[Senate Report 111-121]
[From the U.S. Government Publishing Office]
111th Congress
2d Session SENATE Report
111-121
_______________________________________________________________________
Calendar No. 267
CLEAN ENERGY JOBS AND AMERICAN POWER ACT
__________
R E P O R T
of the
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
to accompany
S. 1733
together with
ADDITIONAL AND MINORITY VIEWS
February 2, 2010.--Ordered to be printed
CLEAN ENERGY JOBS AND AMERICAN POWER ACT
Calendar No. 267
111th Congress Report
SENATE
2d Session 111-121
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CLEAN ENERGY JOBS AND AMERICAN POWER ACT
_______
February 2, 2010.--Ordered to be printed
_______
Mrs. Boxer, from the Committee on Environment and Public Works,
submitted the following
R E P O R T
[To accompany S. 1733]
together with
ADDITIONAL AND MINORITY VIEWS
[Including cost estimate of the Congressional Budget Office]
The Committee on Environment and Public Works, to which was
referred a bill (S. 1733) to create clean energy jobs, promote
energy independence, reduce global warming pollution, and
transition to a clean energy economy, having considered the
same, reports favorably with an amendment thereon and
recommends that the bill, as amended, do pass.
Introduction and Purposes
The Clean Energy Jobs and American Power Act was introduced
by Senator Kerry, Chairman of the Committee on Foreign
Relations, and co-sponsored by Senator Boxer, Chairman of the
Committee on Environment and Public Works, on September 30,
2009. The bill was referred to the Committee, considered at a
markup by the Committee held on November 3-5, 2009, and ordered
favorably reported.
The Act's primary purposes are to: maintain American global
economic leadership and create clean energy jobs; achieve
energy independence; support reliance on a wide variety of
energy sources, as well as energy efficiency; promote national
security; reduce global warming pollution; and establish a
framework for a new clean energy economy.
Background and Need for Legislation
MAINTAINING GLOBAL ECONOMIC LEADERSHIP AND CREATING CLEAN ENERGY JOBS
Clean energy is the global economic opportunity of the 21st
century.
Venture capitalists and governments alike are increasingly
recognizing the promise of clean energy. The global clean
energy market is estimated to reach $500 billion a year by
2020, 2\1/2\ times the current global PC market of $200
billion.
Clean energy is a prominent and growing piece of the $6
trillion world energy market. Today there are 4 billion
consumers of electricity; that number is expected to increase
quickly, doubling global energy use over the next 25 years. The
President's Economic Recovery Advisory Board concluded that
clean energy ``is perhaps the largest economic opportunity of
the 21st century.'' And `first actors'--the companies and
countries who invest early in the clean energy economy--will
benefit as more nations commit to clean energy goals and fuel
the clean energy marketplace.\1\
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\1\The Climate Group, ``Cutting the Cost,'' September 2009.
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According to the International Energy Agency, more than $26
trillion will be invested worldwide in energy infrastructure in
the next two decades.\2\ This is ``the next great global
industry'' according to John Doerr, head of one the leading
U.S. venture capital firms.\3\ As the CEO of GE Energy
testified: ``The U.S. can stand by and watch other countries
take the leadership role in these technologies, and accrue the
economic benefits that go with it, or act swiftly to ensure
that there is a large domestic industry for the best
technologies.''\4\
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\2\International Energy Agency, World Energy Outlook 2008 at 5
(2008).
\3\Testimony of John Doerr before Senate Committee on Environment &
Public Works, ``Investing in Green Technology as a Strategy for
Economic Recovery,'' January 7, 2009.
\4\Testimony of John Krenicki before Senate Committee on
Environment & Public Works hearing, ``Ensuring & Enhancing U.S.
Competitiveness while Moving toward a Clean Energy Economy.'' July 16,
2009.
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Today, the U.S. has an opportunity to solidify its
leadership role in the race to deliver clean energy to the
global market, but other nations are moving quickly to seize
these opportunities as well. Although many clean energy
technologies were developed in the U.S., other countries--
including Germany, Spain, and China--have jumped out ahead on
deployment and are rapidly increasing their market share. For
instance, in 2001, the U.S. held 28 percent of the world's
solar manufacturing market, and China had just 1 percent. By
2008, China's market share had grown to 29 percent, while
America's had dropped to 6 percent.\5\
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\5\Environmental Defense Fund citing PV News April 2009.
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As of mid-2009, just 2 of the top 10 solar photovoltaic
manufacturers, 1 of the top 10 wind turbine manufacturers and 1
of the top 10 advanced battery manufacturers were American.\6\
As Mr. Doerr noted: ``If you list today's top 30 companies in
solar, wind, and advanced batteries, American companies hold
only 6 spots. That fact should worry us all.''\7\ He added
that: ``current policies are the principal obstacle to creating
even more new jobs in the next great industry, clean
technology.''\8\
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\6\Lazard, 7/10/09
\7\January 7, 2009.
\8\Testimony of John Doerr before Senate Committee on Environment &
Public Works, ``Ensuring and Enhancing U.S. Competitiveness while
Moving toward a Clean Energy Economy,'' July 16, 2009.
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Comprehensive clean energy legislation is one of the keys
to ensuring that U.S. companies can take advantage of the
opportunities in the global clean energy marketplace today. The
bill provides a comprehensive framework that will stimulate the
large scale investments needed for low- and zero-carbon sources
of energy and energy efficiency.
These investments are expected to create millions of new
jobs. Between 1998 and 2007, clean industry jobs grew at a rate
of 9 percent, far faster than the economy as a whole.\9\ Two of
the most thorough analyses of the economic benefits from
investing in a clean energy economy have projected major new
job growth, on the order of 1.7-1.9 million net new jobs
created.\10,\\11\
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\9\Pew Charitable Trusts, The Clean Energy Economy, 8 (June 2009).
\10\Political Economy Research Institute/University of
Massachusetts, Amherst; ``The Economic Benefits of Investing in Clean
Energy,'' June 2009.
\11\University of California at Berkeley, Clean Energy and Climate
Policy for U.S. Growth and Job Creation, Oct. 25, 2009. Can be accessed
at: http://are.berkeley.edu/dwrh/CERES_Web/Docs/ES_DRHFK091025.pdf.
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These statistics have been affirmed by business leaders
testifying before the committees. Wayne Krouse, CEO of Hydro
Green Energy, LLC testified before the Committee that:
``[P]olicies, such as climate change legislation,
that recognize and financially value the many benefits
of our nation's clean energy technologies, particularly
their carbon-free profile, will act as a huge driver
for growth and development of the clean technology
industry.''\12\ Charles O. Holliday, Jr. CEO of Dupont
believes: ``Federal legislation will help create the
marketplace that will drive innovation, economic
growth, and environmental progress.''\13\ The Committee
heard extensive testimony from other representatives of
utilities, businesses, unions and investors, who
collectively made clear that comprehensive climate
legislation is necessary to create the certainty that
will attract the large scale private capital
investments necessary to spur clean energy job growth.
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\12\Testimony of Wayne F. Krouse before Senate Committee on
Environment & Public Works, ``Business Opportunities and Climate
Policy,'' May 19, 2009.
\13\Testimony of Charles O. Holliday, Jr. before Senate Committee
on Environment & Public Works, ``Business Opportunities and Climate
Policy,'' May 19, 2009.
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ACHIEVING ENERGY INDEPENDENCE
The current economic challenges are exacerbated by
America's reliance on imported oil. America transfers about
$330 billion every year to foreign countries to pay for
oil.\14\ With policies that promote American clean energy and
energy efficiency, that money can be spent and then reinvested
here in the United States, providing the capital for sustained
economic recovery, rather than being sent overseas.
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\14\Energy Information Administration Annual Energy Review 2008,
pages 210-211; can be accessed at: http://www.eia.doe.gov/emeu/aer/pdf/
aer.pdf.
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The transition to clean energy means ensuring that all of
America's energy sources are as clean and efficient as
possible, without damaging our short-term competitiveness. To
make America more energy independent, the Act provides
incentives for investment in each of these sources of power.
Coal is the source for approximately 50% of our electric
power generation.\15\ The United States has the largest
estimated recoverable coal reserves in the world, with 28% of
global reserves,\16\ and experts agree that coal will continue
to play a significant part in our energy future, both in the
United States and throughout the world.\17\
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\15\Energy Information Administration, Electricity in the United
States. Can be accessed at: http://tonto.eia.doe.gov/energyexplained/
index.cfm?page=electricity_in_the_united_states.
\16\U.S. Department of Energy, Energy Information Administration,
Coal Explained, How Much Coal Is Left (online at www.eia.doe.gov/neic/
infosheets/coalreserves.html); and U.S. Department of Energy, Energy
Information Administration, International Energy Outlook (May 2009) at
p.59, Table 9 (online at http://www.eia.doe.gov/oiaf/ieo/pdf/
0484(2009).pdf).
\17\The Future of Coal--Options for a Carbon-Constrained World,
Massachusetts Institute of Technology Interdisciplinary Study (2007),
at ix (online at http://web.mit.edu/coal/).
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Technology must be developed to address the use of coal and
its associated global warming emissions. The Act invests an
estimated $10 billion over ten years to support research and
development of new carbon capture and sequestration technology,
to advance the next generation of coal-fired power plants.
Natural gas is the cleanest form of fossil fuel generated
power, producing less than half of the carbon dioxide emissions
of equivalent energy output from burning coal. Currently,
natural gas provides nearly 20% of our Nation's power.\18\
Recent discoveries and advances in drilling technologies have
increased America's estimated natural gas reserves by 35%,
decreasing our need to import natural gas from outside of North
America.\19\
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\18\Id.
\19\``Potential Gas Committee Reports Unprecedented Increase in
Magnitude of U.S. Natural Gas Resource Base.'' Colorado School of
Mines. June 18, 2009. Can be accessed at: http://www.mines.edu/
Potential-Gas-Committee-reports-unprecedented-increase-in-magnitude-of-
U.S.-natural-gas-resource-base.
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The Act creates a new federal program that encourages
investment in low-carbon power generation, especially natural
gas. It also provides additional incentives that provide offset
credits to companies that reduce leaks from natural gas
pipelines. This will help ensure that America can rely on
natural gas as a major component of its energy supply.
Nuclear energy currently provides nearly 20% of our power--
up to as much as 50% of electricity in some states.\20\ The Act
supports new programs for research and development for advanced
nuclear technology and nuclear waste management, and training
programs to train the highly-skilled workforce necessary for
the construction, operation, maintenance and support of nuclear
facilities. The bill's pollution reduction program creates
strong incentives for the development of additional nuclear
powered electric generation facilities. EPA's analysis
indicates that under comprehensive climate change legislation,
the U.S. will be expected to add nearly 160 new nuclear power
plants by 2050.\21\
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\20\Energy Information Administration, Electricity in the United
States. Can be accessed at: http://tonto.eia.doe.gov/energyexplained/
index.cfm?page=electricity_in_the_united_states.
\21\See EPA Analysis of the American Clean Energy & Security Act of
2009, H.R. 2454 in the 111th Congress (June 23, 2009) at 10; EPA
Analysis of Economic Impacts of S. 1733: The Clean Energy Jobs and
American Power Act of 2009 (October 23, 2009); available at: http://
www.epa.gov/climatechange/economics/economicanalyses.html; U.S. Nuclear
Regulatory Commission data on current capacity, http://www.nrc.gov/
info-finder/reactor/.
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Renewable energy and energy efficiency are critical to
America's future clean energy economy. In the short term,
increased energy efficiency presents tremendous, low-cost
opportunities both to reduce carbon emissions and to create
economic benefits. The global consulting firm McKinsey &
Company estimates that addressing barriers to energy efficiency
improvements can reduce end-use energy consumption in 2020 by
roughly 23 percent of projected demand, potentially abating up
to 1.1 gigatons of greenhouse gases annually.\22\ Already
nearly a thousand U.S. cities have adopted ambitious
environmental standards for new construction and refitting
existing buildings.\23\ By creating a framework and incentives
to achieve greater energy efficiencies, the Act will help
American companies to profit and improve their international
competitive position.
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\22\McKinsey & Company, Unlocking Energy Efficiency in the U.S.
Economy (July 2009). Can be accessed at: http://www.mckinsey.com/
clientservice/electricpowernaturalgas/downloads/
us_energy_efficiency_full_report.pdf
\23\1,000TH MAYOR--MESA, AZ MAYOR SCOTT SMITH SIGNS THE U.S.
CONFERENCE OF MAYORS CLIMATE PROTECTION AGREEMENT. The United States
Conference of Mayors. October 2, 2009. Can be accessed at: http://
www.usmayors.org/pressreleases/uploads/1000signatory.pdf.
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CLIMATE CHANGE SCIENCE AND IMPACTS
The Intergovernmental Panel on Climate Change (IPCC) was
established in 1988 by the World Meteorological Organization to
synthesize on an ongoing basis developing peer-reviewed climate
research. With the active participation of thousands of
scientists worldwide, the IPCC has released four major
assessments of climate science since 1990, each relying on
peer-reviewed work. The IPCC assessments have reported
increasing certainty about the threat and causes of climate
change. The IPCC's general finding that the emissions of
greenhouse gases from human activities are warming the planet
is also supported by the American Association for the
Advancement of Science,\24\ the American Geophysical Union,\25\
the American Chemical Society,\26\ the American Meteorological
Society,\27\ and 13 National Academies (including the United
States' National Academy of Sciences).\28\
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\24\http://www.aaas.org/news/releases/2007/0202ipcc.shtml.
\25\http://www.agu.org/sci_soc/policy/positions/
climate_change2008.shtml.
\26\http://portal.acs.org/portal/fileFetch/C/WPCP_007661/pdf/
WPCP_007661.pdf.
\27\http://www.ametsoc.org/POLICY/2007climatechange.html.
\28\http://www.nationalacademies.org/includes/
G8Statement_Energy_07_May.pdf.
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The most recent Fourth Assessment Report (AR4) was released
by the IPCC in 2007. AR4 represents six years of work from over
1,200 authors who are leading experts in their respective
fields. An additional 2,500 experts reviewed drafts of the
report. AR4 Working Group I found that the level of carbon
dioxide in the atmosphere ``has increased from a pre-industrial
value of about 280 ppm to 379 ppm in 2005.''\29\ Levels of
methane, another greenhouse gas, have risen from 715 ppb to
1774 ppb. AR4 concluded that evidence of climate warming is now
``unequivocal,'' and that it is very likely that human
activities have caused ``most of the observed increase in
global average temperatures since the mid-20th century.''
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\29\IPCC, AR4, Working Group I, Summary for Policy Makers.
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Within the range of temperatures that could result at the
end of this century due to greenhouse gas emissions, the IPCC
predicts that there will be ``significant extinctions around
the globe''; ``widespread coral mortality''; loss of about 30%
of global coastal wetlands; decreased productivity of all
cereal crops at low latitudes and a ``substantial burden on
health services'' including malnutrition, diarrheal, cardio-
respiratory, and infectious diseases.\30\
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\30\IPCC, AR4, Working Group II, Summary for Policy Makers.
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The IPCC's conclusions have been independently confirmed by
the U.S. Global Change Research Program, a program established
by Congress\31\ consisting of scientific experts from 13 U.S.
agencies, under the leadership of the White House Office of
Science and Technology Policy. In June 2009 the Program
published its report, Global Climate Change Impacts in the U.S.
The report reached the following major conclusions:
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\31\Global Change Research Act of 1990, P.L. 101-606, 104 Stat.
3096 (Nov. 16, 1990).
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1. Global warming is unequivocal and primarily human-
induced. Global temperature has increased over the past 50
years. This observed increase is due primarily to human induced
emissions of heat-trapping gases.
2. Climate changes are underway in the United States and
are projected to grow. Climate-related changes are already
observed in the United States and its coastal waters. These
include increases in heavy downpours, rising temperature and
sea level, rapidly retreating glaciers, thawing permafrost,
lengthening growing seasons, lengthening ice-free seasons in
the ocean and on lakes and rivers, earlier snowmelt, and
alterations in river flows. These changes are projected to
grow.
3. Widespread climate-related impacts are occurring now and
are expected to increase. Climate changes are already affecting
water, energy, transportation, agriculture, ecosystems, and
health. These impacts are different from region to region and
will grow under projected climate change.
4. Climate change will stress water resources. Water is an
issue in every region, but the nature of the potential impacts
varies. Drought, related to reduced precipitation, increased
evaporation, and increased water loss from plants, is an
important issue in many regions, especially in the West. Floods
and water quality problems are likely to be amplified by
climate change in most regions. Declines in mountain snowpack
are important in the West and Alaska where snowpack provides
vital natural water storage.
5. Crop and livestock production will be increasingly
challenged. Many crops show positive responses to elevated
carbon dioxide and low levels of warming, but higher levels of
warming often negatively affect growth and yields. Increased
pests, water stress, diseases, and weather extremes will pose
adaptation challenges for crop and livestock production.
6. Coastal areas are at increasing risk from sea-level rise
and storm surge. Sea-level rise and storm surge place many U.S.
coastal areas at increasing risk of erosion and flooding,
especially along the Atlantic and Gulf Coasts, Pacific Islands,
and parts of Alaska. Energy and transportation infrastructure
and other property in coastal areas are very likely to be
adversely affected.
7. Risks to human health will increase. Harmful health
impacts of climate change are related to increasing heat
stress, waterborne diseases, poor air quality, extreme weather
events, and diseases transmitted by insects and rodents.
Reduced cold stress provides some benefits. Robust public
health infrastructure can reduce the potential for negative
impacts.
8. Climate change will interact with many social and
environmental stresses. Climate change will combine with
pollution, population growth, overuse of resources,
urbanization, and other social, economic, and environmental
stresses to create larger impacts than from any of these
factors alone.
9. Thresholds will be crossed, leading to large changes in
climate and ecosystems. There are a variety of thresholds in
the climate system and ecosystems. These thresholds determine,
for example, the presence of sea ice and permafrost, and the
survival of species, from fish to insect pests, with
implications for society. With further climate change, the
crossing of additional thresholds is expected.
10. Future climate change and its impacts depend on choices
made today. The amount and rate of future climate change depend
primarily on current and future human-caused emissions of heat-
trapping gases and airborne particles. Responses involve
reducing emissions to limit future warming, and adapting to the
changes that are unavoidable.\32\
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\32\http://downloads.globalchange.gov/usimpacts/pdfs/executive-
summary.pdf, Global Climate Change Impacts in the United States, U.S.
Global Change Research Program (2009). Similar unequivocal conclusions
were made in reports published by the Program in 2007 and 2008, under
the Administration of President George W. Bush. See http://
www.globalchange.gov/publications/reports/scientific-assessments/saps.
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In considering these impacts, it is important to note that
GHG gases remain in the atmosphere for long time periods.
Because of the long lifetime of GHGs in the atmosphere and the
tremendous amount of physical inertia in the climate system, we
will be unable to avert or reverse severe climate impacts if we
wait until we observe those impacts. The current levels of
greenhouse gases, for example, commit us to an increase of at
least another 1-1.6+F of warming, even if we could stop
emitting GHGs tomorrow. Similarly, the rise of sea levels in
response to emissions of GHGs will continue for hundreds of
years as the heat from climate change slowly mixes through the
ocean. Therefore, by the time we observe a particular projected
impact, it may already be too late to avert or reverse that
impact.
In summary, both the U.S. and international bodies charged
with evaluating the science of climate change have concluded
that the science overwhelmingly establishes the threat posed by
human-induced climate change and the urgent need to act now to
avert it.
PROTECTING NATIONAL SECURITY
Unchecked climate change threatens vital U.S. national
security interests. As Admiral Dennis McGinn, U.S. Navy (Ret.)
and member of the Center for Naval Analysis' Military Advisory
Board, testified before the Committee: ``American's current
energy posture constitutes a serious threat to our national
security, militarily, diplomatically, and economically.''\33\
Mr. McGinn's warnings were echoed in testimony of The Honorable
John Warner, former Republican Senator and member of the EPW
Committee, who served as Secretary of the Navy under President
Nixon, and Kathleen Hicks, Deputy Undersecretary of Defense for
Strategy, Plans, and Forces, U.S. Department of Defense. Drew
Sloan, an infantry officer who served in both Iraq and
Afghanistan, further stated, ``I lead soldiers on the ground in
hostile situations and my experiences there have given me an
appreciation for what our fighting men and women will face in
the future if we do not act decisively against climate
change.''
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\33\Testimony of Vice Admiral Dennis McGinn before the Senate
Committee on Environment and Public Works, ``Legislative Hearing on S.
1733, Clean Energy Jobs and American Power Act,'' October 28, 2009.
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The Center for Naval Analysis Corporation (CNA), a non-
profit research organization dedicated to solving national
security, defense, and a broader range of public interest
issues, has published two reports entitled National Security
and the Threat of Climate Change and Powering America's
Defense: Energy and the Risks to National Security.\34\ The
reports conclude that, unchecked, climate change will threaten
U.S. national security by amplifying the conditions for
political instability, mass migration, and threatening
America's military infrastructure and energy security.\35\ The
military advisory board that oversaw these reports was
comprised of a distinguished panel of retired military officers
from all service branches.
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\34\www.cna.org.
\35\National Security and the Threat of Climate Change, The CNA
Corporation, 2007, page 6.
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Civil unrest and political instability caused by the
extreme weather and ecological conditions associated with
climate change could ``disrupt our way of life and force
changes in the way we keep safe and secure.''\36\ Climate
change has the potential to create more frequent and intense
natural and humanitarian disasters due to flooding, droughts,
disease, and crop failure.\37\ Climate change could lead to
competition for scarce natural resources and ``exacerbate the
stresses which may lead to conflict.''\38\ Moreover, lack of
basic human needs like water and food will force the movement
of people, both within their own borders and internationally.
These conditions would increase the potential for failed
states, and thus the growth of global terrorism. Increases in
weather disasters, such as hurricanes, will also stimulate
migrations to the U.S.\39\ For example, storm damage and sea
level rise in the Caribbean islands could contribute to an
increase in the flow of immigrants into the U.S.\40\ Such
outcomes will have security consequences for the U.S. because
it is ``difficult to evaluate U.S. impacts without doing so
elsewhere.''\41\
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\36\National Security and the Threat of Climate Change, The CNA
Corporation, 2007, page 6.
\37\Testimony of Vice Admiral Dennis McGinn before the Senate
Committee on Environment and Public Works, ``Legislative Hearing on S.
1733, Clean Energy Jobs and American Power Act,'' October 28, 2009.
\38\Testimony of Kathleen Hicks before the Senate Committee on
Environment and Public Works, ``Legislative Hearing on S. 1733, Clean
Energy Jobs and American Power Act,'' October 28, 2009.
\39\Purvis, N, and J. Busby, The Security Implications of Climate
Change for the UN System, ECSP Report, Issue 10 (2004).
\40\Campbell, Kurt M. et al., The Age of Consequences: The Foreign
Policy and National Security Implications of Global Climate Change,
November 2007, page 56.
\41\Id.
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In addition to these indirect risks to national security,
there are also direct impacts on U.S. military infrastructure
and operations. According to the National Intelligence Council,
``the demands of . . . potential humanitarian responses may
significantly tax U.S. military transportation and support
force structures, resulting in a strained readiness posture and
decreased strategic depth for combat operations.''\42\ On top
of humanitarian and disaster relief, the U.S. military will
also need to defend the Arctic and its resources undersea, due
to melting of the Arctic ice.\43\ To prepare for--or avoid--
such impacts, the Pentagon and State Department have
incorporated the national security implications of climate
change in their long term strategic planning, the Quadrennial
Defense Review and Quadrennial Diplomacy and Development
review, respectively.\44\
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\42\Testimony of Dr. Thomas Fingar before House Permanent Select
Committee on Intelligence, ``National Intelligence Assessment on the
National Security Implications of Global Climate Change to 2030,'' June
25, 2008.
