            2005, section 722 would have required
                            emission allowances to be held for
                            other than 66.2 percent of United
                            States greenhouse gas emissions in
                            2005;
                              (iii) if the requirements of this
                            title for 2014 had been in effect in
                            2005, section 722 would have required
                            emission allowances to be held for
                            other than 75.7 percent of United
                            States greenhouse gas emissions in
                            2005; or
                              (iv) if the requirements of this
                            title for 2016 had been in effect in
                            2005, section 722 would have required
                            emission allowances to be held for
                            other than 84.5 percent United States
                            greenhouse gas emissions in 2005.
                      (B) Adjustment formula.--
                              (i) In general.--If the Administrator
                            adjusts under this paragraph the number
                            of emission allowances established
                            pursuant to paragraph (1), the number
                            of emission allowances the
                            Administrator establishes for any given
                            calendar year shall equal the product
                            of--
                                      (I) United States greenhouse
                                    gas emissions in 2005,
                                    expressed in tons of carbon
                                    dioxide equivalent;
                                      (II) the percent of United
                                    States greenhouse gas emissions
                                    in 2005, expressed in tons of
                                    carbon dioxide equivalent, that
                                    would have been subject to
                                    section 722 if the requirements
                                    of this title for the given
                                    calendar year had been in
                                    effect in 2005; and
                                      (III) the percentage set
                                    forth for that calendar year in
                                    section 703(a), or determined
                                    under clause (ii) of this
                                    subparagraph.
                              (ii) Targets.--In applying the
                            portion of the formula in clause
                            (i)(III) of this subparagraph, for
                            calendar years for which a percentage
                            is not listed in section 703(a), the
                            Administrator shall use a uniform
                            annual decline in the amount of
                            emissions between the years that are
                            specified.
                              (iii) Carbon dioxide equivalent
                            value.--If the Administrator adjusts
                            under this paragraph the number of
                            emission allowances established
                            pursuant to paragraph (1), the
                            Administrator shall use the carbon
                            dioxide equivalent values established
                            pursuant to section 712.
                              (iv) Limitation on adjustment
                            timing.--Once a calendar year has
                            started, the Administrator may not
                            adjust the number of emission
                            allowances to be established for that
                            calendar year.
                      (C) Limitation on adjustment authority.--The
                    Administrator may adjust under this paragraph
                    the number of emission allowances to be
                    established pursuant to paragraph (1) only
                    once.
      (f) Compensatory Allowance.--
              (1) In general.--The regulations promulgated under
            subsection (h) shall provide for the establishment and
            distribution of compensatory allowances for--
                      (A) the destruction, in 2012 or later, of
                    fluorinated gases that are greenhouse gases
                    if--
                              (i) allowances or offset credits were
                            retired for their production or
                            importation; and
                              (ii) such gases are not required to
                            be destroyed under any other provision
                            of law;
                      (B) the nonemissive use, in 2012 or later, of
                    petroleum-based or coal-based liquid or gaseous
                    fuel, petroleum coke, natural gas liquid, or
                    natural gas as a feedstock, if allowances or
                    offset credits were retired for the greenhouse
                    gases that would have been emitted from their
                    combustion; and
                      (C) the conversionary use, in 2012 or later,
                    of fluorinated gases in a manufacturing
                    process, including semiconductor research or
                    manufacturing, if allowances or offset credits
                    were retired for the production or importation
                    of such gas.
              (2) Establishment and distribution.--
                      (A) In general.--Not later than 90 days after
                    the end of each calendar year, the
                    Administrator shall establish and distribute to
                    the entity taking the actions described in
                    subparagraph (A), (B), or (C) of paragraph (1)
                    a quantity of compensatory allowances
                    equivalent to the number of tons of carbon
                    dioxide equivalent of avoided emissions
                    achieved through such actions. In establishing
                    the quantity of compensatory allowances, the
                    Administrator shall take into account the
                    carbon dioxide equivalent value of any
                    greenhouse gas resulting from such action.
                      (B) Source of allowances.--Compensatory
                    allowances established under this subsection
                    shall not be emission allowances established
                    under subsection (a).
                      (C) Identification numbers.--The
                    Administrator shall assign to each compensatory
                    allowance established under subparagraph (A) a
                    unique identification number.
              (3) Definitions.--For purposes of this subsection--
                      (A) the term ``destruction'' means the
                    conversion of a greenhouse gas by thermal,
                    chemical, or other means to another gas or set
                    of gases with little or no carbon dioxide
                    equivalent value;
                      (B) the term ``nonemissive use'' means the
                    use of fossil fuel as a feedstock in an
                    industrial or manufacturing process to the
                    extent that greenhouse gases are not emitted
                    from such process, and to the extent that the
                    products of such process are not intended for
                    use as, or to be contained in, a fuel; and
                      (C) the term ``conversionary use'' means the
                    conversion during research or manufacturing of
                    a fluorinated gas into another greenhouse gas
                    or set of gases with a lower carbon dioxide
                    equivalent value.
              (4) Feedstock emissions study.--
                      (A) The Administrator may conduct a study to
                    determine the extent to which petroleum-based
                    or coal-based liquid or gaseous fuel, petroleum
                    coke, natural gas liquid, or natural gas are
                    used as feedstocks in manufacturing processes
                    to produce products and the greenhouse gas
                    emissions resulting from such uses.
                      (B) If as a result of such a study, the
                    Administrator determines that the use of such
                    products by noncovered sources results in
                    substantial emissions of greenhouse gases or
                    their precursors and that such emissions have
                    not been adequately addressed under other
                    requirements of this Act, the Administrator
                    may, after notice and comment rulemaking,
                    promulgate a regulation reducing compensatory
                    allowances commensurately if doing so will not
                    result in leakage.
      (g) Fluorinated Gases Assessment.--No later than March 31,
    2014, the Administrator shall conduct an assessment of the
    regulation of non-HFC fluorinated gases under this title to
    determine whether the most appropriate point of regulation is
    at the gas manufacturer or importer level, or at the source of
    emissions downstream. If the Administrator determines, based on
    consideration of environmental effectiveness, cost
    effectiveness, administrative feasibility, extent of coverage
    of emissions, and competitiveness considerations, that
    emissions of non-HFC fluorinated gases can best be regulated by
    designating downstream emission sources as covered entities
    with compliance obligations under section 722, the
    Administrator shall, after notice and comment rulemaking,
    change the definition of covered entity with respect to
    fluorinated gases (other than HFCs) accordingly and establish
    such requirements as are necessary to ensure compliance for
    such entities with the requirements of this title.
      (h) Regulations.--Not later than 24 months after the date of
    enactment of this title, the Administrator shall promulgate
    regulations to carry out the provisions of this title.

    SEC. 722. PROHIBITION OF EXCESS EMISSIONS.

      (a) Prohibition.--Except as provided in subsection (c),
    effective January 1, 2012, each covered entity is prohibited
    from emitting greenhouse gases, and having attributable
    greenhouse gas emissions, in combination, in excess of its
    allowable emissions level. A covered entity's allowable
    emissions level for each calendar year is the number of
    emission allowances (or credits or other allowances as provided
    in subsection (d)) it holds as of 12:01 a.m. on April 1 (or a
    later date established by the Administrator under subsection
    (j)) of the following calendar year.
      (b) Methods of Demonstrating Compliance.--Except as otherwise
    provided in this section, the owner or operator of a covered
    entity shall not be considered to be in compliance with the
    prohibition in subsection (a) unless, as of 12:01 a.m. on April
    1 (or a later date established by the Administrator under
    subsection (j)) of each calendar year starting in 2013, the
    owner or operator holds a quantity of emission allowances (or
    credits or other allowances as provided in subsection (d)) at
    least as great as the quantity calculated as follows:
              (1) Electricity sources.--For a covered entity
            described in section 700(13)(A), 1 emission allowance
            for each ton of carbon dioxide equivalent of greenhouse
            gas that such covered entity emitted in the previous
            calendar year, excluding emissions resulting from the
            combustion of--
                      (A) petroleum-based or coal-based liquid
                    fuel;
                      (B) natural gas liquid;
                      (C) renewable biomass or gas derived from
                    renewable biomass; or
                      (D) petroleum coke or gas derived from
                    petroleum coke.
              (2) Fuel producers and importers.--For a covered
            entity described in section 700(13)(B), 1 emission
            allowance for each ton of carbon dioxide equivalent of
            greenhouse gas that would be emitted from the
            combustion of any petroleum-based or coal-based liquid
            fuel, petroleum coke, or natural gas liquid, produced
            or imported by such covered entity during the previous
            calendar year for sale or distribution in interstate
            commerce, assuming no capture and sequestration of any
            greenhouse gas emissions.
              (3) Industrial gas producers and importers.--For a
            covered entity described in section 700(13)(C), 1
            emission allowance for each ton of carbon dioxide
            equivalent of fossil fuel-based carbon dioxide, nitrous
            oxide, or any other fluorinated gas that is a
            greenhouse gas (except for nitrogen trifluoride), or
            any combination thereof, produced or imported by such
            covered entity during the previous calendar year for
            sale or distribution in interstate commerce or released
            as fugitive emissions in the production of fluorinated
            gas.
              (4) Nitrogen trifluoride sources.--For a covered
            entity described in section 700(13)(D), 1 emission
            allowance for each ton of carbon dioxide equivalent of
            nitrogen trifluoride that such covered entity emitted
            in the previous calendar year.
              (5) Geological sequestration sites.--For a covered
            entity described in section 700(13)(E), 1 emission
            allowance for each ton of carbon dioxide equivalent of
            greenhouse gas that such covered entity emitted in the
            previous calendar year.
              (6) Industrial stationary sources.--For a covered
            entity described in section 700(13)(F), (G), or (H), 1
            emission allowance for each ton of carbon dioxide
            equivalent of greenhouse gas that such covered entity
            emitted in the previous calendar year, excluding
            emissions resulting from--
                      (A) the combustion of petroleum-based or
                    coal-based liquid fuel;
                      (B) the combustion of natural gas liquid;
                      (C) the combustion of renewable biomass or
                    gas derived from renewable biomass;
                      (D) the combustion of petroleum coke or gas
                    derived from petroleum coke; or
                      (E) the use of any fluorinated gas that is a
                    greenhouse gas purchased for use at that
                    covered entity, except for nitrogen
                    trifluoride.
              (7) Industrial fossil fuel-fired combustion
            devices.--For a covered entity described in section
            700(13)(I), 1 emission allowance for each ton of carbon
            dioxide equivalent of greenhouse gas that the devices
            emitted in the previous calendar year, excluding
            emissions resulting from the combustion of--
                      (A) petroleum-based or coal-based liquid
                    fuel;
                      (B) natural gas liquid;
                      (C) renewable biomass or gas derived from
                    renewable biomass; or
                      (D) petroleum coke or gas derived from
                    petroleum coke.
              (8) Natural gas local distribution companies.--For a
            covered entity described in section 700(13)(J), 1
            emission allowance for each ton of carbon dioxide
            equivalent of greenhouse gas that would be emitted from
            the combustion of the natural gas, and any other gas
            meeting the specifications for commingling with natural
            gas for purposes of delivery, that such entity
            delivered during the previous calendar year to
            customers that are not covered entities, assuming no
            capture and sequestration of that greenhouse gas.
              (9) Algae-based fuels.--Where carbon dioxide (or
            another greenhouse gas) is used as an input in the
            production of algae-based fuels, the Administrator
            shall ensure that allowances are required to be held
            either for the carbon dioxide used to grow the algae or
            for the carbon dioxide emitted from combustion of the
            fuel produced from such algae, but not for both.
              (10) Fugitive emissions.--The greenhouse gas
            emissions to which paragraphs (1), (4), (6), and (7)
            apply shall not include fugitive emissions of
            greenhouse gas, except to the extent the Administrator
            determines that data on the carbon dioxide equivalent
            value of greenhouse gas in the fugitive emissions can
            be provided with sufficient precision, reliability,
            accessibility, and timeliness to ensure the integrity
            of emission allowances, the allowance tracking system,
            and the cap on emissions.
              (11) Export exemption.--This section shall not apply
            to any petroleum-based or coal-based liquid fuel,
            petroleum coke, natural gas liquid, fossil fuel-based
            carbon dioxide, nitrous oxide, or fluorinated gas that
            is exported for sale or use.
              (12) Natural gas liquids.--Notwithstanding subsection
            (a), if the owner or operator of a covered entity
            described in section 700(13)(B) that produces natural
            gas liquids does not take ownership of the liquids, and
            is not responsible for the distribution or use of the
            liquids in commerce, the owner of the liquids shall be
            responsible for compliance with this section, section
            723, and other relevant sections of this title with
            respect to such liquids. In the regulations promulgated
            under section 721, the Administrator shall include such
            provisions with respect to such liquids as the
            Administrator determines are appropriate to determine
            and ensure compliance, and to penalize noncompliance.
            In such a case, the owner of the covered entity shall
            provide to the Administrator, in a manner to be
            determined by the Administrator, information regarding
            the quantity and ownership of liquids produced at the
            covered entity.
              (13) Application of multiple paragraphs.--For a
            covered entity to which more than 1 of paragraphs (1)
            through (8) apply, all applicable paragraphs shall
            apply, except that not more than 1 emission allowance
            shall be required for the same emission.
      (c) Phase-in of Prohibition.--
              (1) Industrial stationary sources.--The prohibition
            under subsection (a) shall first apply to a covered
            entity described in section 700(13)(D), (F), (G), (H),
            or (I), with respect to emissions occurring during
            calendar year 2014.
              (2) Natural gas local distribution companies.--The
            prohibition under subsection (a) shall first apply to a
            covered entity described in section 700(13)(J) with
            respect to deliveries occurring during calendar year
            2016.
      (d) Additional Methods.--In addition to using the method of
    compliance described in subsection (b), a covered entity may do
    the following:
              (1) Offset credits.--
                      (A) In general.--Covered entities
                    collectively may, in accordance with this
                    paragraph, use offset credits to demonstrate
                    compliance for up to a maximum of 2 billion
                    tons of greenhouse gas emissions annually. The
                    ability to demonstrate compliance with offset
                    credits shall be divided pro rata among covered
                    entities by allowing each covered entity to
                    satisfy a percentage of the number of
                    allowances required to be held under subsection
                    (b) to demonstrate compliance by holding 1
                    domestic offset credit or 1.25 international
                    offset credits in lieu of an emission
                    allowance, except as provided in subparagraph
                    (D).
                      (B) Applicable percentage.--The percentage
                    referred to in subparagraph (A) for a given
                    calendar year shall be determined by dividing 2
                    billion by the sum of 2 billion plus the number
                    of emission allowances established under
                    section 721(a) for the previous year, and
                    multiplying that number by 100. Not more than
                    one half of the applicable percentage under
                    this paragraph may be used by holding domestic
                    offset credits, and not more than one half of
                    the applicable percentage under this paragraph
                    may be used by holding international offset
                    credits, except as provided in subparagraph
                    (C).
                      (C) Modified percentages.--If the
                    Administrator determines that domestic offset
                    credits available for use in demonstrating
                    compliance in any calendar year at domestic
                    offset prices generally equal to or less than
                    allowance prices, are likely to offset less
                    than 0.9 billion tons of greenhouse gas
                    emissions (measured in tons of carbon dioxide
                    equivalents), the Administrator shall increase
                    the percent of emissions that can be offset
                    through the use of international offset credits
                    (and decrease the percent of emissions that can
                    be allowed through the use of domestic offset
                    credits by the same amount) to reflect the
                    amount that 1.0 billion exceeds the number of
                    domestic offset credits the Administrator
                    determines is available for that year, up to a
                    maximum of 0.5 billion tons of greenhouse gas
                    emissions.
                      (D) International offset credits.--
                    Notwithstanding subparagraph (A), to
                    demonstrate compliance prior to calendar year
                    2018, a covered entity may use 1 international
                    offset credit in lieu of an emission allowance
                    up to the amount permitted under this
                    paragraph.
                      (E) President's recommendation.--The
                    President may make a recommendation to Congress
                    as to whether the number 2 billion specified in
                    subparagraphs (A) and (B) should be increased
                    or decreased.
              (2) International emission allowances.--To
            demonstrate compliance, a covered entity may hold an
            international emission allowance in lieu of an emission
            allowance, except as modified under section 728(d).
              (3) Compensatory allowances.--To demonstrate
            compliance, a covered entity may hold a compensatory
            allowance obtained under section 721(f) in lieu of an
            emission allowance.
      (e) Retirement of Allowances and Credits.--As soon as
    practicable after a deadline established for covered entities
    to demonstrate compliance with this title, the Administrator
    shall retire the quantity of allowances or credits required to
    be held under this title.
      (f) Alternative Metrics.--For categories of covered entities
    described in subparagraph (B), (C), (D), (G), (H), or (I) of
    section 700(13), the Administrator may, by rule, establish an
    applicability threshold for inclusion under those subparagraphs
    using an alternative metric and level, provided that such
    metric and level are easier to administer and cover the same
    size and type of sources as the threshold defined in such
    subparagraphs.
      (g) Threshold Review.--For each category of covered entities
    described in subparagraph (B), (C), (D), (G), (H), or (I) of
    section 700(13), the Administrator shall, in 2020 and once
    every 8 years thereafter, review the carbon dioxide equivalent
    emission thresholds that are used to define covered entities.
    After consideration of--
              (1) emissions from covered entities in each such
            category, and from other entities of the same type that
            emit less than the threshold amount for the category
            (including emission sources that commence operation
            after the date of enactment of this title that are not
            covered entities); and
              (2) whether greater greenhouse gas emission
            reductions can be cost-effectively achieved by lowering
            the applicable threshold,
    the Administrator may by rule lower such threshold to not less
    than 10,000 tons of carbon dioxide equivalent emissions. In
    determining the cost effectiveness of potential reductions from
    lowering the threshold for covered entities, the Administrator
    shall consider alternative regulatory greenhouse gas programs,
    including setting standards under other titles of this Act.
      (h) Designated Representatives.--The regulations promulgated
    under section 721(h) shall require that each covered entity,
    and each entity holding allowances or credits or receiving
    allowances or credits from the Administrator under this title,
    select a designated representative.
      (i) Education and Outreach.--
              (1) In general.--The Administrator shall establish
            and carry out a program of education and outreach to
            assist covered entities, especially entities having
            little experience with environmental regulatory
            requirements similar or comparable to those under this
            title, in preparing to meet the compliance obligations
            of this title. Such program shall include education
            with respect to using markets to effectively achieve
            such compliance.
              (2) Failure to receive information.--A failure to
            receive information or assistance under this subsection
            may not be used as a defense against an allegation of
            any violation of this title.
      (j) Adjustment of Deadline.--The Administrator may, by rule,
    establish a deadline for demonstrating compliance, for a
    calendar year, later than the date provided in subsection (a),
    as necessary to ensure the availability of emissions data, but
    in no event shall the deadline be later than June 1.
      (k) Notice Requirement for Covered Entities Receiving Natural
    Gas From Natural Gas Local Distribution Companies.--The owner
    or operator of a covered entity that takes delivery of natural
    gas from a natural gas local distribution company shall, not
    later than September 1 of each calendar year, notify such
    natural gas local distribution company in writing that such
    entity will qualify as a covered entity under this title for
    that calendar year.
      (l) Compliance Obligation.--For purposes of this title, the
    year of a compliance obligation is the year in which compliance
    is determined, not the year in which the greenhouse gas
    emissions occur or the covered entity has attributable
    greenhouse gas emissions.

    SEC. 723. PENALTY FOR NONCOMPLIANCE.

      (a) Enforcement.--A violation of any prohibition of,
    requirement of, or regulation promulgated pursuant to this
    title shall be a violation of this Act. It shall be a violation
    of this Act for a covered entity to emit greenhouse gases, and
    have attributable greenhouse gas emissions, in combination, in
    excess of its allowable emissions level as provided in section
    722(a). Each ton of carbon dioxide equivalent for which a
    covered entity fails to demonstrate compliance under section
    722(b) shall be a separate violation.
      (b) Excess Emissions Penalty.--
              (1) In general.--The owner or operator of any covered
            entity that fails for any year to comply, on the
            deadline described in section 722(a) or (j), shall be
            liable for payment to the Administrator of an excess
            emissions penalty in the amount described in paragraph
            (2).
              (2) Amount.--The amount of an excess emissions
            penalty required to be paid under paragraph (1) shall
            be equal to the product obtained by multiplying--
                      (A) the tons of carbon dioxide equivalent of
                    greenhouse gas emissions or attributable
                    greenhouse gas emissions for which the owner or
                    operator of a covered entity failed to comply
                    under section 722(b) on the deadline; by
                      (B) twice the fair market value of emission
                    allowances established for emissions occurring
                    in the calendar year for which the emission
                    allowances were due.
              (3) Timing.--An excess emissions penalty required
            under this subsection shall be immediately due and
            payable to the Administrator, without demand, in
            accordance with regulations promulgated by the
            Administrator, which shall be issued not later than 2
            years after the date of enactment of this title.
              (4) No effect on liability.--An excess emissions
            penalty due and payable by the owners or operators of a
            covered entity under this subsection shall not diminish
            the liability of the owners or operators for any fine,
            penalty, or assessment against the owners or operators
            for the same violation under any other provision of
            this Act or any other law.
      (c) Excess Emissions Allowances.--The owner or operator of a
    covered entity that fails for any year to comply on the
    deadline described in section 722(a) or (j) shall be liable to
    offset the covered entity's excess combination of greenhouse
    gases emitted and attributable greenhouse gas emissions by an
    equal quantity of emission allowances during the following
    calendar year, or such longer period as the Administrator may
    prescribe. During the year in which the covered entity failed
    to comply, or any year thereafter, the Administrator may deduct
    the emission allowances required under this subsection to
    offset the covered entity's excess actual or attributable
    emissions.

    SEC. 724. TRADING.

      (a) Permitted Transactions.--Except as otherwise provided in
    this title, the lawful holder of an emission allowance,
    compensatory allowance, or offset credit may, without
    restriction, sell, exchange, transfer, hold for compliance in
    accordance with section 722, or request that the Administrator
    retire the emission allowance, compensatory allowance, or
    offset credit.
      (b) No Restriction on Transactions.--The privilege of
    purchasing, holding, selling, exchanging, transferring, and
    requesting retirement of emission allowances, compensatory
    allowances, or offset credits shall not be restricted to the
    owners and operators of covered entities, except as otherwise
    provided in this title.
      (c) Effectiveness of Allowance Transfers.--No transfer of an
    allowance or offset credit shall be effective for purposes of
    this title until a certification of the transfer, signed by the
    designated representative of the transferor, is received and
    recorded by the Administrator in accordance with regulations
    promulgated under section 721(h).
      (d) Allowance Tracking System.--The regulations promulgated
    under section 721(h) shall include a system for issuing,
    recording, holding, and tracking allowances and offset credits
    that shall specify all necessary procedures and requirements
    for an orderly and competitive functioning of the allowance and
    offset credit markets. Such regulations shall provide for
    appropriate publication of the information in the system on the
    Internet.

    SEC. 725. BANKING AND BORROWING.

      (a) Banking.--An emission allowance may be used to comply
    with section 722 or section 723 for emissions in--
              (1) the vintage year for the allowance; or
              (2) any calendar year subsequent to the vintage year
            for the allowance.
      (b) Expiration.--
              (1) Regulations.--The Administrator may establish by
            regulation criteria and procedures for determining
            whether, and for implementing a determination that, the
            expiration of an allowance or credit established or
            issued by the Administrator under this title, or
            expiration of the ability to use an international
            emission allowance to comply with section 722, is
            necessary to ensure the authenticity and integrity of
            allowances or credits or the allowance tracking system.
              (2) General rule.--An allowance or credit established
            or issued by the Administrator under this title shall
            not expire unless--
                      (A) it is retired by the Administrator as
                    required under this title; or
                      (B) it is determined to expire or to have
                    expired by a specific date by the Administrator
                    in accordance with regulations promulgated
                    under paragraph (1).
              (3) International emission allowances.--The ability
            to use an international emission allowance to comply
            with section 722 shall not expire unless--
                      (A) the allowance is retired by the
                    Administrator as required by this title; or
                      (B) the ability to use such allowance to meet
                    such compliance obligation requirements is
                    determined to expire or to have expired by a
                    specific date by the Administrator in
                    accordance with regulations promulgated under
                    paragraph (1).
      (c) Borrowing Future Vintage Year Allowances.--
              (1) Borrowing without interest.--In addition to the
            uses described in subsection (a), an emission allowance
            may be used to comply with section 722(a) or section
            723 for emissions, production, importation,
            manufacture, or deliveries in the calendar year
            immediately preceding the vintage year for the
            allowance.
              (2) Borrowing with interest.--
                      (A) In general.--A covered entity may
                    demonstrate compliance under subsection (b) in
                    a specific calendar year for up to 15 percent
                    of its emissions by holding emission allowances
                    with a vintage year 1 to 5 years later than
                    that calendar year.
                      (B) Limitations.--An emission allowance
                    borrowed pursuant to this paragraph shall be an
                    emission allowance that is established by the
                    Administrator for a specific future calendar
                    year under section 721(a) and that is held by
                    the borrower.
                      (C) Prepayment of interest.--For each
                    emission allowance that an owner or operator of
                    a covered entity borrows pursuant to this
                    paragraph, such owner or operator shall, at the
                    time it borrows the allowance, hold for
                    retirement by the Administrator a quantity of
                    emission allowances that is equal to the
                    product obtained by multiplying--
                              (i) 0.08; by
                              (ii) the number of years between the
                            calendar year in which the allowance is
                            being used to satisfy a compliance
                            obligation and the vintage year of the
                            allowance.

    SEC. 726. STRATEGIC RESERVE.

      (a) Strategic Reserve Auctions.--
              (1) In general.--Once each quarter of each calendar
            year for which allowances are established under section
            721(a), the Administrator shall auction strategic
            reserve allowances.
              (2) Restriction to covered entities.--In each auction
            conducted under paragraph (1), only covered entities
            that the Administrator expects will be required to
            comply with section 722 in the following calendar year
            shall be eligible to make purchases.
      (b) Pool of Emission Allowances for Strategic Reserve
    Auctions.--
              (1) Filling the strategic reserve initially.--
                      (A) In general.--The Administrator shall, not
                    later than 2 years after the date of enactment
                    of this title, establish a strategic reserve
                    account, and shall place in that account an
                    amount of emission allowances established under
                    section 721(a) for each calendar year from 2012
                    through 2050 in the amounts specified in
                    subparagraph (B) of this paragraph.
                      (B) Amount.--The amount referred to in
                    subparagraph (A) shall be--
                              (i) for each of calendar years 2012
                            through 2019, 1 percent of the quantity
                            of emission allowances established for
                            that year pursuant to section
                            721(e)(1);
                              (ii) for each of calendar years 2020
                            through 2029, 2 percent of the quantity
                            of emission allowances established for
                            that year pursuant to section
                            721(e)(1); and
                              (iii) for each of calendar years 2030
                            through 2050, 3 percent of the quantity
                            of emission allowances established for
                            that year pursuant to section
                            721(e)(1).
                      (C) Effect on other provisions.--Any
                    provision in this title (except for
                    subparagraph (B) of this paragraph) that refers
                    to a quantity or percentage of the emission
                    allowances established for a calendar year
                    under section 721(a) shall be considered to
                    refer to the amount of emission allowances as
                    determined pursuant to section 721(e), less any
                    emission allowances established for that year
                    that are placed in the strategic reserve
                    account under this paragraph.
              (2) Supplementing the strategic reserve.--The
            Administrator shall also--
                      (A) at the end of each calendar year,
                    transfer to the strategic reserve account each
                    emission allowance that was offered for sale
                    but not sold at any auction conducted under
                    section 791; and
                      (B) transfer emission allowances established
                    under subsection (g) from auction proceeds, and
                    deposit them into the strategic reserve, to the
                    extent necessary to maintain the reserve at its
                    original size.
      (c) Minimum Strategic Reserve Auction Price.--
              (1) In general.--At each strategic reserve auction,
            the Administrator shall offer emission allowances for
            sale beginning at a minimum price per emission
            allowance, which shall be known as the ``minimum
            strategic reserve auction price''.
              (2) Initial minimum strategic reserve auction
            prices.--The minimum strategic reserve auction price
            shall be $28 (in constant 2009 dollars) for the
            strategic reserve auctions held in 2012. For the
            strategic reserve auctions held in 2013 and 2014, the
            minimum strategic reserve auction price shall be the
            strategic reserve auction price for the previous year
            increased by 5 percent plus the rate of inflation (as
            measured by the Consumer Price Index for All Urban
            Consumers).
              (3) Minimum strategic reserve auction price in
            subsequent years.--For each strategic reserve auction
            held in 2015 and each year thereafter, the minimum
            strategic reserve auction price shall be 60 percent
            above a rolling 36-month average of the daily closing
            price for that year's emission allowance vintage as
            reported on registered carbon trading facilities,
            calculated using constant dollars.
      (d) Quantity of Emission Allowances Released From the
    Strategic Reserve.--
              (1) Initial limits.--For each of calendar years 2012
            through 2016, the annual limit on the number of
            emission allowances from the strategic reserve account
            that may be auctioned is an amount equal to 5 percent
            of the emission allowances established for that
            calendar year under section 721(a). This limit does not
            apply to international offset credits sold on
            consignment pursuant to subsection (h).
              (2) Limits in subsequent years.--For calendar year
            2017 and each year thereafter, the annual limit on the
            number of emission allowances from the strategic
            reserve account that may be auctioned is an amount
            equal to 10 percent of the emission allowances
            established for that calendar year under section
            721(a). This limit does not apply to international
            offset credits sold on consignment pursuant to
            subsection (h).
              (3) Allocation of limitation.--One-fourth of each
            year's annual strategic reserve auction limit under
            this subsection shall be made available for auction in
            each quarter. Any allowances from the strategic reserve
            account that are made available for sale in a quarterly
            auction and not sold shall be rolled over and added to
            the quantity available for sale in the following
            quarter, except that allowances not sold at auction in
            the fourth quarter of a year shall not be rolled over
            to the following calendar year's auctions, but shall be
            returned to the strategic reserve account.
      (e) Purchase Limit.--
              (1) In general.--Except as provided in paragraph (2)
            or (3), the annual number of emission allowances that a
            covered entity may purchase at the strategic reserve
            auctions in each calendar year shall not exceed 20
            percent of the covered entity's emissions during the
            most recent year for which allowances or credits were
            retired under section 722.
              (2) 2012 limit.--For calendar year 2012, the maximum
            aggregate number of emission allowances that a covered
            entity may purchase from that year's strategic reserve
            auctions shall be 20 percent of the covered entity's
            greenhouse gas emissions that the covered entity
            reported to the registry established under section 713
            for 2011 and that would be subject to section 722(a) if
            occurring in later calendar years.
              (3) New entrants.--The Administrator shall, by
            regulation, establish a separate purchase limit
            applicable to entities that expect to become a covered
            entity in the year of the auction, permitting them to
            purchase emission allowances at the strategic reserve
            auctions in their first calendar year of operation in
            an amount of at least 20 percent of their expected
            combined emissions and attributable greenhouse gas
            emissions for that year.
      (f) Delegation or Contract.--Pursuant to regulations under
    this section, the Administrator may, by delegation or contract,
    provide for the conduct of strategic reserve auctions under the
    Administrator's supervision by other departments or agencies of
    the Federal Government or by nongovernmental agencies, groups,
    or organizations.
      (g) Use of Auction Proceeds.--
              (1) Deposit in strategic reserve fund.--The proceeds
            from strategic reserve auctions shall be placed in the
            Strategic Reserve Fund established under section
            793(1), and shall be available without further
            appropriation or fiscal year limitation for the
            purposes described in this subsection.
              (2) International offset credits for reduced
            deforestation.--The Administrator shall use the
            proceeds from each strategic reserve auction to
            purchase international offset credits issued for
            reduced deforestation activities pursuant to section
            743(e). The Administrator shall retire those
            international offset credits and establish a number of
            emission allowances equal to 80 percent of the number
            of international offset credits so retired. Emission
            allowances established under this paragraph shall be in
            addition to those established under section 721(a).
              (3) Emission allowances.--The Administrator shall
            deposit emission allowances established under paragraph
            (2) in the strategic reserve, except that, with respect
            to any such emission allowances in excess of the amount
            necessary to fill the strategic reserve to its original
            size, the Administrator shall--
                      (A) except as provided in subparagraph (B),
                    assign a vintage year to the emission
                    allowance, which shall be no earlier than the
                    year in which the allowance is established
                    under paragraph (2) and shall treat such
                    allowances as ones that are not designated for
                    distribution or auction for purposes of section
                    782(q) and (r); and
                      (B) to the extent any such allowances cannot
                    be assigned a vintage year because of the
                    limitation in paragraph (4), retire the
                    allowances.
              (4) Limitation.--In no case may the Administrator
            assign under paragraph (3)(A) more emission allowances
            to a vintage year than the number of emission
            allowances from that vintage year that were placed in
            the strategic reserve account under subsection (b)(1).
      (h) Availability of International Offset Credits for
    Auction.--
              (1) In general.--The regulations promulgated under
            section 721(h) shall allow any entity holding
            international offset credits from reduced deforestation
            issued under section 743(e) to request that the
            Administrator include such offset credits in an
            upcoming strategic reserve auction. The regulations
            shall provide that--
                      (A) such international offset credits will be
                    used to fill bid orders only after the supply
                    of strategic reserve allowances available for
                    sale at that auction has been depleted;
                      (B) international offset credits may be sold
                    at a strategic reserve auction under this
                    subsection only if the Administrator determines
                    that it is highly likely that covered entities
                    will, to cover emissions occurring in the year
                    the auction is held, use offset credits to
                    demonstrate compliance under section 722 for
                    emissions equal to or greater than 80 percent
                    of 2 billion tons of carbon dioxide equivalent;
                      (C) upon sale of such international offset
                    credits, the Administrator shall retire those
                    international offset credits, and establish and
                    provide to the purchasers a number of emission
                    allowances equal to 80 percent of the number of
                    international offset credits so retired, which
                    allowances shall be in addition to those
                    established under section 721(a); and
                      (D) for international offset credits sold
                    pursuant to this subsection, the proceeds for
                    the entity that offered the international
                    offset credits for sale shall be the lesser
                    of--
                              (i) the average daily closing price
                            for international offset credits sold
                            on registered exchanges (or if such
                            price is unavailable, the average price
                            as determined by the Administrator)
                            during the six months prior to the
                            strategic reserve auction at which they
                            were auctioned, with the remaining
                            funds collected upon the sale of the
                            international offset credits deposited
                            in the Treasury; and
                              (ii) the amount received for the
                            international offset credits at the
                            auction.
              (2) Proceeds.--For international offset credits sold
            pursuant to this subsection, notwithstanding section
            3302 of title 31, United States Code, or any other
            provision of law, within 90 days of receipt, the United
            States shall transfer the proceeds from the auction, as
            defined in paragraph (1)(D), to the entity that offered
            the international offset credits for sale. No funds
            transferred from a purchaser to a seller of
            international offset credits under this paragraph shall
            be held by any officer or employee of the United States
            or treated for any purpose as public monies.
              (3) Pricing.--When the Administrator acts under this
            subsection as the agent of an entity in possession of
            international offset credits, the Administrator is not
            obligated to obtain the highest price possible for the
            international offset credits, and instead shall auction
            such international offset credits in the same manner
            and pursuant to the same rules (except as modified in
            paragraph (1)) as set forth for auctioning strategic
            reserve allowances. Entities requesting that such
            international offset credits be offered for sale at a
            strategic reserve auction may not set a minimum reserve
            price for their international offset credits that is
            different than the minimum strategic reserve auction
            price set pursuant to subsection (c).
      (i) Initial Regulations.--Not later than 24 months after the
    date of enactment of this title, the Administrator shall
    promulgate regulations, in consultation with other appropriate
    agencies, governing the auction of allowances under this
    section. Such regulations shall include the following
    requirements:
              (1) Frequency; first auction.--Auctions shall be held
            four times per year at regular intervals, with the
            first auction to be held no later than March 31, 2012.
              (2) Auction format.--Auctions shall follow a single-
            round, sealed-bid, uniform price format.
              (3) Participation; financial assurance.--Auctions
            shall be open to any covered entity eligible to
            purchase emission allowances at the auction under
            subsection (a)(2), except that the Administrator may
            establish financial assurance requirements to ensure
            that auction participants can and will perform on their
            bids.
              (4) Disclosure of beneficial ownership.--Each bidder
            in an auction shall be required to disclose the person
            or entity sponsoring or benefitting from the bidder's
            participation in the auction if such person or entity
            is, in whole or in part, other than the bidder.
              (5) Purchase limits.--No person may, directly or in
            concert with another participant, purchase more than 20
            percent of the allowances offered for sale at any
            quarterly auction.
              (6) Publication of information.--After the auction,
            the Administrator shall, in a timely fashion, publish
            the identities of winning bidders, the quantity of
            allowances obtained by each winning bidder, and the
            auction clearing price.
              (7) Other requirements.--The Administrator may
            include in the regulations such other requirements or
            provisions as the Administrator, in consultation with
            other agencies as appropriate, considers appropriate to
            promote effective, efficient, transparent, and fair
            administration of auctions under this section.
      (j) Revision of Regulations.--The Administrator may, at any
    time, in consultation with other agencies as appropriate,
    revise the initial regulations promulgated under subsection
    (i). Such revised regulations need not meet the requirements
    identified in subsection (i) if the Administrator determines
    that an alternative auction design would be more effective,
    taking into account factors including costs of administration,
    transparency, fairness, and risks of collusion or manipulation.
    In determining whether and how to revise the initial
    regulations under this subsection, the Administrator shall not
    consider maximization of revenues to the Federal Government.

    SEC. 727. PERMITS.

      (a) Permit Program.--For stationary sources subject to title
    V of this Act, that are covered entities, the provisions of
    this title shall be implemented by permits issued to such
    covered entities (and enforced) in accordance with the
    provisions of title V, as modified by this title. Any such
    permit issued by the Administrator, or by a State with an
    approved permit program, shall require the owner or operator of
    a covered entity to hold emission allowances or offset credits
    at least equal to the total annual amount of carbon dioxide
    equivalents for its combined emissions and attributable
    greenhouse gas emissions to which section 722 applies. No such
    permit shall be issued that is inconsistent with the
    requirements of this title, and title V as applicable. Nothing
    in this section regarding compliance plans or in title V shall
    be construed as affecting allowances or offset credits.
    Submission of a statement by the owner or operator, or the
    designated representative of the owners and operators, of a
    covered entity that the owners and operators will hold emission
    allowances or offset credits for the entity's combined
    emissions and attributable greenhouse gas emissions to which
    section 722 applies shall be deemed to meet the proposed and
    approved planning requirements of title V. Recordation by the
    Administrator of transfers of emission allowances shall amend
    automatically all applicable proposed or approved permit
    applications, compliance plans, and permits.
      (b) Multiple Owners.--No permit shall be issued under this
    section and no allowances or offset credits shall be disbursed
    under this title to a covered entity or any other person until
    the designated representative of the owners or operators has
    filed a certificate of representation with regard to matters
    under this title, including the holding and distribution of
    emission allowances and the proceeds of transactions involving
    emission allowances. Where there are multiple holders of a
    legal or equitable title to, or a leasehold interest in, such a
    covered entity or other entity or where a utility or industrial
    customer purchases power under a long-term power purchase
    contract from an independent power production facility that is
    a covered entity, the certificate shall state--
              (1) that emission allowances and the proceeds of
            transactions involving emission allowances will be
            deemed to be held or distributed in proportion to each
            holder's legal, equitable, leasehold, or contractual
            reservation or entitlement; or
              (2) if such multiple holders have expressly provided
            for a different distribution of emission allowances by
            contract, that emission allowances and the proceeds of
            transactions involving emission allowances will be
            deemed to be held or distributed in accordance with the
            contract.
    A passive lessor, or a person who has an equitable interest
    through such lessor, whose rental payments are not based,
    either directly or indirectly, upon the revenues or income from
    the covered entity or other entity shall not be deemed to be a
    holder of a legal, equitable, leasehold, or contractual
    interest for the purpose of holding or distributing emission
    allowances as provided in this subsection, during either the
    term of such leasehold or thereafter, unless expressly provided
    for in the leasehold agreement. Except as otherwise provided in
    this subsection, where all legal or equitable title to or
    interest in a covered entity, or other entity, is held by a
    single person, the certificate shall state that all emission
    allowances received by the entity are deemed to be held for
    that person.
      (c) Prohibition.--It shall be unlawful for any person to
    operate any stationary source subject to the requirements of
    this section except in compliance with the terms and
    requirements of a permit issued by the Administrator or a State
    with an approved permit program in accordance with this
    section. For purposes of this subsection, compliance, as
    provided in section 504(f), with a permit issued under title V
    which complies with this title for covered entities shall be
    deemed compliance with this subsection as well as section
    502(a).
      (d) Reliability.--Nothing in this section or title V shall be
    construed as requiring termination of operations of a
    stationary source that is a covered entity for failure to have
    an approved permit, or compliance plan, that is consistent with
    the requirements in the second and fifth sentences of
    subsection (a) concerning the holding of emission allowances,
    compensatory allowances, international emission allowances, or
    offset allowances, except that any such covered entity may be
    subject to the applicable enforcement provision of section 113.
      (e) Regulations.--The Administrator shall promulgate
    regulations to implement this section. To provide for permits
    required under this section, each State in which one or more
    stationary sources and that are covered entities are located
    shall submit, in accordance with this section and title V,
    revised permit programs for approval.

    SEC. 728. INTERNATIONAL EMISSION ALLOWANCES.

      (a) Qualifying Programs.--The Administrator, in consultation
    with the Secretary of State, may by rule designate an
    international climate change program as a qualifying
    international program if--
              (1) the program is run by a national or supranational
            foreign government, and imposes a mandatory absolute
            tonnage limit on greenhouse gas emissions from 1 or
            more foreign countries, or from 1 or more economic
            sectors in such a country or countries; and
              (2) the program is at least as stringent as the
            program established by this title, including provisions
            to ensure at least comparable monitoring, compliance,
            enforcement, quality of offsets, and restrictions on
            the use of offsets.
      (b) Disqualified Allowances.--An international emission
    allowance may not be held under section 722(d)(2) if it is in
    the nature of an offset instrument or allowance awarded based
    on the achievement of greenhouse gas emission reductions or
    avoidance, or greenhouse gas sequestration, that are not
    subject to the mandatory absolute tonnage limits referred to in
    subsection (a)(1).
      (c) Retirement.--
              (1) Entity certification.--The owner or operator of
            an entity that holds an international emission
            allowance under section 722(d)(2) shall certify to the
            Administrator that such international emission
            allowance has not previously been used to comply with
            any foreign, international, or domestic greenhouse gas
            regulatory program.
              (2) Retirement.--
                      (A) Foreign and international regulatory
                    entities.--The Administrator, in consultation
                    with the Secretary of State, shall seek, by
                    whatever means appropriate, including
                    agreements and technical cooperation on
                    allowance tracking, to ensure that any relevant
                    foreign, international, and domestic regulatory
                    entities--
                              (i) are notified of the use, for
                            purposes of compliance with this title,
                            of any international emission
                            allowance; and
                              (ii) provide for the disqualification
                            of such international emission
                            allowance for any subsequent use under
                            the relevant foreign, international, or
                            domestic greenhouse gas regulatory
                            program, regardless of whether such use
                            is a sale, exchange, or submission to
                            satisfy a compliance obligation.
                      (B) Disqualification from further use.--The
                    Administrator shall ensure that, once an
                    international emission allowance has been
                    disqualified or otherwise used for purposes of
                    compliance with this title, such allowance
                    shall be disqualified from any further use
                    under this title.
      (d) Use Limitations.--The Administrator may, by rule, modify
    the percentage applicable to international emission allowances
    under section 722(d)(2), consistent with the purposes of the
    Safe Climate Act.

                                PART D--OFFSETS

    SEC. 731. OFFSETS INTEGRITY ADVISORY BOARD.

      (a) Establishment.--Not later than 30 days after the date of
    enactment of this title, the Administrator shall establish an
    independent Offsets Integrity Advisory Board. The Advisory
    Board shall make recommendations to the Administrator for use
    in promulgating and revising regulations under this part and
    part E, and for ensuring the overall environmental integrity of
    the programs established pursuant to those regulations.
      (b) Membership.--The Advisory Board shall be comprised of at
    least nine members. Each member shall be qualified by
    education, training, and experience to evaluate scientific and
    technical information on matters referred to the Board under
    this section. The Administrator shall appoint Advisory Board
    members, including a chair and vice-chair of the Advisory
    Board. Terms shall be 3 years in length, except for initial
    terms, which may be up to 5 years in length to allow
    staggering. Members may be reappointed only once for an
    additional 3-year term, and such second term may follow
    directly after a first term.
      (c) Activities.--The Advisory Board established pursuant to
    subsection (a) shall--
              (1) provide recommendations, not later than 90 days
            after the Advisory Board's establishment and
            periodically thereafter, to the Administrator regarding
            offset project types that should be considered for
            eligibility under section 733, taking into
            consideration relevant scientific and other issues,
            including--
                      (A) the availability of a representative data
                    set for use in developing the activity
                    baseline;
                      (B) the potential for accurate quantification
                    of greenhouse gas reduction, avoidance, or
                    sequestration for an offset project type;
                      (C) the potential level of scientific and
                    measurement uncertainty associated with an
                    offset project type; and
                      (D) any beneficial or adverse environmental,
                    public health, welfare, social, economic, or
                    energy effects associated with an offset
                    project type;
              (2) make available to the Administrator its advice
            and comments on offset methodologies that should be
            considered under regulations promulgated pursuant to
            section 734(a) and (b), including methodologies to
            address the issues of additionality, activity
            baselines, measurement, leakage, uncertainty,
            permanence, and environmental integrity;
              (3) make available to the Administrator, and other
            relevant Federal agencies, its advice and comments
            regarding scientific, technical, and methodological
            issues specific to the issuance of international offset
            credits under section 743;
              (4) make available to the Administrator, and other
            relevant Federal agencies, its advice and comments
            regarding scientific, technical, and methodological
            issues associated with the implementation of part E;
              (5) make available to the Administrator its advice
            and comments on areas in which further knowledge is
            required to appraise the adequacy of existing, revised,
            or proposed methodologies for use under this part and
            part E, and describe the research efforts necessary to
            provide the required information; and
              (6) make available to the Administrator its advice
            and comments on other ways to improve or safeguard the
            environmental integrity of programs established under
            this part and part E.
      (d) Scientific Review of Offset and Deforestation Reduction
    Programs.--Not later than January 1, 2017, and at five-year
    intervals thereafter, the Advisory Board shall submit to the
    Administrator and make available to the public an analysis of
    relevant scientific and technical information related to this
    part and part E. The Advisory Board shall review approved and
    potential methodologies, scientific studies, offset project
    monitoring, offset project verification reports, and audits
    related to this part and part E, and evaluate the net emissions
    effects of implemented offset projects. The Advisory Board
    shall recommend changes to offset methodologies, protocols, or
    project types, or to the overall offset program under this
    part, to ensure that offset credits issued by the Administrator
    do not compromise the integrity of the annual emission
    reductions established under section 703, and to avoid or
    minimize adverse effects to human health or the environment.

    SEC. 732. ESTABLISHMENT OF OFFSETS PROGRAM.

      (a) Regulations.--Not later than 2 years after the date of
    enactment of this title, the Administrator, in consultation
    with appropriate Federal agencies and taking into consideration
    the recommendations of the Advisory Board, shall promulgate
    regulations establishing a program for the issuance of offset
    credits in accordance with the requirements of this part. The
    Administrator shall periodically revise these regulations as
    necessary to meet the requirements of this part.
      (b) Requirements.--The regulations described in subsection
    (a) shall--
              (1) authorize the issuance of offset credits with
            respect to qualifying offset projects that result in
            reductions or avoidance of greenhouse gas emissions, or
            sequestration of greenhouse gases;
              (2) ensure that such offset credits represent
            verifiable and additional greenhouse gas emission
            reductions or avoidance, or increases in sequestration;
              (3) ensure that offset credits issued for
            sequestration offset projects are only issued for
            greenhouse gas reductions that are permanent;
              (4) provide for the implementation of the
            requirements of this part; and
              (5) include as reductions in greenhouse gases
            reductions achieved through the destruction of methane
            and its conversion to carbon dioxide.
      (c) Coordination To Minimize Negative Effects.--In
    promulgating and implementing regulations under this part, the
    Administrator shall act (including by rejecting projects, if
    necessary) to avoid or minimize, to the maximum extent
    practicable, adverse effects on human health or the environment
    resulting from the implementation of offset projects under this
    part.
      (d) Offset Registry.--The Administrator shall establish
    within the allowance tracking system established under section
    724(d) an Offset Registry for qualifying offset projects and
    offset credits issued with respect thereto under this part.
      (e) Legal Status of Offset Credit.--An offset credit does not
    constitute a property right.
      (f) Fees.--The Administrator shall assess fees payable by
    offset project developers in an amount necessary to cover the
    administrative costs to the Environmental Protection Agency of
    carrying out the activities under this part. Amounts collected
    for such fees shall be available to the Administrator for
    carrying out the activities under this part to the extent
    provided in advance in appropriations Acts.

    SEC. 733. ELIGIBLE PROJECT TYPES.

      (a) List of Eligible Project Types.--
              (1) In general.--As part of the regulations
            promulgated under section 732(a), the Administrator
            shall establish, and may periodically revise, a list of
            types of projects eligible to generate offset credits,
            including international offset credits, under this
            part.
              (2) Advisory board recommendations.--In determining
            the eligibility of project types, the Administrator
            shall take into consideration the recommendations of
            the Advisory Board. If a list established under this
            section differs from the recommendations of the
            Advisory Board, the regulations promulgated under
            section 732(a) shall include a justification for the
            discrepancy.
              (3) Initial determination.--The Administrator shall
            establish the initial eligibility list under paragraph
            (1) not later than one year after the date of enactment
            of this title. The Administrator shall add additional
            project types to the list not later than 2 years after
            the date of enactment of this title. In determining the
            initial list, the Administrator shall give priority to
            consideration of offset project types that are
            recommended by the Advisory Board and for which there
            are well developed methodologies that the Administrator
            determines would meet the criteria of section 734, with
            such modifications as the Administrator deems
            appropriate. In issuing methodologies pursuant to
            section 734, the Administrator shall give priority to
            methodologies for offset types included on the initial
            eligibility list.
      (b) Modification of List.--The Administrator--
              (1) may at any time, by rule, add a project type to
            the list established under subsection (a) if the
            Administrator, in consultation with appropriate Federal
            agencies and taking into consideration the
            recommendations of the Advisory Board, determines that
            the project type can generate additional reductions or
            avoidance of greenhouse gas emissions, or sequestration
            of greenhouse gases, subject to the requirements of
            this part;
              (2) may at any time, by rule, determine that a
            project type on the list does not meet the requirements
            of this part, and remove a project type from the list
            established under subsection (a), in consultation with
            appropriate Federal agencies and taking into
            consideration any recommendations of the Advisory
            Board; and
              (3) shall consider adding to or removing from the
            list established under subsection (a), at a minimum,
            project types proposed to the Administrator--
                      (A) by petition pursuant to subsection (c);
                    or
                      (B) by the Advisory Board.
      (c) Petition Process.--Any person may petition the
    Administrator to modify the list established under subsection
    (a) by adding or removing a project type pursuant to subsection
    (b). Any such petition shall include a showing by the
    petitioner that there is adequate data to establish that the
    project type does or does not meet the requirements of this
    part. Not later than 12 months after receipt of such a
    petition, the Administrator shall either grant or deny the
    petition and publish a written explanation of the reasons for
    the Administrator's decision. The Administrator may not deny a
    petition under this subsection on the basis of inadequate
    Environmental Protection Agency resources or time for review.

    SEC. 734. REQUIREMENTS FOR OFFSET PROJECTS.

      (a) Methodologies.--As part of the regulations promulgated
    under section 732(a), the Administrator shall establish, for
    each type of offset project listed as eligible under section
    733, the following:
              (1) Additionality.--A standardized methodology for
            determining the additionality of greenhouse gas
            emission reductions or avoidance, or greenhouse gas
            sequestration, achieved by an offset project of that
            type. Such methodology shall ensure, at a minimum, that
            any greenhouse gas emission reduction or avoidance, or
            any greenhouse gas sequestration, is considered
            additional only to the extent that it results from
            activities that--
                      (A) are not required by or undertaken to
                    comply with any law, including any regulation
                    or consent order;
                      (B) were not commenced prior to January 1,
                    2009, except in the case of--
                              (i) offset project activities that
                            commenced after January 1, 2001, and
                            were registered as of the date of
                            enactment of this title under an offset
                            program with respect to which the
                            Administrator has made an affirmative
                            determination under section 740(a)(2);
                            or
                              (ii) activities that are readily
                            reversible, with respect to which the
                            Administrator may set an alternative
                            earlier date under this subparagraph
                            that is not earlier than January 1,
                            2001, where the Administrator
                            determines that setting such an
                            alternative date may produce an
                            environmental benefit by removing an
                            incentive to cease and then reinitiate
                            activities that began prior to January
                            1, 2009;
                      (C) are not receiving support under part E of
                    this title or title IV, subtitle D of the
                    American Clean Energy and Security Act of 2009;
                    and
                      (D) exceed the activity baseline established
                    under paragraph (2).
              (2) Activity baselines.--A standardized methodology
            for establishing activity baselines for offset projects
            of that type. The Administrator shall set activity
            baselines to reflect a conservative estimate of
            business-as-usual performance or practices for the
            relevant type of activity such that the baseline
            provides an adequate margin of safety to ensure the
            environmental integrity of offsets calculated in
            reference to such baseline.
              (3) Quantification methods.--A standardized
            methodology for determining the extent to which
            greenhouse gas emission reductions or avoidance, or
            greenhouse gas sequestration, achieved by an offset
            project of that type exceed a relevant activity
            baseline, including protocols for monitoring and
            accounting for uncertainty.
              (4) Leakage.--A standardized methodology for
            accounting for and mitigating potential leakage, if
            any, from an offset project of that type, taking
            uncertainty into account.
      (b) Accounting for Reversals.--
              (1) In general.--For each type of sequestration
            project listed under section 733, the Administrator
            shall establish requirements to account for and address
            reversals, including--
                      (A) a requirement to report any reversal with
                    respect to an offset project for which offset
                    credits have been issued under this part;
                      (B) provisions to require emission allowances
                    to be held in amounts to fully compensate for
                    greenhouse gas emissions attributable to
                    reversals, and to assign responsibility for
                    holding such emission allowances; and
                      (C) any other provisions the Administrator
                    determines necessary to account for and address
                    reversals.
              (2) Mechanisms.--The Administrator shall prescribe
            mechanisms to ensure that any sequestration with
            respect to which an offset credit is issued under this
            part results in a permanent net increase in
            sequestration, and that full account is taken of any
            actual or potential reversal of such sequestration,
            with an adequate margin of safety. The Administrator
            shall prescribe at least one of the following
            mechanisms to meet the requirements of this paragraph:
                      (A) An offsets reserve, pursuant to paragraph
                    (3).
                      (B) Insurance that provides for purchase and
                    provision to the Administrator for retirement
                    of an amount of offset credits or emission
                    allowances equal in number to the tons of
                    carbon dioxide equivalents of greenhouse gas
                    emissions released due to reversal.
                      (C) Another mechanism that the Administrator
                    determines satisfies the requirements of this
                    part.
              (3) Offsets reserve.--
                      (A) In general.--An offsets reserve referred
                    to in paragraph (2)(A) is a program under
                    which, before issuance of offset credits under
                    this part, the Administrator shall subtract and
                    reserve from the quantity to be issued a
                    quantity of offset credits based on the risk of
                    reversal. The Administrator shall--
                              (i) hold these reserved offset
                            credits in the offsets reserve; and
                              (ii) register the holding of the
                            reserved offset credits in the Offset
                            Registry established under section
                            732(d).
                      (B) Project reversal.--
                              (i) In general.--If a reversal has
                            occurred with respect an offset project
                            for which offset credits are reserved
                            under this paragraph, the Administrator
                            shall remove offset credits from the
                            offsets reserve and cancel them to
                            fully account for the tons of carbon
                            dioxide equivalent that are no longer
                            sequestered.
                              (ii) Intentional reversals.--If the
                            Administrator determines that a
                            reversal was intentional, the offset
                            project developer for the relevant
                            offset project shall place into the
                            offsets reserve a quantity of offset
                            credits, or combination of offset
                            credits and emission allowances, equal
                            in number to the number of reserve
                            offset credits that were canceled due
                            to the reversal pursuant to clause (i).
                              (iii) Unintentional reversals.--If
                            the Administrator determines that a
                            reversal was unintentional, the offset
                            project developer for the relevant
                            offset project shall place into the
                            offsets reserve a quantity of offset
                            credits, or combination of offset
                            credits and emission allowances, equal
                            in number to half the number of offset
                            credits that were reserved for that
                            offset project, or half the number of
                            reserve offset credits that were
                            canceled due to the reversal pursuant
                            to clause (i), whichever is less.
                      (C) Use of reserved offset credits.--Offset
                    credits placed into the offsets reserve under
                    this paragraph may not be used to comply with
                    section 722.
      (c) Crediting Periods.--
              (1) In general.--For each offset project type, the
            Administrator shall specify a crediting period, and
            establish provisions for petitions for new crediting
            periods, in accordance with this subsection.
              (2) Duration.--The crediting period shall be no less
            than 5 and no greater than 10 years for any project
            type other than those involving sequestration.
              (3) Eligibility.--An offset project shall be eligible
            to generate offset credits under this part only during
            the project's crediting period. During such crediting
            period, the project shall remain eligible to generate
            offset credits, subject to the methodologies and
            project type eligibility list that applied as of the
            date of project approval under section 735, except as
            provided in paragraph (4) of this subsection.
              (4) Petition for new crediting period.--An offset
            project developer may petition for a new crediting
            period to commence after termination of a crediting
            period, subject to the methodologies and project type
            eligibility list in effect at the time when such
            petition is submitted. A petition may not be submitted
            under this paragraph more than 18 months before the end
            of the pending crediting period. The Administrator may
            limit the number of new crediting periods available for
            projects of particular project types.
      (d) Environmental Integrity.--In establishing the
    requirements under this section, the Administrator shall apply
    conservative assumptions or methods to maximize the certainty
    that the environmental integrity of the cap established under
    section 703 is not compromised.
      (e) Pre-Existing Methodologies.--In promulgating requirements
    under this section, the Administrator shall give due
    consideration to methodologies for offset projects existing as
    of the date of enactment of this title.
      (f) Added Project Types.--The Administrator shall establish
    methodologies described in subsection (a), and, as applicable,
    requirements and mechanisms for reversals as described in
    subsection (b), for any project type that is added to the list
    pursuant to section 733.

    SEC. 735. APPROVAL OF OFFSET PROJECTS.

      (a) Approval Petition.--An offset project developer shall
    submit an offset project approval petition providing such
    information as the Administrator requires to determine whether
    the offset project is eligible for issuance of offset credits
    under rules promulgated pursuant to this part.
      (b) Timing.--An approval petition shall be submitted to the
    Administrator under subsection (a) no later than the time at
    which an offset project's first verification report is
    submitted under section 736.
      (c) Approval Petition Requirements.--As part of the
    regulations promulgated under section 732, the Administrator
    shall include provisions for, and shall specify, the required
    components of an offset project approval petition required
    under subsection (a), which shall include--
              (1) designation of an offset project developer; and
              (2) any other information that the Administrator
            considers to be necessary to achieve the purposes of
            this part.
      (d) Approval and Notification.--Not later than 90 days after
    receiving a complete approval petition under subsection (a),
    the Administrator shall approve or deny the petition in writing
    and, if the petition is denied, provide the reasons for denial.
    After an offset project is approved, the offset project
    developer shall not be required to resubmit an approval
    petition during the offset project's crediting period, except
    as provided in section 734(c)(4).
      (e) Appeal.--The Administrator shall establish procedures for
    appeal and review of determinations made under subsection (d).
      (f) Voluntary Preapproval Review.--The Administrator may
    establish a voluntary preapproval review procedure, to allow an
    offset project developer to request the Administrator to
    conduct a preliminary eligibility review for an offset project.
    Findings of such reviews shall not be binding upon the
    Administrator. The voluntary preapproval review procedure--
              (1) shall require the offset project developer to
            submit such basic project information as the
            Administrator requires to provide a meaningful review;
            and
              (2) shall require a response from the Administrator
            not later than 6 weeks after receiving a request for
            review under this subsection.

    SEC. 736. VERIFICATION OF OFFSET PROJECTS.

      (a) In General.--As part of the regulations promulgated under
    section 732(a), the Administrator shall establish requirements,
    including protocols, for verification of the quantity of
    greenhouse gas emission reductions or avoidance, or
    sequestration of greenhouse gases, resulting from an offset
    project. The regulations shall require that an offset project
    developer shall submit a report, prepared by a third-party
    verifier accredited under subsection (d), providing such
    information as the Administrator requires to determine the
    quantity of greenhouse gas emission reductions or avoidance, or
    sequestration of greenhouse gas, resulting from the offset
    project.
      (b) Schedule.--The Administrator shall prescribe a schedule
    for the submission of verification reports under subsection
    (a).
      (c) Verification Report Requirements.--The Administrator
    shall specify the required components of a verification report
    required under subsection (a), which shall include--
              (1) the name and contact information for a designated
            representative for the offset project developer;
              (2) the quantity of greenhouse gas reduced, avoided,
            or sequestered;
              (3) the methodologies applicable to the project
            pursuant to section 734;
              (4) a certification that the project meets the
            applicable requirements;
              (5) a certification establishing that the conflict of
            interest requirements in the regulations promulgated
            under subsection (d)(1) have been complied with; and
              (6) any other information that the Administrator
            considers to be necessary to achieve the purposes of
            this part.
      (d) Verifier Accreditation.--
              (1) In general.--As part of the regulations
            promulgated under section 732(a), the Administrator
            shall establish a process and requirements for periodic
            accreditation of third-party verifiers to ensure that
            such verifiers are professionally qualified and have no
            conflicts of interest.
              (2) Standards.--
                      (A) American national standards institute
                    accreditation.--The Administrator may accredit,
                    or accept for purposes of accreditation under
                    this subsection, verifiers accredited under the
                    American National Standards Institute (ANSI)
                    accreditation program in accordance with ISO
                    14065. The Administrator shall accredit, or
                    accept for accreditation, verifiers under this
                    subparagraph only if the Administrator finds
                    that the American National Standards Institute
                    accreditation program provides sufficient
                    assurance that the requirements of this part
                    will be met.
                      (B) Epa accreditation.--As part of the
                    regulations promulgated under section 732(a),
                    the Administrator may establish accreditation
                    standards for verifiers under this subsection,
                    and may establish related training and testing
                    programs and requirements.
              (3) Public accessibility.--Each verifier meeting the
            requirements for accreditation in accordance with this
            subsection shall be listed in a publicly accessible
            database, which shall be maintained and updated by the
            Administrator.

    SEC. 737. ISSUANCE OF OFFSET CREDITS.

      (a) Determination and Notification.--Not later than 90 days
    after receiving a complete verification report under section
    736, the Administrator shall--
              (1) make the report publicly available;
              (2) make a determination of the quantity of
            greenhouse gas emissions reduced or avoided, or
            greenhouse gases sequestered, resulting from an offset
            project approved under section 735; and
              (3) notify the offset project developer in writing of
            such determination.
      (b) Issuance Of Offset Credits.--The Administrator shall
    issue one offset credit to an offset project developer for each
    ton of carbon dioxide equivalent that the Administrator has
    determined has been reduced, avoided, or sequestered during the
    period covered by a verification report submitted in accordance
    with section 736, only if--
              (1) the Administrator has approved the offset project
            pursuant to section 735; and
              (2) the relevant emissions reduction, avoidance, or
            sequestration has--
                      (A) already occurred, during the offset
                    project's crediting period; and
                      (B) occurred after January 1, 2009.
      (c) Appeal.--The Administrator shall establish procedures for
    appeal and review of determinations made under subsection (a).
      (d) Timing.--Offset credits meeting the criteria established
    in subsection (b) shall be issued not later than 2 weeks
    following the verification determination made by the
    Administrator under subsection (a).
      (e) Registration.--The Administrator shall assign a unique
    serial number to and register each offset credit to be issued
    in the Offset Registry established under section 732(d).

    SEC. 738. AUDITS.

      (a) In General.--The Administrator shall, on an ongoing
    basis, conduct random audits of offset projects, offset
    credits, and practices of third-party verifiers. In each year,
    the Administrator shall conduct audits, at minimum, for a
    representative sample of project types and geographic areas.
      (b) Delegation.--The Administrator may delegate to a State or
    tribal government the responsibility for conducting audits
    under this section if the Administrator finds that the program
    proposed by the State or tribal government provides assurances
    equivalent to those provided by the auditing program of the
    Administrator, and that the integrity of the offset program
    under this part will be maintained. Nothing in this subsection
    shall prevent the Administrator from conducting any audit the
    Administrator considers necessary and appropriate.

    SEC. 739. PROGRAM REVIEW AND REVISION.

      At least once every 5 years, the Administrator shall review
    and, based on new or updated information and taking into
    consideration the recommendations of the Advisory Board, update
    and revise--
              (1) the list of eligible project types established
            under section 733;
              (2) the methodologies established, including specific
            activity baselines, under section 734(a);
              (3) the reversal requirements and mechanisms
            established or prescribed under section 734(b);
              (4) measures to improve the accountability of the
            offsets program; and
              (5) any other requirements established under this
            part to ensure the environmental integrity and
            effective operation of this part.

    SEC. 740. EARLY OFFSET SUPPLY.

      (a) Projects Registered Under Other Government-Recognized
    Programs.--Except as provided in subsection (b) or (c), the
    Administrator shall issue one offset credit for each ton of
    carbon dioxide equivalent emissions reduced, avoided, or
    sequestered--
              (1) under an offset project that was started after
            January 1, 2001;
              (2) for which a credit was issued under any
            regulatory or voluntary greenhouse gas emission offset
            program that the Administrator determines--
                      (A) was established under State or tribal law
                    or regulation prior to January 1, 2009, or has
                    been approved by the Administrator pursuant to
                    subsection (e);
                      (B) has developed offset project type
                    standards, methodologies, and protocols through
                    a public consultation process or a peer review
                    process;
                      (C) has made available to the public
                    standards, methodologies, and protocols that
                    require that credited emission reductions,
                    avoidance, or sequestration are permanent,
                    additional, verifiable, and enforceable;
                      (D) requires that all emission reductions,
                    avoidance, or sequestration be verified by a
                    State regulatory agency or an accredited third-
                    party independent verification body;
                      (E) requires that all credits issued are
                    registered in a publicly accessible registry,
                    with individual serial numbers assigned for
                    each ton of carbon dioxide equivalent emission
                    reductions, avoidance, or sequestration; and
                      (F) ensures that no credits are issued for
                    activities for which the entity administering
                    the program, or a program administrator or
                    representative, has funded, solicited, or
                    served as a fund administrator for the
                    development of, the project or activity that
                    caused the emission reduction, avoidance, or
                    sequestration; and
              (3) for which the credit described in paragraph (2)
            is transferred to the Administrator.
      (b) Ineligible Credits.--Subsection (a) shall not apply to
    offset credits that have expired or have been retired,
    canceled, or used for compliance under a program established
    under State or tribal law or regulation.
      (c) Limitation.--Notwithstanding subsection (a)(1), offset
    credits shall be issued under this section--
              (1) only for reductions or avoidance of greenhouse
            gas emissions, or sequestration of greenhouse gases,
            that occur after January 1, 2009; and
              (2) only until the date that is 3 years after the
            date of enactment of this title, or the date that
            regulations promulgated under section 732(a) take
            effect, whichever occurs sooner.
      (d) Retirement of Credits.--The Administrator shall seek to
    ensure that offset credits described in subsection (a)(2) are
    retired for purposes of use under a program described in
    subsection (b).
      (e) Other Programs.--(1) Offset programs that either--
              (A) were not established under State or tribal law;
            or
              (B) were not established prior to January 1, 2009,
    but that otherwise meet all of the criteria of subsection
    (a)(2) may apply to the Administrator to be approved under this
    subsection as an eligible program for early offset credits
    under this section.
      (2) The Administrator shall approve any such program that the
    Administrator determines has criteria and methodologies of at
    least equal stringency to the criteria and methodologies of the
    programs established under State or tribal law that the
    Administrator determines meet the criteria of subsection
    (a)(2). The Administrator may approve types of offsets under
    any such program that are subject to criteria and methodologies
    of at least equal stringency to the criteria and methodologies
    for such types of offsets applied under the programs
    established under State or tribal law that the Administrator
    determines meet the criteria of subsection (a)(2). The
    Administrator shall make a determination on any application
    received under this subsection by no later than 180 days from
    the date of receipt of the application.

    SEC. 741. ENVIRONMENTAL CONSIDERATIONS.

      If the Administrator lists forestry projects as eligible
    offset project types under section 733, the Administrator, in
    consultation with appropriate Federal agencies, shall
    promulgate regulations for the selection and use of species in
    forestry and other relevant land management-related offset
    projects--
              (1) to ensure that native species are given primary
            consideration in such projects;
              (2) to enhance biological diversity in such projects;
              (3) to prohibit the use of federally designated or
            State-designated noxious weeds;
              (4) to prohibit the use of a species listed by a
            regional or State invasive plant authority within the
            applicable region or State; and
              (5) in accordance with widely accepted,
            environmentally sustainable forestry practices.

    SEC. 742. TRADING.

      Section 724 shall apply to the trading of offset credits.

    SEC. 743. INTERNATIONAL OFFSET CREDITS.

