[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 ``20F'' and inserting ``-20F''.
  (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).
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                         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 [20F] -20F 
        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.

                                  
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