\43\National Security and the Threat of Climate Change, The CNA
Corporation, 2007, page 38.
\44\Testimony of Kathleen Hicks before the Senate Committee on
Environment and Public Works, ``Legislative Hearing on S. 1733, Clean
Energy Jobs and American Power Act,'' October 28, 2009.
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Dependence on foreign oil weakens international leverage,
undermines foreign policy objectives, and entangles America
with unstable regimes.\45\ In 2008, the U.S. spent $386 billion
dollars to import oil, and much of this money went to countries
with regimes hostile toward U.S. interests.\46\ Economic
stability is critical to our national security, and reliance on
fossil fuel markets that have experienced wild swings constrict
the economy in the short-term and undermine long-term strategic
planning.\47\
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\45\Powering America's Defense: Energy and the Risks to National
Security, The CNA Corporation, 2009, page 1.
\46\Testimony of Kathleen Hicks before the Senate Committee on
Environment and Public Works, ``Legislative Hearing on S. 1733, Clean
Energy Jobs and American Power Act,'' October 28, 2009.
\47\Powering America's Defense: Energy and the Risks to National
Security, The CNA Corporation, 2009, page 11.
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Included in the CNA's recommendations for mitigating the
impacts of climate change is a call for the U.S. to commit to
both a national and international policy that will stabilize
climate change at levels that will avoid significant security
impacts. In addition, to reduce our military infrastructure and
energy security risk, CNA believes that the Department of
Defense should increase energy efficiency in operations where
troops are engaged, transform use of energy at installations
via smart grid technology and electrification of its vehicle
fleet, and expand adoption of distributed and renewable energy
generation at its installations.\48\
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\48\Powering America's Defense: Energy and the Risks to National
Security, The CNA Corporation, 2009, page ix.
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Clearly, climate change can be regarded as a ``threat
multiplier'' that will result in increased demands and stresses
on the U.S. and the world.\49\ Addressing global climate change
effectively is critically important to protecting America's
national security.
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\49\National Security and the Threat of Climate Change, The CNA
Corporation, 2007, page 44.
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THE PATH TO AVOIDING SEVERE CLIMATE CHANGE
The Act achieves reductions by placing a steadily declining
cap on carbon pollution, reaching an 83 percent reduction below
2005 levels by 2050, and calling for a 20 percent reduction by
2020. Importantly, the Act also provides for periodic review of
the emissions targets by the National Academy of Sciences,
including assessment of whether the targets need to be revised
to provide sufficient protection.
The bill accomplishes these goals through a pollution
reduction program that covers less than 2% of American
businesses and keeps American industry competitive during the
transition to a new energy economy, while preserving the
important functions of the Clean Air Act in the area of carbon
pollution reduction.
The system applies only to the largest polluters in the
country--initially around 7,400 facilities that will account
for 86 percent of U.S. carbon pollution by 2020.\50\ Over
ninety-eight percent of American businesses, including farmers,
are not covered by this program. The market-based program also
provides necessary flexibility. If a company needs more time to
clean up its carbon pollution, it can pay for the right to keep
polluting. Alternatively, if a business can decrease pollution
quickly and affordably, it will be rewarded financially.
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\50\See Congressional Budget Office, cost estimate for S. 1733,
Clean Energy Jobs and American Power Act; available at: http://cbo.gov/
ftpdocs/108xx/doc10864/s1733.pdf
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The bill also ensures that small businesses, farmers and
ranchers are not unduly burdened. The bill does not cover any
agricultural enterprise or any small business that emits less
than 25,000 tons of carbon-based pollutants per year. This
25,000 ton cut-off is equivalent to the carbon pollution of 130
railway cars of coal, 2,300 homes, 4,600 cars, or 58,000
barrels of oil.
Delayed emission reductions significantly constrain the
opportunities to achieve lower stabilisation levels and
increase the risk of more severe climate change impacts.\51\
Because of the long lifetime of GHGs in the atmosphere, delayed
action will commit all countries to moderate to high climate
risks, regardless of actions they may seek to take at a later
date.
---------------------------------------------------------------------------
\51\IPCC AR4 Synthesis Report.
---------------------------------------------------------------------------
TECHNOLOGIES ARE AVAILABLE TODAY TO COMBAT GLOBAL WARMING AND SPUR
ECONOMIC GROWTH
U.S. companies and researchers have led the way in
developing a broad spectrum of breakthrough technologies
enabling substantial emissions reductions now. Many studies
have identified and discussed the numerous emissions reduction
technologies and practices that are presently available. In
addition, a study by McKinsey and Company found that
significant emissions reductions could be achieved from energy
efficiency measures.\52\
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\52\McKinsey & Company, Unlocking Energy Efficiency in the U.S.
Economy (July 2009). Can be accessed at: http://www.mckinsey.com/
clientservice/electricpowernaturalgas/downloads/
us_energy_efficiency_full_report.pdf
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The Advanced Coal Technology Work Group convened by EPA
reported in January that:
[W]idespread commercial deployment of [advanced coal
and CCS] technologies likely will not occur without
legislation that establishes a significant long-term
market driver. National mandatory GHG reduction
legislation, for example, can provide a carbon price
signal that would encourage the widespread deployment
of large-scale carbon dioxide capture and sequestration
systems. It is critical that any national policy should
include provisions that prioritize and encourage early
deployment of [advanced coal technology]--particularly
CCS.\53\
---------------------------------------------------------------------------
\53\http://www.epa.gov/air/caaac/coaltech.html.
A July 2009 analysis by The Climate Group, an international
coalition of leading organizations and experts, concluded that
short-term targets are achievable by focusing on energy
efficiency, deforestation and existing renewable and nuclear
technologies. Long-term targets require a price on carbon and
investment and scaling up of known and viable, but not yet
commercialized, technologies. ``Innovation and technology will
be essential to provide the answers to climate change, energy
security and economic growth. The solutions are achievable,
affordable and realistic but will require concerted effort and
international cooperation to be successfully executed.''\54\
---------------------------------------------------------------------------
\54\``Breaking the Climate Deadlock/Technology for a Low Carbon
Future,'' The Climate Group, July 2009. Available at: http://
www.theclimategroup.org/assets/resources/Technology_
for_a_low_carbon_future_report.pdf.
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For many clean energy technologies, achieving broad market
adoption can require substantial capital investments. The
Committee heard testimony from many experts regarding the
market framework and certainty that will be a necessary
prerequisite to the private sector investment that is needed.
The bill provides this certainty, establishing a long term
reduction path (and therefore market signal) and a framework
that includes approximately 86% of our economy's global warming
emissions in a single comprehensive pollution reduction
program.
The bill also provides major financial incentives
supporting the widespread adoption of these technologies. It
has been estimated that the allocation and auction of
allowances under the bill could generate tens of billions of
dollars annually that will be dedicated to funding of such
green technology deployment.
THE COST OF INACTION
Failing to effectively avert climate change would likely
cause major adverse economic impacts. The U.S. Global Change
Research Program reported in July 2009 that:
Climate changes are underway in the United States and
are projected to grow. Climate-related changes are
already observed in the United States and its coastal
waters. These include increases in heavy downpours,
rising temperature and sea level, rapidly retreating
glaciers, thawing permafrost, lengthening growing
seasons, lengthening ice-free seasons in the ocean and
on lakes and rivers, earlier snowmelt, and alterations
in river flows. These changes are projected to
grow.\55\
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\55\http://www.globalchange.gov/publications/reports/scientific-
assessments/us-impacts; U.S. Climate Change Science Program, Global
Climate Change Impacts in the United States (Analyses of the Effects of
Global Climate Change on the U.S. now, and into the future).
In 2006 the Stern Review on the Economics of Climate
Change, authored by the former Chief Economist of the World
Bank Sir Nicholas Stern, concluded that the impacts of climate
change would total at least 5 percent of global GDP each year
and could be as high as 20 percent of GDP or more.\56\ Other
analyses of the economic impacts of four of the most
significant categories of these impacts--hurricane damage, real
estate losses, energy costs and water costs--concluded that by
2025, those impacts would cost 1.36 percent of GDP or $271
billion, and by 2100 those impacts would cost 1.84 percent of
GDP, or $1.9 trillion.\57\
---------------------------------------------------------------------------
\56\http://webarchive.nationalarchives.gov.uk/+/http://www.hm-
treasury.gov.uk/media/4/3/Executive_Summary.pdf.
\57\http://www.nrdc.org/globalwarming/cost/cost.pdf.
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Nonpartisan analyses of S. 1733, and of its House
counterpart, H.R. 2454, the American Clean Energy and Security
Act (ACES), have concluded that the costs of the pollution
reduction and investment program will be very modest. The
Environmental Protection Agency (EPA) estimated that H.R. 2454
would cost an average family between $80 and $111 a year and
estimated that S. 1733 would have similar costs.\58\ At the
same time, the EPA and EIA analyses show median household
income rising $4,500 to $5,500 per year, relative to 2009
levels, far outweighing any increased costs of climate
legislation.\59\
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\58\http://www.epa.gov/climatechange/economics/pdfs/
EPA_S1733_Analysis.pdf.
\59\http://www.epa.gov/climatechange/economics/pdfs/
HR2454_Analysis.pdf, http://www.eia.doe.gov/oiaf/servicerpt/hr2454/.
---------------------------------------------------------------------------
In addition, the bill invests emissions allowances and
allowance value in a number of ways designed to further protect
U.S. consumers and workers. These include:
Rebates for low- and moderate-income consumers on
their energy bills.
A market stability fund to protect consumers and
businesses from price volatility. This mechanism ensures that,
even as the energy economy changes, customers will experience
stable, affordable prices.
Support for strong policing measures to establish
marketplace accountability and ensure the new carbon
marketplace is transparent, fair, and accountable.
Billions of dollars in investment for the clean,
efficient, and renewable use of energy and the deployment of
twenty-first century energy technologies.
Worker training for new industries, including new
programs at post-secondary institutions.
Support for energy-intensive, trade-exposed
industries to ensure that U.S. manufacturing remains
competitive.
ECONOMIC ANALYSIS
EPA conducted and provided to the Committee a synthesis
report that examined the key differences between S. 1733 and
H.R. 2454 and analyzed the impacts on the cost estimates
resulting from each of those key differences, individually and
in the aggregate. Earlier in 2009, the EPA, the Congressional
Budget Office (CBO) and the Energy Information Administration
(EIA) modeled potential economic impacts of H.R. 2454, the
American Clean Energy and Security Act (ACES), which is very
similar to S. 1733.\60\ Because of the similarity between the
two bills, EPA concluded with a very high degree of confidence
that an additional modeling analysis of S. 1733 would not
render meaningful new information or significantly different
results. As EPA explained in its report: ``For the most part
the differences between the bills result in relatively small
differences in estimated costs and may even cancel each other
out.''\61\
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\60\http://www.cbo.gov/ftpdocs/102xx/doc10262&/hr2454.pdf; http://
www.epa.gov/climatechange/economics/pdfs/HR2454_Analysis.pdf; and
http://www.eia.doe.gov/oiaf/servicerpt/hr2454/.
\61\U.S. EPA, ``Economic Impacts of S. 1733: The Clean Energy Jobs
and American Power Act of 2009,'' Oct. 23, 2009.
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During committee consideration of S. 1733, David McIntosh,
EPA Assistant Administrator for the Office of Congressional and
Intergovernmental Relations, described the extensive analysis
and modeling that laid the foundation for EPA's report on S.
1733: ``It relied on over 50 modeled scenarios. . . . And all
of those modeling efforts rely themselves on a large body of
literature and analysis that, if you put it all together,
amounts to over 340,000 pages.''\62\
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\62\Testimony of David McIntosh before Senate Committee on
Environment and Public Works, Nov. 3, 2009.
---------------------------------------------------------------------------
The Committee had much more analysis from EPA with respect
to S. 1733 than the House Energy and Commerce Committee had
available when it considered H.R. 2454 earlier this year. On
May 21, 2009, after a 4-day markup, the House Energy and
Commerce Committee favorably reported an amended version of
H.R. 2454 based on a summary of the manager's amendment from
EPA.
Finally, it is important to note that at the time of the
markup S. 1733 did not constitute the complete piece of
legislation. Rather, S. 1733 would be considered and modeled
with reported bills from other Committees, including S. 1462,
from the Committee on Energy and Natural Resources, before
final legislation will be considered on the Senate floor.
Discussion of Provisions and Section-by-Section Analysis
Section 1. Short title; Table of contents
Section 1 provides that the Act may be cited as the ``Clean
Energy Jobs and American Power Act''.
Section 2. Findings
Describes the impacts of climate change and the benefits of
transitioning to a clean energy economy.
Discussion
The most central findings of the Act are: (1) the United
States can take back control of the energy future of the United
States, strengthen economic competitiveness, safeguard the
health of families and the environment, and ensure the national
security, of the United States by increasing energy
independence; (2) efficiency in the energy sector also
represents a critical avenue to reduce energy consumption and
carbon pollution, and those benefits can be captured while
generating additional savings for consumers; (3) substantially
increasing the investment in the clean energy future of the
United States will provide economic opportunities to millions
of people in the United States and drive future economic growth
in this country; (4) if unchecked, the impact of climate change
will include widespread effects on health and welfare,
including--increased outbreaks from waterborne diseases; more
droughts; diminished agricultural production; severe storms and
floods; heat waves; wildfires; and a substantial rise in sea
levels, due in part to--melting mountain glaciers, shrinking
sea ice and thawing permafrost.
Section 3. Economy-wide emission reduction goals
This section establishes targets for reducing greenhouse
gas (GHG) emissions to:
97% of 2005 emissions in 2012
80% of 2005 emissions in 2020
58% of 2005 emissions in 2030
17% of 2005 emissions in 2050
Section 4. Definitions
This section includes definitions of terms used throughout
the Act
DIVISION A--AUTHORIZATIONS FOR POLLUTION REDUCTION, TRANSITION, AND
ADAPTATION
Section 101. Structure of Act
Describes the authorizations included in the bill,
including those that receive an allocation of allowances under
Division B.
Section 102. Requirements relating to Federal advisory committees
This section requires any scientific advisory panel
convened pursuant to this Act and the members of such panel to
meet standards of scientific integrity, provide independent
advice, and avoid or disclose conflicts of interest. The
section also requires the public disclosure of the charter,
proceedings and membership of all advisory committees.
Section 103. Voluntary renewable energy markets
Includes findings describing the accomplishments of
voluntary renewable energy markets and states that it is the
policy of the United States to continue to support the growth
of these markets.
TITLE I--GREENHOUSE GAS REDUCTION PROGRAMS
SUBTITLE A--CLEAN TRANSPORTATION
Section 111. Emission standards
Amends Title VIII of the Clean Air Act to require EPA to
establish greenhouse gas emission standards for new heavy-duty
vehicles and engines, and for nonroad vehicles and engines.
Section 112. Greenhouse gas emission reductions through transportation
efficiency
Section 112 adds a new section to the Clean Air Act,
Section 831, under which State and local transportation
agencies will incorporate consideration of transportation
strategies for reducing greenhouse gas emissions into their
transportation plans in order to be eligible for the
transportation planning, transit, and competitive
transportation grants created in this Act.
Section 113. Transportation greenhouse gas emission reduction program
grants
Section 113 adds a new section to the Clean Air Act,
Section 832, which creates a planning grant program for MPOs
and a competitive grant program for States and eligible MPOs to
help implement emission reduction efforts described in Section
112 above.
Section 114. SmartWay Transportation Efficiency Program
Section 114 adds a new section to the Clean Air Act,
Section 822, which creates statutory authority for the SmartWay
Transportation Efficiency Program, expanding the current EPA
SmartWay Transport Partnership.
Discussion
According to the Environmental Protection Agency's
``Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990--
2007'' the transportation sector is responsible for 28% of the
greenhouse gas emissions in the United States, second only to
electricity generation.\63\ Emissions from the transportation
sector are also growing much faster than many other sectors,
representing 47% of the increase in total greenhouse gas
emissions in the United States between 1990 and 2006.\64\
Transportation is clearly a significant part of the climate
problem, and must be part of the solution.
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\63\U.S. Environmental Protection Agency, ``Inventory of U.S.
Greenhouse Gas Emissions and Sinks: 1990-2007,'' at ES-14 (April 15,
2009).
\64\U.S. Environmental Protection Agency, Regulatory Announcement,
``EPA and NHTSA Propose Historic National Program to Reduce Greenhouse
Gases and Improve Fuel Economy for Cars and Trucks,'' Sept. 2009.
Available at: http://www.epa.gov/otaq/climate/regulations/
420f09047.pdf.
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The bill takes significant steps to reduce greenhouse gas
emissions from the transportation sector. The legislation
amends the Clean Air Act to require the EPA Administrator, in
consultation with the Secretary of Transportation, to establish
national greenhouse gas emissions reduction goals and develop a
variety of tools (including emission models, methodologies and
information as to best practices) to be used by States and
regions when they develop transportation sector greenhouse gas
emissions reduction targets and plans. The authority conferred
upon EPA under the new section 831(a) of the Clean Air Act
requires consultation and interaction with the Secretary of
Transportation and maintains the Department of Transportation's
(USDOT) role in transportation planning. Under this subtitle,
USDOT (in consultation with EPA) will promulgate regulations
regarding modeling and measurement of greenhouse gas emissions
and make appropriate updates to transportation planning
regulations to facilitate an effective integration of
greenhouse gas emission reduction into transportation planning.
This subtitle allows States and participating metropolitan
planning organizations (MPOs) to develop their own targets and
strategies for reducing greenhouse gas emissions from the
transportation sector. Section 134(k) of this subtitle requires
that the setting of targets and selection of strategies be
customized to the jurisdiction as the circumstances facing each
jurisdiction will be different and standardized plans are
unlikely to be effective.
The policy, scope of planning, and consultation sections of
existing federal-aid highway and transit requirements are
amended to introduce a stronger emphasis on energy consumption,
greenhouse gas emissions, and sustainable environments. In
addition, a greater role in the long-range planning process is
provided for State and local agencies responsible for
transportation, public transportation, air quality and housing
as well as Indian tribes and public health agencies, as
appropriate. This subtitle does not change the longstanding
roles for the Federal government, State governments, and MPOs
under Titles 23 and 49.
The goal of the new planning requirements in this Subtitle
is to foster performance-based planning by States and MPOs that
explicitly takes into account greenhouse gas emission
reductions. Such practices benefit from the adoption of goals
that are built upon consensus at the community and State
levels. This subtitle does nothing to preclude citizen
involvement in planning, or civil actions under NEPA at the
project level. Section 112(d) clarifies that citizen lawsuits
shall not be applicable to the provisions of this Act that
relate to the setting of greenhouse gas emission reduction
targets nor the development of plans to reduce greenhouse gas
emissions.
Scenario analyses, as incorporated into the new planning
provisions, are intended as procedural planning tools to be
undertaken before the formulation of targets and strategies,
not as a project selection mechanism. Furthermore, the minimum
planning requirements outlined for States and MPOs are intended
to indicate that a State or MPO is able to take additional
steps if it so chooses. It is not intended that USDOT add
minimum requirements to this list through administrative action
or require the use of a particular technique.
In addition to comprehensive new planning requirements,
this subtitle creates an incentive for action by providing
planning funds to MPOs, discretionary grants for States and
MPOs to use in implementing their plans, and formula grants to
public transportation agencies, all of which will be used to
reduce greenhouse gas emissions from the transportation sector.
The funding provided rewards MPOs and States for setting their
own targets and strategies to reduce emissions. If a State or
MPO's efforts do not meet the requirements of this subtitle or
are not approved by the Secretary, they are not eligible for
grants.
The goal of this Subtitle is to foster performance-based
planning by States and MPOs that explicitly takes into account
greenhouse gas emission reductions. Such practices benefit from
the adoption of goals that are built upon consensus at the
community and State levels. This subtitle does nothing to
preclude citizen involvement at the plan level or civil actions
under NEPA at the project level. Section 112(d) clarifies that
citizen lawsuits shall not be applicable to the provisions of
this Act that relate to the setting of greenhouse gas emission
reduction targets nor the development of plans to reduce
greenhouse gas emissions.
SUBTITLE B--CARBON CAPTURE AND SEQUESTRATION
Section 121. 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 122. Regulations for geological 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 EPA 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.
Section 123. Studies and reports
Requires the EPA Administrator to establish a multi-
stakeholder task force and conduct a study of the legal
framework for geologic sequestration sites and activities.
Section 124. Performance standards for new coal-fueled power plants
Amends the Clean Air Act to establish performance standards
for new coal-fueled 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 once they begin operations. Plants
permitted from 2009-2020 are required to meet the specified
standard after 10 gigawatts of commercial deployment is
achieved but no later than January 1, 2020.
Requires the Administrator in consultation with the
Department of Energy to submit a report to Congress not later
than June 30, 2017 that includes a finding, based on a review
of the status of commercial deployment of carbon capture and
sequestration technology on whether the date for compliance
with the performance standards should be maintained or extended
to January 1, 2022.
Section 125. 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 fuel-based electricity
distribution utilities to hold a referendum on the
establishment of a Carbon Storage Research Corporation program
for the demonstration and early deployment of carbon capture
and sequestration (CCS) technologies. If approved by entities
representing two-thirds of the nation's fossil fuel-based
delivered electricity, the Corporation would be operated as a
division or affiliate of the Electric Power Research Institute
and would assess power distribution 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 those technologies.
Discussion
Coal-fired plants generate almost a third of U.S.
CO2 emissions, equal to the emissions from all of
our cars, trucks, and buses combined.\65\
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\65\U.S. Environmental Protection Agency, Inventory of U.S.
Greenhouse Gas Emissions and Sinks 1990-2007 (April 15, 2009) at Tables
2-1 2-13 (online at http://www.epa.gov/climatechange/emissions/
downloads09/InventoryUSGhG1990-2007.pdf).
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The greenhouse gas emissions from burning coal must be
addressed in order to avert the worst consequences of global
climate change. Technology for carbon capture and sequestration
(CCS) can allow the continued use of coal with greatly reduced
impact on the climate. CCS involves the physical capture of
CO2 at power plants, compressing the gas into a
liquid, and injecting the CO2 into geological
formations.
The technologies that are needed to implement CCS exist
today and have been commercially deployed in other industries,
such as in oil and gas production. Despite the availability of
these technologies, however, no full-scale CCS project has yet
been implemented at a coal-fired power plant, in large measure
due to the substantial capital investment required at scale.
S. 1733 provides significant incentives for the development
and early demonstration of CCS technologies. For example, the
bill invests up to 5% of allowances in carbon capture and
sequestration (CCS) projects, estimated to equal more than $3
billion per year by 2020, and provides advanced payments of
emission allowances to reward early actors who pledge specific
reductions through the implementation of CCS technology on new
or retrofitted plants. The bill also authorizes the private
sector to establish a ten-year, $10 billion program for the
development and early demonstration of CCS technologies.
Moreover, S. 1733 also provides an important indirect incentive
for CCS, by putting a price on CO2 emissions.
Because of the very large volumes of CO2 that
will need to be sequestered, the most promising CO2
storage potential is in geological formations. However, the
bill supports potential technologies that can safely sequester
CO2. For example, the incentives in the bill for CCS
will apply to CCS technologies that capture CO2
emissions from power plant flue gas and combines it with other
materials to produce cement, aggregate, or other building
materials.\66\
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\66\Testimony of Brent Constantz, Ph.D, CEO of Calera Corporation,
before Senate Appropriations Committee, Subcommittee on Energy and
Water Development, May 6, 2009.
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Currently, the lack of market certainty has prevented
significant investment in either new pulverized coal or new CCS
coal plants. For example, 54 percent of coal capacity ordered
since 2000 has been canceled or put on hold in the last two
years, in part because of uncertainties concerning the
enactment of climate legislation, which most in the private
sector view as likely or inevitable.\67\ Deployment of the
first 5-10 commercial scale CCS projects will facilitate large-
scale deployment, reduce costs, and lay the groundwork for
deployment of CCS plants.