      (a) In General.--The Administrator, in consultation with the
    Secretary of State and the Administrator of the United States
    Agency for International Development, may issue, in accordance
    with this section, international offset credits based on
    activities that reduce or avoid greenhouse gas emissions, or
    increase sequestration of greenhouse gases, in a developing
    country. Such credits may be issued for projects pursuant to
    the requirements of this part or as provided in subsection (c),
    (d), or (e).
      (b) Issuance.--
              (1) Regulations.--Not later than 2 years after the
            date of enactment of this title, the Administrator, in
            consultation with the Secretary of State, the
            Administrator of the United States Agency for
            International Development, and any other appropriate
            Federal agency, and taking into consideration the
            recommendations of the Advisory Board, shall promulgate
            regulations for implementing this section. Except as
            otherwise provided in this section, the issuance of
            international offset credits under this section shall
            be subject to the requirements of this part.
              (2) Requirements for international offset credits.--
            The Administrator may issue international offset
            credits only if--
                      (A) the United States is a party to a
                    bilateral or multilateral agreement or
                    arrangement that includes the country in which
                    the project or measure achieving the relevant
                    greenhouse gas emission reduction or avoidance,
                    or greenhouse gas sequestration, has occurred;
                      (B) such country is a developing country; and
                      (C) such agreement or arrangement--
                              (i) ensures that all of the
                            requirements of this part apply to the
                            issuance of international offset
                            credits under this section; and
                              (ii) provides for the appropriate
                            distribution of international offset
                            credits issued.
      (c) Sector-Based Credits.--
              (1) In general.--In order to minimize the potential
            for leakage and to encourage countries to take
            nationally appropriate mitigation actions to reduce or
            avoid greenhouse gas emissions, or sequester greenhouse
            gases, the Administrator, in consultation with the
            Secretary of State and the Administrator of the United
            States Agency for International Development, shall--
                      (A) identify sectors of specific countries
                    with respect to which the issuance of
                    international offset credits on a sectoral
                    basis is appropriate; and
                      (B) issue international offset credits for
                    such sectors only on a sectoral basis.
              (2) Identification of sectors.--
                      (A) General rule.--For purposes of paragraph
                    (1)(A), a sectoral basis shall be appropriate
                    for activities--
                              (i) in countries that have
                            comparatively high greenhouse gas
                            emissions, or comparatively greater
                            levels of economic development; and
                              (ii) that, if located in the United
                            States, would be within a sector
                            subject to the compliance obligation
                            under section 722.
                      (B) Factors.--In determining the sectors and
                    countries for which international offset
                    credits should be awarded only on a sectoral
                    basis, the Administrator, in consultation with
                    the Secretary of State and the Administrator of
                    the United States Agency for International
                    Development, shall consider the following
                    factors:
                              (i) The country's gross domestic
                            product.
                              (ii) The country's total greenhouse
                            gas emissions.
                              (iii) Whether the comparable sector
                            of the United States economy is covered
                            by the compliance obligation under
                            section 722.
                              (iv) The heterogeneity or homogeneity
                            of sources within the relevant sector.
                              (v) Whether the relevant sector
                            provides products or services that are
                            sold in internationally competitive
                            markets.
                              (vi) The risk of leakage if
                            international offset credits were
                            issued on a project-level basis,
                            instead of on a sectoral basis, for
                            activities within the relevant sector.
                              (vii) The capability of accurately
                            measuring, monitoring, reporting, and
                            verifying the performance of sources
                            across the relevant sector.
                              (viii) Such other factors as the
                            Administrator, in consultation with the
                            Secretary of State and the
                            Administrator of the United States
                            Agency for International Development,
                            determines are appropriate to--
                                      (I) ensure the integrity of
                                    the United States greenhouse
                                    gas emissions cap established
                                    under section 703; and
                                      (II) encourage countries to
                                    take nationally appropriate
                                    mitigation actions to reduce or
                                    avoid greenhouse gas emissions,
                                    or sequester greenhouse gases.
              (3) Sectoral basis.--
                      (A) Definition.--In this subsection, the term
                    ``sectoral basis'' means the issuance of
                    international offset credits only for the
                    quantity of sector-wide reductions or avoidance
                    of greenhouse gas emissions, or sector-wide
                    increases in sequestration of greenhouse gases,
                    achieved across the relevant sector of the
                    economy relative to a baseline level of
                    performance established in an agreement or
                    arrangement described in subsection (b)(2)(A)
                    for the sector.
                      (B) Baseline.--The baseline for a sector
                    shall be established at levels of greenhouse
                    gas emissions lower than would occur under a
                    business-as-usual scenario taking into account
                    relevant domestic or international policies or
                    incentives to reduce greenhouse gas emissions,
                    among other factors, and additionality and
                    performance shall be determined on the basis of
                    such baseline.
      (d) Credits Issued by an International Body.--
              (1) In general.--The Administrator, in consultation
            with the Secretary of State, may issue international
            offset credits in exchange for instruments in the
            nature of offset credits that are issued by an
            international body established pursuant to the United
            Nations Framework Convention on Climate Change, to a
            protocol to such Convention, or to a treaty that
            succeeds such Convention. The Administrator may issue
            international offset credits under this subsection only
            if, in addition to the requirements of subsection (b),
            the Administrator has determined that the international
            body that issued the instruments has implemented
            substantive and procedural requirements for the
            relevant project type that provide equal or greater
            assurance of the integrity of such instruments as is
            provided by the requirements of this part.
              (2) Retirement.--The Administrator, in consultation
            with the Secretary of State, shall seek, by whatever
            means appropriate, including agreements, arrangements,
            or technical cooperation with the international issuing
            body described in paragraph (1), to ensure that such
            body--
                      (A) is notified of the Administrator's
                    issuance, under this subsection, of an
                    international offset credit in exchange for an
                    instrument issued by such international body;
                    and
                      (B) provides, to the extent feasible, for the
                    disqualification of the instrument issued by
                    such international body for subsequent use
                    under any relevant foreign or international
                    greenhouse gas regulatory program, regardless
                    of whether such use is a sale, exchange, or
                    submission to satisfy a compliance obligation.
      (e) Offsets From Reduced Deforestation.--
              (1) Requirements.--The Administrator, in accordance
            with the regulations promulgated under subsection
            (b)(1) and an agreement or arrangement described in
            subsection (b)(2)(A), shall issue international offset
            credits for greenhouse gas emission reductions achieved
            through activities to reduce deforestation only if, in
            addition to the requirements of subsection (b)--
                      (A) the activity occurs in--
                              (i) a country listed by the
                            Administrator pursuant to paragraph
                            (2);
                              (ii) a state or province listed by
                            the Administrator pursuant to paragraph
                            (5); or
                              (iii) a country listed by the
                            Administrator pursuant to paragraph
                            (6);
                      (B) except as provided in paragraph (5) or
                    (6), the quantity of the international offset
                    credits is determined by comparing the national
                    emissions from deforestation relative to a
                    national deforestation baseline for that
                    country established, in accordance with an
                    agreement or arrangement described in
                    subsection (b)(2)(A), pursuant to paragraph
                    (4);
                      (C) the reduction in emissions from
                    deforestation has occurred before the issuance
                    of the international offset credit and, taking
                    into consideration relevant international
                    standards, has been demonstrated using ground-
                    based inventories, remote sensing technology,
                    and other methodologies to ensure that all
                    relevant carbon stocks are accounted;
                      (D) the Administrator has made appropriate
                    adjustments, such as discounting for any
                    additional uncertainty, to account for
                    circumstances specific to the country,
                    including its technical capacity described in
                    paragraph (2)(A);
                      (E) the activity is designed, carried out,
                    and managed--
                              (i) in accordance with widely
                            accepted, environmentally sustainable
                            forest management practices;
                              (ii) to promote or restore native
                            forest species and ecosystems where
                            practicable, and to avoid the
                            introduction of invasive nonnative
                            species;
                              (iii) in a manner that gives due
                            regard to the rights and interests of
                            local communities, indigenous peoples,
                            forest-dependent communities, and
                            vulnerable social groups;
                              (iv) with consultations with, and
                            full participation of, local
                            communities, indigenous peoples, and
                            forest-dependent communities, in
                            affected areas, as partners and primary
                            stakeholders, prior to and during the
                            design, planning, implementation, and
                            monitoring and evaluation of
                            activities; and
                              (v) with equitable sharing of profits
                            and benefits derived from offset
                            credits with local communities,
                            indigenous peoples, and forest-
                            dependent communities; and
                      (F) the reduction otherwise satisfies and is
                    consistent with any relevant requirements
                    established by an agreement reached under the
                    auspices of the United Nations Framework
                    Convention on Climate Change.
              (2) Eligible countries.--The Administrator, in
            consultation with the Secretary of State and the
            Administrator of the United States Agency for
            International Development, and in accordance with an
            agreement or arrangement described in subsection
            (b)(2)(A), shall establish, and periodically review and
            update, a list of the developing countries that have
            the capacity to participate in deforestation reduction
            activities at a national level, including--
                      (A) the technical capacity to monitor,
                    measure, report, and verify forest carbon
                    fluxes for all significant sources of
                    greenhouse gas emissions from deforestation
                    with an acceptable level of uncertainty, as
                    determined taking into account relevant
                    internationally accepted methodologies, such as
                    those established by the Intergovernmental
                    Panel on Climate Change;
                      (B) the institutional capacity to reduce
                    emissions from deforestation, including strong
                    forest governance and mechanisms to equitably
                    distribute deforestation resources for local
                    actions; and
                      (C) a land use or forest sector strategic
                    plan that--
                              (i) assesses national and local
                            drivers of deforestation and forest
                            degradation and identifies reforms to
                            national policies needed to address
                            them;
                              (ii) estimates the country's
                            emissions from deforestation and forest
                            degradation;
                              (iii) identifies improvements in data
                            collection, monitoring, and
                            institutional capacity necessary to
                            implement a national deforestation
                            reduction program; and
                              (iv) establishes a timeline for
                            implementing the program and
                            transitioning to low-emissions
                            development.
              (3) Protection of interests.--With respect to an
            agreement or arrangement described in subsection
            (b)(2)(A) with a country that addresses international
            offset credits under this subsection, the
            Administrator, in consultation with the Secretary of
            State and the Administrator of the United States Agency
            for International Development, shall seek to ensure the
            establishment and enforcement by such country of legal
            regimes, processes, standards, and safeguards that--
                      (A) give due regard to the rights and
                    interests of local communities, indigenous
                    peoples, forest-dependent communities, and
                    vulnerable social groups;
                      (B) promote consultations with, and full
                    participation of, forest-dependent communities
                    and indigenous peoples in affected areas, as
                    partners and primary stakeholders, prior to and
                    during the design, planning, implementation,
                    and monitoring and evaluation of activities;
                    and
                      (C) encourage equitable sharing of profits
                    and benefits derived from international offset
                    credits with local communities, indigenous
                    peoples, and forest-dependent communities.
              (4) National deforestation baseline.--A national
            deforestation baseline established under this
            subsection shall--
                      (A) be national in scope;
                      (B) be consistent with nationally appropriate
                    mitigation commitments or actions with respect
                    to deforestation, taking into consideration the
                    average annual historical deforestation rates
                    of the country during a period of at least 5
                    years, the applicable drivers of deforestation,
                    and other factors to ensure additionality;
                      (C) establish a trajectory that would result
                    in zero net deforestation by not later than 20
                    years after the national deforestation baseline
                    has been established;
                      (D) be adjusted over time to take account of
                    changing national circumstances;
                      (E) be designed to account for all
                    significant sources of greenhouse gas emissions
                    from deforestation in the country; and
                      (F) be consistent with the national
                    deforestation baseline, if any, established for
                    such country under section 754(d)(1).
              (5) State-level or province-level activities.--
                      (A) Eligible states or provinces.--The
                    Administrator, in consultation with the
                    Secretary of State and the Administrator of the
                    United States Agency for International
                    Development, shall establish, and periodically
                    review and update, a list of states or
                    provinces in developing countries where--
                              (i) the developing country is not
                            included on the list of countries
                            established pursuant to paragraph
                            (6)(A);
                              (ii) the state or province by itself
                            is a major emitter of greenhouse gases
                            from tropical deforestation on a scale
                            commensurate to the emissions of other
                            countries; and
                              (iii) the state or province meets the
                            eligibility criteria in paragraphs (2)
                            and (3) for the geographic area under
                            its jurisdiction.
                      (B) Activities.--The Administrator may issue
                    international offset credits for greenhouse gas
                    emission reductions achieved through activities
                    to reduce deforestation at a state or
                    provincial level that meet the requirements of
                    this section. Such credits shall be determined
                    by comparing the emissions from deforestation
                    within that state or province relative to the
                    state or province deforestation baseline for
                    that state or province established, in
                    accordance with an agreement or arrangement
                    described in subsection (b)(2)(A), pursuant to
                    subparagraph (C) of this paragraph.
                      (C) State-level or province-level
                    deforestation baseline.--A state-level or
                    province-level deforestation baseline shall--
                              (i) be consistent with any existing
                            nationally appropriate mitigation
                            commitments or actions for the country
                            in which the activity is occurring,
                            taking into consideration the average
                            annual historical deforestation rates
                            of the state or province during a
                            period of at least 5 years, relevant
                            drivers of deforestation, and other
                            factors to ensure additionality;
                              (ii) establish a trajectory that
                            would result in zero net deforestation
                            by not later than 20 years after the
                            state-level or province-level
                            deforestation baseline has been
                            established; and
                              (iii) be designed to account for all
                            significant sources of greenhouse gas
                            emissions from deforestation in the
                            state or province and adjusted to fully
                            account for emissions leakage outside
                            the state or province.
                      (D) Phase out.--Beginning 5 years after the
                    first calendar year for which a covered entity
                    must demonstrate compliance with section
                    722(a), the Administrator shall issue no
                    further international offset credits for
                    eligible state-level or province-level
                    activities to reduce deforestation pursuant to
                    this paragraph.
              (6) Projects and programs to reduce deforestation.--
                      (A) Eligible countries.--The Administrator,
                    in consultation with the Secretary of State and
                    the Administrator of the United States Agency
                    for International Development, shall establish,
                    and periodically review and update, a list of
                    developing countries that--
                              (i) the Administrator determines,
                            based on recent, credible, and reliable
                            emissions data, account for less than 1
                            percent of global greenhouse gas
                            emissions and less than 3 percent of
                            global forest-sector and land use
                            change greenhouse gas emissions; and
                              (ii) have, or in the determination of
                            the Administrator are making a good
                            faith effort to develop, a land use or
                            forest sector strategic plan that meets
                            the criteria described in paragraph
                            (2)(C).
                      (B) Activities.--The Administrator may issue
                    international offset credits for greenhouse gas
                    emission reductions achieved through project or
                    program level activities to reduce
                    deforestation in countries listed under
                    subparagraph (A) that meet the requirements of
                    this section. The quantity of international
                    offset credits shall be determined by comparing
                    the project-level or program-level emissions
                    from deforestation to a deforestation baseline
                    for such project or program established
                    pursuant to subparagraph (C).
                      (C) Project-level or program-level
                    baseline.--A project-level or program-level
                    deforestation baseline shall--
                              (i) be consistent with any existing
                            nationally appropriate mitigation
                            commitments or actions for the country
                            in which the project or program is
                            occurring, taking into consideration
                            the average annual historical
                            deforestation rates in the project or
                            program boundary during a period of at
                            least 5 years, applicable drivers of
                            deforestation, and other factors to
                            ensure additionality;
                              (ii) be designed to account for all
                            significant sources of greenhouse gas
                            emissions from deforestation in the
                            project or program boundary; and
                              (iii) be adjusted to fully account
                            for emissions leakage outside the
                            project or program boundary.
                      (D) Phase out.--(i) Beginning 5 years after
                    the first calendar year for which a covered
                    entity must demonstrate compliance with section
                    722(a), the Administrator shall issue no
                    further international offset credits for
                    project-level or program-level activities as
                    described in this paragraph, except as provided
                    in clause (ii).
                      (ii) The Administrator may extend the phase
                    out deadline for the issuance of international
                    offset credits under this section by up to 8
                    years with respect to eligible activities
                    taking place in a least developed nation, which
                    is a foreign country that the United Nations
                    has identified as among the least developed of
                    developing countries at the time that the
                    Administrator determines to provide an
                    extension, provided that the Administrator, in
                    consultation with the Secretary of State and
                    the Administrator of the United States Agency
                    for International Development, determines the
                    nation--
                              (I) lacks sufficient capacity to
                            adopt and implement effective programs
                            to achieve reductions in deforestation
                            measured against national baselines;
                              (II) is receiving support under part
                            E to develop such capacity; and
                              (III) has developed and is working to
                            implement a credible national strategy
                            or plan to reduce deforestation.
              (7) Deforestation.--In implementing this subsection,
            the Administrator, taking into consideration the
            recommendations of the Advisory Board, may include
            forest degradation, or soil carbon losses associated
            with forested wetlands or peatlands, within the meaning
            of deforestation.
      (f) Modification of Requirements.--In promulgating
    regulations under subsection (b)(1) with respect to the
    issuance of international offset credits under subsection (c),
    (d), or (e), the Administrator, in consultation with the
    Secretary of State and the Administrator of the United States
    Agency for International Development, may modify or omit a
    requirement of this part (excluding the requirements of this
    section) if the Administrator determines that the application
    of that requirement to such subsection is not feasible. In
    modifying or omitting such a requirement on the basis of
    infeasibility, the Administrator, in consultation with the
    Secretary of State and the Administrator of the United States
    Agency for International Development, shall ensure, with an
    adequate margin of safety, the integrity of international
    offset credits issued under this section and of the greenhouse
    gas emissions cap established pursuant to section 703.
      (g) Avoiding Double Counting.--The Administrator, in
    consultation with the Secretary of State, shall seek, by
    whatever means appropriate, including agreements, arrangements,
    or technical cooperation, to ensure that activities on the
    basis of which international offset credits are issued under
    this section are not used for compliance with an obligation to
    reduce or avoid greenhouse gas emissions, or increase
    greenhouse gas sequestration, under a foreign or international
    regulatory system. In addition, no international offset credits
    shall be issued for emission reductions from activities with
    respect to which emission allowances were allocated under
    section 781 for distribution under part E.
      (h) Limitation.--The Administrator shall not issue
    international offset credits generated by projects based on the
    destruction of hydrofluorocarbons.

      PART E--SUPPLEMENTAL EMISSIONS REDUCTIONS FROM REDUCED DEFORESTATION

    SEC. 751. DEFINITIONS.

      In this part:
              (1) Leakage prevention activities.--The term
            ``leakage prevention activities'' means activities in
            developing countries that are directed at preserving
            existing forest carbon stocks, including forested
            wetlands and peatlands, that might, absent such
            activities, be lost through leakage.
              (2) National deforestation reduction activities.--The
            term ``national deforestation reduction activities''
            means activities in developing countries that reduce a
            quantity of greenhouse gas emissions from deforestation
            that is calculated by measuring actual emissions
            against a national deforestation baseline established
            pursuant to section 754(d)(1) and (2).
              (3) Subnational deforestation reduction activities.--
            The term ``subnational deforestation reduction
            activities'' means activities in developing countries
            that reduce a quantity of greenhouse gas emissions from
            deforestation that are calculated by measuring actual
            emissions using an appropriate baseline established by
            the Administrator that is less than national in scope.
              (4) Supplemental emissions reductions.--The term
            ``supplemental emissions reductions'' means greenhouse
            gas emissions reductions achieved from reduced or
            avoided deforestation under this part.
              (5) Usaid.--The term ``USAID'' means the United
            States Agency for International Development.

    SEC. 752. FINDINGS.

      Congress finds that--
              (1) as part of a global effort to mitigate climate
            change, it is in the national interest of the United
            States to assist developing countries to reduce and
            ultimately halt emissions from deforestation;
              (2) deforestation is one of the largest sources of
            greenhouse gas emissions in developing countries,
            amounting to roughly 20 percent of overall emissions
            globally;
              (3) recent scientific analysis shows that it will be
            substantially more difficult to limit the increase in
            global temperatures to less than 2 degrees centigrade
            above preindustrial levels without reducing and
            ultimately halting net emissions from deforestation;
              (4) reducing emissions from deforestation is highly
            cost-effective, compared to many other sources of
            emissions reductions;
              (5) in addition to contributing significantly to
            worldwide efforts to address global warming, this
            assistance will generate significant environmental and
            social cobenefits, including protection of
            biodiversity, ecosystem services, and forest-related
            livelihoods; and
              (6) Under the Bali Action Plan, developed country
            parties to the United Nations Framework Convention on
            Climate Change, including the United States, committed
            to ``enhanced action on the provision of financial
            resources and investment to support action on
            mitigation and adaptation and technology cooperation,''
            including, inter alia, consideration of ``improved
            access to adequate, predictable, and sustainable
            financial resources and financial and technical
            support, and the provision of new and additional
            resources, including official and concessional funding
            for developing country parties''.

    SEC. 753. SUPPLEMENTAL EMISSIONS REDUCTIONS THROUGH REDUCED
                        DEFORESTATION.

      (a) Regulations.--Not later than 2 years after the date of
    enactment of this title, the Administrator, in consultation
    with the Administrator of USAID and any other appropriate
    agencies, shall promulgate regulations establishing a program
    to use emission allowances set aside for this purpose under
    section 781 to achieve the reduction of greenhouse gas
    emissions from deforestation in developing countries in
    accordance with the requirements of this part.
      (b) Objectives.--The objectives of the program established
    under this section shall be to--
              (1) achieve supplemental emissions reductions of at
            least 720,000,000 tons of carbon dioxide equivalent in
            2020, a cumulative amount of at least 6,000,000,000
            tons of carbon dioxide equivalent by December 31, 2025,
            and additional supplemental emissions reductions in
            subsequent years;
              (2) build capacity to reduce deforestation in
            developing countries experiencing deforestation,
            including preparing developing countries to participate
            in international markets for international offset
            credits for reduced emissions from deforestation; and
              (3) preserve existing forest carbon stocks in
            countries where such forest carbon may be vulnerable to
            international leakage, particularly in developing
            countries with largely intact native forests.

    SEC. 754. REQUIREMENTS FOR INTERNATIONAL DEFORESTATION REDUCTION
                        PROGRAM.

      (a) Eligible Countries.--The Administrator may support
    activities under this part only with respect to a developing
    country that--
              (1) the Administrator, in consultation with the
            Administrator of USAID, determines is experiencing
            deforestation or forest degradation or has standing
            forest carbon stocks that may be at risk of
            deforestation or degradation; and
              (2) has entered into a bilateral or multilateral
            agreement or arrangement with the United States
            establishing the conditions of its participation in the
            program established under this part, which shall
            include an agreement to meet the standards established
            under subsection (d) for the activities to which those
            standards apply.
      (b) Activities.--(1) Subject to the requirements of this
    part, the Administrator, in consultation with the Administrator
    of USAID, may support activities to achieve the objectives
    identified in section 753(b), including--
              (A) national deforestation reduction activities;
              (B) subnational deforestation reduction activities,
            including pilot activities that reduce greenhouse gas
            emissions but are subject to significant uncertainty;
              (C) activities to measure, monitor, and verify
            deforestation, avoided deforestation, and deforestation
            rates;
              (D) leakage prevention activities;
              (E) development of measurement, monitoring, and
            verification capacities to enable a country to quantify
            supplemental emissions reductions and to generate for
            sale offset credits from reduced or avoided
            deforestation;
              (F) development of governance structures to reduce
            deforestation and illegal logging;
              (G) enforcement of requirements for reduced
            deforestation or forest conservation;
              (H) efforts to combat illegal logging and increase
            enforcement cooperation;
              (I) providing incentives for policy reforms to
            achieve the objectives identified in section 753(b);
            and
              (J) monitoring and evaluation of the results of the
            activities conducted under this section.
      (2) Activities selected by usaid.--
              (A) The Administrator of USAID, in consultation with
            the Administrator, may select for support and
            implementation pursuant to subsection (c) any of the
            activities described in paragraph (1), consistent with
            this part and the regulations promulgated under
            subsection (d), and subject to the requirement to
            achieve the objectives listed in section 753(b)(1).
              (B) With respect to the activities listed in
            subparagraphs (D) through (J) of paragraph (1), the
            Administrator of USAID, in consultation with the
            Administrator, shall have primary but not exclusive
            responsibility for selecting the activities to be
            supported and implemented.
      (3) Interagency coordination.--The Administrator and the
    Administrator of USAID shall jointly develop and biennially
    update a strategic plan for meeting the objectives listed in
    section 753(b) and shall execute a memorandum of understanding
    delineating the agencies' respective roles in implementing this
    part.
      (c) Mechanisms.--
              (1) In general.--The Administrator may support
            activities to achieve the objectives identified in
            section 753(b) by--
                      (A) developing and implementing programs and
                    projects that achieve such objectives; and
                      (B) distributing emission allowances to a
                    country that is eligible under subsection (a),
                    to any private or public group (including
                    international organizations), or to an
                    international fund established by an
                    international agreement to which the United
                    States is a party, to carry out activities to
                    achieve such objectives.
              (2) Usaid activities.--With respect to activities
            selected and implemented by the Administrator of USAID
            pursuant to (b)(2), the Administrator shall distribute
            emission allowances as provided in subparagraph (1)
            based upon the direction of the Administrator of USAID,
            subject to the availability of allowances for such
            activities.
              (3) Implementation through international
            organizations.--If support is distributed through an
            international organization, the agency responsible for
            selecting activities in accordance with subparagraph
            (b)(1) or (2), in consultation with the Secretary of
            State, shall ensure the establishment and
            implementation of adequate mechanisms to apply and
            enforce the eligibility requirements and other
            requirements of this section.
              (4) Role of the secretary of state.--The
            Administrator may not distribute emission allowances to
            the government of another country or to an
            international organization or international fund unless
            the Secretary of State has concurred with such
            distribution.
      (d) Standards.--The Administrator, in consultation with the
    Administrator of USAID, shall promulgate standards to ensure
    that supplemental emissions reductions achieved through
    supported activities are additional, measurable, verifiable,
    permanent, monitored, and account for leakage and uncertainty.
    In addition, such standards shall--
              (1) require the establishment of a national
            deforestation baseline for each country with national
            deforestation reduction activities that is used to
            account for reductions achieved from such activities;
              (2) provide that a national deforestation baseline
            established under paragraph (1) shall--
                      (A) be national in scope;
                      (B) be consistent with nationally appropriate
                    mitigation commitments or actions with respect
                    to deforestation, taking into consideration the
                    average annual historical deforestation rates
                    of the country during a period of at least 5
                    years and other factors to ensure
                    additionality;
                      (C) establish a trajectory that would result
                    in zero net deforestation by not later than 20
                    years from the date the baseline is
                    established;
                      (D) be adjusted over time to take account of
                    changing national circumstances;
                      (E) be designed to account for all
                    significant sources of greenhouse gas emissions
                    from deforestation in the country; and
                      (F) be consistent with the national
                    deforestation baseline, if any, established for
                    such country under section 743(e)(4);
              (3) with respect to support provided pursuant to
            subsection (b)(1)(A) or (B), require supplemental
            emissions reductions to be achieved and verified prior
            to compensation through the distribution of emission
            allowances under this part;
              (4) with respect to accounting for subnational
            deforestation reduction activities that lack the
            standardized or precise measurement and monitoring
            techniques needed for a full accounting of changes in
            emissions or baselines, or are subject to other sources
            of uncertainty, apply a conservative discount factor to
            reflect the uncertainty regarding the levels of
            reductions achieved;
              (5) ensure that activities under this part shall be
            designed, carried out, and managed--
                      (A) in accordance with widely accepted,
                    environmentally sustainable forestry practices;
                      (B) to promote native species and
                    conservation or restoration of native forests,
                    if practicable, and to avoid the introduction
                    of invasive nonnative species;
                      (C) in a manner that gives due regard to the
                    rights and interests of local communities,
                    indigenous peoples, forest-dependent
                    communities, and vulnerable social groups;
                      (D) with consultations with, and full
                    participation of, local communities, indigenous
                    peoples, and forest-dependent communities in
                    affected areas, as partners and primary
                    stakeholders, prior to and during the design,
                    planning, implementation, and monitoring and
                    evaluation of activities; and
                      (E) with equitable sharing of profits and
                    benefits derived from the activities with local
                    communities, indigenous peoples, and forest-
                    dependent communities; and
              (6) with respect to support for all activities under
            this part, seek to ensure the establishment and
            enforcement by the recipient country of legal regimes,
            standards, processes, and safeguards that--
                      (A) give due regard to the rights and
                    interests of local communities, indigenous
                    peoples, forest-dependent communities, and
                    vulnerable social groups;
                      (B) promote consultations with local
                    communities and indigenous peoples and forest-
                    dependent communities in affected areas, as
                    partners and primary stakeholders, prior to and
                    during the design, planning, implementation,
                    monitoring, and evaluation of activities under
                    this part; and
                      (C) encourage equitable sharing of profits
                    and benefits from incentives for emissions
                    reductions or leakage prevention with local
                    communities, indigenous peoples, and forest-
                    dependent communities.
      (e) Expansion of Scope.--The Administrator, in consultation
    with the Administrator of USAID, may decide, taking into
    account any advice from the Advisory Board, to expand, where
    appropriate, the scope of activities under this part to
    include--
              (1) reduced emissions from forest degradation; or
              (2) reduced soil carbon-derived emissions associated
            with deforestation and degradation of forested wetlands
            and peatlands.
      (f) Accounting.--The Administrator shall establish a publicly
    accessible registry of the supplemental emissions reductions
    achieved through support provided under this part each year,
    after appropriately discounting for uncertainty and other
    relevant factors as required by the standards established under
    subsection (d).
      (g) Transition to National Reductions.--Beginning 5 years
    after the date that a country entered into the agreement or
    arrangement required under subsection (a)(2), the Administrator
    shall provide no further compensation through emission
    allowances to that country under this part for any subnational
    deforestation reduction activities, except that the
    Administrator may extend this period by an additional 5 years
    if the Administrator, in consultation with the Administrator of
    USAID, determines that--
              (1) the country is making substantial progress
            towards adopting and implementing a program to achieve
            reductions in deforestation measured against a national
            baseline;
              (2) the greenhouse gas emissions reductions achieved
            are not resulting in significant leakage; and
              (3) the greenhouse gas emissions reductions achieved
            are being appropriately discounted to account for any
            leakage that is occurring.
    The limitation under this subsection shall not apply to support
    for activities to further the objectives listed in section
    753(b)(2) or (3).
      (h) Coordination With U.S. Foreign Assistance.--Subject to
    the direction of the President, the Administrator and the
    Administrator of USAID shall, to the extent practicable and
    consistent with the objectives of this program, seek to align
    activities under this section with broader development, poverty
    alleviation, or natural resource management objectives and
    initiatives in the recipient country.
      (i) Support as Supplement.--The provision of support for
    activities under this part shall be used to supplement, and not
    to supplant, any other Federal, State, or local support
    available to carry out such qualifying activities under this
    part.

    SEC. 755. REPORTS AND REVIEWS.

      (a) Reports.--Not later than January 1, 2014, and annually
    thereafter, the Administrator and the Administrator of USAID
    shall submit to the Committee on Energy and Commerce and the
    Committee on Foreign Affairs of the House of Representatives,
    and the Committee on Environment and Public Works and the
    Committee on Foreign Relations of the Senate, and make
    available to the public, a report on the support provided under
    this part during the prior fiscal year. The report shall
    include--
              (1) a statement of the quantity of supplemental
            emissions reductions for which compensation in the form
            of emission allowances was provided under this part
            during the prior fiscal year, as registered by the
            Administrator under section 754(f); and
              (2) a description of the national and subnational
            deforestation reduction activities, capacity-building
            activities, and leakage prevention activities supported
            under this part, including a statement of the quantity
            of emission allowances distributed to each recipient
            for each activity during the prior fiscal year, and a
            description of what was accomplished through each of
            the activities.
      (b) Reviews.--Not later than 4 years after the date of
    enactment of this title and every 5 years thereafter, the
    Administrator and the Administrator of USAID and taking into
    consideration any evaluation by or recommendations from the
    Advisory Board established under section 731, shall conduct a
    review of the activities undertaken pursuant to this part and
    make any appropriate changes in the program established under
    this part based on the findings of the review. The review shall
    include the effects of the activities on--
              (1) total documented carbon stocks of each country
            that directly or indirectly received support under this
            part compared with such country's national
            deforestation baseline established under section
            754(d)(1);
              (2) the number of countries with the capacity to
            generate for sale instruments in the nature of offset
            credits from forest-related activities, and the amount
            of such activities;
              (3) forest governance in each country that directly
            or indirectly received support under this part;
              (4) indigenous peoples and forest-dependent
            communities residing in areas affected by such
            activities;
              (5) biodiversity and ecosystem services within
            forested areas associated with the activities;
              (6) international leakage; and
              (7) any program or mechanism established under the
            United Nations Framework Convention on Climate Change
            related to greenhouse gas emissions from deforestation.

    SEC. 756. LEGAL EFFECT OF PART.

              (1) In general.--Nothing in this part supersedes,
            limits, or otherwise affects any restriction imposed by
            Federal law (including regulations) on any interaction
            between an entity located in the United States and an
            entity located in a foreign country.
              (2) Role of the secretary of state.--Nothing in this
            part shall be construed as affecting the role of the
            Secretary of State or the responsibilities of the
            Secretary under section 622 (c) of the Foreign
            Assistance Act of 1961.

            PART F--ENSURING REAL REDUCTIONS IN INDUSTRIAL EMISSIONS

    SEC. 761. PURPOSES.

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

    SEC. 762. INTERNATIONAL NEGOTIATIONS.

      (a) Finding.--Congress finds that the purposes of this part,
    as set forth in section 761, can be most effectively addressed
    and achieved through agreements negotiated between the United
    States and foreign countries.
      (b) Statement of Policy.--It is the policy of the United
    States to work proactively under the United Nations Framework
    Convention on Climate Change, and in other appropriate forums,
    to establish binding agreements, including sectoral agreements,
    committing all major greenhouse gas-emitting nations to
    contribute equitably to the reduction of global greenhouse gas
    emissions.
      (c) Notification of Foreign Countries.--Not later than
    January 1, 2020, the President shall notify foreign countries
    that an International Reserve Allowance Program, as described
    in subpart 2, may apply to primary products produced in a
    foreign country by a sector for which the President has made a
    determination described in section 767(c).

    SEC. 763. DEFINITIONS.

      In this part:
              (1) Carbon leakage.--The term ``carbon leakage''
            means any substantial increase (as determined by the
            Administrator) in greenhouse gas emissions by
            industrial entities located in other countries if such
            increase is caused by an incremental cost of production
            increase in the United States resulting from the
            implementation of this title.
              (2) Eligible industrial sector.--The term ``eligible
            industrial sector'' means an industrial sector
            determined by the Administrator under section 764(b) to
            be eligible to receive emission allowance rebates under
            subpart 1.
              (3) Industrial sector.--The term ``industrial
            sector'' means any sector that is in the manufacturing
            sector (as defined in NAICS codes 31, 32, and 33).
              (4) Naics.--The term ``NAICS'' means the North
            American Industrial Classification System of 2002.
              (5) Output.--The term ``output'' means the total
            tonnage or other standard unit of production (as
            determined by the Administrator) produced by an entity
            in an industrial sector. The output of the cement
            sector is hydraulic cement, and not clinker.
              (6) Primary product.--The term ``primary product''
            means a product manufactured by an eligible industrial
            sector that is--
                      (A) iron, steel, steel mill products
                    (including pipe and tube), aluminum, cement,
                    glass (including flat, container, and specialty
                    glass and fiberglass), pulp, paper, chemicals,
                    or industrial ceramics; or
                      (B) any other manufactured product that is
                    sold in bulk for purposes of further
                    manufacture or inclusion in a finished product.

                  Subpart 1--Emission Allowance Rebate Program

    SEC. 764. ELIGIBLE INDUSTRIAL SECTORS.

      (a) List.--
              (1) Initial list.--Not later than June 30, 2011, the
            Administrator shall publish in the Federal Register a
            list of eligible industrial sectors pursuant to
            subsection (b). Such list shall include the amount of
            the emission allowance rebate per unit of production
            that shall be provided to entities in each eligible
            industrial sector in the following two calendar years
            pursuant to section 765.
              (2) Subsequent lists.--Not later than February 1,
            2013, and every four years thereafter, the
            Administrator shall publish in the Federal Register an
            updated version of the list published under paragraph
            (1).
      (b) Eligible Industrial Sectors.--
              (1) In general.--Not later than June 30, 2011, the
            Administrator shall promulgate a rule designating,
            based on the criteria under paragraph (2), the
            industrial sectors eligible for emission allowance
            rebates under this subpart.
              (2) Presumptively eligible industrial sectors.--
                      (A) Eligibility criteria.--An owner or
                    operator of an entity shall be eligible to
                    receive emission allowance rebates under this
                    subpart if such entity is in an industrial
                    sector that is included in a six-digit
                    classification of the NAICS that meets the
                    criteria in both clauses (i) and (ii), or the
                    criteria in clause (iii).
                              (i) Energy or greenhouse gas
                            intensity.--As determined by the
                            Administrator, the industrial sector
                            had--
                                      (I) an energy intensity of at
                                    least 5 percent, calculated by
                                    dividing the cost of purchased
                                    electricity and fuel costs of
                                    the sector by the value of the
                                    shipments of the sector, based
                                    on data described in
                                    subparagraph (E); or
                                      (II) a greenhouse gas
                                    intensity of at least 5
                                    percent, calculated by
                                    dividing--
                                              (aa) the number 20
                                            multiplied by the
                                            number of tons of
                                            carbon dioxide
                                            equivalent greenhouse
                                            gas emissions
                                            (including direct
                                            emissions from fuel
                                            combustion, process
                                            emissions, and indirect
                                            emissions from the
                                            generation of
                                            electricity used to
                                            produce the output of
                                            the sector) of the
                                            sector based on data
                                            described in
                                            subparagraph (E); by
                                              (bb) the value of the
                                            shipments of the
                                            sector, based on data
                                            described in
                                            subparagraph (E).
                              (ii) Trade intensity.--As determined
                            by the Administrator, the industrial
                            sector had a trade intensity of at
                            least 15 percent, calculated by
                            dividing the value of the total imports
                            and exports of such sector by the value
                            of the shipments plus the value of
                            imports of such sector, based on data
                            described in subparagraph (E).
                              (iii) Very high energy or greenhouse
                            gas intensity.--As determined by the
                            Administrator, the industrial sector
                            had an energy or greenhouse gas
                            intensity, as calculated under clause
                            (i)(I) or (II), of at least 20 percent.
                      (B) Iron and steel sector.--For purposes of
                    this subpart, in carrying out this section and
                    section 765, the Administrator shall consider
                    as in different industrial sectors--
                              (i) entities using integrated iron
                            and steelmaking technologies (including
                            coke ovens, blast furnaces, and other
                            iron-making technologies); and
                              (ii) entities using electric arc
                            furnace technologies.
                      (C) Metal and phosphate production classified
                    under more than one naics code.--For purposes
                    of this subpart, in carrying out this section
                    and section 765, the Administrator shall--
                              (i) aggregate data for the
                            beneficiation or other processing of
                            iron and copper ores and phosphate with
                            subsequent steps in the process of
                            metal and phosphate manufacturing
                            regardless of the NAICS code under
                            which such activity is classified; and
                              (ii) aggregate data for the
                            manufacturing of steel with the
                            manufacturing of steel pipe and tube
                            made from purchased steel in a
                            nonintegrated process.
                      (D) Exclusion.--The petroleum refining sector
                    shall not be an eligible industrial sector.
                      (E) Data sources.--
                              (i) Electricity and fuel costs, value
                            of shipments.--The Administrator shall
                            determine electricity and fuel costs
                            and the value of shipments under this
                            subsection from data from the United
                            States Census of Mineral Industries and
                            the United States Census Annual Survey
                            of Manufacturers. The Administrator
                            shall take the average of data from as
                            many of the years of 2004, 2005, and
                            2006 for which such data are available.
                            If such data are unavailable, the
                            Administrator shall make a
                            determination based upon 2002 or 2006
                            data from the most detailed industrial
                            classification level of Energy
                            Information Agency's Manufacturing
                            Energy Consumption Survey (using 2006
                            data if it is available) and the 2002
                            or 2007 Economic Census of the United
                            States (using 2007 data if it is
                            available). If data from the
                            Manufacturing Energy Consumption Survey
                            are unavailable for any sector at the
                            six-digit classification level in the
                            NAICS, then the Administrator may
                            extrapolate the information necessary
                            to determine the eligibility of a
                            sector under this paragraph from
                            available Manufacturing Energy
                            Consumption Survey data pertaining to a
                            broader industrial category classified
                            in the NAICS. Fuel cost data shall not
                            include the cost of fuel used as
                            feedstock by an industrial sector.
                              (ii) Imports and exports.--The
                            Administrator shall base the value of
                            imports and exports under this
                            subsection on United States
                            International Trade Commission data.
                            The Administrator shall take the
                            average of data from as many of the
                            years of 2004, 2005, and 2006 for which
                            such data are available.
                              (iii) Percentages.--The Administrator
                            shall round the energy intensity,
                            greenhouse gas intensity, and trade
                            intensity percentages under
                            subparagraph (A) to the nearest whole
                            number.
                              (iv) Greenhouse gas emission
                            calculations.--When calculating the
                            tons of carbon dioxide equivalent
                            greenhouse gas emissions for each
                            sector under subparagraph
                            (A)(i)(II)(aa), the Administrator--
                                      (I) shall use the best
                                    available data from as many of
                                    the years 2004, 2005, and 2006
                                    for which such data is
                                    available; and
                                      (II) may, to the extent
                                    necessary with respect to a
                                    sector, use economic and
                                    engineering models and the best
                                    available information on
                                    technology performance levels
                                    for such sector.
              (3) Administrative determination of additional
            eligible industrial sectors.--
                      (A) Individual showing petition.--
                              (i) Petition.--The owner or operator
                            of an entity in an industrial sector
                            may petition the Administrator to
                            designate as eligible industrial
                            sectors under this subpart an entity or
                            a group of entities that--
                                      (I) represent a subsector of
                                    a six-digit section of the
                                    NAICS code; and
                                      (II) meet the eligibility
                                    criteria in both clauses (i)
                                    and (ii) of paragraph (2)(A),
                                    or the eligibility criteria in
                                    clause (iii) of paragraph
                                    (2)(A).
                              (ii) Data.--In making a determination
                            under this subparagraph, the
                            Administrator shall consider data
                            submitted by the petitioner that is
                            specific to the entity, data solicited
                            by the Administrator from other
                            entities in the subsector, if such
                            other entities exist, and data
                            specified in paragraph (2)(E).
                              (iii) Basis of subsector
                            determination.--The Administrator shall
                            determine an entity or group of
                            entities to be a subsector of a six-
                            digit section of the NAICS code based
                            only upon the products manufactured and
                            not the industrial process by which the
                            products are manufactured, except that
                            the Administrator may determine an
                            entity or group of entities that
                            manufacture a product from a virgin
                            material to be a separate subsector
                            from another entity or group of
                            entities that manufacture the same
                            product from recycled material.
                              (iv) Final action.--The Administrator
                            shall take final action on such
                            petition no later than 6 months after
                            the petition is received by the
                            Administrator.
                      (B) Updated trade intensity data.--The
                    Administrator shall designate as eligible to
                    receive emission allowance rebates under this
                    subpart an industrial sector that--
                              (i) met the energy or greenhouse gas
                            intensity criteria in paragraph
                            (2)(A)(i) as of the date of
                            promulgation of the rule under
                            paragraph (1); and
                              (ii) meets the trade intensity
                            criteria in paragraph (2)(A)(ii), using
                            data from any year after 2006.
                      (C) Use of most recent data.--In determining
                    whether to designate a sector or subsector as
                    an eligible industrial sector under this
                    paragraph, the Administrator shall use the most
                    recent data available from the sources
                    described in paragraph (2)(E), rather than the
                    data from the years specified in paragraph
                    (2)(E), to determine the trade intensity of
                    such sector or subsector, but only for
                    determining such trade intensity.

    SEC. 765. DISTRIBUTION OF EMISSION ALLOWANCE REBATES.

      (a) Distribution Schedule.--
              (1) In general.--For each vintage year, the
            Administrator shall distribute allowances pursuant to
            this section no later than October 31 of the preceding
            calendar year. The Administrator shall make such annual
            distributions to the owners and operators of each
            entity in an eligible industrial sector in the amount
            of emission allowances calculated under subsection (b),
            except that--
                      (A) for vintage years 2012 and 2013, the
                    distribution for a covered entity shall be the
                    entity's indirect carbon factor as calculated
                    under subsection (b)(3); and
                      (B) for vintage year 2026 and thereafter, the
                    distribution shall be the amount calculated
                    under subsection (b) multiplied by, except as
                    modified by the President pursuant to section
                    767(c)(3)(A) for a sector--
                              (i) 90 percent for vintage year 2026;
                              (ii) 80 percent for vintage year
                            2027;
                              (iii) 70 percent for vintage year
                            2028;
                              (iv) 60 percent for vintage year
                            2029;
                              (v) 50 percent for vintage year 2030;
                              (vi) 40 percent for vintage year
                            2031;
                              (vii) 30 percent for vintage year
                            2032;
                              (viii) 20 percent for vintage year
                            2033;
                              (ix) 10 percent for vintage year
                            2034; and
                              (x) 0 percent for vintage year 2035
                            and thereafter.
              (2) Resumption of reduction.--If the President has
            modified the percentage stated in paragraph (1)(B)
            under section 767(c)(3)(A), and the President
            subsequently makes a determination under section 767(b)
            for an eligible industrial sector that more than 70
            percent of global output for that sector is produced or
            manufactured in countries that have met at least one of
            the criteria in that subsection, then the reduction
            schedule set forth in paragraph (1)(B) of this
            subsection shall begin in the next vintage year, with
            the percentage reduction based on the amount of the
            distribution of emission allowances under this section
            in the previous year.
              (3) Newly eligible sectors.--In addition to receiving
            a distribution of emission allowances under this
            section in the first distribution occurring after an
            industrial sector is designated as eligible under
            section 764(b)(3), the owner or operator of an entity
            in that eligible industrial sector may receive a
            prorated share of any emission allowances made
            available for distribution under this section that were
            not distributed for the year in which the petition for
            eligibility was granted under section 764(b)(3)(A).
      (b) Calculation of Direct and Indirect Carbon Factors.--
              (1) In general.--
                      (A) Covered entities.--Except as provided in
                    subsection (a), for covered entities that are
                    in eligible industrial sectors, the amount of
                    emission allowance rebates shall be based on
                    the sum of the covered entity's direct and
                    indirect carbon factors.
                      (B) Other eligible entities.--For entities
                    that are in eligible industrial sectors but are
                    not covered entities, the amount of emission
                    allowance rebates shall be based on the
                    entity's indirect carbon factor.
                      (C) New entities.--Not later than 2 years
                    after the date of enactment of this title, the
                    Administrator shall issue regulations governing
                    the distribution of emission allowance rebates
                    for the first and second years of operation of
                    a new entity in an eligible industrial sector.
                    These regulations shall provide for--
                              (i) the distribution of emission
                            allowance rebates to such entities
                            based on comparable entities in the
                            same sector; and
                              (ii) an adjustment in the third and
                            fourth years of operation to reconcile
                            the total amount of emission allowance
                            rebates received during the first and
                            second years of operation to the amount
                            the entity would have received during
                            the first and second years of operation
                            had the appropriate data been
                            available.
              (2) Direct carbon factor.--The direct carbon factor
            for a covered entity for a vintage year is the product
            of--
                      (A) the average output of the covered entity
                    for the two years preceding the year of the
                    distribution; and
                      (B) the most recent calculation of the
                    average direct greenhouse gas emissions
                    (expressed in tons of carbon dioxide
                    equivalent) per unit of output for all covered
                    entities in the sector, as determined by the
                    Administrator under paragraph (4).
              (3) Indirect carbon factor.--
                      (A) In general.--The indirect carbon factor
                    for an entity for a vintage year is the product
                    obtained by multiplying the average output of
                    the entity for the two years preceding the
                    years of the distribution by both the
                    electricity emissions intensity factor
                    determined pursuant to subparagraph (B) and the
                    electricity efficiency factor determined
                    pursuant to subparagraph (C) for the year
                    concerned.
                      (B) Electricity emissions intensity factor.--
                    Each person selling electricity to the owner or
                    operator of an entity in any sector designated
                    as an eligible industrial sector under section
                    764(b) shall provide the owner or operator of
                    the entity and the Administrator, on an annual
                    basis, the electricity emissions intensity
                    factor for the entity. The electricity
                    emissions intensity factor for the entity,
                    expressed in tons of carbon dioxide equivalents
                    per kilowatt hour, is determined by dividing--
                              (i) the annual sum of the hourly
                            product of--
                                      (I) the electricity purchased
                                    by the entity from that person
                                    in each hour (expressed in
                                    kilowatt hours), multiplied by
                                      (II) the marginal or weighted
                                    average tons of carbon dioxide
                                    equivalent per kilowatt hour
                                    that the person selling the
                                    electricity charges to the
                                    entity, taking into account the
                                    entity's retail rate
                                    arrangements, by
                              (ii) the total kilowatt hours of
                            electricity purchased by the entity
                            from that person during that year.
                      (C) Electricity efficiency factor.--The
                    electricity efficiency factor is the average
                    amount of electricity (in kilowatt hours) used
                    per unit of output for all entities in the
                    relevant sector, as determined by the
                    Administrator based on the best available data,
                    including data provided under paragraph (6).
                      (D) Indirect carbon factor reduction.--If an
                    electricity provider received a free allocation
                    of emission allowances pursuant to section
                    782(a), the Administrator shall adjust the
                    indirect carbon factor to avoid rebates to the
                    eligible entity for costs that the
                    Administrator determines were not incurred by
                    the industrial entity because the allowances
                    were freely allocated to the eligible entity's
                    electricity provider and used for the benefit
                    of industrial consumers.
              (4) Greenhouse gas intensity calculations.--The
            Administrator shall calculate the average direct
            greenhouse gas emissions (expressed in tons of carbon
            dioxide equivalent) per unit of output for all covered
            entities in each eligible industrial sector every four
            years using an average of the two most recent years of
            the best available data.
              (5) Ensuring efficiency improvements.--When making
            greenhouse gas calculations, the Administrator shall--
                      (A) limit the average direct greenhouse gas
                    emissions per unit of output, calculated under
                    paragraph (4), for any eligible industrial
                    sector to an amount that is not greater than it
                    was in any previous calculation under this
                    subsection; and
                      (B) limit the electricity emissions intensity
                    factor, calculated under paragraph (3)(B) and
                    resulting from a change in electricity supply,
                    for any entity to an amount that is not greater
                    than it was during any previous year.
              (6) Data sources.--For the purposes of this
            subsection--
                      (A) the Administrator shall use data from the
                    greenhouse gas registry, established under
                    section 713, where it is available; and
                      (B) each owner or operator of an entity in an
                    eligible industrial sector and each department,
                    agency, and instrumentality of the United
                    States shall provide the Administrator with
                    such information as the Administrator finds
                    necessary to determine the direct carbon factor
                    and the indirect carbon factor for each entity
                    subject to this section.
      (c) Total Maximum Distribution.--Notwithstanding subsections
    (a) and (b), the Administrator shall not distribute more
    allowances for any vintage year pursuant to this section than
    are allocated for use under this part pursuant to section 782
    for that vintage year. For any vintage year for which the total
    emission allowance rebates calculated pursuant to this section
    exceed the number of allowances allocated pursuant to section
    782, the Administrator shall reduce each entity's distribution
    on a pro rata basis so that the total distribution under this
    section equals the number of allowances allocated under section
    782.

               Subpart 2--International Reserve Allowance Program

    SEC. 766. INTERNATIONAL RESERVE ALLOWANCE PROGRAM.

      (a) Establishment.--
              (1) In general.--If the President takes an action
            described in section 767(c)(3)(B) with respect to a
            sector then, not later than 24 months after that
            determination, the Administrator shall issue
            regulations--
                      (A) determining an appropriate price for and
                    offering for sale to United States importers
                    international reserve allowances;
                      (B) requiring the submission of appropriate
                    amounts of such allowances in conjunction with
                    the importation into the United States of a
                    primary product produced or manufactured by
                    that sector;
                      (C) exempting from the requirements of
                    subparagraph (B) primary products produced in--
                              (i) foreign countries that the United
                            Nations has identified as among the
                            least developed of developing
                            countries; or
                              (ii) foreign countries that the
                            President has determined to be
                            responsible for less than 0.5 percent
                            of total global greenhouse gas
                            emissions; and
                      (D) prohibiting the introduction into
                    interstate commerce of a primary product
                    without submitting the required number of
                    international reserve allowances in accordance
                    with such regulations, unless the product was
                    produced by a covered entity under this title,
                    or by an entity that is or could be regulated
                    under this title.
              (2) Purpose of program.--The Administrator shall
            establish the program under paragraph (1) in a manner
            that addresses, consistent with international
            agreements to which the United States is a party, the
            competitive imbalance in the costs of producing or
            manufacturing primary products in industrial sectors
            resulting from the difference between--
                      (A) the direct and indirect costs of
                    complying with this title; and
                      (B) the direct and indirect costs, if any, of
                    complying in other countries with greenhouse
                    gas regulatory programs, requirements, export
                    tariffs, or other measures adopted or imposed
                    to reduce greenhouse gas emissions.
              (3) Emission allowance rebates.--The Administrator
            shall take into account the value of emission allowance
            rebates distributed under subpart 1 when making
            calculations under paragraph (2).
              (4) Limitation.--The International Reserve Allowance
            Program may not begin before January 1, 2025.
      (b) Covered Entities.--International reserve allowances may
    not be held by covered entities to comply with section 722.

                     Subpart 3--Presidential Determination

    SEC. 767. PRESIDENTIAL REPORTS AND DETERMINATIONS.

      (a) Report.--Not later than January 1, 2018, the President
    shall submit a report to Congress on the effectiveness of the
    distribution of emission allowance rebates under subpart 1 in
    mitigating carbon leakage in industrial sectors. Such report
    shall also include--
              (1) recommendations on how to better achieve the
            purposes of this part, including an assessment of the
            feasibility and usefulness of an International Reserve
            Allowance Program; and
              (2) an assessment of the amount and duration of
            assistance, including distribution of free allowances,
            being provided to eligible industrial sectors in other
            developed countries to mitigate costs of compliance
            with domestic greenhouse gas reduction programs in such
            countries.
      (b) Presidential Determination.--Not later than June 30,
    2022, and every four years thereafter, the President, in
    consultation with the Administrator and other appropriate
    agencies, shall determine, for each eligible industrial sector,
    whether more than 70 percent of global output for that sector
    is produced or manufactured in countries that have met at least
    one of the following criteria:
              (1) The country is a party to an international
            agreement to which the United States is a party that
            includes a nationally enforceable greenhouse gas
            emissions reduction commitment for that country that is
            at least as stringent as that of the United States.
              (2) The country is a party to a multilateral or
            bilateral emission reduction agreement for that sector
            to which the United States is a party.
              (3) The country has an annual energy or greenhouse
            gas intensity, as described in section 764(b)(2)(A)(i),
            for the sector that is equal to or less than the energy
            or greenhouse gas intensity for such sector in the
            United States in the most recent calendar year for
            which data are available.
              (4) The country has implemented policies, including
            sectoral caps, export tariffs, production fees,
            electricity generation regulations, or greenhouse gas
            emissions fees, that individually or collectively
            impose an incremental increase on the cost of
            production associated with greenhouse gas emissions
            from the sector that is at least 60 percent of the cost
            of complying with this title in the United States for
            such sector, averaged over a two-year period.
      (c) Effect of Presidential Determination.--If the President
    makes a determination under subsection (b) with respect to an
    eligible industrial sector that 70 percent or less of the
    global output for the sector is produced or manufactured in
    countries that have met one or more of the criteria in
    subsection (b), then the President shall, not later than June
    30, 2022, and every four years thereafter--
              (1) assess the extent to which the emission allowance
            rebates provided pursuant to subpart 1 have mitigated
            or addressed, or could mitigate or address, carbon
            leakage in that sector;
              (2) assess the extent to which an International
            Reserve Allowance Program has mitigated or addressed,
            or could mitigate or address, carbon leakage in that
            sector and the feasibility of establishing such a
            program; and
              (3) with respect to that sector--
                      (A) modify the percentage by which direct and
                    indirect carbon factors will be multiplied
                    under section 765(a)(1)(B);
                      (B) implement an International Reserve
                    Allowance Program under section 766 for the
                    products of the sector; or
                      (C) take the actions in both subparagraph (A)
                    and (B).
      (d) Report to Congress.--Not later than June 30, 2022, and
    every four years thereafter, the President shall transmit to
    the Congress a report providing notice of any determination
    made under subsection (b), explaining the reasons for such
    determination, and identifying the actions taken by the
    President under subsection (c).
      (e) Limitation.--The President may only implement an
    International Reserve Allowance Program for sectors producing
    primary products.
      (f) Iron and Steel Sector.--For the purposes of this subpart,
    the Administrator shall consider to be in the same industrial
    sector--
              (1) entities using integrated iron and steelmaking
            technologies (including coke ovens, blast furnaces, and
            other iron-making technologies); and
              (2) entities using electric arc furnace technologies.

                       PART H--DISPOSITION OF ALLOWANCES

    SEC. 781. ALLOCATION OF ALLOWANCES FOR SUPPLEMENTAL REDUCTIONS.

      (a) In General.--The Administrator shall allocate for each
    vintage year the following percentage of the emission
    allowances established under section 721(a), for distribution
    in accordance with part E:
              (1) For vintage years 2012 through 2025, 5 percent.
              (2) For vintage years 2026 through 2030, 3 percent.
              (3) For vintage years 2031 through 2050, 2 percent.
      (b) Adjustment.--The Administrator shall modify the
    percentages set forth in subsection (a) as necessary to ensure
    the achievement of the annual supplemental emission reduction
    objective for 2020, and the cumulative reduction objective
    through 2025, set forth in section 753(b)(1).
      (c) Carryover.--If the Administrator has not distributed all
    of the allowances allocated pursuant to this section for a
    given vintage year by the end of that year, the Administrator
    shall--
              (1) auction the remaining emission allowances under
            section 791 not later than March 31 of the year
            following that vintage year; and
              (2) increase the allocation for the vintage year
            after the vintage year for which emission allowances
            were undistributed by the amount of undistributed
            emission allowances.

    SEC. 782. ALLOCATION OF EMISSION ALLOWANCES.

      (a) Electricity Consumers.--The Administrator shall allocate
    emission allowances for the benefit of electricity consumers,
    to be distributed in accordance with section 783 in the
    following amounts:
              (1) For vintage years 2012 and 2013, 43.75 percent of
            the emission allowances established for each year under
            section 721(a).
              (2) For vintage years 2014 and 2015, 38.89 percent of
            the emission allowances established for each year under
            section 721(a).
              (3) For vintage years 2016 through 2025, 35.00
            percent of the emission allowances established for each
            year under section 721(a).
              (4) For vintage year 2026, 28 percent of the emission
            allowances established for each year under section
            721(a).
              (5) For vintage year 2027, 21 percent of the emission
            allowances established for each year under section
            721(a).
              (6) For vintage year 2028, 14 percent of the emission
            allowances established for each year under section
            721(a).
              (7) For vintage year 2029, 7 percent of the emission
            allowances established for each year under section
            721(a).
      (b) Natural Gas Consumers.--The Administrator shall allocate
    emission allowances for the benefit of natural gas consumers to
    be distributed in accordance with section 784 in the following
    amounts:
              (1) For vintage years 2016 through 2025, 9 percent of
            the emission allowances established for each year under
            section 721(a).
              (2) For vintage year 2026, 7.2 percent of the
            emission allowances established for each year under
            section 721(a).
              (3) For vintage year 2027, 5.4 percent of the
            emission allowances established for each year under
            section 721(a).
              (4) For vintage year 2028, 3.6 percent of the
            emission allowances established for each year under
            section 721(a).
              (5) For vintage year 2029, 1.8 percent of the
            emission allowances established for each year under
            section 721(a).
      (c) Home Heating Oil and Propane Consumers.--The
    Administrator shall allocate emission allowances for the
    benefit of home heating oil and propane consumers to be
    distributed in accordance with section 785 in the following
    amounts:
              (1) For vintage years 2012 and 2013, 1.875 percent of
            the emission allowances established for each year under
            section 721(a).
              (2) For vintage years 2014 and 2015, 1.67 percent of
            the emission allowances established for each year under
            section 721(a).
              (3) For vintage years 2016 through 2025, 1.5 percent
            of the emission allowances established for each year
            under section 721(a).
              (4) For vintage year 2026, 1.2 percent of the
            emission allowances established for each year under
            section 721(a).
              (5) For vintage year 2027, 0.9 percent of the
            emission allowances established for each year under
            section 721(a).
              (6) For vintage year 2028, 0.6 percent of the
            emission allowances established for each year under
            section 721(a).
              (7) For vintage year 2029, 0.3 percent of the
            emission allowances established for each year under
            section 721(a).
      (d) Low Income Consumers.--For each vintage year starting in
    2012, the Administrator shall auction pursuant to section 791
    15 percent of the emission allowances established for each year
    under section 721(a), with the proceeds used for the benefit of
    low income consumers to fund the program set forth in subtitle
    C of title IV of American Clean Energy and Security Act of
    2009.
      (e) Trade-Vulnerable Industries.--The Administrator shall
    allocate emission allowances to energy-intensive, trade-exposed
    entities, to be distributed in accordance with section 765, in
    the following amounts:
              (1) For vintage years 2012 and 2013, up to 2.0
            percent of the emission allowances established for each
            year under section 721(a).
              (2) For vintage year 2014, up to 15 percent of the
            emission allowances established for that year under
            section 721(a).
              (3) For vintage year 2015, up to the product of the
            amount specified in paragraph (2), multiplied by the
            quantity of emission allowances established for 2015
            under section 721(a) divided by the quantity of
            emission allowances established for 2014 under section
            721(a).
              (4) For vintage year 2016, up to the product of the
            amount specified in paragraph (3), multiplied by the
            quantity of emission allowances established for 2015
            under section 721(a) divided by the quantity of
            emission allowances established for 2014 under section
            721(a).
              (5) For vintage years 2017 through 2025, up to the
            product of the amount specified in paragraph (4),
            multiplied by the quantity of emission allowances
            established for that year under section 721(a) divided
            by the quantity of emission allowances established for
            2016 under section 721(a).
              (6) For vintage years 2026 through 2050, up to the
            product of the amount specified in paragraph (4)--
                      (A) multiplied by the quantity of emission
                    allowances established for the applicable year
                    during 2026 through 2050 under section 721(a)
                    divided by the quantity of emission allowances
                    established for 2016 under section 721(a); and
                      (B) multiplied by a factor, not exceeding 100
                    percent, that shall equal 90 percent for 2026
                    and decline 10 percent for each year thereafter
                    until reaching zero,
            except that, if the President sets one or more factors
            for a year under section 767(c)(3)(A), the highest
            factor set (not exceeding 100 percent) shall be used
            for that year instead of the factor specified in
            subparagraph (B).
      (f) Deployment of Carbon Capture and Sequestration
    Technology.--
              (1) Annual allocation.--The Administrator shall
            allocate emission allowances for the deployment of
            carbon capture and sequestration technology to be
            distributed in accordance with section 786 in the
            following amounts:
                      (A) For vintage years 2014 through 2017, 1.75
                    percent of the emission allowances established
                    for each year under section 721(a).
                      (B) For vintage years 2018 and 2019, 4.75
                    percent of the emission allowances established
                    for each year under section 721(a).
                      (C) For vintage years 2020 through 2050, 5
                    percent of the emission allowances established
                    for each year under section 721(a).
              (2) Carryover.--If the Administrator has not
            distributed all of the allowances allocated pursuant to
            this subsection for a given vintage year by the end of
            that year, the Administrator shall--
                      (A) auction those emission allowances under
                    section 791 not later than March 31 of the year
                    following that vintage year; and
                      (B) increase the allocation under this
                    subsection for the vintage year after the
                    vintage year for which emission allowances were
                    undisbursed by the amount of undisbursed
                    emission allowances, but only to the extent
                    that allowances for that later year are to be
                    auctioned.
      (g) Investment in Energy Efficiency and Renewable Energy.--
    The Administrator shall allocate emission allowances to invest
    in energy efficiency and renewable energy as follows:
              (1) To be distributed in accordance with section 132
            of the American Clean Energy and Security Act of 2009
            in the following amounts:
                      (A) For vintage years 2012 through 2015, 9.5
                    percent of the emission allowances established
                    for each year under section 721(a).
                      (B) For vintage years 2016 through 2017, 6.5
                    percent of the emission allowances established
                    for each year under section 721(a).
                      (C) For vintage years 2018 through 2021, 5.5
                    percent of the emission allowances established
                    for each year under section 721(a).
                      (D) For vintage years 2022 through 2025, 1.0
                    percent of the emission allowances established
                    for each year under section 721(a).
                      (E) For vintage years 2026 through 2050, 4.5
                    percent of the emission allowances established
                    for each year under section 721(a).
                      (F) At the same time the vintage year 2022
                    through 2025 allowances are distributed, 3.55
                    percent of emission allowances established
                    under section 721(a) for the vintage year four
                    years greater shall also be distributed (which
                    shall be in addition to the emission allowances
                    in subparagraph (E)).
              (2) To be distributed in accordance with section 201
            of the American Clean Energy and Security Act of 2009,
            for each vintage year from 2012 through 2050, 0.5
            percent of emission allowances established under
            section 721(a).
      (h) Clean Energy Innovation Centers.--For each vintage year
    from 2012 through 2050, the Administrator shall allocate for
    Clean Energy Innovation Centers, 1.5 percent of emission
    allowances established under section 721(a), to be distributed
    in accordance with section 171 of the American Clean Energy and
    Security Act of 2009.
      (i) Investment in Clean Vehicle Technology.--The
    Administrator shall allocate emission allowances to invest in
    the development and deployment of clean vehicles, to be
    distributed in accordance with section 124 of the American
    Clean Energy and Security Act of 2009 in the following amounts:
              (1) For vintage years 2012 through 2017, 3 percent of
            the emission allowances established for each year under
            section 721(a).
              (2) For vintage years 2018 through 2025, 1 percent of
            the emission allowances established for each year under
            section 721(a).
      (j) Domestic Fuel Production.--For vintage years 2014 through
    2026, the Administrator shall allocate 2.0 percent of the
    emission allowances established under section 721(a) to
    domestic refiners, to be distributed in accordance with section
    787.
      (k) Investment in Workers.--The Administrator shall auction
    pursuant to section 791 emission allowances for workers in the
    following amounts and shall report to the Secretary of Labor
    the amount of proceeds from the sale of these allowances:
              (1) For vintage years 2012 through 2021, 0.5 percent
            of the emission allowances established for each year
            under section 721(a).
              (2) For vintage years 2022 through 2050, 1.0 percent
            of the emission allowances established for each year
            under section 721(a).
      (l) Domestic Adaptation.--The Administrator shall allocate
    emission allowances for domestic adaptation as follows:
              (1) To be distributed in accordance with section 453
            of the American Clean Energy and Security Act of 2009
            in the following amounts:
                      (A) For vintage years 2012 through 2021, 0.9
                    percent of the emission allowances established
                    for each year under section 721(a).
                      (B) For vintage years 2022 through 2026, 1.9
                    percent of the emission allowances established
                    for each year under section 721(a).
                      (C) For vintage years 2027 through 2050, 3.9
                    percent of the emission allowances established
                    for each year under section 721(a).
              (2) For vintage year 2012 and thereafter, the
            Administrator shall auction, pursuant to section 791,
            0.1 percent of the emission allowances established for
            each year under section 721(a), and shall deposit the
            proceeds in the Climate Change Health Protection and
            Promotion Fund established by section 467 of the
            American Clean Energy and Security Act of 2009.
      (m) Wildlife and Natural Resource Adaptation.--The
    Administrator shall allocate emission allowances for wildlife
    and natural resource adaptation as follows:
              (1) To be distributed to State agencies in accordance
            with section 480(c)(1) of the American Clean Energy and
            Security Act of 2009 in the following amounts:
                      (A) For vintage years 2012 through 2021,
                    0.385 percent of the emission allowances
                    established for each year under section 721(a).
                      (B) For vintage years 2022 through 2026, 0.77
                    percent of the emission allowances established
                    for each year under section 721(a).
                      (C) For vintage years 2027 through 2050, 1.54
                    percent of the emission allowances established
                    for each year under section 721(a).
              (2) To be auctioned pursuant to section 791, with the
            proceeds to be deposited in the Natural Resources
            Climate Change Adaptation Fund established pursuant to
            section 480(a), in the following amounts:
                      (A) For vintage years 2012 through 2021,
                    0.615 percent of the emission allowances
                    established for each year under section 721(a).
                      (B) For vintage years 2022 through 2026, 1.23
                    percent of the emission allowances established
                    for each year under section 721(a).
                      (C) For vintage years 2027 through 2050, 2.46
                    percent of the emission allowances established
                    for each year under section 721(a).
      (n) International Adaptation.--The Administrator shall
    allocate emission allowances for international adaptation to be
    distributed in accordance with part 2 of subtitle E of title IV
    of the American Clean Energy and Security Act of 2009 in the
    following amounts:
              (1) For vintage years 2012 through 2021, 1.0 percent
            of the emission allowances established for each year
            under section 721(a).
              (2) For vintage years 2022 through 2026, 2.0 percent
            of the emission allowances established for each year
            under section 721(a).
              (3) For vintage years 2027 through 2050, 4.0 percent
            of the emission allowances established for each year
            under section 721(a).
      (o) International Clean Technology Deployment.--The
    Administrator shall allocate emission allowances for
    international clean technology deployment for distribution in
    accordance with subtitle D of title IV of the American Clean
    Energy and Security Act of 2009 in the following amounts:
              (1) For vintage years 2012 through 2021, 1.0 percent
            of the emission allowances established for each year
            under section 721(a).
              (2) For vintage years 2022 through 2026, 2.0 percent
            of the emission allowances established for each year
            under section 721(a).
              (3) For vintage years 2027 through 2050, 4.0 percent
            of the emission allowances established for each year
            under section 721(a).
      (p) Release of Future Allowances.--The Administrator shall
    make future year allowances available by auctioning allowances,
    pursuant to section 791, in the following amounts:
              (1) In each of calendar years 2014 through 2019, a
            string of 0.70 billion allowances with vintage years 12
            to 17 years after the year of the auction, with an
            equal number of allowances from each vintage year in
            the string.
              (2) In each of calendar years 2020 through 2025, a
            string of 0.50 billion allowances with vintage years 12
            to 17 years after the year of the auction, with an
            equal number of allowances from each vintage year in
            the string.
              (3) In each of calendar years 2026 through 2030, a
            string of 0.3 billion allowances with vintage years 12
            to 17 years after the year of the auction, with an
            equal number of allowances from each vintage year in
            the string.
      (q) Deficit Reduction.--
              (1) For each of vintage years 2012 through 2025, any
            allowances not designated for distribution or auction
            pursuant to section 781, subsections (a) through (o) of
            this section, or section 790 shall be auctioned by the
            Administrator pursuant to section 791 and the proceeds
            shall be deposited into the Treasury.
              (2) Unless otherwise specified, any allowances
            allocated pursuant to subsections (a) through (o) and
            not distributed by March 31 of the calendar year
            following the allowance's vintage year, shall be
            auctioned by the Administrator and the proceeds shall
            be deposited into the Treasury.
              (3) For auctions conducted through calendar year 2020
            pursuant to subsection (p), the auction proceeds shall
            be deposited into the Treasury.
      (r) Climate Change Consumer Refund.--
              (1) For each of vintage years 2026 through 2050, the
            Administrator shall auction the following allowances
            established under section 721(a) and deposit the
            proceeds into the Climate Change Consumer Refund
            Account:
                      (A) Any allowances not designated for
                    distribution or auction pursuant to section
                    781, subsections (a) through (p) of this
                    section, or section 790.
                      (B) Unless otherwise specified, any
                    allowances allocated pursuant to subsections
                    (a) through (o) and not distributed by March 31
                    of the calendar year following the allowance's
                    vintage year.
              (2) For auctions conducted pursuant to subsection (p)
            in calendar years 2021 and thereafter, the
            Administrator shall place the proceeds from the sales
            of the these allowances into the Climate Change
            Consumer Refund Account. Funds deposited into the
            Climate Change Consumer Refund Account shall be used as
            specified in section 789 and shall be available for
            expenditure, without further appropriation or fiscal
            year limitation.

    SEC. 783. ELECTRICITY CONSUMERS.