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\67\http://www.eenews.net/eenewspm/2008/02/19/3/.
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SUBTITLE--NUCLEAR AND ADVANCED TECHNOLOGIES
Section 131. Findings and policy
Provides Congressional findings related to the role of
nuclear power as an energy source. Establishes a policy of
promoting a safe and clean nuclear energy industry, through
reductions in financial and technical barriers to construction
and operations incentives for the development of a well-trained
workforce and the growth of safe domestic nuclear and nuclear-
related industries.
Section 132. Nuclear worker training
Establishes a grant program, administered by EPA, to
provide assistance for training of workers that will be
essential for the growth of safe domestic nuclear and nuclear-
related industries.
Section 133. Nuclear safety and waste management programs
Establishes programs to provide grants and other assistance
for research projects that seek to develop new technologies for
nuclear waste management.
Discussion
The Committee recognizes that nuclear energy will play an
important role in meeting emissions reductions goals and in
transitioning to a clean energy economy. The development of
nuclear power requires well-trained workers and a safe and
effective means for disposal of spent nuclear waste. Subtitle C
seeks to address these issues, with an explicit policy of
promoting a safe and clean nuclear energy industry, and by
establishing grant programs to train workers and invest in
research and development on nuclear waste management
technologies.
SUBTITLE D--WATER EFFICIENCY
Section 141. WaterSense
Authorizes EPA's WaterSense program, a voluntary program
for labeling water-efficient high-performance products and
services. Provides the same type of labeling for water-
efficient products and services as currently in place for
energy-efficient products under the Energy Star program.
Section 142. 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 143. State residential water efficiency and conservation
incentives program
Authorizes grants to eligible entities for programs
offering incentives to consumers who purchase and install
water-efficient products and services such as those labeled
under WaterSense.
Discussion
This Subtitle promotes water efficiency measures. Climate
change will continue to place extreme pressures on water
resource availability and water quality throughout the United
States--effects such as greater evaporation rates, earlier
snowmelt, extended and extreme drought, water scarcity, extreme
flooding, and water quality degradation are expected to occur
at increasing rates.\68\
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\68\National Association of Clean Water Agencies, ``Confronting
Climate Change: An Early Analysis of Water and Wastewater Adaptation
Costs,'' October 2009, 1-1. Available at:
http://www.nacwa.org/images/stories/public/2009-10-28ccreport.pdf.
---------------------------------------------------------------------------
Between 1950 and 2000, the U.S. population nearly doubled
while the public demand for water more than tripled.\69\
Climate change impacts coupled with greater public demand for
water make water efficiency measures, on both the federal and
state level, paramount to ensuring adequate water supplies.
---------------------------------------------------------------------------
\69\http://www.epa.gov/WaterSense/water/why.htm.
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This Subtitle authorizes the WaterSense program and other
similar water efficiency measures. Not only does water
efficiency help to protect the future of our nation's water
supply, but it also reduces pollution and decreases energy
consumption by contributing to healthy wetlands, reducing the
need to construct additional water and wastewater treatment
facilities, and eliminating excessive surface water
withdrawals.\70\
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\70\http://www.epa.gov/WaterSense/water/save/env_benefits.htm.
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SUBTITLE E--MISCELLANEOUS
Section 151. Office of Consumer Advocacy
Establishes an Office of Consumer Advocacy within the
Federal Energy Regulatory Commission to identify and defend the
consumer interest in proceedings before the Commission.
Section 152. Clean technology business competition grant program
Provides for grants by EPA to nonprofit organizations for
competitive programs supporting start-up businesses in the
areas of energy efficiency, renewable energy, air quality,
water quality and conservation, transportation, smart grid,
green buildings, and waste management.
Section 153. Product carbon disclosure program
Requires EPA to conduct a study regarding effectiveness of
a voluntary product carbon disclosure and labeling program, to
implement such a program based on the results of the study, and
to report to Congress.
Section 154. State recycling programs
Requires EPA to establish a state recycling and reuse
program and develop analyses and methodologies to optimize
reductions of greenhouse gas emissions through recycling and
reuse. Provides that funds distributed by States under the Act
to carry out these programs be allocated in minimum proportions
among county and municipal programs, eligible recycling
facilities, and eligible manufacturing facilities.
Discussion
Preventing and recycling solid waste helps not only to
better manage the nation's waste stream, it also provides an
important tool in reducing greenhouse gas emissions. Waste
prevention and recycling can reduce methane emissions--a potent
greenhouse gas--from landfills. It can also provide a steady
source of organic material that can be beneficially reused.
According to the Environmental Protection Agency, producing
products from virgin materials typically involves more energy
than producing the same products from recycled materials.
Reusing intact products, meanwhile, uses the least amount of
energy. Reusing materials and products, then, can increase
energy efficient production and save manufacturers and
consumers money, while reducing greenhouse gas emissions.
Section 155. Supplemental agriculture, abandoned mine lands, and
forestry greenhouse gas reduction and renewable energy program
Establishes a new program to provide assistance to
agriculture and forestry landowners and to entities seeking to
clean up abandoned mine lands for projects that reduce
greenhouse gases or sequester carbon. Establishes a research
program for the development and deployment of renewable energy
technologies in the agricultural and forestry sectors.
Section 156. Economic development climate change fund
Authorizes the Economic Development Administration to
provide up to $50 million per year in technical assistance and
grants for projects that promote green economic development in
distressed communities.
This section amends Title II of the Public Works and
Economic Development Act of 1965 to authorize a program through
which the Secretary of Commerce may provide technical
assistance and grants for projects that: (1) promote energy
efficiency to enhance economic competitiveness; (2) increase
the use of renewable energy to support economic development;
(3) develop conventional energy resources to produce
alternative transportation fuels, electricity and heat; (4)
develop energy efficient or environmentally sustainable
infrastructure; (5) promote environmentally sustainable
economic development practices and models; (6) support
development of energy efficiency and alternative energy
development plans, studies or analysis.
The Federal share for projects funded under this program
will be 80%, except that the Federal share used to supplement
another Federal grant, loan or loan guarantee may be 100%. For
each of fiscal years 2009 through 2013, $50 million is
authorized for this program.
Discussion
This section will authorize the Economic Development
Administration to provide grants, loans and loan guarantees
aimed at both improving our environment and supporting job
creation.
Section 157. Study of risk-based programs addressing vulnerable areas
Requires preparation of a report within two years assessing
federal pre-disaster mitigation, emergency response and flood
insurance policies and programs that affect areas vulnerable to
the impacts of climate change, with strategies and
recommendations.
Discussion
Federal policies relating to pre-disaster mitigation,
emergency response and flood insurance programs will be
critically important to efforts to minimize damage and loss of
life resulting from increased hurricanes and other climate-
related storms. U.S. Census Bureau data indicate that more than
35 million Americans live in coastal counties most threatened
by hurricanes. Testimony provided by the Reinsurance
Association of America stated that Gulf Coast and Atlantic
Coast insured property exposure total approximately $9
trillion, and the U.S. insurance industry has reported more
than $170 billion of hurricane related losses since 1988.
Section 157 calls for a study and report analyzing key federal
policies that will affect areas vulnerable to the impacts of
climate change, including consistency with the State and tribal
response and adaptation goals under the Act, and provide
strategies and recommendations for improving those policies.
The Committee expects that the study and report will identify
significant opportunities for cost savings to the Federal
Government, as well as lead to better preparation of coastal
areas for climate-related events.
Section 158. Efficient buildings program
Provides assistance to owners of buildings for verifiable,
additional, and enforceable improvements in energy performance.
SUBTITLE F--ENERGY EFFICIENCY AND RENEWABLE ENERGY
Section 161. Renewable energy
Directs EPA to establish a program to provide grants and
other assistance to renewable energy projects in states with
mandatory renewable portfolio standards.
Section 162. Advanced biofuels
Directs EPA to establish a program to provide grants to
promote the production and use of advanced biofuels through
research and development, planning, translation of new
technologies into commercial use, and construction of
appropriate facilities.
Section 163. Energy efficiency in building codes
Requires the EPA Administrator, or such other agency head
as the President designates, to set a national goal for
improvement in building energy efficiency, promulgate a rule
establishing national energy efficiency building codes for
residential and commercial buildings, and regularly report to
Congress on progress in improving building efficiency.
Section 164. Retrofit for energy and environmental performance
Establishes the Retrofit for Energy and Environmental
Performance Program to provide allowances to States to conduct
cost-effective building retrofits. Provides that States may use
local governments or other agencies or entities to carry out
the work and may use flexible forms of financial assistance
providing up to 50% of the costs of retrofits, with funding
increasing in proportion to efficiency achievement. Provides
additional assistance for the retrofitting of historic
buildings. Directs the Administrator of EPA to establish
standards and guidelines for the program, in consultation with
the Secretary of Energy. Requires States to offer preferential
access to at least 10% of dedicated program funding to public
and assisted housing. Allows funding to be used to provide
training to building staff relating to energy-efficient
operations and maintenance of residential and nonresidential
buildings. Nothing in this section would require a homeowner to
audit or retrofit their home or authorize mandatory enforcement
of building code requirements.
Section 165. Certified stoves program
This section directs the Environmental Protection Agency
(EPA) to establish a program to assist in the replacement of
older inefficient wood stoves or pellet stoves with cleaner
burning units to improve air quality, including reductions in
methane and carbon dioxide from improved combustion efficiency.
It authorizes the Administrator to provide grants, incentives
and loans for people who rely on wood as a source of heat.
Section 166. Renewable fuel standard
This section clarifies that advanced biofuels are included
in the Renewable Fuels Standard by replacing the term
``cellulosic biofuel'' with the term ``Advanced Green
Biofuel.'' Advanced Green Biofuel is defined to mean a fuel
that is derived from renewable biomass and has lifecycle
greenhouse gas emissions of at least 60% below the relevant
baseline.
Section 167. Tree planting programs
This section authorizes a grant program through the
Environmental Protection Agency to provide technical and
financial assistance to plant trees around residential and
commercial buildings, to reduce energy use and demand peaks.
Discussion: Energy efficiency
Increasing energy efficiency can help to reduce household
and business costs, the need for new electricity generation and
greenhouse gas and other pollution, while improving the
reliability of energy supplies and the efficiency of
manufacturing and other businesses. The programs authorized in
sections 163, 164, 165 and 167 of this subtitle seek to build
on and expand the nation's energy security, consumer savings,
industrial competitiveness and job base by increasing energy
efficiency. The increase in energy efficiency not only improves
our national energy security, it can help to address global
warming and environmental threats--while increasing our
nation's competitiveness and transforming the way our country
uses energy. Reduced energy demand can also help to reduce the
strain on existing electricity systems, resulting in a more
stable supply of power and less need for new fossil fuel
burning power plants.
This subtitle places a focus on improving energy efficiency
of residential and commercial buildings. According to the
Department of Energy, the typical U.S. family spends roughly
$1,900 a year on home utility bills. The Department notes that
a large portion of the energy used in homes can be wasted. For
example, uninsulated home heating air ducts can lose up to 60
percent of the heat in the air that they convey. Insulating
these ducts can save homes money and reduce energy demand.
Replacing an old air conditioner with a new, energy-efficient
model reduces utility cooling bills by up to 50 percent. This
can also save money on energy bills and reduce energy
demand.\71\
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\71\Energy Savers Booklet: Tips on Saving Energy and Money at Home.
US Department of Energy. Available at http://www1.eere.energy.gov/
consumer/tips/pdfs/energy_savers.pdf
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According to the Department of Energy, the Nation's
buildings sector accounts for roughly 40 percent of our energy
use, 72 percent of our electricity consumption, and 34 percent
of our nation's use of natural gas--and building-related energy
costs were about $390 billion in 2006.\72\ According to the
Environmental Protection Agency, commercial buildings that have
met the agency's Energy Star standards\73\ are one-third more
energy efficient than average U.S. office buildings and have
annual energy bills that are 35 percent lower than the average
building.\74\ Data from the Energy Star program shows that
buildings that met the program requirements in 2008 resulted in
a net savings of $5.3 billion, with 18.5 million metric tons of
avoided greenhouse gas emissions.\75\
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\72\Buildings Energy Data Book, Sept. 2008, Tables 1.1.3 1.1.6,
3.1.1, 3.3.1, 4.1.5, 5.1.2, 5.3.1. Available at http://
buildingsdatabook.eren.doe.gov/docs/DataBooks/2008_BEDB_Updated.pdf
\73\The Environmental Protection Agency's Energy Star Program
promotes the use of energy efficient products and building designs.
\74\Summary of the financial benefits of Energy Star labeled
buildings. US Environmental Protection Agency. Available at: http://
www.energystar.gov/ia/partners/publications/pubdocs/
Summary_of_the_Financial_Benefits_23June06_FINAL.pdf
\75\Energy Star and Other Climate Protection Partnerships: 2008
Annual Report. US Environmental Protection Agency. Available at http://
www.energystar.gov/ia/partners/publications/pubdocs/
Annual%20Report_122309_to%20EPA_Web.pdf
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Retrofits, a major component of increasing energy
efficiency, and the primary focus of the Retrofits for Energy
and Environmental Performance program authorized in Section
164, provide new domestic job opportunities. Retrofitting
existing homes requires jobs that cannot be exported and must
be performed in communities across the nation. These jobs
include installing insulation, new windows and new heating and
cooling systems. Many of these jobs rely on existing skills
used in the construction industry.
Discussion: Renewable fuels
According to the Environmental Protection Agency,
transportation accounts for 28 percent of the nation's
greenhouse gas emissions. Reducing our nation's dependence of
foreign sources of petroleum to fuel our transportation sector
strengthens our national security and promotes energy
independence. The programs authorized in this subtitle promote
domestic sources of biofuels that accomplish these goals while
providing domestic sources of employment and reducing
greenhouse gas emissions.
The advanced biofuel sector is on the cutting edge of
science. The advanced green biofuel grant program and the
modification of the term ``cellulosic'' biofuel in the
renewable fuels standard recognize the rapid development of
this technology and seek to promote these new fuel sources. The
advanced green biofuel program provides the Environmental
Protection Agency with maximum flexibility to help promote
advanced biofuel development at each stage of production,
focusing on fostering advanced green biofuels that are
sustainably generated throughout the production cycle and that
can use the nation's existing fuel delivery systems.
SUBTITLE G--EMISSION REDUCTIONS FROM PUBLIC TRANSPORTATION VEHICLES
Section 171. Short title
Section 172. State fuel economy regulation for taxicabs
Allows State and local governments to set emissions
standards for fuel efficiency of taxi cabs at least as
stringent as applicable Federal standards.
Section 173. State regulation of motor vehicle emissions for taxicabs
Amends the Clean Air Act to allow State and local
governments to set emissions standards for emissions from taxi
cabs at least as stringent as applicable Federal standards.
SUBTITLE H--CLEAN ENERGY AND NATURAL GAS
Section 181. Clean energy and accelerated emission reduction program
Authorizes EPA to carry out a program to provide incentive
payments for power generation projects that achieve reductions
in greenhouse gases as compared to the electric utility sector
average.
Section 182. Advanced natural gas technologies
Authorizes EPA to carry out a program to provide grants for
research and development of advanced technologies, including
carbon capture and sequestration, which reduce greenhouse gas
emissions from natural gas-fueled electricity generation
facilities.
Discussion
Natural gas will play an important role in reducing U.S.
greenhouse gas emissions because it has by far the lowest
carbon content of the fossils fuels. Natural gas can be used in
power generation, transportation, and direct end use
applications.\76\ Using natural gas in the transportation
sector can increase our national security by decreasing our use
of oil--two thirds of which is foreign oil.
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\76\Testimony of Joel Bluestein, Senior Vice President, ICF
International, before Senate Committee on Environment and Public Works,
``Legislative Hearing on S. 1733, Clean Energy Jobs and American Power
Act,'' Oct. 28, 2009.
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Recent developments in natural gas drilling technology have
greatly increased estimated U.S. natural gas reserves. The
Energy Information Agency forecasts that the U.S. production of
natural gas from unconventional sources will increase from 47%
of the U.S. total in 2007 to 56% in 2030.\77\
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\77\U.S. Department of Energy, Energy Information Agency, Annual
Energy Outlook 2009 (March 2009) (online at http://www.eia.doe.gov/
oiaf/aeo/gas.html).
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Increased production of natural gas, especially from
unconventional sources where hydraulic fracturing is used or
where production fluids cannot be re-injected into the
formations, is not without risks to human health and the
environment. In the Interior, Environment and Related Agencies
Appropriations Act, 2010, Congress urged EPA to conduct a
scientific, peer-reviewed study, including consultation with
other federal agencies and appropriate State and interstate
regulatory authorities, on the relationship between hydraulic
fracturing and drinking water.\78\
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\78\H. Conf. Report 111-316 (Oct. 28, 2009), at 109.
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Using more domestic natural gas will enhance our economic
competitiveness. Higher demand for natural gas will create more
U.S. jobs, and using domestic gas in lieu of imported oil would
reduce our trade imbalance, keeping more of our energy dollars
to invest at home instead of sending overseas. Natural gas can
also be used to develop new, clean-energy technologies such as
wind-gas hybrid electricity plants, carbon capture and
sequestration, and natural gas transportation fuels. American
engineered low-carbon technology innovations could be marketed
to the rest of the world, helping to reduce worldwide
CO2 emissions and maintaining the United States'
leadership in technology innovation.\79\
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\79\Testimony of John D. Podesta, President and CEO, Center for
American Progress, before Senate Committee on Environment and Public
Works, ``Legislative Hearing on Clean Energy Jobs and American Power
Act, S. 1733'', Oct. 29, 2009.
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S. 1733 will encourage the use of natural gas for power
generation by authorizing EPA to carry out a program under
Section 181 to provide incentive payments for power generation
projects that achieve reductions in greenhouse gases as
compared to the electric utility sector average.
Section 182 of the bill will significantly accelerate the
development of advanced natural gas technologies by authorizing
EPA to provide grants for research and development of advanced
natural gas technologies, including CO2 capture and
sequestration from natural gas-fired power plants.
TITLE II--RESEARCH
SUBTITLE A--ENERGY RESEARCH
Section 201. Advanced energy research
Authorizes EPA to carry out a program to provide grants to
support research and development on innovative energy
technologies that reduce US dependence on foreign energy
sources and reduce greenhouse gas emissions.
Discussion
Increased funding for research on advanced energy
technologies is critically important to achieving technological
breakthroughs that will help the U.S. transition to a clean
energy economy. The U.S. Government has a history of funding
the basic research of technologies that have become central to
our economy. Similarly, the basic research being conducted
today will lead to the clean energy technologies of tomorrow.
Federal research and sponsorship will be critically important
to ensuring a substantial U.S. role in these industries.
Section 201 creates a program that will direct appropriated
funds to these vitally important research projects.
SUBTITLE B--DRINKING WATER ADAPTATION, TECHNOLOGY, EDUCATION, AND
RESEARCH
Section 211. Effects of climate change on drinking water utilities
Requires EPA to establish and provide funding for a
research program, to be conducted through a nonprofit water
research foundation and sponsored by drinking water utilities,
to assist utilities in adapting to the effects of climate
change.
Discussion
This section directs funds to assist drinking water
utilities in adapting to climate change impacts on our water
and wastewater systems. Such impacts include extended and
extreme drought, water scarcity and the need to develop new
supplies, extreme flooding and sea level rise, costly energy
and energy efficiency actions, and water quality degradation
and increased treatment requirements.\80\
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\80\National Association of Clean Water Agencies, ``Confronting
Climate Change: An Early Analysis of Water and Wastewater Adaptation
Costs,'' October 2009, 1-2, http://www.
nacwa.org/images/stories/public/2009-10-28ccreport.pdf.
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A recent study by the National Association of Clean Water
Agencies estimates that drinking water utilities will require
$325-$692 billion to address climate change through 2050.\81\
Drinking water utilities will likely have to engage in costly
adaptation strategies to respond to climate change impacts
including: increasing conservation to extend existing sources
of water; learning to tap new water sources, such as seawater
desalination, lower quality groundwater and wastewater reuse;
increasing storage and conveyance to accommodate changes in the
timing and intensity of precipitation and runoff; increasing
wastewater treatment; addressing flooding damage, particularly
in coastal areas; and creating water management portfolios that
add flexibility and support sustainability of the water
supply.\82\
---------------------------------------------------------------------------
\81\Id. at 3-7.
\82\Id. at 3-5.
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Water and wastewater infrastructure planning operates
within a 20- to 40-year timeframe, making timely action
critical.\83\ Adaptation responses identified must continue to
include innovative approaches and cooperation among water-
related organizations.\84\ This section will provide additional
funds to research adaptation strategies and build partnerships
as drinking water utilities face increasing challenges in
securing and sustaining our nation's water supply.
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\83\Id. at 1-2.
\84\Id. at 3-1.
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TITLE III--TRANSITION AND ADAPTATION
SUBTITLE A--GREEN JOBS AND WORKER TRANSITION
PART 1--GREEN JOBS
Section 301. Clean energy curriculum development grants
Authorizes the Secretary of Education to award grants, on a
competitive basis, to eligible partnerships to develop programs
of study focused on emerging careers and jobs in the fields of
clean energy, renewable energy, energy efficiency, climate
change mitigation, and climate change adaptation.
Section 302. Development of information and resources clearinghouse for
vocational education and job training in renewable energy
sectors.
Requires the Secretary of Labor, in collaboration with the
Secretary of Energy and the Secretary of Education, to develop
an internet-based information and resources clearinghouse to
aid career and technical education and job training programs
for the renewable energy sectors.
Section 303. Green construction careers demonstration project
Requires the Secretary of Labor, in consultation with the
Secretary of Energy, to establish a Green Construction Careers
demonstration project to promote careers and quality employment
practices in the green construction sector and to advance
efficiency and performance on construction projects related to
the Act.
Discussion
The Committee intends that the Secretary use the authority
provided under the Demonstration Program to develop a national
framework that would include benchmarks and standards to ensure
that qualified pre-apprenticeship programs are effectively
aligned and coordinated with appropriate apprenticeship or
other training programs as defined in the Act. One critical
area of alignment and coordination is the use of appropriate
and industry recognized curriculum such as an approved multi-
craft core curriculum, that prepare participants for entry into
appropriate apprenticeship or other training programs as
defined in the Act and further post-secondary education.
The Committee is also interested in the Secretary
developing other standards to ensure that qualified pre-
apprenticeship programs are high quality and responsive to
local labor market demand, including standards encouraging
curriculum that provides an introduction to energy and water
efficient construction and retrofitting and other renewable
energy technologies, and responsive to the diverse needs of
program participants--including limited English language
proficient participants--and the specific training, support,
and placement services they will require for successful entry
into qualified apprenticeship programs.
PART 2--CLIMATE CHANGE WORKER ADJUSTMENT ASSISTANCE
Section 311-313. Petitions, eligibility requirements, and
determinations; Program benefits; General provisions
Establishes a program to assist workers with transition to
new careers by enabling workers to receive transition
assistance and career-related training. Benefits include 156
weeks of income supplement, 80% of monthly health care
premiums, 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.
Discussion
These sections will create a program for climate change
worker adjustment assistance, to be funded by a portion of the
revenues from the auction of emission allowances. The program
will be administered by the Department of Labor (DOL). America
has a long tradition of investing in targeted assistance
programs for workers who are affected by shifts in Federal
policy and economic transitions. Like the GI Bill and
provisions under the 1990 Clean Air Act amendments supporting
affected coal miners, this program will result in a net
economic benefit to our economy, helping workers gain the
technical expertise needed in our changing economy.
SUBTITLE B--INTERNATIONAL CLIMATE CHANGE PROGRAMS
Section 321. Strategic interagency board on international climate
investment
Directs the President to establish the Strategic
Interagency Board on International Climate Investment, composed
of the Secretary of State, the Administrator of EPA, and other
Federal officials, to assess, monitor and evaluate the progress
and contributions of U.S. Government entities in supporting
financing for international climate change activities.
Section 322. Emission reductions from reduced deforestation
Amends Title VII of the Clean Air Act by inserting Part E,
which includes the following new sections:
Part E--Supplemental Emission Reductions
Section 751. Definitions
Defines forest carbon activities.
Section 752. Purposes
States the purposes to develop and improve mitigation
policies and actions that reduce deforestation and forest
degradation or conserve or restore forest ecosystems in a
measurable, verifiable, and reportable manner.
Section 753. Emission reductions from reduced deforestation
Directs the Administrator of the United States Agency for
International Development (U.S. AID), in consultation with the
Administrator of EPA, the Secretary of Agriculture, and the
heads of any other appropriate agencies to establish a program
to build capacity in developing countries to reduce emissions
from deforestation and to participate in international markets
for offset credits, which will ensure a sufficient supply of
offsets for American companies.
Section 323. International clean energy deployment program
Directs the Secretary of State, in consultation with an
interagency group designated by the President, to establish a
program that supports activities in developing countries
contributing to substantial, measurable, reportable and
verifiable reductions, sequestrations or avoidance of
greenhouse gas emissions.
Section 324. International climate change adaptation and global
security program
Directs the Secretary of State, in consultation with the
Administrator of U.S. AID, the Secretary of the Treasury, and
EPA to establish a program to provide assistance to the most
vulnerable developing countries to protect and promote the
interests of the United States.
Section 325. Evaluation and reports
Directs the Strategic Interagency Board to implement a
system to monitor and evaluate the effectiveness and efficiency
of assistance provided under this Act. Also directs the Board
to prepare an annual report to Congress describing steps
agencies have taken and the progress made toward accomplishing
the objectives of this part, and the ramifications of any
potentially destabilizing impacts climate change may have on
the interests of the United States.
Section 326. Report on climate actions of major economies
Requires the Secretary of State, working with the Strategic
Interagency Board, to prepare annually an interagency report on
the climate change and energy polices of the top five largest
greenhouse gas emitting countries that are not members of the
Organization for Economic Co-Operation and Development.
Requires the report to provide Congress and the American public
with a better understanding of the actions these countries are
taking to reduce greenhouse gas emissions.
Discussion
The objectives of this subtitle are to establish a
coordinated and strategic approach to providing international
climate finance and provide a strong commitment to securing an
international climate agreement that promotes the interests of
the United States. This subtitle supports the key elements of
such an agreement which include adaptation to climate change,
deployment of clean energy technologies, and reducing rates of
deforestation in developing countries.
A key finding of the IPCC and other groups is that climate
change will have its most severe impacts in many of the least
developed parts of the world, often the same countries that
have made the smallest contributions to the emissions of
greenhouse gases. For example, people living in developing
countries are more than 20 times as likely to be affected by
climate-related disasters.\85\ Drought prone regions in Africa,
low-lying countries in Southeast Asia, and glacier-water
dependent parts of South America and Asia may be particularly
vulnerable. Because many of these regions already suffer from
instability and limited resources, climate change has the
potential to greatly magnify instability, competition and
conflict, which threatens the national security interests of
the United States. The Center for Naval Analysis in a 2007
report described climate change, its impact on developing
countries, and the implications for U.S. national security as a
``threat multiplier''.\86\ The background section of this
report further describes how these changes have the potential
to impact the national security of the U.S.
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\85\Oxfam America. Adaptation 101.
\86\Center for Naval Analysis. 2007. National Security and the
Threat of Climate Change. Available at: http://
securityandclimate.cna.org/report/ National%20Security%20
and%20the%20Threat%20of%20Climate%20Change.pdf.
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Some impacts of climate change will occur even if global
efforts to reduce emissions begin immediately and are highly
successful. For example, World Health Organization estimates
that climate change may already contribute to 150,000 deaths
each year and the IPCC projects that by 2020, long before high
concentrations of greenhouse gases are reached, 75 to 250
million people in Africa will be exposed to increased water
stress as a result of climate change.\87,\\88\ Assistance to
reduce water scarcity, reduce impacts of flooding and sea-level
rise, improve agricultural practices, and improve health
systems to address climate-related health impacts will help
least developed nations respond to the impacts of unavoidable
climate change and reduce the degree to which climate change
creates or exacerbates threats to national security.
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\87\WHO, ``Climate and health,'' Fact Sheet No. 266, August 2007,
www.who.int/mediacentre/factsheets/fs266/en/index.html
\88\IPCC AR4 Working Group II, Summary for Policymakers, at p.13.
Available at: http://www1.ipcc.ch/pdf/assessment-report/ar4/wg2/ar4-
wg2-spm.pdf.
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By building capacity and providing powerful incentives to
develop national efforts to reduce deforestation, the Committee
intends that the program authorized under Section 322 will both
achieve significant reductions in emissions from deforestation
and allow many nations to participate in carbon markets, which
will expand the supply of available offset credits and reduce
costs for American companies. Deforestation is one of the
largest sources of greenhouse gas emissions in developing
countries, amounting to approximately 15 percent of overall
emissions globally. 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.
This subtitle also establishes a program for development of
clean energy technologies in developing countries. Investments
in clean energy technology cooperation can substantially reduce
global greenhouse gas emissions while also increasing demand
for clean energy products, opening up new markets for United
States companies, spurring innovation, and lowering costs.
SUBTITLE C--ADAPTING TO CLIMATE CHANGE
PART 1--DOMESTIC ADAPTATION
Subpart A--National Climate Change Adaptation Program
Section 341. National climate change adaptation program and services
Requires the President to establish a National Climate
Change Adaptation Program to increase the overall effectiveness
of Federal climate change adaptation efforts.
Sections 342. Climate Services
Directs the Secretary of Commerce to establish within the
National Oceanic and Atmospheric Administration a National
Climate Service to develop and disseminate climate information,
data, forecasts, and warnings at national and regional scales.
SUBPART B--PUBLIC HEALTH AND CLIMATE CHANGE
Sections 351. Sense of Congress on public health and climate change
States 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 352. Relationship to other laws
Clarifies that nothing in the subpart limits authorities or
responsibilities conferred by other law.
Section 353. National strategic action plan
Requires the Secretary of Health and Human Services to
prepare and implement a national strategic action 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, supported by a science advisory board and a needs
assessment.
Section 354-356. Advisory board; Reports; Definitions
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.
Discussion
Experts within the global public health community have
reached a broad consensus that climate change poses a serious
threat to public health. The IPCC's Fourth Assessment report
described severe likely impacts on public health, including:
Increased numbers of people suffering from death,
disease, and injury from heat waves, floods, storms, fires and
droughts.
Increased cardio-respiratory diseases due to
higher concentrations of ground-level ozone pollution related
to climate change.
Changes in the range of some infectious disease
vectors.
Increased malnutrition and consequent disorders,
including those relating to child growth and development.\89\
---------------------------------------------------------------------------
\89\Intergovernmental Panel on Climate Change, Climate Change 2007:
Impacts, Adaptation and Vulnerability, at 12 (2007).
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The World Health Organization (WHO) estimates that climate
change may already be causing more than 150,000 deaths each
year.\90\
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\90\World Health Organization, Health and Environmental Linkages
Initiative, Climate Change. Available at http://www.who.int/heli/risks/
climate/climatechange/en/
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Dr. Howard Frumkin, Director of the Centers for Disease
Control (CDC) provided more detail in testimony before the
Committee in February 2009, stating that ``CDC considers
climate change a serious public health concern.''\91\ He
described several categories of public health threats posed by
climate change:
---------------------------------------------------------------------------
\91\Testimony of Dr. Howard Frumkin before Senate Committee on
Environment & Public Works, ``Update on the Latest Global Warming
Science,'' Feb. 25, 2009, at 1.
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Direct effects of heat
Health effects related to extreme weather
events
Air pollution-related health effects
Water- and food-borne infectious diseases
Vector-borne and zoonotic diseases
Emerging pathogens susceptible to weather
conditions
Allergies
Mental health problems\92\
---------------------------------------------------------------------------
\92\Id. at 2-3.
CDC has concluded that ``an effective public health
response to climate change can prevent injuries, illnesses, and
death while enhancing overall public health preparedness.''\93\
The U.S. Global Change Research Program has similarly concluded
that: ``health impacts of climate change are related to heat
stress, waterborne diseases, poor air quality, extreme weather
events, and diseases transmitted by insects and rodents. Robust
public health infrastructure can reduce the potential for
negative impacts.''\94\
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\93\Id. at 14.
\94\http://www.globalchange.gov/publications/reports/scientific-
assessments/us-impacts/key- findings;
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As Committee members have noted, among those State
officials charged with protecting the public health, there is
no partisan divide or disagreement on the need to take urgent
action to address climate change. For example, the Association
of State and Territorial Health Officials, representing all 50
States, recently joined in a letter to the Committee saying:
We are very concerned about the human health effects
of climate change. Global warming is expected to worsen
many health problems, including heat and other weather-
related illness and injury, diarrheal and other
infectious diseases. Respiratory illness associated
with pollution and allergens in the air may be
exacerbated. To help prepare for these challenges, we
need to develop proactive global climate change
preparedness strategies now.
Sections 351-356 provide for development of a comprehensive
national strategic action plan to respond to these public
health threats in the United States and an advisory board to
develop and oversee these efforts.
SUBPART C--CLIMATE CHANGE SAFEGUARDS FOR NATURAL RESOURCES CONSERVATION
Section 361-363. Purposes; Natural Resources Climate Change Adaptation
Policy; Definitions
States that the purpose of this subpart is to establish a
program to address climate change impacts on natural resources.
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.
Section 364. Council on Environmental Quality
Directs the Council on Environmental Quality to advise the
President and coordinate federal actions regarding strategies,
plans, programs, and activities relating to protecting,
restoring, and maintaining natural resources so that they are
more resilient to the ongoing and expected impacts of climate
change.
Section 365. Natural Resources Climate Change Adaptation Panel
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 366. Natural Resources Climate Change Adaptation strategy
Requires the Adaptation Panel to develop a strategy for
making natural resources more resilient to the impacts of
climate change and ocean acidification. The strategy is to
assess likely impacts to natural resources, strategies for
helping wildlife adapt, and specific actions that Federal
agencies should take.
Section 367. Natural resources adaptation science and information
Establishes a process through National Oceanic and
Atmospheric Administration 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.
Section 368. Federal Natural Resource Agency adaptation plans
Requires Federal agencies to develop natural resource
adaptation plans, consistent with the National Adaptation
Strategy, including prioritized goals and a schedule for
implementation of adaptation programs within their respective
jurisdictions.
Section 369. 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 370. Natural Resources Climate Change Adaptation Account.
Provides that of the allowances devoted to state natural
resources adaptation 84% be provided to State wildlife agencies
and 16% to State coastal agencies. Funds placed in the Natural
Resources Climate Change Adaptation Fund are to be distributed
to Federal agencies in the following amounts: 28% 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% to DOI for cooperative grant
programs; 5% to DOI for tribal programs; 20% to the Land and
Water Conservation Fund
(\1/6\ to DOI for competitive grants, \1/3\ for land
acquisition under Sec. 7 of the Land and Water Conservation
Fund Act, \1/6\ to U.S. Department of Agriculture (USDA) for
the Forestry Assistance Act, and \1/3\ to the USDA for land
acquisition,); 8% to USDA for the Forest Service; 12% to EPA
for estuaries and freshwater ecosystems; 8% to the Army Corps
of Engineers for freshwater ecosystems; and 11% to the
Secretary of Commerce for coastal and marine ecosystems. All
funds must be used for adaptation activities, and States shall
ensure that a minimum of 10% of project costs are paid by non-
Federal sources.
Section 371. National fish and wildlife habitat and corridors
information program
Establishes a program in the DOI to support States and
tribes in the development of a geographical information system
(GIS) of databases of fish and wildlife habitats and corridors.
Facilitates the use of database tools in wildlife management
programs.
Section 372. Additional provisions regarding Indian tribes
Clarifies that nothing in this subpart amends Federal trust
responsibilities to Indian tribes or exempts information on
tribal sacred sites or cultural activities from the Freedom of
Information Act, and clarifies that DOI may apply the
provisions of the Indian Self-Determination and Education
Assistance Act as appropriate.
Discussion
America's rich natural resources are estimated to provide
the nation with billions of dollars of services each year:
wetlands purify our water and protect our coasts, forests clean
our air and water and provide income to the timber industry,
and recreational opportunities like hunting and fishing fuel
the economy of many rural areas. However, climate change places
many of the nation's bountiful natural resources at risk. Even
if legislation is enacted to cut global warming pollution
today, climate change will drastically impact natural resources
for many decades to come as wildlife and plant populations are
subjected to changes in temperature, precipitation, stream
flow, and the timing and frequency of severe weather events.
The IPCC reports that 20-30% or potentially more plant and
animal species will be placed at risk of extinction by climate
change.\95\ For changes over 2.5+C, the IPCC predicts that
there will be major changes in ecosystem structure and function
with ``predominantly negative consequences for biodiversity and
ecosystem goods and services, e.g., water and food
supply.''\96\ Global warming could, for example, lead to the
destruction of many wetlands, including up to 90% of wetlands
in the prairie potholes region.\97\ Increased fire risk due to
drought, seasonal shifts, and increased pest load can
significantly increase fire risk in the western US.\98,\\99\
Water levels in Lake Erie, already below average, could
decrease 4-5 feet by the end of this century, disrupting
shoreline habitat.\100\
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\95\IPCC AR4 Working Group 2, Section 4 ES, and Section 4.4.11.
\96\IPCC AR4 Working Group 2, Summary for Policy Makers, p.11.
\97\M.G. Anderson and L.G. Sorenson. 2001. ``Global Climate Change
and Waterfowl: Adaptation in the Face of Uncertainty.'' Transaction of
the 66th North American Wildlife and Natural Resources Conference
(Washington, DC: Wildlife Management Institute, 300-319.
\98\Westerling, A. L., H. G. Hidalgo, D. R. Cayan, and T. W.
Swetnam. 2006. Warming and earlier spring increases Western U.S. forest
wildfire activity. Science 313: 940-43.
\99\http://www.usgcrp.gov/usgcrp/Library/nationalassessment/
overviewforests.htm.
\100\Lofgren, B.M., Quinn, F.H., Clites, A.H., Assel, R.A.,
Eberhardt, A.J., Luukkonen, C.L. 2002. Evaluation of Potential Impacts
on Great Lakes Water Resources Based on Climate Scenarios of Two GCMs,
Journal of Great Lakes Research, 28(4):537-554.
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This subpart invests critical funding to help our natural
resources survive this period of climatic change. Investment
now will help avoid impacts that will be difficult or
impossible to reverse.\101\ Currently, resource managers are
without the financial means to address the many challenges of
climate change. The allowance value provided through the
pollution reduction program in Division B will assist natural
resource managers in safeguarding existing natural resources
and wildlife and taking steps to increase resilience to climate
change. Under this subpart, federal, state, and tribal agencies
will receive funding to carry out natural resource adaptation
activities that help with survival of fish and wildlife, fish
and wildlife habitats, plants, and associated ecological
processes threatened by climate change or ocean acidification.
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\101\National Wildlife Federation. 2008. Investing in America's
Natural Resources--The Urgent Need for Global Warming Legislation.
Reston, Virginia.
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SUBPART D--ADDITIONAL CLIMATE CHANGE ADAPTATION PROGRAMS
Section 381. Water system mitigation and adaptation partnerships
Requires the EPA Administrator to establish a water system
mitigation and adaptation partnership program for distribution
of funds under the Act by States as grants for water system
adaptation projects.
Identifies eligible parties and uses. Provides for a
competitive process, prioritizing applications for water
systems at the greatest and most immediate risk of facing
significant climate-related negative impacts, and establishes
requirements and goals to be met by States in awarding grants.
Discussion
Drinking, irrigation and wastewater systems will face
significant challenges in adapting to climate change impacts.
Such impacts are expected to include extreme flooding, extended
and extreme drought, water scarcity, water quality degradation
and increased treatment requirements.\102\ These impacts affect
the function and operation of existing water infrastructure as
well as water management practices.\103\ Furthermore, as water
demand continues to grow because of population growth and
increased affluence, so will the stress on the Nation's aging
water infrastructure.\104\
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\102\National Association of Clean Water Agencies, ``Confronting
Climate Change: An Early Analysis of Water and Wastewater Adaptation
Costs,'' October 2009, 1-2, http://www.nacwa.org/images/stories/public/
2009-10-28ccreport.pdf.
\103\Id. at 175.
\104\Id.
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A recent study by the National Association of Clean Water
Agencies estimates that wastewater and drinking water utilities
will require $325-$692 billion to address climate change
through 2050.\105\ Utilities will likely have to engage in
costly adaptation strategies to respond to climate change
impacts including: increasing conservation to extend existing
sources of water; learning to tap new water sources, such as
seawater desalination, lower quality groundwater and wastewater
reuse; increasing storage and conveyance to accommodate changes
in the timing and intensity of precipitation and runoff;
increasing wastewater treatment; addressing flooding damage,
particularly in coastal areas; and creating water management
portfolios that add flexibility and support sustainability of
the water supply.\106\
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\105\National Association of Clean Water Agencies, ``Confronting
Climate Change: An Early Analysis of Water and Wastewater Adaptation
Costs,'' October 2009, 1-2, http://www.nacwa.org/images/stories/public/
2009-10-28ccreport.pdf.
\106\Id. at 3-5.
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Water and wastewater infrastructure planning operates
within a 20- to 40-year timeframe, making timely action
critical.\107\ This section establishes a program that will
provide additional funds to assist drinking water, wastewater,
and irrigation systems to carry out the projects and activities
necessary to secure and sustain the Nation's water supply in
the face of climate change.
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\107\Id. at 1-2.
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Section 382. Flood control, protection, prevention and response.
Requires the Administrator to establish a program for
distribution of funds by States under the Act for flood
control, protection, prevention and response projects.
Establishes eligible uses, objectives and priorities, including
projects that advance multiple objectives and utilize non-
structural approaches.
Discussion
According to the IPCC, ``[t]he impacts of climate change on
freshwater systems and their management are mainly due to the
observed and projected increases in temperature, sea level and
precipitation variability.''\108\ Extreme flooding and drought
are likely to occur due to increased precipitation intensity
and variability.\109\ Warmer temperatures will very likely lead
to higher precipitation extremes that ``directly affect the
risk of flash flooding and urban flooding.''\110\ The program
established by this section will provide funding to local
governments to carry out projects that reduce flood risk and
plan for increased flood risk associated with climate change.
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\108\Intergovernmental Panel on Climate Change (IPCC) Fourth
Assessment Report, ``Climate Change 2007: Impacts, Adaptation and
Vulnerability.'' Chapter 3: Fresh Water Resources and their Management,
at 175.
\109\Id.
\110\Id. at 187
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Section 383. Wildfire
Establishes a program to provide grants for education
programs to raise awareness of homeowners and citizens about
wildland fire protection practices, including FireWise or
similar programs, training programs for local firefighters on
wildland firefighting techniques and approaches, equipment
acquisition to facilitate wildland fire preparedness,
development and implementation of community wildfire protection
plans, and forest restoration that accomplishes fuels
reduction.
Discussion
Climate change also is a significant contributor to the
increasing severity and duration of wildfires throughout the
United States. Research indicates that in the last twenty years
there has been a fourfold increase in the number of major
wildfires.\111\ This increase in wildfire activity has in turn
impacted the ability of federal land management agencies to
adequately fund and address wildfire suppression and mitigation
efforts. In 1991 the Forest Service spent 13% of its budget on
wildfire. As of 2007, it spent 45% of its budget on
wildfire.\112\ Further resources provided by the bill will
assist in responding to these impacts.
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\111\Science Vol. 313. no. 5789, pp. 927-928 (Aug. 18, 2006).
\112\New York Times, ``On Fringe of Forests, Homes and Fires
Meet,'' June 26, 2007. Available at: http://www.nytimes.com/2007/06/26/
us/26fire.html.; Testimony of Phyllis K. Fong, Inspector General, U.S.
Department of Agriculture, before Senate Committee on Energy and
Natural Resources, ``Costs of Wildfire Suppression,'' January 30, 2007.
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Section 384. Coastal and Great Lakes state adaptation program
Requires the EPA Administrator to distribute annually
funding for coastal State economic protection under the Act
pursuant to a prescribed formula, for projects and activities
addressing the impacts of climate change in coastal watersheds.
Discussion
Coastal areas will be particularly impacted by climate
change. For example, water quality in coastal areas will be
compromised in several ways. First, sea level rise will extend
areas of salinization of groundwater and estuaries, resulting
in a decrease in freshwater availability for humans and
ecosystems.\113\ Second, higher surface temperatures will
promote algal blooms and increase the concentration of
pathogens in drinking water sources.\114\ Third, due to higher
runoff and lower water levels, increasing nutrients and
sediments will negatively impact water quality in general.\115\
Sea level rise will also impact infrastructure such as roads,
levees, and wastewater and drinking water systems and require
significant investment to modify and relocate these systems.
The funding provided by this section will assist coastal
communities in adapting to these impacts.
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\113\Id. at 175.
\114\Id. at 188.
\115\Id.
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DIVISION B--POLLUTION REDUCTION AND INVESTMENT
Title I--Reducing Global Warming Pollution
SUBTITLE A--REDUCING GLOBAL WARMING POLLUTION
Amends the Clean Air Act to add Title VII to establish a
declining limit on global warming pollution and to spur private
investment in technologies to reduce global warming pollution.
Section 101. Reducing global warming pollution
Creates a new Title VII in the Clean Air Act, which
establishes a global warming pollution reduction and investment
program.
Discussion
Subtitle A, which creates a new Title VII in the Clean Air
Act, establishes a comprehensive market-based program for
greenhouse gas reduction. This subtitle establishes the rules
and creates the structure of the greenhouse gas emissions
reduction market. By allowing sources to purchase and sell
allowances, the bill permits the private sector to find and use
the lowest-cost reductions for compliance with emissions
limitations. The program creates an explicit economic value for
emissions reductions, which also creates a financial incentive
for, and financial return on, investment in innovations leading
to emissions reductions.
A market-based pollution reduction system was first
introduced in the U.S. in 1989 by then-President, George H.W.
Bush as an innovative strategy for reducing the pollutants that
caused acid rain. With bipartisan support, the 101st Congress
incorporated the Bush cap and trade proposal in the Clean Air
Act Amendment of 1990. Since 1990, the cap and trade approach
first used in the acid rain program has enjoyed continued
bipartisan support, having been incorporated several times in
legislative proposals and pollution control regulations put
forward by both the Clinton administration and the second Bush
administration. The pollution reduction program in the
Committee-reported bill seeks to capture the benefits of the
acid rain approach.
The success of the cap and trade approach reflects several
factors. First, imposing a cap on emissions ensures that the
full measure of required emissions reductions specified by
Congress will be achieved. Second, businesses can operate with
far more flexibility under a cap and trade program than under
more traditional pollution control programs. Third, under cap
and trade, businesses can buy and sell the difference between
their actual emissions and their legally mandated emissions
levels. Cap and trade literally creates a market for emissions
reductions and what markets do best is drive costs down. As a
result, individual businesses can find the lowest cost way to
reduce their emissions--including by purchasing surplus
reductions from other sources that can achieve them at lower
cost. The overall cost of the program, in turn, will be that
much lower. At the same time, markets are the single most
effective driver of innovation; thus, a market for greenhouse
gas emissions reductions is certain to spur significant
innovations in reducing emissions.