      (a) Definitions.--For purposes of this section:
              (1) Electricity local distribution company.--The term
            ``electricity local distribution company'' means an
            electric utility--
                      (A) that has a legal, regulatory, or
                    contractual obligation to deliver electricity
                    directly to retail consumers in the United
                    States, regardless of whether that entity or
                    another entity sells the electricity as a
                    commodity to those retail consumers; and
                      (B) the retail rates of which, except in the
                    case of a registered electric cooperative, are
                    regulated by a State regulatory authority,
                    regulatory commission, municipality, public
                    utility, or by an Indian tribe pursuant to
                    tribal law.
              (2) Long-term contract generator.--The term ``long-
            term contract generator'' means a qualifying small
            power production facility or a qualifying cogeneration
            facility (within the meaning of section 3(17)(C) or
            3(18)(B) of the Federal Power Act), or a new
            independent power production facility (within the
            meaning of section 416(a)(2) of this Act, except that
            subparagraph (C) of such definition shall not apply for
            purposes of this paragraph), that is--
                      (A) a covered entity;
                      (B) as of the commencement of operation, a
                    facility consisting of one or more utility
                    units with total installed net output capacity
                    (in MWe) of no more than 130 percent of the
                    facility's total planned net output capacity
                    (in MWe);
                      (C) as of the date of enactment of this
                    title, a facility with a power sales agreement
                    executed before January 1, 2007, that governs
                    the facility's electricity sales and provides
                    for sales at a price (whether a fixed price or
                    a price formula) for electricity that does not
                    allow for recovery of the costs of compliance
                    with the limitation on greenhouse gas emissions
                    under this title; and
                      (D) not a merchant coal generator.
              (3) Merchant coal generator.--The term ``merchant
            coal generator'' means an electric generation facility
            that--
                      (A) is a covered entity;
                      (B) derives at least 85 percent of its heat
                    input from coal, petroleum coke, or any
                    combination of these 2 fuels;
                      (C) is not owned by a Federal, State, or
                    regional agency or power authority; and
                      (D) generates electricity for sale to others,
                    provided that such sales are not subject to--
                              (i) retail rate regulation by a State
                            public utility commission; or
                              (ii) self-regulation of rates by a
                            local government, State agency, or
                            electric cooperative.
              (4) State regulatory authority.--The term ``State
            regulatory authority'' has the meaning given that term
            in section 3(17) of the Public Utility Regulatory
            Policies Act of 1978 (16 U.S.C. 2602(17)).
      (b) Electricity Local Distribution Companies.--
              (1) Allocation.--Not later than June 30 of 2011 and
            each calendar year thereafter through 2028, the
            Administrator shall distribute to electricity local
            distribution companies for the benefit of retail
            ratepayers the quantity of emission allowances
            allocated for the electricity sector for the following
            vintage year pursuant to section 782(a), provided that
            the Administrator shall first subtract from such
            quantity and distribute or reserve for distribution the
            quantity of emission allowances for the relevant
            vintage year that are required for distribution under
            subsections (c) and (d) of this section.
              (2) Distribution of allowances based on emissions.--
                      (A) In general.--For each vintage year, 50
                    percent of the emission allowances available
                    for distribution under paragraph (1) shall be
                    distributed by the Administrator among
                    individual electricity local distribution
                    companies ratably based on the annual average
                    carbon dioxide emissions attributable to
                    generation of electricity delivered at retail
                    by each such company during the base period
                    determined under subparagraph (B).
                      (B) Base period.--
                              (i) Vintage years 2012 and 2013.--For
                            vintage years 2012 and 2013, an
                            electricity local distribution
                            company's base period shall be--
                                      (I) calendar years 2006
                                    through 2008; or
                                      (II) any 3 consecutive
                                    calendar years between 1999 and
                                    2008, inclusive, that such
                                    company selects, provided that
                                    the company timely informs the
                                    Administrator of such
                                    selection.
                              (ii) Vintage years 2014 and
                            thereafter.--For vintage years 2014 and
                            thereafter, the base period shall be--
                                      (I) the base period selected
                                    under clause (i); or
                                      (II) any 3 consecutive
                                    calendar years between 2009
                                    through 2012, inclusive, or,
                                    for local distribution
                                    companies with new units that
                                    are not fully operational
                                    before 2012, solely calendar
                                    year 2012, provided that such
                                    company selects a period from
                                    among these options and timely
                                    informs the Administrator of
                                    such selection.
                      (C) Determination of emissions.--As part of
                    the regulations promulgated pursuant to
                    subsection (e), the Administrator, after
                    consultation with the Energy Information
                    Administration, shall determine the average
                    amount of carbon dioxide emissions attributable
                    to generation of electricity delivered at
                    retail by each electricity local distribution
                    company for each of the years 1999 through 2009
                    or the most recent calendar year for which
                    appropriate data are available, taking into
                    account entities' electricity generation,
                    electricity purchases, and electricity sales.
                    Not later than March 31, 2013, the
                    Administrator, after consultation with the
                    Energy Information Administration, shall update
                    such determination to include emissions for any
                    additional calendar years through 2012. Such
                    determinations shall be as precise as
                    practicable, taking into account the nature of
                    data currently available and the nature of
                    markets and regulation in effect in various
                    regions of the country. The following
                    requirements shall apply to such
                    determinations:
                              (i) The Administrator shall determine
                            the amount of fossil fuel-based
                            electricity delivered at retail by each
                            electricity local distribution company,
                            and shall use appropriate emission
                            factors to calculate carbon dioxide
                            emissions associated with the
                            generation of such electricity.
                              (ii) Where it is not practical to
                            determine the precise fuel mix for the
                            electricity delivered at retail by an
                            individual electricity local
                            distribution company, the Administrator
                            may use the best available data,
                            including average data on a regional
                            basis with reference to Regional
                            Transmission Organizations or regional
                            entities (as that term is defined in
                            section 215(a)(7) of the Federal Power
                            Act (16 U.S.C. 824o(a)(7)), to estimate
                            fuel mix and emissions. Different
                            methodologies may be applied in
                            different regions if appropriate to
                            obtain the most accurate estimate.
              (3) Distribution of allowances based on deliveries.--
                      (A) Initial allocation formula.--Except as
                    provided in subparagraph (B), for each vintage
                    year, the Administrator shall distribute 50
                    percent of the emission allowances allocated
                    under paragraph (1) of this subsection among
                    individual electricity local distribution
                    companies ratably based on each electricity
                    local distribution company's annual average
                    retail electricity deliveries for 2006 through
                    2008, unless the owner or operator of the
                    company selects 3 other consecutive years
                    between 1999 and 2008, inclusive, and timely
                    notifies the Administrator of its selection.
                      (B) Updating.--Prior to distributing 2015
                    vintage emission allowances under this
                    subparagraph and at 3-year intervals
                    thereafter, the Administrator shall update the
                    distribution formula under this subparagraph to
                    reflect changes in each electricity local
                    distribution company's service territory since
                    the most recent formula was established. For
                    each successive 3-year period, the
                    Administrator shall distribute allowances
                    ratably among individual electricity local
                    distribution companies based on the product
                    of--
                              (i) each electricity local
                            distribution company's average annual
                            deliveries per customer during calendar
                            years 2006 through 2008, or during the
                            3 alternative consecutive years
                            selected by such company under
                            subparagraph (A); and
                              (ii) the number of customers of such
                            electricity local distribution company
                            in the most recent year in which the
                            formula is updated under this clause.
              (4) Use of allowances.--
                      (A) Ratepayer benefit.--Emission allowances
                    distributed to an electricity local
                    distribution company under this subsection
                    shall be used exclusively for the benefit of
                    retail ratepayers of such electricity local
                    distribution company and may not be used to
                    support electricity sales or deliveries to
                    entities or persons other than such ratepayers.
                      (B) Ratepayer classes.--In using emission
                    allowances distributed under this section for
                    the benefit of ratepayers, an electricity local
                    distribution company shall ensure that
                    ratepayer benefits are distributed--
                              (i) among ratepayer classes ratably
                            based on electricity deliveries to each
                            class; and
                              (ii) equitably among individual
                            ratepayers within each ratepayer class,
                            including entities that receive
                            emission allowances pursuant to part F.
                      (C) Limitation.--An electricity local
                    distribution company shall not use the value of
                    emission allowances distributed under this
                    subsection to provide to any ratepayer a rebate
                    that is based solely on the quantity of
                    electricity delivered to such ratepayer. To the
                    extent an electricity local distribution
                    company uses the value of emission allowances
                    distributed under this subsection to provide
                    rebates, it shall, to the maximum extent
                    practicable, provide such rebates with regard
                    to the fixed portion of ratepayers' bills or as
                    a fixed credit or rebate on electricity bills.
                      (D) Guidelines.--As part of the regulations
                    promulgated under subsection (e), the
                    Administrator shall prescribe specific
                    guidelines for the implementation of the
                    requirements of this paragraph.
              (5) Regulatory proceedings.--
                      (A) Requirement.--No electricity local
                    distribution company shall be eligible to
                    receive emission allowances under this
                    subsection unless the State regulatory
                    authority with authority over such company, or
                    the entity with authority to regulate retail
                    electricity rates of an electricity local
                    distribution company not regulated by a State
                    regulatory authority, has--
                              (i) promulgated a regulation or
                            completed a rate proceeding (or the
                            equivalent, in the case of a ratemaking
                            entity other than a State regulatory
                            authority) that provides for the full
                            implementation of the requirements of
                            paragraph (4) of this subsection; and
                              (ii) made available to the
                            Administrator and the public a report
                            describing, in adequate detail, the
                            manner in which the requirements of
                            paragraph (4) will be implemented.
                      (B) Updating.--The Administrator shall
                    require, as a condition of continued receipt of
                    emission allowances under this subsection by an
                    electricity local distribution company, that a
                    new regulation be promulgated or rate
                    proceeding be completed, and a new report be
                    made available to the Administrator and the
                    public, pursuant to subparagraph (A), not less
                    frequently than every 5 years.
              (6) Plans and reporting.--
                      (A) Regulations.--As part of the regulations
                    promulgated under subsection (e), the
                    Administrator shall prescribe requirements
                    governing plans and reports to be submitted in
                    accordance with this paragraph.
                      (B) Plans.--Not later than April 30 of 2011
                    and every 5 years thereafter through 2026, each
                    electricity local distribution company shall
                    submit to the Administrator a plan, approved by
                    the State regulatory authority or other entity
                    charged with regulating the retail rates of
                    such company, describing such company's plans
                    for the disposition of the value of emission
                    allowances to be received pursuant to this
                    subsection, in accordance with the requirements
                    of this subsection.
                      (C) Reports.--Not later than June 30 of 2013
                    and each calendar year thereafter through 2031,
                    each electricity local distribution company
                    shall submit a report to the Administrator, and
                    to the relevant State regulatory authority or
                    other entity charged with regulating the retail
                    electricity rates of such company, describing
                    the disposition of the value of any emission
                    allowances received by such company in the
                    prior calendar year pursuant to this
                    subsection, including--
                              (i) a description of sales, transfer,
                            exchange, or use by the company for
                            compliance with obligations under this
                            title, of any such emission allowances;
                              (ii) the monetary value received by
                            the company, whether in money or in
                            some other form, from the sale,
                            transfer, or exchange of emission
                            allowances received by the company
                            under this subsection;
                              (iii) the manner in which the
                            company's disposition of emission
                            allowances received under this
                            subsection complies with the
                            requirements of this subsection,
                            including each of the requirements of
                            paragraph (4); and
                              (iv) such other information as the
                            Administrator may require pursuant to
                            subparagraph (A).
                      (D) Publication.--The Administrator shall
                    make available to the public all plans and
                    reports submitted under this subsection,
                    including by publishing such plans and reports
                    on the Internet.
              (7) Audits.--Each year, the Administrator shall audit
            a representative sample of electricity local
            distribution companies to ensure that emission
            allowances distributed under this subsection have been
            used exclusively for the benefit of retail ratepayers
            and that such companies are complying with the
            requirements of this subsection. In selecting companies
            for audit, the Administrator shall take into account
            any credible evidence of noncompliance with such
            requirements. The Administrator shall make available to
            the public a report describing the results of each such
            audit, including by publishing such report on the
            Internet.
              (8) Enforcement.--A violation of any requirement of
            this subsection shall be a violation of this Act. Each
            emission allowance the value of which is used in
            violation of the requirements of this subsection shall
            be a separate violation.
      (c) Merchant Coal Generators.--
              (1) Qualifying emissions.--The qualifying emissions
            for a merchant coal generator for a given calendar year
            shall be the product of the number of megawatt hours of
            electricity generated by such generator in such
            calendar year and the average carbon dioxide emissions
            per megawatt hour generated by such generator during
            calendar years 2006 through 2008, provided that the
            number of megawatt hours in a given calendar year for
            purposes of such calculation shall be reduced in
            proportion to the portion of such generator's carbon
            dioxide emissions that are either--
                      (A) captured and sequestered in such calendar
                    year; or
                      (B) attributable to the combustion or
                    gasification of renewable biomass, such that
                    the generator is not required to hold emission
                    allowances for such emissions.
              (2) Phase-down schedule.--The Administrator shall
            identify an annual phase-down factor, applicable to
            distributions to merchant coal generators for each of
            vintage years 2012 through 2029, that corresponds to
            the overall decline in the amount of emission
            allowances to be allocated to the electricity sector in
            such years pursuant to section 782(a). Such factor
            shall--
                      (A) for vintage year 2012, be equal to 1.0;
                      (B) for each of vintage years 2013 through
                    2029, correspond to the quotient of--
                              (i) the quantity of emission
                            allowances allocated to the electricity
                            sector under section 782(a) for such
                            vintage year; divided by
                              (ii) the quantity of emission
                            allowances allocated to the electricity
                            sector under section 782(a) for vintage
                            year 2012.
              (3) Distribution of emission allowances.--Not later
            than March 1 of 2013 and each calendar year through
            2030, the Administrator shall distribute emission
            allowances of the preceding vintage year to the owner
            or operator of each merchant coal generator equal to
            the product of--
                      (A) 0.5;
                      (B) the qualifying emissions for such
                    merchant coal generator for the preceding year,
                    as determined under paragraph (1); and
                      (C) the phase-down factor for the preceding
                    calendar year, as identified under paragraph
                    (2).
              (4) Adjustment.--
                      (A) Study.--Not later than July 1, 2014, the
                    Administrator, in consultation with the Federal
                    Energy Regulatory Commission, shall complete a
                    study to determine whether the allocation
                    formula under paragraph (3) is resulting in, or
                    is likely to result in, windfall profits to
                    merchant coal generators or substantially
                    disparate treatment of merchant coal generators
                    operating in different markets or regions.
                      (B) Regulation.--If the Administrator, in
                    consultation with the Federal Energy Regulatory
                    Commission, makes an affirmative finding of
                    windfall profits or disparate treatment under
                    subparagraph (A), the Administrator shall, not
                    later than 18 months after the completion of
                    the study described in subparagraph (A),
                    promulgate regulations providing for the
                    adjustment of the allocation formula under
                    paragraph (3) to mitigate, to the extent
                    practicable, such windfall profits, if any, and
                    such disparate treatment, if any.
              (5) Limitation on allowances.--Notwithstanding
            paragraph (3) or (4), for any vintage year the
            Administrator shall distribute under this subsection no
            more than 10 percent of the total quantity of emission
            allowances available for such vintage year for
            distribution to the electricity sector under section
            782(a). If the quantity of emission allowances that
            would otherwise be distributed pursuant to paragraph
            (3) or (4) for any vintage year would exceed such
            limit, the Administrator shall distribute 10 percent of
            the total emission allowances available for
            distribution under section 782(a) for such vintage year
            ratably among merchant coal generators based on the
            applicable formula under paragraph (3) or (4).
      (d) Generators With Long-Term Power Purchase Agreements.--
              (1) Reserved allowances.--Notwithstanding subsections
            (b) and (c) of this section, the Administrator shall
            withhold from distribution to electricity local
            distribution companies a number of emission allowances
            equal to 105 percent of the emission allowances the
            Administrator anticipates will be distributed to long-
            term contract generators under this subsection. If not
            required to distribute all of these reserved allowances
            under this subsection, the Administrator shall
            distribute any remaining emission allowances to the
            electricity local distribution companies in accordance
            with subsection (b).
              (2) Distribution.--Not later than March 1 of 2013 and
            each calendar year through 2030, the Administrator
            shall distribute to the owner or operator of each long-
            term contract generator the number of emission
            allowances of the preceding vintage year that are equal
            to the number of tons of carbon dioxide emitted as a
            result of a qualifying long-term power purchase
            agreement referred to in subsection (a)(2)(C).
              (3) Duration.--A long-term contract generator shall
            cease to be eligible to receive allocations under this
            subsection upon the earliest of the following dates:
                      (A) The date when the facility no longer
                    qualifies as a qualifying small power
                    production facility or a qualifying
                    cogeneration facility (within the meaning of
                    section 3(17)(C) or 3(18)(B) of the Federal
                    Power Act), or a new independent power
                    production facility (within the meaning of
                    section 416(a)(2) of this Act, except that
                    subparagraph (C) of such definition shall not
                    apply for purposes of this clause).
                      (B) The date when the facility no longer
                    meets the total installed net output capacity
                    criterion required to be met as of the
                    commencement of operation in subsection
                    (a)(2)(B).
                      (C) The date when the power purchase
                    agreement referred to in subsection (a)(2)(C)--
                              (i) expires;
                              (ii) is terminated; or
                              (iii) is amended in any way that
                            changes the location of the facility,
                            the price (whether a fixed price or
                            price formula) for electricity sold
                            under such agreement, the quantity of
                            electricity sold under the agreement,
                            or the expiration or termination date
                            of the agreement.
              (4) Eligibility.--To be eligible to receive allowance
            distributions under this subsection, the owner or
            operator of a long-term contract generator shall submit
            each of the following in writing to the Administrator
            within 180 days after the date of enactment of this
            title, and not later than September 30 of each vintage
            year for which such generator wishes to receive
            emission allowances:
                      (A) A certificate of representation described
                    in section 700(15).
                      (B) An identification of each owner and each
                    operator of the facility.
                      (C) An identification of the units at the
                    facility and the location of the facility.
                      (D) A written certification by the designated
                    representative that the facility meets all the
                    requirements of the definition of a long-term
                    contract generator.
                      (E) The expiration date of the power purchase
                    agreement referred to in subsection (a)(2)(C).
                      (F) A copy of the power purchase agreement
                    referred to in subsection (a)(2)(C).
              (5) Notification.--Not later than 30 days after a
            facility loses, in accordance with paragraph (3), its
            eligibility for emission allowances distributed
            pursuant to this subsection, the designated
            representative of such facility shall notify the
            Administrator in writing when, and on what basis, the
            facility lost its eligibility to receive emission
            allowances.
      (e) Regulations.--Not later than 2 years after the date of
    enactment of this title, the Administrator, in consultation
    with the Federal Energy Regulatory Commission, shall promulgate
    regulations to implement the requirements of this section.

    SEC. 784. NATURAL GAS CONSUMERS.

      (a) Definitions.--For purposes of this section:
              (1) Natural gas local distribution company.--The term
            ``natural gas local distribution company'' means a
            natural gas local distribution company that is a
            covered entity.
              (2) Cost-effective.--The term ``cost-effective'',
            with respect to an energy efficiency program, means
            that the program meets the Total Resource Cost Test,
            which requires that the net present value of economic
            benefits over the life of the program, including
            avoided supply and delivery costs and deferred or
            avoided investments, is greater than the net present
            value of the economic costs over the life of the
            program, including program costs and incremental costs
            borne by the energy consumer.
      (b) Allocation.--Not later than June 30 of 2015 and each
    calendar year thereafter through 2028, the Administrator shall
    distribute to natural gas local distribution companies for the
    benefit of retail ratepayers the quantity of emission
    allowances allocated for the following vintage year pursuant to
    section 782(b). Such allowances shall be distributed among
    local natural gas distribution companies based on the following
    formula:
              (1) Initial formula.--Except as provided in paragraph
            (2), for each vintage year, the Administrator shall
            distribute emission allowances among natural gas local
            distribution companies ratably based on each such
            company's annual average retail natural gas deliveries
            for 2006 through 2008, unless the owner or operator of
            the company selects 3 other consecutive years between
            1999 and 2008, inclusive, and timely notifies the
            Administrator of its selection.
              (2) Updating.--Prior to distributing 2019 vintage
            emission allowances and at 3-year intervals thereafter,
            the Administrator shall update the distribution formula
            under this subsection to reflect changes in each
            natural gas local distribution company's service
            territory since the most recent formula was
            established. For each successive 3-year period, the
            Administrator shall distribute allowances ratably among
            natural gas local distribution companies based on the
            product of--
                      (A) each natural gas local distribution
                    company's average annual natural gas deliveries
                    per customer during calendar years 2006 through
                    2008, or during the 3 alternative consecutive
                    years selected by such company under paragraph
                    (1); and
                      (B) the number of customers of such natural
                    gas local distribution company in the most
                    recent year in which the formula is updated
                    under this paragraph.
      (c) Use of Allowances.--
              (1) Ratepayer benefit.--Emission allowances
            distributed to a natural gas local distribution company
            under this section shall be used exclusively for the
            benefit of retail ratepayers of such natural gas local
            distribution company and may not be used to support
            natural gas sales or deliveries to entities or persons
            other than such ratepayers.
              (2) Ratepayer classes.--In using emission allowances
            distributed under this section for the benefit of
            ratepayers, a natural gas local distribution company
            shall ensure that ratepayer benefits are distributed--
                      (A) among ratepayer classes ratably based on
                    natural gas deliveries to each class; and
                      (B) equitably among individual ratepayers
                    within each ratepayer class.
              (3) Limitation.--A natural gas local distribution
            company shall not use the value of emission allowances
            distributed under this section to provide to any
            ratepayer a rebate that is based solely on the quantity
            of natural gas delivered to such ratepayer. To the
            extent a natural gas local distribution company uses
            the value of emission allowances distributed under this
            section to provide rebates, it shall, to the maximum
            extent practicable, provide such rebates with regard to
            the fixed portion of ratepayers' bills or as a fixed
            creditor rebate on natural gas bills.
              (4) Energy efficiency programs.--The value of no less
            than one third of the emission allowances distributed
            to natural gas local distribution companies pursuant to
            this section in any calendar year shall be used for
            cost-effective energy efficiency programs for natural
            gas consumers. Such programs must be authorized and
            overseen by the State regulatory authority, or by the
            entity with regulatory authority over retail natural
            gas rates in the case of a natural gas local
            distribution company that is not regulated by a State
            regulatory authority.
              (5) Guidelines.--As part of the regulations
            promulgated under subsection (h), the Administrator
            shall prescribe specific guidelines for the
            implementation of the requirements of this subsection.
      (d) Regulatory Proceedings.--
              (1) Requirement.--No natural gas local distribution
            company shall be eligible to receive emission
            allowances under this section unless the State
            regulatory authority with authority over such company,
            or the entity with authority to regulate retail rates
            of a natural gas local distribution company not
            regulated by a State regulatory authority, has--
                      (A) promulgated a regulation or completed a
                    rate proceeding (or the equivalent, in the case
                    of a ratemaking entity other than a State
                    regulatory authority) that provides for the
                    full implementation of the requirements of
                    subsection (c); and
                      (B) made available to the Administrator and
                    the public a report describing, in adequate
                    detail, the manner in which the requirements of
                    subsection (c) will be implemented.
              (2) Updating.--The Administrator shall require, as a
            condition of continued receipt of emission allowances
            under this section, that a new regulation be
            promulgated or rate proceeding be completed, and a new
            report be made available to the Administrator and the
            public, pursuant to paragraph (1), not less frequently
            than every 5 years.
      (e) Plans and Reporting.--
              (1) Regulations.--As part of the regulations
            promulgated under subsection (h), the Administrator
            shall prescribe requirements governing plans and
            reports to be submitted in accordance with this
            subsection.
              (2) Plans.--Not later than April 30 of 2015 and every
            5 years thereafter through 2025, each natural gas local
            distribution company shall submit to the Administrator
            a plan, approved by the State regulatory authority or
            other entity charged with regulating the retail rates
            of such company, describing such company's plans for
            the disposition of the value of emission allowances to
            be received pursuant to this section, in accordance
            with the requirements of this section.
              (3) Reports.--Not later than June 30 of 2017 and each
            calendar year thereafter through 2031, each natural gas
            local distribution company shall submit a report to the
            Administrator, approved by the relevant State
            regulatory authority or other entity charged with
            regulating the retail natural gas rates of such
            company, describing the disposition of the value of any
            emission allowances received by such company in the
            prior calendar year pursuant to this subsection,
            including--
                      (A) a description of sales, transfer,
                    exchange, or use by the company for compliance
                    with obligations under this title, of any such
                    emission allowances;
                      (B) the monetary value received by the
                    company, whether in money or in some other
                    form, from the sale, transfer, or exchange of
                    emission allowances received by the company
                    under this section;
                      (C) the manner in which the company's
                    disposition of emission allowances received
                    under this subsection complies with the
                    requirements of this section, including each of
                    the requirements of subsection (c);
                      (D) the cost-effectiveness of, and energy
                    savings achieved by, energy efficiency programs
                    supported through such emission allowances; and
                      (E) such other information as the
                    Administrator may require pursuant to paragraph
                    (1).
              (4) Publication.--The Administrator shall make
            available to the public all plans and reports submitted
            by natural gas local distribution companies under this
            subsection, including by publishing such plans and
            reports on the Internet.
      (f) Audits.--Each year, the Administrator shall audit a
    representative sample of natural gas local distribution
    companies to ensure that emission allowances distributed under
    this section have been used exclusively for the benefit of
    retail ratepayers and that such companies are complying with
    the requirements of this section. In selecting companies for
    audit, the Administrator shall take into account any credible
    evidence of noncompliance with such requirements. The
    Administrator shall make available to the public a report
    describing the results of each such audit, including by
    publishing such report on the Internet.
      (g) Enforcement.--A violation of any requirement of this
    section shall be a violation of this Act. Each emission
    allowance the value of which is used in violation of the
    requirements of this section shall be a separate violation.
      (h) Regulations.--Not later than January 1, 2014, the
    Administrator, in consultation with the Federal Energy
    Regulatory Commission, shall promulgate regulations to
    implement the requirements of this section.

    SEC. 785. HOME HEATING OIL AND PROPANE CONSUMERS.

      (a) Definitions.--For purposes of this section:
              (1) Carbon content.--The term ``carbon content''
            means the amount of carbon dioxide that would be
            emitted as a result of the combustion of a fuel.
              (2) Cost-effective.--The term ``cost-effective'' has
            the meaning given that term in section 784(a)(2).
      (b) Allocation.--Not later than September 30 of each of
    calendar years 2012 through 2029, the Administrator shall
    distribute among the States, in accordance with this section,
    the quantity of emission allowances allocated pursuant to
    section 782(c).
      (c) Distribution Among States.--The Administrator shall
    distribute emission allowances among the States under this
    section each year ratably based on the ratio of--
              (1) the carbon content of home heating oil and
            propane sold to consumers within each State in the
            preceding year for residential or commercial uses; to
              (2) the carbon content of home heating oil and
            propane sold to consumers within the United States in
            the preceding year for residential or commercial uses.
      (d) Use of Allowances.--
              (1) In general.--States shall use emission allowances
            distributed under this section exclusively for the
            benefit of consumers of home heating oil or propane for
            residential or commercial purposes. Such proceeds shall
            be used exclusively for--
                      (A) cost-effective energy efficiency programs
                    for consumers that use home heating oil or
                    propane for residential or commercial purposes;
                    or
                      (B) rebates or other direct financial
                    assistance programs for consumers of home
                    heating oil or propane used for residential or
                    commercial purposes.
              (2) Administration and delivery mechanisms.--In
            administering programs supported by this section,
            States shall--
                      (A) use no less than 50 percent of the value
                    of emission allowances received under this
                    section for cost-effective energy efficiency
                    programs to reduce consumers' overall fuel
                    costs;
                      (B) to the extent practicable, deliver
                    consumer support under this section through
                    existing energy efficiency and consumer energy
                    assistance programs or delivery mechanisms,
                    including, where appropriate, programs or
                    mechanisms administered by parties other than
                    the State; and
                      (C) seek to coordinate the administration and
                    delivery of energy efficiency and consumer
                    energy assistance programs supported under this
                    section, with one another and with existing
                    programs for various fuel types, so as to
                    deliver comprehensive, fuel-blind, coordinated
                    programs to consumers.
      (e) Reporting.--Each State receiving emission allowances
    under this section shall submit to the Administrator, within 12
    months of each receipt of such allowances, a report, in
    accordance with such requirements as the Administrator may
    prescribe, that--
              (1) describes the State's use of emission allowances
            distributed under this section, including a description
            of the energy efficiency and consumer assistance
            programs supported with such allowances;
              (2) demonstrates the cost-effectiveness of, and the
            energy savings achieved by, energy efficiency programs
            supported under this section; and
              (3) includes a report prepared by an independent
            third party, in accordance with such regulations as the
            Administrator may promulgate, evaluating the
            performance of the energy efficiency and consumer
            assistance programs supported under this section.
      (f) Enforcement.--If the Administrator determines that a
    State is not in compliance with this section, the Administrator
    may withhold a portion of the emission allowances, the quantity
    of which is equal to up to twice the quantity of the allowances
    that the State failed to use in accordance with the
    requirements of this section, that such State would otherwise
    be eligible to receive under this section in later years.
    Allowances withheld pursuant to this subsection shall be
    distributed among the remaining States ratably in accordance
    with the formula in subsection (c).

    SEC. 786. COMMERCIAL DEPLOYMENT OF CARBON CAPTURE AND SEQUESTRATION
                        TECHNOLOGIES.

      (a) Regulations.--Not later than 2 years after the date of
    enactment of this title, the Administrator shall promulgate
    regulations providing for the distribution of emission
    allowances allocated pursuant to section 782(f), pursuant to
    the requirements of this section, to support the commercial
    deployment of carbon capture and sequestration technologies in
    both electric power generation and industrial operations.
      (b) Eligibility Criteria.--To be eligible to receive emission
    allowances under this section, the owner or operator of a
    project must--
              (1) implement carbon capture and sequestration
            technology--
                      (A) at an electric generating unit that--
                              (i) has a nameplate capacity of 200
                            megawatts or more;
                              (ii) in the case of a retrofit
                            application, applies the carbon capture
                            and sequestration technology to the
                            flue gas from at least 200 megawatts of
                            the total nameplate generating capacity
                            of the unit, provided that clause (i)
                            shall apply without exception;
                              (iii) derives at least 50 percent of
                            its annual fuel input from coal,
                            petroleum coke, or any combination of
                            these 2 fuels; and
                              (iv) upon implementation of capture
                            and sequestration technology, will
                            achieve an emission limit that is at
                            least a 50 percent reduction in
                            emissions of the carbon dioxide
                            produced by--
                                      (I) the unit, measured on an
                                    annual basis, determined in
                                    accordance with section
                                    812(b)(2); or
                                      (II) in the case of retrofit
                                    applications under clause (ii),
                                    the treated portion of flue gas
                                    from the unit, measured on an
                                    annual basis, determined in
                                    accordance with section
                                    812(b)(2); or
                      (B) at an industrial source that--
                              (i) absent carbon capture and
                            sequestration, would emit greater than
                            50,000 tons per year of carbon dioxide;
                              (ii) upon implementation, will
                            achieve an emission limit that is at
                            least a 50 percent reduction in
                            emissions of the carbon dioxide
                            produced by the emission point,
                            measured on an annual basis, determined
                            in accordance with section 812(b)(2);
                            and
                              (iii) does not produce a liquid
                            transportation fuel from a solid
                            fossil-based feedstock;
              (2) geologically sequester carbon dioxide at a site
            that meets all applicable permitting and certification
            requirements for geologic sequestration, or, pursuant
            to such requirements as the Administrator may prescribe
            by regulation, convert captured carbon dioxide to a
            stable form that will safely and permanently sequester
            such carbon dioxide;
              (3) meet all other applicable State and Federal
            permitting requirements; and
              (4) be located in the United States.
      (c) Phase I Distribution to Electric Generating Units.--
              (1) Application.--This subsection shall apply only to
            projects at the first 6 gigawatts of electric
            generating units, measured in cumulative generating
            capacity of such units.
              (2) Distribution.--The Administrator shall distribute
            emission allowances allocated under section 782(f) to
            the owner or operator of each eligible project at an
            electric generating unit in a quantity equal to the
            quotient obtained by dividing--
                      (A) the product obtained by multiplying--
                              (i) the number of metric tons of
                            carbon dioxide emissions avoided
                            through capture and sequestration of
                            emissions by the project, as determined
                            pursuant to such methodology as the
                            Administrator shall prescribe by
                            regulation; and
                              (ii) a bonus allowance value,
                            pursuant to paragraph (3); by
                      (B) the average fair market value of an
                    emission allowance during the preceding year.
              (3) Bonus allowance values.--
                      (A) For a generating unit achieving the
                    capture and sequestration of 85 percent or more
                    of the carbon dioxide that otherwise would be
                    emitted by such unit, the bonus allowance value
                    shall be $90.
                      (B) The Administrator shall by regulation
                    establish a bonus allowance value for each rate
                    of lower capture and sequestration achieved by
                    a generating unit, from a minimum of $50 per
                    ton for a 50 percent rate and varying directly
                    with increasing rates of capture and
                    sequestration up to $90 per ton for an 85
                    percent rate.
                      (C) For a generating unit that achieves the
                    capture and sequestration of at least 50
                    percent of the carbon dioxide that otherwise
                    would be emitted by such unit by not later than
                    January 1, 2017, the otherwise applicable bonus
                    allowance value under this paragraph shall be
                    increased by $10, provided that the owner of
                    such unit notifies the Administrator of its
                    intent to achieve such rate of capture and
                    sequestration by not later than January 1,
                    2012.
                      (D) For a carbon capture and sequestration
                    project sequestering in a geological formation
                    for purposes of enhanced hydrocarbon recovery,
                    the Administrator shall, by regulation, reduce
                    the applicable bonus allowance value under this
                    paragraph to reflect the lower net cost of the
                    project when compared to sequestration into
                    geological formations solely for purposes of
                    sequestration.
                      (E) All monetary values in this section shall
                    be adjusted annually for inflation.
      (d) Phase II Distribution to Electric Generating Units.--
              (1) Application.--This subsection shall apply only to
            the distribution of emission allowances to carbon
            capture and sequestration projects at electric
            generating units after the capacity threshold
            identified in subsection (c)(1) is reached.
              (2) Regulations.--Not later than 2 years prior to the
            date on which the capacity threshold identified in
            subsection (c)(1) is projected to be reached, the
            Administrator shall promulgate regulations to govern
            the distribution of emission allowances to the owners
            or operators of eligible projects under this
            subsection.
              (3) Reverse auctions.--
                      (A) In general.--Except as provided in
                    paragraph (4), the regulations promulgated
                    under paragraph (2) shall provide for the
                    distribution of emission allowances to the
                    owners or operators of eligible projects under
                    this subsection through reverse auctions, which
                    shall be held no less frequently than once each
                    calendar year. The Administrator may establish
                    a separate auction for each of no more than 5
                    different project categories, defined on the
                    basis of coal type, capture technology,
                    geological formation type, new unit versus
                    retrofit application, such other factors as the
                    Administrator may prescribe, or any combination
                    thereof. The Administrator may establish
                    appropriate minimum rates of capture and
                    sequestration in implementing this paragraph.
                      (B) Auction process.--At each reverse
                    auction--
                              (i) the Administrator shall solicit
                            bids from eligible projects;
                              (ii) eligible projects participating
                            in the auction shall submit a bid
                            including the desired level of carbon
                            dioxide sequestration incentive per ton
                            and the estimated quantity of carbon
                            dioxide that the project will
                            permanently sequester over 10 years;
                            and
                              (iii) the Administrator shall select
                            bids, within each auction, for the
                            sequestration amount submitted,
                            beginning with the eligible project
                            submitting the bid for the lowest level
                            of sequestration incentive on a per ton
                            basis and meeting such other
                            requirements as the Administrator may
                            specify, until the amount of funds
                            available for the reverse auction is
                            committed.
                      (C) Form of distribution.--The Administrator
                    shall provide deployment incentives to the
                    owners or operators of eligible projects
                    selected through a reverse auction under this
                    paragraph pursuant to a formula equivalent to
                    that described in subsection (c)(2), except
                    that the incentive level that is bid by the
                    entity shall be substituted for the bonus
                    allowance value.
              (4) Alternative distribution method.--
                      (A) In general.--If the Administrator
                    determines that reverse auctions would not
                    provide for efficient and cost-effective
                    commercial deployment of carbon capture and
                    sequestration technologies, the Administrator
                    may instead, through regulations promulgated
                    under paragraph (2) or (5), prescribe a
                    schedule for the award of bonus allowances to
                    the owners or operators of eligible projects
                    under this subsection, in accordance with the
                    requirements of this paragraph.
                      (B) Multiple tranches.--The Administrator
                    shall divide emission allowances available for
                    distribution to the owners or operators of
                    eligible projects into a series of tranches,
                    each supporting the deployment of a specified
                    quantity of cumulative electric generating
                    capacity utilizing carbon capture and
                    sequestration technology, each of which shall
                    not be greater than 6 gigawatts.
                      (C) Method of distribution.--The
                    Administrator shall distribute emission
                    allowances within each tranche, on a first-
                    come, first-served basis--
                              (i) based on the date of full-scale
                            operation of capture and sequestration
                            technology; and
                              (ii) pursuant to a formula, similar
                            to that set forth in subsection (c)(2)
                            (except that the Administrator shall
                            prescribe bonus allowance values
                            different than those set forth in
                            subsection (c)(2)), establishing the
                            number of allowances to be distributed
                            per ton of carbon dioxide sequestered
                            by the project.
                      (D) Requirements.--For each tranche
                    established pursuant to subparagraph (A), the
                    Administrator shall establish a schedule for
                    distributing emission allowances that--
                              (i) is based on a sliding scale that
                            provides higher bonus allowance values
                            for projects achieving higher rates of
                            capture and sequestration;
                              (ii) for each capture and
                            sequestration rate, establishes a bonus
                            allowance value that is lower than that
                            established for such rate in the
                            previous tranche (or, in the case of
                            the first tranche, than that
                            established for such rate under
                            subsection (c)(3)); and
                              (iii) may establish different bonus
                            allowance levels for no more than 5
                            different project categories, defined
                            by coal type, capture technology,
                            geological formation type, new unit
                            versus retrofit application, such other
                            factors as the Administrator may
                            prescribe, or any combination thereof.
                      (E) Criteria for establishing bonus allowance
                    values.--In setting bonus allowance values
                    under this paragraph, the Administrator shall
                    seek to cover no more than the reasonable
                    incremental capital and operating costs of a
                    project that are attributable to implementation
                    of carbon capture, transportation, and
                    sequestration technologies, taking into
                    account--
                              (i) the reduced cost of compliance
                            with section 722 of this Act;
                              (ii) the reduced cost associated with
                            sequestering in a geological formation
                            for purposes of enhanced hydrocarbon
                            recovery when compared to sequestration
                            into geological formations solely for
                            purposes of sequestration;
                              (iii) the relevant factors defining
                            the project category; and
                              (iv) such other factors as the
                            Administrator determines are
                            appropriate.
              (5) Revision of regulations.--The Administrator shall
            review, and as appropriate revise, the applicable
            regulations under this subsection no less frequently
            than every 8 years.
      (e) Limits for Certain Electric Generating Units.--
              (1) Definitions.--For purposes of this subsection,
            the terms ``covered EGU'' and ``initially permitted''
            shall have the meaning given those terms in section 812
            of this Act.
              (2) Covered egus initially permitted from 2009
            through 2014.--For a covered EGU that is initially
            permitted on or after January 1, 2009, and before
            January 1, 2015, the Administrator shall reduce the
            quantity of emission allowances that the owner or
            operator of such covered EGU would otherwise be
            eligible to receive under this section as follows:
                      (A) In the case of a unit commencing
                    operation on or before January 1, 2019, if the
                    date in clause (ii)(I) is earlier than the date
                    in clause (ii)(II), by the product of--
                              (i) 20 percent; and
                              (ii) the number of years, if any,
                            that have elapsed between--
                                      (I) the earlier of January 1,
                                    2020, or the date that is 5
                                    years after the commencement of
                                    operation of such covered EGU;
                                    and
                                      (II) the first year that such
                                    covered EGU achieves (and
                                    thereafter maintains) an
                                    emission limit that is at least
                                    a 50 percent reduction in
                                    emissions of the carbon dioxide
                                    produced by the unit, measured
                                    on an annual basis, as
                                    determined in accordance with
                                    section 812(b)(2).
                      (B) In the case of a unit commencing
                    operation after January 1, 2019, by the product
                    of--
                              (i) 20 percent; and
                              (ii) the number of years between--
                                      (I) the commencement of
                                    operation of such covered EGU;
                                    and
                                      (II) the first year that such
                                    covered EGU achieves (and
                                    thereafter maintains) an
                                    emission limit that is at least
                                    a 50 percent reduction in
                                    emissions of the carbon dioxide
                                    produced by the unit, measured
                                    on an annual basis, as
                                    determined in accordance with
                                    section 812(b)(2).
              (3) Covered egus initially permitted from 2015
            through 2019.--The owner or operator of a covered EGU
            that is initially permitted on or after January 1,
            2015, and before January 1, 2020, shall be ineligible
            to receive emission allowances pursuant to this section
            if such unit, upon commencement of operations (and
            thereafter), does not achieve and maintain an emission
            limit that is at least a 50 percent reduction in
            emissions of the carbon dioxide produced by the unit,
            measured on an annual basis, as determined in
            accordance with section 812(b)(2).
      (f) Industrial Sources.--
              (1) Allowances.--The Administrator may distribute not
            more than 15 percent of the allowances allocated under
            section 782(a) for any vintage year to the owners or
            operators of eligible industrial sources to support the
            commercial-scale deployment of carbon capture and
            sequestration technologies at such sources.
              (2) Distribution.--The Administrator shall, by
            regulation, prescribe requirements for the distribution
            of emission allowances to the owners or operators of
            industrial sources under this subsection, based on a
            bonus allowance formula that awards allowances to
            qualifying projects on the basis of tons of carbon
            dioxide captured and permanently sequestered. The
            Administrator may provide for the distribution of
            emission allowances pursuant to--
                      (A) a reverse auction method, similar to that
                    described under subsection (d)(3), including
                    the use of separate auctions for different
                    project categories; or
                      (B) an incentive schedule, similar to that
                    described under subsection (d)(4), which shall
                    ensure that incentives are set so as to satisfy
                    the requirement described in subsection
                    (d)(4)(E).
              (3) Revision of regulations.--The Administrator shall
            review, and as appropriate revise, the applicable
            regulations under this subsection no less frequently
            than every 8 years.
      (g) Limitations.--Allowances may be distributed under this
    section only for tons of carbon dioxide emissions that have
    already been captured and sequestered. A qualifying project may
    receive annual emission allowances under this section only for
    the first 10 years of operation. No greater than 72 gigawatts
    of total cumulative generating capacity (including industrial
    applications, measured by such equivalent metric as the
    Administrator may designate) may receive emission allowances
    under this section. Upon reaching the limit described in the
    preceding sentence, any emission allowances that are allocated
    for carbon capture and sequestration deployment under section
    782(f) and are not yet obligated under this section shall be
    treated as allowances not designated for distribution for
    purposes of section 782(r).
      (h) Exhaustion of Account and Annual Roll-Over of Surplus
    Allowances.--
              (1) In distributing bonus allowances under this
            subsection, the Administrator shall ensure that
            qualifying projects receiving allowances receive
            distributions for 10 years.
              (2) If the Administrator determines that the
            allowances allocated under section 782(f) with a
            vintage year that matches the year of distribution will
            be exhausted once the estimated full 10-year
            distributions will be provided to current eligible
            participants, the Administrator shall provide to new
            eligible projects allowances from vintage years after
            the year of the distribution.
      (i) Retrofit Applications.--(1) In calculating bonus
    allowance values for retrofit applications eligible under
    subsections (b)(1)(A)(ii) and (b)(1)(A)(iv)(II), the
    Administrator shall apply the required capture rates with
    respect to the treated portion of flue gas from the unit.
      (2) No additional projects shall be eligible for allowances
    under subsections (b)(1)(A)(ii) and (b)(1)(A)(iv)(II) as of
    such time as the Administrator reports, pursuant to section
    812(d), that carbon capture and sequestration retrofit projects
    at electric generating units that are eligible for allowances
    under this section have been applied, in the aggregate, to the
    flue gas generated by 1 gigawatt of total cumulative generating
    capacity.
      (j) Davis-Bacon Compliance.--All laborers and mechanics
    employed on projects funded directly by or assisted in whole or
    in part by this section through the use of bonus allowances
    shall be paid wages at rates not less than those prevailing on
    projects of a character similar in the locality as determined
    by the Secretary of Labor in accordance with subchapter IV,
    chapter 31, part A of subtitle II of title 40, United States
    Code. With respect to the labor standards specified in this
    section, the Secretary of Labor shall have the authority and
    functions set forth in Reorganization Plan Numbered 14 of 1950
    (64 Stat. 1267; 5 U.S.C. App.) and section 3145 of title 40,
    United States Code.

    SEC. 787. ALLOCATIONS TO REFINERIES.

      (a) Purpose.--To provide emission allowance rebates to
    petroleum refiners in the United States in a manner that
    promotes energy efficiency and a reduction in greenhouse gas
    emissions at such facilities.
      (b) Definitions.--In this section:
              (1) Emissions.--The term ``emissions'' means the
            greenhouse gas emissions in the calendar year preceding
            the calendar year in which emission allowances are
            being distributed. The term includes direct emissions
            from fuel combustion, process emissions, and indirect
            emissions from the generation of electricity used to
            produce the output of the petroleum refinery or sector.
              (2) Intensity.--The term ``intensity'' means tons of
            carbon dioxide equivalent emissions per unit of output
            in a given year.
              (3) Intensity factor.--The term ``intensity factor''
            means the intensity of the petroleum refining sector
            divided by the intensity for an individual petroleum
            refinery.
              (4) Output.--The term ``output'' means the average
            annual number of gallons of refined fuel produced in
            the three calendar years preceding the calendar year in
            which emission allowances are being distributed.
              (5) Petroleum refinery.--The term ``petroleum
            refinery'' means a facility classified under 324110 of
            the North American Industrial Classification System of
            2002.
              (6) Production factor.--The term ``production
            factor'' means the output of an individual petroleum
            refinery divided by the output of the petroleum
            refining sector.
      (c) In General.--For each vintage year between 2014 and 2026,
    the Administrator shall distribute allowances pursuant to this
    section to owners and operators of petroleum refineries in the
    United States.
      (d) Distribution Schedule.--The Administrator shall
    distribute emission allowances of each vintage year no later
    than October 31 of the preceding calendar year.
      (e) Calculation of Emission Allowance Rebates.--
              (1) For each petroleum refinery, the Administrator
            shall calculate an individual allocation factor for
            each vintage year, based upon the product of the
            intensity factor for such refinery multiplied by the
            production factor for such refinery.
              (2) The Administrator shall also calculate a total
            allocation factor for each vintage year, based upon the
            sum of all of the individual allocation factors.
              (3) The Administrator shall calculate the number of
            emission allowances to be provided to each petroleum
            refinery in each vintage year by dividing the
            individual allocation factor for such refinery by the
            total allocation factor, then multiplying the result by
            the number of emission allowances allocated to the
            program under this section for that vintage year.
      (f) Data Sources.--
              (1) The Administrator shall use data from the
            greenhouse gas registry, established under section 713,
            where it is available.
              (2) The Administrator shall determine, by rule, the
            methodology by which to calculate indirect emissions
            for a refinery. The Administrator shall also determine,
            by rule, the methodology by which to take into account
            the value of allowances provided at no cost to local
            distribution companies that is passed through to a
            refinery. Each person selling electricity to the owner
            or operator of a petroleum refinery shall provide the
            owner or operator and the Administrator, on an annual
            basis, such data as the Administrator determines is
            necessary to implement this section.

    SEC. 788. [SECTION RESERVED].

    SEC. 789. CLIMATE CHANGE CONSUMER REFUNDS.

      (a) Refund.--In each year after deposits are made to the
    Climate Change Consumer Refund Account, the Secretary of the
    Treasury shall provide tax refunds on a per capita basis to
    each household in the United States that shall collectively
    equal the amount deposited into the Climate Change Consumer
    Refund Account.
      (b) Limitations.--The Secretary of the Treasury shall
    establish procedures to ensure that individuals who are not--
              (1) citizens or nationals of the United States; or
              (2) immigrants lawfully residing in the United
            States,
    are excluded for the purpose of calculating and distributing
    refunds under this section.

    SEC. 790. EXCHANGE FOR STATE-ISSUED ALLOWANCES.

      (a) In General.--Not later than one year after the date of
    enactment of this title, the Administrator shall issue
    regulations allowing any person in the United States to
    exchange greenhouse gas emission allowances issued before
    December 31, 2011, by the State of California or for the
    Regional Greenhouse Gas Initiative, or the Western Climate
    Initiative (in this section referred to as ``State
    allowances'') for emission allowances established by the
    Administrator under section 721(a).
      (b) Regulations.--Regulations issued under subsection (a)
    shall--
              (1) provide that a person exchanging State allowances
            under this section receive emission allowances
            established under section 721(a) in the amount that is
            sufficient to compensate for the cost of obtaining and
            holding such State allowances;
              (2) establish a deadline by which persons must
            exchange the State allowances; and
              (3) provide that the Federal emission allowances
            disbursed pursuant to this section shall be deducted
            from the allowances to be auctioned pursuant to section
            782(b).
      (c) Cost of Obtaining State Allowance.--For purposes of this
    section, the cost of obtaining a State allowance shall be the
    average auction price, for emission allowances issued in the
    year in which the State allowance was issued, under the program
    under which the State allowance was issued.

    SEC. 791. AUCTION PROCEDURES.

      (a) In General.--To the extent that auctions of emission
    allowances by the Administrator are authorized by this part,
    such auctions shall be carried out pursuant to this section and
    the regulations established hereunder.
      (b) Initial Regulations.--Not later than 12 months after the
    date of enactment of this title, the Administrator, in
    consultation with other agencies, as appropriate, shall
    promulgate regulations governing the auction of allowances
    under this section. Such regulations shall include the
    following requirements:
              (1) Frequency; first auction.--Auctions shall be held
            four times per year at regular intervals, with the
            first auction to be held no later than March 31, 2011.
              (2) Auction schedule; current and future vintages.--
            The Administrator shall, at each quarterly auction
            under this section, offer for sale both a portion of
            the allowances with the same vintage year as the year
            in which the auction is being conducted and a portion
            of the allowances with vintage years from future years.
            The preceding sentence shall not apply to auctions held
            before 2012, during which period, by necessity, the
            Administrator shall auction only allowances with a
            vintage year that is later than the year in which the
            auction is held. Beginning with the first auction and
            at each quarterly auction held thereafter, the
            Administrator may offer for sale allowances with
            vintage years of up to four years after the year in
            which the auction is being conducted, except as
            provided in section 782(p).
              (3) Auction format.--Auctions shall follow a single-
            round, sealed-bid, uniform price format.
              (4) Participation; financial assurance.--Auctions
            shall be open to any person, except that the
            Administrator may establish financial assurance
            requirements to ensure that auction participants can
            and will perform on their bids.
              (5) Disclosure of beneficial ownership.--Each bidder
            in the auction shall be required to disclose the person
            or entity sponsoring or benefitting from the bidder's
            participation in the auction if such person or entity
            is, in whole or in part, other than the bidder.
              (6) Purchase limits.--No person may, directly or in
            concert with another participant, purchase more than 5
            percent of the allowances offered for sale at any
            quarterly auction.
              (7) Publication of information.--After the auction,
            the Administrator shall, in a timely fashion, publish
            the identities of winning bidders, the quantity of
            allowances obtained by each winning bidder, and the
            auction clearing price.
              (8) Other requirements.--The Administrator may
            include in the regulations such other requirements or
            provisions as the Administrator, in consultation with
            other agencies, as appropriate, considers appropriate
            to promote effective, efficient, transparent, and fair
            administration of auctions under this section.
      (c) Revision of Regulations.--The Administrator may, in
    consultation with other agencies, as appropriate, at any time,
    revise the initial regulations promulgated under subsection
    (b). Such revised regulations need not meet the requirements
    identified in subsection (b) if the Administrator determines
    that an alternative auction design would be more effective,
    taking into account factors including costs of administration,
    transparency, fairness, and risks of collusion or manipulation.
    In determining whether and how to revise the initial
    regulations under this subsection, the Administrator shall not
    consider maximization of revenues to the Federal Government.
      (d) Reserve Auction Price.--The minimum reserve auction price
    shall be $10 (in constant 2009 dollars) for auctions occurring
    in 2012. The minimum reserve price for auctions occurring in
    years after 2012 shall be the minimum reserve auction price for
    the previous year increased by 5 percent plus the rate of
    inflation (as measured by the Consumer Price Index for all
    urban consumers).
      (e) Delegation or Contract.--Pursuant to regulations under
    this section, the Administrator may by delegation or contract
    provide for the conduct of auctions under the Administrator's
    supervision by other departments or agencies of the Federal
    Government or by nongovernmental agencies, groups, or
    organizations.

    SEC. 792. AUCTIONING ALLOWANCES FOR OTHER ENTITIES.

      (a) Consignment.--Any entity holding emission allowances or
    compensatory allowances may request that the Administrator
    auction, pursuant to section 791, the allowances on
    consignment.
      (b) Pricing.--When the Administrator acts under this section
    as the agent of an entity in possession of emission allowances,
    the Administrator is not obligated to obtain the highest price
    possible for the emission allowances, and instead shall auction
    consignment allowances in the same manner and pursuant to the
    same rules as auctions of other allowances under section 791.
    The Administrator may permit the entity offering the allowance
    for sale to condition the sale of its allowances pursuant to
    this section on a minimum reserve price that is different than
    the reserve auction price set pursuant to section 791(d).
      (c) Proceeds.--For emission allowances and compensatory
    allowances auctioned pursuant to this section, notwithstanding
    section 3302 of title 31, United States Code, or any other
    provision of law, within 90 days of receipt, the United States
    shall transfer the proceeds from the auction to the entity
    which held the allowances auctioned. No funds transferred from
    a purchaser to a seller of emission allowances or compensatory
    allowances under this subsection shall be held by any officer
    or employee of the United States or treated for any purpose as
    public monies.
      (d) Regulations.--The Administrator shall issue regulations
    within 24 months after the date of enactment of this title to
    implement this section.

    SEC. 793. ESTABLISHMENT OF FUNDS.

      There is established in the Treasury of the United States the
    following funds:
              (1) The Strategic Reserve Fund.
              (2) The Climate Change Consumer Refund Fund.

    SEC. 794. OVERSIGHT OF ALLOCATIONS.

      (a) In General.--Not later than January 1, 2014, and every 2
    years thereafter, the Comptroller General of the United States
    shall carry out a review of programs administered by the
    Federal Government that distribute emission allowances or funds
    from any Federal auction of allowances.
      (b) Contents.--Each such report shall include a comprehensive
    evaluation of the administration and effectiveness of each
    program, including--
              (1) the efficiency, transparency, and soundness of
            the administration of each program;
              (2) the performance of activities receiving
            assistance under each program;
              (3) the cost-effectiveness of each program in
            achieving the stated purposes of the program; and
              (4) recommendations, if any, for regulatory or
            administrative changes to each program to improve its
            effectiveness.
      (c) Focus.--In evaluating program performance, each review
    under this section review shall address the effectiveness of
    such programs in--
              (1) creating and preserving jobs;
              (2) ensuring a manageable transition for working
            families and workers;
              (3) reducing the emissions, or enhancing
            sequestration, of greenhouse gases;
              (4) developing clean technologies; and
              (5) building resilience to the impacts of climate
            change.

                TITLE VIII--ADDITIONAL GREENHOUSE GAS STANDARDS

    SEC. 801. DEFINITIONS.

      For purposes of this title, terms that are defined in title
    VII, except for the term ``stationary source'', shall have the
    meaning given those terms in title VII.

                      PART A--STATIONARY SOURCE STANDARDS

    SEC. 811. STANDARDS OF PERFORMANCE.

      (a) Uncapped Stationary Sources.--
              (1) Inventory of source categories.--(A) Within 12
            months after the date of enactment of this title, the
            Administrator shall publish under section 111(b)(1)(A)
            an inventory of categories of stationary sources that
            consist of those categories that contain sources that
            individually had uncapped greenhouse gas emissions
            greater than 10,000 tons of carbon dioxide equivalent
            and that, in the aggregate, were responsible for
            emitting at least 20 percent annually of the uncapped
            greenhouse gas emissions.
              (B) The Administrator shall include in the inventory
            under this paragraph each source category that is
            responsible for at least 10 percent of the uncapped
            methane emissions in 2005. Notwithstanding any other
            provision, the inventory required by this section shall
            not include sources of enteric fermentation. The list
            under this paragraph shall include industrial sources,
            the emissions from which, when added to the capped
            emissions from industrial sources, constitute at least
            95 percent of the greenhouse gas emissions of the
            industrial sector.
              (C) For purposes of this subsection, emissions shall
            be calculated using tons of carbon dioxide equivalents.
            In promulgating the inventory required by this
            paragraph and the schedule required under by paragraph
            (2)(C), the Administrator shall use the most current
            emissions data available at the time of promulgation,
            except as provided in subparagraph (B).
              (D) Notwithstanding any other provisions, the
            Administrator may list under 111(b) any source category
            identified in the inventory required by this subsection
            without making a finding that the source category
            causes or contributes significantly to, air pollution
            with may be reasonably anticipated to endanger public
            health or welfare.
              (2) Standards and schedule.--(A) For each category
            identified as provided in paragraph (1), the
            Administrator shall promulgate standards of performance
            under section 111 for the uncapped emissions of
            greenhouse gases from stationary sources in that
            category and shall promulgate corresponding regulations
            under section 111(d).
              (B) The Administrator shall promulgate standards as
            required by this subsection for stationary sources in
            categories identified as provided in paragraph (1) as
            expeditiously as practicable, assuring that--
                      (i) standards for identified source
                    categories that, combined, emitted 80 percent
                    or more of the greenhouse gas emissions of the
                    identified source categories shall be
                    promulgated not later than 3 years after the
                    date of enactment of this title and shall
                    include standards for natural gas extraction;
                    and
                      (ii) for all other identified source
                    categories--
                              (I) standards for not less than an
                            additional 25 percent of the identified
                            categories shall be promulgated not
                            later than 5 years after the date of
                            enactment of this title;
                              (II) standards for not less than an
                            additional 25 percent of the identified
                            categories shall be promulgated not
                            later than 7 years after the date of
                            enactment of this title; and
                              (III) standards for all the
                            identified categories shall be
                            promulgated not later than 10 years
                            after the date of enactment of this
                            title.
              (C) Not later than 24 months after the date of
            enactment of this title and after notice and
            opportunity for comment, the Administrator shall
            publish a schedule establishing a date for the
            promulgation of standards for each category of sources
            identified pursuant to paragraph (1). The date for each
            category shall be consistent with the requirements of
            subparagraph (B). The determination of priorities for
            the promulgation of standards pursuant to this
            paragraph is not a rulemaking and shall not be subject
            to judicial review, except that failure to promulgate
            any standard pursuant to the schedule established by
            this paragraph shall be subject to review under section
            304(a)(2).
              (D) Notwithstanding section 307, no action of the
            Administrator listing a source category under paragraph
            (1) shall be a final agency action subject to judicial
            review, except that any such action may be reviewed
            under section 307 when the Administrator issues
            performance standards for such category.
      (b) Capped Sources.--No standard of performance shall be
    established under section 111 for capped greenhouse gas
    emissions from a capped source unless the Administrator
    determines that such standards are appropriate because of
    effects that do not include climate change effects. In
    promulgating a standard of performance under section 111 for
    the emission from capped sources of any air pollutant that is
    not a greenhouse gas, the Administrator shall treat the
    emission of any greenhouse gas by those entities as a nonair
    quality public health and environmental impact within the
    meaning of section 111(a)(1).
      (c) Performance Standards.--For purposes of setting a
    performance standard for source categories identified pursuant
    to subsection (a)--
              (1) The Administrator shall take into account the
            goal of reducing total United States greenhouse gas
            emissions as set forth in section 702.
              (2) The Administrator may promulgate a design,
            equipment, work practice, or operational standard, or
            any combination thereof, under section 111 in lieu of a
            standard of performance under that section without
            regard to any determination of feasibility that would
            otherwise be required under section 111(h).
              (3) Notwithstanding any other provision, in setting
            the level of each standard required by this section,
            the Administrator shall take into account projections
            of allowance prices, such that the marginal cost of
            compliance (expressed as dollars per ton of carbon
            dioxide equivalent reduced) imposed by the standard
            would not, in the judgement of the Administrator, be
            expected to exceed the Administrator's projected
            allowance prices over the time period spanning from the
            date of initial compliance to the date that the next
            revisions of the standard would come into effect
            pursuant to the schedule under section 111(b)(1)(B).
      (d) Definitions.--In this section, the terms ``uncapped
    greenhouse gas emissions'' and ``uncapped methane emissions''
    mean those greenhouse gas or methane emissions, respectively,
    to which section 722 would not have applied if the requirements
    of this title had been in effect for the same year as the
    emissions data upon which the list is based.
      (e) Study of the Effects of Performance Standards.--
              (1) Study.--The Administrator shall conduct a study
            of the impacts of performance standards required under
            this section, which shall evaluate the effect of such
            standards on the--
                      (A) costs of achieving compliance with the
                    economy-wide reduction goals specified in
                    section 702 and the reduction targets specified
                    in section 703;
                      (B) available supply of offset credits; and
                      (C) ability to achieve the economy-wide
                    reduction goals specified in section 702 and
                    any other benefits of such standards.
              (2) Report.--The Administrator shall submit to the
            House Energy and Commerce Committee a report that
            describes the results of the study not later than 18
            months after the publication of the standards required
            under subsection (a)(2)(B)(i).

    SEC. 812. PERFORMANCE STANDARDS FOR NEW COAL-FIRED POWER PLANTS.

      (a) Definitions.--For purposes of this section:
              (1) Covered egu.--The term ``covered EGU'' means a
            utility unit that is required to have a permit under
            section 503(a) and is authorized under state or federal
            law to derive at least 30 percent of its annual heat
            input from coal, petroleum coke, or any combination of
            these fuels.
              (2) Initially permitted.--The term ``initially
            permitted'' means that the owner or operator has
            received a Clean Air Act preconstruction approval or
            permit, for the covered EGU as a new (not a modified)
            source, but administrative review or appeal of such
            approval or permit has not been exhausted. A subsequent
            modification of any such approval or permits, ongoing
            administrative or court review, appeals, or challenges,
            or the existence or tolling of any time to pursue
            further review, appeals, or challenges shall not affect
            the date on which a covered EGU is considered to be
            initially permitted under this paragraph.
      (b) Standards.--(1) A covered EGU that is initially permitted
    on or after January 1, 2020, shall achieve an emission limit
    that is a 65 percent reduction in emissions of the carbon
    dioxide  produced by the  unit, as measured on an annual basis,
    or meet such more stringent standard as the Administrator may
    establish pursuant to subsection (c).
      (2) A covered EGU that is initially permitted after January
    1, 2009, and before January 1, 2020, shall, by the applicable
    compliance date established under this paragraph, achieve an
    emission limit that is a 50 percent reduction in emissions of
    the carbon dioxide produced by the  unit, as measured on an
    annual basis. Compliance with the requirement set forth in this
    paragraph shall be required by the earliest of the following:
              (A) Four years after the date the Administrator has
            published pursuant to subsection (d) a report that
            there are in commercial operation in the United States
            electric generating units or other stationary sources
            equipped with carbon capture and sequestration
            technology that, in the aggregate--
                      (i) have a total of at least 4 gigawatts of
                    nameplate generating capacity of which--
                              (I) at least 3 gigawatts must be
                            electric generating units; and
                              (II) up to 1 gigawatt may be
                            industrial applications, for which
                            capture and sequestration of 3 million
                            tons of carbon dioxide per year on an
                            aggregate annualized basis shall be
                            considered equivalent to 1 gigawatt;
                      (ii) include at least 2 electric generating
                    units, each with a nameplate generating
                    capacity of 250 megawatts or greater, that
                    capture, inject, and sequester carbon dioxide
                    into geologic formations other than oil and gas
                    fields; and
                      (iii) are capturing and sequestering in the
                    aggregate at least 12 million tons of carbon
                    dioxide per year, calculated on an aggregate
                    annualized basis.
              (B) January 1, 2025.
      (3) If the deadline for compliance with paragraph (2) is
    January 1, 2025, the Administrator may extend the deadline for
    compliance by a covered EGU by up to 18 months if the
    Administrator makes a determination, based on a showing by the
    owner or operator of the unit, that it will be technically
    infeasible for the unit to meet the standard by the deadline.
    The owner or operator must submit a request for such an
    extension by no later than January 1, 2022, and the
    Administrator shall provide for public notice and comment on
    the extension request.
      (c) Review and Revision of Standards.--Not later than 2025
    and at 5-year intervals thereafter, the Administrator shall
    review the standards for new covered EGUs under this section
    and shall, by rule, reduce the maximum carbon dioxide emission
    rate for new covered EGUs to a rate which reflects the degree
    of emission limitation achievable through the application of
    the best system of emission reduction which (taking into
    account the cost of achieving such reduction and any nonair
    quality health and environmental impact and energy
    requirements) the Administrator determines has been adequately
    demonstrated.
      (d)  Reports.--Not later than the date 18 months after the
    date of enactment of this title and semiannually thereafter,
    the Administrator shall publish a report on the nameplate
    capacity of units (determined pursuant to subsection (b)(2)(A))
    in commercial operation in the United States equipped with
    carbon capture and sequestration technology, including the
    information described in subsection (b)(2)(A) (including the
    cumulative generating capacity to which carbon capture and
    sequestration retrofit projects meeting the criteria described
    in section 786(b)(1)(A)(ii) and (b)(1)(A)(iv)(II) has been
    applied and the quantities of carbon dioxide captured and
    sequestered by such projects).
      (e) Regulations.--Not later than 2 years after the date of
    enactment of this title, the Administrator shall promulgate
    regulations to carry out the requirements of this section.

    SEC. 813. GEOLOGIC SEQUESTRATION SITES.

      (a) Coordinated Process.--The Administrator shall establish a
    coordinated approach to certifying and permitting geologic
    sequestration, taking into consideration all relevant statutory
    authorities. In establishing such approach, the Administrator
    shall--
              (1) take into account, and reduce redundancy with,
            the requirements of section 1421 of the Safe Drinking
            Water Act (42 U.S.C. 300h), as amended by section
            112(b) of the American Clean Energy and Security Act of
            2009, including the rulemaking for geologic
            sequestration wells described at 73 Fed. Reg. 43491-541
            (July 25, 2008); and
              (2) to the extent practicable, reduce the burden on
            certified entities and implementing authorities.
      (b) Regulations.--Not later than 2 years after the date of
    enactment of this title, the Administrator shall promulgate
    regulations to protect human health and the environment by
    minimizing the risk of escape to the atmosphere of carbon
    dioxide injected for purposes of geologic sequestration.
      (c) Requirements.--The regulations under subsection (b) shall
    include--
              (1) a process to obtain certification for geologic
            sequestration under this section; and
              (2) requirements for--
                      (A) monitoring, record keeping, and reporting
                    for emissions associated with injection into,
                    and escape from, geologic sequestration sites,
                    taking into account any requirements or
                    protocols developed under section 713;
                      (B) public participation in the certification
                    process that maximizes transparency;
                      (C) the sharing of data between States,
                    Indian tribes, and the Environmental Protection
                    Agency; and
                      (D) other elements or safeguards necessary to
                    achieve the purpose set forth in subsection
                    (b).
      (d) Report.--Not later than 2 years after the promulgation of
    regulations under subsection (b), and at 3-year intervals
    thereafter, the Administrator shall deliver to the Committee on
    Energy and Commerce of the House of Representatives and the
    Committee on Environment and Public Works of the Senate a
    report on geologic sequestration in the United States, and, to
    the extent relevant, other countries in North America. Such
    report shall include--
              (1) data regarding injection, emissions to the
            atmosphere, if any, and performance of active and
            closed geologic sequestration sites, including those
            where enhanced hydrocarbon recovery operations occur;
              (2) an evaluation of the performance of relevant
            Federal environmental regulations and programs in
            ensuring environmentally protective geologic
            sequestration practices;
              (3) recommendations on how such programs and
            regulations should be improved or made more effective;
            and
              (4) other relevant information.

                             PART B--MOBILE SOURCES

    SEC. 821. GREENHOUSE GAS EMISSION STANDARDS FOR MOBILE SOURCES.

      (a) New Motor Vehicles and New Motor Vehicle Engines.--(1)
    Pursuant to section 202(a)(1), by December 31, 2010, the
    Administrator shall promulgate standards applicable to
    emissions of greenhouse gases from new heavy-duty motor
    vehicles or new heavy-duty motor vehicle engines, excluding
    such motor vehicles covered by the Tier II standards (as
    established by the Administrator as of the date of the
    enactment of this section). The Administrator may revise these
    standards from time to time.
      (2) Regulations issued under section 202(a)(1) applicable to
    emissions of greenhouse gases from new heavy-duty motor
    vehicles or new heavy-duty motor vehicle engines, excluding
    such motor vehicles covered by the Tier II standards (as
    established by the Administrator as of the date of the
    enactment of this section), shall contain standards that
    reflect the greatest degree of emissions reduction achievable
    through the application of technology which the Administrator
    determines will be available for the model year to which such
    standards apply, giving appropriate consideration to cost,
    energy, and safety factors associated with the application of
    such technology. Any such regulations shall take effect after
    such period as the Administrator finds necessary to permit the
    development and application of the requisite technology, and,
    at a minimum, shall apply for a period no less than 3 model
    years beginning no earlier than the model year commencing 4
    years after such regulations are promulgated.
      (3) Regulations issued under section 202(a)(1) applicable to
    emissions of greenhouse gases from new heavy-duty motor
    vehicles or new heavy-duty motor vehicle engines, excluding
    such motor vehicles covered by the Tier II standards (as
    established by the Administrator as of the date of the
    enactment of this section), shall supersede and satisfy any and
    all of the rulemaking and compliance requirements of section
    32902(k) of title 49, United States Code.
      (4) Other than as specifically set forth in paragraph (3) of
    this subsection, nothing in this section shall affect or
    otherwise increase or diminish the authority of the Secretary
    of Transportation to adopt regulations to improve the overall
    fuel efficiency of the commercial goods movement system.
      (b) Nonroad Vehicles and Engines.--(1) Pursuant to section
    213(a)(4) and (5), the Administrator shall identify those
    classes or categories of new nonroad vehicles or engines, or
    combinations of such classes or categories, that, in the
    judgment of the Administrator, both contribute significantly to
    the total emissions of greenhouse gases from nonroad engines
    and vehicles, and provide the greatest potential for
    significant and cost-effective reductions in emissions of
    greenhouse gases. The Administrator shall promulgate standards
    applicable to emissions of greenhouse gases from these new
    nonroad engines or vehicles by December 31, 2012. The
    Administrator shall also promulgate standards applicable to
    emissions of greenhouse gases for such other classes and
    categories of new nonroad vehicles and engines as the
    Administrator determines appropriate and in the timeframe the
    Administrator determines appropriate. The Administrator shall
    base such determination, among other factors, on the relative
    contribution of greenhouse gas emissions, and the costs for
    achieving reductions, from such classes or categories of new
    nonroad engines and vehicles. The Administrator may revise
    these standards from time to time.
      (2) Standards under section 213(a)(4) and (5) applicable to
    emissions of greenhouse gases from those classes or categories
    of new nonroad engines or vehicles identified in the first
    sentence of paragraph (1) of this subsection, shall achieve the
    greatest degree of emissions reduction achievable based on the
    application of technology which the Administrator determines
    will be available at the time such standards take effect,
    taking into consideration cost, energy, and safety factors
    associated with the application of such technology. Any such
    regulations shall take effect after such period as the
    Administrator finds necessary to permit the development and
    application of the requisite technology.
      (3) For purposes of this section and standards under section
    213(a)(4) or (5) applicable to emissions of greenhouse gases,
    the term ``nonroad engines and vehicles'' shall include non-
    internal combustion engines and the vehicles these engines
    power (such as electric engines and electric vehicles), for
    those non-internal combustion engines and vehicles which would
    be in the same category and have the same uses as nonroad
    engines and vehicles that are powered by internal combustion
    engines.
      (c) Aircraft and Aircraft Engines.--
              (1) Pursuant to section 231(a), the Administrator
            shall promulgate standards applicable to emissions of
            greenhouse gases from new aircraft and new engines used
            in aircraft by December 31, 2012. Notwithstanding any
            requirement in section 231(a), the Administrator, in
            consultation with the Administrator of the Federal
            Aviation Administration, shall also promulgate
            standards applicable to emissions of greenhouse gases
            from other classes and categories of aircraft and
            aircraft engines for such classes and categories as the
            Administrator determines appropriate and in the
            timeframe the Administrator determines appropriate. The
            Administrator may revise these standards from time to
            time.
              (2) Standards under section 231(a) applicable to
            emissions of greenhouse gases from new aircraft and new
            engines used in aircraft, and any later revisions or
            additional standards, shall achieve the greatest degree
            of emissions reduction achievable based on the
            application of technology which the Administrator
            determines will be available at the time such standards
            take effect, taking into consideration cost, energy,
            and safety factors associated with the application of
            such technology. Any such standards shall take effect
            after such period as the Administrator finds necessary
            to permit the development and application of the
            requisite technology.
      (d) Averaging, Banking, and Trading of Emissions Credits.--In
    establishing standards applicable to emissions of greenhouse
    gases pursuant to this section and sections 202(a), 213(a)(4)
    and (5), and 231(a), the Administrator may establish provisions
    for averaging, banking, and trading of greenhouse gas emissions
    credits within or across classes or categories of motor
    vehicles and motor vehicle engines, nonroad vehicles and
    engines (including marine vessels), and aircraft and aircraft
    engines, to the extent the Administrator determines appropriate
    and considering the factors appropriate in setting standards
    under those sections. Such provisions may include reasonable
    and appropriate provisions concerning generation, banking,
    trading, duration, and use of credits.
      (e) Reports.--The Administrator shall, from time to time,
    submit a report to Congress that projects the amount of
    greenhouse gas emissions from the transportation sector,
    including transportation fuels, for the years 2030 and 2050,
    based on the standards adopted under this section.
      (f) Greenhouse Gases.--Notwithstanding the provisions of
    section 711, hydrofluorocarbons shall be considered a
    greenhouse gas for purposes of this section.

    SEC. 822. SMARTWAY TRANSPORTATION EFFICIENCY PROGRAM.