Under the pollution reduction program established by the
reported bill, EPA will distribute and auction to covered
entities a fixed number of emissions ``allowances,'' each of
which gives the owner the authorization to emit one ton of CO2-
equivalent in any one year. An entity may then sell the
allowances to another covered entity provided that at the end
of the year it surrenders to the EPA enough allowances to cover
its emissions for that year. Allowances that are not used to
cover emissions in one year may be saved for use in later
years, an option known as ``banking.'' Because the number of
emissions allowances the EPA distributes every year is fixed,
then, by definition, an allowance remaining in excess of a
plant's emissions represents an ``extra'' reduction that may be
transferred to another plant to cover its incremental
emissions. No matter how many or how few allowances are
transferred total emissions always remain constrained by the
cap, guaranteeing economy-wide emissions reductions.
How businesses reduce their GHG emissions has been left
completely to the discretion of the businesses themselves. As a
result, it is up to them to manage the continually changing
economic, technical, and other circumstances in which they are
operating and to integrate their basic business activities with
their obligation to meet their emissions cap. Through emissions
trading, businesses have the means, as well as the incentive,
to find the lowest-possible-cost ways of achieving compliance
anywhere within the entire economy and to reap financial
rewards for developing those means. Under this program, each
business can choose between and among various compliance
alternatives, ranging from energy-efficient technologies, to
capturing CO2-emissions from smokestacks, to changing their
materials or processes, to acquiring allowances or offsets from
other businesses that can make reductions more cost-
effectively.
Critical to the character and success of the program is the
fact that the aggregate number of allowances circulated every
year is fixed, or capped. As a result of this design,
businesses must plan for economic growth and change while
operating against a limit on their total greenhouse gas
emissions. This cap and trade regime gives businesses a direct
financial incentive to reduce emissions below required levels.
Extra reductions, in the form of unused allowances, give
companies flexibility to offset increases in emissions in one
location with reductions in another. In addition, businesses,
like electric utilities, can optimize control by reducing
emissions when it is least expensive to do so and then bank the
surplus allowances for future use or sale. Consequently, extra
reductions give covered sources the flexibility needed to
respond to economic demands and opportunities while meeting
their compliance obligations under the cap.
TITLE VII--GLOBAL WARMING POLLUTION REDUCTION AND INVESTMENT PROGRAM
PART A--GLOBAL WARMING POLLUTION REDUCTION GOALS AND TARGETS
Section 701. Findings
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% of 2005
levels by 2012, 80% by 2020, 58% by 2030, and 17% by 2050.
Section 703. Reduction targets for specified sources
Requires that the regulations issued under Title VII reduce
emissions of covered sources to 97% of 2005 levels by 2012, 80%
by 2020, 58% by 2030, and 17% by 2050.
Section 704. Supplemental pollution reductions
Directs the EPA Administrator to achieve additional low-
cost reductions in global warming pollution equal to an
additional 10 percentage points of reductions from U.S.
emissions in 2005 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 that includes an analysis of the latest
science relevant to climate change, an analysis of capacity to
monitor and verify greenhouse gas reductions, an analysis of
worldwide and domestic progress in reducing global warming
pollution, and additional measures that can be taken.
Section 706. National academy review
Directs the EPA Administrator to commission reports from
the National Academy of Sciences every four years, to evaluate
the most recent EPA report submitted under Section 705, and
provide recommendations for actions 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 issued under sections 705 and
706. If the National Academy review confirms that further
emission reductions are needed, either domestically or
globally, the President may direct federal agencies to use
existing statutory authority to meet National Academy
recommendations, and must submit a report to Congress
recommending additional steps (including legislation) necessary
to achieve emissions reductions.
Discussion
Scientists continue to develop a deeper understanding of
the causes and consequences of climate change. Because climate
science is rapidly evolving, sections 705-707 are designed to
ensure that Congress has access to the most current science
possible when evaluating future climate-related legislation.
The EPA and National Academy studies will update Congress on
the latest science regarding the sources and concentrations of
greenhouse gases, their anticipated impact on the climate, and
the deployment of technologies to reduce emissions. They will
also provide an unbiased, technical examination of the
performance of this legislation and ways in which it might be
improved.
Section 708. Consultation With States. Requires the
Administrator to consult with States involved with the Regional
Greenhouse Gas Initiative, Mid-west Governor's Accord and the
Western Climate Initiative in the development of any
regulations required by this title.
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. The EPA
Administrator may designate additional anthropogenic greenhouse
gases by rule.
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.
Discussion
This section directs the Administrator to utilize
continuous emissions monitoring systems or alternative systems
and methodologies that provide precision, reliability,
accessibility, and timeliness that is as similar as technically
feasible to continuous emissions monitoring systems. The
Committee recognizes that continuous emissions monitoring
systems may not be technically feasible nor provide the
greatest accuracy when monitoring emissions from certain
industrial processes, particularly those with relatively small
quantities of emissions of high global warming potential gases.
The Committee encourages the Administrator to take both the
variability of industrial processes and the accuracy of
alternative systems and methodologies into account when
determining the type of emissions monitoring system or
methodology to require.
Section 714. Perfluorocarbon and other nonhydrofluorocarbon fluorinated
substance production regulation
Provides the Administrator the discretion to regulate non-
hydrofluorocarbon fluorinated substances emitted during the
production of perfluorocarbon either under the emissions limits
established under Section 722 or through a mandatory best
achievable performance standard that is revised to be more
stringent every two years or consistently over a 10-year
period.
PART C--PROGRAM RULES
Section 721. Emission allowances
Establishes an annual tonnage limit on greenhouse gas
emissions from specified activities. Directs the EPA
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).
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, entities that refine or import
petroleum-based and other specified liquid fuels for
introduction into interstate commerce, fluorinated gas
manufacturers, and emitters of nitrogen trifluoride are covered
entities starting with emissions in 2012. Specified industrial
sources, including process emissions associated with petroleum
refining, are covered starting with emissions in 2014. Process
emissions from refineries that are small business refiners are
covered starting with emissions in 2015. Local distribution
companies that deliver natural gas are covered starting with
emissions in 2016.
Allows covered entities to use a total of up to two billion
tons of domestic and international offset credits in lieu of
allowances to demonstrate compliance for a portion of their
emissions. The ability to use these offsets is divided pro rata
among all covered entities. Of the two billion tons of offset
credits, \3/4\ may be derived from domestic offsets and \1/4\
from international offsets. If the Administrator determines
that an insufficient number of domestic offsets are available,
the number of international offsets available may be increased
by 750 million metric tons. Starting with the 2018 compliance
obligation, covered entities using offset credits must submit
five tons of international offset credits for every four tons
of emissions being offset.
Allows the use of term offset credits in lieu of domestic
offset credits to demonstrate temporary compliance with the
Act. When the crediting term of a term offset credit expires,
the covered entity must either submit a term offset credit to
continue to demonstrate compliance temporarily or submit an
allowance or domestic offset credit to demonstrate final
compliance.
Covered entities may also submit an international emission
allowance or compensatory allowance in place of a domestic
emission allowance.
Section 723. Penalty for noncompliance
Establishes penalties for parties that fail to comply with
the requirements of Title VII.
Section 724. Trading
Clarifies that Title VII as established by this section
does not restrict who can hold an allowance, nor does it
restrict the purchase, sale, or other transactions involving
allowances.
Section 725. Banking and borrowing
Permits unlimited banking of allowances for use during
future compliance years. Establishes a two-year rolling
compliance period by allowing covered entities to borrow an
unlimited number of allowances from one year into the future.
Covered entities may also satisfy up to 15% of their compliance
obligations by submitting emission allowances with vintage
years 2 to 5 years in the future, but must pay an 8% premium
(in allowances) to do so.
Discussion
Allowing sources to ``bank'' reductions--by making more
reductions than required and saving unused allowances for
compliance in future years brings both economic and
environmental benefits. Sources that create a supply of
additional or excess reductions when they can achieve those
reductions at lower cost, will, by using those banked
allowances in later years, be able to curb their costs in later
years should future reductions become more expensive. At the
same time, the environment benefits from reductions are
achieved earlier.
Another feature of the greenhouse gas allowance trading
market is the option afforded sources, under certain
conditions, to ``borrow'' allowances or incremental reductions
from future years to offset for purposes of compliance in a
current year. This option grants sources additional flexibility
to manage their financial and compliance demands in the most
economically efficient way possible. Since ``borrowing''
allowances from future years represents a delay in achieving
required reductions, the borrowing program in effect requires
sources to achieve greater reductions in later years.
Section 726. Market stability reserve
Directs the Administrator to create a ``market stability
reserve'' of emission allowances that will be auctioned at a
minimum set price ($28/ton in 2012) that increases annually.
The auction of additional allowances will help contain the
costs of meeting the annual greenhouse gas limits and minimize
price fluctuations. The ``market stability reserve'' will be
established by setting aside a number of allowances from each
year's limit. Following an auction, the reserve will be
refilled through the purchase and retirement of offset credits.
Discussion
The market stability reserve is designed to provide
certainty in the price of allowances by preventing large price
fluctuations. This also has the benefit of preventing
speculation by dampening the ability to increase allowance
prices above the pre-determined reserve price.
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 771. Every
quarter, the Administrator shall auction a specified number of
allowances from the reserve with a minimum reserve price that
begins at $28 and rises at a specified percentage plus
inflation. The auction of additional allowances at a specified
price will reduce the allowance price once the reserve price
trigger is met.
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 offset credits. 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 market
stability 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.
Section 727. Permits
Clarifies the obligations of operators of major 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, to
review the offsets program and provide recommendations to the
President on: Offset project eligibility, scientific
uncertainty, quantification methodologies and related issues.
Section 732. Establishment of offsets program
Directs the President to establish an offsets program and
requires that regulations ensure offsets are verifiable,
additional, and permanent. Directs the President to delegate to
the Secretary of Agriculture elements of the program regarding
agriculture and forestry offset projects and direct work with
farmers, ranchers and foresters.
Section 733. Eligible project types
Requires the President to establish and update a list of
offset project types that are eligible under the program,
taking into account the recommendations of the Offsets
Integrity Advisory Board. Projects types for consideration
include fugitive methane emissions from coal mines, landfills,
and oil and gas distribution facilities; agricultural,
grassland, and rangeland sequestration and management
practices; and changes in carbon stocks attributed to land use
change and forestry activities.
Section 734. Requirements for offset projects
Requires that for each offset project type, the President
establish standardized methodologies for: Determining
additionality; establishing activity baselines; measuring
performance; and accounting for and mitigating potential
leakage. Establishes requirements regarding the permanence of
offset projects and crediting periods, and procedures to
address reversals, including penalties.
Section 735. Approval of offset projects
Establishes procedures for approval of offset projects,
including reporting and record-keeping requirements and a
requirement that an offset project developer certify the
accuracy of information provided in an approval petition.
Section 736. Verification of offset projects
Directs the President to establish requirements for the
verification of offset project performance, and requires that
verification reports be prepared by accredited third-party
verifiers. Allows the President to revoke the accreditation of
any third-party verifier that the President finds fails to
maintain professional qualifications or to avoid a conflict of
interest.
Section 737. Issuance of offset credits
Establishes procedures for the issuance of offset credits
and directs the President 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 President to conduct, on an ongoing basis,
random audits of offset projects, offset credits, and practices
of third-party verifiers. Allows the President to delegate this
responsibility to State governments.
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 State or other programs that meet specified
criteria. Limits the issuance of offset credits under this
section to reductions that occur between January 1, 2009, and
three years after enactment or the effective date of Federal
offset regulations, whichever is sooner.
Section 741. Environmental considerations
Requires additional environmental considerations for
forestry and other land management-related offset projects.
Section 742. Trading
Provides that the trading provisions applicable to
allowances are also applicable to offset credits.
Section 743. Office of offsets integrity
Establishes an Office of Offsets Integrity within the
Department of Justice to: supervise and coordinate
investigations and civil enforcement of the carbon offsets
program established in this part.
Section 744. International offset credits
Allows the President 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 this section. Requires that the U.S. 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.
Establishes procedures and requirements regarding the issuance
of international offset credits for activities that reduce
deforestation.
Section 102. Definitions
Defines key terms for Titles VII and VIII of the Clean Air
Act.
Section 103. Offset reporting requirements
Amends Section 114 of the Clean Air Act to require any
person who is an offset project developer to establish and
maintain records for a period of not less than the offset
project crediting period plus five years.
Discussion
Part D directs the President to promulgate regulations
creating a program to verify offset projects and issue offset
credits. Offset allowances are in addition to emission
allowances and are created when a facility or entity that is
not covered by the emissions cap can certify that it has either
has reduced the number of carbon dioxide equivalents that the
facility or entity otherwise would have emitted in that
calendar year or has increased the number of carbon dioxide
equivalents that the facility or entity otherwise would have
captured from the atmosphere and stored in that calendar year.
Capped sources may then purchase these offset allowances to
help them meet their compliance obligations under the cap.
Part D specifies procedures and standards that the
President must use in certifying, monitoring, and enforcing
offsets. The procedures and standards established in the
subtitle are intended to ensure that the emission reductions
and sequestration increases certified as offsets will be real,
verified, monitored, permanent, enforced, and additional to
what would have happened in the absence of the offset
certification. Such certainty benefits both the purchasers of
allowances (by ensuring valid offsets) and the suppliers of
offsets (by providing a solid, reliable market).
This part includes a provision requiring the President to
delegate to the Secretary of Agriculture elements of the
program related to oversight of agriculture and forestry
projects and direct interaction with farmers, ranchers and
forest landowners. The Committee recognizes the important role
the U.S. Department of Agriculture will play in the offset
program and intends for USDA and the Environmental Protection
Agency to work collaboratively in the implementation of this
program. There is substantial evidence that the agriculture
sector, which has no emissions limitation obligations under the
pollution reduction program established by this title, could
achieve cost-effective reductions or carbon sequestration. This
provision is aimed at facilitating participation by farmers,
ranchers, and foresters in the offset market.
In testimony before the Committee in legislative hearings
on the bill, Thomas Vilsack, Secretary of the U.S. Department
of Agriculture, stated that:
The creation of an offset market will create new
opportunities for the agricultural sector. In
particular, our analysis indicates that annual returns
to farmers and ranchers range from about $1 billion per
year in 2015-20 to almost $15-20 billion in 2040-50,
not accounting for the costs of implementing offset
practices. In the short term, the economic benefits to
agriculture from cap-and-trade legislation will likely
outweigh the costs. In the long term, the economic
benefits from offsets markets easily trump increased
input costs from cap-and-trade legislation.\116\
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\116\Statement of Thomas J. Vilsack, Secretary of Agriculture,
before Senate Committee on Environment & Public Works, ``Legislative
Hearing on Clean Energy Jobs and American Power Act,'' Oct. 27, 2009.
The Committee expects the President, or such agency as the
President determines, to issue an initial list of offset
project types and their associated methodologies under section
733 as expeditiously as practicable, but in no case later than
one year from the date of enactment. Additional project types,
along with their associated methodologies, should be added 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, the
agencies should build on experience in programs already
underway at the Environmental Protection Agency, such as
Natural Gas STAR, Climate Leaders, and the Landfill Methane
Outreach Program.
The provisions for early offset supply under section 740
would enable existing offset projects certified through state,
tribal or voluntary programs to qualify for offset credits
under the pollution reduction program authorized by this Title.
It is the intent of the Committee for both programs established
under state or tribal law as well as other voluntary programs
with criteria and methodologies of equal stringency that meet
the requirements of subsection (a)(2) to be eligible to provide
offset credits under this section. To ensure an adequate supply
of offsets and to enable early actors with verifiable offset
projects to receive offset credits, the Committee encourages
the President to expeditiously determine whether voluntary
programs that petition for approval under subsection (e) meet
the requirements of subsection (a)(2) and if so, approve these
programs.
SUBTITLE B--DISPOSITION OF ALLOWANCES
Section 111. 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 clean
energy, and to spur energy efficiency and the deployment of
clean energy technology. Allocates allowances to prevent
deforestation and support national and international adaptation
efforts and for other purposes.
PART H--DISPOSITION OF ALLOWANCES
Section 771. Allocation of emission allowances
Provides for allocation and auction of allowances.
Discussion
This section provides for the distribution of allowances
established by the pollution reduction program. The
distribution of allowances are targeted towards four principal
areas--consumer protection, transition to a clean energy
economy, climate change adaptation, and investment in clean
energy technologies. In the initial years of the program, a
majority of allowances are distributed freely to covered
entities to ease the transition to clean energy sources and
reduce the overall cost to consumers of the emissions reduction
program. This ensures that the major sectors covered by the
pollution reduction program are able to accommodate their
pollution reduction obligation. These allowances begin to
decline after 2025 and by the year 2030 over 91% of allowances
are auctioned or invested in public purposes, such as energy
efficiency, renewable energy and climate change adaptation.
A majority of the allowances are dedicated to consumer
protection throughout the life of the bill. As much as 69% of
allowances remaining after set-asides are applied are reserved
for consumer rebates by the year 2035.
Section 772. Electricity consumers
Directs distribution of allowances allocated for the
benefit of consumers to local electricity distribution
companies (LDCs), whose retail rates are regulated by States or
other entities. Requires half of the allowances to be
distributed based on historic emissions and half based on
retail sales, but prohibits any electricity LDC from receiving
allowances whose value exceeds the LDC's direct and indirect
costs of complying with this Title. Requires that these
allowances be used exclusively for the benefit of the LDC's
retail ratepayers, and prohibits the Administrator from
releasing an LDC's allowances until after a ratemaking or
similar proceeding has been conducted regarding the appropriate
use of the allowances.
Directs distribution of allowances for merchant coal
generators and for certain generators with long-term power
purchase agreements and small LDCs and rural electric
cooperatives and publicly owned utilities that are small LDCs
to support renewable electricity deployment, energy efficiency
programs, and consumer assistance for low-income ratepayers.
Requires the Administrator to conduct an audit of LDCs
receiving allowances under this section to ensure that emission
allowances have been used exclusively for the benefit of retail
ratepayers. Every three years, the U.S. Government
Accountability Office is required to report on the integrity of
the allowance program, and the Administrator is required to
submit to Congress an evaluation of the disposition of emission
allowances.
Discussion
Customers of electric utilities will receive approximately
35% of allowances remaining after set-asides are distributed,
representing a significant portion of current utility
emissions. Local electric distribution companies (LDCs), whose
rates are regulated by the States, will receive 30% of the
allowances, which are required to be used to protect consumers.
Merchant coal and long-term power purchase agreements will
receive 5% of the allowances. The allowances will phase out
over a five-year period from 2026 through 2030. For further
consumer protection, small LDCs (including rural electric
cooperatives) receive 0.5% of distributed allowances and will
receive an additional 0.5% distribution of the supplemental
allowance allocation described below each year from 2012
through 2025, phasing out by 2030.
These provisions are intended to protect consumers,
especially low-income consumers. LDCs for electricity (also
known as load serving entities) provide a convenient platform
for distributing the economic benefits of a cap and trade
system back to consumers, as they are the ones which deliver
monthly electrical bills. They are also under the guidance and
oversight of state public utility commissions--giving states
oversight of how the funds directed through these provisions
are spent. The section specifically requires LDCs to use the
allowances for the benefit of consumers. However, this section
does not prescribe the mechanism LDC's should use to benefit
consumers; such as direct rebates or end-user energy efficiency
improvements.
This section further directs the EPA and the Federal Energy
Regulatory Commission (FERC) to conduct and issue a study on
whether the allocation formula for allowances provided to
merchant coal generators is resulting in windfall profits to
merchant coal generators or substantially disparate treatment
of merchant coal generators operating in different markets or
regions. This section also requires the EPA Administrator to
find, based on the report, whether such impacts are occurring,
and if so, adjust the allocation formula accordingly. The
Committee does not intend for EPA to make such a determination
and adjust the allocation formula prior to evaluating data on
the impact of the allocation formula, but rather the Committee
intends for EPA, in consultation with FERC, to base the
determination on the analysis of data derived from multiple
years of allowance allocations that have taken place.
Section 773. Natural gas consumers
Directs the Administrator on how to distribute the
allowances allocated for the benefit of consumers to local
natural gas distribution companies, whose retail rates are
regulated by States or other entities.
Discussion
Local natural gas distribution companies, whose rates are
regulated by the States, will receive 9% of the distributed
allowances, which are required to be used to protect consumers
from natural gas price increases. These allowances will phase
out over a five-year period from 2026 through 2030.
Section 774. Home heating oil and propane consumers
Directs the Administrator on how to distribute allowances
to States for programs to benefit residential and commercial
users of home heating oil, propane, and kerosene.
States will receive 1.5% of the distributed allowances for
programs to benefit users of home heating oil and propane.
These allowances will phase out over a five-year period from
2026 through 2030.
Section 775. Domestic fuel production
Oil refiners will receive 1.25% of allowances starting in
2014 and ending in 2026, with an additional 1% allocated to
small business refiners.
Section 776. Consumer protection
Establishes two rebate programs to provide rebates to
offset electricity and other cost impacts on consumers. The
section establishes a low and moderate income rebate fund as
well as a climate change consumer rebate fund to distribute
proceeds from the sale of allowances.
Fifteen percent of distributed allowances will be auctioned
each year with the proceeds distributed to low- and moderate-
income families to protect against any energy cost increases.
The allocation increases to 18.5% after 2029.
Section 777. 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 778. Auction procedures
Establishes single-round, sealed-bid, uniform-price auction
procedures, which may be modified by the Administrator.
Provides that a percentage of allowances will be made available
for small business refiners to purchase for compliance for that
year at the average auction price.
Section 779. Auctioning allowances for other entities
Establishes rules by which the Administrator may auction
allowances on behalf of other entities.
Section 780. Commercial deployment of carbon capture and permanent
sequestration technologies
Directs 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. Entities that receive
allowances are required to capture at least 50% of the carbon
dioxide emitted.
Discussion
1.75% of distributed allowances from 2014 through 2017,
4.75% in 2018 and 2019, and 5% in subsequent years will be
allocated to help electric utilities cover the costs of
installing and operating carbon capture and sequestration
technologies.
The allowance disbursement program is structured to provide
greater incentives for facilities to deploy CCS technologies
early in the program. Specifically, the program allows entities
to receive payments in advance of completing the CCS project.
Entities receiving advanced payments must meet certain
milestones and achieve a 50% reduction in emissions within 18
months of startup of the project. Penalties are established for
failing to meet these standards including repayment of
allowances received. In addition, the program provides
incentives for facilities to capture and sequester larger
amounts of carbon dioxide by linking the amount of bonus
allowances provided to the amount of carbon captured.
Section 781. 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.
Section 782. Early action recognition
Provides allowances for projects and activities that
sequestered carbon or reduced greenhouse gas emissions prior to
the beginning of the Pollution Reduction and Investment Program
established in this Title. This includes projects that held a
state, local, or voluntary offset credit prior to January 1,
2009 or a project or process improvement for which the entity
publicly stated greenhouse gas reduction goals and can
demonstrate measurable reductions against those goals.
Discussion
Section 782(a)(2) directs the Administrator to distribute
allowances to entities that do not hold offset credits from a
state, local, or voluntary program but meet the following
criteria for documented early reductions, avoidance, or
sequestration of greenhouse gas emissions--(1) the entity
publicly stated greenhouse gas reduction goals and publicly
reported against those goals; (2) the entity demonstrated
entity-wide net greenhouse gas reductions; and (3) the entity
demonstrates the actual projects or process improvements
undertaken to make reductions and documents the reductions
(such as through documentation of engineering projects). The
Committee intends these criteria to include emissions
reductions made by entities pursuant to programs covered by a
memorandum of understanding (MOU) or other agreement involving
the U.S. Environmental Protection Agency, in which the entity's
greenhouse gas reduction goals are described in such MOU or
other agreement, and for which entities can demonstrate, with
sufficient precision (e.g., through documentation of
engineering projects), entity-wide net greenhouse gas
reductions.
Section 783. Establishment of deficit reduction fund
Establishes a deficit reduction fund in the U.S. Treasury.
Discussion
From 2012 through 2029, 10% of allowances annually will be
auctioned with the proceeds used to reduce the Federal deficit,
increasing to 22% in 2030 through 2039 and 25% from 2040
through 2050. As a result of these provisions, the bill will
not increase the Federal deficit in any decade over the life of
the program.
SUBTITLE C--ADDITIONAL GREENHOUSE GAS STANDARDS
Section 121. Greenhouse gas standards
Establishes Title VIII of the Clean Air Act to set forth
additional requirements related to greenhouse gases.
TITLE VIII--ADDITIONAL GREENHOUSE GAS STANDARDS
Section 801. Definitions
Defines terms used in Title VIII.
Section 811. Standards of performance
Directs the Administrator to delay until January 1, 2020
the establishment of standards of performance under section 111
of the Clean Air Act for stationary sources whose emissions are
not subject to the requirements of Section 721 and are eligible
as offset projects under Section 733.
Section 122. HFC regulation
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, requires HFC consumption to be
phased-down to 15% of the baseline by 2032. Requires allowances
to be distributed through a combination of annual auctions and
non-auction sales. Allows offset credits for destruction of
chlorofluorocarbons (CFCs).
Section 123. Black carbon
Directs the Administrator to conduct a study of black
carbon emissions, report on existing efforts to reduce domestic
black carbon pollution, and 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. Includes in Title III of the Clean Air Act a
provision directing the Administrator to use existing authority
to achieve further reductions.
Section 124. States
Amends section 116 of the Clean Air Act to preserve States'
existing authority to adopt and enforce standards or
limitations on air pollutants under the Clean Air Act,
including greenhouse gas emissions.
Section 125. State programs
Includes in Title VIII of the Clean Air Act section 861,
barring States from implementing or enforcing a Comprehensive
Greenhouse Gas Emission Limitation program to control
greenhouse gas emissions covered by Title VII. The moratorium
begins in 2012 or 9 months after the first auction, whichever
is earlier, and continues through the year 2017. Includes
section 862, which authorizes the Administrator to make grants
to air pollution control agencies under section 105 of the
Clean Air Act to implement global warming programs established
under the Clean Air Act.
Section 126. Enforcement
Amends section 307 of the Clean Air Act to provide that in
ruling on a petition for review under the Clean Air Act, the
court may remand without overturning an action of the
Administrator under specified circumstances. Sets deadline for
the Administrator to respond to a court remand and take final
action.
Section 127. Forestry sector greenhouse gas accounting
Directs the Administrator in consultation with the
Secretaries of Agriculture and the Interior, to provide an
annual accounting of sequestration and emissions of greenhouse
gases from forests and forest products. Requires that the
accounting be based on existing sources of data.
Section 128. Conforming amendments
Provides for conforming amendments to Clean Air Act
enforcement and administrative provisions to incorporate Titles
VII and VIII.
This section includes provisions relating to the treatment
of greenhouse gases under other Clean Air Act programs by
providing that greenhouse gases may not be added to the list of
criteria air pollutants under section 112 of the Clean Air Act
or hazardous air pollutants under Section 108 of the Clean Air
Act based on their effect on climate change, and further that
section 115 of the Clean Air Act shall not apply to an air
pollutant with respect to that pollutant's contribution to
climate change. In addition, this section excludes sources
below 25,000 tons of annual emissions of carbon dioxide
equivalent from the definition of ``major emitting source''
under the Clean Air Act and therefore the New Source Review and
Prevention of Significant Deterioration regulations for major
emitting sources. Finally, this section excludes sources
emitting less than 25,000 tons CO2 per year from the
requirement to hold a permit under Title V, if such sources do
not otherwise trigger the Title V requirements based on their
emission of other pollutants.
Section 129. Davis-Bacon compliance
Requires recipients of emission allowances or funding under
this 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). Excludes application of these provisions to retrofitting
of residential buildings (apart from large apartment buildings)
and smaller nonresidential buildings.
SUBTITLE D--CARBON MARKET ASSURANCE
Sections 131. Carbon market assurance
States the sense of the Senate that there shall be a carbon
market oversight program to provide for effective and
comprehensive market oversight and enforcement that lowers
systemic risk and protects consumers.
SUBTITLE E--ENSURING REAL REDUCTIONS IN INDUSTRIAL EMISSIONS
Section 141. 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.
PART F--ENSURING REAL REDUCTIONS IN INDUSTRIAL EMISSIONS
Section 761-762. Purposes; Definitions
Outlines purposes, including 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.
Section 763-764. Eligible industrial sectors; Distribution of emission
allowance rebates
Establishes a program that rebates emission allowances to
eligible industrial sectors to compensate these sectors for
costs incurred as a result of compliance with Title VII of the
Clean Air Act, as added by this Act. Requires the Administrator
to determine which sectors and sub-sectors should be eligible
for rebates through a rulemaking based on an assessment of the
energy and greenhouse gas intensity of each sector and the
trade intensity of each sector. This section also allows firms
to petition the Administrator for relieve based upon evidence
that the industrial subsector meets eligibility criteria even
though the sector as a whole may not.
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. In calculating indirect costs, this section requires
the Administrator to account for any benefit received by a
facility through the distribution of allowances to the
facility's electricity provider under Section 772.
This section provides incentives for increased efficiency
by limiting the calculation of greenhouse gas per unit of
output, the electricity intensity factor, and the electricity
efficiency factor to an amount less than the amount previously
calculated. To accommodate for fluctuations in the business
cycle, when calculating the greenhouse gas intensity and
electricity efficiency, this section requires the Administrator
to use the 5 most recent years of the best available data from
up to 7 years prior to the year in which such calculations are
made, excluding data from the highest and lowest year for both
factors
Section 765. International trade
States the sense of the Senate that there will be trade
provisions, including a border measure that is consistent with
international obligations of the United States and designed to
work in conjunction with provisions that allocate allowances to
energy-intensive and trade-exposed industries.
TITLE II--PROGRAM ALLOCATIONS
Section 201. Distribution of allowances for investment in clean
vehicles
Provides that 3% of distributed allowances through 2017 and
1% from 2018 through 2025 will be allocated for investments in
electric vehicles and other advanced automobile technology
development and deployment. Distributes emission allowances to
vehicle manufacturers and component suppliers to re-equip or
expand manufacturing facilities in the U.S. to produce
qualified advanced technology vehicles or plug-in electric
drive or hybrid-electric, hybrid hydraulic, plug-in hybrid,
electric, fuel cell drive medium- and heavy-duty motor vehicles
(including transit vehicles). Directs that the proceeds of the
auction of allowances pursuant to section 771(b)(3) to be
placed in a Clean Vehicle Technology Fund and used for the
following purposes: 75% for the Black Carbon Reduction Grant
Program authorized under Section 795A of the Energy Policy Act
of 2005; 20% for the use and integration of domestically-
produced plug-in electric drive vehicles; and 5% for the
development and demonstration of a national transportation low-
emission energy plan.
Section 202. State and local investment in energy efficiency and
renewable energy
States will receive 10.35% of distributed allowances in
2012 and 2013; 8.55% in 2014 and 2015; 5-6% in the years 2016-
2021 and more than 4% of allowances in 2022 and thereafter.
These allocations are supplemented by 0.5% each year of the
additional allowances described below under ``Supplemental
Allowances.''
Section 202 distributes emission allowances to States,
Indian tribes, and local governments, for programs to reduce
greenhouse gas emissions, promote energy efficiency and
conservation, and accelerate the deployment of renewable energy
sources. States receive 60 percent of allowances distributed
under this section, of which not less than 40 percent shall be
used for specified energy efficiency programs. Of the 40
percent reserved for energy efficiency programs, not less than
10 percent shall be used for thermal energy efficiency
projects, not less than 5 percent for energy efficiency
building retrofits pursuant to Section 164 of Division A, and
not less than 35% to benefit persons of low income. States may
also use their allocation allowances for other purposes
including renewable energy programs, improvements in
electricity transmission, retrofits and housing investments,
and smart grid development.
Local governments receive 25 percent of allowance
allocations under this section for energy efficiency projects
through the Energy Efficiency Community Block Grants program.
Fifteen percent of allowances under this section are
distributed directly to renewable energy generators for
renewable energy facilities with a capacity of 10 megawatts or
greater.
Section 203. Energy efficiency in building codes
Provides 0.50% of distributed allowances will be allocated
to support implementation of codes to reduce emissions of
greenhouse gases from buildings. Distributes emission
allowances to update and implement building codes pursuant to
Section 163 of Division A.
Section 204. Energy Innovation Hubs
Distributes emission allowances for research and
development of clean technologies. Allowances are distributed
through regional energy innovation hubs.
Section 205. ARPA-E research
Distributes emission allowances to qualified research
institutions to achieve the goals of the Advanced Research
Projects Agency-Energy (ARPA-E) as described in section 5012(c)
of the America COMPETES Act.
The total for advanced energy research under sections 204
and 205 equals 4% of distributed allowances in 2012 and 2013,
2% in 2014 and 2015, and 1.7% of allowances in subsequent
years.
Section 206. International clean energy deployment program
Distributes emission allowances to provide assistance to
developing countries for clean energy deployment pursuant to
Section 323 of Division A.
Section 207. International climate change adaptation and global
security
Distributes emission allowances to provide assistance to
developing countries for climate change adaptation pursuant to
Section 324 of Division A.
Section 208. Energy efficiency and renewable energy worker training
Provides emission allowances to the Secretary of Energy to
carry out the Energy Efficiency and Renewable Worker Training
program authorized in the Workforce Investment Act of 1998.
Section 209. Worker transition
Provides emission allowances for worker transition
assistance pursuant to the program established in Sections 311-
313 of Division A. In 2012 and 2013, 1.5% of distributed
allowances will be allocated for worker assistance, and to
train workers for jobs in the areas of energy efficiency and
renewable energy. This allocation will be 0.55% of allowances
in 2014 and 2015, and 1% annually thereafter.
Section 210. State programs for greenhouse gas reduction and climate
adaptation
Distributes proceeds of emission allowances for
implementation of projects, programs, or measures to reduce
emissions of greenhouse gases and build resilience to the
impacts of climate change. Ten percent (10%) of allowance
proceeds are reserved for funding of coastal and Great Lake
State economic protection programs pursuant to the program in
Section 384 of Division A. At least one percent (1%) of
allowance proceeds are reserved to support climate change
response programs administered by Indian tribes. Ten percent
(10%) of allowance proceeds are dedicated to wildfire grants
pursuant to Section 383 of Division A. The remaining proceeds
are allocated to fund State and local programs, including;
grants to fund water systems mitigation and adaptation
partnerships; flood control and response; recycling programs;
adverse impacts on agriculture and ranching activities; and
programs addressing air pollution and air quality. States and
tribes are required to prepare Climate Change Response Plans
governing uses of funds and to report on such uses in detail
every two years.
In 2012 and 2013, 1.34% of distributed allowances will be
allocated to the states to be used for domestic adaptation
purposes, including water system adaptation, wildfire
reduction, flood mitigation, and coastal adaptation, and for
activities to reduce greenhouse gas emissions, including
promoting state and local recycling programs. The number of
allowances allocated for state adaptation and mitigation
programs ranges from 0.5% to 1.3% from 2012 through 2026 and
will increase to 2.18% thereafter.
Section 211. Climate change health protection and promotion fund
Distributes proceeds of emission allowances for activities
to prepare and respond to the impacts of climate change on
public health pursuant to Sections 351-356 of Division A. 0.10%
of distributed allowances will be auctioned annually with the
proceeds used for protection of public health against the
effects of climate change.
Section 212. Climate change safeguards for natural resources
conservation
Distributes proceeds of emission allowances for activities
to prepare and respond to the impacts of climate change on
natural resources pursuant to Section 370 (a) of Division A. 1%
of distributed allowances will support protection of natural
resources each year from 2012 through 2021, increasing to 2% in
2022 through 2026 and 4% annually in subsequent years.
Section 213. Nuclear worker training
Distributes proceeds of emission allowances to provide
assistance for training of workers that will be essential for
the growth of safe domestic nuclear and nuclear-related
industries pursuant to Section 132 of Division A.
Section 214. Supplemental agriculture, abandoned mine lands, renewable
energy, and forestry
Provides allowances for investment in agriculture,
abandoned mine lands, and forestry projects to sequester carbon
and reduce greenhouse gas emissions pursuant to the program in
Section 155 of Division A. 1% of allowances in 2012 and 2013
and .28% in 2014 through 2016 will be allocated for investments
in agriculture, abandoned mine lands, and renewable energy.
These allocations are supplemented by 1% each year of the
additional allowances described below under ``Supplemental
Allowances.''
Section 215. Investment in greenhouse gas reductions from the
transportation sector
A Climate Change Transportation Fund is established in the
Treasury into which the proceeds of auctions under Section
771(b)(10) of the Clean Air Act for the vintage years specified
are deposited. These funds are available without further
appropriation for the following purposes: 50 percent shall be
used for the planning and competitive grant programs under
Section 832 of the Clean Air Act; and 50 percent shall be
distributed as formula grants for public transportation in
accordance with Section 215(d) of this Act. The distribution
formula to be used by USDOT for the public transportation
grants under 215(d) is a composite of the purposes and formulas
contained in current transit law: 80 percent based on 49 USC
5307; 10 percent based on 49 USC 5311; and 10 percent based on
49 USC 5340.
Discussion
Section 215 contains a transit set-aside. This funding is
eligible, consistent with current transit law, for capital
needs and preventative maintenance (as well as operating
assistance in areas under 200,000). A three part distribution
blends existing Federal Transit Administration formulas: to
urbanized areas based on population under section 5307; to
areas other than urbanized ones under 5311 (including the 15
percent set-aside for rural intercity bus services); and also
via the growing and high density states formula under 5340.
Section 216. State programs for natural resource adaptation activities
Distributes proceeds of emission allowances for activities
to prepare and respond to the impacts of climate change on
natural resources pursuant to Section 370(b) of Division A.
Legislative History
The Clean Energy Jobs and American Power Act (S. 1733) was
introduced by Senator Kerry and co-sponsored by Senator Boxer
on September 30, 2009. On November 5, 2009, the full Committee
on Environment and Public Works considered and ordered
favorably reported a substitute amendment.
Hearings
In the 111th Congress the Committee on Environment and
Public Works and its subcommittees held 15 hearings considering
issues relating to clean energy jobs and global warming
pollution reduction legislation. These hearings included:
``Investing in Green Technology as a Strategy for Economic
Recovery,'' on January 7, 2009; ``Update on the Latest Global
Warming Science,'' on February 25, 2009; ``Oversight--the
Environmental Protection Agency's Renewable Fuel Standard,'' on
April 1, 2009; ``Oversight of the GSA and Energy Efficiency in
Public Buildings,'' on April 22, 2009; ``Business Opportunities
and Climate Policy,'' on May 19, 2009; ``Moving America toward
a Clean Energy Economy and Reducing Global Warming Pollution:
Legislative Tools,'' on July 7, 2009; ``Economic Opportunities
for Agriculture, Forestry Communities, and Others in Reducing
Global Warming Pollution,'' on July 14, 2009;
``Transportation's Role in Climate Change and Reducing
Greenhouse Gases,'' on July 14, 2009; ``Ensuring and Enhancing
U.S. Competitiveness while Moving toward a Clean Energy
Economy,'' on July 16, 2009; ``Clean Energy Jobs, Climate-
Related Policies and Economic Growth--State and Local Views,''
on July 21, 2009; ``Climate Change and National Security,'' on
July 30, 2009; ``Climate Change and Ensuring that America Leads
the Clean Energy Transformation,'' on August 6, 2009.
The Committee held three legislative hearings to consider
S. 1733, the Clean Energy Jobs and American Power Act, on
October 27, October 28, and October 29, 2009.
Roll Call Votes
On November 5, 2009, the full Committee on Environment and
Public Works considered and ordered favorably reported a
substitute amendment by a vote of 11-1 (Senators Boxer, Carper,
Lautenberg, Cardin, Sanders, Klobuchar, Whitehouse, T. Udall,
Merkley, Gillibrand, and Specter voted yea, and Senator Baucus
voted nay). Senators Inhofe, Voinovich, Vitter, Barrasso,
Crapo, Bond, and Alexander did not record a vote.
Regulatory Impact Statement
In compliance with section 11(b) of rule XXVI of the
Standing Rules of the Senate, the committee notes, based on
CBO's estimates discussed in detail below, that S. 1733 would
require certain types of private entities to participate in the
programs to reduce GHG emissions created by the bill. CBO
estimates that the annual cost of this requirement would amount
to tens of billions of dollars for private-sector entities.
Mandates Assessment
Based upon the CBO cost estimate below, the Committee notes
that S. 1733 contains several intergovernmental mandates as
defined in the Unfunded Mandates Reform Act (UMRA).
CBO estimates that the aggregate cost of mandates in the
bill would significantly exceed the annual thresholds
established in UMRA for intergovernmental and private-sector
mandates ($69 million and $139 million in 2009, respectively,
adjusted annually for inflation). CBO also estimates that
States would receive at least $60 billion in allowances over
the 2012-2016 period for specific purposes, offsetting mandate
costs.
Congressional Budget Office Cost Estimate
In compliance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 403 of the
Congressional Budget Act of 1974, the Committee provides the
following cost estimate, prepared by the Congressional Budget
Office:
December 16, 2009.
Hon. Barbara Boxer,
Chairman, Committee on Environment and Public Works,
U.S. Senate, Washington, DC.
Dear Madam Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1733, the Clean
Energy Jobs and American Power Act.
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.
S. 1733--Clean Energy Jobs and American Power Act
Summary: S. 1733 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 beginning in 2012. 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.
The legislation also would authorize the establishment of a
Carbon Storage Research Corporation to support research and
development of carbon capture and sequestration (CCS)
technology. Funding for the corporation would largely be
derived from assessments on utilities enforced by the federal
government.
CBO and the Joint Committee on Taxation (JCT) estimate that
over the 2010-2019 period enacting this legislation would:
Increase federal revenues by about $854
billion; and
Increase direct spending by about $833
billion.
In total, those changes would reduce budget deficits (or
increase future surpluses) by about $21 billion over the 2010-
2019 period. (All estimated effects would be on-budget.) In
years after 2019, direct spending would be less than the net
revenues attributable to the legislation in each of the 10-year
periods following 2019. Therefore, CBO estimates that enacting
S. 1733 would not increase the deficit in any of the four 10-
year periods following 2019.
The legislation also would authorize appropriations for
various programs under EPA, the Department of Energy (DOE), and
other agencies. Assuming appropriation of the necessary
amounts, CBO estimates that implementing S. 1733 would increase
discretionary spending by about $29 billion over the 2010-2019
period. Most of that funding would stem from spending auction
proceeds associated with the HFC cap-and-trade program.
S. 1733 contains 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 significantly exceed the annual thresholds established in
UMRA for intergovernmental and private-sector mandates ($69
million and $139 million in 2009, respectively, adjusted
annually for inflation).
MAJOR PROVISIONS
The major provisions of S. 1733 are described in the
following sections.
Cap-and-trade programs for greenhouse gases
This legislation would designate as GHGs: carbon dioxide
(CO2), 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. 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\
---------------------------------------------------------------------------
\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,
petroleum 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, petroleum coke, and
renewable biomass--if their activities result in more
than 25,000 mtCO2e of emissions. Small
refineries eligible for the tax credit on low-sulphur
diesel-fuel production would need to submit allowances
for GHG emissions from their sites beginning in 2015;
Beginning in 2016, natural gas distributors
that deliver at least 460 million cubic feet of natural
gas per year 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 each mtCO2e 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
The cap for the GHG cap-and-trade program would take effect
in 2012, and emission allowances would be either auctioned or
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.
S. 1733 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 create 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 about 100
million to 200 million mtCO2e per year--falling to
1,035 million mtCO2e in 2050 and thereafter, about
14 percent of projected emissions from covered entities in the
absence of legislation to regulate such emissions.\2\
---------------------------------------------------------------------------
\2\In April 2009, EPA proposed a finding that GHGs contribute to
air pollution and, consequently, may endanger public health or welfare.
CBO's current baseline for GHG emissions does not take into
consideration any regulations under the Clean Air Act that may result
from this finding.
---------------------------------------------------------------------------
Two-Part Distribution Scheme for Allowances. The
legislation specifies the percentage of emission allowances
that would be freely allocated (that is, distributed at no
charge) to certain entities and what percentage of emission
allowances would be auctioned by vintage year (that is, the
calendar year for which an allowance is established). The
distribution scheme for each year has two separate parts: the
first part, referred to in the bill as the ``initial
reservation,'' would allocate a specified portion of the
allowances created by the GHG cap-and-trade program. A second
distribution would be made following this initial reservation
(see Table 1). Some of the allowances allocated as part of the
initial reservation would be auctioned while others would be
distributed at no charge for a variety of purposes, such as
support for trade-exposed industries, investments in energy
efficiency and renewable energy, and reducing GHGs in the
transportation sector. Some of the proceeds from the allowances
that would be auctioned would be deposited in the Treasury and
would not be available for spending--thus, reducing the budget
deficit.
The initial reservation of allowances includes about 3.5
billion allowances that would accumulate in a market stability
fund over the 2012-2050 period. Under the bill, EPA could
auction allowances in the market stability and if the market
price of allowances rose to unexpectedly high levels. CBO's
estimate assumes that sales from the market stability fund
would not be triggered. However, because of the uncertainty
inherent in this process, such sales could occur.
After the first distributions were completed each year, the
remaining allowances would be auctioned or freely allocated, as
specified in the legislation, in a second round of allocations.
Including auctions stemming from the initial reservation, 27
percent to 30 percent of allowances would be auctioned over the
2012-2019 period (see Table 1). The percentage of all
allowances auctioned would increase to about 28 percent by 2025
and gradually increase to about 80 percent in 2035 and remain
at that level through 2050. Table 1 includes additional details
concerning the percentage of emission allowances dedicated to
auction and allocated free of charge.
Use of Offsets in Lieu of Allowances. 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
certified activities 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, and reducing the use of nitrogen
fertilizer. Under the bill, such offsets could occur
domestically or in a developing 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.
TABLE 1.--GHG ALLOWANCES AUCTIONED AND FREELY ALLOCATED UNDER S. 1733
----------------------------------------------------------------------------------------------------------------
By vintage year--
-------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2017 2018 2019
----------------------------------------------------------------------------------------------------------------
Quantity of Emission Allowances (In Millions of Metric Tons)
Total........................... 4,627 4,544 5,053 5,003 5,482 5,261 5,132 5,002
Initial Reservation of
Allowances:
Auctioned................... 555 545 606 600 658 631 616 600
Freely Allocated............ 81 80 88 88 96 92 90 88
Market Stability Fund....... 93 91 101 100 110 105 103 100
-------------------------------------------------------------------------------
Subtotal................ 729 716 796 788 863 829 808 788
Second Distribution of Remaining
Allowances:
Auctioned................... 853 838 792 784 841 795 754 735
Freely Allocated............ 3,045 2,990 3,465 3,431 3,778 3,637 3,570 3,479
Memorandum--Disposition of Allowances Under S. 1733
(In percentage of total emission
allowances)
Auctioned....................... 30.4 30.4 27.7 27.7 27.3 27.1 26.7 26.7
Freely Allocated................ 67.6 67.6 70.3 70.3 70.7 70.9 71.3 71.3
Market Stability Fund........... 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
----------------------------------------------------------------------------------------------------------------
Note: Vintage year is the calendar year for which an allowance is established. Components may not sum to totals
because of rounding.
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 mtCO2e 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 make 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.