      (a) In General.--There is established within the
    Environmental Protection Agency a SmartWay Transport Program to
    quantify, demonstrate, and promote the benefits of
    technologies, products, fuels, and operational strategies that
    reduce petroleum consumption, air pollution, and greenhouse gas
    emissions from the mobile source sector.
      (b) General Duties.--Under the program established under this
    section, the Administrator shall carry out each of the
    following:
              (1) Development of measurement protocols to evaluate
            the energy consumption and greenhouse gas impacts from
            technologies and strategies in the mobile source
            sector, including those for passenger transport and
            goods movement.
              (2) Development of qualifying thresholds for
            certifying, verifying, or designating energy-efficient,
            low-greenhouse gas SmartWay technologies and strategies
            for each mode of passenger transportation and goods
            movement.
              (3) Development of partnership and recognition
            programs to promote best practices and drive demand for
            energy-efficient, low-greenhouse gas transportation
            performance.
              (4) Promotion of the availability of, and
            encouragement of the adoption of, SmartWay certified or
            verified technologies and strategies, and publication
            of the availability of financial incentives, such as
            assistance from loan programs and other Federal and
            State incentives.
      (c) Smartway Transport Freight Partnership.--The
    Administrator shall establish a SmartWay Transport Partnership
    program with shippers and carriers of goods to promote energy-
    efficient, low-greenhouse gas transportation. In carrying out
    such partnership, the Administrator shall undertake each of the
    following:
              (1) Certification of the energy and greenhouse gas
            performance of participating freight carriers,
            including those operating rail, trucking, marine, and
            other goods movement operations.
              (2) Publication of a comprehensive energy and
            greenhouse gas performance index of freight modes
            (including rail, trucking, marine, and other modes of
            transporting goods) and individual freight companies so
            that shippers can choose to deliver their goods more
            efficiently.
              (3) Development of tools for--
                      (A) carriers to calculate their energy and
                    greenhouse gas performance; and
                      (B) shippers to calculate the energy and
                    greenhouse gas impacts of moving their products
                    and to evaluate the relative impacts from
                    transporting their goods by different modes and
                    corporate carriers.
              (4) Provision of recognition opportunities for
            participating shipper and carrier companies
            demonstrating advanced practices and achieving superior
            levels of greenhouse gas performance.
      (d) Improving Freight Greenhouse Gas Performance Databases.--
    The Administrator shall, in coordination with other appropriate
    agencies, define and collect data on the physical and
    operational characteristics of the Nation's truck population,
    with special emphasis on data related to energy efficiency and
    greenhouse gas performance to inform the performance index
    published under subsection (c)(2) of this section, and other
    means of goods transport as necessary, at least every 5 years.
      (e) Establishment of Financing Program.--The Administrator
    shall establish a SmartWay Financing Program to competitively
    award funding to eligible entities identified by the
    Administrator in accordance with the program requirements in
    subsection (g).
      (f) Purpose.--Under the SmartWay Financing Program, eligible
    entities shall--
              (1) use funds awarded by the Administrator to provide
            flexible loan and lease terms that increase approval
            rates or lower the costs of loans and leases in
            accordance with guidance developed by the
            Administrator; and
              (2) make such loans and leases available to public
            and private entities for the purpose of adopting low-
            greenhouse gas technologies or strategies for the
            mobile source sector that are designated by the
            Administrator.
      (g) Program Requirements.--The Administrator shall determine
    program design elements and requirements, including--
              (1) the type of financial mechanism with which to
            award funding, in the form of grants or contracts;
              (2) the designation of eligible entities to receive
            funding, including State, tribal, and local
            governments, regional organizations comprised of
            governmental units, nonprofit organizations, or for-
            profit companies;
              (3) criteria for evaluating applications from
            eligible entities, including anticipated--
                      (A) cost-effectiveness of loan or lease
                    program on a metric-ton-of-greenhouse gas-
                    saved-per-dollar basis;
                      (B) ability to promote the loan or lease
                    program and associated technologies and
                    strategies to the target audience; and
              (4) reporting requirements for entities that receive
            awards, including--
                      (A) actual cost-effectiveness and greenhouse
                    gas savings from the loan or lease program
                    based on a methodology designated by the
                    Administrator;
                      (B) the total number of applications and
                    number of approved applications; and
                      (C) terms granted to loan and lease
                    recipients compared to prevailing market
                    practices.
      (h) Authorization of Appropriations.--Such sums as necessary
    are authorized to be appropriated to the Administrator to carry
    out this section.

                     PART C--EXEMPTIONS FROM OTHER PROGRAMS

    SEC. 831. CRITERIA POLLUTANTS.

      As of the date of the enactment of the Safe Climate Act, no
    greenhouse gas may be added to the list under section 108(a) on
    the basis of its effect on global climate change.

    SEC. 832. INTERNATIONAL AIR POLLUTION.

      Section 115 shall not apply to an air pollutant with respect
    to that pollutant's contribution to global warming.

    SEC. 833. HAZARDOUS AIR POLLUTANTS.

      No greenhouse gas may be added to the list of hazardous air
    pollutants under section 112 unless such greenhouse gas meets
    the listing criteria of section 112(b) independent of its
    effects on global climate change.

    SEC. 834. NEW SOURCE REVIEW.

      The provisions of part C of title I shall not apply to a
    major emitting facility that is initially permitted or modified
    after January 1, 2009, on the basis of its emissions of any
    greenhouse gas.

    SEC. 835. TITLE V PERMITS.

      Notwithstanding any provision of title III or V, no
    stationary source shall be required to apply for, or operate
    pursuant to, a permit under title V, solely because the source
    emits any greenhouse gases that are regulated solely because of
    their effect on global climate change.

                         PART D--PLANNING REQUIREMENTS

    SEC. 841. GREENHOUSE GAS EMISSIONS REDUCTIONS THROUGH TRANSPORTATION
                        EFFICIENCY.

      (a) In General.--Each State shall--
              (1) not later than 3 years after the date of
            enactment of this section, submit to the Administrator
            goals for transportation-related greenhouse gas
            emissions reductions, which goals shall be reasonably
            commensurate with the targets for overall greenhouse
            gas emissions reduction established by this Act; and
              (2) as part of each transportation plan or
            transportation improvement program developed under
            title 23 or title 49, United States Code, ensure that a
            plan to achieve such goals, or an updated version of
            such a plan, is submitted to the Administrator and to
            the Secretary of Transportation (in this section
            referred to as the ``Secretary'') by each metropolitan
            planning organization in the State for an area with a
            population exceeding 200,000.
      (b) Models and Methodologies.--
              (1) In general.--The Administrator shall promulgate
            regulations to establish standards for use in
            developing goals, plans, and strategies under this
            section and for monitoring progress toward such goals.
            Such standards shall include--
                      (A) data collection techniques for assessing
                    State and regional transportation-related
                    greenhouse gas emissions;
                      (B) methodologies for determining
                    transportation-related greenhouse gas emissions
                    baselines;
                      (C) models and methodologies for scenario
                    analysis; and
                      (D) models and methodologies for estimating
                    transportation-related greenhouse gas emissions
                    reductions from the strategies considered under
                    this section.
            Such regulations may approve or improve existing models
            and methodologies
              (2) Timing.--The Administrator shall--
                      (A) publish proposed regulations under
                    paragraph (1) not later than 1 year after the
                    date of enactment of this section; and
                      (B) promulgate final regulations under
                    paragraph (1) not later than 2 years after such
                    date of enactment.
              (3) Assessment.--At least every 6 years after
            promulgating final regulations under paragraph (1), the
            Administrator, in coordination with the Secretary,
            shall assess current and projected progress in reducing
            transportation-related greenhouse gas emissions. The
            assessment shall examine the contributions to emissions
            reductions attributable to improvements in vehicle
            efficiency, greenhouse gas performance of
            transportation fuels, and increased efficiency in
            utilizing transportation systems.
      (c) Greenhouse Gas Reduction Goals.--
              (1) Consultation.--Each State shall develop the goals
            referred to in subsection (a)(1)--
                      (A) in concurrence with State agencies
                    responsible for air quality and transportation;
                      (B) in consultation with each metropolitan
                    planning organization for an area in the State
                    with a population exceeding 200,000 and
                    applicable local air quality and transportation
                    agencies; and
                      (C) with public involvement, including public
                    comment periods and meetings.
              (2) Period.--The goals referred to in subsection
            (a)(1) shall be for 4-, 10-, and 20-year periods.
              (3) Targets; designated year.--The goals referred to
            in subsection (a)(1) shall establish targets to reduce
            transportation-related greenhouse gas emissions in the
            covered area. The targets shall be designed to ensure
            that the levels of such emissions stabilize and
            decrease after a designated year. The State shall
            consider designating 2010 as such designated year.
              (4) Covered area.--The goals referred to in
            subsection (a)(1)--
                      (A) shall be established on a statewide
                    basis;
                      (B) shall be established for each
                    metropolitan planning organization in the State
                    for an area with a population exceeding
                    200,000; and
                      (C) may be established on a voluntary basis,
                    in accordance with the provisions of this
                    section, for any metropolitan planning
                    organization not described in subparagraph (B).
              (5) Revised goals.--Every 4 years, each State shall
            update and revise, as appropriate, the goals referred
            to in subsection (a)(1).
      (d) Planning.--A plan submitted under subsection (a)(2)
    shall--
              (1) be based upon the models and methodologies
            established by the Administrator under subsection (b);
              (2) use transportation and land use scenario analysis
            to address transportation-related greenhouse gas
            emissions and economic development impacts; and
              (3) be developed--
                      (A) with public involvement, including public
                    comment periods and meetings that provide
                    opportunities for comment from a variety of
                    stakeholders based on age, race, income, and
                    disability;
                      (B) with regional coordination, including
                    with respect to--
                              (i) metropolitan planning
                            organizations;
                              (ii) the localities comprising the
                            metropolitan planning organization;
                              (iii) the State in which the
                            metropolitan planning organization is
                            located; and
                              (iv) air quality, environmental
                            health, and transportation agencies for
                            the State and region involved; and
                      (C) in consultation with the State and local
                    housing, public health, economic development,
                    land use, environment, and public
                    transportation agencies.
      (e) Strategies.--In developing goals under subsection (a)(1)
    and a plan under subsection (a)(2), the State or metropolitan
    planning organization, as applicable, shall consider
    transportation and land use planning strategies to reduce
    transportation-related greenhouse gas emissions, including the
    following:
              (1) Efforts to increase or improve public
            transportation, including--
                      (A) new public transportation systems,
                    including new commuter rail systems;
                      (B) expansion of existing public
                    transportation systems;
                      (C) employer-based subsidies;
                      (D) cleaner locomotive technologies;
                      (E) quality of service improvements,
                    including improved frequency of service; and
                      (F) use of transit buses that are powered by
                    alternative fuels.
              (2) Updates to zoning and other land use regulations
            and plans to support development that--
                      (A) coordinates transportation and land use
                    planning;
                      (B) focuses future growth close to existing
                    and planned job centers and public facilities;
                      (C) uses existing infrastructure;
                      (D) promotes walking, bicycling, and public
                    transportation use; and
                      (E) mixes land uses such as housing, retail,
                    and schools.
              (3) Implementation of a policy (referred to as a
            ``complete streets policy'') that--
                      (A) ensures adequate accommodation of all
                    users of transportation systems, including
                    pedestrians, bicyclists, public transportation
                    users, motorists, children, the elderly, and
                    individuals with disabilities; and
                      (B) adequately addresses the safety and
                    convenience of all users of the transportation
                    system.
              (4) Construction of bicycle and pedestrian
            infrastructure facilities, including facilities that
            improve the connections with networks that provide
            access to human services, employment, schools, and
            retail.
              (5) Projects to promote telecommuting, flexible work
            schedules, or satellite work centers.
              (6) Pricing measures, including tolling, congestion
            pricing, and pay-as-you-drive insurance.
              (7) Intermodal freight system strategies, including
            enhanced rail services, short sea shipping, and other
            strategies.
              (8) Parking policies.
              (9) Intercity rail service, including high speed
            rail.
              (10) Travel demand management projects.
              (11) Restriction of the use of certain roads, or
            lanes, by vehicles other than passenger buses and high-
            occupancy vehicles.
              (12) Reduction of vehicle idling, including idling
            associated with freight management, construction,
            transportation, and commuter operations.
              (13) Policies to encourage the use of retrofit
            technologies and early replacement of vehicles, engines
            and equipment to reduce transportation-related
            greenhouse gas emissions from existing mobile sources.
              (14) Other projects that the Administrator finds
            reduce transportation-related greenhouse gas emissions.
      (f) Public Availability.--The Administrator shall publish,
    including by posting on the Environmental Protection Agency's
    website--
              (1) the goals and plans submitted under subsection
            (a); and
              (2) for each plan submitted under subsection (a)(2),
            an analysis of the anticipated effects of the plan on
            greenhouse gas emissions and oil consumption.
      (g) Certification.--The Administrator, in consultation with
    the Secretary, shall certify a State or metropolitan planning
    organization greenhouse gas reduction plan submitted under
    subsection (a)(2) if the plan's implementation is likely to
    meet the corresponding greenhouse gas reduction goal referred
    to in subsection (a)(1). If the Administrator, in consultation
    with the Secretary, determines that a submitted plan cannot be
    certified, the State or metropolitan planning organization
    shall revise and resubmit the plan within 1 year.
      (h) Enforcement.--If the Administrator finds that a State has
    failed to submit goals under subsection (a)(1), has failed to
    ensure the submission of a plan under subsection (a)(2), or has
    failed to submit a revised plan under subsection (g), for any
    area in the State (irrespective of whether the area is a
    nonattainment area), the Administrator shall impose a
    prohibition in accordance with section 179(b)(1) applicable to
    the area within 2 years of such a finding. The Administrator
    may not impose a prohibition under the preceding sentence, and
    no action may be brought by the Administrator or any other
    entity alleging a violation of this section, based on the
    content or adequacy of a goal or plan submitted under
    subsection (a)(1) or (a)(2) or failure to achieve the goal
    submitted under subsection (a)(1).
      (i) Competitive Grants.--
              (1) Grants.--The Administrator, in consultation with
            the Secretary, may award grants to States or
            metropolitan planning organizations--
                      (A) to support activities related to
                    improving data collection, modeling, and
                    monitoring systems to assess transportation-
                    related greenhouse gas emissions and the
                    effects of plans, policies, and strategies
                    referenced in this section;
                      (B) for the development of goals and plans to
                    be submitted under sections (a)(1) or (a)(2);
                    and
                      (C) to implement plans certified under
                    subsection (g) or elements thereof, provided
                    that each project thus funded includes a
                    measurement and evaluation component that meets
                    the regulations promulgated under subsection
                    (b).
              (2) Priority.--In making grants under paragraph
            (1)(C), the Administrator shall give priority to
            applicants based upon--
                      (A) the amount of total greenhouse gas
                    emissions to be reduced as a result of
                    implementation of a certified plan, within the
                    covered area, as determined by methods
                    established under subsection (b);
                      (B) the amount of per capita greenhouse gas
                    emissions to be reduced as a result of
                    implementation of a certified plan, within the
                    covered area, as determined by methods
                    established under subsection (b);
                      (C) the cost effectiveness, in terms of
                    dollars per tons of greenhouse gas reductions,
                    to be achieved as a result of the
                    implementation of a certified plan;
                      (D) the potential for both short- and long-
                    term reductions; and
                      (E) such other factors as the Administrator
                    determines appropriate.
              (3) Authorization of appropriations.--To carry out
            this subsection, there are authorized to be
            appropriated such sums as may be necessary.
      (j) Definitions.--In this section:
              (1) The term ``metropolitan planning organization''
            means a metropolitan planning organization, as such
            term is used in section 176.
              (2) The term ``scenario analysis'' means an analysis
            that is conducted by identifying different trends and
            making projections based on those trends to develop a
            range of scenarios and estimates of how each scenario
            could improve access to goods and services, including
            access to employment, education, and health care
            (especially for elderly and economically disadvantaged
            communities), and could affect rates of--
                      (A) vehicle miles traveled;
                      (B) vehicle hours traveled;
                      (C) use of mobile source fuel by type,
                    including electricity; and
                      (D) transportation-related greenhouse gas
                    emissions.
      (k) Land Use Authority.--Nothing in this section may be
    construed to--
              (1) infringe upon the existing authority of State or
            local governments to plan or control land use; or
              (2) provide or transfer authority over land use to
            any other entity.

                              PART E--BLACK CARBON

    SEC. 851. BLACK CARBON.

      (a) Domestic Black Carbon Mitigation.--Not later than 18
    months after the date of enactment of this section, the
    Administrator, taking into consideration the public health and
    environmental impacts of black carbon emissions, including the
    effects on global and regional warming, the Arctic, and other
    snow and ice-covered surfaces, shall propose regulations under
    the existing authorities of this Act to reduce emissions of
    black carbon or propose a finding that existing regulations
    promulgated pursuant to this Act adequately regulate black
    carbon emissions. Not later than two years after the date of
    enactment of this section, the Administrator shall promulgate
    final regulations under the existing authorities of this Act or
    finalize the proposed finding.
      (b) International Black Carbon Mitigation.--
              (1) Report.--Not later than one year after the date
            of enactment of this section, the Administrator, in
            coordination with the Secretary of State and other
            appropriate Federal agencies, shall transmit a report
            to Congress on the amount, type, and direction of all
            present United States financial, technical, and related
            assistance to foreign countries to reduce, mitigate,
            and otherwise abate black carbon emissions.
              (2) Other opportunities.--The report required under
            paragraph (1) shall also identify opportunities and
            recommendations, including action under existing
            authorities, to achieve significant black carbon
            emission reductions in foreign countries through
            technical assistance or other approaches to--
                      (A) promote sustainable solutions to bring
                    clean, efficient, safe, and affordable stoves,
                    fuels, or both stoves and fuels to residents of
                    developing countries that are reliant on solid
                    fuels such as wood, dung, charcoal, coal, or
                    crop residues for home cooking and heating, so
                    as to help reduce the public health,
                    environmental, and economic impacts of black
                    carbon emissions from these sources by--
                              (i) identifying key regions for
                            large-scale demonstration efforts, and
                            key partners in each such region; and
                              (ii) developing for each such region
                            a large-scale implementation strategy
                            with a goal of collectively reaching
                            20,000,000 homes over 5 years with
                            interventions that will--
                                      (I) increase stove efficiency
                                    by over 50 percent (or such
                                    other goal as determined by the
                                    Administrator);
                                      (II) reduce emissions of
                                    black carbon by over 60 percent
                                    (or such other goal as
                                    determined by the
                                    Administrator); and
                                      (III) reduce the incidence of
                                    severe pneumonia in children
                                    under 5 years old by over 30
                                    percent (or such other goal as
                                    determined by the
                                    Administrator);
                      (B) make technological improvements to diesel
                    engines and provide greater access to fuels
                    that emit less or no black carbon;
                      (C) reduce unnecessary agricultural or other
                    biomass burning where feasible alternatives
                    exist;
                      (D) reduce unnecessary fossil fuel burning
                    that produces black carbon where feasible
                    alternatives exist;
                      (E) reduce other sources of black carbon
                    emissions; and
                      (F) improve capacity to achieve greater
                    compliance with existing laws to address black
                    carbon emissions.

                             PART F--MISCELLANEOUS

    SEC. 861. STATE PROGRAMS.

      Notwithstanding section 116, no State or political
    subdivision thereof shall implement or enforce a cap and trade
    program that covers any capped emissions emitted during the
    years 2012 through 2017. For purposes of this section, the term
    ``cap and trade program'' means a system of greenhouse gas
    regulation under which a State or political subdivision issues
    a limited number of tradable instruments in the nature of
    emission allowances and requires that sources within its
    jurisdiction surrender such tradeable instruments for each unit
    of greenhouse gases emitted during a compliance period. For
    purposes of this section, a ``cap-and-trade program'' does not
    include a target or limit on greenhouse gas emissions adopted
    by a State or political subdivision that is implemented other
    than through the issuance and surrender of a limited number of
    tradable instruments in the nature of emission allowances, nor
    does it include any other standard, limit, regulation, or
    program to reduce greenhouse gas emissions that is not
    implemented through the issuance and surrender of a limited
    number of tradeable instruments in the nature of emission
    allowances. For purposes of this section, the term ``cap and
    trade program'' does not include, among other things, fleet-
    wide motor vehicle emission requirements that allow greater
    emissions with increased vehicle production, or requirements
    that fuels, or other products, meet an average pollution
    emission rate or lifecycle greenhouse gas standard.

    SEC. 862. GRANTS FOR SUPPORT OF AIR POLLUTION CONTROL PROGRAMS.

      The Administrator is authorized to make grants to air
    pollution control agencies pursuant to section 105 for purposes
    of assisting in the implementation of programs to address
    global warming established under the Safe Climate Act.

               *       *       *       *       *       *       *

                                  ----------

                            SAFE DRINKING WATER ACT

    TITLE XIV--SAFETY OF PUBLIC WATER SYSTEMS

               *       *       *       *       *       *       *

          Part C--Protection of Underground Sources of Drinking Water

                         REGULATIONS FOR STATE PROGRAMS

      Sec. 1421. (a) * * *

               *       *       *       *       *       *       *

      (e) Carbon Dioxide Geologic Sequestration Wells.--
              (1) In general.--Not later than 1 year after the date
            of enactment of this subsection, the Administrator
            shall promulgate regulations under subsection (a) for
            carbon dioxide geologic sequestration wells.
              (2) Financial responsibility.--The regulations
            referred to in paragraph (1) shall include requirements
            for maintaining evidence of financial responsibility,
            including financial responsibility for emergency and
            remedial response, well plugging, site closure, and
            post-injection site care. Financial responsibility may
            be established for carbon dioxide geologic
            sequestration wells in accordance with regulations
            promulgated by the Administrator by any one, or any
            combination, of the following: insurance, guarantee,
            trust, standby trust, surety bond, letter of credit,
            qualification as a self-insurer, or any other method
            satisfactory to the Administrator.

               *       *       *       *       *       *       *

                                  ----------

                  ENERGY INDEPENDENCE AND SECURITY ACT OF 2007

    TITLE I--ENERGY SECURITY THROUGH IMPROVED VEHICLE FUEL ECONOMY

               *       *       *       *       *       *       *

    Subtitle B--Improved Vehicle Technology

               *       *       *       *       *       *       *

    SEC. 136. ADVANCED TECHNOLOGY VEHICLES MANUFACTURING INCENTIVE PROGRAM.

      (a)  * * *

               *       *       *       *       *       *       *

      (d) Direct Loan Program.--
              (1) In general.--Not later than 1 year after the date
            of enactment of this Act, and subject to the
            availability of appropriated funds, the Secretary shall
            carry out a program to provide a total of not more than
            [$25,000,000,000] $50,000,000,000 in loans to eligible
            individuals and entities (as determined by the
            Secretary) for the costs of activities described in
            subsection (b). The loans shall be made through the
            Federal Financing Bank, with the full faith and credit
            of the United States Government on the principal and
            interest. The full credit subsidy shall be paid by the
            Secretary using appropriated funds.

               *       *       *       *       *       *       *

    TITLE III--ENERGY SAVINGS THROUGH IMPROVED STANDARDS FOR APPLIANCE AND
                                    LIGHTING

    Subtitle A--Appliance Energy Efficiency

               *       *       *       *       *       *       *

    SEC. 302. UPDATING APPLIANCE TEST PROCEDURES.

      (a) Consumer Appliances.--Section 323(b)(1) of the Energy
    Policy and Conservation Act (42 U.S.C. 6293(b)(1)) is amended
    by striking ``(1)'' and all that follows through the [end of
    the paragraph] end of subparagraph (A) and inserting the
    following:
              ``(1) Test procedures.--
                      ``(A) * * *
      (b) Industrial Equipment.--Section 343(a) of the Energy
    Policy and Conservation Act (42 U.S.C. [6313(a)] 6314(a)) is
    amended by striking ``(a)'' and all that follows through the
    end of paragraph (1) and inserting the following:
      ``(a) Prescription by Secretary; Requirements.--
              ``(1) * * *

               *       *       *       *       *       *       *

    [SEC. 313. ELECTRIC MOTOR EFFICIENCY STANDARDS.

      [(a) Definitions.--Section 340(13) of the Energy Policy and
    Conservation Act (42 U.S.C. 6311(13)) is amended--
              [(1) by redesignating subparagraphs (B) through (H)
            as subparagraphs (C) through (I), respectively; and
              [(2) by striking ``(13)(A)'' and all that follows
            through the end of subparagraph (A) and inserting the
            following:
              [``(13) Electric motor.--
                      [``(A) General purpose electric motor
                    (subtype i).--The term `general purpose
                    electric motor (subtype I)' means any motor
                    that meets the definition of `General Purpose'
                    as established in the final rule issued by the
                    Department of Energy entitled `Energy
                    Efficiency Program for Certain Commercial and
                    Industrial Equipment: Test Procedures,
                    Labeling, and Certification Requirements for
                    Electric Motors' (10 CFR 431), as in effect on
                    the date of enactment of the Energy
                    Independence and Security Act of 2007.
                      [``(B) General purpose electric motor
                    (subtype ii).--The term `general purpose
                    electric motor (subtype II)' means motors
                    incorporating the design elements of a general
                    purpose electric motor (subtype I) that are
                    configured as 1 of the following:
                              [``(i) A U-Frame Motor.
                              [``(ii) A Design C Motor.
                              [``(iii) A close-coupled pump motor.
                              [``(iv) A Footless motor.
                              [``(v) A vertical solid shaft normal
                            thrust motor (as tested in a horizontal
                            configuration).
                              [``(vi) An 8-pole motor (900 rpm).
                              [``(vii) A poly-phase motor with
                            voltage of not more than 600 volts
                            (other than 230 or 460 volts.''.
      [(b) Standards.--
              [(1) Amendments.--Section 342(b) of the Energy Policy
            and Conservation Act (42 U.S.C. 6313(b)) is amended--
                      [(A) by redesignating paragraphs (2) and (3)
                    as paragraphs (3) and (4), respectively; and
                      [(B) by inserting after paragraph (1) the
                    following:
              [``(2) Electric motors.--
                      [``(A) General purpose electric motors
                    (subtype i).--Except as provided in
                    subparagraph (B), each general purpose electric
                    motor (subtype I) with a power rating of 1
                    horsepower or greater, but not greater than 200
                    horsepower, manufactured (alone or as a
                    component of another piece of equipment) after
                    the 3-year period beginning on the date of
                    enactment of the Energy Independence and
                    Security Act of 2007, shall have a nominal full
                    load efficiency that is not less than as
                    defined in NEMA MG-1 (2006) Table 12-12.
                      [``(B) Fire pump motors.--Each fire pump
                    motor manufactured (alone or as a component of
                    another piece of equipment) after the 3-year
                    period beginning on the date of enactment of
                    the Energy Independence and Security Act of
                    2007 shall have nominal full load efficiency
                    that is not less than as defined in NEMA MG-1
                    (2006) Table 12-11.
                      [``(C) General purpose electric motors
                    (subtype ii).--Each general purpose electric
                    motor (subtype II) with a power rating of 1
                    horsepower or greater, but not greater than 200
                    horsepower, manufactured (alone or as a
                    component of another piece of equipment) after
                    the 3-year period beginning on the date of
                    enactment of the Energy Independence and
                    Security Act of 2007, shall have a nominal full
                    load efficiency that is not less than as
                    defined in NEMA MG-1 (2006) Table 12-11.
                      [``(D) NEMA design b, general purpose
                    electric motors.--Each NEMA Design B, general
                    purpose electric motor with a power rating of
                    more than 200 horsepower, but not greater than
                    500 horsepower, manufactured (alone or as a
                    component of another piece of equipment) after
                    the 3-year period beginning on the date of
                    enactment of the Energy Independence and
                    Security Act of 2007, shall have a nominal full
                    load efficiency that is not less than as
                    defined in NEMA MG-1 (2006) Table 12-11.''.
              [(2) Effective date.--The amendments made by
            paragraph (1) take effect on the date that is 3 years
            after the date of enactment of this Act.]

               *       *       *       *       *       *       *

                     Subtitle B--Lighting Energy Efficiency

    SEC. 321. EFFICIENT LIGHT BULBS.

      (a)  * * *

               *       *       *       *       *       *       *

      (e) Prohibited Acts.--Section 332(a) of the Energy Policy and
    Conservation Act (42 U.S.C. 6302(a)) [is amended] (as amended
    by section 306(b)) is amended--
              [(1) in paragraph (4), by striking ``or'' at the end;
              [(2) in paragraph (5), by striking the period at the
            end and inserting ``; or''; and]
              (1) in paragraph (5), by striking ``or'' after the
            semicolon at the end;
              (2) in paragraph (6), by striking the period at the
            end and inserting ``; or''; and

               *       *       *       *       *       *       *

    SEC. 322. INCANDESCENT REFLECTOR LAMP EFFICIENCY STANDARDS.

      (a)  * * *
      (b) Standards for Fluorescent Lamps and Incandescent
    Reflector Lamps.--Section 325(i) of the Energy Policy and
    Conservation Act (42 U.S.C. [6995(i)] 6295(i)) is amended by
    striking paragraph (1) and inserting the following:
              ``(1) Standards.--
                      ``(A) * * *

               *       *       *       *       *       *       *

    SEC. 325. ENERGY EFFICIENCY LABELING FOR CONSUMER ELECTRONIC PRODUCTS.

      (a)  * * *
      (b) Content of Label.--Section 324(c) of the Energy Policy
    and Conservation Act (42 U.S.C. [6924(c)] 6294(c)) is amended
    by adding at the end the following:
              ``(9) Discretionary application.--The Commission may
            apply paragraphs (1), (2), (3), (5), and (6) of this
            subsection to the labeling of any product covered by
            paragraph (2)(I) or (6) of subsection (a).''.

               TITLE IV--ENERGY SAVINGS IN BUILDINGS AND INDUSTRY

    SEC. 401. DEFINITIONS.

      In this title:
              (1)  * * *
              (2) Advisory committee.--The term ``Advisory
            Committee'' means the Green Building Advisory Committee
            established under section [484] 494.

               *       *       *       *       *       *       *

              (13) High-performance green building.--The term
            ``high-performance green building'' means a high-
            performance building that, during its life-cycle, as
            compared with similar buildings (as measured by
            Commercial Buildings Energy Consumption Survey or
            Residential Energy Consumption Survey data from the
            Energy Information [Agency] Administration)--
                      (A)  * * *

               *       *       *       *       *       *       *

    Subtitle C--High-Performance Federal Buildings

               *       *       *       *       *       *       *

    SEC. 436. HIGH-PERFORMANCE GREEN FEDERAL BUILDINGS.

      (a)  * * *

               *       *       *       *       *       *       *

      (c) Duties.--The Federal Director shall--
              (1)  * * *

               *       *       *       *       *       *       *

              (3) establish a senior-level Federal Green Building
            Advisory Committee under section [474] 494, which shall
            provide advice and recommendations in accordance with
            that section and subsection (d);

               *       *       *       *       *       *       *

    SEC. 440. AUTHORIZATION OF APPROPRIATIONS.

      There is authorized to be appropriated to carry out sections
    434 through 439 [and 482] $4,000,000 for each of fiscal years
    2008 through 2012, to remain available until expended.

               *       *       *       *       *       *       *

    Subtitle D--Industrial Energy Efficiency

               *       *       *       *       *       *       *

    SEC. 452. ENERGY-INTENSIVE INDUSTRIES PROGRAM.

      (a) * * *

               *       *       *       *       *       *       *

      (e) Institution of Higher Education-Based Industrial Research
    and Assessment Centers.--[The Secretary shall provide funding
    to institution of higher education-based industrial research
    and assessment centers, whose purpose shall be--]
              (1) In general.--The Secretary shall provide funding
            to institution of higher education-based industrial
            research and assessment centers, whose purposes shall
            be--
                      [(1)] (A) to identify opportunities for
                    optimizing energy efficiency and environmental
                    performance;
                      [(2)] (B) to promote applications of emerging
                    concepts and technologies in small- and medium-
                    sized manufacturers;
                      [(3)] (C) to promote research and development
                    for the use of alternative energy sources to
                    supply heat, power, and new feedstocks for
                    energy-intensive industries;
                      [(4)] (D) to coordinate with appropriate
                    Federal and State research offices, and provide
                    a clearinghouse for industrial process and
                    energy efficiency technical assistance
                    resources; and
                      [(5)] (E) to coordinate with State-accredited
                    technical training centers and community
                    colleges, while ensuring appropriate services
                    to all regions of the United States.
              (2) Coordination with centers for energy and
            environmental knowledge and outreach.--An industrial
            research and assessment center may serve as a Center
            for Energy and Environmental Knowledge and Outreach
            established pursuant to section 173 of the American
            Clean Energy and Security Act of 2009.

    SEC. 453. ENERGY EFFICIENCY FOR DATA CENTER BUILDINGS.

      (a)  * * *

               *       *       *       *       *       *       *

      (c) Data Center Efficiency Organization.--
              (1) In general.--After the establishment of the
            program described in subsection (b) but not later than
            2 years after the date of enactment of this Act, the
            Secretary and the Administrator shall jointly designate
            an information technology industry organization to
            consult with and to coordinate the program.

               *       *       *       *       *       *       *

    TITLE V--ENERGY SAVINGS IN GOVERNMENT AND PUBLIC INSTITUTIONS

               *       *       *       *       *       *       *

          Subtitle E--Energy Efficiency and Conservation Block Grants

    SEC. 541. DEFINITIONS.

      In this subtitle:
              (1)  * * *

               *       *       *       *       *       *       *

              (3)(A) Eligible unit of local government-alternative
            1.--The term ``eligible unit of local government-
            alternative 1'' means--
                      (i) a city with a population--
                              (I)  * * *
                              (II) that causes the city to be 1 of
                            the 10 highest-populated cities of the
                            State in which the city is located;
                            [and]
                      (ii) a county with a population--
                              (I)  * * *
                              (II) that causes the county to be 1
                            of the 10 highest-populated counties of
                            the State in which the county is
                            located[.]; or
                      (iii) a group of adjacent, contiguous, or
                    geographically proximate units of local
                    government that reach agreement to act jointly
                    for purposes of this section and that represent
                    a combined population of not less than 35,000.
              (B) Eligible unit of local government-alternative
            2.--The term ``eligible unit of local government-
            alternative 2'' means--
                      (i) a city with a population of at least
                    50,000; [or]
                      (ii) a county with a population of at least
                    200,000[.]; or
                      (iii) a group of adjacent, contiguous, or
                    geographically proximate units of local
                    government that reach agreement to act jointly
                    for purposes of this section and that represent
                    a combined population of not less than 50,000.

               *       *       *       *       *       *       *

    SEC. 545. REQUIREMENTS FOR ELIGIBLE ENTITIES.

      (a)  * * *
      (b) Eligible Units of Local Government and Indian Tribes.--
              (1)  * * *

               *       *       *       *       *       *       *

              (3) Limitations on use of funds.--Of amounts provided
            to an eligible unit of local government or Indian tribe
            under the program, an eligible unit of local government
            or [Indian tribe may use--
                      [(A) for administrative expenses] Indian
                    tribe may use for administrative expenses,
                    excluding the cost of meeting the reporting
                    requirements of this subtitle, an amount equal
                    to the greater of--
                      [(i)] (A) 10 percent; and
                      [(ii)] (B) $75,000[;].
                      [(B) for the establishment of revolving loan
                    funds, an amount equal to the greater of--
                              [(i) 20 percent; and
                              [(ii) $250,000; and
                      [(C) for the provision of subgrants to
                    nongovernmental organizations for the purpose
                    of assisting in the implementation of the
                    energy efficiency and conservation strategy of
                    the eligible unit of local government or Indian
                    tribe, an amount equal to the greater of--
                              [(i) 20 percent; and
                              [(ii) $250,000.]

               *       *       *       *       *       *       *

    TITLE XIII--SMART GRID

               *       *       *       *       *       *       *

    SEC. 1302. SMART GRID SYSTEM REPORT.

      The Secretary, acting through the Assistant Secretary of the
    Office of Electricity Delivery and Energy Reliability (referred
    to in this section as the ``OEDER'') and through the Smart Grid
    Task Force established in section 1303, shall, after consulting
    with any interested individual or entity as appropriate, no
    later than 1 year after [enactment] the date of enactment of
    this Act, and every 2 years thereafter, report to Congress
    concerning the status of smart grid deployments nationwide and
    any regulatory or government barriers to continued deployment.
    The report shall provide the current status and prospects of
    smart grid development, including information on technology
    penetration, communications network capabilities, costs, and
    obstacles. It may include recommendations for State and Federal
    policies or actions helpful to facilitate the transition to a
    smart grid. To the extent appropriate, it should take a
    regional perspective. In preparing this report, the Secretary
    shall solicit advice and contributions from the Smart Grid
    Advisory Committee created in section 1303; from other involved
    Federal agencies including but not limited to the Federal
    Energy Regulatory Commission (``Commission''), the National
    Institute of Standards and Technology (``Institute''), and the
    Department of Homeland Security; and from other stakeholder
    groups not already represented on the Smart Grid Advisory
    Committee.

               *       *       *       *       *       *       *

    SEC. 1306. FEDERAL MATCHING FUND FOR SMART GRID INVESTMENT COSTS.

      (a) * * *

               *       *       *       *       *       *       *

      (c) Investments Not Included.--Qualifying Smart Grid
    investments do not include any of the following:
              (1) * * *

               *       *       *       *       *       *       *

              (3) After the final date for State consideration of
            the Smart Grid Information Standard under [section 1307
            (paragraph (17) of section 111(d) of the Public Utility
            Regulatory Policies Act of 1978)] paragraph (19) of
            section 111(d) of the Public Utility Regulatory
            Policies Act of 1978 (16 U.S.C. 2621(d)), an investment
            that is not in compliance with such standard.

               *       *       *       *       *       *       *

                                  ----------

    TITLE 49, UNITED STATES CODE

               *       *       *       *       *       *       *

    SUBTITLE VI--MOTOR VEHICLE AND DRIVER PROGRAMS

               *       *       *       *       *       *       *

    PART C--INFORMATION, STANDARDS, AND REQUIREMENTS

               *       *       *       *       *       *       *

                      CHAPTER 329--AUTOMOBILE FUEL ECONOMY

    Sec.
    32901.  Definitions.
         * * * * * * *
    32920.  Open fuel standard for transportation.
         * * * * * * *

    Sec. 32920. Open fuel standard for transportation

      (a) Definitions.--In this section:
              (1) E85.--The term ``E85'' means a fuel mixture
            containing 85 percent ethanol and 15 percent gasoline
            by volume.
              (2) Flexible fuel automobile.--The term ``flexible
            fuel automobile'' means an automobile that has been
            warranted by its manufacturer to operate on gasoline,
            E85, and M85.
              (3) Fuel choice-enabling automobile.--The term ``fuel
            choice-enabling automobile'' means--
                      (A) a flexible fuel automobile; or
                      (B) an automobile that has been warranted by
                    its manufacturer to operate on biodiesel.
              (4) Light-duty automobile.--The term ``light-duty
            automobile'' means--
                      (A) a passenger automobile; or
                      (B) a non-passenger automobile.
              (5) Light-duty automobile manufacturer's annual
            covered inventory.--The term ``light-duty automobile
            manufacturer's annual covered inventory'' means the
            number of light-duty automobiles powered by an internal
            combustion engine that a manufacturer, during a given
            calendar year, manufactures in the United States or
            imports from outside of the United States for sale in
            the United States.
              (6) M85.--The term ``M85'' means a fuel mixture
            containing 85 percent methanol and 15 percent gasoline
            by volume.
      (b) Open Fuel Standard for Transportation.--
              (1) In general.--The Secretary may promulgate
            regulations to require each light-duty automobile
            manufacturer's annual covered inventory to be comprised
            of a minimum percentage of fuel-choice enabling
            automobiles, with sufficient lead time, if the
            Secretary, in coordination with the Secretary of Energy
            and the Administrator of the Environmental Protection
            Agency, determines such requirement is a cost-effective
            way to achieve the Nation's energy independence and
            environmental objectives. The cost-effective
            determination shall consider the future availability of
            both alternative fuel supply and infrastructure to
            deliver the alternative fuel to the fuel-choice
            enabling vehicles.
              (2) Temporary exemption from requirements.--
                      (A) Application.--A manufacturer may request
                    an exemption from the requirement described in
                    paragraph (1) by submitting an application to
                    the Secretary, at such time, in such manner,
                    and containing such information as the
                    Secretary may require by regulation. Each such
                    application shall specify the models, lines,
                    and types of automobiles affected.
                      (B) Evaluation.--After evaluating an
                    application received from a manufacturer, the
                    Secretary may at any time, under such terms and
                    conditions, and to such extent as the Secretary
                    considers appropriate, temporarily exempt, or
                    renew the exemption of, a light-duty automobile
                    from the requirement described in paragraph (1)
                    if the Secretary determines that unavoidable
                    events not under the control of the
                    manufacturer prevent the manufacturer of such
                    automobile from meeting its required production
                    volume of fuel choice-enabling automobiles,
                    including--
                              (i) a disruption in the supply of any
                            component required for compliance with
                            the regulations;
                              (ii) a disruption in the use and
                            installation by the manufacturer of
                            such component; or
                              (iii) application to plug-in electric
                            drive vehicles causing such vehicles to
                            fail to meet State air quality
                            requirements.
                      (C) Consolidation.--The Secretary may
                    consolidate applications received from multiple
                    manufacturers under subparagraph (A) if they
                    are of a similar nature.
                      (D) Conditions.--Any exemption granted under
                    subparagraph (B) shall be conditioned upon the
                    manufacturer's commitment to recall the
                    exempted automobiles for installation of the
                    omitted components within a reasonable time
                    proposed by the manufacturer and approved by
                    the Secretary after such components become
                    available in sufficient quantities to satisfy
                    both anticipated production and recall volume
                    requirements.
                      (E) Notice.--The Secretary shall publish in
                    the Federal Register--
                              (i) notice of each application
                            received from a manufacturer;
                              (ii) notice of each decision to grant
                            or deny a temporary exemption; and
                              (iii) the reasons for granting or
                            denying such exemptions.

               *       *       *       *       *       *       *

                                  ----------

                           ENERGY POLICY ACT OF 2005

    SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

      (a) * * *

               *       *       *       *       *       *       *

      (b) Table of Contents.--The table of contents for this Act is
    as follows:
         * * * * * * *

                           TITLE I--ENERGY EFFICIENCY

         * * * * * * *

                Subtitle B--Energy Assistance and State Programs

         * * * * * * *
    [Sec. 124. Energy efficient appliance rebate programs.]
    Sec. 124. Energy efficient and smart appliance rebate program.
         * * * * * * *

                      Subtitle C--Energy Efficient Products

         * * * * * * *
    [Sec. 134. Energy efficiency public information initiative.]
    Sec. 134. Energy efficiency and Smart Grid public information
              initiative.

               *       *       *       *       *       *       *

    TITLE I--ENERGY EFFICIENCY

               *       *       *       *       *       *       *

    Subtitle B--Energy Assistance and State Programs

               *       *       *       *       *       *       *

    SEC. 124. [ENERGY EFFICIENT APPLIANCE REBATE PROGRAMS.] ENERGY
                        EFFICIENT AND SMART APPLIANCE REBATE PROGRAM.

      (a) Definitions.--In this section:
              (1) * * *

               *       *       *       *       *       *       *

              (4) Smart appliance.--The term ``smart appliance''
            means a product that the Administrator of the
            Environmental Protection Agency or the Secretary of
            Energy has determined qualifies for such a designation
            in the Energy Star program pursuant to section 142 of
            the American Clean Energy and Security Act of 2009, or
            that the Secretary or the Administrator has separately
            determined includes the relevant Smart Grid
            capabilities listed in section 1301 of the Energy
            Independence and Security Act of 2007 (15 U.S.C.
            17381).
              [(4)] (5) State energy office.--The term ``State
            energy office'' means the State agency responsible for
            developing State energy conservation plans under
            section 362 of the Energy Policy and Conservation Act
            (42 U.S.C. 6322).
              [(5)] (6) State program.--The term ``State program''
            means a State energy efficient appliance rebate program
            described in subsection (b)(1).
      (b) Eligible States.--A State shall be eligible to receive an
    allocation under subsection (c) if the State--
              (1) establishes (or has established) a State energy
            efficient and smart appliance rebate program to provide
            rebates to residential consumers for the purchase of
            residential Energy Star products, including products
            designated as being smart appliances, or products with
            improved energy efficiency in cold climates, to replace
            used appliances of the same type;

               *       *       *       *       *       *       *

              (3) provides assurances satisfactory to the Secretary
            that the State will use the allocation to supplement,
            but not supplant, funds made available to carry out the
            administration of the State program.

               *       *       *       *       *       *       *

      (d) Use of Allocated Funds.--The allocation to a State energy
    office under subsection (c) may be used to pay up to 50 percent
    of the cost of establishing and carrying out the administration
    of a State program, and up to 100 percent of the value of the
    rebates provided pursuant to this section.
      (e) Issuance of Rebates.--Rebates may be provided to
    residential consumers that meet the requirements of the State
    program. The amount of a rebate shall be determined by the
    State energy office, taking into consideration--
              (1) * * *

               *       *       *       *       *       *       *

              (3) the difference between the cost of the
            residential Energy Star product, with separate
            consideration as applicable if the product is also a
            smart appliance, or product with improved energy
            efficiency in a cold climate and the cost of an
            appliance that is not a residential Energy Star product
            or product with improved energy efficiency in a cold
            climate, but is of the same type as, and is the nearest
            capacity, performance, and other relevant
            characteristics (as determined by the State energy
            office) to, the residential Energy Star product or
            product with improved energy efficiency in a cold
            climate or smart appliance.
      (f) Authorization of Appropriations.--There are authorized to
    be appropriated to the Secretary to carry out this section
    [$50,000,000 for each of the fiscal years 2006 through 2010.]
    $100,000,000 for each fiscal year from 2010 through 2015.

               *       *       *       *       *       *       *

    Subtitle C--Energy Efficient Products

               *       *       *       *       *       *       *

    SEC. 134. [ENERGY EFFICIENCY PUBLIC INFORMATION INITIATIVE.] ENERGY
                        EFFICIENCY AND SMART GRID PUBLIC INFORMATION
                        INITIATIVE.

      (a) In General.--The Secretary shall carry out a
    comprehensive national program, including advertising and media
    awareness, to inform consumers about--
              (1) the need to [reduce energy consumption during the
            4-year period beginning on the date of enactment of
            this Act] increase energy efficiency and to adopt Smart
            Grid technology and practices;
              (2) the [benefits to consumers of reducing] economic
            and environmental benefits to consumers and the United
            States of optimizing consumption of electricity,
            natural gas, and petroleum, particularly during peak
            use periods;
              (3) the effect of energy efficiency and Smart Grid
            capability in reducing energy and electricity prices
            throughout the economy, together with the importance of
            low energy costs to economic growth and preserving
            manufacturing jobs in the United States; and
              (4) practical, cost-effective measures that consumers
            can take to reduce consumption of electricity, natural
            gas, and gasoline, including--
                      (A) * * *

               *       *       *       *       *       *       *

                      (C) purchasing energy efficient products;
                    [and]
                      (D) purchasing and utilizing equipment that
                    includes Smart Grid features and capability;
                    and
                      [(D)] (E) proper tire maintenance.

               *       *       *       *       *       *       *

      (c) Report.--[Not later than July 1, 2009,] For each year
    when appropriations pursuant to the authorization in this
    section exceed $10,000,000, the Secretary shall submit to
    Congress a report describing the effectiveness of the program
    under this section.
      (d) Termination of Authority.--The program carried out under
    this section shall terminate on December 31, [2010] 2020.
      (e) Authorization of Appropriations.--There are authorized to
    be appropriated to carry out this section $90,000,000 for each
    of fiscal years 2006 through [2010] 2020.

               *       *       *       *       *       *       *

                           TITLE II--RENEWABLE ENERGY

    Subtitle A--General Provisions

               *       *       *       *       *       *       *

    SEC. 203. FEDERAL PURCHASE REQUIREMENT.

      (a) Requirement.--The President, acting through the
    Secretary, shall seek to ensure that, to the extent
    economically feasible and technically practicable, of the total
    amount of [electric] energy the Federal Government consumes
    during any fiscal year, the following amounts shall be
    renewable energy:
              (1) * * *

               *       *       *       *       *       *       *

      (b) Definitions.--In this section:
              (1) * * *
              (2) Renewable energy.--The term ``renewable energy''
            means electric or thermal energy generated from solar,
            wind, biomass, landfill gas, ocean (including tidal,
            wave, current, and thermal), geothermal, municipal
            solid waste, or new hydroelectric generation capacity
            achieved from increased efficiency or additions of new
            capacity at an existing hydroelectric project.
      [(c) Calculation.--For purposes of determining compliance
    with the requirement of this section, the amount of renewable
    energy shall be doubled if--
              [(1) the renewable energy is produced and used on-
            site at a Federal facility;
              [(2) the renewable energy is produced on Federal
            lands and used at a Federal facility; or
              [(3) the renewable energy is produced on Indian land
            as defined in title XXVI of the Energy Policy Act of
            1992 (25 U.S.C. 3501 et seq.) and used at a Federal
            facility.]
      (c) Calculation.--Renewable energy produced at a Federal
    facility, on Federal lands, or on Indian lands (as defined in
    title XXVI of the Energy Policy Act of 1992 (25 U.S.C. 3501 et
    seq.)) shall be calculated separately from renewable energy
    consumed at a Federal facility, and each may be used to comply
    with the consumption requirement under subsection (a).

               *       *       *       *       *       *       *

    TITLE VII--VEHICLES AND FUELS

               *       *       *       *       *       *       *

                     Subtitle G--Diesel Emissions Reduction

    SEC. 791. DEFINITIONS.

      In this subtitle:
              (1) * * *

               *       *       *       *       *       *       *

              (3) Eligible entity.--The term ``eligible entity''
            means--
                      (A) * * *
                      (B) a nonprofit organization or institution
                    in any State that--
                              (i) * * *

               *       *       *       *       *       *       *

              (9) Definition of state.--[The term ``State''
            includes the District of Columbia.] The term ``State''
            includes the District of Columbia, American Samoa,
            Guam, the Commonwealth of the Northern Mariana Islands,
            Puerto Rico, and the Virgin Islands.

               *       *       *       *       *       *       *

    SEC. 793. STATE GRANT AND LOAN PROGRAMS.

      (a) * * *

               *       *       *       *       *       *       *

      (c) Allocation of Funds.--
              (1) * * *
              (2) Allocation.--Using not more than 20 percent of
            the funds made available to carry out this subtitle for
            a fiscal year, the Administrator shall provide to each
            State described in paragraph (1) for the fiscal year an
            allocation of funds that is equal to--
                      (A) if each of the [51 States] 56 States
                    qualifies for an allocation, an amount equal to
                    [1.96 percent] 1.785 percent of the funds made
                    available to carry out this section; or
                      (B) if fewer than [51 States] 56 States
                    qualifies for an allocation, an amount equal to
                    the amount described in subparagraph (A), plus
                    an additional amount equal to the product
                    obtained by multiplying--
                              (i) * * *
                              [(ii) the amount of funds remaining
                            after each State described in paragraph
                            (1) receives the 2-percent allocation
                            under this paragraph.]
                              (ii) the amount of funds remaining
                            after each State described in paragraph
                            (1) receives the 1.785-percent
                            allocation under this paragraph.

               *       *       *       *       *       *       *

               TITLE XVII--INCENTIVES FOR INNOVATIVE TECHNOLOGIES

    SEC. 1701. DEFINITIONS.

      In this title:
              (1) * * *

               *       *       *       *       *       *       *

              (6) Renewable fuel.--The term ``renewable fuel'' has
            the meaning given the term in section 211(o)(1) of the
            Clean Air Act (42 U.S.C. 7545(o)(1)), except that the
            term shall include all ethanol and biodiesel.
              (7) Renewable fuel pipeline.--The term ``renewable
            fuel pipeline'' means a common carrier pipeline for
            transporting renewable fuel.
              (8) Conditional commitment.--The term ``conditional
            commitment'' means a final term sheet negotiated
            between the Secretary and a project sponsor or
            sponsors, which term sheet shall be binding on both
            parties and become a final loan guarantee agreement if
            all conditions precedent established in the term sheet,
            which shall include the acquisition of all necessary
            permits and licenses, are satisfied.

    SEC. 1702. TERMS AND CONDITIONS.

      (a) * * *
      [(b) Specific Appropriation or Contribution.--No guarantee
    shall be made unless--
              [(1) an appropriation for the cost has been made; or
              [(2) the Secretary has received from the borrower a
            payment in full for the cost of the obligation and
            deposited the payment into the Treasury.]
      (b) Specific Appropriation or Contribution.--
              (1) In general.--No guarantee shall be made unless--
                      (A) an appropriation for the cost has been
                    made;
                      (B) the Secretary has received from the
                    borrower a payment in full for the cost of the
                    obligation and deposited the payment into the
                    Treasury; or
                      (C) a combination of appropriations or
                    payments from the borrower has been made
                    sufficient to cover the cost of the obligation.
              (2) Limitation.--The source of payments received from
            a borrower under paragraph (1)(B) shall not be a loan
            or other debt obligation that is made or guaranteed by
            the Federal Government.

               *       *       *       *       *       *       *

      (h) Fees.--
              (1) * * *
              [(2) Availability.--Fees collected under this
            subsection shall--
                      [(A) be deposited by the Secretary into the
                    Treasury; and
                      [(B) remain available until expended, subject
                    to such other conditions as are contained in
                    annual appropriations Acts.]
              (2) Availability.--Fees collected under this
            subsection shall--
                      (A) be deposited by the Secretary into a
                    special fund in the Treasury to be known as the
                    ``Incentives For Innovative Technologies
                    Fund''; and
                      (B) remain available to the Secretary for
                    expenditure, without further appropriation or
                    fiscal year limitation, for administrative
                    expenses incurred in carrying out this title.

               *       *       *       *       *       *       *

      (k) Wage Rate Requirements.--No loan guarantee shall be made
    under this title unless the borrower has provided to the
    Secretary reasonable assurances that all laborers and mechanics
    employed by contractors and subcontractors in the performance
    of construction work financed in whole or in part by the
    guaranteed loan will be paid wages at rates not less than those
    prevailing on projects of a character similar to the contract
    work in the civil subdivision of the State in which the
    contract work is to be performed as determined by the Secretary
    of Labor in accordance with subchapter IV of chapter 31 of part
    A of subtitle II of title 40, United States Code. With respect
    to the labor standards specified in this subsection, the
    Secretary of Labor shall have the authority and functions set
    forth in Reorganization Plan Numbered 14 of 1950 (64 Stat.
    1267; 5 U.S.C. App.) and section 3145 of title 40, United
    States Code.

    SEC. 1703. ELIGIBLE PROJECTS.

      (a) * * *
      (b) Categories.--Projects from the following categories shall
    be eligible for a guarantee under this section:
              (1) * * *

               *       *       *       *       *       *       *

              (11) Renewable fuel pipelines.
              (12) The development, construction, acquisition,
            retrofitting, or engineering integration of a qualified
            advanced electric transmission manufacturing plant or
            the construction of a qualified advanced electric
            transmission property (whether by construction of new
            facilities or the modification of existing facilities).
            For purposes of this paragraph, the terms ``qualified
            advanced electric transmission property'' and
            ``qualified advanced electric transmission
            manufacturing plant'' have the meanings provided by
            section 1705(a)(5).

               *       *       *       *       *       *       *

    SEC. 1705. TEMPORARY PROGRAM FOR RAPID DEPLOYMENT OF RENEWABLE ENERGY
                        AND ELECTRIC POWER TRANSMISSION PROJECTS.

      (a) In General.--Notwithstanding section 1703, the Secretary
    may make guarantees under this section only for the following
    categories of projects that commence construction not later
    than September 30, 2011:
              (1) * * *

               *       *       *       *       *       *       *

              (5) The development, construction, acquisition,
            retrofitting, or engineering integration of a qualified
            advanced electric transmission manufacturing plant or
            the construction of a qualified high efficiency
            transmission property or a qualified advanced electric
            transmission property (whether by construction of new
            facilities or the modification of existing facilities).
            For purposes of this paragraph:
                      (A) The term ``qualified advanced electric
                    transmission property'' means any high voltage
                    electric transmission cable, related
                    substation, converter station, or other
                    integrated facility that--
                              (i) utilizes advanced ultra low
                            resistance superconductive material or
                            other advanced technology that has been
                            determined by the Secretary of Energy
                            as--
                                      (I) reasonably likely to
                                    become commercially viable
                                    within 10 years after the date
                                    of enactment of this paragraph;
                                      (II) capable of reliably
                                    transmitting at least 5
                                    gigawatts of high-voltage
                                    electric energy for distances
                                    greater than 300 miles with
                                    energy losses not exceeding 3
                                    percent of the total power
                                    transported; and
                                      (III) not creating an
                                    electromagnetic field;
                              (ii) has been determined by an
                            appropriate energy regulatory body,
                            upon application, to be in the public
                            interest and thereby eligible for
                            inclusion in regulated rates; and
                              (iii) can be located safely and
                            economically in a permanent underground
                            right of way not to exceed 25 feet in
                            width.
                    The term ``qualified advanced electric
                    transmission property'' shall not include any
                    property placed in service after December 31,
                    2016.
                      (B)(i) The term ``qualified high efficiency
                    transmission property'' means any high voltage
                    overhead electric transmission line, related
                    substation, or other integrated facility that--
                              (I) utilizes advanced conductor core
                            technology that--
                                      (aa) has been determined by
                                    the Secretary of Energy as
                                    reasonably likely to become
                                    commercially viable within 10
                                    years after the date of
                                    enactment of this paragraph;
                                      (bb) is suitable for use on
                                    transmission lines up to 765kV;
                                    and
                                      (cc) exhibits power losses at
                                    least 30 percent lower than
                                    that of transmission lines
                                    using conventional ``ACSR''
                                    conductors;
                              (II) has been determined by an
                            appropriate energy regulatory body,
                            upon application, to be in the public
                            interest and thereby eligible for
                            inclusion in regulated rates; and
                              (III) can be located safely and
                            economically in a right of way not to
                            exceed that used by conventional
                            ``ACSR'' conductors; and
                      (ii) The term ``qualified high efficiency
                    transmission property'' shall not include any
                    property placed in service after December 31,
                    2016.
                      (C) The term ``qualified advanced electric
                    transmission manufacturing plant'' means any
                    industrial facility located in the United
                    States which can be equipped, re-equipped,
                    expanded, or established to produce in whole or
                    in part qualified advanced electric
                    transmission property.

               *       *       *       *       *       *       *

                                  ----------

                       ENERGY POLICY AND CONSERVATION ACT

      Be it enacted by the Senate and House of Representatives of
    the United States of America in Congress assembled, That this
    Act may be cited as the ``Energy Policy and Conservation Act''.

                                TABLE OF CONTENTS

         * * * * * * *

                     TITLE III--IMPROVING ENERGY EFFICIENCY

         * * * * * * *

                      Part C--Certain Industrial Equipment

         * * * * * * *
    [Sec. 334. Injunctive enforcement.]
    Sec. 334. Jurisdiction and venue.
         * * * * * * *
    Sec. 347. Motor efficiency rebate program.

               *       *       *       *       *       *       *

    TITLE III--IMPROVING ENERGY EFFICIENCY

               *       *       *       *       *       *       *

     Part B--Energy Conservation Program for Consumer Products Other Than
                                  Automobiles

                                  DEFINITIONS

      Sec. 321. For purposes of this part:
              (1) * * *

               *       *       *       *       *       *       *

              [(6) The term ``energy conservation standard''
            means--
                      [(A) a performance standard which prescribes
                    a minimum level of energy efficiency or a
                    maximum quantity of energy use, or, in the case
                    of showerheads, faucets, water closets, and
                    urinals, water use, for a covered product,
                    determined in accordance with test procedures
                    prescribed under section 323; or
                      [(B) a design requirement for the products
                    specified in paragraphs (6), (7), (8), (10),
                    (15), (16), (17), and (19) of section 322(a);
                    and
            includes any other requirements which the Secretary may
            prescribe under section 325(r).]
              (6) Energy conservation standard.--
                      (A) In general.--The term ``energy
                    conservation standard'' means 1 or more
                    performance standards that--
                              (i) for covered products (excluding
                            clothes washers, dishwashers,
                            showerheads, faucets, water closets,
                            and urinals), prescribe a minimum level
                            of energy efficiency or a maximum
                            quantity of energy use, determined in
                            accordance with test procedures
                            prescribed under section 323;
                              (ii) for showerheads, faucets, water
                            closets, and urinals, prescribe a
                            minimum level of water efficiency or a
                            maximum quantity of water use,
                            determined in accordance with test
                            procedures prescribed under section
                            323; and
                              (iii) for clothes washers and
                            dishwashers--
                                      (I) prescribe a minimum level
                                    of energy efficiency or a
                                    maximum quantity of energy use,
                                    determined in accordance with
                                    test procedures prescribed
                                    under section 323; and
                                      (II) may include a minimum
                                    level of water efficiency or a
                                    maximum quantity of water use,
                                    determined in accordance with
                                    those test procedures.
                      (B) Inclusions.--The term ``energy
                    conservation standard'' includes--
                              (i) 1 or more design requirements, if
                            the requirements were established--
                                      (I) on or before the date of
                                    enactment of this subclause;
                                      (II) as part of a direct
                                    final rule under section
                                    325(p)(4); or
                                      (III) as part of a final rule
                                    published on or after January
                                    1, 2012, and
                              (ii) any other requirements that the
                            Secretary may prescribe under section
                            325(r).
                      (C) Exclusion.--The term ``energy
                    conservation standard'' does not include a
                    performance standard for a component of a
                    finished covered product, unless regulation of
                    the component is specifically authorized or
                    established pursuant to this title.

               *       *       *       *       *       *       *

              (30)(A) * * *

               *       *       *       *       *       *       *

              (C) Except as provided in subparagraph (E), the term
            ``incandescent lamp'' means a lamp in which light is
            produced by a filament heated to incandescence by an
            electric current, including only the following:
                      (i) * * *
                      (ii) Any lamp (commonly referred to as a
                    reflector lamp) which is not colored or
                    designed for rough or vibration service
                    applications, that contains an inner reflective
                    coating on the outer bulb to direct the light,
                    an R, PAR, ER, BR, BPAR, or similar bulb shapes
                    with E26 medium screw bases, a rated voltage or
                    voltage range that lies at least partially
                    within 115 and 130 volts, a diameter which
                    exceeds 2.25 inches, and has a rated wattage
                    that is 40 watts or higher.

               *       *       *       *       *       *       *

              (D) General service incandescent lamp.--
                      (i) In general.--The term ``general service
                    incandescent lamp'' means a standard
                    incandescent or halogen type lamp that--
                              (I) * * *

               *       *       *       *       *       *       *

                              (III) has a lumen range of not less
                            than 310 lumens and not more than 2,600
                            lumens or, in the case of a modified
                            spectrum lamp, not less than 232 lumens
                            and not more than 1,950 lumens; and

               *       *       *       *       *       *       *

              (T) Appliance lamp.--The term ``appliance lamp''
            means any lamp that--
                      (i) is specifically designed to operate in a
                    household appliance[,] and has a maximum
                    wattage of 40 watts, [and is sold at retail,]
                    including an oven lamp, refrigerator lamp, and
                    vacuum cleaner lamp; and
                      (ii) when sold at retail, is designated and
                    marketed for the intended application, with--
                              (I) * * *

               *       *       *       *       *       *       *

              (67) Art work light fixture.--The term ``art work
            light fixture'' means a light fixture designed only to
            be mounted directly to an art work and for the purpose
            of illuminating that art work.
              (68) Led light engine.--The term ``LED light engine''
            or ``LED light engine with integral heat sink'' means a
            subsystem of an LED light fixture that--
                      (A) includes 1 or more LED components,
                    including--
                              (i) an LED driver power source with
                            electrical and mechanical interfaces;
                            and
                              (ii) an integral heat sink to provide
                            thermal dissipation; and
                      (B) may be designed to accept additional
                    components that provide aesthetic, optical, and
                    environmental control.
              (69) Led light fixture.--The term ``LED light
            fixture'' means a complete lighting unit consisting
            of--
                      (A) an LED light source with 1 or more LED
                    lamps or LED light engines; and
                      (B) parts--
                              (i) to distribute the light;
                              (ii) to position and protect the
                            light source; and
                              (iii) to connect the light source to
                            electrical power.
              (70) Light fixture.--The term ``light fixture'' means
            a product designed to provide light that includes--
                      (A) at least 1 lamp socket; and
                      (B) parts--
                              (i) to distribute the light;
                              (ii) position and protect 1 or more
                            lamps; and
                              (iii) to connect 1 or more lamps to a
                            power supply.
              (71) Portable light fixture.--
                      (A) In general.--The term ``portable light
                    fixture'' means a light fixture that has a
                    flexible cord and an attachment plug for
                    connection to a nominal 120-volt circuit that--
                              (i) allows the user to relocate the
                            product without any rewiring; and
                              (ii) typically can be controlled with
                            a switch located on the product or the
                            power cord of the product.
                      (B) Exclusions.--The term ``portable light
                    fixture'' does not include--
                              (i) direct plug-in night lights, sun
                            or heat lamps, medical or dental
                            lights, portable electric hand lamps,
                            signs or commercial advertising
                            displays, photographic lamps,
                            germicidal lamps, or light fixtures for
                            marine use or for use in hazardous
                            locations (as those terms are defined
                            in ANSI/NFPA 70 of the National
                            Electrical Code); or
                              (ii) decorative lighting strings,
                            decorative lighting outfits, or
                            electric candles or candelabra without
                            lamp shades that are covered by
                            Underwriter Laboratories (UL) standard
                            588, ``Seasonal and Holiday Decorative
                            Products''.
              (72) Gu-24.--The term ``GU-24'' means the designation
            of a lamp socket, based on a coding system by the
            International Electrotechnical Commission, under
            which--
                      (A) ``G'' indicates a holder and socket type
                    with 2 or more projecting contacts, such as
                    pins or posts;
                      (B) ``U'' distinguishes between lamp and
                    holder designs of similar type that are not
                    interchangeable due to electrical or mechanical
                    requirements; and
                      (C) 24 indicates the distance in millimeters
                    between the electrical contact posts.
              (73) Gu-24 adaptor.--
                      (A) In general.--The term ``GU-24 Adaptor''
                    means a 1-piece device, pig-tail, wiring
                    harness, or other such socket or base
                    attachment that--
                              (i) connects to a GU-24 socket on 1
                            end and provides a different type of
                            socket or connection on the other end;
                            and
                              (ii) does not alter the voltage.
                      (B) Exclusion.--The term ``GU-24 Adaptor''
                    does not include a fluorescent ballast with a
                    GU-24 base.
              (74) Gu-24 base lamp.--``GU-24 base lamp'' means a
            light bulb designed to fit in a GU-24 socket.
              (75) The term ``water dispenser'' means a factory-
            made assembly that mechanically cools and heats potable
            water and that dispenses the cooled or heated water by
            integral or remote means.
              (76) The term ``bottle-type water dispenser'' means a
            drinking water dispenser designed for dispensing both
            hot and cold water that uses a removable bottle or
            container as the source of potable water.
              (77) The term ``commercial hot food holding cabinet''
            means a heated, fully-enclosed compartment with one or
            more solid or glass doors that is designed to maintain
            the temperature of hot food that has been cooked in a
            separate appliance. Such term does not include heated
            glass merchandizing cabinets, drawer warmers,
            commercial hot food holding cabinets with interior
            volumes of less than 8 cubic feet, or cook-and-hold
            appliances.
              (78) The term ``portable electric spa'' means a
            factory-built electric spa or hot tub, supplied with
            equipment for heating and circulating water.

                                    COVERAGE

      Sec. 322. (a) In General.--The following consumer products,
    excluding those consumer products designed solely for use in
    recreational vehicles and other mobile equipment, are covered
    products:
              (1) * * *

               *       *       *       *       *       *       *

              (20) Portable light fixtures.
              (21) Bottle type water dispensers.
              (22) Commercial hot food holding cabinets.
              (23) Portable electric spas.
              [(20)] (24) Any other type of consumer product which
            the Secretary classifies as a covered product under
            subsection (b).

               *       *       *       *       *       *       *

                                TEST PROCEDURES

      Sec. 323. (a) * * *
      (b) Amended and New Procedures.--
              (1) * * *

               *       *       *       *       *       *       *

              (19) Led fixtures and led light engines.--Test
            procedures for LED fixtures and LED light engines shall
            be based on Illuminating Engineering Society of North
            America (IESNA) test procedure LM-79, Approved Method
            for Electrical and Photometric Testing of Solid-State
            Lighting Devices, and IESNA-approved test procedure for
            testing LED light engines.
              (20) Bottle type water dispensers.--Test procedures
            for bottle type water dispensers shall be based on
            ``Energy Star Program Requirements for Bottled Water
            Coolers version 1.1'' published by the Environmental
            Protection Agency. Units with an integral, automatic
            timer shall not be tested using section 4D, ``Timer
            Usage,'' of the test criteria.
              (21) Commercial hot food holding cabinets.--Test
            procedures for commercial hot food holding cabinets
            shall be based on the test procedures described in
            ANSI/ASTM F2140-01 (Test for idle energy rate-dry
            test). Interior volume shall be based on the method
            shown in the Environmental Protection Agency's ``Energy
            Star Program Requirements for Commercial Hot Food
            Holding Cabinets'' as in effect on August 15, 2003.
              (22) Portable electric spas.--Test procedures for
            portable electric spas shall be based on the test
            method for portable electric spas contained in section
            1604, title 20, California Code of Regulations as
            amended on December 3, 2008. When the American National
            Standards Institute publishes a test procedure for
            portable electric spas, the Secretary shall revise the
            Department of Energy's procedure.
              (23) Consensus and alternate test procedures.--
                      (A) Receipt of joint recommendation or
                    alternate testing procedure.--On receipt of--
                              (i) a statement that is submitted
                            jointly by interested persons that are
                            fairly representative of relevant
                            points of view (including
                            representatives of manufacturers of
                            covered products, States, and
                            efficiency advocates), as determined by
                            the Secretary, and contains
                            recommendations with respect to the
                            testing procedure for a covered
                            product; or
                              (ii) a submission of a testing
                            procedure currently in use for a
                            covered product by a State, nation, or
                            group of nations--
                                      (I) if the Secretary
                                    determines that the recommended
                                    testing procedure contained in
                                    the statement or submission is
                                    in accordance with subsection
                                    (b)(3), the Secretary may issue
                                    a final rule that establishes
                                    an energy or water conservation
                                    testing procedure that is
                                    published simultaneously with a
                                    notice of proposed rulemaking
                                    that proposes a new or amended
                                    energy or water conservation
                                    testing procedure that is
                                    identical to the testing
                                    procedure established in the
                                    final rule to establish the
                                    recommended testing procedure
                                    (referred to in this paragraph
                                    as a ``direct final rule''); or
                                      (II) if the Secretary
                                    determines that a direct final
                                    rule cannot be issued based on
                                    the statement or submission,
                                    the Secretary shall publish a
                                    notice of the determination,
                                    together with an explanation of
                                    the reasons for the
                                    determination.
                      (B) Public comment.--The Secretary shall
                    solicit public comment for a period of at least
                    110 days with respect to each direct final rule
                    issued by the Secretary under subparagraph
                    (A)(ii)(I).
                      (C) Withdrawal of direct final rules.--
                              (i) In general.--Not later than 120
                            days after the date on which a direct
                            final rule issued under subparagraph
                            (A)(ii)(I) is published in the Federal
                            Register, the Secretary shall withdraw
                            the direct final rule if--
                                      (I) the Secretary receives 1
                                    or more adverse public comments
                                    relating to the direct final
                                    rule under subparagraph (B)or
                                    any alternative joint
                                    recommendation; and
                                      (II) based on the rulemaking
                                    record relating to the direct
                                    final rule, the Secretary
                                    determines that such adverse
                                    public comments or alternative
                                    joint recommendation may
                                    provide a reasonable basis for
                                    withdrawing the direct final
                                    rule under paragraph (3) or any
                                    other applicable law.
                              (ii) Action on withdrawal.--On
                            withdrawal of a direct final rule under
                            clause (i), the Secretary shall--
                                      (I) proceed with the notice
                                    of proposed rulemaking
                                    published simultaneously with
                                    the direct final rule as
                                    described in subparagraph
                                    (A)(ii)(I); and
                                      (II) publish in the Federal
                                    Register the reasons why the
                                    direct final rule was
                                    withdrawn.
                              (iii) Treatment of withdrawn direct
                            final rules.--A direct final rule that
                            is withdrawn under clause (i) shall not
                            be considered to be a final rule for
                            purposes of subsection (b).
                      (D) Effect of paragraph.--Nothing in this
                    paragraph authorizes the Secretary to issue a
                    direct final rule based solely on receipt of
                    more than 1 statement containing recommended
                    test procedures relating to the direct final
                    rule.
              (24) Televisions.--(A) On the date of enactment of
            this paragraph, Appendix H to Subpart B of Part 430 of
            the United States Code of Federal Regulations,
            ``Uniform Test Method for Measuring the Energy
            Consumption of Television Sets'', is repealed.
              (B) No later than 12 months after the date of
            enactment of this paragraph the Secretary shall publish
            in the Federal Register a final rule prescribing a new
            test method for televisions.