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 be used to support research and
development of technologies related to 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 the
funds it collects and spends should be included in the federal
budget.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 1733 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 S. 1733 will be enacted in fiscal year 2010, 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 S. 1733
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 10.0 70.2 78.6 95.0 105.3 111.6 122.0 128.2 133.3 253.9 854.2
4CHANGES IN DIRECT SPENDINGEstimated Budget Authority.... 0 9.0 72.3 80.4 96.2 106.3 112.6 123.6 129.6 135.4 257.9 865.4
Estimated Outlays............. 0 0.6 61.1 76.7 93.9 104.0 110.7 122.8 128.6 134.4 232.4 832.8 NET CHANGE IN THE BUDGET DEFICIT FROM
CHANGES IN REVENUES AND DIRECT SPENDINGImpact on Deficit\1\.......... 0 9.3 9.1 1.9 1.1 1.3 0.9 -0.8 -0.4 -1.1 21.4 21.4 CHANGES IN SPENDING SUBJECT TO APPROPRIATIONEstimated Authorization Level. 1.1 1.1 1.9 2.2 2.5 4.1 4.5 4.8 6.2 6.3 8.9 34.8
Estimated Outlays............. 0.1 0.6 1.3 1.8 2.3 3.1 4.0 4.5 5.2 6.0 6.1 28.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Positive numbers indicate decreases in deficits; negative numbers indicate increases in deficits.
Note: Components may not sum to totals because of rounding.
Basis of estimate: CBO estimates that implementing this
legislation would result in additional revenues, net of income
and payroll tax offsets, of $254 billion over the 2010-2014
period and $854 billion over the 2010-2019 period. We estimate
that direct spending would increase by $232 billion and $833
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 $29 billion
over the 2010-2019 period, assuming appropriation of the
amounts estimated to be necessary.
Budgetary treatment of allowances
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 S. 1733, 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 $80 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, either the government could 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 allowances and their
disposition as budgetary transactions, regardless of whether
the allowances would be sold or distributed at no cost.
Revenues resulting from cap-and-trade programs
The impact of S. 1733 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 for renewable energy
production 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 $17 per mtCO2e of emissions in 2011 to about
$30 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 S. 1733
----------------------------------------------------------------------------------------------------------------
By fiscal year, in dollars--
-----------------------------------------------------------------------
2011 2012 2013 2014 2015 2016 2017 2018 2019
----------------------------------------------------------------------------------------------------------------
Estimated GHG Allowance Price........... 17 18 20 21 23 25 26 28 30
Estimated HFC Allowance Price........... n.a.\1 2 3 4 10 11 13 18 19
\
----------------------------------------------------------------------------------------------------------------
\1\Prices equal the weighted average of the estimated auction prices and fixed-price sales required under the
legislation.
Note: n.a. = not applicable.
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
provisions 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.\3\
---------------------------------------------------------------------------
\3\For a more detailed discussion of the methods CBO used to
estimate the price for carbon allowances for similar legislation, see
How CBO Estimates the Costs of Reducing Greenhouse-Gas Emissions, CBO
Background Paper (April 2009).
---------------------------------------------------------------------------
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.\4\ 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 GHG 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.\5\
---------------------------------------------------------------------------
\4\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.
\5\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 (such as
households, electric utilities, and manufacturers).\6\
---------------------------------------------------------------------------
\6\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 the Electric Power Research Institute, 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.\7\ 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.
---------------------------------------------------------------------------
\7\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).
---------------------------------------------------------------------------
Response to Opportunities for Banking of Emission
Allowances. If entities covered by the legislation were
required to use emission allowances only in the designated
vintage year, the price of allowances would rise at a rate that
reflected the increasing stringency of the cap as emissions.
Such a requirement would yield an inflation-adjusted allowance
price growing at a rate much greater than the rate of return
that CBO estimates firms could obtain on alternative
investments.
Under S. 1733, firms would be allowed to bank unlimited
numbers of allowances. CBO expects that the profit-maximizing
behavior of 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.
CBO therefore expects that firms would continue to bank
allowances up to the point where the rate of increase in the
price of allowances equaled the rate of return that they might
receive by making alternative investments. CBO believes that
the appropriate rate of return that reflects investments of
comparable riskiness is the after-tax, long-run, inflation-
adjusted rate of return to capital in the U.S. nonfinancial
corporate sector, which CBO projects to be 5.6 percent.
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 2.5 billion
mtCO2e of allowances and raising the allowance price
in 2019 by about 5 percent, compared with a policy that
prohibited banking.
Response to Offset Credits. S. 1733 would allow entities
covered by the legislation to meet their GHG reduction
obligations by substituting offset credits in lieu of up to two
billion GHG allowances each year. CBO expects that covered
entities would take advantage of this provision whenever the
cost of doing so is less than other methods of compliance. CBO
estimates that this provision would have a significant effect
on allowance prices. As discussed below, by reducing the cost
of complying with the cap, offsets would probably lower the
price of allowances by a substantial amount.\8\
---------------------------------------------------------------------------
\8\For additional discussion of offset use in a cap-and-trade
program for reducing GHG emissions see CBO (2009) The Use of Offsets to
Reduce Greenhouse Gases. Economic and Budget Issue Brief (August 3).
---------------------------------------------------------------------------
Under the bill, domestic offset credits could be used in
lieu of up to 1.5 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 300 million allowances in 2012
and nearly 400 million allowances by 2020.
Covered entities could also use international offsets in
lieu of at least 500 million allowances per year. If domestic
offsets were not used to the maximum level, international
offsets could substitute for up to 1.25 billion allowances a
year. In no case could domestic and international offsets
substitute for more than two billion allowances per year. CBO
estimates that covered entities would use international offsets
in lieu of about 200 million allowances in 2012 and in lieu of
about 300 million allowances in 2020.
To calculate the supply of offsets from international
sources, CBO adjusted information from EPA on the supply of
international offsets at different prices to account for
certain provisions in the legislation, expected demand for
offsets from other countries, and an estimate of the cost of
verifying offsets and marketing them to potential users. Based
on information from the Department of State, EPA, and outside
experts, CBO expects that agreements with certain countries
that would be necessary for them to supply valid offsets would
take significant time to negotiate. CBO expects that the number
of agreements and the scope of their coverage would increase as
participants gained more experience with the program. CBO also
anticipates that other developed countries (for example, those
in the European Union) would seek offsets for their own
emissions reduction programs, thereby pushing up the price of
international offsets available to U.S. entities.
Response to Emissions Allowances from Other Programs. S.
1733 also would allow covered entities to submit an unlimited
number of emissions allowances obtained from international
programs of ``comparable stringency'' in lieu of GHG allowances
issued by EPA. For this estimate, CBO assumed that a program of
``comparable stringency'' would essentially be equivalent to a
cap-and-trade market where allowances sell for a comparable
price. Therefore, we expect that this provision would have no
effect on the prices of allowances for GHG emissions in the
United States.
Sensitivity of Estimated Allowance Prices and Budget Impact
to Changes in Assumptions. In cap-and-trade systems such as the
one established by this legislation, the most important
assumptions affecting the allowance price involve: the
responsiveness of households and firms to changes in the prices
associated with emissions; the discount rate that allowance
holders apply to decisions about whether to bank allowances;
and the availability of qualified offset credits from domestic
and international sources. Differences in those assumptions can
dramatically affect the estimated allowance price and the
subsequent impact on the budget.
For example, if the response of households and firms to
allowance prices were 10 percent stronger (or weaker), on
average, allowance prices would be roughly 9 percent lower or 9
percent higher. If firms are more focused on present costs (by
employing a higher discount rate than CBO estimated), they
would be more likely to put off expenses associated with
reducing emissions and bank fewer allowances. Use of a 6
percent discount rate would decrease CBO's estimate of prices
on 2012 by 8 percent and increase projected prices in 2050 by 7
percent. Conversely, firms could be more concerned about the
future (by employing a lower discount rate that CBO estimated)
and choose to reduce more emissions in the short term,
resulting in fewer necessary reductions in the future. Use of a
5 percent rate would increase CBO's estimate of initial-year
prices by about 10 percent and decrease projected prices in
2050 by about 10 percent. Finally, allowance prices would be
nearly three times higher if no offsets were made available to
regulated entities. If either domestic or international offsets
(but not both) were not available, allowance prices would be
about 40 percent higher.
Depending on the actual price of allowances, the budget
impact of this legislation also would vary. For example, if the
price of allowances were $1 higher beginning in 2012, the
effect on the budget would be an additional surplus of $1.2
billion over the 2012-2019 period. If instead, allowance prices
were $1 lower beginning in 2012, the net gain over that same
period would decrease by $1.1 billion.
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 $19 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 rate of population growth 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 $291 billion over the
2010-2014 period and $984 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 Web
site 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 111 of
division B 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.
CBO estimates that the auction of GHG and HFC allowances
would generate revenues, net of income and payroll tax offsets,
of about $76 billion over the 2010-2014 period and about $235
billion over the next 10 years. We also estimate that the
distribution of GHG allowances at no cost would generate
revenues, net of income and payroll tax offsets, of about $175
billion over the 2012-2014 period and about $625 billion over
the 2012-2019 period (see memorandum to Table 4).
Other revenues
Increased Use of Accelerated Tax Depreciation and Business
Tax Credits. By encouraging electricity production using
renewable resources, enacting S. 1733 would result in an
increase in the use of certain federal tax incentives. Those
incentives include both accelerated depreciation of certain
assets and tax credits available to firms that invest in
specific forms of renewable energy. When calculating taxable
profits, businesses depreciate (that is, deduct over time) the
cost of acquiring fixed investment property--namely, plant and
equipment. For tax purposes, businesses are generally allowed a
greater degree of accelerated depreciation--earlier deductions
than would occur if they measured the actual wearing out of the
property--for certain types of fixed investments used to
produce electricity from renewable resources, such as wind and
solar equipment, than they are allowed for investments to
produce electricity from fossil fuels. By bringing about faster
growth in the amount of electricity produced from renewable
resources, S. 1733 would result in increased business tax
deductions and reduced tax receipts.
In addition, S. 1733 would result in firms claiming a
greater amount of business tax credits for the renewable
electricity production credit (section 45 of the Internal
Revenue Code) and the energy credit that applies primarily to
investments in solar and geothermal energy production (section
48 of the Internal Revenue Code). JCT estimates that the
increased use of accelerated depreciation and business tax
credits would reduce revenues by about $14 billion over the
2010-2019 period.
Carbon Storage Research Corporation. Section 125 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. 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, amounts collected from the
assessments should be recorded in the budget as revenues, and
subsequent expenditures should be considered direct spending.
TABLE 4.--ESTIMATED CHANGES IN REVENUES AND DIRECT SPENDING UNDER S. 1733
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in billions of dollars
---------------------------------------------------------------------------------------------------------------------------------------
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010-2014 2010-2019
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUESNet Revenues Resulting from Cap-and-Trade Programs\1\... 0 9.1 69.3 78.0 94.7 105.4 112.4 123.5 130.6 136.5 251.1 859.5
Increased Use of Accelerated Tax Depreciation and 0 0 -0.1 -0.3 -0.7 -1.2 -1.8 -2.5 -3.4 -4.2 -1.1 -14.1
Business Tax Credits...................................
Carbon Storage Research Corporation..................... 0 0.9 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 3.8 8.6
Penalties and Other Revenue Changes..................... 0 0 * * * * * * * * 0.1 0.2
---------------------------------------------------------------------------------------------------------------------------------------
Total Changes in Revenues........................... 0 10.0 70.2 78.6 95.0 105.3 111.6 122.0 128.2 133.3 253.9 854.2 CHANGES IN DIRECT SPENDING
Spending of Auction Proceeds\2\
Estimated Budget Authority.......................... 0 7.9 17.5 18.4 19.4 21.5 23.3 23.8 24.7 25.7 63.3 182.2
Estimated Outlays................................... 0 0.3 6.7 14.8 17.2 19.2 21.3 23.0 23.7 24.6 39.1 150.9
Outlays Associated with Emission Allowances Freely
Allocated:
Estimated Budget Authority.......................... 0 0 53.7 60.9 75.7 83.6 88.2 98.7 103.7 108.6 190.2 673.0
Estimated Outlays................................... 0 0 53.7 60.9 75.7 83.6 88.2 98.7 103.7 108.6 190.2 673.0
Carbon Storage Research Corporation:
Estimated Budget Authority.......................... 0 1.0 1.1 1.1 1.2 1.2 1.2 1.2 1.2 1.2 4.4 10.2
Estimated Outlays................................... 0 0.3 0.7 1.0 1.1 1.2 1.2 1.2 1.2 1.2 3.1 8.9
Total Changes in Direct Spending:...............
Estimated Budget Authority.................. 0 9.0 72.3 80.4 96.2 106.3 112.6 123.6 129.6 135.4 257.9 865.4
Estimated Outlays........................... 0 0.6 61.1 76.7 93.9 104.0 110.7 122.8 128.6 134.4 232.4 832.8 NET CHANGE IN THE BUDGET DEFICIT
FROM CHANGES IN REVENUES AND DIRECT SPENDINGImpact on Deficit\3\.................................... 0 9.3 9.1 1.9 1.1 1.3 0.9 -0.8 -0.4 -1.1 21.4 21.4
Memorandum--Details on Auction Revenues:
Gross Revenues from Auctioned Allowances................ 0 12.1 27.3 29.5 32.0 37.2 40.5 41.8 44.6 46.4 100.9 311.4
Net Revenues from Auctioned Allowances.................. 0 9.1 20.6 22.3 24.1 28.1 30.5 31.4 33.5 34.9 76.1 234.5
Gross Revenues from Allowances Freely Allocated......... 0 0 53.7 60.9 75.7 83.6 88.2 98.7 103.7 108.6 190.2 673.0
Net Revenues from Allowances Freely Allocated........... 0 0 48.7 55.7 70.5 77.4 81.9 92.1 97.1 101.6 175.0 625.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Revenues are net of income and payroll tax offsets.
\2\Includes $0.1 billion savings in unemployment benefits over the 2010-2019 period.
\3\Positive numbers indicate decreases in deficits; negative numbers indicate increases in deficits.
Notes: * = between -$50 million and $50 million.
Numbers may not sum to totals because of rounding.
For this estimate, CBO assumes that the corporation would
be created and would collect assessments totaling about $1.0
billion (the minimum allowed under the bill) in 2011 and $1.1
billion (the maximum allowed under the bill) each year
thereafter. Authority to levy assessments and conduct
operations would terminate 10 years and 6 months after
enactment.
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 $3.8 billion over the 2010-2014 period and
$8.6 billion over the next 10 years.
Penalties. Under S. 1733, civil penalties would be assessed
on those owners and operators who fail to meet their compliance
obligation on time. The penalty would equal the volume of
emissions generated by an entity in excess of the allowances it
held multiplied by twice the fair market value of an emission
allowance 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 S.
1733 would total between $25 million and $50 million 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 financed by 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 would be less
than $100 million.
Direct spending
CBO estimates that enacting this legislation would increase
direct spending by $833 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.
Spending of Auction Proceeds. Revenues from the auction of
emission allowances for the GHG cap-and-trade program would be
deposited into 10 new funds established by the legislation.
Spending from those funds would not require any further
appropriation action. CBO's estimate of direct spending by
funds over the 2010-2019 period includes:
The Energy Refund Account (outlays of $112
billion) would provide financial assistance to low- and
moderate-income households and is intended to offset
the impact of the bill on energy prices;
The Climate Change Transportation Fund
(outlays of $16 billion) would enable the Department of
Transportation (DOT) to provide grants to states to
support activities that would reduce GHG emissions;
The Supplemental Agriculture, Abandoned Mine
Land, Renewable Energy, and Forestry Fund (outlays of
$9 billion) would enable the Department of Agriculture
and the Department of the Interior (DOI) to establish
programs supporting agricultural and forestry projects
that reduce or sequester GHGs;
The Worker Transition Fund (outlays of $4
billion) would enable the Department of Labor (DOL) to
provide assistance to workers who lose their jobs as a
result of the measures their employers take to comply
with the provisions of the bill;
The Natural Resources Climate Change
Adaptation Account (outlays of $4 billion) would enable
DOI and other federal agencies to support state
adaptation activities, including activities to protect
fish and wildlife, reduce the risk of wildfires, and
maintain and restore coastal habitats and ecosystems;
The Clean Vehicle Technology Fund (outlays
of $3 billion) would enable EPA to provide grants to
manufacturers and component suppliers to refurbish or
expand existing manufacturing facilities to produce
advanced technology vehicles and to support engineering
integration of certain vehicles and components, and to
enable DOE to provide support for a national
transportation low-emission energy plan;
The Energy Efficiency and Renewable Energy
Worker Training Fund (outlays of $1 billion) would
enable DOE to provide funding for grants to support
training for jobs in the energy-efficiency industry and
a national research program;
The Nuclear Worker Training Fund (outlays of
$1 billion) would enable DOE and DOL to provide grants
and other support for workforce development and
training related to nuclear energy;
The Climate Change Health Protection and
Promotion Fund (outlays of $1 billion) would enable the
Department of Health and Human Services (HHS) to
implement a national strategic action plan to respond
to the impact of climate change on health; and
The Consumer Rebate Fund (deposits would be
made to this fund beginning in 2026) would provide
financial relief to consumers affected by the bill's
provisions.
Outlays Associated with Emission Allowances Freely
Allocated. CBO estimates that direct spending would increase by
$673 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.
Carbon Storage Research Corporation. As previously
discussed in the section on revenues, S. 1733 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. As a result, collections would total $10.2 billion
over the 2010-2019 period. 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 $8.9 billion over the 2010-2019 period.
Spending subject to appropriation
Assuming appropriation of the necessary amounts, CBO
estimates that implementing this legislation would increase
discretionary spending by about $29 billion over the 2010-2019
period (see Table 5). Most of that amount would stem from
spending of revenues from the HFC auction of consumption
allowances. Additional spending would result from spending to
support federal agencies' costs to administer programs
established under the bill and to support various grant
programs and other activities related to energy efficiency and
clean energy technologies.
Stratospheric Ozone and Climate Protection Fund. Under the
legislation, about $22.9 billion in revenues from the auction
of consumption allowances over the 2012-2019 period would be
credited to the Stratospheric Ozone and Climate Protection
Fund. CBO estimates that outlays from this fund would total
about $19 billion over the 2012-2019 period. Those proceeds
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.
TABLE 5.--ESTIMATED SPENDING SUBJECT TO APPROPRIATION UNDER S. 1733
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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 APPROPRIATIONSpending of Proceeds from Stratospheric Ozone and
Climate Protection Fund:
Estimated Authorization Level....................... 0 0 0.6 1.0 1.3 3.0 3.3 3.6 5.0 5.0 2.9 22.9
Estimated Outlays................................... 0 0 0.2 0.7 1.1 2.0 2.9 3.4 4.1 4.8 2.0 19.1
Administrative Costs to Federal Agencies:
Estimated Authorization Level....................... 0.5 0.4 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.6 2.5 5.4
Estimated Outlays................................... 0.1 0.3 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.6 1.9 4.7
Clean Energy and Energy-Efficiency Programs:
Estimated Authorization Level....................... 0.6 0.7 0.7 0.7 0.7 0.6 0.6 0.6 0.6 0.7 3.4 6.5
Estimated Outlays................................... 0.1 0.4 0.6 0.6 0.7 0.6 0.5 0.5 0.6 0.6 2.3 5.1
Total Changes:
Estimated Authorization Level................... 1.1 1.1 1.9 2.2 2.5 4.1 4.5 4.8 6.2 6.3 8.9 34.8
Estimated Outlays............................... 0.1 0.6 1.3 1.8 2.3 3.1 4.0 4.5 5.2 6.0 6.1 28.9
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers may not sum to totals because of rounding.
Administrative Costs of Federal Agencies. Several federal
agencies, including EPA, DOL, DOE, and others would be
responsible for administering programs under S. 1733. In total,
CBO estimates that fully funding administrative costs of
federal agencies would require appropriations totaling about
$500 million in 2010 and $5.4 billion over the 2010-2019
period. A significant portion of the estimated costs would be
incurred by EPA to administer the proposed GHG cap-and-trade
program, including roughly a 5 percent increase in personnel.
Such personnel would be responsible for developing regulations,
preparing rulemakings, assessments, and studies, distributing
proceeds generated from the auctions, and other activities
related to the cap-and-trade program. Other agencies would be
responsible for supporting various programs and activities
funded by the distribution of revenues from the auction of
allowances and the freely allocated allowances. Those programs
include advanced energy research, international clean-energy
programs, and worker transition assistance. The agencies
supporting those types of programs would incur costs for
additional personnel, contractors, and information technology.
Those cost estimates are primarily based on information from
EPA and other federal agencies and on historical information
about how large regulatory programs have been implemented. CBO
estimates that spending for administrative costs would total
about $5 billion over the 2010-2019 period.
Clean Energy and Energy-Efficiency Programs. S. 1733 would
establish new programs and requirements aimed at promoting
clean energy and supporting energy efficiency. CBO estimates
that fully funding those activities, which would be implemented
primarily by EPA would require appropriations totaling $6.5
billion over the 2010-2019 period. That amount includes:
$2.0 billion to support grants for reducing
emissions of black carbon;
$500 million to fund grants for research and
development efforts and production of biofuels;
$1.7 billion to support water-efficient
products, buildings, landscapes, and processes; and
$2.3 billion for various studies and grant
programs related to climate change and renewable
energy.
Assuming appropriation of the necessary amounts, CBO
estimates that implementing clean energy and energy-efficiency
programs under S. 1733 would cost about $5 billion over the
2010-2019 period, with additional spending occurring in later
years.
Budgetary impacts after 2019
Under this legislation, both cap-and-trade programs would
be permanent. The cap for the HFC cap-and-trade program would
level off beginning in 2032, and that for the GHG cap-and-trade
program would level off beginning in 2050. Most federal
spending associated with the GHG cap-and-trade program would
begin in the early years of the program and end by 2050 or
earlier. Although spending from the energy refund account would
be permanent, spending from the consumer rebate fund would
begin in 2027 and end in 2050.
Intergovernmental and private-sector impact: S. 1733
contains 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 significantly
exceed the annual thresholds established in UMRA for
intergovernmental and private-sector mandates ($69 million and
$139 million in 2009, respectively, adjusted annually for
inflation).
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 annual cost of this requirement would amount
to tens of billions of dollars for private-sector entities and
hundreds of millions of dollars for public entities.
Although not available to cover the mandate costs of the
cap-and-trade requirements, at least $60 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. Most public entities and some private
entities will be required to report similar information under
current law, and therefore the public sector would incur
minimal additional costs. However, more private-sector entities
would be required to report information on greenhouse gases to
the registry under the bill. Based on information about
compliance costs from EPA's impact analysis of the current
reporting requirement, CBO estimates that the cost for private
entities could increase by about $30 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 estimates that the cost to comply with those
mandates would be small.
Carbon Capture and Sequestration Assessments. The bill
would authorize the Carbon Storage Research Corporation to levy
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. If 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 would total
$150 million for public utilities and $850 million for private
utilities in the first year the mandate is in effect. CBO
estimates that the annual cost of the assessments would
increase to a total of $175 million for public utilities and
$925 million for private utilities in subsequent years. The
cost of the requirement to regulatory authorities would be
small.
Performance Standards for Coal-Fueled Power Plants. The
bill 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. 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. Because CBO cannot determine how EGUs would comply with
the mandate, CBO has no basis to estimate the cost.
Energy Building Codes. The bill would give EPA the
authority to issue new energy efficiency standards for state
and local codes relating to residential and commercial
buildings. If EPA were to issue such regulations, those
requirements would be mandates on both public entities that
would have to implement and enforce the new standards and
private entities that would have to comply. Because most states
already have processes to review and update their building
codes, the costs of the new requirements are not expected to be
large. Furthermore, the bill would provide about $2 billion in
allowances to states over the first five years for implementing
building codes. Because the stringency of the building codes
would depend on future regulatory action, CBO has no basis for
estimating the costs to the private sector of complying with
this mandate.