               *       *       *       *       *       *       *

                                    LABELING

      Sec. 324. (a) In General.--(1) * * *
      (2)(A) * * *

               *       *       *       *       *       *       *

      (I)(i) Not later than 90 days after the date of enactment of
    this subparagraph, the Commission shall initiate a rulemaking
    to implement the additional labeling requirements specified in
    subsection (c)(1)(C) of this section with an effective date for
    the revised labeling requirement not later than 12 months from
    issuance of the final rule.
      (ii) Not later than 24 months after the date of enactment of
    this subparagraph, the Commission shall complete the rulemaking
    initiated under clause (i).
      (iii) Not later than 90 days after issuance of the final rule
    as provided in this subparagraph, the Secretary shall issue
    calculation methods required to effectuate the labeling
    requirements specified in subsection (c)(1)(C) of this section.
      (J)(i) Not later than 3 years after the date of enactment of
    this subparagraph, the Federal Trade Commission shall initiate
    a rulemaking to consider making a special note in a prominent
    manner on any ENERGY GUIDE label for any product actually
    including Smart Grid capability that--
                              (I) Smart Grid capability is a
                            feature of that product;
                              (II) the use and value of that
                            feature depended on the Smart Grid
                            capability of the utility system in
                            which the product was installed and the
                            active utilization of that feature by
                            the customer; and
                              (III) on a utility system with Smart
                            Grid capability, the use of the
                            product's Smart Grid capability could
                            reduce the customer's cost of the
                            product's annual operation by an
                            estimated dollar amount range
                            representing the result of incremental
                            energy and electricity cost savings
                            that would result from the customer
                            taking full advantage of such Smart
                            Grid capability.
                      (ii) Not later than 3 years after the date of
                    enactment of this subparagraph, the Commission
                    shall complete the rulemaking initiated under
                    clause (i).

               *       *       *       *       *       *       *

      (c) Content of Label.--(1) Subject to paragraph (6), a rule
    prescribed under this section shall require that each covered
    product in the type or class of covered products to which the
    rule applies bear a label which discloses--
              (A) the estimated annual operating cost of such
            product (determined in accordance with test procedures
            prescribed under section 323), except that if--
                      (i) * * *

               *       *       *       *       *       *       *

            the Commission shall require disclosure of a different
            useful measure of energy consumption (determined in
            accordance with test procedures prescribed under
            section 323); [and]
              (B) information respecting the range of estimated
            annual operating costs for covered products to which
            the rule applies; except that if the Commission
            requires disclosure under subparagraph (A) of a measure
            of energy consumption different from estimated annual
            operating cost, then the label shall disclose the range
            of such measure of energy consumption of covered
            products to which such rule applies[.];
              (C) for products or groups of products providing a
            comparable function (including the group of products
            comprising the heating function of heat pumps and
            furnaces) among covered products listed in paragraphs
            (3), (4), (5), (8), (9), (10), and (11) of section
            322(a) of this part, and others designated by the
            Secretary, the estimated total annual atmospheric
            carbon dioxide emissions (or their equivalent in other
            greenhouse gases) associated with, or caused by, the
            product, calculated utilizing--
                      (i) national average energy use for the
                    product including energy consumed at the point
                    of end use based on test procedures developed
                    under section 323 of this part;
                      (ii) national average energy consumed or lost
                    in the production, generation, transportation,
                    storage, and distribution of energy to the
                    point of end use; and
                      (iii) any direct emissions of greenhouse
                    gases from the product during normal use;
              (D) in determining the national average energy
            consumption and total annual atmospheric carbon dioxide
            emissions, the Secretary shall utilize Federal
            Government sources, including the Energy Information
            Administration Annual Energy Review, the Environmental
            Protection Agency eGRID data base, Environmental
            Protection Agency AP-42 Emission Factors as amended,
            and other sources determined to be appropriate by the
            Secretary; and
              (E) information presenting, for each product (or
            group of products providing the comparable function)
            identified in section (c)(1)(C) of this section, the
            estimated annual carbon dioxide emissions calculated
            within the range of emissions calculated for all models
            of the product or group according to its function,
            including those models consuming fuels and those models
            not consuming fuels.

               *       *       *       *       *       *       *

                              ENERGY STAR PROGRAM

      Sec. 324A. (a) * * *

               *       *       *       *       *       *       *

      (c) Duties.--The Administrator and the Secretary shall--
              (1) * * *

               *       *       *       *       *       *       *

              (6) on adoption of a new or revised product category,
            specification, or criterion, provide reasonable notice
            to interested parties of any changes (including
            effective dates) in product categories, specifications,
            or criteria, along with--
                      (A) * * *
                      (B) as appropriate, responses to comments
                    submitted by interested parties; [and]
              (7) provide appropriate lead time (which shall be 270
            days, unless the Agency or Department specifies
            otherwise) prior to the applicable effective date for a
            new or a significant revision to a product category,
            specification, or criterion, taking into account the
            timing requirements of the manufacturing, product
            marketing, and distribution process for the specific
            product addressed[.];
              (8) in establishing and revising an Energy Star
            product category, specification, or criterion, require
            inclusion of developmental products planned for sale
            within 2 years in the testing or evaluation of products
            proposed for purposes of such establishment or
            revision;
              (9) not later than 18 months after the date of
            enactment of this paragraph, establish and implement a
            rating system for products identified as Energy Star
            products pursuant to this section to provide consumers
            with the most helpful information on the relative
            energy efficiency of those products, unless the
            Administrator and the Secretary communicate to Congress
            that establishing such a system would diminish the
            value of the Energy Star brand to consumers;
              (10)(A) review the Energy Star product criteria for
            the 10 products in each product category with the
            greatest energy consumption at least once every 3
            years; and
              (B) based on the review, update and publish the
            Energy Star product criteria for each such category, as
            necessary; and
              (11) require periodic verification of compliance with
            the Energy Star product criteria by products identified
            as Energy Star products pursuant to this section,
            including--
                      (A) purchase and testing of products from the
                    market; or
                      (B) other appropriate testing and compliance
                    approaches.

               *       *       *       *       *       *       *

                         ENERGY CONSERVATION STANDARDS

      Sec. 325. (a) * * *

               *       *       *       *       *       *       *

      (g) Standards for Dishwashers; Clothes Washers; Clothes
    Dryers, Fluorescent Lamp Ballasts.--(1) * * *

               *       *       *       *       *       *       *

      (8)(A) * * *

               *       *       *       *       *       *       *

      (C) The standards described in subparagraph (A) do not apply
    to--
              (i) * * *
              (ii) a ballast that is designed for use with 2
            F96T12HO lamps at ambient temperatures of [20F] -20F
            or less and for use in an outdoor sign; or

               *       *       *       *       *       *       *

      [(i) General Service Fluorescent Lamps, General Service
    Incandescent Lamps, Intermediate Base Incandescent Lamps,
    Candelabra Base Incandescent Lamps, and Incandescent Reflector
    Lamps.--
              [(1) Standards.--
                      [(A) Definition of effective date.--In this
                    paragraph (other than subparagraph (D)), the
                    term ``effective date'' means, with respect to
                    each type of lamp specified in a table
                    contained in subparagraph (B), the last day of
                    the period of months corresponding to that type
                    of lamp (as specified in the table) that
                    follows October 24, 1992.
                      [(B) Minimum standards.--Each of the
                    following general service fluorescent lamps and
                    incandescent reflector lamps manufactured after
                    the effective date specified in the tables
                    contained in this paragraph shall meet or
                    exceed the following lamp efficacy and CRI
                    standards:

                                                   [FLUORESCENT LAMPS
    ----------------------------------------------------------------------------------------------------------------
                                                                                                      Effective Date
               [Lamp Type              Nominal Lamp       Minimum CRI       Minimum Average Lamp        (Period of
                                          Wattage                              Efficacy (LPW)            Months)
    ----------------------------------------------------------------------------------------------------------------
    4-foot medium bi-pin...........        >35 W              69                    75.0                    36
                                           =35 W              45                    75.0                    36
    2-foot U-shaped................        >35 W              69                    68.0                    36
                                           =35 W              45                    64.0                    36
    8-foot slimline................         65 W              69                    80.0                    18
                                           =65 W              45                    80.0                    18
    8-foot high output.............       >100 W              69                    80.0                    18
                                          =100 W              45                    80.0                    18
    ----------------------------------------------------------------------------------------------------------------

                          INCANDESCENT REFLECTOR LAMPS
    ------------------------------------------------------------------------
                                                              Effective Date
         Nominal Lamp Wattage         Minimum Average Lamp      (Period of
                                         Efficacy (LPW)           Months)
    ------------------------------------------------------------------------
     40-50.......................             10.5                  36
     51-66.......................             11.0                  36
     67-85.......................             12.5                  36
     86-115......................             14.0                  36
    116-155......................             14.5                  36
    156-205......................             15.0                  36
    ------------------------------------------------------------------------

                      [(C) Exemptions.--The standards specified in
                    subparagraph (B) shall not apply to the
                    following types of incandescent reflector
                    lamps:
                              [(i) Lamps rated at 50 watts or less
                            that are ER30, BR30, BR40, or ER40
                            lamps.
                              [(ii) Lamps rated at 65 watts that
                            are BR30, BR40, or ER40 lamps.
                              [(iii) R20 incandescent reflector
                            lamps rated 45 watts or less.
                      [(D) Effective dates.--
                              [(i) ER, br, and bpar lamps.--The
                            standards specified in subparagraph (B)
                            shall apply with respect to ER
                            incandescent reflector lamps, BR
                            incandescent reflector lamps, BPAR
                            incandescent reflector lamps, and
                            similar bulb shapes on and after
                            January 1, 2008.
                              [(ii) Lamps between 2.25-2.75 inches
                            in diameter.--The standards specified
                            in subparagraph (B) shall apply with
                            respect to incandescent reflector lamps
                            with a diameter of more than 2.25
                            inches, but not more than 2.75 inches,
                            on and after the later of January 1,
                            2008, or the date that is 180 days
                            after the date of enactment of the
                            Energy Independence and Security Act of
                            2007.
      [(2) Notwithstanding section 332(a)(5) and section 332(b), it
    shall not be unlawful for a manufacturer to sell a lamp which
    is in compliance with the law at the time such lamp was
    manufactured.
      [(3) Not less than 36 months after the date of the enactment
    of this subsection, the Secretary shall initiate a rulemaking
    procedure and shall publish a final rule not later than the end
    of the 54-month period beginning on the date of the enactment
    of this subsection to determine if the standards established
    under paragraph (1) should be amended. Such rule shall contain
    such amendment, if any, and provide that the amendment shall
    apply to products manufactured on or after the 36-month period
    beginning on the date such final rule is published.
      [(4) Not less than eight years after the date of the
    enactment of this subsection, the Secretary shall initiate a
    rulemaking procedure and shall publish a final rule not later
    than nine years and six months after the date of the enactment
    of this subsection to determine if the standards in effect for
    fluorescent lamps and incandescent lamps should be amended.
    Such rule shall contain such amendment, if any, and provide
    that the amendment shall apply to products manufactured on or
    after the 36-month period beginning on the date such final rule
    is published.
      [(5) Not later than the end of the 24-month period beginning
    on the date labeling requirements under section 324(a)(2)(C)
    become effective, the Secretary shall initiate a rulemaking
    procedure to determine if the standards in effect for
    fluorescent lamps and incandescent lamps should be amended so
    that they would be applicable to additional general service
    fluorescent and shall publish, not later than 18 months after
    initiating such rulemaking, a final rule including such amended
    standards, if any. Such rule shall provide that the amendment
    shall apply to products manufactured after a date which is 36
    months after the date such rule is published.
              [(6) Standards for general service lamps.--
                      [(A) Rulemaking before january 1, 2014.--
                              [(i) In general.--Not later than
                            January 1, 2014, the Secretary shall
                            initiate a rulemaking procedure to
                            determine whether--
                                      [(I) standards in effect for
                                    general service lamps should be
                                    amended to establish more
                                    stringent standards than the
                                    standards specified in
                                    paragraph (1)(A); and
                                      [(II) the exemptions for
                                    certain incandescent lamps
                                    should be maintained or
                                    discontinued based, in part, on
                                    exempted lamp sales collected
                                    by the Secretary from
                                    manufacturers.
                              [(ii) Scope.--The rulemaking--
                                      [(I) shall not be limited to
                                    incandescent lamp technologies;
                                    and
                                      [(II) shall include
                                    consideration of a minimum
                                    standard of 45 lumens per watt
                                    for general service lamps.
                              [(iii) Amended standards.--If the
                            Secretary determines that the standards
                            in effect for general service
                            incandescent lamps should be amended,
                            the Secretary shall publish a final
                            rule not later than January 1, 2017,
                            with an effective date that is not
                            earlier than 3 years after the date on
                            which the final rule is published.
                              [(iv) Phased-in effective dates.--The
                            Secretary shall consider phased-in
                            effective dates under this subparagraph
                            after considering--
                                      [(I) the impact of any
                                    amendment on manufacturers,
                                    retiring and repurposing
                                    existing equipment, stranded
                                    investments, labor contracts,
                                    workers, and raw materials; and
                                      [(II) the time needed to work
                                    with retailers and lighting
                                    designers to revise sales and
                                    marketing strategies.
                              [(v) Backstop requirement.--If the
                            Secretary fails to complete a
                            rulemaking in accordance with clauses
                            (i) through (iv) or if the final rule
                            does not produce savings that are
                            greater than or equal to the savings
                            from a minimum efficacy standard of 45
                            lumens per watt, effective beginning
                            January 1, 2020, the Secretary shall
                            prohibit the sale of any general
                            service lamp that does not meet a
                            minimum efficacy standard of 45 lumens
                            per watt.
                              [(vi) State preemption.--Neither
                            section 327(b) nor any other provision
                            of law shall preclude California or
                            Nevada from adopting, effective
                            beginning on or after January 1, 2018--
                                      [(I) a final rule adopted by
                                    the Secretary in accordance
                                    with clauses (i) through (iv);
                                      [(II) if a final rule
                                    described in subclause (I) has
                                    not been adopted, the backstop
                                    requirement under clause (v);
                                    or
                                      [(III) in the case of
                                    California, if a final rule
                                    described in subclause (I) has
                                    not been adopted, any
                                    California regulations relating
                                    to these covered products
                                    adopted pursuant to State
                                    statute in effect as of the
                                    date of enactment of the Energy
                                    Independence and Security Act
                                    of 2007.
                      [(B) Rulemaking before january 1, 2020.--
                              [(i) In general.--Not later than
                            January 1, 2020, the Secretary shall
                            initiate a rulemaking procedure to
                            determine whether--
                                      [(I) standards in effect for
                                    general service incandescent
                                    lamps should be amended to
                                    reflect lumen ranges with more
                                    stringent maximum wattage than
                                    the standards specified in
                                    paragraph (1)(A); and
                                      [(II) the exemptions for
                                    certain incandescent lamps
                                    should be maintained or
                                    discontinued based, in part, on
                                    exempted lamp sales data
                                    collected by the Secretary from
                                    manufacturers.
                              [(ii) Scope.--The rulemaking shall
                            not be limited to incandescent lamp
                            technologies.
                              [(iii) Amended standards.--If the
                            Secretary determines that the standards
                            in effect for general service
                            incandescent lamps should be amended,
                            the Secretary shall publish a final
                            rule not later than January 1, 2022,
                            with an effective date that is not
                            earlier than 3 years after the date on
                            which the final rule is published.
                              [(iv) Phased-in effective dates.--The
                            Secretary shall consider phased-in
                            effective dates under this subparagraph
                            after considering--
                                      [(I) the impact of any
                                    amendment on manufacturers,
                                    retiring and repurposing
                                    existing equipment, stranded
                                    investments, labor contracts,
                                    workers, and raw materials; and
                                      [(II) the time needed to work
                                    with retailers and lighting
                                    designers to revise sales and
                                    marketing strategies.
      [(7)(A) With respect to any lamp to which standards are
    applicable under this subsection or any lamp specified in
    section 346, the Secretary shall inform any Federal entity
    proposing actions which would adversely impact the energy
    consumption or energy efficiency of such lamp of the energy
    conservation consequences of such action. It shall be the
    responsibility of such Federal entity to carefully consider the
    Secretary's comments.
      [(B) Notwithstanding section 325(n)(1), the Secretary shall
    not be prohibited from amending any standard, by rule, to
    permit increased energy use or to decrease the minimum required
    energy efficiency of any lamp to which standards are applicable
    under this subsection if such action is warranted as a result
    of other Federal action (including restrictions on materials or
    processes) which would have the effect of either increasing the
    energy use or decreasing the energy efficiency of such product.
      [(8) Not later than the date on which standards established
    pursuant to this subsection become effective, or, with respect
    to high-intensity discharge lamps covered under section 346,
    the effective date of standards established pursuant to such
    section, each manufacturer of a product to which such standards
    are applicable shall file with the Secretary a laboratory
    report certifying compliance with the applicable standard for
    each lamp type. Such report shall include the lumen output and
    wattage consumption for each lamp type as an average of
    measurements taken over the preceding 12-month period. With
    respect to lamp types which are not manufactured during the 12-
    month period preceding the date such standards become
    effective, such report shall be filed with the Secretary not
    later than the date which is 12 months after the date
    manufacturing is commenced and shall include the lumen output
    and wattage consumption for each such lamp type as an average
    of measurements taken during such 12-month period.]
      (i) General Service Fluorescent Lamps, General Service
    Incandescent Lamps, Intermediate Base Incandescent Lamps,
    Candelabra Base Incandescent Lamps, and Incandescent Reflector
    Lamps.--
              (1) Energy efficiency standards.--
                      (A) In general.--Each of the following
                    general service fluorescent lamps, general
                    service incandescent lamps, intermediate base
                    incandescent lamps, candelabra base
                    incandescent lamps, and incandescent reflector
                    lamps manufactured after the effective date
                    specified in the tables listed in this
                    subparagraph shall meet or exceed the following
                    lamp efficacy, new maximum wattage, and CRI
                    standards:

                                                    FLUORESCENT LAMPS
    ----------------------------------------------------------------------------------------------------------------
                                                                                                      Effective Date
               Lamp Type               Nominal Lamp       Minimum CRI       Minimum Average Lamp        (Period of
                                          Wattage                              Efficacy (LPW)            Months)
    ----------------------------------------------------------------------------------------------------------------
    4-foot medium bi-pin...........        >35 W              69                    75.0                    36
                                           =35 W              45                    75.0                    36
    2-foot U-shaped................        >35 W              69                    68.0                    36
                                           =35 W              45                    64.0                    36
    8-foot slimline................         65 W              69                    80.0                    18
                                           =65 W              45                    80.0                    18
    8-foot high output.............       >100 W              69                    80.0                    18
                                          =100 W              45                    80.0                    18
    ----------------------------------------------------------------------------------------------------------------

                          INCANDESCENT REFLECTOR LAMPS
    ------------------------------------------------------------------------
                                                              Effective Date
         Nominal Lamp Wattage         Minimum Average Lamp      (Period of
                                         Efficacy (LPW)           Months)
    ------------------------------------------------------------------------
     40-50.......................             10.5                  36
     51-66.......................             11.0                  36
     67-85.......................             12.5                  36
     86-115......................             14.0                  36
    116-155......................             14.5                  36
    156-205......................             15.0                  36
    ------------------------------------------------------------------------

                                           GENERAL SERVICE INCANDESCENT LAMPS
    ----------------------------------------------------------------------------------------------------------------
                                                                                             Minimum
                           Rated Lumen Ranges                            Maximum Rated        Rated       Effective
                                                                            Wattage         Lifetime        Date
    ----------------------------------------------------------------------------------------------------------------
    1490-2600                                                                        72     1,000 hrs      1/1/2012
    1050-1489                                                                        53     1,000 hrs      1/1/2013
    750-1049                                                                         43     1,000 hrs      1/1/2014
    310-749                                                                          29     1,000 hrs      1/1/2014
    ----------------------------------------------------------------------------------------------------------------

                                  MODIFIED SPECTRUM GENERAL SERVICE INCANDESCENT LAMPS
    ----------------------------------------------------------------------------------------------------------------
                                                                                             Minimum
                           Rated Lumen Ranges                            Maximum Rated        Rated       Effective
                                                                            Wattage         Lifetime        Date
    ----------------------------------------------------------------------------------------------------------------
    1118-1950                                                                        72     1,000 hrs      1/1/2012
    788-1117                                                                         53     1,000 hrs      1/1/2013
    563-787                                                                          43     1,000 hrs      1/1/2014
    232-562                                                                          29     1,000 hrs      1/1/2014
    ----------------------------------------------------------------------------------------------------------------

                      (B) Application.--
                              (i) Application criteria.--This
                            subparagraph applies to each lamp
                            that--
                                      (I) is intended for a general
                                    service or general illumination
                                    application (whether
                                    incandescent or not);
                                      (II) has a medium screw base
                                    or any other screw base not
                                    defined in ANSI C81.61-2006;
                                      (III) is capable of being
                                    operated at a voltage at least
                                    partially within the range of
                                    110 to 130 volts; and
                                      (IV) is manufactured or
                                    imported after December 31,
                                    2011.
                              (ii) Requirement.--For purposes of
                            this paragraph, each lamp described in
                            clause (i) shall have a color rendering
                            index that is greater than or equal
                            to--
                                      (I) 80 for nonmodified
                                    spectrum lamps; or
                                      (II) 75 for modified spectrum
                                    lamps.
                      (C) Candelabra incandescent lamps and
                    intermediate base incandescent lamps.--
                              (i) Candelabra base incandescent
                            lamps.--Effective beginning January 1,
                            2012, a candelabra base incandescent
                            lamp shall not exceed 60 rated watts.
                              (ii) Intermediate base incandescent
                            lamps.--Effective beginning January 1,
                            2012, an intermediate base incandescent
                            lamp shall not exceed 40 rated watts.
                      (D) Exemptions.--
                              (i) Statutory exemptions.--The
                            standards specified in subparagraph (A)
                            shall not apply to the following types
                            of incandescent reflector lamps:
                                      (I) Lamps rated at 50 watts
                                    or less that are ER30, BR30,
                                    BR40, or ER40 lamps.
                                      (II) Lamps rated at 65 watts
                                    that are BR30, BR40, or ER40
                                    lamps.
                                      (III) R20 incandescent
                                    reflector lamps rated 45 watts
                                    or less.
                              (ii) Administrative exemptions.--
                                      (I) Petition.--Any person may
                                    petition the Secretary for an
                                    exemption for a type of general
                                    service lamp from the
                                    requirements of this
                                    subsection.
                                      (II) Criteria.--The Secretary
                                    may grant an exemption under
                                    subclause (I) only to the
                                    extent that the Secretary
                                    finds, after a hearing and
                                    opportunity for public comment,
                                    that it is not technically
                                    feasible to serve a specialized
                                    lighting application (such as a
                                    military, medical, public
                                    safety, or certified historic
                                    lighting application) using a
                                    lamp that meets the
                                    requirements of this
                                    subsection.
                                      (III) Additional criterion.--
                                    To grant an exemption for a
                                    product under this clause, the
                                    Secretary shall include, as an
                                    additional criterion, that the
                                    exempted product is unlikely to
                                    be used in a general service
                                    lighting application.
                      (E) Extension of coverage.--
                              (i) Petition.--Any person may
                            petition the Secretary to establish
                            standards for lamp shapes or bases that
                            are excluded from the definition of
                            general service lamps.
                              (ii) Increased sales of exempted
                            lamps.--The petition shall include
                            evidence that the availability or sales
                            of exempted incandescent lamps have
                            increased significantly since the date
                            on which the standards on general
                            service incandescent lamps were
                            established.
                              (iii) Criteria.--The Secretary shall
                            grant a petition under clause (i) if
                            the Secretary finds that--
                                      (I) the petition presents
                                    evidence that demonstrates that
                                    commercial availability or
                                    sales of exempted incandescent
                                    lamp types have increased
                                    significantly since the
                                    standards on general service
                                    lamps were established and
                                    likely are being widely used in
                                    general lighting applications;
                                    and
                                      (II) significant energy
                                    savings could be achieved by
                                    covering exempted products, as
                                    determined by the Secretary
                                    based in part on sales data
                                    provided to the Secretary from
                                    manufacturers and importers.
                              (iv) No presumption.--The grant of a
                            petition under this subparagraph shall
                            create no presumption with respect to
                            the determination of the Secretary with
                            respect to any criteria under a
                            rulemaking conducted under this
                            section.
                              (v) Expedited proceeding.--If the
                            Secretary grants a petition for a lamp
                            shape or base under this subparagraph,
                            the Secretary shall--
                                      (I) conduct a rulemaking to
                                    determine standards for the
                                    exempted lamp shape or base;
                                    and
                                      (II) complete the rulemaking
                                    not later than 18 months after
                                    the date on which notice is
                                    provided granting the petition.
                      (F) Effective dates.--
                              (i) In general.--In this paragraph,
                            except as otherwise provided in a table
                            contained in subparagraph (A) or in
                            clause (ii), the term ``effective
                            date'' means the last day of the month
                            specified in the table that follows
                            October 24, 1992.
                              (ii) Special effective dates.--
                                      (I) Er, br, and bpar lamps.--
                                    The standards specified in
                                    subparagraph (A) shall apply
                                    with respect to ER incandescent
                                    reflector lamps, BR
                                    incandescent reflector lamps,
                                    BPAR incandescent reflector
                                    lamps, and similar bulb shapes
                                    on and after January 1, 2008,
                                    or the date that is 180 days
                                    after the date of enactment of
                                    the Energy Independence and
                                    Security Act of 2007.
                                      (II) Lamps between 2.25-2.75
                                    inches in diameter.--The
                                    standards specified in
                                    subparagraph (A) shall apply
                                    with respect to incandescent
                                    reflector lamps with a diameter
                                    of more than 2.25 inches, but
                                    not more than 2.75 inches, on
                                    and after the later of January
                                    1, 2008, or the date that is
                                    180 days after the date of
                                    enactment of the Energy
                                    Independence and Security Act
                                    of 2007.
              (2) Compliance with existing law.--Notwithstanding
            section 332(a)(5) and section 332(b), it shall not be
            unlawful for a manufacturer to sell a lamp that is in
            compliance with the law at the time the lamp was
            manufactured.
              (3) Rulemaking before october 24, 1995.--
                      (A) In general.--Not later than 36 months
                    after October 24, 1992, the Secretary shall
                    initiate a rulemaking procedure and shall
                    publish a final rule not later than the end of
                    the 54-month period beginning on October 24,
                    1992, to determine whether the standards
                    established under paragraph (1) should be
                    amended.
                      (B) Administration.--The rule shall contain
                    the amendment, if any, and provide that the
                    amendment shall apply to products manufactured
                    on or after the 36-month period beginning on
                    the date on which the final rule is published.
              (4) Rulemaking before october 24, 2000.--
                      (A) In general.--Not later than 8 years after
                    October 24, 1992, the Secretary shall initiate
                    a rulemaking procedure and shall publish a
                    final rule not later than 9 years and 6 months
                    after October 24, 1992, to determine whether
                    the standards in effect for fluorescent lamps
                    and incandescent lamps should be amended.
                      (B) Administration.--The rule shall contain
                    the amendment, if any, and provide that the
                    amendment shall apply to products manufactured
                    on or after the 36-month period beginning on
                    the date on which the final rule is published.
              (5) Rulemaking for additional general service
            fluorescent lamps.--
                      (A) In general.--Not later than the end of
                    the 24-month period beginning on the date
                    labeling requirements under section
                    324(a)(2)(C) become effective, the Secretary
                    shall--
                              (i) initiate a rulemaking procedure
                            to determine whether the standards in
                            effect for fluorescent lamps and
                            incandescent lamps should be amended so
                            that the standards would be applicable
                            to additional general service
                            fluorescent lamps; and
                              (ii) publish, not later than 18
                            months after initiating the rulemaking,
                            a final rule including the amended
                            standards, if any.
                      (B) Administration.--The rule shall provide
                    that the amendment shall apply to products
                    manufactured after a date which is 36 months
                    after the date on which the rule is published.
              (6) Standards for general service lamps.--
                      (A) Rulemaking before january 1, 2014.--
                              (i) In general.--Not later than
                            January 1, 2014, the Secretary shall
                            initiate a rulemaking procedure to
                            determine whether--
                                      (I) standards in effect for
                                    general service lamps should be
                                    amended; and
                                      (II) the exclusions for
                                    certain incandescent lamps
                                    should be maintained or
                                    discontinued based, in part, on
                                    excluded lamp sales collected
                                    by the Secretary from
                                    manufacturers.
                              (ii) Scope.--The rulemaking--
                                      (I) shall not be limited to
                                    incandescent lamp technologies;
                                    and
                                      (II) shall include
                                    consideration of a minimum
                                    standard of 45 lumens per watt
                                    for general service lamps.
                              (iii) Amended standards.--If the
                            Secretary determines that the standards
                            in effect for general service lamps
                            should be amended, the Secretary shall
                            publish a final rule not later than
                            January 1, 2017, with an effective date
                            that is not earlier than 3 years after
                            the date on which the final rule is
                            published.
                              (iv) Phased-in effective dates.--The
                            Secretary shall consider phased-in
                            effective dates under this subparagraph
                            after considering--
                                      (I) the impact of any
                                    amendment on manufacturers,
                                    retiring and repurposing
                                    existing equipment, stranded
                                    investments, labor contracts,
                                    workers, and raw materials; and
                                      (II) the time needed to work
                                    with retailers and lighting
                                    designers to revise sales and
                                    marketing strategies.
                              (v) Backstop requirement.--If the
                            Secretary fails to complete a
                            rulemaking in accordance with clauses
                            (i) through (iv) or if the final rule
                            does not produce savings that are
                            greater than or equal to the savings
                            from a minimum efficacy standard of 45
                            lumens per watt, effective beginning
                            January 1, 2020, the Secretary shall
                            prohibit the manufacture of any general
                            service lamp that does not meet a
                            minimum efficacy standard of 45 lumens
                            per watt.
                              (vi) State preemption.--Neither
                            section 327(c) nor any other provision
                            of law shall preclude California or
                            Nevada from adopting, effective
                            beginning on or after January 1, 2018--
                                      (I) a final rule adopted by
                                    the Secretary in accordance
                                    with clauses (i) through (iv);
                                      (II) if a final rule
                                    described in subclause (I) has
                                    not been adopted, the backstop
                                    requirement under clause (v);
                                    or
                                      (III) in the case of
                                    California, if a final rule
                                    described in subclause (I) has
                                    not been adopted, any
                                    California regulations relating
                                    to these covered products
                                    adopted pursuant to State
                                    statute in effect as of the
                                    date of enactment of the Energy
                                    Independence and Security Act
                                    of 2007.
                      (B) Rulemaking before january 1, 2020.--
                              (i) In general.--Not later than
                            January 1, 2020, the Secretary shall
                            initiate a rulemaking procedure to
                            determine whether--
                                      (I) standards in effect for
                                    general service lamps should be
                                    amended; and
                                      (II) the exclusions for
                                    certain incandescent lamps
                                    should be maintained or
                                    discontinued based, in part, on
                                    excluded lamp sales data
                                    collected by the Secretary from
                                    manufacturers.
                              (ii) Scope.--The rulemaking shall not
                            be limited to incandescent lamp
                            technologies.
                              (iii) Amended standards.--If the
                            Secretary determines that the standards
                            in effect for general service lamps
                            should be amended, the Secretary shall
                            publish a final rule not later than
                            January 1, 2022, with an effective date
                            that is not earlier than 3 years after
                            the date on which the final rule is
                            published.
                              (iv) Phased-in effective dates.--The
                            Secretary shall consider phased-in
                            effective dates under this subparagraph
                            after considering--
                                      (I) the impact of any
                                    amendment on manufacturers,
                                    retiring and repurposing
                                    existing equipment, stranded
                                    investments, labor contracts,
                                    workers, and raw materials; and
                                      (II) the time needed to work
                                    with retailers and lighting
                                    designers to revise sales and
                                    marketing strategies.
              (7) Federal actions.--
                      (A) Comments of secretary.--
                              (i) In general.--With respect to any
                            lamp to which standards are applicable
                            under this subsection or any lamp
                            specified in section 346, the Secretary
                            shall inform any Federal entity
                            proposing actions that would adversely
                            impact the energy consumption or energy
                            efficiency of the lamp of the energy
                            conservation consequences of the
                            action.
                              (ii) Consideration.--The Federal
                            entity shall carefully consider the
                            comments of the Secretary.
                      (B) Amendment of standards.--Notwithstanding
                    section 325(n)(1), the Secretary shall not be
                    prohibited from amending any standard, by rule,
                    to permit increased energy use or to decrease
                    the minimum required energy efficiency of any
                    lamp to which standards are applicable under
                    this subsection if the action is warranted as a
                    result of other Federal action (including
                    restrictions on materials or processes) that
                    would have the effect of either increasing the
                    energy use or decreasing the energy efficiency
                    of the product.
              (8) Compliance.--
                      (A) In general.--Not later than the date on
                    which standards established pursuant to this
                    subsection become effective, or, with respect
                    to high-intensity discharge lamps covered under
                    section 346, the effective date of standards
                    established pursuant to that section, each
                    manufacturer of a product to which the
                    standards are applicable shall file with the
                    Secretary a laboratory report certifying
                    compliance with the applicable standard for
                    each lamp type.
                      (B) Contents.--The report shall include the
                    lumen output and wattage consumption for each
                    lamp type as an average of measurements taken
                    over the preceding 12-month period.
                      (C) Other lamp types.--With respect to lamp
                    types that are not manufactured during the 12-
                    month period preceding the date on which the
                    standards become effective, the report shall--
                              (i) be filed with the Secretary not
                            later than the date that is 12 months
                            after the date on which manufacturing
                            is commenced; and
                              (ii) include the lumen output and
                            wattage consumption for each such lamp
                            type as an average of measurements
                            taken during the 12-month period.
              (9) Certain incandescent reflector lamps.--(A) No
            later than 12 months after enactment of this paragraph,
            the Secretary shall publish a final rule establishing
            standards for incandescent reflector lamp types
            described in paragraph (1)(D). Such standards shall be
            effective on July 1, 2013.
              (B) Any rulemaking for incandescent reflector lamps
            completed after enactment of this section shall
            consider standards for all incandescent reflector
            lamps, inclusive of those specified in paragraph
            (1)(C).
              (10) Reflector lamps.--No later than January 1, 2015,
            the Secretary shall publish a final rule establishing
            and amending standards for reflector lamps, including
            incandescent reflector lamps. Such standards shall be
            effective no sooner than three years after publication
            of the final rule. Such rulemaking shall consider
            incandescent and nonincandescent technologies. Such
            rulemaking shall consider a new metric other than
            lumens-per-watt based on the photometric distribution
            of light from such lamps.

               *       *       *       *       *       *       *

      (l) Standards for Other Covered Products.--(1) The Secretary
    may prescribe an energy conservation standard for any type (or
    class) of covered products of a type specified in [paragraph
    (19)] paragraph (24) of section 322(a) if the requirements of
    subsections (o) and (p) are met and the Secretary determines
    that--
              (A) * * *

               *       *       *       *       *       *       *

      (2) Any new or amended standard for covered products of a
    type specified in [paragraph (19)] paragraph (24) of section
    322(a) shall not apply to products manufactured within five
    years after the publication of a final rule establishing such
    standard.

               *       *       *       *       *       *       *

      (4) Energy efficiency standards for certain lamps.--
              (A) In general.--The Secretary shall prescribe an
            energy efficiency standard for rough service lamps,
            vibration service lamps, 3-way incandescent lamps,
            2,601-3,300 lumen general service incandescent lamps,
            and shatter-resistant lamps [only] in accordance with
            this paragraph.

               *       *       *       *       *       *       *

      (o) Criteria for Prescribing New or Amended Standards.--(1) *
    * *
      (2)(A) * * *
      (B)(i) In determining whether a standard is economically
    justified, the Secretary shall, after receiving views and
    comments furnished with respect to the proposed standard,
    determine whether the benefits of the standard exceed its
    burdens by, to the greatest extent practicable, considering--
              (I) * * *

               *       *       *       *       *       *       *

              (VI) the need for national energy and water
            conservation; [and]
              (VII) the estimated value of the carbon dioxide and
            other emission reductions that will be achieved by
            virtue of the higher energy efficiency of the covered
            products resulting from the imposition of the standard;
              (VIII) the estimated impact of standards for a
            particular product on average consumer energy prices;
              (IX) the increased energy efficiency that may be
            attributable to the installation of Smart Grid
            technologies or capabilities in the covered products,
            if applicable in the determination of the Secretary;
              (X) the availability in the United States or in other
            nations of examples or prototypes of covered products
            that achieve significantly higher efficiency standards
            for energy or for water; and
              [(VII)] (XI) other factors the Secretary considers
            relevant.

               *       *       *       *       *       *       *

      (iii) If the Secretary finds that the additional cost to the
    consumer of purchasing a product complying with an energy
    conservation standard level will be less than [three] 5 times
    the value of the energy, and as applicable, water, savings
    during the first year that the consumer will receive as a
    result of the standard, as calculated under the applicable test
    procedure, there shall be a rebuttable presumption that such
    standard level is economically justified. [A determination by
    the Secretary that such criterion is not met shall not be taken
    into consideration in the Secretary's determination of whether
    a standard is economically justified.] For products with an
    average expected useful life of less than 5 years, such
    rebuttable presumption shall be determined utilizing 75 percent
    of the product's average expected useful life as a multiplier
    instead of 5. Such a presumption may be rebutted only if the
    Secretary finds, based on clear, convincing, and reliable
    evidence, that--
              (I) such standard level would cause serious and
            unavoidable hardship to the average consumer of the
            product, or to manufacturers supplying a significant
            portion of the market for the product, that
            substantially outweighs the standard level's benefits;
              (II) the standard and implementing regulations cannot
            be designed to avoid or mitigate the hardship
            identified under subclause (I), through the adoption of
            regional standards consistent with paragraph (6) of
            this subsection, or other reasonable means consistent
            with this part;
              (III) the same or substantially similar hardship
            would not occur under a standard adopted in the absence
            of the presumption, but that otherwise meets the
            requirements of this section; and
              (IV) the hardship cannot be avoided or mitigated
            pursuant the procedures specified in section 504 of the
            Department of Energy Organization Act (42 U.S.C. 7194).

               *       *       *       *       *       *       *

      (u) Battery Charger and External Power Supply Electric Energy
    Consumption.--(1) * * *

               *       *       *       *       *       *       *

      [(7)] (4) End-use products.--An energy conservation standard
    for external power supplies shall not constitute an energy
    conservation standard for the separate end-use product to which
    the external power [supplies is] supply is connected.

               *       *       *       *       *       *       *

      (ii) Portable Light Fixtures.--
              (1) In general.--Subject to paragraphs (2) and (3),
            portable light fixtures manufactured on or after
            January 1, 2012, shall meet 1 or more of the following
            requirements:
                      (A) Be a fluorescent light fixture that meets
                    the requirements of the Energy Star Program for
                    Residential Light Fixtures, Version 4.2.
                      (B) Be equipped with only 1 or more GU-24
                    line-voltage sockets, not be rated for use with
                    incandescent lamps of any type (as defined in
                    ANSI standards), and meet the requirements of
                    version 4.2 of the Energy Star program for
                    residential light fixtures.
                      (C) Be an LED light fixture or a light
                    fixture with an LED light engine and comply
                    with the following minimum requirements:
                              (i) Minimum light output: 200 lumens
                            (initial).
                              (ii) Minimum LED light engine
                            efficacy: 40 lumens/watt installed in
                            fixtures that meet the minimum light
                            fixture efficacy of 29 lumens/watt or,
                            alternatively, a minimum LED light
                            engine efficacy of 60 lumens/watt for
                            fixtures that do not meet the minimum
                            light fixture efficacy of 29 lumens/
                            watt.
                              (iii) All portable fixtures shall
                            have a minimum LED light fixture
                            efficacy of 29 lumens/watt and a
                            minimum LED light engine efficacy of 60
                            lumens/watt by January 1, 2016.
                              (iv) Color Correlated Temperature
                            (CCT): 2700K through 4000K.
                              (v) Minimum Color Rendering Index
                            (CRI): 75.
                              (vi) Power factor equal to or greater
                            than 0.70.
                              (vii) Portable luminaries that have
                            internal power supplies shall have zero
                            standby power when the luminaire is
                            turned off.
                              (viii) LED light sources shall
                            deliver at least 70 percent of initial
                            lumens for at least 25,000 hours.
                      (D)(i) Be equipped with an ANSI-designated
                    E12, E17, or E26 screw-based socket and be
                    prepackaged and sold together with 1 screw-
                    based compact fluorescent lamp or screw-based
                    LED lamp for each screw-based socket on the
                    portable light fixture.
                      (ii) The compact fluorescent or LED lamps
                    prepackaged with the light fixture shall be
                    fully compatible with any light fixture
                    controls incorporated into the light fixture
                    (for example, light fixtures with dimmers shall
                    be packed with dimmable lamps).
                      (iii) Compact fluorescent lamps prepackaged
                    with light fixtures shall meet the requirements
                    of the Energy Star Program for CFLs Version
                    4.0.
                      (iv) Screw-based LED lamps shall comply with
                    the minimum requirements described in
                    subparagraph (C).
                      (E) Be equipped with 1 or more single-ended,
                    non-screw based halogen lamp sockets (line or
                    low voltage), a dimmer control or high-low
                    control, and be rated for a maximum of 100
                    watts.
              (2) Review.--
                      (A) Review.--The Secretary shall review the
                    criteria and standards established under
                    paragraph (1) to determine if revised standards
                    are technologically feasible and economically
                    justified.
                      (B) Components.--The review shall include
                    consideration of--
                              (i) whether a separate compliance
                            procedure is still needed for halogen
                            fixtures described in subparagraph (E)
                            and, if necessary, what an appropriate
                            standard for halogen fixtures shall be;
                              (ii) whether the specific technical
                            criteria described in subparagraphs
                            (A), (C), and (D)(iii) should be
                            modified; and
                              (iii) which fixtures should be
                            exempted from the light fixture
                            efficacy standard as of January 1,
                            2016, because the fixtures are
                            primarily decorative in nature (as
                            defined by the Secretary) and, even if
                            exempted, are likely to be sold in
                            limited quantities.
                      (C) Timing.--
                              (i) Determination.--Not later than
                            January 1, 2014, the Secretary shall
                            publish amended standards, or a
                            determination that no amended standards
                            are justified, under this subsection.
                              (ii) Standards.--Any standards under
                            this paragraph shall take effect on
                            January 1, 2016.
              (3) Art work light fixtures.--Art work light fixtures
            manufactured on or after January 1, 2012, shall--
                      (A) comply with paragraph (1); or
                      (B)(i) contain only ANSI-designated E12
                    screw-based line-voltage sockets;
                      (ii) have not more than 3 sockets;
                      (iii) be controlled with an integral high/low
                    switch;
                      (iv) be rated for not more than 25 watts if
                    fitted with 1 socket; and
                      (v) be rated for not more than 15 watts per
                    socket if fitted with 2 or 3 sockets.
              (4) Exception from preemption.--Notwithstanding
            section 327, Federal preemption shall not apply to a
            regulation concerning portable light fixtures adopted
            by the California Energy Commission on or before
            January 1, 2014.
      (jj) GU-24 Base Lamps.--
              (1) In general.--A GU-24 base lamp shall not be an
            incandescent lamp as defined by ANSI.
              (2) Gu-24 adaptors.--GU-24 adaptors shall not adapt a
            GU-24 socket to any other line voltage socket.
      (kk) Bottle Type Water Dispensers.--Effective January 1,
    2012, bottle-type water dispensers designed for dispensing both
    hot and cold water shall not have standby energy consumption
    greater than 1.2 kilowatt-hours per day.
      (ll) Commercial Hot Food Holding Cabinets.--Effective January
    1, 2012, commercial hot food holding cabinets with interior
    volumes of 8 cubic feet or greater shall have a maximum idle
    energy rate of 40 watts per cubic foot of interior volume.
      (mm) Portable Electric Spas.--Effective January 1, 2012,
    portable electric spas shall not have a normalized standby
    power greater than 5(V2/3) Watts where V=the fill
    volume in gallons.
      (nn) Revisions.--The Secretary of Energy shall consider
    revisions to the standards in subsections (kk), (ll), and (mm)
    in accordance with subsection (o) and publish a final rule no
    later than January 1, 2013 establishing such revised standards,
    or make a finding that no revisions are technically feasible
    and economically justified. Any such revised standards shall
    take effect January 1, 2016.
      [(ii)] (oo) Application Date.--Section 327 applies--
              (1) * * *
              (2) to products for which energy conservation
            standards are established under subsections (w) through
            [(hh)] (mm) on the date of enactment of those
            subsections, except that any State or local standard
            prescribed or enacted before the date of enactment of
            those subsections shall not be preempted until the
            energy conservation standards established under
            subsections (w) through [(hh)] (mm) take effect.

                         REQUIREMENTS OF MANUFACTURERS

      Sec. 326. (a) * * *

               *       *       *       *       *       *       *

      [(d) Information Requirements.--(1) For purposes of carrying
    out this part, the Secretary may require, under this part or
    other provision of law administered by the Secretary, each
    manufacturer of a covered product to submit information or
    reports to the Secretary with respect to energy efficiency,
    energy use, or, in the case of showerheads, faucets, water
    closets, and urinals, water use of such covered product and the
    economic impact of any proposed energy conservation standard,
    as the Secretary determines may be necessary to establish and
    revise test procedures, labeling rules, and energy conservation
    standards for such product and to insure compliance with the
    requirements of this part. In making any determination under
    this paragraph, the Secretary shall consider existing public
    sources of information, including nationally recognized
    certification programs of trade associations.
      [(2) The Secretary shall exercise authority under this
    section in a manner designed to minimize unnecessary burdens on
    manufacturers of covered products.
      [(3) The provisions of section 11(d) of the Energy Supply and
    Environmental Coordination Act of 1974 shall apply with respect
    to information obtained under this subsection to the same
    extent and in the same manner as they apply with respect to
    energy information obtained under section 11 of such Act.]
      (d) Information Requirements.--(1) For purposes of carrying
    out this part, the Secretary shall publish proposed regulations
    not later than one year after the date of enactment of the
    American Clean Energy and Security Act of 2009, and after
    receiving public comment, final regulations not later than 18
    months from such date of enactment under this part or other
    provision of law administered by the Secretary, which shall
    require each manufacturer of a covered product to submit
    information or reports to the Secretary on an annual basis in a
    form adopted by the Secretary. Such reports shall include
    information or data with respect to--
              (A) the manufacturers' compliance with all
            requirements applicable pursuant to this part;
              (B) the economic impact of any proposed energy
            conservation standard;
              (C) the manufacturers' annual shipments of each class
            or category of covered products, organized, to the
            maximum extent practicable, by--
                      (i) energy efficiency, energy use, and, if
                    applicable, water use;
                      (ii) the presence or absence of such
                    efficiency related or energy consuming
                    operational characteristics or components as
                    the Secretary determines are relevant for the
                    purposes of carrying out this part; and
                      (iii) the State or regional location of sale,
                    for covered products for which the Secretary
                    may adopt regional standards; and
              (D) such other categories of information as the
            Secretary deems relevant to carry out this part,
            including such other information as may be necessary to
            establish and revise test procedures, labeling rules,
            and energy conservation standards and to insure
            compliance with the requirements of this part.
      (2) In adopting regulations under this subsection, the
    Secretary shall consider existing public sources of
    information, including nationally recognized certification
    programs of trade associations.
      (3) The Secretary shall exercise authority under this section
    in a manner designed to minimize unnecessary burdens on
    manufacturers of covered products.
      (4) To the extent that they do not conflict with the duties
    of the Secretary in carrying out this part, the provisions of
    section 11(d) of the Energy Supply and Environmental
    Coordination Act of 1974 (15 U.S.C. 796(d)) shall apply with
    respect to information obtained under this subsection to the
    same extent and in the same manner as they apply with respect
    to other energy information obtained under such section.

                              EFFECT ON OTHER LAW

      Sec. 327. (a) * * *
      (b) General Rule of Preemption for Energy Conservation
    Standards Before Federal Standard Becomes Effective for a
    Product.--Effective on the date of enactment of the National
    Appliance Energy Conservation Act of 1987 and ending on the
    effective date of an energy conservation standard established
    under section 325 for any covered product, no State regulation,
    or revision thereof, concerning the energy efficiency, energy
    use, or water use of the covered product shall be effective
    with respect to such covered product, unless the State
    regulation or revision--
              (1)(A) * * *
              (B) in the case of any portion of any regulation that
            establishes requirements for general service
            incandescent lamps, intermediate base incandescent
            lamps, or candelabra base lamps, was enacted or adopted
            by the State of California or Nevada before December 4,
            2007, except that--
                      (i) the regulation adopted by the California
                    Energy Commission with an effective date of
                    January 1, 2008, shall only be effective until
                    the effective date of the Federal standard for
                    the applicable lamp category under
                    subparagraphs (A), (B), and (C) of section
                    325(i)(1); and
                      (ii) the States of California and Nevada may,
                    at any time, modify or adopt a State standard
                    for general service lamps to conform with
                    Federal standards with effective dates no
                    earlier than 12 months prior to the Federal
                    effective dates prescribed under subparagraphs
                    (A), (B), and (C) of section 325(i)(1), at
                    which time any prior regulations adopted by the
                    State of California or Nevada shall no longer
                    be effective[; and].
                      [(iii) all other States may, at any time,
                    modify or adopt a State standard for general
                    service lamps to conform with Federal standards
                    and effective dates.]

               *       *       *       *       *       *       *

      (c) General Rule of Preemption for Energy Conservation
    Standards When Federal Standard Becomes Effective for a
    Product.--Except as provided in section 325(b)(3)(A)(ii),
    subparagraphs (B) and (C) of section 325(j)(3), and
    subparagraphs (B) and (C) of section 325(k)(3) and effective on
    the effective date of an energy conservation standard
    established in or prescribed under section 325 for any covered
    product, no State regulation concerning the energy efficiency,
    energy use, or water use of such covered product shall be
    effective with respect to such product unless the regulation--
              (1) * * *

               *       *       *       *       *       *       *

              (6) is a regulation (or portion thereof) concerning
            the water efficiency or water use of gravity tank-type
            low consumption water closets for installation in
            public places, except that such a regulation shall be
            effective only until January 1, 1997; [or]

               *       *       *       *       *       *       *

              (8)(A) * * *
              (B) is an amendment to a regulation described in
            subparagraph (A) that was developed to align California
            regulations to changes in the Institute for
            Transportation Engineers standards, entitled
            ``Performance Specification: Pedestrian Traffic Control
            Signal Indications''; [and]
              (9) is a regulation concerning metal halide lamp
            fixtures adopted by the California Energy Commission on
            or before January 1, 2011, [except that--
                      [(A) if the Secretary fails to issue] except
                    that if the Secretary fails to issue a final
                    rule within 180 days after the deadlines for
                    rulemakings in section 325(hh), notwithstanding
                    any other provision of this section, preemption
                    shall not apply to a regulation concerning
                    metal halide lamp fixtures adopted by the
                    California Energy Commission--
                      [(i)] (A) * * *
                      [(ii)] (B) on or before July 1, 2022, if the
                    Secretary fails to meet the deadline specified
                    in section 325(hh)(3)[.];
              (10) is a regulation for general service lamps that
            conforms with Federal standards and effective dates;
              (11) is an energy efficiency standard for general
            service lamps enacted into law by the State of Nevada
            prior to December 19, 2007, if the State has not
            adopted the Federal standards and effective dates
            pursuant to subsection (b)(1)(B)(ii); or
              (12) is a regulation concerning standards for hot
            food holding cabinets, drinking water dispensers and
            portable electric spas adopted by the California Energy
            Commission on or before January 1, 2013.
      (d) Waiver of Federal Preemption.--(1)(A) Any State or river
    basin commission with a [State regulation] State statute or
    regulation which provides for any energy conservation standard
    or other requirement with respect to energy use, energy
    efficiency, or water use for any type (or class) of covered
    product for which there is a Federal energy conservation
    standard under section 325 may file a petition with the
    Secretary requesting a rule that such [State regulation] State
    statute or regulation become effective with respect to such
    covered product.
      (B) Subject to paragraphs (2) through (5), the Secretary
    shall, within the period described in paragraph (2) and after
    consideration of the petition and the comments of interested
    persons, prescribe such rule if the Secretary finds (and
    publishes such finding) that the State or river basin
    commission has established by a preponderance of the evidence
    that such State regulation is needed to meet unusual and
    compelling State or local energy or water interests. In making
    such a finding, the Secretary may not reject a petition for
    failure of the petitioning State or river basin commission to
    produce confidential information maintained by any manufacturer
    or distributor, or group or association of manufacturers or
    distributors, and which the petitioning party does not have the
    legal right to obtain.
      (C) For purposes of this subsection, the term ``unusual and
    compelling State or local energy or water interests'' means
    interests which--
              (i) * * *
              (ii) are such that the [costs] estimated costs,
            benefits, burdens, and reliability of energy or water
            savings resulting from the State regulation make such
            regulation preferable or necessary when measured
            against the [costs] estimated costs, benefits, burdens,
            and reliability of alternative approaches to energy or
            water savings or production, including reliance on
            reasonably predictable market-induced improvements in
            efficiency of all products subject to the State
            regulation.
    The factors described in clause (ii) shall be evaluated [within
    the context of the State's energy plan and forecast, and,] with
    respect to a State regulation for which a petition has been
    submitted to the Secretary which provides for any energy
    conservation standard or requirement with respect to water use
    of a covered product, within the context of the water supply
    and groundwater management plan, water quality program, and
    comprehensive plan (if any) of the State or river basin
    commission for improving, developing, or conserving a waterway
    affected by water supply development.

               *       *       *       *       *       *       *

      (f) Exception for Certain Building Code Requirements.--(1) *
    * *

               *       *       *       *       *       *       *

      (3) Effective on the effective date of an energy conservation
    standard for a covered product established in or prescribed
    under section 325, a regulation or other requirement contained
    in a State or local building code for new construction
    concerning the energy efficiency or energy use of such covered
    product is not superseded by this part if the code complies
    with all of the following requirements:
              (A) * * *
              [(B) The code does not require that the covered
            product have an energy efficiency exceeding the
            applicable energy conservation standard established in
            or prescribed under section 325, except that the
            required efficiency may exceed such standard up to the
            level required by a regulation of that State for which
            the Secretary has issued a rule granting a waiver under
            subsection (d).
              [(C) The credit to the energy consumption or
            conservation objective allowed by the code for
            installing covered products having energy efficiencies
            exceeding such energy conservation standard established
            in or prescribed under section 325 or the efficiency
            level required in a State regulation referred to in
            subparagraph (B) is on a one-for-one equivalent energy
            use or equivalent cost basis.
              [(D) If the code uses one or more baseline building
            designs against which all submitted building designs
            are to be evaluated and such baseline building designs
            contain a covered product subject to an energy
            conservation standard established in or prescribed
            under section 325, the baseline building designs are
            based on the efficiency level for such covered product
            which meets but does not exceed such standard or the
            efficiency level required by a regulation of that State
            for which the Secretary has issued a rule granting a
            waiver under subsection (d).
              [(E) If the code sets forth one or more optional
            combinations of items which meet the energy consumption
            or conservation objective, for every combination which
            includes a covered product the efficiency of which
            exceeds either standard or level referred to in
            subparagraph (D), there also shall be at least one
            combination which includes such covered product the
            efficiency of which does not exceed such standard or
            level by more than 5 percent, except that at least one
            combination shall include such covered product the
            efficiency of which meets but does not exceed such
            standard.
              [(F) The energy consumption or conservation objective
            is specified in terms of an estimated total consumption
            of energy (which may be calculated from energy loss- or
            gain-based codes) utilizing an equivalent amount of
            energy (which may be specified in units of energy or
            its equivalent cost).
              [(G) The estimated energy use of any covered product
            permitted or required in the code, or used in
            calculating the objective, is determined using the
            applicable test procedures prescribed under section
            323, except that the State may permit the estimated
            energy use calculation to be adjusted to reflect the
            conditions of the areas where the code is being applied
            if such adjustment is based on the use of the
            applicable test procedures prescribed under section 323
            or other technically accurate documented procedure.]
              (B) The code meets at least one of the following
            requirements:
                      (i) The code does not require that the
                    covered product have an energy efficiency
                    exceeding--
                              (I) the applicable energy
                            conservation standard established in or
                            prescribed under section 325;
                              (II) the level required by a
                            regulation of that State for which the
                            Secretary has issued a rule granting a
                            waiver under subsection (d) of this
                            section; or
                              (III) the required level established
                            in the International Energy
                            Conservation Code or in a standard of
                            the American Society of Heating,
                            Refrigerating and Air-Conditioning
                            Engineers, or by the Secretary pursuant
                            to section 304 of the Energy
                            Conservation and Production Act.
                      (ii) If the code uses one or more baseline
                    building designs against which all submitted
                    building designs are to be evaluated and such
                    baseline building designs contain a covered
                    product subject to an energy conservation
                    standard established in or prescribed under
                    section 325, the baseline building designs are
                    based on an efficiency level for such covered
                    product which meets but does not exceed one of
                    the levels specified in clause (i).
                      (iii) If the code sets forth one or more
                    optional combinations of items which meet the
                    energy consumption or conservation objective,
                    in at least one combination that the State has
                    found to be reasonably achievable using
                    commercially available technologies the
                    efficiency of the covered product meets but
                    does not exceed one of the levels specified in
                    clause (i).
              (C) The credit to the energy consumption or
            conservation objective allowed by the code for
            installing covered products having energy efficiencies
            exceeding one of the levels specified in subparagraph
            (B)(i) is on a one-for-one equivalent energy use or
            equivalent energy cost basis, taking into account the
            typical lifetime of the product.
              (D) The energy consumption or conservation objective
            is specified in terms of an estimated total consumption
            of energy (which may be calculated from energy loss- or
            gain-based codes) utilizing an equivalent amount of
            energy (which may be specified in units of energy or
            its equivalent cost) and equivalent lifetimes.
              (E) The estimated energy use of any covered product
            permitted or required in the code, or used in
            calculating the objective, is determined using the
            applicable test procedures prescribed under section
            323, except that the State may permit the estimated
            energy use calculation to be adjusted to reflect the
            conditions of the areas where the code is being applied
            if such adjustment is based on the use of the
            applicable test procedures prescribed under section 323
            or other technically accurate documented procedure.
      (4)(A) * * *
      [(B) If a building code requires the installation of covered
    products with efficiencies exceeding both the applicable
    Federal standard established in or prescribed under section 325
    and the applicable standard of such State, if any, that has
    been granted a waiver under subsection (d), such requirement of
    the building code shall not be applicable unless the Secretary
    has granted a waiver for such requirement under subsection
    (d).]
      (B) If a building code requires the installation of covered
    products with efficiencies exceeding the levels and
    requirements specified in paragraph (3)(B), such requirement of
    the building code shall not be applicable unless the Secretary
    has granted a waiver for such requirement under subsection (d)
    of this section.

               *       *       *       *       *       *       *

                                PROHIBITED ACTS

      Sec. 332. (a) In General.--It shall be unlawful--
              (1) * * *

               *       *       *       *       *       *       *

              [(6)] (7) for any manufacturer, distributor,
            retailer, or private labeler to distribute in commerce
            an adapter that--
                      (A) * * *

               *       *       *       *       *       *       *

                            [INJUNCTIVE ENFORCEMENT

      [Sec. 334. The United States district courts shall have
    jurisdiction to restrain (1) any violation of section 332 and
    (2) any person from distributing in commerce any covered
    product which does not comply with an applicable rule under
    section 324 or 325. Any such action shall be brought by the
    Commission, except that any such action to restrain any
    violation of section 332(a)(3) which relates to requirements
    prescribed by the Secretary, any violation of section 332(a)(4)
    which relates to requests of the Secretary under section
    326(b)(2), or any violation of section 332(a)(5) shall be
    brought by the Secretary. Any such action to restrain any
    person from distributing in commerce a general service
    incandescent lamp that does not comply with the applicable
    standard established under section 325(i) or an adapter
    prohibited under section 332(a)(6) may also be brought by the
    attorney general of a State in the name of the State. Any such
    action may be brought in the United States district court for a
    district wherein any act, omission, or transaction constituting
    the violation occurred, or in such court for the district
    wherein the defendant is found or transacts business. In any
    action under this section, process may be served on a defendant
    in any other district in which the defendant resides or may be
    found.]

    SEC. 334. JURISDICTION AND VENUE.

      (a) Jurisdiction.--The United States district courts shall
    have jurisdiction to restrain--
              (1) any violation of section 332; and
              (2) any person from distributing in commerce any
            covered product which does not comply with an
            applicable rule under section 324 or 325.
      (b) Authority.--Any action referred to in subsection (a)
    shall be brought by the Commission or by the attorney general
    of a State in the name of the State, except that--
              (1) any such action to restrain any violation of
            section 332(a)(3) which relates to requirements
            prescribed by the Secretary or any violation of section
            332(a)(4) which relates to request of the Secretary
            under section 326(b)(2) shall be brought by the
            Secretary; and
              (2) any violation of section 332(a)(5) or 332(a)(7)
            shall be brought by the Secretary or by the attorney
            general of a State in the name of the State.
      (c) Venue and Service of Process.--Any such action may be
    brought in the United States district court for a district
    wherein any act, omission, or transaction constituting the
    violation occurred, or in such court of the district wherein
    the defendant is found or transacts business. In any action
    under this section, process may be served on a defendant in any
    other district in which the defendant resides or may be found.

               *       *       *       *       *       *       *

                      Part C--Certain Industrial Equipment

                                  DEFINITIONS

      Sec. 340. For purposes of this part--
              (1) The term ``covered equipment'' means one of the
            following types of industrial equipment:
                      (A) * * *

               *       *       *       *       *       *       *

                      [(L) Any other type of industrial equipment
                    which the Secretary classifies as covered
                    equipment under section 341(b).]
                      (L) Outdoor luminaires.
                      (M) Outdoor high light output lamps.
                      (N) Any other type of industrial equipment
                    which the Secretary classifies as covered
                    equipment under section 341(b).

               *       *       *       *       *       *       *

              (13) Electric motor.--
                      [(A) General purpose electric motor (subtype
                    i).--The term ``general purpose electric motor
                    (subtype I)'' means any motor that meets the
                    definition of ``General Purpose'' as
                    established in the final rule issued by the
                    Department of Energy entitled ``Energy
                    Efficiency Program for Certain Commercial and
                    Industrial Equipment: Test Procedures,
                    Labeling, and Certification Requirements for
                    Electric Motors'' (10 CFR 431), as in effect on
                    the date of enactment of the Energy
                    Independence and Security Act of 2007.
                      [(B) General purpose electric motor (subtype
                    ii).--The term ``general purpose electric motor
                    (subtype II)'' means motors incorporating the
                    design elements of a general purpose electric
                    motor (subtype I) that are configured as 1 of
                    the following:
                              [(i) A U-Frame Motor.
                              [(ii) A Design C Motor.
                              [(iii) A close-coupled pump motor.
                              [(iv) A Footless motor.
                              [(v) A vertical solid shaft normal
                            thrust motor (as tested in a horizontal
                            configuration).
                              [(vi) An 8-pole motor (900 rpm).
                              [(vii) A poly-phase motor with
                            voltage of not more than 600 volts
                            (other than 230 or 460 volts.]
                      (A) In general.--The term ``electric motor''
                    means any motor that is--
                              (i) a general purpose T-frame,
                            single-speed, foot-mounting, polyphase
                            squirrel-cage induction motor of the
                            National Electrical Manufacturers
                            Association, Design A and B, continuous
                            rated, operating on 230/460 volts and
                            constant 60 Hertz line power as defined
                            in NEMA Standards Publication MG1-1987;
                            or
                              (ii) a motor incorporating the design
                            elements described in clause (i), but
                            is configured to incorporate one or
                            more of the following variations--
                                      (I) U-frame motor;
                                      (II) NEMA Design C motor;
                                      (III) close-coupled pump
                                    motor;
                                      (IV) footless motor;
                                      (V) vertical solid shaft
                                    normal thrust motor (as tested
                                    in a horizontal configuration);
                                      (VI) 8-pole motor; or
                                      (VII) poly-phase motor with a
                                    voltage rating of not more than
                                    600 volts (other than 230 volts
                                    or 460 volts, or both, or can
                                    be operated on 230 volts or 460
                                    volts, or both).
              [(C)] (B) The term ``definite purpose motor'' means
            any motor designed in standard ratings with standard
            operating characteristics or standard mechanical
            construction for use under service conditions other
            than usual or for use on a particular type of
            application and which cannot be used in most general
            purpose applications.
              [(D)] (C) The term ``special purpose motor'' means
            any motor, other than a general purpose motor or
            definite purpose motor, which has special operating
            characteristics or special mechanical construction, or
            both, designed for a particular application.
              [(E)] (D) The term ``open motor'' means a motor
            having ventilating openings which permit passage of
            external cooling air over and around the windings of
            the machine.
              [(F)] (E) The term ``enclosed motor'' means a motor
            so enclosed as to prevent the free exchange of air
            between the inside and outside of the case but not
            sufficiently enclosed to be termed airtight.
              [(G)] (F) The term ``small electric motor'' means a
            NEMA general purpose alternating current single-speed
            induction motor, built in a two-digit frame number
            series in accordance with NEMA Standards Publication
            MG1-1987.
              [(H)] (G) The term ``efficiency'' when used with
            respect to an electric motor means the ratio of an
            electric motor's useful power output to its total power
            input, expressed in percentage.
              [(I)] (H) The term ``nominal full load efficiency''
            means the average efficiency of a population of motors
            of duplicate design as determined in accordance with
            NEMA Standards Publication MG1-1987.

               *       *       *       *       *       *       *

              [(22)] (23) Single package vertical air
            conditioner.--The term ``single package vertical air
            conditioner'' means air-cooled commercial package air
            conditioning and heating equipment that--
                      (A) * * *

               *       *       *       *       *       *       *

              [(23)] (24) Single package vertical heat pump.--The
            term ``single package vertical heat pump'' means a
            single package vertical air conditioner that--
                      (A) * * *

               *       *       *       *       *       *       *

              (25) The term ``luminaire'' means a complete lighting
            unit consisting of one or more light sources and
            ballast(s), together with parts designed to distribute
            the light, to position and protect such lamps, and to
            connect such light sources to the power supply.
              (26) The term ``outdoor luminaire'' means a luminaire
            that is listed as suitable for wet locations pursuant
            to Underwriters Laboratories Inc. standard UL 1598 and
            is labeled as ``Suitable for Wet Locations'' consistent
            with section 410.4(A) of the National Electrical Code
            2005, or is designed for roadway illumination and meets
            the requirements of Addendum A for IESNA TM-15-07:
            Backlight, Uplight, and Glare (BUG) Ratings, except
            for--
                      (A) luminaires designed for outdoor video
                    display images that cannot be used in general
                    lighting applications;
                      (B) portable luminaires designed for use at
                    construction sites;
                      (C) luminaires designed for continuous
                    immersion in swimming pools and other water
                    features;
                      (D) seasonal luminaires incorporating solely
                    individual lamps rated at 10 watts or less;
                      (E) luminaires designed to be used in
                    emergency conditions that incorporate a means
                    of charging a battery and a device to switch
                    the power supply to emergency lighting loads
                    automatically upon failure of the normal power
                    supply;
                      (F) components used for repair of installed
                    luminaries and that meet the requirements of
                    section 342(h);
                      (G) a luminaire utilizing an electrode-less
                    fluorescent lamp as the light source;
                      (H) decorative gas lighting systems;
                      (I) luminaires designed explicitly for
                    lighting for theatrical purposes, including
                    performance, stage, film production, and video
                    production;
                      (J) luminaires designed as theme elements in
                    theme/amusement parks and that cannot be used
                    in most general lighting applications;
                      (K) luminaires designed explicitly for
                    vehicular roadway tunnels designed to comply
                    with ANSI/IESNA RP-22-05;
                      (L) luminaires designed explicitly for
                    hazardous locations meeting UL Standard 844;
                      (M) searchlights;
                      (N) luminaires that are designed to be
                    recessed into a building, and that cannot be
                    used in most general lighting applications;
                      (O) a luminaire rated only for residential
                    applications utilizing a light source or
                    sources regulated under the amendments made by
                    section 321 of the Energy Independence and
                    Security Act of 2007 and with a light output no
                    greater than 2,600 lumens;
                      (P) a residential pole-mounted luminaire that
                    is not rated for commercial use utilizing a
                    light source or sources meeting the efficiency
                    requirements of section 231 of the Energy
                    Independence and Security Act of 2007 and
                    mounted on a post or pole not taller than 10.5
                    feet above ground and with a light output not
                    greater than 2,600 lumens;
                      (Q) a residential fixture with E12
                    (Candelabra) bases that is rated for not more
                    than 300 watts total; or
                      (R) a residential fixture with medium screw
                    bases that is rated for not more than 145
                    watts.
              (27) The term ``outdoor high light outputlamp'' means
            a lamp that--
                      (A) has a rated lumen output not less than
                    2601 lumens;
                      (B) is capable of being operated at a voltage
                    not less than 110 volts and not greater than
                    300 volts, or driven at a constant current of
                    6.6 amperes;
                      (C) is not a Parabolic Aluminized Reflector
                    lamp; and
                      (D) is not a J-type double-ended (T-3)
                    halogen quartz lamp, utilizing R-7S bases, that
                    is manufactured before January 1, 2015.
              (28) The term ``outdoor lighting control'' means a
            device incorporated in a luminaire that receives a
            signal, from either a sensor (such as an occupancy
            sensor, motion sensor, or daylight sensor) or an input
            signal (including analog or digital signals
            communicated through wired or wireless technology), and
            can adjust the light level according to the signal.

               *       *       *       *       *       *       *

                                   STANDARDS

      Sec. 342. (a) Small, Large, and Very Large Commercial Package
    Air Conditioning and Heating Equipment, Packaged Terminal Air
    Conditioners and Heat Pumps, Warm-Air Furnaces, Packaged
    Boilers, Storage Water Heaters, Instantaneous Water Heaters,
    and Unfired Hot Water Storage Tanks.--(1) * * *

               *       *       *       *       *       *       *

              (6) Amended energy efficiency standards.--
                      (A) * * *
                      (B) Rule.--[If the Secretary]
                              (i) In general.--If the Secretary
                            makes a determination described in
                            [clause (ii)(II)] subparagraph
                            (A)(ii)(II) for a product described in
                            [clause (i)] subparagraph (A)(i), not
                            later than 30 months after the date of
                            publication of the amendment to the
                            ASHRAE/IES Standard 90.1 for the
                            product, the Secretary shall issue the
                            rule establishing the amended standard.
                              (ii) Factors.--In determining whether
                            a standard is economically justified
                            for the purposes of subparagraph
                            (A)(ii)(II), the Secretary shall, after
                            receiving views and comments furnished
                            with respect to the proposed standard,
                            determine whether the benefits of the
                            standard exceed the burden of the
                            proposed standard by, to the maximum
                            extent practicable, considering--
                                      (I) the economic impact of
                                    the standard on the
                                    manufacturers and on the
                                    consumers of the products
                                    subject to the standard;
                                      (II) the savings in operating
                                    costs throughout the estimated
                                    average life of the product in
                                    the type (or class) compared to
                                    any increase in the price of,
                                    or in the initial charges for,
                                    or maintenance expenses of, the
                                    products that are likely to
                                    result from the imposition of
                                    the standard;
                                      (III) the total projected
                                    quantity of energy savings
                                    likely to result directly from
                                    the imposition of the standard;
                                      (IV) any lessening of the
                                    utility or the performance of
                                    the products likely to result
                                    from the imposition of the
                                    standard;
                                      (V) the impact of any
                                    lessening of competition, as
                                    determined in writing by the
                                    Attorney General, that is
                                    likely to result from the
                                    imposition of the standard;
                                      (VI) the need for national
                                    energy conservation; and
                                      (VII) other factors the
                                    Secretary considers relevant.
                              (iii) Administration.--
                                      (I) Energy use and
                                    efficiency.--The Secretary may
                                    not prescribe any amended
                                    standard under this paragraph
                                    that increases the maximum
                                    allowable energy use, or
                                    decreases the minimum required
                                    energy efficiency, of a covered
                                    product.
                                      (II) Unavailability.--
                                              (aa) In general.--The
                                            Secretary may not
                                            prescribe an amended
                                            standard under this
                                            subparagraph if the
                                            Secretary finds (and
                                            publishes the finding)
                                            that interested persons
                                            have established by a
                                            preponderance of the
                                            evidence that a
                                            standard is likely to
                                            result in the
                                            unavailability in the
                                            United States in any
                                            product type (or class)
                                            of performance
                                            characteristics
                                            (including reliability,
                                            features, sizes,
                                            capacities, and
                                            volumes) that are
                                            substantially the same
                                            as those generally
                                            available in the United
                                            States at the time of
                                            the finding of the
                                            Secretary.
                                              (bb) Other types or
                                            classes.--The failure
                                            of some types (or
                                            classes) to meet the
                                            criterion established
                                            under this subclause
                                            shall not affect the
                                            determination of the
                                            Secretary on whether to
                                            prescribe a standard
                                            for the other types or
                                            classes.
                      (C) Amendment of standard.--
                              (i) * * *

               *       *       *       *       *       *       *

                              (iv) Application to products.--[An
                            amendment prescribed under this
                            subsection] Notwithstanding
                            subparagraph (D), an amendment
                            prescribed under this subparagraph
                            shall apply to products manufactured
                            after a date that is the later of--
                                      (I) * * *

               *       *       *       *       *       *       *

                              [(iii)] (vi) Consideration of prices
                            and operating patterns.--If the
                            Secretary is considering revised
                            standards for air-cooled 3-phase
                            central air conditioners and central
                            air conditioning heat pumps with less
                            65,000 Btu per hour (cooling capacity),
                            the Secretary shall use commercial
                            energy prices and operating patterns in
                            all analyses conducted by the
                            Secretary.

               *       *       *       *       *       *       *

      (11) Warm air furnaces.--Each warm air furnace with an input
    rating of 225,000 Btu per hour or more and manufactured after
    January 1, 2011, shall meet the following standard levels:
              (A) Gas-fired units.--
                      (i) Minimum thermal efficiency of 80 percent.
                      (ii) Include an interrupted or intermittent
                    ignition device.
                      (iii) Have jacket losses not exceeding 0.75
                    percent of the input rating.
                      (iv) Have either power venting or a flue
                    damper.
              (B) Oil-fired units.--
                      (i) Minimum thermal efficiency of 81 percent.
                      (ii) Have jacket losses not exceeding 0.75
                    percent of the input rating.
                      (iii) Have either power venting or a flue
                    damper.
      (b) Electric Motors.--(1) Except for definite purpose motors,
    special purpose motors, and those motors exempted by the
    Secretary under [paragraph (2)] paragraph (3), each electric
    motor manufactured (alone or as a component of another piece of
    equipment) after the 60-month period beginning on the date of
    the enactment of this subsection, or in the case of an electric
    motor which requires listing or certification by a nationally
    recognized safety testing laboratory, after the 84-month period
    beginning on such date, shall have a nominal full load
    efficiency of not less than the following:

    ----------------------------------------------------------------------------------------------------------------
                                                                               Nominal Full-Load Efficiency
                                                                     -----------------------------------------------
                             Number of poles                                Open Motors            Closed Motors
                                                                     -----------------------------------------------
                                                                         6       4       2       6       4       2
    ----------------------------------------------------------------------------------------------------------------
    Motor Horsepower                                                  ......  ......  ......  ......  ......  ......
    1...............................................................    80.0    82.5  ......    80.0    82.5    75.5
    1.5.............................................................    84.0    84.0    82.5    85.5    84.0    82.5
    2...............................................................    85.5    84.0    84.0    86.5    84.0    84.0
    3...............................................................    86.5    86.5    84.0    87.5    87.5    85.5
    5...............................................................    87.5    87.5    85.5    87.5    87.5    87.5
    7.5.............................................................    88.5    88.5    87.5    89.5    89.5    88.5
    10..............................................................    90.2    89.5    88.5    89.5    89.5    89.5
    15..............................................................    90.2    91.0    89.5    90.2    91.0    90.2
    20..............................................................    91.0    91.0    90.2    90.2    91.0    90.2
    25..............................................................    91.7    91.7    91.0    91.7    92.4    91.0
    30..............................................................    92.4    92.4    91.0    91.7    92.4    91.0
    40..............................................................    93.0    93.0    91.7    93.0    93.0    91.7
    50..............................................................    93.0    93.0    92.4    93.0    93.0    92.4
    60..............................................................    93.6    93.6    93.0    93.6    93.6    93.0
    75..............................................................    93.6    94.1    93.0    93.6    94.1    93.0
    100.............................................................    94.1    94.1    93.0    94.1    94.5    93.6
    125.............................................................    94.1    94.5    93.6    94.1    94.5    94.5
    150.............................................................    94.5    95.0    93.6    95.0    95.0    94.5
    200.............................................................    94.5    95.0    94.5    95.0    95.0    95.0
    ----------------------------------------------------------------------------------------------------------------

      (2) Standards effective beginning december 19, 2010.--
              (A) In general.--Except for definite purpose motors,
            special purpose motors, and those motors exempted by
            the Secretary under paragraph (3) and except as
            provided for in subparagraphs (B), (C), and (D), each
            electric motor manufactured with power ratings from 1
            to 200 horsepower (alone or as a component of another
            piece of equipment) on or after December 19, 2010,
            shall have a nominal full load efficiency of not less
            than the nominal full load efficiency described in NEMA
            MG-1 (2006) Table 12-12.
              (B) Fire pump electric motors.--Except for those
            motors exempted by the Secretary under paragraph (3),
            each fire pump electric motor manufactured with power
            ratings from 1 to 200 horsepower (alone or as a
            component of another piece of equipment) on or after
            December 19, 2010, shall have a nominal full load
            efficiency that is not less than the nominal full load
            efficiency described in NEMA MG-1 (2006) Table 12-11.
              (C) Nema design b electric motors.--Except for those
            motors exempted by the Secretary under paragraph (3),
            each NEMA Design B electric motor with power ratings of
            more than 200 horsepower, but not greater than 500
            horsepower, manufactured (alone or as a component of
            another piece of equipment) on or after December 19,
            2010, shall have a nominal full load efficiency of not
            less than the nominal full load efficiency described in
            NEMA MG-1 (2006) Table 12-11.
              (D) Motors incorporating certain design elements.--
            Except for those motors exempted by the Secretary under
            paragraph (3), each electric motor described in section
            340(13)(A)(ii) manufactured with power ratings from 1
            to 200 horsepower (alone or as a component of another
            piece of equipment) on or after December 19, 2010,
            shall have a nominal full load efficiency of not less
            than the nominal full load efficiency described in NEMA
            MG-1 (2006) Table 12-11.
      [(2)] (3)(A) The Secretary may, by rule, provide that the
    standards specified in [paragraph (1)] paragraphs (1) and (2)
    shall not apply to certain types or classes of electric motors
    if--
              (i) * * *

               *       *       *       *       *       *       *

      (D) Manufacturers of types or classes of motors developed
    after the date of the enactment of this subsection to which
    standards under [paragraph (1)] paragraphs (1) and (2) would be
    applicable may petition the Secretary for exemptions from
    compliance with such standards based on the criteria specified
    in subparagraph (A).
      [(3)] (4)(A) The Secretary shall publish a final rule no
    later than the end of the 24-month period beginning on the
    effective date of the standards established under paragraph (1)
    to determine if such standards should be amended. Such rule
    shall provide that any amendment shall apply to electric motors
    manufactured on or after a date which is five years after the
    effective date of the standards established under paragraph
    (1).

               *       *       *       *       *       *       *

      (g) Outdoor Luminaires.--
              (1) Each outdoor luminaire manufactured on or after
            January 1, 2011, shall--
                      (A) have an initial luminaire efficacy of at
                    least 50 lumens per watt; and
                      (B) be designed to use a light source with a
                    lumen maintenance, calculated as mean rated
                    lumens divided by initial lumens, of at least
                    0.6.
              (2) Each outdoor luminaire manufactured on or after
            January 1, 2013, shall--
                      (A) have an initial luminaire efficacy of at
                    least 70 lumens per watt; and
                      (B) be designed to use a light source with a
                    lumen maintenance, calculated as mean rated
                    lumens divided by initial lumens, of at least
                    0.6.
              (3) Each outdoor luminaire manufactured on or after
            January 1, 2015, shall--
                      (A) have an initial luminaire efficacy of at
                    least 80 lumens per watt; and
                      (B) be designed to use a light source with a
                    lumen maintenance, calculated as mean rated
                    lumens divided by initial lumens, of at least
                    0.65.
              (4) In addition to the requirements of paragraphs (1)
            through (3), each outdoor luminaire manufactured on or
            after January 1, 2011, shall have the capability of
            producing at least two different light levels,
            including 100 percent and 60 percent of full lamp
            output as tested with the maximum rated lamp per UL1598
            or the manufacturer's maximum specified for the
            luminaire under test.
              (5)(A) Not later than January 1, 2017, the Secretary
            shall issue a final rule amending the applicable
            standards established in paragraphs (3) and (4) if
            technologically feasible and economically justified.
              (B) A final rule issued under subparagraph (A) shall
            establish efficiency standards at the maximum level
            that is technically feasible and economically
            justified, as provided in subsections (o) and (p) of
            section 325. The Secretary may also, in such
            rulemaking, amend or discontinue the product exclusions
            listed in section 340(26)(A) through (P), or amend the
            lumen maintenance requirements in paragraph (3) if the
            Secretary determines that such amendments are
            consistent with the purposes of this Act.
              (C) If the Secretary issues a final rule under
            subparagraph (A) establishing amended standards, the
            final rule shall provide that the amended standards
            apply to products manufactured on or after January 1,
            2020, or one year after the date on which the final
            amended standard is published, whichever is later.
      (h) Outdoor High Light Output Lamps.--Each outdoor high light
    output lamp manufactured on or after January 1, 2012, shall
    have a lighting efficiency of at least 45 lumens per watt.

                                TEST PROCEDURES

      Sec. 343. (a) Prescription by Secretary; Requirements.--
              (1) [Test procedures.--
                      [(A) Amendment.--] Test procedures.--At least
                    once every 7 years, the Secretary shall conduct
                    an evaluation of each class of covered
                    equipment and--
                      [(i)] (A) if the Secretary determines that
                    amended test procedures would more accurately
                    or fully comply with the requirements of
                    paragraphs (2) and (3), shall prescribe test
                    procedures for the class in accordance with
                    this section; or
                      [(ii)] (B) shall publish notice in the
                    Federal Register of any determination not to
                    amend a test procedure.

               *       *       *       *       *       *       *

              (10) Outdoor lighting.--
                      (A) With respect to outdoor luminaires and
                    outdoor high light output lamps, the test
                    procedures shall be based upon the test
                    procedures specified in illuminating
                    engineering society procedures LM-79 as of
                    March 1, 2009, and LM-31, and/or other
                    appropriate consensus test procedures developed
                    by the Illuminating Engineering Society or
                    other appropriate consensus standards bodies.
                      (B) If illuminating engineering society
                    procedure LM--79 is amended, the Secretary
                    shall amend the test procedures established in
                    subparagraph (A) as necessary to be consistent
                    with the amended LM-79 test procedure, unless
                    the Secretary determines, by rule, published in
                    the Federal Register and supported by clear and
                    convincing evidence, that to do so would not
                    meet the requirements for test procedures under
                    paragraph (2).
                      (C) The Secretary may revise the test
                    procedures for outdoor luminaires or outdoor
                    high light output lamps by rule consistent with
                    paragraph (2), and may incorporate as
                    appropriate consensus test procedures developed
                    by the Illuminating Engineering Society or
                    other appropriate consensus standards bodies.

               *       *       *       *       *       *       *

             ADMINISTRATION, PENALTIES, ENFORCEMENT, AND PREEMPTION

      Sec. 345. (a) The provisions of section 326 (a), (b), and
    (d), the provisions of subsections (l) through (s) of section
    325, and section 327 through 336 shall apply with respect to
    this part (other than the equipment specified in [subparagraphs
    (B) through (G)] subparagraphs (B), (C), (D), (I), (J), and (K)
    of section 340(1)) to the same extent and in the same manner as
    they apply in part B. In applying such provisions for the
    purposes of this part--
              (1) * * *

               *       *       *       *       *       *       *

      (b)(1) The provisions of section 325(p)(5), section 326(a),
    (b), and (d), section 327(a), and sections 328 through 336
    shall apply with respect to the equipment specified in
    [subparagraphs (B) through (G)] subparagraphs (B), (C), (D),
    (I), (J), and (K) of section 340(1) to the same extent and in
    the same manner as they apply in [part A] part B. In applying
    such provisions for the purposes of such equipment, paragraphs
    (1), (2), (3), and (4) of subsection (a) shall apply.

               *       *       *       *       *       *       *

      (d)(1) Except as provided in paragraphs (2) and (3), section
    327 shall apply with respect to very large commercial package
    air conditioning and heating equipment to the same extent and
    in the same manner as section 327 applies under [part A] part B
    on the date of enactment of this subsection.

               *       *       *       *       *       *       *

      (e)(1)(A) Subsections (a), (b), and (d) of section 326,
    subsections (m) through (s) of section 325, and sections 328
    through 336 shall apply with respect to commercial
    refrigerators, freezers, and refrigerator-freezers to the same
    extent and in the same manner as those provisions apply under
    [part A] part B.

               *       *       *       *       *       *       *

      (2)(A) Section 327 shall apply to commercial refrigerators,
    freezers, and refrigerator-freezers for which standards are
    established under paragraphs (2) and (3) of section 342(c) to
    the same extent and in the same manner as those provisions
    apply under [part A] part B on the date of enactment of this
    subsection, except that any State or local standard issued
    before the date of enactment of this subsection shall not be
    preempted until the standards established under paragraphs (2)
    and (3) of section 342(c) take effect.

               *       *       *       *       *       *       *

      (3)(A) Section 327 shall apply to commercial refrigerators,
    freezers, and refrigerator-freezers for which standards are
    established under section 342(c)(4) to the same extent and in
    the same manner as the provisions apply under [part A] part B
    on the date of publication of the final rule by the Secretary,
    except that any State or local standard issued before the date
    of publication of the final rule by the Secretary shall not be
    preempted until the standards take effect.

               *       *       *       *       *       *       *

      (f)(1)(A)(i) Except as provided in clause (ii), section 327
    shall apply to automatic commercial ice makers for which
    standards have been established under section 342(d)(1) to the
    same extent and in the same manner as the section applies under
    [part A] part B on the date of enactment of this subsection.

               *       *       *       *       *       *       *

      (2)(A)(i) Except as provided in clause (ii), section 327
    shall apply to automatic commercial ice makers for which
    standards have been established under section 342(d)(2) to the
    same extent and in the same manner as the section applies under
    [part A] part B on the date of publication of the final rule by
    the Secretary.

               *       *       *       *       *       *       *

      (h) Walk-In Coolers and Walk-In Freezers.--
              (1) Covered types.--
                      (A) Relationship to other law.--
                              (i) In general.--Except as otherwise
                            provided in this subsection, section
                            327 shall apply to walk-in coolers and
                            walk-in freezers for which standards
                            have been established under paragraphs
                            (1), (2), and (3) of section 342(f) to
                            the same extent and in the same manner
                            as the section applies under [part A]
                            part B on the date of enactment of this
                            subsection.

               *       *       *       *       *       *       *

              (3) California.--Any standard issued in the State of
            California before January 1, 2011, under title 20 of
            the California Code of Regulations, that refers to
            walk-in coolers and walk-in freezers, for which
            standards have been established under paragraphs (1),
            (2), and (3) of section 342(f), shall not be preempted
            until the standards established under [section
            342(f)(3)] section 342(f)(4) take effect.
      (i)(1) Except as provided in paragraph (2), section 327 shall
    apply to outdoor luminaires to the same extent and in the same
    manner as the section applies under part B.
      (2) Any State standard that is adopted on or before January
    1, 2015, pursuant to a statutory requirement to adopt
    efficiency standards for reducing outdoor lighting energy use
    enacted prior to January 31, 2008, shall not be preempted.

               *       *       *       *       *       *       *

    SEC. 347. MOTOR EFFICIENCY REBATE PROGRAM.

      (a) Establishment.--Not later than January 1, 2010, in
    accordance with subsection (b), the Secretary shall establish a
    program to provide rebates for expenditures made by entities--
              (1) for the purchase and installation of a new
            electric motor that has a nominal full load efficiency
            that is not less than the nominal full load efficiency
            as defined in--
                      (A) table 12-12 of NEMA Standards Publication
                    MG 1-2006 for random wound motors rated 600
                    volts or lower; or
                      (B) table 12-13 of NEMA Standards Publication
                    MG 1-2006 for form wound motors rated 5000
                    volts or lower; and
              (2) to replace an installed motor of the entity the
            specifications of which are established by the
            Secretary by a date that is not later than 90 days
            after the date of enactment of this section.
      (b) Requirements.--
              (1) Application.--To be eligible to receive a rebate
            under this section, an entity shall submit to the
            Secretary an application in such form, at such time,
            and containing such information as the Secretary may
            require, including--
                      (A) demonstrated evidence that the entity
                    purchased an electric motor described in
                    subsection (a)(1) to replace an installed motor
                    described in subsection (a)(2);
                      (B) demonstrated evidence that the entity--
                              (i) removed the installed motor of
                            the entity from service; and
                              (ii) properly disposed the installed
                            motor of the entity; and
                      (C) the physical nameplate of the installed
                    motor of the entity.
              (2) Authorized amount of rebate.--The Secretary may
            provide to an entity that meets each requirement under
            paragraph (1) a rebate the amount of which shall be
            equal to the product obtained by multiplying--
                      (A) the nameplate horsepower of the electric
                    motor purchased by the entity in accordance
                    with subsection (a)(1); and
                      (B) $25.00.
              (3) Payments to distributors of qualifying electric
            motors.--To assist in the payment for expenses relating
            to processing and motor core disposal costs, the
            Secretary shall provide to the distributor of an
            electric motor described in subsection (a)(1), the
            purchaser of which received a rebate under this
            section, an amount equal to the product obtained by
            multiplying--
                      (A) the nameplate horsepower of the electric
                    motor; and
                      (B) $5.00.
      (c) Authorization of Appropriations.--There are authorized to
    be appropriated to carry out this section, to remain available
    until expended--
              (1) $80,000,000 for fiscal year 2011;
              (2) $75,000,000 for fiscal year 2012;
              (3) $70,000,000 for fiscal year 2013;
              (4) $65,000,000 for fiscal year 2014; and
              (5) $60,000,000 for fiscal year 2015.

               *       *       *       *       *       *       *

    Part E--INDUSTRIAL ENERGY EFFICIENCY

               *       *       *       *       *       *       *

    SEC. 373. WASTE ENERGY RECOVERY INCENTIVE GRANT PROGRAM.

      (a) * * *

               *       *       *       *       *       *       *

      (c) Grants to States.--In the case of any State that has
    achieved 80 percent or more of waste heat recovery
    opportunities identified by the Secretary under this part, the
    [Administrator] Secretary shall make a 1-time grant to the
    State in an amount of not more than $1,000 per megawatt of
    waste-heat capacity recovered (or a thermal equivalent) to
    support State-level programs to identify and achieve additional
    energy efficiency.

               *       *       *       *       *       *       *

      (e) Limitation.--The Secretary shall not award grants to any
    person for a combined heat and power project or a waste heat
    recovery project [that qualifies for] who elects to claim
    specific Federal tax incentives for combined heat and power or
    for waste heat recovery from that project.

               *       *       *       *       *       *       *

    SEC. 375. CLEAN ENERGY APPLICATION CENTERS.

      (a) * * *

               *       *       *       *       *       *       *

      (f) Coordination With Centers for Energy and Environmental
    Knowledge and Outreach.--A Clean Energy Application Center may
    serve as a Center for Energy and Environmental Knowledge and
    Outreach established pursuant to section 173 of the American
    Clean Energy and Security Act of 2009.
      [(f)] (g) Authorization.--There is authorized to be
    appropriated to carry out this section [$10,000,000 for each of
    fiscal years 2008 through 2012] $30,000,000 for fiscal year
    2010 and each fiscal year thereafter.

               *       *       *       *       *       *       *

    Part G--Energy Conservation Program for Schools and Hospitals

               *       *       *       *       *       *       *

    SEC. 399A. ENERGY SUSTAINABILITY AND EFFICIENCY GRANTS AND LOANS FOR
                        INSTITUTIONS.

      (a) Definitions.--In this section:
              (1) * * *

               *       *       *       *       *       *       *

              (5) Institutional entity.--The term ``institutional
            entity'' means an institution of higher education, a
            public school district, a local government, a municipal
            utility, [or a designee] a not-for-profit hospital or
            not-for-profit inpatient health care facility, or a
            designated agent of 1 of those entities.

               *       *       *       *       *       *       *

      (c) Grants for Energy Efficiency Improvement and Energy
    Sustainability.--
              (1) Grants.--
                      (A) * * *

               *       *       *       *       *       *       *

                      [(C) Minimum funding.--Not less than 50
                    percent of the total funding for all grants
                    under this subsection shall be awarded in
                    grants to institutions of higher education.]

               *       *       *       *       *       *       *

      (f) Grant Amounts.--
              (1) * * *

               *       *       *       *       *       *       *

              (3) Grants for efficiency improvement and energy
            sustainability.--In the case of grants for efficiency
            improvement and energy sustainability under subsection
            (c), grant funds shall be available for not more than
            an amount equal to the lesser of--
                      (A) [$1,000,000] $2,500,000; or

               *       *       *       *       *       *       *

      (i) Authorization.--
              (1) Grants.--There is authorized to be appropriated
            for the cost of grants authorized in subsections (b),
            (c), and (d) [$250,000,000 for each of fiscal years
            2009 through 2013] $250,000,000 for each of fiscal
            years 2010 through 2015, of which not more than 5
            percent may be used for administrative expenses.

               *       *       *       *       *       *       *

                                  ----------

    FEDERAL POWER ACT

               *       *       *       *       *       *       *

    Part II--REGULATION OF ELECTRIC UTILITY COMPANIES ENGAGED IN INTERSTATE
    COMMERCE

               *       *       *       *       *       *       *

    SEC. 216A. TRANSMISSION PLANNING.

      (a) Federal Policy.--
              (1) Objectives.--It is the policy of the United
            States that regional electric grid planning should
            facilitate the deployment of renewable and other zero-
            carbon energy sources for generating electricity to
            reduce greenhouse gas emissions while ensuring
            reliability, reducing congestion, ensuring cyber-
            security, and providing for cost-effective electricity
            services throughout the United States.
              (2) Options.--In addition to the policy under
            paragraph (1), it is the policy of the United States
            that regional electric grid planning to meet these
            objectives should take into account all significant
            demand-side and supply-side options, including energy
            efficiency, distributed generation, renewable energy
            and zero-carbon electricity generation technologies,
            smart-grid technologies and practices, demand response,
            electricity storage, voltage regulation technologies,
            high capacity conductors with at least 25 percent
            greater efficiency than traditional ACSR (aluminum
            stranded conductors steel reinforced) conductors,
            superconductor technologies, underground transmission
            technologies, and new conventional electric
            transmission capacity and corridors.
      (b) Planning.--
              (1) Planning principles.--Not later than 1 year after
            the date of enactment of this section, the Commission
            shall adopt, after notice and opportunity for comment,
            national electricity grid planning principles derived
            from the Federal policy established under subsection
            (a) to be applied in ongoing and future transmission
            planning that may implicate interstate transmission of
            electricity.
              (2) Regional planning entities.--Not later than 3
            months after the date of adoption by the Commission of
            national electricity grid planning principles pursuant
            to paragraph (1), entities that conduct or may conduct
            transmission planning pursuant to State or Federal law
            or regulation, including States, entities designated by
            States, public utility transmission providers,
            operators and owners, regional organizations, and
            electric utilities, and that are willing to incorporate
            the national electricity grid planning principles
            adopted by the Commission in their electric grid
            planning, shall identify themselves and the regions for
            which they propose to develop plans to the Commission.
              (3) Coordination of regional planning entities.--The
            Commission shall encourage regional planning entities
            described under paragraph (2) to cooperate and
            coordinate across regions and to harmonize regional
            electric grid planning with planning in adjacent or
            overlapping jurisdictions to the maximum extent
            feasible. The Commission shall work with States, public
            utilities transmission providers, load-serving
            entities, transmission operators, and other
            organizations to resolve any conflict or competition
            among proposed planning entities in order to build
            consensus and promote the Federal policy established
            under subsection (a). The Commission shall seek to
            ensure that planning that is consistent with the
            national electricity grid planning principles adopted
            pursuant to paragraph (1) is conducted in all regions
            of the United States and the territories.
              (4) Relation to existing planning policy.--In
            implementing the Federal policy established under
            subsection (a), the Commission shall--
                      (A) incorporate any ongoing planning efforts
                    undertaken pursuant to section 217; and
                      (B) consult with and invite the participation
                    of the Secretary of Energy in relationship to
                    the Secretary's duties pursuant to section 216.
              (5) Assistance.--
                      (A) In general.--The Commission shall provide
                    support to and participate in the regional grid
                    planning processes conducted by regional
                    planning entities. The Commission may provide
                    planning resources and assistance as required
                    or as requested by regional planning entities,
                    including system data, cost information, system
                    analysis, technical expertise, modeling
                    support, dispute resolution services, and other
                    assistance to regional planning entities, as
                    appropriate.
                      (B) Authorization.--There are authorized to
                    be appropriated such sums as may be necessary
                    to carry out this paragraph.
              (6) Conflict resolution.--In the event that regional
            grid plans conflict, the Commission shall assist the
            regional planning entities in resolving such conflicts
            in order to achieve the objectives of the Federal
            policy established under subsection (a).
              (7) Submission of plans.--The Commission shall
            require regional planning entities to submit initial
            regional electric grid plans to the Commission not
            later than 18 months after the date the Commission
            promulgates national electricity grid planning
            principles pursuant to paragraph (1). Regional electric
            grid plans should, in general, be developed from sub-
            regional requirements and plans, including planning
            input reflecting individual utility service areas.
            Regional plans may then in turn be combined into larger
            regional plans, up to interconnection-wide and national
            plans, as appropriate and necessary as determined by
            the Commission. The Commission shall review such plans
            for consistency with the national grid planning
            principles and may return a plan to one or more
            planning entities for further consideration, along with
            the Commission's own recommendations for resolution of
            any conflict or for improvement. To the extent
            practicable, all plans submitted to the Commission
            shall be public documents and available on the
            Commission's website.
              (8) Multi-regional meetings.--As regional grid plans
            are submitted to the Commission, the Commission may
            convene multi-regional meetings to discuss regional
            grid plan consistency and integration, including
            requirements for multi-regional projects, and to
            resolve any conflicts that emerge from such multi-
            regional projects. The Commission shall provide its
            recommendations for eliminating any inter-regional
            conflicts.
              (9) Report to congress.--Not later than 3 years after
            the date of enactment of this section, the Commission
            shall provide a report to Congress containing the
            results of the regional grid planning process,
            including summaries of the adopted regional plans. The
            Commission shall provide an electronic version of its
            report on its website with links to all regional and
            sub-regional plans taken into account. The Commission
            shall note and provide its recommended resolution for
            any conflicts not resolved during the planning process.
            The Commission shall make any recommendations to
            Congress on the appropriate Federal role or support
            required to address the needs of the electric grid,
            including recommendations for addressing any needs that
            are beyond the reach of existing State and Federal
            authority.

               *       *       *       *       *       *       *

                        PART IV--CARBON MARKET ASSURANCE

    SEC. 401. OVERSIGHT AND ASSURANCE OF CARBON MARKETS.

      (a) Definitions.--In this section:
              (1) Contract of sale.--The term ``contract of sale''
            includes sales, agreements of sale, and agreements to
            sell.
              (2) Covered entity.--The term ``covered entity''
            shall have the meaning given in section 700 of the
            Clean Air Act.
              (3) Future delivery.--The term ``future delivery''
            does not include any sale of any cash commodity for
            deferred shipment or delivery.
              (4) Offset creation contract.--The term ``offset
            creation contract'' mean a written agreement for the
            origination and development of an offset project, and
            the related issuance of offset credits, pursuant to
            title VII of the Clean Air Act.
              (5) Regulated allowance.--The term ``regulated
            allowance'' means any emission allowance, compensatory
            allowance, offset credit, or Federal renewable
            electricity credit established or issued under the
            American Clean Energy and Security Act of 2009.
              (6) Regulated allowance derivative.--The term
            ``regulated allowance derivative'' means an instrument
            that is, or includes, an instrument--
                      (A) which--
                              (i) is of the character of, or is
                            commonly known to the trade as, a ``put
                            option'', ``call option'',
                            ``privilege'', ``indemnity'', ``advance
                            guaranty'', ``decline guaranty'', or
                            ``swap agreement''; or
                              (ii) is a contract of sale for future
                            delivery other than an offset creation
                            contract; and
                      (B) the value of which, in whole or in part,
                    is expressly linked to the price of a regulated
                    allowance or another regulated allowance
                    derivative.
              (7) Regulated instrument.--The term ``regulated
            instrument'' means a regulated allowance or a regulated
            allowance derivative.
      (b) Regulated Allowance Market.--
              (1) Authority.--The Commission shall promulgate
            regulations for the establishment, operation, and
            oversight of markets for regulated allowances not later
            than 18 months after the date of the enactment of this
            section, and from time to time thereafter as may be
            appropriate.
              (2) Regulations.--The regulations promulgated
            pursuant to paragraph (1) shall--
                      (A) provide for effective and comprehensive
                    market oversight;
                      (B) prohibit fraud, market manipulation
                    (including an entity's fraudulent or
                    manipulative conduct with respect to regulated
                    allowance derivatives that benefits the entity
                    in regulated allowance markets), and excess
                    speculation, and provide measures to limit
                    unreasonable fluctuation in the prices of
                    regulated allowances;
                      (C) facilitate compliance with title VII of
                    the Clean Air Act by covered entities;
                      (D) ensure market transparency and
                    recordkeeping deemed necessary and appropriate
                    by the Commission to provide for efficient
                    price discovery; prevention of fraud, market
                    manipulation, and excess speculation; and
                    compliance with title VII of the Clean Air Act
                    and section 610 of the Public Utility
                    Regulatory Policies Act of 1978;
                      (E) as necessary, ensure that position
                    limitations for individual market participants
                    are established with respect to each class of
                    regulated allowances;
                      (F) as necessary, ensure that margin
                    requirements are established for each class of
                    regulated allowances;
                      (G) provide for the formation and operation
                    of a fair, orderly and liquid national market
                    system that allows for the best execution in
                    the trading of regulated allowances;
                      (H) limit or eliminate counterparty risks,
                    market power concentration risks, and other
                    risks associated with over-the-counter trading;
                    and
                      (I) establish standards for qualification as,
                    and operation of, trading facilities for
                    regulated allowances;
                      (J) establish standards for qualification as,
                    and operation of, clearing organizations for
                    trading facilities for regulated allowances;
                    and
                      (K) include such other requirements as
                    necessary to preserve market integrity and
                    facilitate compliance with title VII of the
                    Clean Air Act and section 610 of the Public
                    Utility Regulatory Policies Act of 1978 and the
                    regulations promulgated under such title and
                    such section.
              (3) Enforcement.--
                      (A) In general.--If the Commission
                    determines, after notice and an opportunity for
                    a hearing on the record, that any entity has
                    violated any rule or order issued by the
                    Commission under this subsection, the
                    Commission may issue an order--
                              (i) prohibiting the entity from
                            trading on a trading facility for
                            regulated allowances registered with
                            the Commission, and requiring all such
                            facilities to refuse the entity all
                            privileges for such period as may be
                            specified in the order;
                              (ii) if the entity is registered with
                            the Commission in any capacity,
                            suspending for a period of not more
                            than 6 months, or revoking, the
                            registration of the entity;
                              (iii) assessing the entity a civil
                            penalty of not more than $1,000,000 per
                            day per violation for as long as the
                            violation continues (and in determining
                            the amount of a civil penalty, the
                            Commission shall take into account the
                            nature and seriousness of the violation
                            and the efforts to remedy the
                            violation); and
                              (iv) requiring disgorgement of unjust
                            profits, restitution to entities harmed
                            by the violation as determined by the
                            Commission, or both.
                      (B) Authority to suspend or revoke
                    registration.--The Commission may suspend for a
                    period of not more than 6 months, or revoke,
                    the registration of a trading facility for
                    regulated allowances or of a clearing
                    organization registered by the Commission if,
                    after notice and opportunity for a hearing on
                    the record, the Commission finds that--
                              (i) the entity violated any rule or
                            order issued by the Commission under
                            this subsection; or
                              (ii) a director, officer, employee,
                            or agent of the entity has violated any
                            rule or order issued by the Commission
                            under this subsection.
                      (C) Cease and desist proceedings.--
                              (i) In general.--If the Commission
                            determines that any entity may be
                            violating, may have violated, or may be
                            about to violate any provision of this
                            part, or any regulation promulgated by,
                            or any restriction, condition, or order
                            made or imposed by, the Commission
                            under this Act, and if the Commission
                            finds that the alleged violation or
                            threatened violation, or the
                            continuation of the violation, is
                            likely to result in significant harm to
                            covered entities or market
                            participants, or significant harm to
                            the public interest, the Commission may
                            issue a temporary order requiring the
                            entity--
                                      (I) to cease and desist from
                                    the violation or threatened
                                    violation;
                                      (II) to take such action as
                                    is necessary to prevent the
                                    violation or threatened
                                    violation; and
                                      (III) to prevent, as the
                                    Commission determines to be
                                    appropriate--
                                              (aa) significant harm
                                            to covered entities or
                                            market participants;
                                              (bb) significant harm
                                            to the public interest;
                                            and
                                              (cc) frustration of
                                            the ability of the
                                            Commission to conduct
                                            the proceedings or to
                                            redress the violation
                                            at the conclusion of
                                            the proceedings.
                              (ii) Timing of entry.--An order
                            issued under clause (i) shall be
                            entered only after notice and
                            opportunity for a hearing, unless the
                            Commission determines that notice and
                            hearing before entry would be
                            impracticable or contrary to the public
                            interest.
                              (iii) Effective date.--A temporary
                            order issued under clause (i) shall--
                                      (I) become effective upon
                                    service upon the entity; and
                                      (II) unless set aside,
                                    limited, or suspended by the
                                    Commission or a court of
                                    competent jurisdiction, remain
                                    effective and enforceable
                                    pending the completion of the
                                    proceedings.
                      (D) Proceedings regarding dissipation or
                    conversion of assets.--
                              (i) In general.--In a proceeding
                            involving an alleged violation of a
                            regulation or order promulgated or
                            issued by the Commission, if the
                            Commission determines that the alleged
                            violation or related circumstances are
                            likely to result in significant
                            dissipation or conversion of assets,
                            the Commission may issue a temporary
                            order requiring the respondent to take
                            such action as is necessary to prevent
                            the dissipation or conversion of
                            assets.
                              (ii) Timing of entry.--An order
                            issued under clause (i) shall be
                            entered only after notice and
                            opportunity for a hearing, unless the
                            Commission determines that notice and
                            hearing before entry would be
                            impracticable or contrary to the public
                            interest.
                              (iii) Effective date.--A temporary
                            order issued under clause (i) shall--
                                      (I) become effective upon
                                    service upon the respondent;
                                    and
                                      (II) unless set aside,
                                    limited, or suspended by the
                                    Commission or a court of
                                    competent jurisdiction, remain
                                    effective and enforceable
                                    pending the completion of the
                                    proceedings.
                      (E) Review of temporary orders.--
                              (i) Application for review.--At any
                            time after a respondent has been served
                            with a temporary cease-and-desist order
                            pursuant to subparagraph (C) or order
                            regarding the dissipation or conversion
                            of assets pursuant to subparagraph (D),
                            the respondent may apply to the
                            Commission to have the order set aside,
                            limited, or suspended.
                              (ii) No prior hearing.--If a
                            respondent has been served with a
                            temporary order entered without a prior
                            hearing of the Commission--
                                      (I) the respondent may, not
                                    later than 10 days after the
                                    date on which the order was
                                    served, request a hearing on
                                    the application; and
                                      (II) the Commission shall
                                    hold a hearing and render a
                                    decision on the application at
                                    the earliest practicable time.
                              (iii) Judicial review.--
                                      (I) In general.--An entity
                                    shall not be required to submit
                                    a request for rehearing of a
                                    temporary order before seeking
                                    judicial review in accordance
                                    with this subparagraph.
                                      (II) Timing of review.--Not
                                    later than 10 days after the
                                    date on which a respondent is
                                    served with a temporary cease-
                                    and-desist order entered with a
                                    prior hearing of the
                                    Commission, or 10 days after
                                    the date on which the
                                    Commission renders a decision
                                    on an application and hearing
                                    under clause (i) with respect
                                    to any temporary order entered
                                    without such a prior hearing--
                                              (aa) the respondent
                                            may obtain a review of
                                            the order in a United
                                            States circuit court
                                            having jurisdiction
                                            over the circuit in
                                            which the respondent
                                            resides or has a
                                            principal place of
                                            business, or in the
                                            United States Court of
                                            Appeals for the
                                            District of Columbia
                                            Circuit, for an order
                                            setting aside,
                                            limiting, or suspending
                                            the effectiveness or
                                            enforcement of the
                                            order; and
                                              (bb) the court shall
                                            have jurisdiction to
                                            enter such an order.
                                      (III) No prior hearing.--A
                                    respondent served with a
                                    temporary order entered without
                                    a prior hearing of the
                                    Commission may not apply to the
                                    applicable court described in
                                    subclause (II) except after a
                                    hearing and decision by the
                                    Commission on the application
                                    of the respondent under clauses
                                    (i) and (ii).
                              (iv) Procedures.--Section 222 and
                            Part III shall apply to--
                                      (I) an application for review
                                    of an order under clause (i);
                                    and
                                      (II) an order subject to
                                    review under clause (iii).
                              (v) No automatic stay of temporary
                            order.--The commencement of proceedings
                            under clause (iii) shall not, unless
                            specifically ordered by the court,
                            operate as a stay of the order of the
                            Commission.
                      (F) Actions to collect civil penalties.--If
                    any person fails to pay a civil penalty
                    assessed under this subsection after an order
                    assessing the penalty has become final and
                    unappealable, the Commission shall bring an
                    action to recover the amount of the penalty in
                    any appropriate United States district court.
                    In any such action, the validity or
                    appropriateness of the final assessment order
                    or judgment shall not be subject to review.
              (4) Transaction fees.--
                      (A) In general.--The Commission shall, in
                    accordance with this paragraph, establish and
                    collect transaction fees designed to recover
                    the costs to the Federal Government of the
                    supervision and regulation of regulated
                    allowance markets and market participants,
                    including related costs for enforcement
                    activities, policy and rulemaking activities,
                    administration, legal services, and
                    international regulatory activities.
                      (B) Initial fee rate.--Each trading facility
                    on or through which regulated allowances are
                    transacted shall pay to the Commission a fee at
                    a rate of not more than $15 per $1,000,000 of
                    the aggregate dollar amount of sales of
                    regulated allowances transacted through the
                    facility.
                      (C) Annual adjustment of fee rate.--The
                    Commission shall, on an annual basis--
                              (i) assess the rate at which fees are
                            to be collected as necessary to meet
                            the cost recovery requirement in
                            subparagraph (A); and
                              (ii) consistent with subparagraph
                            (B), adjust the rate as necessary in
                            order to meet the requirement.
                      (D) Report on adequacy of fees in recovering
                    costs.--The Commission, shall, on an annual
                    basis, report to the Committee on Energy and
                    Commerce of the House of Representatives and
                    the Committee on Energy and Natural Resources
                    of the Senate on the adequacy of the
                    transaction fees in providing funding for the
                    Commission to regulate the regulated allowance
                    markets.
              (5) Judicial review.--Judicial review of actions
            taken by the Commission under this subsection shall be
            pursuant to part III.
              (6) Information-sharing.--Within 6 months after a
            Federal agency with jurisdiction over regulated
            allowance derivatives is delegated authority pursuant
            to subsection (c)(1), the agency shall enter into a
            memorandum of understanding with the Commission
            relating to information sharing, which shall include
            provisions ensuring that information requests to
            markets within the respective jurisdiction of the
            agency are properly coordinated to facilitate, among
            other things, effective information-sharing while
            minimizing duplicative information requests, and
            provisions regarding the treatment of proprietary
            information.
              (7) Additional employees report and appointment.--
            Within 18 months after the date of the enactment of
            this section, the Commission shall submit to the
            President, the Committee on Energy and Commerce of the
            House of Representatives, and the Committee on Energy
            and Natural Resources of the Senate, a report that
            contains recommendations as to how many additional
            employees would be necessary to provide robust
            oversight and enforcement of the regulations
            promulgated under this subsection. As soon as
            practicable after the completion of the report, subject
            to appropriations, the Commission shall appoint the
            recommended number of additional employees for such
            purposes.
      (c) Delegation of Authority by the President.--
              (1) Delegation.--The President, taking into
            consideration the recommendations of the interagency
            working group established in subsection (d), shall
            delegate to members of the working group and the heads
            of other appropriate Federal agencies the authority to
            promulgate regulations for the establishment,
            operation, and oversight of all markets for regulated
            allowance derivatives.
              (2) Regulations.--The regulations promulgated
            pursuant to paragraph (1) shall--
                      (A) provide for effective and comprehensive
                    market oversight;
                      (B) prohibit fraud, market manipulation, and
                    excess speculation, and provide measures to
                    limit unreasonable fluctuation in the prices of
                    regulated allowance derivatives;
                      (C) facilitate compliance with title VII of
                    the Clean Air Act by covered entities;
                      (D) ensure market transparency and
                    recordkeeping necessary to provide for
                    efficient price discovery; prevention of fraud,
                    market manipulation, and excess speculation;
                    and compliance with title VII of the Clean Air
                    Act and section 610 of the Public Utility
                    Regulatory Policies Act of 1978;
                      (E) ensure that position limitations for
                    individual market participants are established
                    with respect to each regulated allowance
                    derivative and aggregate position limitations
                    for individual market participants are
                    established with respect to all regulated
                    allowance derivative markets;
                      (F) ensure that margin requirements are
                    established for each regulated allowance
                    derivative;
                      (G) provide for the formation and operation
                    of a market system that allows for best
                    execution in the trading of regulated allowance
                    derivatives;
                      (H) to the extent the regulations deviate
                    from the rule set forth in paragraph (4)(B),
                    limit or eliminate counterparty risks, market
                    power concentration risks, and other risks
                    associated with over-the-counter trading, and
                    promulgate reporting and market transparency
                    rules for large traders;
                      (I) ensure that market participants do not
                    evade position limits or otherwise undermine
                    the integrity and effectiveness of the
                    regulations promulgated under subparagraph (C)
                    through participation in markets not subject to
                    the position limits and regulations;
                      (J) establish standards, as necessary, for
                    qualification as, and operation of, trading
                    facilities for regulated allowance derivatives;
                      (K) establish standards, as necessary, for
                    qualification as, and operation of, clearing
                    organizations for trading facilities for
                    regulated allowance derivatives;
                      (L) provide boards of trade designated as
                    contract markets under the Commodity Exchange
                    Act, and market participants, with an adequate
                    transition period for compliance with any new
                    regulatory requirements established under this
                    paragraph;
                      (M) determine whether and to what extent
                    offset creation contracts, to the extent
                    incorporating regulated allowance derivatives,
                    should be governed by the same regulations that
                    apply to other regulated allowance derivatives;
                    and
                      (N) include such other requirements as
                    necessary to preserve market integrity and
                    facilitate compliance with title VII of the
                    Clean Air Act and section 610 of the Public
                    Utility Regulatory Policies Act of 1978 and the
                    regulations promulgated under such title and
                    such section.
              (3) Deadline.--The agencies authorized to promulgate
            regulations for the establishment, operation, and
            oversight of markets for regulated allowance
            derivatives pursuant to paragraph (1) shall promulgate
            such regulations not later than 18 months after the
            date of the enactment of this section, and from time to
            time thereafter as may be appropriate.
              (4) Default rules.--
                      (A) An individual market participant,
                    directly or in concert with another
                    participant, shall not control more than 10
                    percent of the open interest in any regulated
                    allowance derivative.
                      (B) All contracts for the purchase or sale of
                    any regulated allowance derivative shall be
                    executed on or through a board of trade
                    designated as a contract market under the
                    Commodity Exchange Act.
                      (C) To the extent that regulations
                    promulgated under this subsection provide
                    different rules with respect to the matters
                    described in subparagraph (A) or (B), the
                    regulations shall supersede subparagraph (A) or
                    (B), as the case may be.
      (d) Working Group.--
              (1) Establishment.--Not later than 30 days after the
            date of the enactment of this section, the President
            shall establish an interagency working group on carbon
            market oversight, which shall include the Administrator
            of the Environmental Protection Agency and
            representatives of other relevant agencies, to make
            recommendations to the President regarding proposed
            regulations for the establishment, operation, and
            oversight of markets for regulated allowance
            derivatives.
              (2) Report.--Not later than 180 days after the date
            of the enactment of this section, and biennially
            thereafter, the interagency working group shall submit
            a written report to the President and Congress that
            includes its recommendations to the President regarding
            proposed regulations for the establishment, operation,
            and oversight of markets for regulated allowance
            derivatives and any recommendations to Congress for
            statutory changes needed to ensure the establishment,
            operation, and oversight of transparent, fair, stable,
            and efficient markets for regulated allowance
            derivatives.
      (e) Enforcement of Regulations.--Each Federal agency that
    promulgates under subsection (c) a regulation of conduct with
    respect to a regulated allowance derivative shall have the same
    authority to enforce compliance with the regulation as the
    Commodity Futures Trading Commission has to enforce compliance
    with any regulation of similar conduct with respect to a
    contract, agreement, or transaction over which the Commodity
    Futures Trading Commission has jurisdiction, except that any
    enforcement by the Federal Energy Regulatory Commission shall
    be pursuant to section 222 and Part III.
      (f) Prohibition on Price or Market Manipulation, Fraud, and
    False or Misleading Statements or Reports.--(1) It shall be a
    felony punishable by a fine of not more than $25,000,000 (or
    $5,000,000 in the case of a person who is an individual) or
    imprisonment for not more than 20 years, or both, together with
    the costs of prosecution for any person, directly or
    indirectly--
              (A) in connection with a transaction involving a
            regulated instrument, to knowingly--
                      (i) use any manipulative or deceptive device
                    or contrivance in violation of regulations
                    promulgated pursuant to this section;
                      (ii) corner or attempt to corner the
                    regulated instrument; or
                      (iii) cheat or defraud, or attempt to cheat
                    or defraud, any other person;
              (B) to knowingly deliver or cause to be delivered a
            false, misleading, or inaccurate report concerning
            information or conditions that affect or tend to affect
            the price of a regulated instrument;
              (C) to knowingly make, or cause to be made, in an
            application, report, or document required to be filed
            under any regulation promulgated pursuant to this
            section, a statement which is false or misleading with
            respect to a material fact, or to omit any material
            fact required to be stated therein or necessary to make
            the statements therein not misleading; or
              (D) to knowingly falsify, conceal, or cover up by any
            trick, scheme, or artifice a material fact, make any
            false, fictitious, or fraudulent statements or
            representations, or make or use any false writing or
            document that contains a false, fictitious, or
            fraudulent statement or entry, to an entity on or
            through which transactions in regulated instruments
            occur, or are settled or cleared, acting in furtherance
            of its official duties under this section or
            regulations promulgated under this section.
      (2) If a person is found guilty of a felony established in
    paragraph (1), the person may be prohibited from holding or
    trading regulated instruments for a period of not more than 5
    years pursuant to the regulations promulgated under this
    section, except that, if the person is a covered entity, the
    person shall be allowed to hold sufficient regulated allowances
    to meet its compliance obligations.
      (g) Relation to State Law.--Nothing in this section shall
    preclude, diminish or qualify any authority of a State or
    political subdivision thereof to adopt or enforce any unfair
    competition, antitrust, consumer protection, securities,
    commodities or any other law or regulation, except that no such
    State law or regulation may relieve any person of any
    requirement otherwise applicable under this section.
      (h) Market Reports.--
              (1) Collection and analysis of information.--The
            Commission, in conjunction with the Federal agency with
            jurisdiction over regulated allowance derivatives
            pursuant to subsection (c)(1), shall, on a continuous
            basis, collect and analyze the following information on
            the functioning of the markets for regulated
            instruments established under this part:
                      (A) The status of, and trends in, the
                    markets, including prices, trading volumes,
                    transaction types, and trading channels and
                    mechanisms.
                      (B) Spikes, collapses, and volatility in
                    prices of regulated instruments, and the causes
                    therefor.
                      (C) The relationship between the market for
                    regulated allowances and allowance derivatives,
                    and the spot and futures markets for energy
                    commodities, including electricity.
                      (D) Evidence of fraud or manipulation in any
                    such market, the effects on any such market of
                    any such fraud or manipulation (or threat of
                    fraud or manipulation) that the Commission, in
                    conjunction with the Federal agency, has
                    identified, and the effectiveness of corrective
                    measures undertaken by the Commission, in
                    conjunction with the Federal agency, to address
                    the fraud, manipulation, or threat.
                      (E) The economic effects of the markets,
                    including to macro- and micro-economic effects
                    of unexpected significant increases and
                    decreases in the price of regulated
                    instruments.
                      (F) Any changes in the roles, activities, or
                    strategies of various market participants.
                      (G) Regional, industrial, and consumer
                    responses to the markets, and energy investment
                    responses to the markets.
                      (H) Any other issue related to the markets
                    that the Commission, in conjunction with the
                    entities, deems appropriate.
              (2) Annual reports to the congress.--Not later than 1
            month after the end of each calendar year, the
            Commission, in conjunction with the Federal agency,
            shall submit to the President, the Committee on Energy
            and Commerce of the House of Representatives, and the
            Committee on Energy and Natural Resources of the
            Senate, and make available to the public, a report on
            the matters described in paragraph (1) with respect to
            the year, including recommendations for any
            administrative or statutory measures the Commission, in
            conjunction with the Federal agency, considers
            necessary to address any threats to the transparency,
            fairness, or integrity of the markets in regulated
            instruments.

    SEC. 402. APPLICABILITY OF PART III PROVISIONS.

      (a) Sections 301, 304, and 306.--Sections 301, 304, and 306
    shall not apply to this part.
      (b) Sections 307, 309, and 314.--Sections 307, 309, and 314
    shall only apply to section 401(c) to the extent that the
    Commission is delegated authority to promulgate regulations for
    the establishment, operation, and oversight of markets for
    regulated allowance derivatives (as defined in section 401). If
    the Commission is not delegated authority to promulgate
    regulations for the establishment, operation, and oversight of
    markets for regulated allowance derivatives, sections 307, 309,
    and 314 shall not apply to section 401(f) in the case of
    regulated allowance derivatives.
      (c) Section 315.--In applying section 315(a) to this part,
    the words ``person or entity'' shall be substituted for the
    words ``licensee or public utility''. In applying section
    315(b) to this part, the words ``an entity'' shall be
    substituted for the words ``a licensee or public utility'' and
    the words ``such entity'' shall be substituted for the words
    ``such licensee or public utility.''
      (d) Section 316.--Section 316(a) shall not apply to section
    401(f).
                                  ----------

    ENERGY CONSERVATION AND PRODUCTION ACT

               *       *       *       *       *       *       *

                                    CONTENTS

       TITLE I--FEDERAL ENERGY ADMINISTRATION ACT AMENDMENTS AND RELATED
                                     MATTERS

         * * * * * * *

           TITLE III--ENERGY CONSERVATION STANDARDS FOR NEW BUILDINGS

         * * * * * * *
    [Sec. 304. Updating State building energy efficiency codes.]
    Sec. 304. Greater energy efficiency in building codes.

               *       *       *       *       *       *       *

    TITLE III--ENERGY CONSERVATION STANDARDS FOR NEW BUILDINGS

               *       *       *       *       *       *       *

    [SEC. 304. UPDATING STATE BUILDING ENERGY EFFICIENCY CODES.

      [(a) Consideration and Determination Respecting Residential
    Building Energy Codes.--(1) Not later than 2 years after the
    date of the enactment of the Energy Policy Act of 1992, each
    State shall certify to the Secretary that it has reviewed the
    provisions of its residential building code regarding energy
    efficiency and made a determination as to whether it is
    appropriate for such State to revise such residential building
    code provisions to meet or exceed CABO Model Energy Code, 1992.
      [(2) The determination referred to in paragraph (1) shall
    be--
              [(A) made after public notice and hearing;
              [(B) in writing;
              [(C) based upon findings included in such
            determination and upon the evidence presented at the
            hearing; and
              [(D) available to the public.
      [(3) Each State may, to the extent consistent with otherwise
    applicable State law, revise the provisions of its residential
    building code regarding energy efficiency to meet or exceed
    CABO Model Energy Code, 1992, or may decline to make such
    revisions.
      [(4) If a State makes a determination under paragraph (1)
    that it is not appropriate for such State to revise its
    residential building code, such State shall submit to the
    Secretary, in writing, the reasons for such determination, and
    such statement shall be available to the public.
      [(5)(A) Whenever CABO Model Energy Code, 1992, (or any
    successor of such code) is revised, the Secretary shall, not
    later than 12 months after such revision, determine whether
    such revision would improve energy efficiency in residential
    buildings. The Secretary shall publish notice of such
    determination in the Federal Register.
      [(B) If the Secretary makes an affirmative determination
    under subparagraph (A), each State shall, not later than 2
    years after the date of the publication of such determination,
    certify that it has reviewed the provisions of its residential
    building code regarding energy efficiency and made a
    determination as to whether it is appropriate for such State to
    revise such residential building code provisions to meet or
    exceed the revised code for which the Secretary made such
    determination.
      [(C) Paragraphs (2), (3), and (4) shall apply to any
    determination made under subparagraph (B).
      [(b) Certification of Commercial Building Energy Code
    Updates.--(1) Not later than 2 years after the date of the
    enactment of the Energy Policy Act of 1992, each State shall
    certify to the Secretary that it has reviewed and updated the
    provisions of its commercial building code regarding energy
    efficiency. Such certification shall include a demonstration
    that such State's code provisions meet or exceed the
    requirements of ASHRAE Standard 90.1-1989.
      [(2)(A) Whenever the provisions of ASHRAE Standard 90.1-1989
    (or any successor standard) regarding energy efficiency in
    commercial buildings are revised, the Secretary shall, not
    later than 12 months after the date of such revision, determine
    whether such revision will improve energy efficiency in
    commercial buildings. The Secretary shall publish a notice of
    such determination in the Federal Register.
      [(B)(i) If the Secretary makes an affirmative determination
    under subparagraph (A), each State shall, not later than 2
    years after the date of the publication of such determination,
    certify that it has reviewed and updated the provisions of its
    commercial building code regarding energy efficiency in
    accordance with the revised standard for which such
    determination was made. Such certification shall include a
    demonstration that the provisions of such State's commercial
    building code regarding energy efficiency meet or exceed such
    revised standard.
      [(ii) If the Secretary makes a determination under
    subparagraph (A) that such revised standard will not improve
    energy efficiency in commercial buildings, State commercial
    building code provisions regarding energy efficiency shall meet
    or exceed ASHRAE Standard 90.1-1989, or if such standard has
    been revised, the last revised standard for which the Secretary
    has made an affirmative determination under subparagraph (A).
      [(c) Extensions.--The Secretary shall permit extensions of
    the deadlines for the certification requirements under
    subsections (a) and (b) if a State can demonstrate that it has
    made a good faith effort to comply with such requirements and
    that it has made significant progress in doing so.
      [(d) Technical Assistance.--The Secretary shall provide
    technical assistance to States to implement the requirements of
    this section, and to improve and implement State residential
    and commercial building energy efficiency codes or to otherwise
    promote the design and construction of energy efficient
    buildings.
      [(e) Availability of Incentive Funding.--(1) The Secretary
    shall provide incentive funding to States to implement the
    requirements of this section, and to improve and implement
    State residential and commercial building energy efficiency
    codes, including increasing and verifying compliance with such
    codes. In determining whether, and in what amount, to provide
    incentive funding under this subsection, the Secretary shall
    consider the actions proposed by the State to implement the
    requirements of this section, to improve and implement
    residential and commercial building energy efficiency codes,
    and to promote building energy efficiency through the use of
    such codes.
      [(2) Additional funding shall be provided under this
    subsection for implementation of a plan to achieve and document
    at least a 90 percent rate of compliance with residential and
    commercial building energy efficiency codes, based on energy
    performance--
              [(A) to a State that has adopted and is implementing,
            on a statewide basis--
                      [(i) a residential building energy efficiency
                    code that meets or exceeds the requirements of
                    the 2004 International Energy Conservation
                    Code, or any succeeding version of that code
                    that has received an affirmative determination
                    from the Secretary under subsection (a)(5)(A);
                    and
                      [(ii) a commercial building energy efficiency
                    code that meets or exceeds the requirements of
                    the ASHRAE Standard 90.1-2004, or any
                    succeeding version of that standard that has
                    received an affirmative determination from the
                    Secretary under subsection (b)(2)(A); or
              [(B) in a State in which there is no statewide energy
            code either for residential buildings or for commercial
            buildings, to a local government that has adopted and
            is implementing residential and commercial building
            energy efficiency codes, as described in subparagraph
            (A).
      [(3) Of the amounts made available under this subsection, the
    Secretary may use $500,000 for each fiscal year to train State
    and local officials to implement codes described in paragraph
    (2).
      [(4)(A) There are authorized to be appropriated to carry out
    this subsection--
              [(i) $25,000,000 for each of fiscal years 2006
            through 2010; and
              [(ii) such sums as are necessary for fiscal year 2011
            and each fiscal year thereafter.
      [(B) Funding provided to States under paragraph (2) for each
    fiscal year shall not exceed one-half of the excess of funding
    under this subsection over $5,000,000 for the fiscal year.]

    SEC. 304. GREATER ENERGY EFFICIENCY IN BUILDING CODES.

      (a) Energy Efficiency Targets.--
              (1) In general.--Except as provided in paragraph (2)
            or (3), the national building code energy efficiency
            target for the national average percentage improvement
            of a building's energy performance when built to a code
            meeting the target shall be--
                      (A) effective on the date of enactment of the
                    American Clean Energy and Security Act of 2009,
                    30 percent reduction in energy use relative to
                    a comparable building constructed in compliance
                    with the baseline code;
                      (B) effective January 1, 2014, for
                    residential buildings, and January 1, 2015, for
                    commercial buildings, 50 percent reduction in
                    energy use relative to the baseline code; and
                      (C) effective January 1, 2017, for
                    residential buildings, and January 1, 2018, for
                    commercial buildings, and every 3 years
                    thereafter, respectively, through January 1,
                    2029, and January 1, 2030, 5 percent additional
                    reduction in energy use relative to the
                    baseline code.
              (2) Consensus-based codes.--If on any effective date
            specified in paragraph (1)(A), (B), or (C) a successor
            code to the baseline codes provides for greater
            reduction in energy use than is required under
            paragraph (1), the overall percentage reduction in
            energy use provided by that successor code shall be the
            national building code energy efficiency target.
              (3) Targets established by secretary.--The Secretary
            may by rule establish a national building code energy
            efficiency target for residential or commercial
            buildings achieving greater reductions in energy use
            than the targets prescribed in paragraph (1) or (2) if
            the Secretary determines that such greater reductions
            in energy use can be achieved with a code that is life
            cycle cost-justified and technically feasible. The
            Secretary may by rule establish a national building
            code energy efficiency target for residential or
            commercial buildings achieving a reduction in energy
            use that is greater than zero but less than the targets
            prescribed in paragraph (1) or (2) if the Secretary
            determines that such lesser target is the maximum
            reduction in energy use that can be achieved through a
            code that is life cycle cost-justified and technically
            feasible.
              (4) Additional reductions in energy use.--Effective
            on January 1, 2033, and once every 3 years thereafter,
            the Secretary shall determine, after notice and
            opportunity for comment, whether further energy
            efficiency building code improvements for residential
            or commercial buildings, respectively, are life cycle
            cost-justified and technically feasible, and shall
            establish updated national building code energy
            efficiency targets that meet such criteria.
              (5) Zero-net-energy buildings.--In setting targets
            under this subsection, the Secretary shall consider
            ways to support the deployment of distributed renewable
            energy technology, and shall seek to achieve the goal
            of zero-net-energy commercial buildings established in
            section 422 of the Energy Independence and Security Act
            of 2007 (42 U.S.C. 17082).
              (6) Baseline code.--For purposes of this section, the
            term ``baseline code'' means--
                      (A) for residential buildings, the 2006
                    International Energy Conservation Code (IECC)
                    published by the International Code Council;
                    and
                      (B) for commercial buildings, the code
                    published in ASHRAE Standard 90.1-2004.
              (7) Consultation.--In establishing the targets
            required by this section, the Secretary shall consult
            with the Director of the National Institute of
            Standards and Technology.
      (b) National Energy Efficiency Building Codes.--
              (1) Requirement.--
                      (A) In general.--There shall be established
                    national energy efficiency building codes under
                    this subsection, for residential and commercial
                    buildings, sufficient to meet each of the
                    national building code energy efficiency
                    targets established under subsection (a), not
                    later than the date that is one year after the
                    deadline for establishment of each such target.
                      (B) Existing code.--If the Secretary finds
                    prior to the date one year after the deadline
                    for establishing a target that one or more
                    energy efficiency building codes published by a
                    recognized consensus-based code development
                    organization meet or exceed the established
                    target, the Secretary shall select the code
                    that meets the target with the highest
                    efficiency in the most cost-effective manner,
                    and such code shall be the national energy
                    efficiency building code.
                      (C) Requirement to establish code.--If the
                    Secretary does not make a finding under
                    subparagraph (B), the national energy
                    efficiency building code shall be established
                    by rule by the Secretary under paragraph (2).
              (2) Establishment by secretary.--
                      (A) Procedure.--In order to establish a
                    national energy efficiency building code as
                    required under paragraph (1)(C), the Secretary
                    shall--
                              (i) not later than six months prior
                            to the effective date for each target,
                            review existing and proposed codes
                            published or under review by recognized
                            consensus-based code development
                            organizations;
                              (ii) determine the percentage of
                            energy efficiency improvements that are
                            or would be achieved in such published
                            or proposed code versions relative to
                            the target;
                              (iii) propose improvements to such
                            published or proposed code versions
                            sufficient to meet or exceed the
                            target; and
                              (iv) unless a finding is made under
                            paragraph (1)(B) with respect to a code
                            published by a recognized consensus-
                            based code development organization,
                            adopt a code that meets or exceeds the
                            relevant national building code energy
                            efficiency target by not later than one
                            year after the effective date of such
                            target.
                      (B) Calculations.--Each code established by
                    the Secretary under this paragraph shall be set
                    at the maximum level the Secretary determines
                    is life cycle cost-justified and technically
                    feasible, in accordance with the following:
                              (i) Savings calculations.--
                            Calculations of energy savings shall
                            take into account the typical lifetimes
                            of different products, measures, and
                            system configurations.
                              (ii) Cost-effectiveness
                            calculations.--Calculations of life
                            cycle cost-effectiveness shall be based
                            on life cycle cost methods and
                            procedures under section 544 of the
                            National Energy Conservation Policy Act
                            (42 U.S.C. 8254), but shall incorporate
                            to the extent feasible externalities
                            such as impacts on climate change and
                            on peak energy demand that are not
                            already incorporated in assumed energy
                            costs.
                      (C) Considerations.--In developing a national
                    energy efficiency building code under this
                    paragraph, the Secretary shall consider--
                              (i) for residential codes--
                                      (I) residential building
                                    standards published or proposed
                                    by ASHRAE;
                                      (II) residential building
                                    codes published or proposed in
                                    the International Energy
                                    Conservation Code (IECC);
                                      (III) data from the
                                    Residential Energy Services
                                    Network (RESNET) on compliance
                                    measures utilized by consumers
                                    to qualify for the residential
                                    energy efficiency tax credits
                                    established under the Energy
                                    Policy Act of 2005;
                                      (IV) data and information
                                    from the Department of Energy's
                                    Building America Program;
                                      (V) data and information from
                                    the Energy Star New Homes
                                    program;
                                      (VI) data and information
                                    from the New Building Institute
                                    and similar organizations; and
                                      (VII) standards for practices
                                    and materials to achieve cool
                                    roofs in residential buildings,
                                    taking into consideration
                                    reduced air conditioning energy
                                    use as a function of cool
                                    roofs, the potential reduction
                                    in global warming from
                                    increased solar reflectance
                                    from buildings, and cool roofs
                                    criteria in State and local
                                    building codes and in national
                                    and local voluntary programs;
                                    and
                              (ii) for commercial codes--
                                      (I) commercial building
                                    standards proposed by ASHRAE;
                                      (II) commercial building
                                    codes proposed in the
                                    International Energy
                                    Conservation Code (IECC);
                                      (III) the Core Performance
                                    Criteria published by the New
                                    Buildings Institute;
                                      (IV) data and information
                                    developed by the Director of
                                    the Commercial High-Performance
                                    Green Building Office of the
                                    Department of Energy and any
                                    public-private partnerships
                                    established under that Office;
                                      (V) data and information from
                                    the Energy Star for Buildings
                                    program;
                                      (VI) data and information
                                    from the New Building
                                    Institute, RESNET, and similar
                                    organizations; and
                                      (VII) standards for practices
                                    and materials to achieve cool
                                    roofs in commercial buildings,
                                    taking into consideration
                                    reduced air conditioning energy
                                    use as a function of cool
                                    roofs, the potential reduction
                                    in global warming from
                                    increased solar reflectance
                                    from buildings, and cool roofs
                                    criteria in State and local
                                    building codes and in national
                                    and local voluntary programs.
                      (D) Consultation.--In establishing any
                    national energy efficiency building code
                    required by this section, the Secretary shall
                    consult with the Director of the National
                    Institute of Standards and Technology.
              (3) Consensus standard assistance.--(A) To support
            the development of consensus standards that may provide
            the basis for national energy efficiency building
            codes, minimize duplication of effort, encourage
            progress through consensus, and facilitate the
            development of greater building efficiency, the
            Secretary shall provide assistance to recognized
            consensus-based code development organizations to
            develop, and where the relevant code has been adopted
            as the national code, disseminate consensus based
            energy efficiency building codes as provided in this
            paragraph.
              (B) Upon a finding by the Secretary that a code
            developed by such an organization meets a target
            established under subsection (a), the Secretary shall--
                      (i) send notice of the Secretary's finding to
                    all duly authorized or appointed State and
                    local code agencies; and
                      (ii) provide sufficient support to such an
                    organization to make the code available on the
                    Internet, or to accomplish distribution of such
                    code to all such State and local code agencies
                    at no cost to the State and local code
                    agencies.
              (C) The Secretary may contract with such an
            organization and with other organizations with
            expertise on codes to provide training for State and
            local code officials and building inspectors in the
            implementation and enforcement of such code.
              (D) The Secretary may provide grants and other
            support to such an organization to--
                      (i) develop appropriate refinements to such
                    code; and
                      (ii) support analysis of options for
                    improvements in the code to meet the next
                    scheduled target.
              (4) Code developed by secretary.--If the Secretary
            establishes a national energy efficiency building code
            under paragraph (2), the Secretary shall--
                      (A) to the extent that such code is based on
                    a prior code developed by a recognized
                    consensus-based code development organization,
                    negotiate and provide appropriate compensation
                    to such organization for the use of the code
                    materials that remain in the code established
                    by the Secretary; and
                      (B) disseminate the national energy
                    efficiency building codes to State and local
                    code officials, and support training and
                    provide guidance and technical assistance to
                    such officials as appropriate.
      (c) State Adoption of Energy Efficiency Building Codes.--
              (1) Requirement.--Not later than 1 year after a
            national energy efficiency building code for
            residential or commercial buildings is established or
            revised under subsection (b), each State--
                      (A) shall--
                              (i) review and update the provisions
                            of its building code regarding energy
                            efficiency to meet or exceed the target
                            met in the new national code, to
                            achieve equivalent or greater energy
                            savings;
                              (ii) document, where local
                            governments establish building codes,
                            that local governments representing not
                            less than 80 percent of the State's
                            urban population have adopted the new
                            national code, or have adopted local
                            codes that meet or exceed the target
                            met in the new national code to achieve
                            equivalent or greater energy savings;
                            or
                              (iii) adopt the new national code;
                            and
                      (B) shall provide a certification to the
                    Secretary demonstrating that energy efficiency
                    building code provisions that apply throughout
                    the State meet or exceed the target met by the
                    new national code, to achieve equivalent or
                    greater energy savings.
              (2) Confirmation.--
                      (A) Requirement.--Not later than 90 days
                    after a State certification is provided under
                    paragraph (1)(B), the Secretary shall determine
                    whether the State's energy efficiency building
                    code provisions meet the requirements of this
                    subsection.
                      (B) Acceptance by secretary.--If the
                    Secretary determines under subparagraph (A)
                    that the State's energy efficiency building
                    code or codes meet the requirements of this
                    subsection, the Secretary shall accept the
                    certification.
                      (C) Deficiency notice.--If the Secretary
                    determines under subparagraph (A) that the
                    State's building code or codes do not meet the
                    requirements of this subsection, the Secretary
                    shall identify the deficiency in meeting the
                    national building code energy efficiency
                    target, and, to the extent possible, indicate
                    areas where further improvement in the State's
                    code provisions would allow the deficiency to
                    be eliminated.
                      (D) Revision of code and recertification.--A
                    State may revise its code or codes and submit a
                    recertification under paragraph (1)(B) to the
                    Secretary at any time.
              (3) Compliant code.--For the purposes of meeting the
            target described in subsection (a)(1)(A) for
            residential buildings, a State that adopts the code
            represented in California's Title 24-2009 by the date
            two years after the date of enactment of the American
            Clean Energy and Security Act of 2009 shall be
            considered to have met the requirements of this
            subsection for the applicable period.
      (d) Application of National Code to State and Local
    Jurisdictions.--
              (1) In general.--Upon the expiration of 1 year after
            a national energy efficiency building code is
            established under subsection (b), in any jurisdiction
            where the State has not had a certification relating to
            that code accepted by the Secretary under subsection
            (c)(2)(B), and the local government has not had a
            certification relating to that code accepted by the
            Secretary under subsection (e)(6)(B), the national code
            shall become the applicable energy efficiency building
            code for such jurisdiction.
              (2) State legislative adoption.--In a State in which
            the relevant building energy code is adopted
            legislatively, the deadline in paragraph (1) shall not
            be earlier than 1 year after the first day that the
            legislature meets following establishment of a national
            energy efficiency building code.
              (3) Violations.--Violations of this section shall be
            defined as follows:
                      (A) If the building is subject to the
                    requirements of a State energy efficiency
                    building code with respect to which a
                    certification has been accepted by the
                    Secretary under subsection (c)(2)(B) or a local
                    energy efficiency building code with respect to
                    which a certification has been accepted by the
                    Secretary pursuant to subsection (e)(6)(B), a
                    violation shall be determined pursuant to the
                    relevant provisions of the State or local code.
                      (B) If the building is subject to the
                    requirements of a national energy efficiency
                    building code adopted under subsection
                    (c)(1)(A)(i) or made applicable under paragraph
                    (1) of this subsection, a violation shall be
                    defined by the Secretary pursuant to subsection
                    (g).
      (e) State Enforcement of Energy Efficiency Building Codes.--
              (1) In general.--Each State, or where applicable
            under State law each local government, shall implement
            and enforce applicable State or local codes with
            respect to which a certification was accepted by the
            Secretary under subsection (c)(2)(B) or paragraph
            (6)(B) of this subsection, or the national energy
            efficiency building codes, as provided in this
            subsection.
              (2) State certification.--Not later than 2 years
            after the date of a certification under subsection
            (c)(1) or the establishment of a national energy
            efficiency building code under subsection (b), each
            State shall certify that it has--
                      (A) achieved compliance with--
                              (i) State codes, or, as provided
                            under State law, local codes, with
                            respect to which a certification was
                            accepted by the Secretary under
                            subsection (c)(2)(B); or
                              (ii) the national energy efficiency
                            building code, as applicable; or
                      (B) for any certification submitted within 7
                    years after the date of enactment of the
                    American Clean Energy and Security Act of 2009,
                    made significant progress toward achieving such
                    compliance.
              (3) Achieving compliance.--A State shall be
            considered to achieve compliance with a code described
            in paragraph (2)(A) if at least 90 percent of new and
            substantially renovated building space in that State in
            the preceding year upon inspection meets the
            requirements of the code. A certification under
            paragraph (2) shall include documentation of the rate
            of compliance based on--
                      (A) independent inspections of a random
                    sample of the new and substantially renovated
                    buildings covered by the code in the preceding
                    year; or
                      (B) an alternative method that yields an
                    accurate measure of compliance as determined by
                    the Secretary.
              (4) Significant progress.--A State shall be
            considered to have made significant progress toward
            achieving compliance with a code described in paragraph
            (2)(A) if--
                      (A) the State has developed a plan, including
                    for hiring enforcement staff, providing
                    training, providing manuals and checklists, and
                    instituting enforcement programs, designed to
                    achieve full compliance within 5 years after
                    the date of the adoption of the code;
                      (B) the State is taking significant, timely,
                    and measurable action to implement that plan;
                      (C) the State has not reduced its
                    expenditures for code enforcement; and
                      (D) at least 50 percent of new and
                    substantially renovated building space in the
                    State in the preceding year upon inspection
                    meets the requirements of the code.
              (5) Secretary's determination.--Not later than 90
            days after a State certification under paragraph (2),
            the Secretary shall determine whether the State has
            demonstrated that it has complied with the requirements
            of this subsection, including accurate measurement of
            compliance, or that it has made significant progress
            toward compliance. If such determination is positive,
            the Secretary shall accept the certification. If the
            determination is negative, the Secretary shall identify
            the areas of deficiency.
              (6) Out of compliance.--
                      (A) In general.--Any State for which the
                    Secretary has not accepted a certification
                    under paragraph (5) by a deadline established
                    under this subsection is out of compliance with
                    this section.
                      (B) Local compliance.--In any State that is
                    out of compliance with this section as provided
                    in subparagraph (A), a local government may be
                    in compliance with this section by meeting all
                    certification requirements applicable to the
                    State.
                      (C) Noncompliance.--Any State that is not in
                    compliance with this section, as provided in
                    subparagraph (A), shall, until the State
                    regains such compliance, be ineligible to
                    receive--
                              (i) emission allowances pursuant to
                            subsection (h)(1);
                              (ii) Federal funding in excess of
                            that State's share (calculated
                            according to the allocation formula in
                            section 363 of the Energy Policy and
                            Conservation Act (42 U.S.C. 6323)) of
                            $125,000,000 each year; and
                              (iii) for--
                                      (I) the first year for which
                                    the State is out of compliance,
                                    25 percent of any additional
                                    funding or other items of
                                    monetary value otherwise
                                    provided under the American
                                    Clean Energy and Security Act
                                    of 2009;
                                      (II) the second year for
                                    which the State is out of
                                    compliance, 50 percent of any
                                    additional funding or other
                                    items of monetary value
                                    otherwise provided under the
                                    American Clean Energy and
                                    Security Act of 2009;
                                      (III) the third year for
                                    which the State is out of
                                    compliance, 75 percent of any
                                    additional funding or other
                                    items of monetary value
                                    otherwise provided under the
                                    American Clean Energy and
                                    Security Act of 2009; and
                                      (IV) the fourth and
                                    subsequent years for which the
                                    State is out of compliance, 100
                                    percent of any additional
                                    funding or other items of
                                    monetary value otherwise
                                    provided under the American
                                    Clean Energy and Security Act
                                    of 2009.
      (f) Federal Enforcement.--Where a State fails and local
    governments in that State also fail to enforce the applicable
    State or national energy efficiency building codes, the
    Secretary shall enforce such codes, as follows:
              (1) The Secretary shall establish, by rule, within 2
            years after the date of enactment of the American Clean
            Energy and Security Act of 2009, an energy efficiency
            building code enforcement capability.
              (2) Such enforcement capability shall be designed to
            achieve 90 percent compliance with such code in any
            State within 1 year after the date of the Secretary's
            determination that such State is out of compliance with
            this section.
              (3) The Secretary may set and collect reasonable
            inspection fees to cover the costs of inspections
            required for such enforcement. Revenue from fees
            collected shall be available to the Secretary to carry
            out the requirements of this section upon
            appropriation.
      (g) Enforcement Procedures.--The Secretary shall propose and,
    not later than three years after the date of enactment of the
    American Clean Energy and Security Act of 2009, shall determine
    and adopt by rule what shall constitute violations of the
    energy efficiency building codes to be enforced pursuant to
    this section, and the penalties that shall apply to violators.
    To the extent that the Secretary determines that the authority
    to adopt and impose such violations and penalties by rule
    requires further statutory authority, the Secretary shall
    report such determination to Congress as soon as such
    determination is made, but not later than one year after the
    enactment of the American Clean Energy and Security Act of
    2009.
      (h) Federal Support.--
              (1) Allowance allocation for state compliance.--For
            each vintage year from 2012 through 2050, the
            Administrator shall distribute allowances allocated
            pursuant to section 782(g)(2) of the Clean Air Act to
            the SEED Account for each State that the Secretary
            identifies as a State from which he has accepted the
            State's certification under subsection (e)(5) for
            compliance with the then current national energy
            efficiency building codes. Such allowances shall be
            distributed according to a formula established by the
            Secretary as follows:
                      (A) One-fifth in an equal amount to each of
                    the 50 States and United States territories.
                      (B) Two-fifths as a function of the relative
                    energy use in all buildings in each State in
                    the most recent year for which data is
                    available.
                      (C) Two-fifths based on the number of
                    building construction starts recorded in each
                    State, the number of new building permits
                    applied for in each State, or other relevant
                    available data indicating building activity in
                    each State, in the judgment of the Secretary,
                    for the year prior to the year of the
                    distribution.
              (2) Allowance allocation to local governments.--In
            the instance that the Secretary certifies that one or
            more local governments are in compliance with this
            section pursuant to subsection (e)(6)(B), the
            Administrator shall provide to each such local
            government the portion of the emission allowances that
            would have been provided to that State as a function of
            the population of that locality as a proportion of the
            population of that State as a whole.
              (3) Unallocated allowances.--To the extent that
            allowances are not provided to State or local
            governments for lack of certification in any year,
            those allowances shall be added to the amount provided
            to those States and local governments that are
            certified as eligible in that year.
              (4) Use of allowances.--Each State or each local
            government shall use such emission allowances as it
            receives pursuant to this section exclusively for the
            purposes of this section, including covering a
            reasonable portion of the costs of the development,
            adoption, implementation, and enforcement of a State or
            local energy efficiency building code with respect to
            which a certification is accepted by the Secretary
            under subsection (c)(2)(B) or subsection (e)(6)(B), or
            the national energy efficiency building code. In a
            State where local governments provide building code
            enforcement, a minimum of 50 percent of the allowance
            value received pursuant to this section shall be
            distributed to local governments as a function of the
            relative populations of such localities.
      (i) Authorization of Appropriations.--There are authorized to
    be appropriated to the Secretary of Energy $100,000,000 for
    each of fiscal years 2010 through 2020 and such sums thereafter
    as may be necessary to support the purposes of this section.
      (j) Annual Reports by Secretary.--The Secretary shall
    annually submit to Congress, and publish in the Federal
    Register, a report on--
              (1) the status of national building energy efficiency
            codes;
              (2) the status of energy efficiency building code
            adoption and compliance in the States;
              (3) the implementation of this section; and
              (4) impacts of past action under this section, and
            potential impacts of further action, on lifetime energy
            use by buildings, including resulting energy and cost
            savings.

    SEC. 305. FEDERAL BUILDING ENERGY EFFICIENCY STANDARDS.

      (a)(1) * * *

               *       *       *       *       *       *       *

      (3)(A) * * *

               *       *       *       *       *       *       *

      (D) Not later than 1 year after the date of enactment of the
    Energy Independence and Security Act of 2007, the Secretary
    shall establish, by rule, revised Federal building energy
    efficiency performance standards that require that:
              (i) For new Federal buildings and Federal buildings
            undergoing major renovations, with respect to which the
            Administrator of General Services is required to
            transmit a prospectus to Congress under section 3307 of
            title 40, United States Code, in the case of public
            buildings (as defined in section 3301 of title 40,
            United States Code), or of at least $2,500,000 in costs
            adjusted annually for inflation for other buildings:
                      (I) The buildings shall be designed so that
                    the fossil fuel-generated energy consumption of
                    the buildings is reduced, as compared with such
                    energy consumption by a similar building [in
                    fiscal year 2003 (as measured by Commercial
                    Buildings Energy Consumption Survey or
                    Residential Energy Consumption Survey data from
                    the Energy Information Agency)] as measured by
                    the calendar year 2003 Commercial Buildings
                    Energy Consumption Survey or the calendar year
                    2005 Residential Energy Consumption Survey data
                    from the Energy Information Administration, by
                    the percentage specified in the following
                    table:

     [Fiscal Year] Calendar Year             Percentage Reduction
       2010................................  55
       2015................................  65
       2020................................  80
       2025................................  90
       2030................................  100.

                      [(II) Upon petition]
                      (II) Downward adjustment of numeric
                    requirement.--
                              (aa) In general.--On petition by an
                            agency subject to this subparagraph,
                            the Secretary may adjust the applicable
                            numeric requirement under subclause (I)
                            downward with respect to a specific
                            building, if the head of the agency
                            designing the building certifies in
                            writing that meeting such requirement
                            would be technically impracticable in
                            light of the agency's specified
                            functional needs for that building and
                            the Secretary concurs with the agency's
                            conclusion. [This subclause shall not
                            apply to the General Services
                            Administration.]
                              (bb) Exceptions to requirement for
                            concurrence of secretary.--
                                      (AA) In general.--The
                                    requirement to petition and
                                    obtain the concurrence of the
                                    Secretary under this subclause
                                    shall not apply to any Federal
                                    building with respect to which
                                    the Administrator of General
                                    Services is required to
                                    transmit a prospectus to
                                    Congress under section 3307 of
                                    title 40, United States Code,
                                    or to any other Federal
                                    building designed, constructed,
                                    or renovated by the
                                    Administrator if the
                                    Administrator certifies, in
                                    writing, that meeting the
                                    applicable numeric requirement
                                    under subclause (I) with
                                    respect to the Federal building
                                    would be technically
                                    impracticable in light of the
                                    specific functional needs for
                                    the building.
                                      (BB) Adjustment.--In the case
                                    of a building described in
                                    subitem (AA), the Administrator
                                    may adjust the applicable
                                    numeric requirement of
                                    subclause (I) downward with
                                    respect to the building.

               *       *       *       *       *       *       *

      TITLE IV--ENERGY CONSERVATION AND RENEWABLE-RESOURCE ASSISTANCE FOR
    EXISTING BUILDINGS

               *       *       *       *       *       *       *

    Part A--Weatherization Assistance for Low-Income Persons

               *       *       *       *       *       *       *

                        AUTHORIZATION OF APPROPRIATIONS

      Sec. 422. For the purpose of carrying out the weatherization
    program under this part, there are authorized to be
    appropriated--
              (1) * * *

               *       *       *       *       *       *       *

              (5) $1,400,000,000 for fiscal year 2012.[.]

               *       *       *       *       *       *       *

                                  ----------

    INSPECTOR GENERAL ACT OF 1978

               *       *       *       *       *       *       *

       REQUIREMENTS FOR FEDERAL ENTITIES AND DESIGNATED FEDERAL ENTITIES

      Sec. 8G. (a) Notwithstanding section 12 of this Act, as used
    in this section--
              (1) * * *
              (2) the term ``designated Federal entity'' means
            Amtrak, the Appalachian Regional Commission, the Board
            of Governors of the Federal Reserve System, the Board
            for International Broadcasting, [the Commodity Futures
            Trading Commission,] the Consumer Product Safety
            Commission, the Corporation for Public Broadcasting,
            the Equal Employment Opportunity Commission, the Farm
            Credit Administration, the Federal Communications
            Commission, the Federal Deposit Insurance Corporation ,
            the Federal Election Commission, the Election
            Assistance Commission, the Federal Housing Finance
            Board, the Federal Labor Relations Authority, the
            Federal Maritime Commission, the Federal Trade
            Commission, the Legal Services Corporation, the
            National Archives and Records Administration, the
            National Credit Union Administration, the National
            Endowment for the Arts, the National Endowment for the
            Humanities, the National Labor Relations Board, the
            National Science Foundation, the Panama Canal
            Commission, the Peace Corps, the Pension Benefit
            Guaranty Corporation, the Securities and Exchange
            Commission, the Smithsonian Institution, the United
            States International Trade Commission, the Postal
            Regulatory Commission, and the United States Postal
            Service;

               *       *       *       *       *       *       *

                                  DEFINITIONS

      Sec. 12. As used in this Act--
              (1) the term ``head of the establishment'' means the
            Secretary of Agriculture, Commerce, Defense, Education,
            Energy, Health and Human Services, Housing and Urban
            Development, the Interior, Labor, State,
            Transportation, Homeland Security, or the Treasury; the
            Attorney General; the Administrator of the Agency for
            International Development, Environmental Protection,
            General Services, National Aeronautics and Space, or
            Small Business, or Veterans' Affairs; the Director of
            the Federal Emergency Management Agency, or the Office
            of Personnel Management; the Chairman of the Nuclear
            Regulatory Commission or the Railroad Retirement Board;
            the Chairperson of the Thrift Depositor Protection
            Oversight Board; the Chief Executive Officer of the
            Corporation for National and Community Service; the
            Administrator of the Community Development Financial
            Institutions Fund; the chief executive officer of the
            Resolution Trust Corporation; the Chairperson of the
            Federal Deposit Insurance Corporation; the Commissioner
            of Social Security, Social Security Administration; the
            Director of the Federal Housing Finance Agency; the
            Board of Directors of the Tennessee Valley Authority;
            the President of the Export-Import Bank; [or the
            Federal Cochairpersons of the Commissions established
            under section 15301 of title 40, United States Code;]
            the Administrator of the Clean Energy Deployment
            Administration; the Federal Cochairpersons of the
            Commissions established under section 15301 of title
            40, United States Code; or the Chairman of the
            Commodity Futures Trading Commission; as the case may
            be;
              (2) the term ``establishment'' means the Department
            of Agriculture, Commerce, Defense, Education, Energy,
            Health and Human Services, Housing and Urban
            Development, the Interior, Justice, Labor, State,
            Transportation, Homeland Security, or the Treasury; the
            Agency for International Development, the Community
            Development Financial Institutions Fund, the
            Environmental Protection Agency, the Federal Emergency
            Management Agency, the General Services Administration,
            the National Aeronautics and Space Administration, the
            Nuclear Regulatory Commission, the Office of Personnel
            Management, the Railroad Retirement Board, the
            Resolution Trust Corporation, the Federal Deposit
            Insurance Corporation, the Small Business
            Administration, the Corporation for National and
            Community Service, or the Veterans' Administration, the
            Social Security Administration, the Federal Housing
            Finance Agency, the Tennessee Valley Authority, the
            Export-Import Bank, [or the Commissions established
            under section 15301 of title 40, United States Code,]
            the Clean Energy Deployment Administration, the
            Commissions established under section 15301 of title
            40, United States Code, or the Commodity Futures
            Trading Commission, as the case may be;

               *       *       *       *       *       *       *

                                  ----------

                  SECTION 507 OF THE ENERGY POLICY ACT OF 1992

    SEC. 507. FLEET REQUIREMENT PROGRAM.

      (a) * * *

               *       *       *       *       *       *       *

      (o) Mandatory State Fleet Programs.--(1) * * *

               *       *       *       *       *       *       *

      (3) The Secretary shall revise the rules under this
    subsection with respect to the types of alternative fueled
    vehicles required for compliance with this subsection to ensure
    those rules are consistent with any guidance issued pursuant to
    section 303 of this Act.

               *       *       *       *       *       *       *

                                  ----------

    NATIONAL ENERGY CONSERVATION POLICY ACT

               *       *       *       *       *       *       *

                          TITLE I--GENERAL PROVISIONS

    SEC. 101. SHORT TITLE AND TABLE OF CONTENTS.

      (a) * * *
      (b) Table of Contents.--

                           TITLE I--GENERAL PROVISIONS

         * * * * * * *

                       TITLE V--FEDERAL ENERGY INITIATIVES

         * * * * * * *
    [Sec. 543. Energy management requirements.]
    Sec. 543. Energy efficient information and communications technologies.

               *       *       *       *       *       *       *

    TITLE V--FEDERAL ENERGY INITIATIVE

               *       *       *       *       *       *       *

    PART 3--FEDERAL ENERGY MANAGEMENT

               *       *       *       *       *       *       *

    [SEC. 543. ENERGY MANAGEMENT REQUIREMENTS.

      [(a) Energy Performance Requirement for Federal Buildings.--
    (1) Subject to paragraph (2), each agency shall apply energy
    conservation measures to, and shall improve the design for the
    construction of, the Federal buildings of the agency (including
    each industrial or laboratory facility) so that the energy
    consumption per gross square foot of the Federal buildings of
    the agency in fiscal years 2006 through 2015 is reduced, as
    compared with the energy consumption per gross square foot of
    the Federal buildings of the agency in fiscal year 2003, by the
    percentage specified in the following table:
    [Fiscal Year                                        Percentage Reduction
        2006......................................................        2
        2007......................................................        4
        2008......................................................        9
        2009......................................................       12
        2010......................................................       15
        2011......................................................       18
        2012......................................................       21
        2013......................................................       24
        2014......................................................       27
        2015......................................................       30.
      [(2) An agency may exclude from the requirements of paragraph
    (1) any building, and the associated energy consumption and
    gross square footage, in which energy intensive activities are
    carried out. Each agency shall identify and list in each report
    made under section 548(a) the buildings designated by it for
    such exclusion.
      [(3) Not later than December 31, 2014, the Secretary shall
    review the results of the implementation of the energy
    performance requirement established under paragraph (1) and
    submit to Congress recommendations concerning energy
    performance requirements for fiscal years 2016 through 2025.
      [(b) Energy Management Requirement for Federal Agencies.--(1)
    Not later than January 1, 2005, each agency shall, to the
    maximum extent practicable, install in Federal buildings owned
    by the United States all energy and water conservation measures
    with payback periods of less than 10 years, as determined by
    using the methods and procedures developed pursuant to section
    544.
      [(2) The Secretary may waive the requirements of this
    subsection for any agency for such periods as the Secretary may
    determine if the Secretary finds that the agency is taking all
    practicable steps to meet the requirements and that the
    requirements of this subsection will pose an unacceptable
    burden upon the agency. If the Secretary waives the
    requirements of this subsection, the Secretary shall, as part
    of the report required under section 548(b), notify the
    Congress in writing with an explanation and a justification of
    the reasons for such waiver.
      [(3) This subsection shall not apply to an agency's
    facilities that generate or transmit electric energy or to the
    uranium enrichment facilities operated by the Department of
    Energy.
      [(4) An agency may participate in the Environmental
    Protection Agency's ``Green Lights'' program for purposes of
    receiving technical assistance in complying with the
    requirements of this section.
      [(c) Exclusions.--(1)(A) An agency may exclude, from the
    energy performance requirement for a fiscal year established
    under subsection (a) and the energy management requirement
    established under subsection (b), any Federal building or
    collection of Federal buildings, if the head of the agency
    finds that--
              [(i) compliance with those requirements would be
            impracticable;
              [(ii) the agency has completed and submitted all
            federally required energy management reports;
              [(iii) the agency has achieved compliance with the
            energy efficiency requirements of this Act, the Energy
            Policy Act of 1992, Executive orders, and other Federal
            law; and
              [(iv) the agency has implemented all practicable,
            life cycle cost-effective projects with respect to the
            Federal building or collection of Federal buildings to
            be excluded.
      [(B) A finding of impracticability under subparagraph (A)(i)
    shall be based on--
              [(i) the energy intensiveness of activities carried
            out in the Federal building or collection of Federal
            buildings; or
              [(ii) the fact that the Federal building or
            collection of Federal buildings is used in the
            performance of a national security function.
      [(2) Each agency shall identify and list, in each report made
    under section 548(a), the Federal buildings designated by it
    for such exclusion. The Secretary shall review such findings
    for consistency with the standards for exclusion set forth in
    paragraph (1), and may within 90 days after receipt of the
    findings, reverse the exclusion. In the case of any such
    reversal, the agency shall comply with the requirements of
    subsections (a) and (b)(1) for the building concerned.
      [(3) Not later than 180 days after the date of enactment of
    this paragraph, the Secretary shall issue guidelines that
    establish criteria for exclusions under paragraph (1).
      [(d) Implementation Steps.--The Secretary shall consult with
    the Secretary of Defense and the Administrator of General
    Services in developing guidelines for the implementation of
    this part. To meet the requirements of this section, each
    agency shall--
              [(1) prepare and submit to the Secretary, not later
            than December 31, 1993, a plan describing how the
            agency intends to meet such requirements, including how
            it will--
                      [(A) designate personnel primarily
                    responsible for achieving such requirements;
                      [(B) identify high priority projects through
                    calculation of payback periods;
                      [(C) take maximum advantage of contracts
                    authorized under title VIII of this Act, of
                    financial incentives and other services
                    provided by utilities for efficiency
                    investment, and of other forms of financing to
                    reduce the direct costs to the Government; and
                      [(D) otherwise implement this part;
              [(2) perform energy surveys of its Federal buildings
            to the extent necessary and update such surveys as
            needed, incorporating any relevant information obtained
            from the survey conducted pursuant to section 550;
              [(3) using such surveys, determine the cost and
            payback period of energy and water conservation
            measures likely to achieve the requirements of this
            section;
              [(4) install energy and water conservation measures
            that will achieve the requirements of this section
            through the methods and procedures established pursuant
            to section 544; and
              [(5) ensure that the operation and maintenance
            procedures applied under this section are continued.
      [(e) Metering of Energy Use.--
              [(1) Deadline.--By October 1, 2012, in accordance
            with guidelines established by the Secretary under
            paragraph (2), all Federal buildings shall, for the
            purposes of efficient use of energy and reduction in
            the cost of electricity used in such buildings, be
            metered. Each agency shall use, to the maximum extent
            practicable, advanced meters or advanced metering
            devices that provide data at least daily and that
            measure at least hourly consumption of electricity in
            the Federal buildings of the agency. Not later than
            October 1, 2016, each agency shall provide for
            equivalent metering of natural gas and steam, in
            accordance with guidelines established by the Secretary
            under paragraph (2). Such data shall be incorporated
            into existing Federal energy tracking systems and made
            available to Federal facility managers.
              [(2) Guidelines.--
                      [(A) In general.--Not later than 180 days
                    after the date of enactment of this subsection,
                    the Secretary, in consultation with the
                    Department of Defense, the General Services
                    Administration, representatives from the
                    metering industry, utility industry, energy
                    services industry, energy efficiency industry,
                    energy efficiency advocacy organizations,
                    national laboratories, universities, and
                    Federal facility managers, shall establish
                    guidelines for agencies to carry out paragraph
                    (1).
                      [(B) Requirements for guidelines.--The
                    guidelines shall--
                              [(i) take into consideration--
                                      [(I) the cost of metering and
                                    the reduced cost of operation
                                    and maintenance expected to
                                    result from metering;
                                      [(II) the extent to which
                                    metering is expected to result
                                    in increased potential for
                                    energy management, increased
                                    potential for energy savings
                                    and energy efficiency
                                    improvement, and cost and
                                    energy savings due to utility
                                    contract aggregation; and
                                      [(III) the measurement and
                                    verification protocols of the
                                    Department of Energy;
                              [(ii) include recommendations
                            concerning the amount of funds and the
                            number of trained personnel necessary
                            to gather and use the metering
                            information to track and reduce energy
                            use;
                              [(iii) establish priorities for types
                            and locations of buildings to be
                            metered based on cost-effectiveness and
                            a schedule of one or more dates, not
                            later than 1 year after the date of
                            issuance of the guidelines, on which
                            the requirements specified in paragraph
                            (1) shall take effect; and
                              [(iv) establish exclusions from the
                            requirements specified in paragraph (1)
                            based on the de minimis quantity of
                            energy use of a Federal building,
                            industrial process, or structure.
              [(3) Plan.--Not later than 6 months after the date
            guidelines are established under paragraph (2), in a
            report submitted by the agency under section 548(a),
            each agency shall submit to the Secretary a plan
            describing how the agency will implement the
            requirements of paragraph (1), including (A) how the
            agency will designate personnel primarily responsible
            for achieving the requirements and (B) demonstration by
            the agency, complete with documentation, of any finding
            that advanced meters or advanced metering devices, as
            defined in paragraph (1), are not practicable.
      [(f) Use of Energy and Water Efficiency Measures in Federal
    Buildings.--
              [(1) Definitions.--In this subsection:
                      [(A) Commissioning.--The term
                    ``commissioning'', with respect to a facility,
                    means a systematic process--
                              [(i) of ensuring, using appropriate
                            verification and documentation, during
                            the period beginning on the initial day
                            of the design phase of the facility and
                            ending not earlier than 1 year after
                            the date of completion of construction
                            of the facility, that all facility
                            systems perform interactively in
                            accordance with--
                                      [(I) the design documentation
                                    and intent of the facility; and
                                      [(II) the operational needs
                                    of the owner of the facility,
                                    including preparation of
                                    operation personnel; and
                              [(ii) the primary goal of which is to
                            ensure fully functional systems that
                            can be properly operated and maintained
                            during the useful life of the facility.
                      [(B) Energy manager.--
                              [(i) In general.--The term ``energy
                            manager'', with respect to a facility,
                            means the individual who is responsible
                            for--
                                      [(I) ensuring compliance with
                                    this subsection by the
                                    facility; and
                                      [(II) reducing energy use at
                                    the facility.
                              [(ii) Inclusions.--The term ``energy
                            manager'' may include--
                                      [(I) a contractor of a
                                    facility;
                                      [(II) a part-time employee of
                                    a facility; and
                                      [(III) an individual who is
                                    responsible for multiple
                                    facilities.
                      [(C) Facility.--
                              [(i) In general.--The term
                            ``facility'' means any building,
                            installation, structure, or other
                            property (including any applicable
                            fixtures) owned or operated by, or
                            constructed or manufactured and leased
                            to, the Federal Government.
                              [(ii) Inclusions.--The term
                            ``facility'' includes--
                                      [(I) a group of facilities at
                                    a single location or multiple
                                    locations managed as an
                                    integrated operation; and
                                      [(II) contractor-operated
                                    facilities owned by the Federal
                                    Government.
                              [(iii) Exclusions.--The term
                            ``facility'' does not include any land
                            or site for which the cost of utilities
                            is not paid by the Federal Government.
                      [(D) Life cycle cost-effective.--The term
                    ``life cycle cost-effective'', with respect to
                    a measure, means a measure, the estimated
                    savings of which exceed the estimated costs
                    over the lifespan of the measure, as determined
                    in accordance with section 544.
                      [(E) Payback period.--
                              [(i) In general.--Subject to clause
                            (ii), the term ``payback period'', with
                            respect to a measure, means a value
                            equal to the quotient obtained by
                            dividing--
                                      [(I) the estimated initial
                                    implementation cost of the
                                    measure (other than financing
                                    costs); by
                                      [(II) the annual cost savings
                                    resulting from the measure,
                                    including--
                                              [(aa) net savings in
                                            estimated energy and
                                            water costs; and
                                              [(bb) operations,
                                            maintenance, repair,
                                            replacement, and other
                                            direct costs.
                              [(ii) Modifications and exceptions.--
                            The Secretary, in guidelines issued
                            pursuant to paragraph (6), may make
                            such modifications and provide such
                            exceptions to the calculation of the
                            payback period of a measure as the
                            Secretary determines to be appropriate
                            to achieve the purposes of this Act.
                      [(F) Recommissioning.--The term
                    ``recommissioning'' means a process--
                              [(i) of commissioning a facility or
                            system beyond the project development
                            and warranty phases of the facility or
                            system; and
                              [(ii) the primary goal of which is to
                            ensure optimum performance of a
                            facility, in accordance with design or
                            current operating needs, over the
                            useful life of the facility, while
                            meeting building occupancy
                            requirements.
                      [(G) Retrocommissioning.--The term
                    ``retrocommis-sioning'' means a process of
                    commissioning a facility or system that was not
                    commissioned at the time of construction of the
                    facility or system.
              [(2) Facility energy managers.--
                      [(A) In general.--Each Federal agency shall
                    designate an energy manager responsible for
                    implementing this subsection and reducing
                    energy use at each facility that meets criteria
                    under subparagraph (B).
                      [(B) Covered facilities.--The Secretary shall
                    develop criteria, after consultation with
                    affected agencies, energy efficiency advocates,
                    and energy and utility service providers, that
                    cover, at a minimum, Federal facilities,
                    including central utility plants and
                    distribution systems and other energy intensive
                    operations, that constitute at least 75 percent
                    of facility energy use at each agency.
              [(3) Energy and water evaluations.--
                      [(A) Evaluations.--Effective beginning on the
                    date that is 180 days after the date of
                    enactment of this subsection and annually
                    thereafter, energy managers shall complete, for
                    each calendar year, a comprehensive energy and
                    water evaluation for approximately 25 percent
                    of the facilities of each agency that meet the
                    criteria under paragraph (2)(B) in a manner
                    that ensures that an evaluation of each such
                    facility is completed at least once every 4
                    years.
                      [(B) Recommissioning and
                    retrocommissioning.--As part of the evaluation
                    under subparagraph (A), the energy manager
                    shall identify and assess recommissioning
                    measures (or, if the facility has never been
                    commissioned, retrocommissioning measures) for
                    each such facility.
              [(4) Implementation of identified energy and water
            efficiency measures.--Not later than 2 years after the
            completion of each evaluation under paragraph (3), each
            energy manager may--
                      [(A) implement any energy- or water-saving
                    measure that the Federal agency identified in
                    the evaluation conducted under paragraph (3)
                    that is life cycle cost-effective; and
                      [(B) bundle individual measures of varying
                    paybacks together into combined projects.
              [(5) Follow-up on implemented measures.--For each
            measure implemented under paragraph (4), each energy
            manager shall ensure that--
                      [(A) equipment, including building and
                    equipment controls, is fully commissioned at
                    acceptance to be operating at design
                    specifications;
                      [(B) a plan for appropriate operations,
                    maintenance, and repair of the equipment is in
                    place at acceptance and is followed;
                      [(C) equipment and system performance is
                    measured during its entire life to ensure
                    proper operations, maintenance, and repair; and
                      [(D) energy and water savings are measured
                    and verified.
              [(6) Guidelines.--
                      [(A) In general.--The Secretary shall issue
                    guidelines and necessary criteria that each
                    Federal agency shall follow for implementation
                    of--
                              [(i) paragraphs (2) and (3) not later
                            than 180 days after the date of
                            enactment of this subsection; and
                              [(ii) paragraphs (4) and (5) not
                            later than 1 year after the date of
                            enactment of this subsection.
                      [(B) Relationship to funding source.--The
                    guidelines issued by the Secretary under
                    subparagraph (A) shall be appropriate and
                    uniform for measures funded with each type of
                    funding made available under paragraph (10),
                    but may distinguish between different types of
                    measures project size, and other criteria the
                    Secretary determines are relevant.
              [(7) Web-based certification.--
                      [(A) In general.--For each facility that
                    meets the criteria established by the Secretary
                    under paragraph (2)(B), the energy manager
                    shall use the web-based tracking system under
                    subparagraph (B) to certify compliance with the
                    requirements for--
                              [(i) energy and water evaluations
                            under paragraph (3);
                              [(ii) implementation of identified
                            energy and water measures under
                            paragraph (4); and
                              [(iii) follow-up on implemented
                            measures under paragraph (5).
                      [(B) Deployment.--
                              [(i) In general.--Not later than 1
                            year after the date of enactment of
                            this subsection, the Secretary shall
                            develop and deploy a web-based tracking
                            system required under this paragraph in
                            a manner that tracks, at a minimum--
                                      [(I) the covered facilities;
                                      [(II) the status of meeting
                                    the requirements specified in
                                    subparagraph (A);
                                      [(III) the estimated cost and
                                    savings for measures required
                                    to be implemented in a
                                    facility;
                                      [(IV) the measured savings
                                    and persistence of savings for
                                    implemented measures; and
                                      [(V) the benchmarking
                                    information disclosed under
                                    paragraph (8)(C).
                              [(ii) Ease of compliance.--The
                            Secretary shall ensure that energy
                            manager compliance with the
                            requirements in this paragraph, to the
                            maximum extent practicable--
                                      [(I) can be accomplished with
                                    the use of streamlined
                                    procedures and templates that
                                    minimize the time demands on
                                    Federal employees; and
                                      [(II) is coordinated with
                                    other applicable energy
                                    reporting requirements.
                      [(C) Availability.--
                              [(i) In general.--Subject to clause
                            (ii), the Secretary shall make the web-
                            based tracking system required under
                            this paragraph available to Congress,
                            other Federal agencies, and the public
                            through the Internet.
                              [(ii) Exemptions.--At the request of
                            a Federal agency, the Secretary may
                            exempt specific data for specific
                            facilities from disclosure under clause
                            (i) for national security purposes.
              [(8) Benchmarking of federal facilities.--
                      [(A) In general.--The energy manager shall
                    enter energy use data for each metered building
                    that is (or is a part of) a facility that meets
                    the criteria established by the Secretary under
                    paragraph (2)(B) into a building energy use
                    benchmarking system, such as the Energy Star
                    Portfolio Manager.
                      [(B) System and guidance.--Not later than 1
                    year after the date of enactment of this
                    subsection, the Secretary shall--
                              [(i) select or develop the building
                            energy use benchmarking system required
                            under this paragraph for each type of
                            building; and
                              [(ii) issue guidance for use of the
                            system.
                      [(C) Public disclosure.--Each energy manager
                    shall post the information entered into, or
                    generated by, a benchmarking system under this
                    subsection, on the web-based tracking system
                    under paragraph (7)(B). The energy manager
                    shall update such information each year, and
                    shall include in such reporting previous years'
                    information to allow changes in building
                    performance to be tracked over time.
              [(9) Federal agency scorecards.--
                      [(A) In general.--The Director of the Office
                    of Management and Budget shall issue semiannual
                    scorecards for energy management activities
                    carried out by each Federal agency that
                    includes--
                              [(i) summaries of the status of
                            implementing the various requirements
                            of the agency and its energy managers
                            under this subsection; and
                              [(ii) any other means of measuring
                            performance that the Director considers
                            appropriate.
                      [(B) Availability.--The Director shall make
                    the scorecards required under this paragraph
                    available to Congress, other Federal agencies,
                    and the public through the Internet.
              [(10) Funding and implementation.--
                      [(A) Authorization of appropriations.--There
                    are authorized to be appropriated such sums as
                    are necessary to carry out this subsection.
                      [(B) Funding options.--
                              [(i) In general.--To carry out this
                            subsection, a Federal agency may use
                            any combination of--
                                      [(I) appropriated funds made
                                    available under subparagraph
                                    (A); and
                                      [(II) private financing
                                    otherwise authorized under
                                    Federal law, including
                                    financing available through
                                    energy savings performance
                                    contracts or utility energy
                                    service contracts.
                              [(ii) Combined funding for same
                            measure.--A Federal agency may use any
                            combination of appropriated funds and
                            private financing described in clause
                            (i) to carry out the same measure under
                            this subsection.
                      [(C) Implementation.--Each Federal agency may
                    implement the requirements under this
                    subsection itself or may contract out
                    performance of some or all of the requirements.
              [(11) Rule of construction.--This subsection shall
            not be construed to require or to obviate any
            contractor savings guarantees.
      [(f) Large Capital Energy Investments.--
              [(1) In general.--Each Federal agency shall ensure
            that any large capital energy investment in an existing
            building that is not a major renovation but involves
            replacement of installed equipment (such as heating and
            cooling systems), or involves renovation,
            rehabilitation, expansion, or remodeling of existing
            space, employs the most energy efficient designs,
            systems, equipment, and controls that are life-cycle
            cost effective.
              [(2) Process for review of investment decisions.--Not
            later than 180 days after the date of enactment of this
            subsection, each Federal agency shall--
                      [(A) develop a process for reviewing each
                    decision made on a large capital energy
                    investment described in paragraph (1) to ensure
                    that the requirements of this subsection are
                    met; and
                      [(B) report to the Director of the Office of
                    Management and Budget on the process
                    established.
              [(3) Compliance report.--Not later than 1 year after
            the date of enactment of this subsection, the Director
            of the Office of Management and Budget shall evaluate
            and report to Congress on the compliance of each agency
            with this subsection.]

    SEC. 543. ENERGY EFFICIENT INFORMATION AND COMMUNICATIONS TECHNOLOGIES.

      (a) In General.--Not later than 1 year after the date of
    enactment of the American Clean Energy and Security Act of
    2009, each Federal agency shall collaborate with the Director
    of the Office of Management and Budget (referred to in this
    section as the ``Director'') to create an implementation
    strategy, including best practices and measurement and
    verification techniques, for the purchase and use of energy
    efficient information and communications technologies and
    practices. Wherever possible, existing standards,
    specifications, performance metrics, and best management
    practices that have been or are being developed in open
    collaboration and with broad stakeholder input and review
    should be incorporated. In addition, agency strategies shall be
    flexible, cost-effective, and based on the specific operating
    requirements and statutory mission of each agency.
      (b) Energy Efficient Information and Communications
    Technologies.--In developing an implementation strategy, each
    agency shall--
              (1) consider information and communications
            technologies and infrastructure, including, but not
            limited to, advanced metering infrastructure,
            information and communications technology services and
            products, efficient data center strategies,
            applications modernization and rationalization,
            building systems energy efficiency, and telework; and
              (2) ensure that agencies are eligible to realize the
            savings and rewards brought about through increased
            efficiencies.
      (c) Performance Goals.--Not later than 6 months after the
    date of enactment of the American Clean Energy and Security Act
    of 2009, the Director shall establish performance goals for
    evaluating the efforts of the agencies in improving the
    maintenance, purchase and use of energy efficiency of
    information and communications technology systems. These
    performance goals should measure information technology costs
    over a specific time horizon (3 to 5 years), providing a
    complete picture of all costs, including energy.
      (d) Report.--Not later than 18 months after the date of
    enactment of the American Clean Energy and Security Act of
    2009, and annually thereafter, the Director shall submit a
    report to Congress on--
              (1) the progress of each agency in reducing energy
            use through its implementation strategy; and
              (2) new and emerging technologies that would help
            achieve increased energy efficiency.

               *       *       *       *       *       *       *

                TITLE VIII--ENERGY SAVINGS PERFORMANCE CONTRACTS

    SEC. 801. AUTHORITY TO ENTER INTO CONTRACTS.

      (a) In General.--(1) * * *
      (2)(A) * * *

               *       *       *       *       *       *       *

      (E) Funding options.--[In] Notwithstanding any other
    provision of law, in carrying out a contract under this title,
    a Federal agency may use any combination of--
              (i) * * *

               *       *       *       *       *       *       *

      (3)(A) The head of a Federal agency may issue a task or
    delivery order under an energy savings performance contract
    by--
              (i) notifying all contractors that have received an
            award under such contract that the agency proposes to
            discuss energy savings performance services for some or
            all of its facilities, soliciting an expression of
            interest in performing site surveys or investigations
            and feasibility designs and studies and the submission
            of qualifications from such contractors, and including
            in such notice summary information concerning energy
            use for any facilities that the agency has specific
            interest in including in such contract;
              (ii) reviewing all expressions of interest and
            qualifications submitted pursuant to the notice under
            clause (i);
              (iii) selecting two or more contractors (from among
            those reviewed under clause (ii)) to conduct
            discussions concerning the contractors' respective
            qualifications to implement potential energy
            conservation measures, including requesting references
            demonstrating experience on similar efforts and the
            resulting energy savings of such similar efforts;
              (iv) selecting and authorizing--
                      (I) more than one contractor (from among
                    those selected under clause (iii)) to conduct
                    site surveys, investigations, feasibility
                    designs and studies or similar assessments for
                    the energy savings performance contract
                    services (or for discrete portions of such
                    services), for the purpose of allowing each
                    such contractor to submit a firm, fixed-price
                    proposal to implement specific energy
                    conservation measures; or
                      (II) one contractor (from among those
                    selected under clause (iii)) to conduct a site
                    survey, investigation, a feasibility design and
                    study or similar for the purpose of allowing
                    the contractor to submit a firm, fixed-price
                    proposal to implement specific energy
                    conservation measures;
              (v) negotiating a task or delivery order for energy
            savings performance contracting services with the
            contractor or contractors selected under clause (iv)
            based on the energy conservation measures identified;
            and
              (vi) issuing a task or delivery order for energy
            savings performance contracting services to such
            contractor or contractors.
      (B) The issuance of a task or delivery order for energy
    savings performance contracting services pursuant to
    subparagraph (A) is deemed to satisfy the task and delivery
    order competition requirements in section 2304c(d) of title 10,
    United States Code, and section 303J(d) of the Federal Property
    and Administrative Services Act of 1949 (41 U.S.C. 253j(d)).
      (C) The Secretary may issue guidance as necessary to agencies
    issuing task or delivery orders pursuant to subparagraph (A).

               *       *       *       *       *       *       *

                                  ----------

    COMMODITY EXCHANGE ACT

               *       *       *       *       *       *       *

    SEC. 1A. DEFINITIONS.

      As used in this Act:
              (1) * * *

               *       *       *       *       *       *       *

              (13) Energy commodity.--The term ``energy commodity''
            means--
                      (A) coal;
                      (B) crude oil, gasoline, diesel fuel, jet
                    fuel, heating oil, and propane;
                      (C) electricity (excluding financial
                    transmission rights which are subject to
                    regulation and oversight by the Federal Energy
                    Regulatory Commission);
                      (D) natural gas; and
                      (E) any other substance (other than an
                    excluded commodity, a metal, or an agricultural
                    commodity) that is used as a source of energy,
                    as the Commission, in its discretion, deems
                    appropriate.
              [(13)] (14) Excluded commodity.--The term ``excluded
            commodity'' means--

                              (i) * * *

               *       *       *       *       *       *       *

              [(14)] (15) Exempt commodity.--The term ``exempt
            commodity'' means a commodity that is not an excluded
            commodity, an energy commodity, or an agricultural
            commodity.
              [(15)] (16) Financial institution.--The term
            ``financial institution'' means--
                      (A) * * *

               *       *       *       *       *       *       *

              [(16)] (17) Floor broker.--The term ``floor broker''
            means any person who, in or surrounding any pit, ring,
            post, or other place provided by a contract market or
            derivatives transaction execution facility for the
            meeting of persons similarly engaged, shall purchase or
            sell for any other person any commodity for future
            delivery on or subject to the rules of any contract
            market or derivatives transaction execution facility.
              [(17)] (18) Floor trader.--The term ``floor trader''
            means any person who, in or surrounding any pit, ring,
            post, or other place provided by a contract market or
            derivatives transaction execution facility for the
            meeting of persons similarly engaged, purchases, or
            sells solely for such person's own account, any
            commodity for future delivery on or subject to the
            rules of any contract market or derivatives transaction
            execution facility.
              [(18)] (19) Foreign futures authority.--The term
            ``foreign futures authority'' means any foreign
            government, or any department, agency, governmental
            body, or regulatory organization empowered by a foreign
            government to administer or enforce a law, rule, or
            regulation as it relates to a futures or options
            matter, or any department or agency of a political
            subdivision of a foreign government empowered to
            administer or enforce a law, rule, or regulation as it
            relates to a futures or options matter.
              [(19)] (20) Future delivery.--The term ``future
            delivery'' does not include any sale of any cash
            commodity for deferred shipment or delivery.
              [(20)] (21) Futures commission merchant.--The term
            ``futures commission merchant'' means an individual,
            association, partnership, corporation, or trust that--
                      (A) * * *

               *       *       *       *       *       *       *

              [(21)] (22) Hybrid instrument.--The term ``hybrid
            instrument'' means a security having one or more
            payments indexed to the value, level, or rate of, or
            providing for the delivery of, one or more commodities.
              (23) Included energy transaction.--The term
            ``included energy transaction'' means a contract,
            agreement, or transaction in an energy commodity for
            future delivery that provides for a delivery point of
            the energy commodity in the United States or a
            territory or possession of the United States, or that
            is offered or transacted on or through a computer
            terminal located in the United States.
              [(22)] (24) Interstate commerce.--The term
            ``interstate commerce'' means commerce--
                      (A) * * *

               *       *       *       *       *       *       *

              [(23)] (25) Introducing broker.--The term
            ``introducing broker'' means any person (except an
            individual who elects to be and is registered as an
            associated person of a futures commission merchant)
            engaged in soliciting or in accepting orders for the
            purchase or sale of any commodity for future delivery
            on or subject to the rules of any contract market or
            derivatives transaction execution facility who does not
            accept any money, securities, or property (or extend
            credit in lieu thereof) to margin, guarantee, or secure
            any trades or contracts that result or may result
            therefrom.
              [(24)] (26) Member of a registered entity; member of
            a derivatives transaction execution facility.--The term
            ``member'' means, with respect to a registered entity
            or derivatives transaction execution facility, an
            individual, association, partnership, corporation, or
            trust--
                      (A) * * *

               *       *       *       *       *       *       *

              [(25)] (27) Narrow-based security index.--
                      (A) The term ``narrow-based security index''
                    means an index--
                              (i) * * *

               *       *       *       *       *       *       *

              [(26)] (28) Option.--The term ``option'' means an
            agreement, contract, or transaction that is of the
            character of, or is commonly known to the trade as, an
            ``option'', ``privilege'', ``indemnity'', ``bid'',
            ``offer'', ``put'', ``call'', ``advance guaranty'', or
            ``decline guaranty''.
              [(27)] (29) Organized exchange.--The term ``organized
            exchange'' means a trading facility that--
                      (A) * * *

               *       *       *       *       *       *       *

              [(28)] (30) Person.--The term ``person'' imports the
            plural or singular, and includes individuals,
            associations, partnerships, corporations, and trusts.
              [(29)] (31) Registered entity.--The term ``registered
            entity'' means--
                      (A) * * *

               *       *       *       *       *       *       *

              [(30)] (32) Security.--The term ``security'' means a
            security as defined in section 2(a)(1) of the
            Securities Act of 1933 (15 U.S.C. 77b(a)(1)) or section
            3(a)(10) of the Securities Exchange Act of 1934 (15
            U.S.C. 78c(a)(10)).
              [(31)] (33) Security future.--The term ``security
            future'' means a contract of sale for future delivery
            of a single security or of a narrow-based security
            index, including any interest therein or based on the
            value thereof, except an exempted security under
            section 3(a)(12) of the Securities Exchange Act of 1934
            as in effect on the date of the enactment of the
            Futures Trading Act of 1982 (other than any municipal
            security as defined in section 3(a)(29) of the
            Securities Exchange Act of 1934 as in effect on the
            date of the enactment of the Futures Trading Act of
            1982). The term ``security future'' does not include
            any agreement, contract, or transaction excluded from
            this Act under section 2(c), 2(d), 2(f), or 2(g) of
            this Act (as in effect on the date of the enactment of
            the Commodity Futures Modernization Act of 2000) or
            title IV of the Commodity Futures Modernization Act of
            2000.
              [(32)] (34) Security futures product.--The term
            ``security futures product'' means a security future or
            any put, call, straddle, option, or privilege on any
            security future.
              [(33)] (35) Significant price discovery contract.--
            The term ``significant price discovery contract'' means
            an agreement, contract, or transaction subject to
            section 2(h)(7).
              [(34)] (36) Trading facility.--
                      (A) * * *

               *       *       *       *       *       *       *

              (37) Credit default swap.--The term ``credit default
            swap'' means a contract which insures a party to the
            contract against the risk that an entity may experience
            a loss of value as a result of an event specified in
            the contract, such as a default or credit downgrade. A
            credit default swap that is traded on or cleared by a
            registered entity shall be excluded from the definition
            of a security as defined in this Act and in section
            2(a)(1) of the Securities Act of 1933 or section
            3(a)(10) of the Securities Exchange Act of 1934, except
            it shall be deemed a security solely for purpose of
            enforcing prohibitions against insider trading in
            sections 10 and 16 of the Securities Exchange Act of
            1934.

    SEC. 2. JURISDICTION OF COMMISSION; LIABILITY OF PRINCIPAL FOR ACT OF
                        AGENT; COMMODITY FUTURES TRADING COMMISSION;
                        TRANSACTION IN INTERSTATE COMMERCE.

      (a) * * *

               *       *       *       *       *       *       *

      (d) Excluded Derivative Transactions.--
              (1) In general.--Nothing in this Act (other than
            section 5b or 12(e)(2)(B) governs or applies to an
            agreement, contract, or transaction in an excluded
            commodity if--
                      (A) the agreement, contract, or transaction
                    is entered into only between persons that are
                    eligible contract participants at the time at
                    which the persons enter into the agreement,
                    contract, or transaction; [and]
                      (B) the agreement, contract, or transaction
                    is not executed or traded on a trading
                    facility[.]; and
                      (C) except as provided in section 4(f), the
                    agreement, contract, or transaction is settled
                    and cleared through a derivatives clearing
                    organization registered with the Commission.
              (2) Electronic trading facility exclusion.--Nothing
            in this Act (other than section 5a (to the extent
            provided in section 5a(g)), 5b, 5d, or 12(e)(2)(B))
            governs or applies to an agreement, contract, or
            transaction in an excluded commodity if--
                      (A) * * *
                      (B) the agreement, contract, or transaction
                    is entered into only between persons that are
                    eligible contract participants described in
                    subparagraph (A), (B)(ii), or (C) of section
                    1a(12)) at the time at which the persons enter
                    into the agreement, contract, or transaction;
                    [and]
                      (C) the agreement, contract, or transaction
                    is executed or traded on an electronic trading
                    facility[.]; and
                      (D) except as provided in section 4(f), the
                    agreement, contract, or transaction is settled
                    and cleared through a derivatives clearing
                    organization registered with the Commission.

               *       *       *       *       *       *       *

      (g) Excluded Swap Transactions.--No provision of this Act
    (other than section 5a (to the extent provided in section
    5a(g)), 5b, 5d, or 12(e)(2)) shall apply to or govern any
    agreement, contract, or transaction in a commodity other than
    an agricultural commodity or an energy commodity if the
    agreement, contract, or transaction is--
              (1) * * *
              (2) subject to individual negotiation by the parties;
            [and]
              (3) not executed or traded on a trading facility[.];
            and
              (4) except as provided in section 4(f), settled and
            cleared through a derivatives clearing organization
            registered with the Commission.
      (h) Legal Certainty for Certain Transactions in Exempt
    Commodities.--
              (1) Except as provided in paragraph (2), nothing in
            this Act shall apply to a contract, agreement, or
            transaction in an exempt commodity (other than an
            energy commodity) which--
                      (A) is entered into solely between persons
                    that are eligible contract participants at the
                    time the persons enter into the agreement,
                    contract, or transaction; [and]
                      (B) is not entered into on a trading
                    facility[.]; and
                      (C) except as provided in section 4(f), is
                    settled and cleared through a derivatives
                    clearing organization registered with the
                    Commission.

               *       *       *       *       *       *       *

              (3) Except as provided in paragraphs (4) and (7),
            nothing in this Act shall apply to an agreement,
            contract, or transaction in an exempt commodity which
            is--
                      (A) entered into on a principal-to-principal
                    basis solely between persons that are eligible
                    commercial entities at the time the persons
                    enter into the agreement, contract, or
                    transaction; [and]
                      (B) executed or traded on an electronic
                    trading facility[.]; and
                      (C) except as provided in section 4(f),
                    settled and cleared through a derivatives
                    clearing organization registered with the
                    Commission.

               *       *       *       *       *       *       *

              (7) Significant price discovery contracts.--
                      (A) In general.--An agreement, contract, or
                    transaction conducted in reliance on the
                    exemption in paragraph (3) shall be subject to
                    the provisions of subparagraphs (B) through (D)
                    of this paragraph and section 4a(a), under such
                    rules and regulations as the Commission shall
                    promulgate, provided that the Commission
                    determines, in its discretion, that the
                    agreement, contract, or transaction performs a
                    significant price discovery function as
                    described in subparagraph (B) of this
                    paragraph.

               *       *       *       *       *       *       *

                      (C) Core principles applicable to significant
                    price discovery contracts.--
                              (i) * * *
                              (ii) Core principles.--The electronic
                            trading facility shall have reasonable
                            discretion (including discretion to
                            account for differences between cleared
                            and uncleared significant price
                            discovery contracts) in establishing
                            the manner in which it complies with
                            the following core principles:
                                      (I) * * *

               *       *       *       *       *       *       *

                                      (IV) Position [limitations
                                    or] accountability.--The
                                    electronic trading facility
                                    shall adopt, where necessary
                                    and appropriate, [position
                                    limitations or] position
                                    accountability for speculators
                                    in significant price discovery
                                    contracts, taking into account
                                    positions in other agreements,
                                    contracts, and transactions
                                    that are treated by a
                                    derivatives clearing
                                    organization, whether
                                    registered or not registered,
                                    as fungible with such
                                    significant price discovery
                                    contracts to reduce the
                                    potential threat of market
                                    manipulation or congestion,
                                    especially during trading in
                                    the delivery month.

               *       *       *       *       *       *       *

                      [(D) Implementation.--
                              [(i) Clearing.--The Commission shall
                            take into consideration differences
                            between cleared and uncleared
                            significant price discovery contracts
                            when reviewing the implementation of
                            the core principles by an electronic
                            trading facility.
                              [(ii) Review.--As part of]
                      (D) Review of implementation.--As part of the
                    Commission's continual monitoring and
                    surveillance activities, the Commission shall,
                    not less frequently than annually, evaluate, as
                    appropriate, all the agreements, contracts, or
                    transactions conducted on an electronic trading
                    facility in reliance on the exemption provided
                    in paragraph (3) to determine whether they
                    serve a significant price discovery function as
                    described in subparagraph (B) of this
                    paragraph.

               *       *       *       *       *       *       *

      (j) This Act shall not be interpreted to affect the
    jurisdiction of the Federal Energy Regulatory Commission with
    respect to the authority of the Federal Energy Regulatory
    Commission under the Federal Power Act (16 U.S.C. 791a et
    seq.), the Natural Gas Act (15 U.S.C. 717 et seq.), or other
    law to obtain information, carry out enforcement actions, or
    otherwise carry out the responsibilities of the Federal Energy
    Regulatory Commission.
      (k) The Commission shall have jurisdiction over the
    establishment, operations, and oversight of markets for
    regulated allowance derivatives (as defined in section 401 of
    the Federal Power Act (16 U.S.C. 791a and following)), and
    shall provide for the establishment, operation, and oversight
    of the markets in accordance with the same regulations that
    apply under this Act to included energy transactions.

               *       *       *       *       *       *       *

      Sec. 4. (a) Unless exempted by the Commission pursuant to
    subsection (c), it shall be unlawful for any person to offer to
    enter into, to enter into, to execute, to confirm the execution
    of, or to conduct any office or business anywhere in the United
    States, its territories or possessions, for the purpose of
    soliciting, or accepting any order for, or otherwise dealing
    in, any transaction in, or in connection with, a contract for
    the purchase or sale of a commodity for future delivery (other
    than a contract which is made on or subject to the rules of a
    board of trade, exchange, or market located outside the United
    States, its territories or possessions, and which is not an
    included energy transaction) unless--
              (1) * * *

               *       *       *       *       *       *       *

      (b) The Commission may adopt rules and regulations
    proscribing fraud and requiring minimum financial standards,
    the disclosure of risk, the filing of reports, the keeping of
    books and records, the safeguarding of customers' funds, and
    registration with the Commission by any person located in the
    United States, its territories or possessions, who engages in
    the offer or sale of any contract of sale of a commodity for
    future delivery that is made or to be made on or subject to the
    rules of a board of trade, exchange, or market located outside
    the United States, its territories or possessions. Such rules
    and regulations may impose different requirements for such
    persons depending upon the particular foreign board of trade,
    exchange, or market involved. No rule or regulation may be
    adopted by the Commission under this subsection that (1)
    requires Commission approval of any contract, rule, regulation,
    or action of any foreign board of trade, exchange, or market,
    or clearinghouse for such board of trade, exchange, or market,
    or (2) governs in any way any rule or contract term or action
    of any foreign board of trade, exchange, or market, or
    clearinghouse for such board of trade, exchange, or market. The
    preceding sentence shall not apply with respect to included
    energy transactions.
      (c)(1) In order to promote responsible economic or financial
    innovation and fair competition, the Commission by rule,
    regulation, or order, after notice and opportunity for hearing,
    may (on its own initiative or on application of any person,
    including any board of trade designated or registered as a
    contract market or derivatives transaction execution facility
    for transactions for future delivery in any commodity under
    section 5 of this Act) exempt any agreement, contract, or
    transaction (or class thereof) that is otherwise subject to
    subsection (a) (including any person or class of persons
    offering, entering into, rendering advice or rendering other
    services with respect to, the agreement, contract, or
    transaction), either unconditionally or on stated terms or
    conditions or for stated periods and either retroactively or
    prospectively, or both, from any of the requirements of
    subsection (a), or from any other provision of this Act (except
    subparagraphs (C)(ii) and (D) of section 2(a)(1), except that
    the Commission and the Securities and Exchange Commission may
    by rule, regulation, or order jointly exclude any agreement,
    contract, or transaction from section 2(a)(1)(D)), if the
    agreement, contract, or transaction, except as provided in
    section 4(h), will be settled and cleared through a derivatives
    clearing organization registered with the Commission and the
    Commission determines that the exemption would be consistent
    with the public interest.

               *       *       *       *       *       *       *

      (6) The Commission may not exempt any included energy
    transaction from the requirements of subsection (a), unless the
    Commission provides 60 days advance notice to the Congress and
    the Position Limit Energy Advisory Group and solicits public
    comment about the exemption request and any proposed Commission
    action.

               *       *       *       *       *       *       *

      (e) Detailed Reporting and Disaggregation of Market Data.--
              (1) Index traders and swap dealers reporting.--The
            Commission shall issue a proposed rule defining and
            classifying index traders and swap dealers (as those
            terms are defined by the Commission) for purposes of
            data reporting requirements and setting routine
            detailed reporting requirements for any positions of
            such entities in contracts traded on designated
            contract markets, over-the-counter markets, derivatives
            transaction execution facilities, foreign boards of
            trade subject to section 4(f), and electronic trading
            facilities with respect to significant price discovery
            contracts not later than 120 days after the date of the
            enactment of this subsection, and issue a final rule
            within 180 days after such date of enactment.
              (2) Disaggregation of index funds and other data in
            markets.--Subject to section 8 and beginning within 60
            days of the issuance of the final rule required by
            paragraph (1), the Commission shall disaggregate and
            make public weekly--
                      (A) the number of positions and total
                    notional value of index funds and other
                    passive, long-only and short-only positions (as
                    defined by the Commission) in all markets to
                    the extent such information is available; and
                      (B) data on speculative positions relative to
                    bona fide physical hedgers in those markets to
                    the extent such information is available.
              (3) Disclosure of identity of holders of positions in
            indexes in excess of position limits.--The Commission
            shall include in its weekly Commitment of Trader
            reports the identity of each person who holds a
            position in an index in excess of a limit imposed under
            section 4i.
      (f) Alternatives to Clearing Through Designated Clearing
    Organizations.--
              (1) Settlement and clearing through certain other
            regulated entities.--An agreement, contract, or
            transaction, or class thereof, relating to an excluded
            commodity, that would otherwise be required to be
            settled and cleared by section 2(d)(1)(C), 2(d)(2)(D),
            2(g)(4), 2(h)(1)(C), or 2(h)(3)(C) of this Act, or
            subsection (c)(1) of this section may be settled and
            cleared through an entity listed in subsections (a) or
            (b) of section 409 of the Federal Deposit Insurance
            Corporation Improvement Act of 1991.
              (2) Waiver of clearing requirement.--
                      (A) The Commission, in its discretion, may
                    exempt an agreement, contract, or transaction,
                    or class thereof, that would otherwise be
                    required by section 2(d)(1)(C), 2(d)(2)(D),
                    2(g)(4), 2(h)(1)(C), or 2(h)(3)(C) of this Act,
                    or subsection (c)(1) of this section to be
                    settled and cleared through a derivatives
                    clearing organization registered with the
                    Commission from such requirement.
                      (B) In granting exemptions pursuant to
                    subparagraph (A), the Commission shall consult
                    with the Securities and Exchange Commission and
                    the Board of Governors of the Federal Reserve
                    System regarding exemptions that relate to
                    excluded commodities or entities for which the
                    Securities Exchange Commission or the Board of
                    Governors of the Federal Reserve System serve
                    as the primary regulator.
                      (C) Before granting an exemption pursuant to
                    subparagraph (A), the Commission shall find
                    that the agreement, contract, or transaction,
                    or class thereof--
                              (i) is highly customized as to its
                            material terms and conditions;
                              (ii) is transacted infrequently;
                              (iii) does not serve a significant
                            price-discovery function in the
                            marketplace; and
                              (iv) is being entered into by parties
                            who can demonstrate the financial
                            integrity of the agreement, contract,
                            or transaction and their own financial
                            integrity, as such terms and standards
                            are determined by the Commission. The
                            standards may include, with respect to
                            any federally regulated financial
                            entity for which net capital
                            requirements are imposed, a net capital
                            requirement associated with any
                            agreement, contract, or transaction
                            subject to an exemption from the
                            clearing requirement that is higher
                            than the net capital requirement that
                            would be associated with such a
                            transaction were it cleared
                      (D) Any agreement, contract, or transaction,
                    or class thereof, which is exempted pursuant to
                    subparagraph (A) shall be reported to the
                    Commission in a manner designated by the
                    Commission, or to such other entity the
                    Commission deems appropriate.
                      (E) The Commission, the Securities and
                    Exchange Commission and the Board of Governors
                    of the Federal Reserve System shall enter into
                    a memorandum of understanding by which the
                    information reported to the Commission pursuant
                    to subparagraph (D) with regard to excluded
                    commodities or entities for which the
                    Securities Exchange Commission or the Board of
                    Governors of the Federal Reserve System serve
                    as the primary regulator may be provided to the
                    other agencies.
      (g) Spot and Forward Exclusion.--The settlement and clearing
    requirements of section 2(d)(1)(C), 2(d)(2)(D), 2(g)(4),
    2(h)(1)(C), 2(h)(3)(C), or 4(c)(1) shall not apply to an
    agreement, contract, or transaction of any cash commodity for
    immediate or deferred shipment or delivery, as defined by the
    Commission.
      Sec. 4a. (a)(1) Excessive speculation in any commodity under
    contracts of sale of such commodity for future delivery made on
    or subject to the rules of contract markets or derivatives
    transaction execution facilities, or on electronic trading
    facilities with respect to a significant price discovery
    contract causing sudden or unreasonable fluctuations or
    unwarranted changes in the price of such commodity, is an undue
    and unnecessary burden on interstate commerce in such
    commodity. For the purpose of diminishing, eliminating, or
    preventing such burden, the Commission shall, from time to
    time, after due notice and opportunity for hearing, by rule,
    regulation, or order, proclaim and fix such limits on the
    amounts of trading which may be done or positions which may be
    held by any person under contracts of sale of such commodity
    for future delivery on or subject to the rules of any contract
    market or derivatives transaction execution facility, or on an
    electronic trading facility with respect to a significant price
    discovery contract, as the Commission finds are necessary to
    diminish, eliminate, or prevent such burden. With respect to
    energy transactions, the Commission shall fix limits on the
    aggregate number of positions which may be held by any person
    for each month across all markets subject to the jurisdiction
    of the Commission. In determining whether any person has
    exceeded such limits, the positions held and trading done by
    any persons directly or indirectly controlled by such person
    shall be included with the positions held and trading done by
    such person; and further, such limits upon positions and
    trading shall apply to positions held by, and trading done by,
    two or more persons acting pursuant to an expressed or implied
    agreement or understanding, the same as if the positions were
    held by, or the trading were done by, a single person. Nothing
    in this section shall be construed to prohibit the Commission,
    consistent with the 3rd sentence, from fixing different trading
    or position limits for different commodities, markets, futures,
    or delivery months, or for different number of days remaining
    until the last day of trading in a contract, or different
    trading limits for buying and selling operations, or different
    limits for the purposes of paragraphs (1) and (2) of subsection
    (b) of this section, or from exempting transactions normally
    known to the trade as ``spreads'' or ``straddles'' or
    ``arbitrage'' or from fixing limits applying to such
    transactions or positions different from limits fixed for other
    transactions or positions. The word ``arbitrage'' in domestic
    markets shall be defined to mean the same as a ``spread'' or
    ``straddle''. The Commission is authorized to define the term
    ``international arbitrage''.
      (2)(A) Not later than 60 days after the date of the enactment
    of this paragraph, the Commission shall convene a Position
    Limit Energy Advisory Group consisting of representatives
    from--
              (i) 7 predominantly commercial short hedgers of the
            actual energy commodity for future delivery;
              (ii) 7 predominantly commercial long hedgers of the
            actual energy commodity for future delivery;
              (iii) 4 non-commercial participants in markets for
            energy commodities for future delivery; and
              (iv) each designated contract market or derivatives
            transaction execution facility upon which a contract in
            the energy commodity for future delivery is traded, and
            each electronic trading facility that has a significant
            price discovery contract in the energy commodity.
      (B) Not later than 60 days after the date on which the
    advisory group is convened under subparagraph (A), and annually
    thereafter, the advisory group shall submit to the Commission
    advisory recommendations regarding the position limits to be
    established in paragraph (1).
      (C) The Commission shall have exclusive authority to grant
    exemptions for bona fide hedging transactions and positions
    from position limits imposed under this Act on energy
    transactions.

               *       *       *       *       *       *       *

      (c)(1) No rule, regulation, or order issued under subsection
    (a) of this section shall apply to transactions or positions
    which are shown to be bona fide hedging transactions or
    positions, as such terms shall be defined by the Commission by
    rule, regulation, or order consistent with the purposes of this
    Act. Such terms may be defined to permit producers, purchasers,
    sellers, middlemen, and users of a commodity or a product
    derived therefrom to hedge their legitimate anticipated
    business needs for that period of time into the future for
    which an appropriate futures contract is open and available on
    an exchange. To determine the adequacy of this Act and the
    powers of the Commission acting thereunder to prevent
    unwarranted price pressures by large hedgers, the Commission
    shall monitor and analyze the trading activities of the largest
    hedgers, as determined by the Commission, operating in the
    cattle, hog, or pork belly markets and shall report its
    findings and recommendations to the Senate Committee on
    Agriculture, Nutrition, and Forestry and the House Committee on
    Agriculture in its annual reports for at least two years
    following the date of enactment of the Futures Trading Act of
    1982.
      (2) For the purposes of contracts of sale for future delivery
    and options on such contracts or commodities, the Commission
    shall define what constitutes a bona fide hedging transaction
    or position as a transaction or position that--
              (A)(i) represents a substitute for transactions made
            or to be made or positions taken or to be taken at a
            later time in a physical marketing channel;
              (ii) is economically appropriate to the reduction of
            risks in the conduct and management of a commercial
            enterprise; and
              (iii) arises from the potential change in the value
            of--
                      (I) assets that a person owns, produces,
                    manufactures, processes, or merchandises or
                    anticipates owning, producing, manufacturing,
                    processing, or merchandising;
                      (II) liabilities that a person owns or
                    anticipates incurring; or
                      (III) services that a person provides,
                    purchases, or anticipates providing or
                    purchasing; or
              (B) reduces risks attendant to a position resulting
            from a transaction that--
                      (i) was executed pursuant to subsection (d),
                    (g), (h)(1), or (h)(2) of section 2, or an
                    exemption issued by the Commission by rule,
                    regulation or order; and
                      (ii) was executed opposite a counterparty for
                    which the transaction would qualify as a bona
                    fide hedging transaction pursuant to paragraph
                    (2)(A) of this subsection.

               *       *       *       *       *       *       *

      (f) The provisions of this section shall apply to the amounts
    of trading which may be done or positions which may be held by
    any person under contracts of sale of an index for future
    delivery on or subject to the rules of any contract market,
    derivatives transaction execution facility, or over-the-counter
    market, or on an electronic trading facility with respect to a
    significant price discovery contract, in the same manner in
    which this section applies to contracts of sale of a commodity
    for future delivery.

               *       *       *       *       *       *       *

    SEC. 4C. PROHIBITED TRANSACTIONS.

      (a) * * *

               *       *       *       *       *       *       *

      (h) Limitation on Eligibility to Purchase a Credit Default
    Swap.--It shall be unlawful for any person to enter into a
    credit default swap unless the person--
              (1) owns a credit instrument which is insured by the
            credit default swap;
              (2) would experience financial loss if an event that
            is the subject of the credit default swap occurs with
            respect to the credit instrument; and
              (3) meets such minimum capital adequacy standards as
            may be established by the Commission, in consultation
            with the Board of Governors of the Federal Reserve
            System, or such more stringent minimum capital adequacy
            standards as may be established by or under the law of
            any State in which the swap is originated or entered
            into, or in which possession of the contract involved
            takes place.

               *       *       *       *       *       *       *

    SEC. 5. DESIGNATION OF BOARDS OF TRADE AS CONTRACT MARKETS.

      (a) * * *

               *       *       *       *       *       *       *

      (d) Core Principles for Contract Markets.--
              (1) * * *

               *       *       *       *       *       *       *

              (5) Position [limitations or] accountability.--To
            reduce the potential threat of market manipulation or
            congestion, especially during trading in the delivery
            month, the board of trade shall adopt [position
            limitations or] position accountability for
            speculators, where necessary and appropriate.

               *       *       *       *       *       *       *

    SEC. 5A. DERIVATIVES TRANSACTION EXECUTION FACILITIES.

      (a) * * *

               *       *       *       *       *       *       *

      (d) Core Principles for Registered Derivatives Transaction
    Execution Facilities.--
              (1) * * *

               *       *       *       *       *       *       *

              (4) Position [Limitations or] accountability.--To
            reduce the potential threat of market manipulation or
            congestion, especially during trading in the delivery
            month, the derivatives transaction execution facility
            shall adopt [position limits or] position
            accountability for speculators, where necessary and
            appropriate for a contract, agreement or transaction
            with an underlying commodity that has a physically
            deliverable supply.

               *       *       *       *       *       *       *

    SEC. 5B. DERIVATIVES CLEARING ORGANIZATIONS.

      (a) * * *

               *       *       *       *       *       *       *

      (c) Registration of Derivatives Clearing Organizations.--
              (1) * * *
              (2) Core principles.--
                      (A) * * *

               *       *       *       *       *       *       *

                      (O) Disclosure of general information.--The
                    applicant shall disclose publicly and to the
                    Commission information concerning--
                              (i) the terms and conditions of
                            contracts, agreements, and transactions
                            cleared and settled by the applicant;
                              (ii) the conventions, mechanisms, and
                            practices applicable to the contracts,
                            agreements, and transactions;
                              (iii) the margin-setting methodology
                            and the size and composition of the
                            financial resource package of the
                            applicant; and
                              (iv) other information relevant to
                            participation in the settlement and
                            clearing activities of the applicant.
                      (P) Daily publication of trading
                    information.--The applicant shall make public
                    daily information on settlement prices, volume,
                    and open interest for contracts settled or
                    cleared pursuant to the requirements of section
                    2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C),
                    2(h)(3)(C) or 4(c)(1) of this Act by the
                    applicant if the Commission determines that the
                    contracts perform a significant price discovery
                    function for transactions in the cash market
                    for the commodity underlying the contracts.
                      (Q) Fitness standards.--The applicant shall
                    establish and enforce appropriate fitness
                    standards for directors, members of any
                    disciplinary committee, and members of the
                    applicant, and any other persons with direct
                    access to the settlement or clearing activities
                    of the applicant, including any parties
                    affiliated with any of the persons described in
                    this subparagraph.

               *       *       *       *       *       *       *

      Sec. 12. (a) * * *

               *       *       *       *       *       *       *

      (e) Clearing Fees.--
              (1) In general.--The Commission shall, in accordance
            with this subsection, charge and collect from each
            registered clearing organization, and each such
            organization shall pay to the Commission, transaction
            fees at a rate calculated to recover the costs to the
            Federal Government of the supervision and regulation of
            futures markets, except those directly related to
            enforcement.
              (2) Fees assessed per side of cleared contracts.--
                      (A) In general.--The Commission shall
                    determine the fee rate referred to in paragraph
                    (1), and shall apply the fee rate per side of
                    any transaction cleared.
                      (B) Authority to delegate.--The Commission
                    may determine the procedures by which the fee
                    rate is to be applied on the transactions
                    subject to the fee, or delegate the authority
                    to make the determination to any appropriate
                    derivatives clearing organization.
              (3) Exemptions.--The Commission may not impose a fee
            under paragraph (1) on--
                      (A) a class of contracts or transactions if
                    the Commission finds that it is in the public
                    interest to exempt the class from the fee; or
                      (B) a contract or transaction cleared by a
                    registered derivatives clearing organization
                    that is--
                              (i) subject to fees under section 31
                            of the Securities Exchange Act of 1934;
                            or
                              (ii) a security as defined in the
                            Securities Act of 1933 or the
                            Securities Exchange Act of 1934.
              (4) Dates for payment of fees.--The fees imposed
            under paragraph (1) shall be paid on or before--
                      (A) March 15 of each year, with respect to
                    transactions occurring on or after the
                    preceding September 1 and on or before the
                    preceding December 31; and
                      (B) September 15 of each year, with respect
                    to transactions occurring on or after the
                    preceding January 1 and on or before the
                    preceding August 31.
              (5) Annual adjustment of fee rates.--
                      (A) In general.--Not later than April 30 of
                    each fiscal year , the Commission shall, by
                    order, adjust each fee rate determined under
                    paragraph (2) for the fiscal year to a uniform
                    adjusted rate that, when applied to the
                    estimated aggregate number of cleared sides of
                    transactions for the fiscal year, is reasonably
                    likely to produce aggregate fee receipts under
                    this subsection for the fiscal year equal to
                    the target offsetting receipt amount for the
                    fiscal year.
                      (B) Definitions.--In subparagraph (A):
                              (i) Estimated aggregate number of
                            cleared sides of transactions.--The
                            term ``estimated aggregate number of
                            cleared sides of transactions'' means,
                            with respect to a fiscal year, the
                            aggregate number of cleared sides of
                            transactions to be cleared by
                            registered derivatives clearing
                            organizations during the fiscal year,
                            as estimated by the Commission, after
                            consultation with the Office of
                            Management and Budget, using the
                            methodology required for making
                            projections pursuant to section 257 of
                            the Balanced Budget and Emergency
                            Deficit Control Act of 1985.
                              (ii) Target offsetting receipt
                            amount.--The term ``target offsetting
                            receipt amount'' means, with respect to
                            a fiscal year, the total level of
                            Commission budget authority for all
                            non-enforcement activities of the
                            Commission, as contained in the regular
                            appropriations Acts for the fiscal
                            year.
                      (C) No judicial review.--An adjusted fee rate
                    prescribed under subparagraph (A) shall not be
                    subject to judicial review.
              (6) Publication.--Not later than April 30 of each
            fiscal year, the Commission shall cause to be published
            in the Federal Register notices of the fee rates
            applicable under this subsection for the succeeding
            fiscal year, and any estimate or projection on which
            the fee rates are based.
              (7) Inapplicability of certain procedural rules.--
            Section 553 of title 5, United States Code, shall not
            apply with respect to any exercise of authority under
            this subsection.
              (8) Establishment of futures and options transaction
            fee account; deposit of fees.--There is established in
            the Treasury of the United States an account which
            shall be known as the ``Futures and Options Transaction
            Fee Account''. All fees collected under this subsection
            for a fiscal year shall be deposited in the account.
            Amounts in the account are authorized to be
            appropriated to fund the expenditures of the
            Commission.
      [(e)] (f) Relation to Other Law, Departments, or Agencies.--
              (1) * * *
              (2) This Act shall supersede and preempt the
            application of any State or local law that prohibits or
            regulates gaming or the operation of bucket shops
            (other than antifraud provisions of general
            applicability) in the case of--
                      (A) * * *
                      (B) an agreement, contract, or transaction
                    (other than a credit default swap in which the
                    purchaser of the swap would not experience
                    financial loss if an event that is the subject
                    of the swap occurred) that is excluded from
                    this Act under section 2(c), 2(d), 2(f), or
                    2(g) of this Act or title IV of the Commodity
                    Futures Modernization Act of 2000, or exempted
                    under section 2(h) or 4(c) of this Act
                    (regardless of whether any such agreement,
                    contract, or transaction is otherwise subject
                    to this Act).
      [(f)] (g)(1) * * *

               *       *       *       *       *       *       *

      [(g)] (h) Consistent with its responsibilities under section
    18, the Commission is directed to facilitate the development
    and operation of computerized trading as an adjunct to the open
    outcry auction system. The Commission is further directed to
    cooperate with the Office of the United States Trade
    Representative, the Department of the Treasury, the Department
    of Commerce, and the Department of State in order to remove any
    trade barriers that may be imposed by a foreign nation on the
    international use of electronic trading systems.

               *       *       *       *       *       *       *

                                  ----------

     SECTION 409 OF THE FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT
                                  ACT OF 1991

    SEC. 409. MULTILATERAL CLEARING ORGANIZATIONS.

      (a) * * *

               *       *       *       *       *       *       *

      (c) Clearing Requirement.--A multilateral clearing
    organization described in subsections (a) or (b) of this
    section shall comply with requirements similar to the
    requirements of sections 5b and 5c of the Commodity Exchange
    Act.

               *       *       *       *       *       *       *

                                  ----------

        SECTION 407 OF THE LEGAL CERTAINTY FOR BANK PRODUCTS ACT OF 2000

    SEC. 407. EXCLUSION OF COVERED SWAP AGREEMENTS.

      No provision of the Commodity Exchange Act (other than
    section 5b of such Act with respect to the clearing of covered
    swap agreements and the settlement and clearing requirements of
    sections 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C),
    2(h)(3)(C), and 4(c)(1) of such Act) shall apply to, and the
    Commodity Futures Trading Commission shall not exercise
    regulatory authority with respect to, a covered swap agreement
    offered, entered into, or provided by a bank.

               *       *       *       *       *       *       *

                                  ----------

    NATURAL GAS ACT

               *       *       *       *       *       *       *

                   ENFORCEMENT OF ACT; REGULATIONS AND ORDERS

      Sec. 20. (a) * * *

               *       *       *       *       *       *       *

      (e) Cease-and-Desist Proceedings; Temporary Orders; Authority
    of the Commission.--
              (1) In general.--If the Commission finds, after
            notice and opportunity for hearing, that any entity may
            be violating, may have violated, or may be about to
            violate any provision of this Act, or any rule,
            regulation, restriction, condition, or order made or
            imposed by the Commission under the authority of this
            Act, the Commission may publish its findings and issue
            an order requiring such entity, and any other entity
            that is, was, or would be a cause of the violation, due
            to an act or omission the entity knew or should have
            known would contribute to such violation, to cease and
            desist from committing or causing such violation and
            any future violation of the same provision, rule, or
            regulation. Such order may, in addition to requiring an
            entity to cease and desist from committing or causing a
            violation, require such entity to comply, to provide an
            accounting and disgorgement, or to take steps to effect
            compliance, with such provision, rule, or regulation,
            upon such terms and conditions and within such time as
            the Commission may specify in such order. Any such
            order may, as the Commission deems appropriate, require
            future compliance or steps to effect future compliance,
            either permanently or for such period of time as the
            Commission may specify.
              (2) Timing of entry.--An order issued under this
            subsection shall be entered only after notice and
            opportunity for a hearing, unless the Commission
            determines that notice and hearing prior to entry would
            be impracticable or contrary to the public interest.
      (f) Hearing.--The notice instituting proceedings pursuant to
    subsection (e) shall fix a hearing date not earlier than 30
    days nor later than 60 days after service of the notice unless
    an earlier or a later date is set by the Commission with the
    consent of any respondent so served.
      (g) Temporary Order.--Whenever the Commission determines
    that--
              (1) a respondent may take actions to dissipate or
            convert assets prior to the completion of the
            proceedings referred to in subsection (e), and such
            assets would be necessary to comply with or otherwise
            satisfy a final enforcement order of the Commission
            pursuant to alleged violations or threatened violations
            specified in the notice instituting proceedings; or
              (2) a respondent is engaged in actual or threatened
            violations of this Act or a Commission rule,
            regulation, restriction or order referred to in
            subsection (e),
    the Commission may issue a temporary order requiring the
    respondent to take such action to prevent dissipation or
    conversion of assets, significant harm to energy consumers, or
    substantial harm to the public interest, frustration of the
    Commission's ability to conduct the proceedings, or frustration
    of the Commission's ability to redress said violation at the
    conclusion of the proceedings, as the Commission deems
    appropriate pending completion of such proceedings.
      (h) Review of Temporary Orders.--
              (1) Commission review.--At any time after the
            respondent has been served with a temporary cease-and-
            desist order pursuant to subsection (g), the respondent
            may apply to the Commission to have the order set
            aside, limited, or suspended. If the respondent has
            been served with a temporary cease-and-desist order
            entered without a prior Commission hearing, the
            respondent may, within 10 days after the date on which
            the order was served, request a hearing on such
            application and the Commission shall hold a hearing and
            render a decision on such application at the earliest
            possible time.
              (2) Judicial review.--Within--
                      (A) 10 days after the date the respondent was
                    served with a temporary cease-and-desist order
                    entered with a prior Commission hearing; or
                      (B) 10 days after the Commission renders a
                    decision on an application and hearing under
                    paragraph (1),
            with respect to any temporary cease-and-desist order
            entered without a prior Commission hearing, the
            respondent may apply to the United States district
            court for the district in which the respondent resides
            or has its principal place of business, or for the
            District of Columbia, for an order setting aside,
            limiting, or suspending the effectiveness or
            enforcement of the order, and the court shall have
            jurisdiction to enter such an order. A respondent
            served with a temporary cease-and-desist order entered
            without a prior Commission hearing may not apply to the
            court except after hearing and decision by the
            Commission on the respondent's application under
            paragraph (1) of this subsection.
              (3) No automatic stay of temporary order.--The
            commencement of proceedings under paragraph (2) of this
            subsection shall not, unless specifically ordered by
            the court, operate as a stay of the Commission's order.
              (4) Exclusive review.--Sections 19(d) and 24 shall
            not apply to a temporary order entered pursuant to this
            section.
      (i) Implementation.--The Commission is authorized to adopt
    rules, regulations, and orders as it deems appropriate to
    implement this section.

               *       *       *       *       *       *       *

                                  ----------

               SECTION 504 OF THE NATURAL GAS POLICY ACT OF 1978

    SEC. 504. ENFORCEMENT.

      (a) * * *

               *       *       *       *       *       *       *

      (d) Cease-and-Desist Proceedings; Temporary Orders; Authority
    of the Commission.--
              (1) In general.--If the Commission finds, after
            notice and opportunity for hearing, that any entity may
            be violating, may have violated, or may be about to
            violate any provision of this Act, or any rule,
            regulation, restriction, condition, or order made or
            imposed by the Commission under the authority of this
            Act, the Commission may publish its findings and issue
            an order requiring such entity, and any other entity
            that is, was, or would be a cause of the violation, due
            to an act or omission the entity knew or should have
            known would contribute to such violation, to cease and
            desist from committing or causing such violation and
            any future violation of the same provision, rule, or
            regulation. Such order may, in addition to requiring an
            entity to cease and desist from committing or causing a
            violation, require such entity to comply, to provide an
            accounting and disgorgement, or to take steps to effect
            compliance, with such provision, rule, or regulation,
            upon such terms and conditions and within such time as
            the Commission may specify in such order. Any such
            order may, as the Commission deems appropriate, require
            future compliance or steps to effect future compliance,
            either permanently or for such period of time as the
            Commission may specify.
              (2) Timing of entry.--An order issued under this
            subsection shall be entered only after notice and
            opportunity for a hearing, unless the Commission
            determines that notice and hearing prior to entry would
            be impracticable or contrary to the public interest.
              (3) Hearing.--The notice instituting proceedings
            pursuant to paragraph (1) shall fix a hearing date not
            earlier than 30 days nor later than 60 days after
            service of the notice unless an earlier or a later date
            is set by the Commission with the consent of any
            respondent so served.
              (4) Temporary order.--Whenever the Commission
            determines that--
                      (A) a respondent may take actions to
                    dissipate or convert assets prior to the
                    completion of the proceedings referred to in
                    paragraph (1) and such assets would be
                    necessary to comply with or otherwise satisfy a
                    final enforcement order of the Commission
                    pursuant to alleged violations or threatened
                    violations specified in the notice instituting
                    proceedings; or
                      (B) a respondent is engaged in actual or
                    threatened violations of this Act or a
                    Commission rule, regulation, restriction or
                    order referred to in paragraph (1),
            the Commission may issue a temporary order requiring
            the respondent to take such action to prevent
            dissipation or conversion of assets, significant harm
            to energy consumers, or substantial harm to the public
            interest, frustration of the Commission's ability to
            conduct the proceedings, or frustration of the
            Commission's ability to redress said violation at the
            conclusion of the proceedings, as the Commission deems
            appropriate pending completion of such proceedings.
              (5) Review of temporary orders.--
                      (A) Commission review.--At any time after the
                    respondent has been served with a temporary
                    cease-and-desist order pursuant to paragraph
                    (4), the respondent may apply to the Commission
                    to have the order set aside, limited, or
                    suspended. If the respondent has been served
                    with a temporary cease-and-desist order entered
                    without a prior Commission hearing, the
                    respondent may, within 10 days after the date
                    on which the order was served, request a
                    hearing on such application and the Commission
                    shall hold a hearing and render a decision on
                    such application at the earliest possible time.
                      (B) Judicial review.--Within--
                              (i) 10 days after the date the
                            respondent was served with a temporary
                            cease-and-desist order entered with a
                            prior Commission hearing; or
                              (ii) 10 days after the Commission
                            renders a decision on an application
                            and hearing under subparagraph (A),
                            with respect to any temporary cease-
                            and-desist order entered without a
                            prior Commission hearing, the
                            respondent may apply to the United
                            States district court for the district
                            in which the respondent resides or has
                            its principal place of business, or for
                            the District of Columbia, for an order
                            setting aside, limiting, or suspending
                            the effectiveness or enforcement of the
                            order, and the court shall have
                            jurisdiction to enter such an order. A
                            respondent served with a temporary
                            cease-and-desist order entered without
                            a prior Commission hearing may not
                            apply to the court except after hearing
                            and decision by the Commission on the
                            respondent's application under
                            paragraph (1) of this subsection.
                      (C) No automatic stay of temporary order.--
                    The commencement of proceedings under
                    subparagraph (B) of this paragraph shall not,
                    unless specifically ordered by the court,
                    operate as a stay of the Commission's order.
              (6) Implementation.--The Commission is authorized to
            adopt rules, regulations, and orders as it deems
            appropriate to implement this subsection.
                                  ----------

              SECTION 171 OF THE WORKFORCE INVESTMENT ACT OF 1998

    SEC. 171. DEMONSTRATION, PILOT, MULTISERVICE, RESEARCH, AND MULTISTATE
                        PROJECTS.

      (a) * * *

               *       *       *       *       *       *       *

      (e) Energy Efficiency and Renewable Energy Worker Training
    Program.--
              (1) * * *

               *       *       *       *       *       *       *

              (8) Authorization of appropriations.--There is
            authorized to be appropriated to carry out this
            subsection, [$125,000,000] $150,000,000 for each fiscal
            year, of which--
                      (A) * * *

               *       *       *       *       *       *       *

                                  ----------

    INTERNAL REVENUE CODE OF 1986

               *       *       *       *       *       *       *

                            Subtitle A--Income Taxes

                      CHAPTER 1--NORMAL TAXES AND SURTAXES

    Subchapter A--Determination of Tax Liability

               *       *       *       *       *       *       *

    PART IV--CREDITS AGAINST TAX

               *       *       *       *       *       *       *

    Subpart C--Refundable Credits

               *       *       *       *       *       *       *

    SEC. 36B. ENERGY TAX CREDIT.

      (a) Allowance of Credit.--In the case of an eligible
    individual, there shall be allowed as a credit against the tax
    imposed by this subtitle for the taxable year an amount equal
    to--
              (1) for an eligible individual with applicable income
            of less than $6,000, the phase in rate times the
            applicable income;
              (2) for an eligible individual with applicable income
            that is greater than or equal to $6,000 and is less
            than or equal to the phase down amount, the maximum
            energy tax credit; and
              (3) for an individual with applicable income that
            exceeds the phase down amount, an amount equal to--
                      (A) the maximum energy tax credit minus; or
                      (B) the difference between the individual's
                    applicable income and the phase down amount
                    multiplied by .2.
      (b) Coordination With Energy Refund Received Through State
    Human Service Agencies.--The amount described in subsection (a)
    shall be reduced by \1/12\ for each month in which the
    individual or his or her spouse received a refund under section
    432 of the American Clean Energy and Security Act of 2009.
              (1) The Secretary of the Treasury shall promulgate
            regulations that instruct States on how to inform adult
            individuals who receive a refund under section 432 of
            the American Clean Energy and Security Act of 2009 of
            the number of months he or she received a refund and
            how such information shall be provided to the Internal
            Revenue Service.
              (2) The Secretary of the Treasury shall establish a
            telephone and online system that allows an individual
            to inquire about the number of months she or he
            received such a refund.
              (3) In the case of an individual that does not report
            the number of months a refund was provided under
            section 432 of the American Clean Energy and Security
            Act of 2009 or recorded an incorrect number of months,
            the Secretary of the Treasury shall adjust the energy
            tax credit based on the information received from
            States, provided that the Secretary of the Treasury has
            made a determination that the information meets a
            sufficient standard for accuracy.
      (c) Definitions and Special Rules.--For purposes of this
    section:
              (1) Eligible individual.--
                      (A) In general.--The term ``eligible
                    individual'' means any individual other than--
                              (i) any nonresident alien individual;
                              (ii) any individual with respect to
                            whom a deduction under section 151 is
                            allowable to another taxpayer for a
                            taxable year beginning in the calendar
                            year in which the individual's taxable
                            year begins; and
                              (iii) an estate or trust.
                      (B) Identification number requirement.--Such
                    term shall not include any individual who--
                              (i) in the case of a return that is
                            not a joint return, does not include
                            the social security number of the
                            individual; and
                              (ii) in the case of joint return,
                            does not include the social security
                            number of at least one of the taxpayers
                            on such return.
                    For purposes of the preceding sentence, the
                    social security number shall not include a TIN
                    issued by the Internal Revenue Service.
              (2) Applicable income.--Applicable income means the
            larger of--
                      (A) earned income as defined in section
                    32(c)(2), except that such term shall not
                    include net earnings from self-employment which
                    are not taken into account in computing taxable
                    income; and
                      (B) adjusted gross income.
              (3) Phase in rate.--The Secretary of the Treasury
            shall compute the phase in rates each year for the
            energy credit for joint returns and for returns that
            are not filed jointly with respect to each relevant
            number of qualifying individuals such that the phase in
            rate equals the maximum energy tax credit divided by
            $6,000.
              (4) Maximum energy tax credit.--
                      (A) In general.--
                              (i) The maximum energy tax credit
                            shall vary based on the number of
                            individuals in the tax filing unit.
                              (ii) The maximum energy tax credit
                            for a filing unit of a particular size
                            shall be equal to the average annual
                            reduction in purchasing power for low-
                            income households of that household
                            size, as calculated by the
                            Environmental Protection Agency, that
                            results from the regulation of
                            greenhouse gas emissions under title
                            VII of the Clean Air Act.
                              (iii) The Environmental Protection
                            Agency, in consultation with other
                            appropriate Federal agencies, shall
                            calculate the maximum energy tax credit
                            by August 31 of each year for the
                            following calendar year using the most
                            recent, reliable data available.
                      (B) Energy tax credit calculation.--
                              (i) Distribution.--For each calendar
                            year, the Environmental Protection
                            Agency shall determine pursuant to
                            subparagraph (B)(iii) the aggregate
                            reduction in purchasing power among all
                            United States households that results
                            from the regulation of greenhouse gas
                            emissions under title VII of the Clean
                            Air Act and distribute that aggregate
                            reduction in purchasing power among all
                            United States households based on--
                                      (I) households' share of
                                    total consumption by all
                                    households;
                                      (II) the carbon intensity and
                                    covered-emissions intensity of
                                    households' consumption; and
                                      (III) the share of
                                    households' carbon and covered-
                                    emissions consumption that is
                                    not financed by Federal
                                    benefits subject to a cost of
                                    living adjustment that offsets
                                    increased carbon costs.
                              (ii) Maximum energy tax credit.--The
                            maximum energy tax credit shall be
                            equal to the arithmetic mean value of
                            the amount allocated under clause (i)
                            to households of a specified household
                            size in the lowest income quintile. Tax
                            filing units that include 5 or more
                            individuals shall be eligible for the
                            arithmetic mean value of the amount
                            allocated under clause (i) to
                            households that includes 5 or more
                            individuals.
                              (iii) Aggregate reduction in
                            purchasing power.--For purposes of this
                            section, the aggregate reduction in
                            purchasing power shall be based on the
                            projected total market value of the
                            emissions allowances used to
                            demonstrate compliance with title VII
                            of the Clean Air Act in that year,
                            adjusted to reflect costs that were not
                            incurred by households as a result of
                            allowances freely allocated pursuant to
                            section 782 of the Clean Air Act, as
                            estimated by the Environmental
                            Protection Agency, and calculated in a
                            way generally recognized as suitable by
                            experts in evaluating such purchasing
                            power impacts.
                              (iv) Income quintiles.--Income
                            quintiles shall be determined by
                            ranking households according to income
                            adjusted for household size, and shall
                            be constructed so that each quintile
                            contains an equal number of people.
              (5) Phase down amount.--
                      (A) In the case of an eligible individual who
                    has no qualifying individuals, the phase down
                    amount shall be--
                              (i) $20,000 in the case of an
                            individual who does not file a joint
                            return; and
                              (ii) $25,000 in the case of a joint
                            return.
                      (B) In the case of an eligible individual who
                    files a joint return and has at least one
                    qualifying individual--
                              (i) If the eligible individual has
                            one qualifying individual, the lowest
                            income level that exceeds the phaseout
                            amount as defined in section 32(b)(2)
                            at which a married couple with one
                            qualifying child is ineligible for the
                            earned income credit for the taxable
                            year.
                              (ii) If the eligible individual has
                            two qualifying individuals, the lowest
                            income level that exceeds the phaseout
                            amount as defined in section 32(b)(2)
                            at which a married couple with two
                            qualifying children is ineligible for
                            the earned income credit for the
                            taxable year.
                              (iii) If the eligible individual
                            claims three or more qualifying
                            individuals, the lowest income level
                            that exceeds the phaseout amount as
                            defined in section 32(b)(2) at which a
                            married couple with three or more
                            qualifying children is ineligible for
                            the earned income credit for the
                            taxable year.
                      (C) In the case of an eligible individual who
                    does not file a joint return and has at least
                    one individual qualifying individual--
                              (i) If the eligible individual has
                            one qualifying individual, the lowest
                            income level that exceeds the phaseout
                            amount as defined in section 32(b)(2)
                            at which a single individual with one
                            qualifying child is ineligible for the
                            earned income credit for the taxable
                            year.
                              (ii) If the eligible individual has
                            two qualifying individuals, the lowest
                            income level that exceeds the phaseout
                            amount as defined in section 32(b)(2)
                            at which a single individual with two
                            qualifying children is ineligible for
                            the earned income credit for the
                            taxable year.
                              (iii) If the eligible individual has
                            three or more qualifying individuals,
                            the lowest income level that exceeds
                            the phaseout amount as defined in
                            section 32(b)(2) at which a single
                            individual with three or more
                            qualifying children is ineligible for
                            the earned income credit for the
                            taxable year.
              (6) Qualifying individual.--A qualifying individual
            is an individual whom the eligible individual claims as
            a dependent under section 151, or as a qualifying child
            for the earned income credit under section 32(c)(3) or
            the child tax credit under section 24, or both. The
            term qualifying individual does not include--
                      (A) someone claimed as a dependent under
                    section 151 if that dependent is claimed as a
                    qualifying child for the earned income tax
                    credit or the child tax credit on a tax form by
                    someone other than the eligible individual; and
                      (B) the eligible individual and, if a joint
                    return, his or her spouse.
              (7) Number of people in the tax filing unit.--The
            number of people in the tax filing unit shall equal the
            sum of the number of qualifying individuals plus--
                      (A) in the case of a joint return, 2; and
                      (B) in the case of a return that is not filed
                    jointly, 1.
      (d) Treatment of Possessions.--
              (1) Payments to possessions.--
                      (A) Mirror code possession.--The Secretary of
                    the Treasury shall pay to each possession of
                    the United States with a mirror code tax system
                    amounts equal to the loss to that possession by
                    reason of the amendments made by this section.
                    Such amounts shall be determined by the
                    Secretary of the Treasury based on information
                    provided by the Government of the respective
                    possession.
                      (B) Other possessions.--The Secretary of the
                    Treasury shall pay to each possession of the
                    United States which does not have a mirror code
                    tax system amounts estimated by the Secretary
                    of the Treasury as being equal to the aggregate
                    benefits that would have been provided to
                    residents of such possession by reason of the
                    amendments made by this section if a mirror
                    code tax system had been in effect in such
                    possession. The preceding sentence shall not
                    apply for a given taxable year with respect to
                    any possession of the United States unless such
                    possession has a plan, which has been approved
                    by the Secretary of the Treasury, under which
                    such possession will promptly distribute such
                    payments to residents of such possession.
              (2) Coordination with credit allowed against united
            states income taxes.--No credit shall be allowed
            against United States income taxes for any taxable year
            under this section to any person--
                      (A) to whom a credit is allowed against taxes
                    imposed by the possession by reason of the
                    amendments made by this section for such
                    taxable year; or
                      (B) who is eligible for a payment under a
                    plan described in paragraph (1)(B) with respect
                    to such taxable year.
      (e) Amount of Credit to be Determined Under Tables.--The
    amount of the credit allowed by this section shall be
    determined under tables prescribed by the Secretary.
      (f) Inflation Adjustments.-- In the case of any taxable year
    beginning after 2009, dollar amounts in subsection (c)(4)(A)
    shall be increased by an amount equal to such dollar amount,
    multiplied by the cost-of-living adjustment determined under
    section 1(f)(3) of the Internal Revenue Code of 1986.
      (g) Treatment in Other Programs.--The energy tax credit
    provided under this section shall not be considered income or
    resources for any purpose under any Federal, State, or local
    laws, including, but not limited to, laws relating to an income
    tax or public assistance program (including, but not limited
    to, health care, cash aid, child care, nutrition programs, and
    housing assistance), and no participating State or political
    subdivision thereof shall decrease any assistance otherwise
    provided an individual or individuals because of the receipt of
    an energy tax credit under this Act.

               *       *       *       *       *       *       *

                         Minority and Additional Views

                          MINORITY VIEWS ON H.R. 2454

                                    SUMMARY

        H.R. 2454 is proposed legislation that if enacted would
    impose major new costs and expansive regulatory controls over a
    weak and struggling U.S. economy. If implemented, this
    legislation threatens to lock the United States into an era of
    economic stagnation and global decline.
        The bill would impose new greenhouse gas emissions
    standards and efficiency standards across the U.S. economy,
    create an untested and complex multi-trillion dollar cap-and-
    trade program, direct the Environmental Protection Agency
    (EPA), the Department of Energy (DOE) and other agencies to
    promulgate a host of new regulations on American businesses and
    enterprise, and authorize more than a trillion dollars of
    taxpayer outlays. This bill if enacted would result in a
    massive expansion of the EPA and other federal regulatory
    control over virtually all major sectors of the U.S. economy.
        If enacted, the bill would impose enormous new direct and
    indirect costs on U.S. consumers and would have major
    implications for financial markets and international trade and
    commerce. The full costs of implementing the bill are not known
    and the bill was considered and reported by the Committee
    before cost estimates of all the titles were prepared or made
    available. While prices for energy and goods and services would
    rise for virtually all Americans, certain regions of the
    country will be particularly adversely affected by the
    legislation. All amendments offered by the Minority to suspend
    the bill in the event of significantly increased energy prices,
    including amendments offered by Representative Lee Terry (R-
    NE), Representative Roy Blunt (R-MO), and Representative George
    Radanovich (R-CA), were defeated. An amendment offered by
    Representative Marsha Blackburn (R-TN) that would have required
    that the costs of compliance be reflected in utility bills,
    fuel pump bills, and manufactured products and food labels, was
    also defeated.
        Enactment of this legislation will unquestionably cause job
    losses in the U.S. in the manufacturing, industrial and other
    energy-intensive sectors, including in those industries that
    produce globally-traded commodities. The bill would
    dramatically increase energy costs for energy-intensive
    industries and put U.S. companies at a competitive disadvantage
    with foreign competitors in China, India, and other developing
    countries. While the proponents of the bill contend that an
    unspecified number of clean energy jobs will be created in the
    coming years, modeling done to date concludes that the number
    of jobs lost would far exceed any jobs created. All amendments
    offered by the Minority, including amendments offered by
    Representative Fred Upton (R-MI), Representative Tim Murphy (R-
    PA), Representative Mike Rogers (R-MI), Representative John
    Shimkus (R-IL), and Representative George Radanovich (R-CA) to
    protect against high national unemployment or job losses in
    specific industries resulting from implementation of the bill,
    such as job losses in the steel, coal, automotive and
    agriculture industries, were all defeated along partisan lines.
        While imposing a massive new energy tax on American
    consumers and businesses, as a practical matter the bill will
    not be effective in reducing overall global greenhouse gas
    emissions. Global climate change is an international issue and
    the U.S. unilateral efforts will be ineffective in reducing
    global emissions as long as the world's major emitters refuse
    to undertake similar emissions reduction programs. An amendment
    offered by Representative Mike Rogers (R-MI) that would suspend
    the bill if China and India do not adopt emissions programs as
    stringent as those in the U.S. was also defeated in a straight
    party-line vote.

                                    TITLE I

        Sec. 101--Combined efficiency and renewable electricity standard

        Section 101 is a combined efficiency and renewable
    electricity mandate which will penalize consumers in areas of
    the country without ample wind resources. This one-size-fits-
    all federal mandate requires utilities to purchase renewable
    electricity, even if it is considerably more expensive than the
    conventional sources of electricity that are currently
    generated. The definition of ``renewable'' in the base text is
    incredibly limited--it picks and chooses favored types of
    electricity even among renewable sources, declaring that all
    hydroelectric electricity does not qualify, and that only a
    limited selection of biomass would be eligible. Democrats
    rejected, on a 26 to 32 vote, an amendment offered by
    Representative Greg Walden (R-OR), which would have replaced
    the flawed definition of ``renewable biomass,'' ensuring
    biomass from both public and private lands would be treated
    equally under the act.
        This section also raises the question of why there are so
    many different ways to try to address the same concern in the
    bill--if the goal of the legislation is to reduce greenhouse
    gas emissions, then why are we mandating certain types of
    electricity be purchased, instead of simply requiring that low-
    emitting electricity be generated? At a February 26, 2009
    hearing the Energy and Environment Subcommittee held on
    renewable electricity mandates, a state public utility
    commissioner testified that ``establishing a uniform national
    RPS focused exclusively on a limited number of sources like
    wind, solar, biomass or geothermal, without regard to crucial
    regional differences, will unnecessarily drive up electricity
    costs, jeopardize reliability, and divert capital that will be
    needed to achieve other objectives like meeting aggressive
    carbon targets.'' Republicans offered a number of amendments to
    remedy this narrow standard. An amendment by Representative
    Greg Walden (R-OR) would have added language to the bill
    allowing nuclear energy, biomass, new hydroelectric power, and
    any other comparable low-emission source of energy to qualify
    for the same provisions provided under this act's renewable
    energy standard. If America is to reduce carbon dioxide
    emissions and increase energy independence, we should encourage
    all sources of clean, domestic energy. This amendment was
    rejected as part of an en bloc vote of 22 to 36. In a similar
    vein, Representative Cliff Stearns (R-FL) offered an amendment
    to afford existing nuclear power plants the same benefits
    provided to new nuclear power plants under the bill.
    Inexplicably, Section 101 effectively gives new nuclear plants
    partial credit as renewable energy but does not give any credit
    to existing plants. Nuclear energy plants, whether they are
    already operating or constructed years from now, all provide
    the dual benefit of reducing national carbon emissions while
    promoting energy independence. Unfortunately, this amendment
    was also rejected, by a vote of 26 to 30.
    Secs. 111-116--Carbon capture and sequestration
        Sections 111-116 (Subtitle B of Title I) of the bill seek
    to facilitate the commercial-scale deployment of carbon capture
    and sequestration (CCS) technologies and set performance
    standards for new coal plants. As currently drafted, however,
    the timeframes for widespread deployment of CCS technologies,
    as well as for meeting the new performance standards, are not 2
    achievable. Notwithstanding the fact that coal currently
    represents approximately 50% of our national electricity, and
    is a domestic, low-cost and reliable source of electricity, the
    Minority believes that this bill is unfortunately unlikely to
    result in any new coal plants being built in the United States.
        As an initial matter, Sections 111 and 113 would require
    the EPA to issue a national strategy for CCS deployment and to
    commission various studies and reports by academics, including
    reports on existing environmental federal and state laws that
    may apply to geologic sequestration sites for carbon dioxide,
    regulatory barriers to CCS deployment, and how and under what
    circumstances the environmental statutes for which EPA has
    responsibility would apply to carbon dioxide injection and
    geologic sequestration activities. These provisions serve to
    highlight the fact that currently there is not a comprehensive
    statutory and regulatory framework in place for carbon capture
    and sequestration sites and facilities, and that significant
    legal and regulatory uncertainty surrounds the deployment of
    CCS technologies. Yet, the legislation does nothing to
    eliminate barriers or solve problems identified by these
    studies and reports. We believe that if the authors want a
    future with coal, the bill should be strengthened in these
    sections to require EPA to explicitly address legal obligations
    and potential liabilities associated with the capture, storage
    and sequestration of carbon and carbon dioxide.
        Section 112 would require EPA to, within two years, issue
    new regulations to minimize the risk of escape to the
    atmosphere of carbon dioxide injected for purposes of geologic
    sequestration. Given the significant technical and other issues
    involved, not the least of which is the lack of an
    understanding of sequestration, two years is not likely to be
    adequate time to complete such a rulemaking. Nor is it clear
    what would happen to CCS development if these new rules were
    not issued timely by EPA or if they were subject to prolonged
    legal challenges. Section 112 would also require EPA to issue,
    within one year of enactment, new regulations under the Safe
    Drinking Water Act (SWDA) for permitting carbon dioxide
    geologic sequestration wells and to address financial
    responsibilities. It is not clear whether or how such
    regulations would affect proposed rules already issued by EPA
    on July 25, 2008, under the SDWA relating to underground
    injection of carbon dioxide for the purpose geologic
    sequestration. It is also not clear whether the bill intends
    that the new regulations impose financial responsibility
    requirements to cover risks to air, ecosystems or public health
    associated with CCS technology deployment, which are areas for
    which financial responsibility mechanisms may not be available.
    Further consideration should be given to whether the timelines
    under this section for issuing the regulations are realistic,
    and the section should be amended to more fully address the
    scope of the regulations to be issued by EPA relating to
    financial responsibility. Further, we believe this section
    creates overlapping and potentially conflicting regimes under
    the Clean Air Act and the SDWA.
        Section 114 seeks to facilitate CCS technology development
    by authorizing formation of an industry ``Carbon Storage
    Research Corporation.'' As currently drafted, the corporation
    would operate as an affiliate of the Electric Power Research
    Institute and would be authorized to make financial assessments
    on deliveries of fossil fuel-fired electricity to retail
    consumers in the amount of between $1 billion and $1.1 billion
    annually for 10 years. The corporation would be authorized to
    use those funds for competitively awarded grants, contracts and
    financial assistance to eligible entities to accelerate
    commercial deployment of CCS technologies. While the
    legislation seeks to support at least 5 commercial-scale
    demonstration projects, it is not clear that the projects to be
    funded would in fact advance the type of large-scale,
    integrated projects for capture and sequestration that would be
    needed for full-scale commercial deployment of CCS technologies
    necessary to meet the performance standards for new coal
    plants. The bill also does not address whether the corporation
    would be subject to any prior federal or state approvals before
    funds could be distributed and used. If the purpose was only to
    do demonstration projects, that is one matter, but we believe
    that Section 114 seeks to be the jumping off point for the
    future of coal. That being the case, its provisions assure that
    coal has a very bleak future.
        Section 115 would require EPA to establish a program to
    distribute emission allowances to support commercial deployment
    of CCS in electric generation and industrial operations. The
    Majority's June 2, 2009, bill summary indicates that the
    estimated value of the allowances allocated for investment in
    CCS technologies is $60 billion through 2025. While this
    section of the bill has been amended to provide certain
    eligibility criteria, this section is highly complex and would
    benefit from clarification and greater direction to EPA about
    how it should be implemented. As currently drafted this section
    contains a lengthy and complex set of provisions authorizing
    reverse auctions and/or the award of bonus allowances to the
    owners or operators of eligible projects, and delegates broad
    rulemaking and decision-making authority to EPA to administer
    the program. Given the complexity and importance of this
    section and the very significant amount of funds at issue,
    additional review and revision of these provisions is
    warranted. We are concerned that without these changes,
    potential fraud, mismanagement and arbitrary application will
    result.
        Finally, Section 116 would establish performance standards
    for new coal-fired power plants that would require a 50%
    reduction for units permitted between January 1, 2009, and
    January 1, 2020, and a 65% reduction for units permitted after
    January 1, 2020. The compliance date for plants permitted
    between 2009 and 2020 for meeting these standards would be not
    later than January 1, 2025, and potentially earlier in the
    event the EPA Administrator were to make certain determinations
    relating to CCS technology availability. The compliance date
    for new plants permitted after 2020 would be upon commencement
    of operations. As currently drafted, the 2025 compliance date
    for any plants that would be constructed during the next decade
    does not appear to be achievable given that the development,
    demonstration and deployment of such technologies present
    significant technical, regulatory, legal and other challenges.
    To the contrary, the Department of Energy (DOE) has advised
    that larger-scale (near commercial scale) CCS projects take
    upwards of 10+ years to complete, and may require more time
    because they are complex in terms of site selection,
    characterization, carbon dioxide injection and post-injection
    monitoring. This section needs to be written in a less
    aspirational and more realistic fashion.
        Given the many challenges associated with CCS technology
    deployment, including the technical and siting issues, the time
    required for necessary environmental reviews, the current lack
    of a comprehensive regulatory and statutory framework for CCS
    deployment, and the need to address with certainty both near-
    and long-term liability issues associated with stored carbon
    dioxide, the CCS provisions of the bill as currently drafted
    call into question whether under this legislation there is a
    serious desire to have any new coal plants built in the United
    States. If not, this would result in increased energy costs to
    American consumers and businesses, and significant adverse
    consequences for regions of the country that rely primarily on
    coal-based electricity.
    Sec. 141-143--Smart Grid Advancement
        Subtitle E on Smart Grid Advancement establishes numerous
    new rulemakings and bureaucratic processes, some of which are
    only tangentially related to smart grid advancement. In
    particular, Section 144 is unclear--it establishes a new
    process requiring unspecified reductions in peak electricity
    usage. It also refers to a ``National Electric Reliability
    Corporation'' which is undefined in the bill and does not
    exist; perhaps this is meant to reference the North American
    Electric Reliability Corporation, an organization whose purview
    extends beyond U.S. borders and is therefore not purely a
    national organization.
    Sec. 151-153--Transmission planning
        Section 151, the transmission planning section, sets up a
    three-year regional and national planning process. This
    provision may actually slow transmission development; existing
    transmission plans could be delayed in favor of waiting for the
    results of this new national plan. When the new plan is
    developed, there is no direction that anything be done with the
    plan other than a report to Congress. Given the massive
    redesign of the national electric system which this bill's
    carbon cap and renewable mandate would require, this bill
    should have included a transmission planning and siting
    proposal which would actually result in a more reliable
    electric system. Representative Joe Barton (R-TX) offered a
    substitute amendment which would have given the Federal Energy
    Regulatory Commission authority to site electric transmission
    comparable to the authority it now has over the natural gas
    pipeline network. This amendment was rejected by a vote of 19
    to 35.
        At the conclusion of Title I consideration, Rep. Roy Blunt
    (R-MO) offered an amendment to suspend the Waxman-Markey bill
    in the event of a 10 percent or greater increase above 2009
    electric rates in retail residential electricity prices in one
    or more Census Divisions in the United States, but that
    amendment was defeated by a partisan vote. Rep. Fred Upton (R-
    MI) also offered four amendments to protect against residential
    electricity account arrearages but those amendments were also
    defeated along partisan lines.

                                    TITLE II

    Sec. 201--Greater energy efficiency in building codes
        Upon the date of enactment of this bill, a 30 percent
    increase in building efficiency is required. Effective January
    1, 2014, for residential buildings and January 1, 2015, for
    commercial buildings, an additional 50 percent increased
    efficiency is required. Subsequent three-year targets of
    additional five percent increases in efficiency are mandated
    through January 2030. These targets and deadlines were
    established with no concern for cost and with no assessment of
    feasibility. Moreover, section 201 requires each state to adopt
    the national energy efficiency building code. Failure by the
    states to adopt the code results in the federal government
    taking over code enforcement, effectively enforcing legislation
    never enacted by the state. In addition, the federal government
    would be empowered to assess civil penalties for failure to
    adopt and enforce the national code. This mandate raises
    potential constitutional questions under the Tenth Amendment,
    where powers not expressly granted to the federal government in
    the Constitution--like zoning and building codes--are reserved
    to the states and local governments.
        Furthermore, Congress's traditional constitutional
    authority to regulate industry under the Commerce Clause does
    not extend to housing, raising additional questions about the
    constitutionality of provisions of this section. Section 201 is
    fraught with Constitutional implications, and this section 201
    was preserved by the Majority who almost unanimously voted
    against the amendment offered by Representative Steve Scalise
    (R-LA) to strike this troubling section.
    Sec. 204--Building energy performance labeling program
        Real property, by legal designation, is unique. A labeling
    system of homes and buildings could never begin to incorporate
    all of the variable, preferences, and elements that make
    residential and commercial buildings distinct and attractive to
    potential purchasers. The energy profile of a home varies
    dramatically from one to the next depending on a range of
    variables for which a government agency cannot account to any
    degree of scientific precision when formulating the labeling
    system. For example, orientation of the home on its lot, number
    of shade trees surrounding the home, local climate, number of
    occupants in the home, decision of residents to use or not use
    the air conditioning and heat. Moreover, the other values of
    the home cannot be quantified in a labeling system. For
    example, historical character, safety features, and original
    fixtures. A ``one-size-fits-all'' numerical rating for
    something as diverse as housing could only serve to mislead
    consumers and distort the housing market.
        By supporting a labeling system--and voting against the
    amendment offered by Mr. Cliff Stearns (R-FL) to remove Section
    204 of the bill--the majority stigmatizes existing housing
    stock while providing no guidance and no incentives for
    upgrading the home.
    Sec. 211--Lighting efficiency standards
        Section 211 adopts consensus standards for portable
    lighting fixtures that would take effect in 2012. In
    particular, this section of the bill adopts California's
    portable lighting fixture standard as the national standard.
    The rationale is that manufacturers of lamps cannot compete
    with two sets of standards, i.e., California's and the rest of
    the country.
        This section would also require the Department of Energy
    (DOE) to publish amended standards in 2014 to take effect in
    2016, or to determine if no new standards are needed. The
    section also provides that if California adopts any new
    regulations concerning portable lighting fixtures prior to
    2014, federal preemption would not apply. As currently drafted,
    these provisions would create the potential again for two
    competing standards in 2014.
        Section 211 should be amended to delete the provisions
    requiring DOE to set new standards in 2014 and the provisions
    exempting California from federal preemption. Such an amendment
    would eliminate the possibility of conflicting California and
    federal standards for portable lighting fixtures, provide
    certainty for manufacturers and avoid undue additional costs
    for consumers.

    Sec. 213--Appliance efficiency standards

        The hit-and-miss approach to appliance efficiency standards
    taken when drafting this section is baffling at best. Despite
    nary a hearing to address specific appliance efficiency
    improvements, the majority has decided to hop into American hot
    tubs, literally. This section mandates efficiency improvements
    in portable electric spas, hot food cabinets, and water
    dispensers to name a few selected items. Three amendments were
    offered en bloc by Representative George Radanovich (R-CA) that
    would have prevented the federal government's intrusion and
    imposition of regulations on portable electric spas, hot food
    cabinets, and water dispensers. Restricting the production of
    these goods will damage more than just these industries. These
    regulations will hinder consumer choice, raise prices, and
    expand federal government regulation into more aspects of daily
    life.

                                   TITLE III

        Title III of this act seeks to reduce the quantity of
    United States greenhouse gas emissions without regard to costs
    to households, businesses, and industry; without regard to the
    availability of the necessary technology to maintain clean,
    inexpensive energy; without regard to effectiveness towards
    reducing global emissions; and without regard to whether the
    provisions will impede the economic growth of the United States
    and the future economic welfare of its citizens.
        There is no safety valve or exit ramp. If household energy
    costs increase by hundreds of dollars or regions lose thousands
    of jobs because of this legislation, there are no provisions to
    rescind the scheme. If carbon capture and sequestration
    technology for the use of clean and abundant coal-fired
    electricity has not become widely available and fully
    deployable, there are no provisions to rescind the scheme's
    effective ban on new coal generation. There is no way out. If
    enacted into law, this legislation--especially as outlined in
    this title--is designed to raise the price of energy on
    American consumers, businesses, and industry. Raising energy
    costs is the only way this legislation can force the reduction
    of greenhouse emissions from the inexpensive, abundant, and
    reliable fossil energy Americans use to live and work. Any
    provisions to shield consumers from costs, merely rearrange the
    costs among regions or income classes, and have no effect on
    the overall impact on the American economy. At the same time,
    the increased energy costs will place the United States at a
    competitive disadvantage to many developing nations, losing
    jobs and economic opportunity overseas, as has been amply
    discussed before the Committee in expert and industry testimony
    during legislative hearings.
        During the Committee markup, Republicans offered numerous
    amendments to suspend the cap-and-trade provisions of the bill,
    should it increase electricity prices to certain levels or
    should job losses, such as in the steel, coal, or automotive
    industry, reach certain levels. All such amendments were
    defeated.

    Sec. 311--Global warming provisions

        Section 311 outlines the schedule for greenhouse emissions
    cuts, and establishes three primary programs for reducing
    greenhouse gases: the cap on large domestic sources, the
    program to reduce tropical deforestation, and the offset
    program. Despite the substantially higher energy costs, it is
    highly questionable whether the emissions reduction programs
    will make enough impact on global greenhouse emissions to
    justify the costs.
        First, it is not established that emissions reductions in
    the United States will have any meaningful impact on global
    emissions. There are no provisions in the legislation to
    require comparable international participation in an emissions
    reduction scheme. Republicans, led by Representative Mike
    Rogers (R-MI), offered an amendment that would require such
    action before the U.S. scheme took effect. The amendment was
    defeated by a party-line vote of 23-36.
        International participation is essential if the goals are
    to reduce global emissions and stabilize levels in the
    atmosphere. Global participation is also essential to ensure
    the international community does not take strategic and
    competitive advantage of higher U.S. energy costs.
        The bill currently does not require binding action from the
    largest and fastest growing greenhouse gas emitters, such as
    China and India, or the fast growing developing world, which at
    present emit more greenhouse gases than the developed world
    combined, according to the Energy Information Administration's
    International Energy Outlook (2009). At the current pace, the
    United States could cut its current energy-related emissions to
    zero, and by 2030 annual global energy-related carbon emissions
    are still projected to be nearly seven billion metric tons more
    than 2005--equivalent to a doubling of all of North America's
    current emissions in 20 years.
        In the meantime, all evidence from the developing world
    indicates no interest in submitting to equivalent binding
    emissions reductions to those required in this legislation. In
    point of fact, India and China have repeatedly and publicly
    stated no interest in binding emissions caps or emissions
    rationing.
        The United States cannot, moreover, assess with any
    reliability the amount of greenhouse gases these nations emit.
    The emissions data China and India submitted in 2004 to the
    United Nations, pursuant to the 1992 United Nations Framework
    Convention on Climate Change, were estimates for 1994
    emissions, and have yet to be updated. Indeed, the most recent
    emissions data reported by most large developing countries are
    now 12 years older than what the United States and other
    developed countries have reported. Moreover, as a bloc, the
    developing countries, including China, Brazil, and India,
    refuse to bring reporting regimes into closer accordance with
    the developed countries.
        These facts form part of the international backdrop against
    which this legislation should be assessed. Not only would this
    cap-and-trade scheme be an ineffective policy if developing
    nations do not reduce emissions, it would weaken U.S. economic
    competitiveness. During legislative hearings, witnesses could
    provide no credible evidence that foreign nations would avoid
    taking economic advantage of reduced U.S. competitiveness. The
    United States, if this legislation is enacted, would
    unilaterally surrender competitiveness with no reliable
    assurance that it can turn back if the international community
    fails to take comparable action.
        Second, emission reduction goals are not based on any
    clearly defined, realistic, or evidentiary foundation relating
    to impacts on world global emissions--or temperature. Indeed
    the only potential factual reference we find for the target of
    an 80% reduction of emissions from 2005 levels is in the
    Majority's report on this bill. This report references a
    handful of the most stringent emissions ``stabilization
    scenarios'' examined by the Intergovernmental Panel on Climate
    Change (IPCC)--the so-called Category I scenarios, composed of
    the six most extreme of some 177 model runs organized into
    seven categories (see the Intergovernmental Panel on Climate
    Change, Climate Change 2007: Mitigation of Climate Change,
    Table TS.2). These Category I scenarios require global
    emissions to have peaked and begun declining between the years
    2000 and 2015. The reality that global emissions have been
    accelerating over most of this time period, and are projected
    to continue to increase for the next 30 years, calls into
    serious question the validity of these targets and their use as
    a realistic goal in this legislation. Taken literally, there
    are implausibly only a few years for proponents of this
    legislation to convince China, India and the rest of the
    developing world to adopt binding emissions caps and commence
    immediate emissions reductions to comport with these targets.
    The IPCC also reports these scenarios depend on current
    technology ``readiness'' of carbon capture and sequestration
    and other undeveloped technologies along with ``simultaneous
    emissions mitigation in developing countries''--factors plainly
    at odds with current reality. We should add that such
    information about the scenarios or emissions targets was not
    examined in any hearing relating to this legislation.
        Third, section 311 is premised on some critical findings
    that minimize the key uncertainties and facts about the Earth's
    climate. For example, the legislation does not define global
    warming, although the text suggests global warming is solely
    the result of man-made, or anthropogenic, emissions and that
    any effects of global warming on climate therefore must be
    traced to these man-made emissions. This construct ignores the
    scientific consensus understanding that global warming is first
    and foremost a natural phenomenon and that climate change is
    not solely or necessarily the result of man-made emissions.
    Reports by the National Academies and the IPCC make clear that
    climate change represents the natural long-term fluctuation in
    regional temperature and weather patterns. It is equally clear
    that, over millennia, natural climate change has occurred and
    has threatened public health and welfare and necessitated
    constant human innovation and adaptation. Hearings before the
    Subcommittee on Energy and the Environment in the 111th and
    110th Congresses provided testimony to these facts.
        Reviews of scientific studies, including by the IPCC and
    the National Academies, and testimony before the Committee
    suggest that combined anthropogenic greenhouse gas emissions
    may contribute to a long-term global warming trend. This has
    also been reported at Committee hearings. However, testimony
    has indicated that scientists cannot quantify how much
    anthropogenic greenhouse gases may be effecting the natural
    global temperature change and how much that may be effecting
    climate change impacts, especially in the future. The IPCC
    consensus document states that ``the complexity of the climate
    system and the multiple interactions that determine its
    behaviour impose limitations on our ability to understand fully
    the future course of Earth's global climate.''
        Given this complexity and uncertainty about man's
    contribution to global warming and climate change, we recognize
    that prudent policy calls for taking cost-effective measures to
    reduce greenhouse gas emissions, but this must be done while
    ensuring continued United States economic growth, innovation,
    and industrial strength. Unfortunately, the provisions setting
    forth emissions reduction targets fail to acknowledge the
    scientific uncertainty or the economic risks. The schedule of
    reductions cannot be linked to any measure of effectiveness.
    The related reviews required by EPA and the National Academies
    do not provide any clear mechanisms for rescinding the
    reduction targets if they prove ineffective or too costly to
    the American public.
        The costs of this legislation are too high to impose such
    emissions targets without sufficient factual or practical
    foundation.

    Sec. 311--Reducing global warming pollution

        With regard to offsets, Section 311 provides for the use of
    a combination of domestic and international offsets that
    covered entities can purchase to meet emissions obligations. If
    not enough domestic offsets are available, up to three-quarters
    of offsets used for compliance may come from developing
    nations. Reliance on international offsets is controversial on
    effectiveness and cost-control grounds.
        There are outstanding and difficult challenges concerning
    the integrity of offset markets, according to two 2008
    evaluations by the Government Accountability Office (GAO).
    There is inherent uncertainty in certifying reductions of
    emissions that have not occurred. There are related challenges
    in measuring and validating the reductions to some acceptable
    standard, domestically and, especially, internationally. The
    GAO concluded that ``the use of carbon offsets in a cap and
    trade program can undermine the system's integrity, given that
    it is not possible to ensure that every credit represents real,
    measurable, and long-term reductions in emissions.'' (Emphasis
    added.)
        The larger the number, range, and geographic scope of
    offset projects allowed into the regulatory scheme, the more
    integrity of emissions reductions becomes an issue. Available
    evidence, as provided by GAO and other witnesses before the
    Subcommittee on Energy and the Environment, shows offset
    markets have not worked as cost-effectively as promised. The
    existing international offset program administered by the
    United Nations in particular has proved susceptible to abuse.
        Analysis provided during climate policy hearings before the
    Committee revealed that the existing international system fails
    as a market because it has animated accounting tricks that
    allow participants to manufacture offset credits at little or
    no cost. The system has also promoted substantial strategic
    behavior on the part of developing nations aimed at
    manipulating baselines in order to increase the number of
    offsets created. And, as participation in the energy sectors of
    developing countries has expanded, the regulatory challenge to
    determine whether these projects' emissions reductions are
    ``additional'' to what would have happened in the absence of
    the international offsets subsidy has increased. Meanwhile, the
    program has failed as a subsidy because the developed world has
    had to purchase the offsets emissions reductions at an
    extremely high premium--10 to 100 times the cost of most of the
    emissions reductions.
        Against this record, there is no assurance international
    abuse can be avoided with additional EPA or other regulatory
    oversight. While provisions provide for EPA determination as to
    the quality and additionality of domestic or international
    offsets, the bill continues to allow the EPA to modify or omit
    integrity requirements ``if not feasible.'' Further, while the
    EPA is directed to conduct random audits of offsets projects,
    it is not evident how the Administrator could successfully
    conduct random audits of international offsets. What agreements
    with China and other nations are there to allow audits of
    offsets projects by U.S. officials? Given the experience and
    evidence collected by the Committee with regard to
    international inspections of food and drug products imported
    into the United States, there is little assurance offset audits
    in China or the developing world can be any more frequent or
    reliable.
        Any such offset subsidies from U.S. covered entities will
    effectively represent a substantial wealth transfer to the
    developing world. The EPA, in its own analysis, notes that the
    availability of offsets drastically affects the cost of
    compliance with the cap-and-trade program. In its analysis, EPA
    wrote that without international offsets the allowance price
    would increase 96 percent. Absent the availability of
    international offsets, or severe restriction because of strict
    EPA regulation and international competition for the projects,
    the costs imposed on Americans by the cap-and-trade scheme
    outlined in this legislation will be substantially higher than
    proponents advertise.
        Section 311 also creates a mechanism to use allowances and
    auction revenues to support a complicated and untested
    international program to prevent tropical deforestation. This
    untested program presents reliability questions similar to
    those created by reliance on international offsets. Integrity
    issues aside, this provision, if enacted, effectively involves
    transferring energy tax funds generated domestically to
    developing countries. Whatever the merits or weaknesses of this
    program, the transfer of funds internationally effectively
    reduces what is available for domestic relief from higher
    energy prices.
        Finally, accounting for the risk that offsets or the
    tropical forest program do not effectively reduce international
    emissions and the cost-benefit of these mechanisms for global
    emissions reduction is called further into question. It is upon
    such questionable foundation that the legislation provides for
    the transfer of tens of billions of dollars to international
    projects (and jobs) that we believe could be more effectively
    spent providing jobs in the United States.

    Sec. 321--Disposition of allowances

        Section 321 provides details on the distribution of free
    allowances and auction revenues to utilities and other affected
    sectors. As it was with the Emissions Trading Scheme in Europe,
    special corporate interest support for caps and emissions
    rationing was not possible without ensuring valuable allowances
    were allotted to these groups. The ostensible purpose of
    distributing free allowances is to reduce job losses and
    prevent increases in consumer (commercial and residential)
    electricity and heating bills. Despite such goals, the funds
    are not necessarily distributed directly to consumers. For
    example, with regard to natural gas consumer allowances, the
    states will actually administer half the funds for natural gas
    energy efficiency programs rather than provide for relief on
    utility bills. The section does not protect consumers from
    higher energy costs. It is the higher costs that drive the cuts
    in CO2.
        All of the targeted spending of the allowances induces
    additional inefficiencies to the program that will raise its
    costs on the economy. Giving allowances to the chosen few just
    redistributes the economic pain to others. Moreover, every
    dollar of allowances given to one group is a dollar's worth
    that cannot be used for cutting taxes or reducing the deficit.
    According to the Congressional Budget Office, under both
    Directors Orszag and Elmendorf, even if all the allowances are
    allocations given away to industry and affected sectors, the
    cap-and-trade scheme will still lead to price increases.

    Sec. 331--Greenhouse gas standards

        Representative Marsha Blackburn (R-TN) offered an amendment
    that would establish that carbon dioxide, water vapor, and
    other greenhouse gases are not air pollutants under the Clean
    Air Act. This amendment would have prevented the Environmental
    Protection Agency from imposing intrusive regulations into all
    aspects of American lives. Throughout the mark-up and the
    series of hearings preceding the legislation's passage, Members
    warned that if Congress does not act on this issue, the EPA
    would. The Blackburn amendment acknowledged this risk and would
    have prevented EPA action without forcing Congress's hand
    before the issues were properly explored and consensus was
    established. The Blackburn amendment would have taken the EPA
    variable out of the equation and would have allowed Congress to
    explore the topic fully, with additional hearings and plenty of
    time for regular order, including a Subcommittee mark-up. This
    amendment failed along strict partisan lines.

    Sec. 335--State programs

        As written, this bill allows states and localities to
    enforce their own regulations of greenhouse gases covered by
    the cap after 2017. Until 2012, and beginning again in 2018,
    states could enforce their own greenhouse gas emissions cap-
    and-trade programs in addition to the federal cap-and-trade
    program established under the Waxman-Markey bill. One major
    premise touted by the Majority is that the complex cap-and-
    trade scheme will provide industry and capital markets with
    certainty to invest in the green technologies of the future,
    the power sector, affected industries, or new clean
    technologies for coal or the oil industry. This certainty is
    compromised without a permanent preemption of state and local
    regulation of greenhouse gas emissions. This section should be
    amended to preempt states from implementing or enforcing their
    own cap-and-trade programs. This would avoid potentially
    duplicative, conflicting and inconsistent state and federal
    regulatory regimes that would impose additional costs,
    regulations and burdens on U.S. consumers and businesses.

    Sec. 336--Enforcement

        Section 336 addresses enforcement relating to Title III of
    the bill. While the current version of the bill has eliminated
    the ``Citizens Suits'' provisions that were offered in the
    original discussion draft of the bill, under the current
    version of the bill, subject to certain limitations any person
    could still seek to bring a civil action against any other
    person for violation of the new greenhouse gas emission
    standards under Title III of the bill. In particular, under
    Section 304 of the Clean Air Act as amended elsewhere by the
    bill, plaintiffs could bring citizen suits to enforce the new
    greenhouse gas emissions standards.
        This section should be amended to add a new paragraph
    focusing any citizen suits to enforce any of the provisions of
    Title III of the bill only on the EPA Administrator. If citizen
    suits are allowed to go forward against any person, it is
    likely that there would be a substantial amount of new climate
    change litigation brought against companies throughout the
    United States in all of the sectors of the economy regulated by
    the bill. While a windfall to lawyers, such litigation would
    impose significant costs and burdens on those companies in
    addition to the already enormous direct and indirect costs
    imposed by the bill. An amendment to limit citizen suits would
    prevent excessive or unwarranted litigation and protect U.S.
    companies and ultimately U.S. jobs and consumers.

    Subtitle D--Carbon market assurance

        The bill provides for the establishment of a regulated
    allowance market where market participants will engage in the
    trading of regulated allowances and regulated allowance
    derivatives. While the bill does provide a certain level of
    market protection comparable to the CFTC regulatory regime in
    the futures market, the bill does not ban speculators from
    participation in this market. Therefore, hedge funds,
    proprietary trading desks and sovereign wealth funds will be
    able to play the market and thus impact the price of carbon.
    Representative Steve Scalise (R-LA) introduced an amendment
    that would have limited participation in the market to covered
    entities, but the amendment was defeated by a vote of 20-32.
        During the summer of 2008, Congress was exploring the link
    between speculation and the increase in food and gas prices.
    Speculation can lead to price volatility and ultimately higher
    prices in the traded contract, which will lead to higher energy
    costs for the average American ratepayer in this new market.

    Sec. 355--Limitation on eligibility to purchase a credit default swap

        In general, it is important to note that this bill delves
    into the derivatives market in a far-reaching way, including by
    banning naked credit default swaps. The derivatives market does
    need regulatory reform, but such reforms should take place
    after extensive hearings within the Committee. Much of this
    language was added only to the Amendment in the Nature of a
    Substitute, and therefore there was not sufficient time for
    review and analysis, not to mention no opportunity for a
    hearing on this topic.

                                    TITLE IV

        By subjecting domestic employers to a costly regulatory
    system, the bill places American jobs at a double disadvantage:
    competitive disadvantage vis-a-vis their foreign competitors
    and pressure to move jobs overseas to countries that do not
    unilaterally disadvantage manufacturing or other energy
    intensive activities.
        Section 401 amends section 762 of the Clean Air Act and
    states: ``Congress finds that the purposes of this part, as set
    forth in section 761, can be most effectively addressed and
    achieved through agreements negotiated between the United
    States and foreign countries.'' Instead of rushing this bill
    through Committee mark-up, including by skipping the
    subcommittee mark-up, international negotiations should have
    taken place prior to this legislation being implemented. This
    would ensure that unilateral actions taken by the United States
    would not be negated by emissions from India and China.
        Section 425 and section 426 of the bill address climate
    change worker adjustment assistance. A far better alternative
    to addressing the job losses that will inevitably be caused by
    the enactment of this bill was proposed by several Republican
    amendments.
        Representative Fred Upton (R-MI) introduced an amendment to
    protect domestic employment that would have required the
    Administrator of the EPA, in consultation with the Secretary of
    Labor, to prepare an annual report to Congress on the average
    national unemployment rate, and if the unemployment rate for
    the prior year surpassed 15% as a result of implementation of
    the 13 bill, then the bill shall sunset. The amendment was
    defeated by a vote of 21-34. Representative Tim Murphy (R-PA)
    introduced an amendment to protect the U.S. steel industry that
    would have required the Administrator of the EPA, in
    consultation with the Secretary of Labor, to prepare an annual
    report to Congress setting forth the number of domestic jobs
    that been lost in the U.S. steel industry as a result of
    implementation of the bill, and the bill shall sunset if the
    total number of job losses in the steel industry exceeded
    10,000. The amendment was defeated by a vote of 20-35.
    Representative Mike Rogers (R-MI) offered three separate
    amendments that would have required the Administrator of the
    EPA, in consultation with the Secretary of Labor, to prepare an
    annual report to Congress on the number of domestic jobs in the
    auto parts, auto and transportation manufacturing industries,
    and the bill shall sunset if there were any job losses in each
    of these industries as a result of the implementation of the
    bill. This series of amendments offered en bloc was defeated by
    a vote of 22-32. Representative John Shimkus (R-IL) introduced
    an amendment that would sunset the bill if two or more coal
    mines were to close as a result of this bill. The amendment was
    defeated by a vote of 22-34. Representative George Radanovich
    (R-CA) introduced an amendment that would sunset the bill if
    the EPA Administrator determined that 43,846 or more jobs were
    lost in the agriculture industry in the United States in the
    prior year due to implementation of the bill. The amendment was
    defeated by a vote of 22-36.

                                       Joe Barton.
                                       Fred Upton.
                                       Cliff Stearns.
                                       Nathan Deal.
                                       George Radanovich.
                                       Greg Walden.
                                       Roy Blunt.
                                       Ralph M. Hall.
                                       Ed Whitfield.
                                       John Shimkus.
                                       Steve Buyer.
                                       Joseph R. Pitts.
                                       Lee Terry.
                                       Tim Murphy.
                                       Sue Wilkins Myrick.
                                       Michael Burgess.
                                       Marsha Blackburn.
                                       Phil Gingrey.
                                       Steve Scalise.

                                ADDITIONAL VIEWS

        When the Energy and Commerce Committee began crafting a
    comprehensive energy and climate change bill, I expected that
    it would include an Open Fuel Standard. Such a standard would
    require new cars manufactured or sold in the United States to
    be flex fuel vehicles capable of burning any combination of
    gasoline, ethanol, or methanol. Although this bill moves a
    small step in that direction, it does not go nearly far enough.
    I am appalled by opposition from the auto industry and its
    allies to any real flex fuel standard. I am especially
    disappointed that while all kinds of compromises were made with
    anti-environmental energy industries, no real compromises on
    flex fuel cars could be made. I consider this a missed
    opportunity.
        Above all else, I believe that our energy policy must break
    our addiction to foreign oil. Our national security and our
    economy depend on it, as the world currently runs on a resource
    controlled by our enemies. We exacerbate our nation's economic
    woes by exporting hundreds of billions of dollars every year to
    purchase foreign oil. That money in turn finances people who
    plot ways to cause us harm.
        These economic and national security problems are enabled
    by the simple fact that oil provides more than 96% of the fuel
    for our cars and trucks. For nearly every American, there is no
    substitute for oil.
        Unfortunately, unless we act now, the problem will continue
    to worsen. Demand for oil continues to rise across the globe,
    led by the rapid industrialization of China and India, while
    production can not keep up.
        The President announced a new national policy two weeks
    ago, which would increase fuel economy and reduce greenhouse
    gas pollution for all new cars and trucks sold in the United
    States. This proposal would come with an average additional
    cost of $1,300 per vehicle. The new CAFE standards, which cover
    model years 2012-2016, and ultimately require an average fuel
    economy standard of 35.5 mpg in 2016, are projected to save 1.8
    billion barrels of oil over the life of the program. This would
    surpass the CAFE law passed by Congress in 2007 requiring an
    average fuel economy of 35 mpg in 2020.
        This is a step in the right direction. However, as a method
    of achieving energy independence, an increase in CAFE standards
    is only a small step because cars still run on oil. They run on
    less oil, but they still run on oil.
        I believe the solution is to introduce fuel choice and
    competition into the market. We can accomplish this by passing
    a law making new cars manufactured or sold in the United States
    flex fuel vehicles capable of burning any combination of
    gasoline, ethanol, or methanol. Flex fuel vehicles cost only
    about $90--$100 more than the same car in a gasoline-only
    version. It is a simple and inexpensive modification that
    should be standard in cars, like seatbelts or airbags.
        The largest producers of both ethanol and methanol are all
    in the Western Hemisphere, and the United States has by far the
    greatest production potential for both. Ethanol is made from
    agricultural products. Methanol can also be made from biomass,
    as well as from natural gas or coal.
        Brazil has already achieved energy independence. Three
    decades ago, Brazil imported 80 percent of its oil supply.
    Today, after investments in their sugar-based ethanol industry,
    and an influx of flex-fuel cars that began in 2003, Brazil has
    achieved energy independence and is largely insulated from
    fluctuations in global oil prices.
        The bipartisan call for implementation of flex fuel
    technology here in the United States is growing. President
    Obama announced during his campaign that he seeks to ensure
    that ``all new vehicles are flexible fuel vehicles . . . by the
    end of his first term in office.'' The Obama-Biden New Energy
    for America Plan, at p. 5. Former House Speaker Newt Gingrich
    joined the call in an April 2009 article in Newsweek, writing
    ``[w]e should . . . pass an open-fuel standard for 95 percent
    of the new cars sold in the United States, allowing the
    construction of flex-fuel vehicles that can run on a variety of
    fuels, including ethanol.'' Newt Gingrich, Our Tanks Are On
    Full, Newsweek (Apr. 13, 2009). Energy Secretary Steven Chu
    expressed his support for flex fuel vehicles to the New
    Democratic Coalition on May 16, 2009, and confirmed his support
    to me in a private conversation later that same day.
        Just six months ago, the CEOs of General Motors, Chrysler,
    and Ford appeared before the Senate Banking Committee and the
    House Financial Services Committee, and each committed to my
    colleagues and to the American people that they would make 50%
    of their cars flex-fuel vehicles by 2012.
               General Motors Corporation--``In 2012, over
            50% of GMs new vehicle sales will be flex-fuel
            capable.'' General Motors Corporation Restructuring
            Plan for Long-Term Viability, Submitted to Senate
            Banking Committee & House of Representatives Financial
            Services Committee, at p. 22 (Dec. 2, 2008).
               Chrysler LLC--``[Chrysler] is on target to
            meet our commitment of 50% of our fleet being flex fuel
            capable by 2012.'' Chrysler's Plan for Short-Term and
            Long-Term Viability, Submitted to the United States
            Senate Committee on Banking, Housing, and Urban
            Affairs, at p. 7 (Dec. 2, 2008).
               Ford Motor Company--``Ford has committed to
            doubling the production of flexible fuel vehicles by
            2010 and to producing 50% of our products capable of
            running on E85 by 2012.'' Ford Motor Company Business
            Plan, Submitted to the Senate Banking Committee, at pp.
            14, 29 (Dec. 2, 2008).
        However, the Detroit Three no longer wants to honor their
    commitment. So, I introduced the Open Fuel Standard Act with
    three of my colleagues--Reps. Bob Inglis (R-SC), Steve Israel
    (D-NY), and Roscoe Bartlett (R-MD)--to require the automakers
    to honor their flex fuel promise to the American people.
        Instead of supporting our legislation, the auto industry is
    vigorously opposing it. Instead of choosing to innovate and
    benefit both American consumers and the U.S. auto industry in
    the long-term, the auto industry would rather resist change and
    continue to follow its failed business plan in the short-term.
        This is precisely the type of misguided thinking that led
    to the deterioration of the U.S. auto industry. Chrysler and
    General Motors have become the first large American car
    companies to declare bankruptcy since Studebaker in 1933. Now
    the American people are picking up the pieces they left behind.
        Despite promises from just six months ago, the automakers
    now argue that they should not be required to produce flex fuel
    cars because there are not enough advanced fuels available to
    run them. The problem with this argument is that it puts the
    nation in a Catch-22. The automakers will not make the cars
    until there is sufficient alternative fuel available to run
    them, but industry has no incentive to produce the alternative
    fuel until there are sufficient numbers of cars available to
    use it. In essence, the automakers are presenting the illusion
    of choice while preventing any real choice at all.
        The Open Fuel Standard would require a simple $90 or $100
    modification to vehicles. That's far less the $1,300 increase
    in CAFE standards that the President just set forth, and could
    be instrumental in breaking our dependence on foreign oil.
        The world is changing, and it's time for the auto industry
    to change with it. Now is the time for bold action and the auto
    industry must not be content by giving us more of the same.
    Simply doing the same thing will yield the same results:
    increasing prices and a greater reliance on OPEC.
        I am disappointed that the opposition to energy
    independence has been so fierce. I believe it is past time to
    break our addiction to foreign oil. The American Clean Energy
    and Security Act is a good start, and I will work every step of
    the way to strengthen it as it moves toward becoming law.
                                                        Eliot L. Engel.