Other Mandates. The bill contains additional mandates that
would affect both public and private entities. Those mandates
include requirements governing the repair of air conditioners
in motor vehicles and requirements for the geological storage
of CO2. CBO estimates that the costs of those
mandates would not be significant during the first five years
the mandates are in effect. The bill 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 would depend on future regulatory action, CBO has no
basis for estimating the cost of the mandates.
Mandates that apply to public entities only
Preemptions of State and Local Authority. S. 1733 contains
preemptions of state and local authority. Because preemptions
limit the authority of state and local governments, they are
considered intergovernmental mandates under UMRA.
Section 861 would preempt state authority to
enforce a cap-and-trade program that covers any capped
emissions during the years 2012 through 2017. The Regional
Greenhouse Gas Initiative (RGGI) and the State of California
plan to conduct allowance auctions during those years. Based on
previous RGGI auction revenues, CBO estimates the cost of this
preemption to be several hundred million dollars annually.
Depending on the design of the California program, however, the
cost of this preemption could be significantly higher.
Section 619 would preempt state laws relating to
the production and import of certain hydrofluorocarbons. CBO
estimates the cost of this preemption to be small.
Procurement of Water-Efficient Products. The bill would
require the District of Columbia to purchase certain products
and services designated to be water efficient by EPA or DOE.
Because the District of Columbia is the only jurisdiction
required to procure such products and the cost associated with
the mandate would be the additional cost of the water-efficient
products relative to the cost of the products already being
purchased, CBO estimates the cost of the mandate to be small.
Other impacts on state and local governments
The bill would provide allowances to state, local, and
tribal governments for a number of specific purposes. The
largest such allocation could be used for energy efficiency
programs, retrofits for commercial and residential buildings,
programs to deploy renewable energy facilities, constructing
new electricity transmission lines, weatherization projects,
and smart grid projects. Other allowance allocations would be
available for natural resource and domestic adaptation,
infrastructure improvements, transportation planning, worker
training programs, building code adoption, and programs to
benefit low-income consumers of home heating oil or propane.
CBO estimates that the allowances would total at least $60
billion through 2016.
In addition, the bill would authorize several grant
programs for renewable energy production, workforce training,
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 submit one
consumption allowance or destruction offset credit per
mtCO2e of HFC 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 consumption allowances established in
the bill, CBO estimates that the cost of purchasing allowances
would amount to about $600 million in the first year the
mandates are in effect and more in subsequent years.
Mobile Emissions Standards. The bill would direct EPA to
establish standards for greenhouse gas emissions from new
heavy-duty vehicles and engines by December 31, 2010. The bill
also would direct EPA to establish standards for classes of new
nonroad vehicles and engines with significant emissions of
greenhouse gases by December 31, 2012. The bill would direct
EPA to issue standards that reflect the best available
technology. Because the stringency of the standards would
depend on future regulatory action, the costs of the mandates
are uncertain.
Previous CBO estimates: On June 5, 2009, CBO transmitted a
cost estimate for H.R. 2454, the American Clean Energy and
Security Act of 2009, as ordered reported by the House
Committee on Energy and Commerce on May 21, 2009. H.R. 2454
also would establish cap-and-trade programs for GHGs and HFCs.
CBO and JCT estimate that over the 2010-2019 period enacting
that version of H.R. 2454 would increase federal revenues by
about $846 billion and increase direct spending by about $821
billion, reducing the budget deficits over that period by about
$24 billion. 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.
In addition, on June 26, 2009, CBO transmitted a cost
estimate for H.R. 2454 as passed by the House of
Representatives on the same day. CBO and JCT estimate that over
the 2010-2019 period, that version of the legislation would
increase federal revenues by about $873 billion and increase
direct spending by about $864 billion, reducing budget deficits
over that period by about $9 billion. For that version of the
legislation, CBO did not complete an estimate of the
legislation's estimated impact on discretionary spending.
H.R. 2454, as passed by the House, is similar to S. 1733;
however, there are some significant differences that result in
the lower estimates of revenues and direct spending under S.
1733. In addition, differences between the two versions of the
legislation account for higher allowance prices under S. 1733.
Significant differences between the pieces of legislation are
addressed below.
Estimate of revenues
Under H.R. 2454 as passed by the House, advance auctions of
future emission allowances would occur beginning in 2014. Those
auctions would result in the collection of additional revenues
over the 2012-2019 period. S. 1733 does not include such
advance auctions.
Estimate of direct spending
Several energy-related provisions in H.R. 2454, as passed
by the House, that CBO estimated would increase direct spending
(such as the renewable-electricity standard and the
establishment of a Clean Energy Deployment Administration) are
not included in S. 1733. Also contributing to lower spending
under the Senate bill are the different amounts of proceeds
from allowance auctions that are not spent. Under S. 1733, over
the 2010-2019 period, 10 percent of the allowances are
auctioned annually as part of the initial reservation and
proceeds stemming from those sales are deposited in the
Treasury and are not available for spending. Under H.R. 2454,
as passed by the House, auction proceeds from more than 10
percent of the allowances available in each of the first two
years of the program could not be spent. In the following eight
years, however, the amount of allowance auction proceeds that
could not be spent would drop to less than 1 percent.
Allowance prices
CBO estimates that prices for emission allowances would be
about 15 percent higher under S. 1733 than under H.R. 2454, as
passed by the House, because S. 1733:
Contains a more stringent emissions cap in
2014 and between 2017 and 2029;
Contains different allocations for
distributing emission allowances and auction revenues;
and
Places greater restrictions on the amount of
international offsets that can be used towards an
entity's compliance obligation.
Emissions Cap. For most years, S. 1733 and H.R. 2454, as
passed by the House, include identical emissions caps and
generally cover the same entities. However, in 2014 and between
2017 and 2029, S. 1733 has a more stringent cap that is between
1 percent and 4 percent lower than the cap under the other
legislation. Beginning in 2030, both versions of the
legislation include the same cap on emissions. The tighter cap
under S. 1733 would result in a slightly higher allowance
price.
Allocation of Emissions Allowances and Auction Revenues.
Both H.R. 2454, as passed by the House, and S. 1733 would
allocate allowances and auction revenue to support various
programs. Although many of those programs and recipients of
allowances are the same in each piece of legislation, the
amounts of those allocations are in some cases larger or
smaller. Under S. 1733, more allowances are set aside for a
reserve fund in the event that allowance prices become
volatile, which effectively tightens the cap further. Also,
fewer allowances are dedicated to energy efficiency under S.
1733, resulting in a slightly higher allowance price. In
addition, the number of allowances allocated for CCS bonuses
would be smaller, which slightly increases projected allowance
prices under S. 1733.
Offsets. The offset provisions in S. 1733 are different
from those in H.R. 2454, as passed by the House. In both bills,
offsets may substitute for 2 billion allowances. However, the
use of international offsets would be more limited in S. 1733
than in H.R. 2454. In S. 1733, international offsets could
substitute for between 500 million and 1.25 billion of
allowances per year depending on the use of domestic offsets.
That difference raises projected allowance prices under S. 1733
by about 10 percent above those under H.R. 2454.
Mandates
H.R. 2454 would impose intergovernmental and private-sector
mandates similar to those contained in S. 1733 by requiring
utilities, manufacturers, and other entities to reduce
greenhouse gas emissions through cap-and-trade programs and
performance standards. H.R. 2454 also contains standards
related to energy efficiency and renewable energy that are not
contained in S. 1733. CBO estimates that the aggregate cost of
mandates in both bills would significantly exceed the annual
thresholds established in UMRA for intergovernmental and
private-sector mandates ($69 million and $139 million in 2009,
respectively, adjusted annually for inflation).
Estimate prepared by: Federal revenues: Mark Booth, Pamela
Greene, and Edward Harris. Federal costs; Susanne S. Mehlman
and Daniel Hoople (cap-and-trade programs), Christi Hawley
Anthony (Department of Labor); Allowance prices: Rob Johansson,
Robert G. Shackleton Jr., Natalie Tawil, and Terry Dinan;
Impact on state, local, and tribal governments: Ryan Miller;
Impact on the private sector: Amy Petz and Brian Prest.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis; Frank J. Sammartino, Assistant
Director for Tax Analysis; Joseph Kile, Assistant Director for
Microeconomic Studies.
MINORITY VIEWS OF SENATORS INHOFE, VOINOVICH, VITTER, BARRASSO, CRAPO,
BOND, AND ALEXANDER
S. 1733, the Clean Energy Jobs and American Power Act,
should be opposed and returned to the Committee on Environment
and Public Works by the full Senate. It is the view of all
Minority Members that both Committee Rules and long established
Committee precedent were violated when the Committee considered
and favorably reported the substitute amendment to S. 1733 on
November 4th 2009. In addition, we believe the Committee failed
to address the important issues associated with a comprehensive
cap-and-trade system to control greenhouse gases. By favorably
reporting the substitute amendment without a full and complete
economic or environmental analysis on the impacts the
legislation will have on both the U.S. economy and global
greenhouse gas emissions, Members did not have the ability to
determine an accurate measure of the bill's costs or
environmental impacts. Legislation of this magnitude should not
go forward until the Committee and the Senate receives
comprehensive analysis on its costs and benefits.
We also object to the legislation advancing on procedural
grounds. The procedural argument originates from the Standing
Rules of the Senate. Under the Standing Rules for Committee
Procedure, Rule XXVI Section 7(a)(1), each committee, and each
subcommittee thereof, is authorized to fix the number of its
members who shall constitute a quorum for the transaction of
such business as may be considered. We note that the Committee
on Environment and Public Works' Rule 2(a) has set the
requirements for a quorum to include two minority members and
that this rule is not inconsistent with the Rules of the
Senate.\1\ Specifically, Rule 2(a) requires one third of the
members of the Committee, at least two of whom are members of
the minority party, to constitute a quorum. At the business
meeting to consider S. 1733, only one Minority Member was in
attendance at any given time, therefore prohibiting the
Committee from conducting business.
---------------------------------------------------------------------------
\1\Rules of the Committee on Environment and Public Works, United
States Senate.
RULE 2. QUORUMS.
(a) BUSINESS MEETINGS: At committee business meetings, and for the
purpose of approving the issuance of a subpoena or approving a
committee resolution, one third of the members of the committee, at
least two of whom are members of the minority party, constitute a
quorum, except as provided in subsection (d).
(b) SUBCOMMITTEE MEETINGS: At subcommittee business meetings, a
majority of the subcommittee members, at least one of whom is a member
of the minority party, constitutes a quorum for conducting business.
(c) CONTINUING QUORUM: Once a quorum as prescribed in subsections
(a) and (b) has been established, the committee or subcommittee may
continue to conduct business.
(d) REPORTING: No measure or matter may be reported to the Senate
by the committee unless a majority of committee members cast votes in
person.
(e) HEARINGS: One member constitutes a quorum for conducting a
hearing.
---------------------------------------------------------------------------
In addition, although the Chairman indicated she could
favorably report S. 1733 through her interpretation of
Committee Rule 2(d) regarding reporting, her interpretation
does not represent the long-established precedent of this
Committee regarding both the letter and spirit of the Rules.
The Minority members continue to interpret Rule 2(a) as
defining a quorum for business meetings. While Rule 2(d)
defines what is needed to report a matter, we note that this
Rule has not been historically defined as expanding Rule 2(a).
Rather, this Rule refers to final passage for reporting, rather
than replacing the quorum requirement necessary to begin to
conduct business or hold a business meeting. It is meant to
modify the one-third requirement, not the two from the
minority. If not, the tradition of protecting minority views is
discarded and the ``two minority members'' language rendered
meaningless.
The requirement for each committee to adopt its own set of
rules was passed in 1970. The rules of the EPW Committee for
each Congress since then, beginning in the 92nd Congress (1971-
72), have required the presence of minority party members to
constitute a quorum at business meetings. That first set of
rules required one member. The next Congress required two, and
most rules since then have been consistent with two. The rules
of the 107th Congress actually required three. The language
contained in Rule 2(d)--in which a majority of the committee
must be physically present to report measures--first appeared
in 1995 (104th Congress). Prior to that, the quorum requirement
referred to exceptions to allow for fewer members to constitute
a quorum at subcommittee meetings (still needing a minority
party presence) and at hearings.
Further, we believe the Majority violated their own
interpretation of the Rules. Under the Chairman's
interpretation, a bill could be introduced and passed without
any minority member's participation, making the quorum
requirement meaningless. However, we note that according to the
Congressional Record from November 5th, and the legislative
history in this Committee Report, the legislation that was
reported out of Committee was an amendment in the nature of a
substitute. Under the Chairman's interpretation, amendments
could only be made at a business meeting. Since two minority
members were not present, a business meeting could not take
place and the only matter to be acted upon should have been a
vote on S. 1733, as introduced.
In addition to violating the Committee and Senate Rules,
the act of reporting this bill without the requisite number of
Minority Members present establishes a dangerous precedent for
this Committee. Back in 2003, the minority at the time did not
participate in the nomination hearing of Gov. Mike Leavitt. The
minority argued that Gov. Leavitt had not answered questions
for the record to their satisfaction, and they boycotted the
hearing. The Majority at the time honored the Rules of this
Committee and worked with the minority until an accommodation
could be made. Despite its differences of opinion on both
sides, the Committee operated in a fair and open manner.
Another example is Clear Skies legislation. In that instance,
the markup spanned two Congresses over two years and was
delayed three times to accommodate the requests of the Minority
seeking time for review of the impacts of the legislation--
which, it should be noted, are not nearly as comprehensive and
economy wide as the effects of S. 1733.
As noted earlier, EPA did not run the full economic
modeling of S. 1733. The Administrator of the EPA, Lisa
Jackson, clearly stated on October 27, 2009, in a legislative
hearing of this committee on S. 1733, that ``we have not run
the full economic modeling [of S. 1733]''. Rather it conducted
a ``meta-analysis'' comparing the legislation to that of the
analysis done on H.R. 2454, the House-passed legislation. We
believe this meta-analysis is insufficient first and foremost
because it rests upon a flawed analysis of HR. 2454. The H.R.
2454 analysis did not make realistic assumption scenarios
regarding the development and deployment of new nuclear power
plants and carbon capture and sequestration technology, as well
as the expected price of natural gas and the potential for
biomass. That analysis also did not include the multiple
mandates and requirements contained in the legislation. It also
did not use in its reference case the Administration's 2009
Budget that assumes 3.3% annual growth in GDP. Finally, it did
not model various levels of CO2 reductions taken by
developing countries such as China and India, and the effect
they would have on global CO2 concentrations.
(Further reasoning for the insufficiency of these brief
modeling runs are outlined in Senator Voinovich's letter to
Lisa Jackson dated November 3, 2009, attached to these views.)
Further, we believe a full analysis would provide details
that an EPA summary discussion paper does not. Among these are
regional analysis, including costs to the Midwest, South, and
Plains that will be different--and likely more expensive--than
the national average because of regional dependence on coal-
fired generation; analysis of the effects on consumers from
higher electricity, gasoline, and natural gas prices; analysis
of impacts on jobs, especially in the manufacturing sector;
analysis of fuel costs on farmers; and technology analysis
exploring the availability of new technology such as carbon
capture and sequestration or deployment of nuclear power.
Finally, an analysis is warranted because of the
substantial differences between S. 1733 and H.R. 2454, which
include: a steeper target of 20% emissions cuts in 2020
(instead of H.R. 2454's 17%); smaller consumer and worker
protection programs; less protection against high program costs
through offset programs; and less protection against high
program costs through a reserve fund. For these and other
reasons, EPA should conduct full modeling to provide members an
accurate and comprehensive assessment of the bill's impacts on
the economy.
Again we urge that S. 1733 should be opposed and returned
to the Committee on Environment and Public Works Committee by
the full Senate until proper analysis is conducted and
Committee rules are followed.
James Inhofe.
George V. Voinovich.
David Vitter.
John Barrasso.
Mike Crapo.
Kit Bond.
Lamar Alexander.
ADDITIONAL VIEWS OF SENATOR MAX BAUCUS
S. 1733, the Clean Energy Jobs and American Power Act,
addresses one of the most challenging issues of our time--
global climate change. Climate change has the potential to
severely impact our environment and our economy. The effects of
climate change are visible in Montana, even today. Whether it
is our green forests turned red by pine bark beetles, the
namesake of Glacier National Park melting away, or sustained
drought and increased wildfires, we are seeing the impacts
firsthand.
We will also see the impacts of climate legislation
firsthand. Montana has much to gain and much to lose from the
transition to a clean energy economy, if it is not properly
structured. For example, the Department of Energy estimates
that Montana's wind energy potential ranges from good to
excellent to superb. But, we lack some of the transmission
infrastructure required to carry that renewable resource to
market. Our state's agriculture and tourism economies depend on
healthy natural resources. S. 1733 includes a strong natural
resource adaptation package that would provide resources to
help sustain our tourism and recreation economy by protecting
our outdoor heritage.
Our state's vast coal reserves have been the lifeblood of
our nation's electricity generation system for decades,
providing low sulfur coal that allows coal-fired utilities to
meet tough clean air standards. Coal is our nation's most
plentiful, low-cost input for generating electricity, but
unless we take steps to develop clean coal technology, we run
the risk of excluding coal from our energy mix in the next
century--a risk we cannot afford. S. 1733 would advance the
development of clean coal technology. Specifically, the bill
provides for advance payment of bonus allowances to a greater
number of carbon capture and storage (CCS) projects, thus
speeding the commercial deployment of this technology and
reducing investment risk. It establishes a performance standard
for new coal-fired power plants, and creates a reasonable early
triggering mechanism for that standard to take effect based on
the deployment of CCS technology.
The reductions contemplated by S. 1733, particularly the
mid-term reduction target, is too high given what we know
today. That is why I offered an alternative that would create a
17 percent target in 2020 with a trigger taking that target up
to 20 percent, if certain conditions regarding emissions
reductions in the international community were met. The offset
provisions in this bill also take some steps forward in terms
of providing incentives for agriculture providers to sequester
carbon, but the structure of the system itself needs to be
stronger. Finally, the EPA's authority under the Clean Air Act
to regulate greenhouse gas emissions is partially addressed in
S. 1733, but the full scope of that issue must be clarified to
provide regulatory certainty.
While I opposed S. 1733, as a member of the EPW and
Agriculture Committees, as Chairman of the Senate Finance
Committee, and most importantly, as a Montanan who wants our
children and grandchildren to be able to enjoy the outdoors the
way we can today, I'm going to work to get climate change
legislation that can get 60 votes, get through the United
States Senate, and signed into law. The Senate must craft a
bill that will create jobs throughout the nation. We will craft
a bill that will protect both Yosemite and Yellowstone. We will
craft a bill that increases our national security by decreasing
our dependence on foreign oil. And ultimately, we will craft a
bill that will secure America's economic and environmental
future for generations.
Max Baucus.
Changes in Existing Law
In compliance with section 12 of rule XXVI of the Standing
Rules of the Senate, 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:
* * * * * * *
----------
CLEAN AIR ACT
* * * * * * *
TITLE I--AIR POLLUTION PREVENTION AND CONTROL
Part A--Air Quality and Emission Limitations
findings and purposes
Sec. 101. (a) * * *
* * * * * * *
Sec. 108. (a)(1) For the purpose of establishing national
primary and secondary ambient air quality standards, the
Administrator shall within 30 days after the date of enactment
of the Clean Air Amendments of 1970 publish, and shall from
time to time thereafter revise, a list which includes each air
pollutant--
(A) emissions of which, in his judgment, cause or
contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare;
(B) the presence of which in the ambient air results
from numerous or diverse mobile or stationary sources;
and
(C) for which air quality criteria had not been
issued before the date of enactment of the Clean Air
Amendments of 1970, but for which he plans to issue air
quality criteria under this section.
(2) The Administrator shall issue air quality criteria for
an air pollutant within 12 months after he has included such
pollutant in a list under paragraph (1). Air quality criteria
for an air pollutant shall accurately reflect the latest
scientific knowledge useful in indicating the kind and extent
of all identifiable effects on public health or welfare which
may be expected from the presence of such pollutant in the
ambient air, in varying quantities. The criteria for an air
pollutant, to the extent practicable, shall include information
on--
(A) those variable factors (including atmospheric
conditions) which of themselves or in combination with
other factors may alter the effects on public health or
welfare of such air pollutant;
(B) the types of air pollutants which, when present
in the atmosphere, may interact with such pollutant to
produce an adverse effect on public health or welfare;
and
(C) any known or anticipated adverse effects on
welfare.
(3) Prohibition on Listing of Greenhouse Gases.--On and
after the date of enactment of this paragraph, the
Administrator shall not include on the list of pollutants under
this subsection any greenhouse gas on the basis of any effect
the greenhouse gas may have on climate change.
SEC. 112. HAZARDOUS AIR POLLUTANTS.
(a) Definitions.--For purposes of this section, except
subsection (r)--
(1) Major source.--The term ``major source'' means
any stationary source or group of stationary sources
located within a contiguous area and under common
control that emits or has the potential to emit
considering controls, in the aggregate, 10 tons per
year or more of any hazardous air pollutant or 25 tons
per year or more of any combination of hazardous air
pollutants. The Administrator may establish a lesser
quantity, or in the case of radionuclides different
criteria, for a major source than that specified in the
previous sentence, on the basis of the potency of the
air pollutant, persistence, potential for
bioaccumulation, other characteristics of the air
pollutant, or other relevant factors.
(2)* * *
* * * * * * *
(20) Greenhouse gas limitation.--No greenhouse gas
may be added to the list of hazardous air pollutants
under this section unless the greenhouse gas meets the
criteria described in subsection (b) independent of the
effects of the greenhouse gas on climate change.
SEC. 113. FEDERAL ENFORCEMENT.
(a) * * *
* * * * * * *
(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--
* * * * * * *
(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) Whenever such person has violated, or is in
violation of, any requirement or prohibition of an
applicable implementation plan or permit. Such an
action shall be commenced (A) during any period of
federally assumed enforcement, or (B) more than 30 days
following the date of the Administrator's notification
under subsection (a)(1) that such person has violated,
or is in violation of, such requirement or prohibition.
(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.
(2) Any person who knowingly--
(A)* * *
* * * * * * *
(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) has violated or is violating any requirement or
prohibition of an applicable implementation plan (such
order shall be issued (i) during any period of
federally assumed enforcement, or (ii) more than thirty
days following the date of the Administrator's
notification under subsection (a)(1) of this section of
a finding that such person has violated or is violating
such requirement or prohibition); or
(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 VII 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)--
* * * * * * *
(d)(1)* * *
* * * * * * *
(e) Recordkeeping for Carbon Offsets Program.--For the
purpose of implementing the carbon offsets program set forth in
subtitle D of title VII, the Administrator shall require any
person who is an offset project developer, and may require any
person who is a third party verifier, to establish and maintain
records, for a period of not less than the crediting period
under section 734(c) plus 5 years, relating to--
(1) any offset project approval petition submitted to
the appropriate officials under section 735;
(2) any reversals which occur with respect to an
offset project;
(3) any verification reports; and
(4) any other aspect of the offset project that the
appropriate officials determines is appropriate.
* * * * * * *
Sec. 115. (a) Whenever the Administrator, upon receipt of
reports, surveys or studies from any duly constituted
international agency has reason to believe that any air
pollutant or pollutants emitted in the United States cause or
contribute to air pollution which may reasonably be anticipated
to endanger public health or welfare in a foreign country or
whenever the Secretary of State requests him to do so with
respect to such pollution which the Secretary of State alleges
is of such a nature, the Administrator shall give formal
notification thereof to the Governor of the State in which such
emissions originate.
(b) The notice of the Administrator shall be deemed to be a
finding under section 110(a)(2)(H)(ii) which requires a plan
revision with respect to so much of the applicable
implementation plan as is inadequate to prevent or eliminate
the endangerment referred to in subsection (a). Any foreign
country so affected by such emission of pollutant or pollutants
shall be invited to appear at any public hearing associated
with any revision of the appropriate portion of the applicable
implementation plan.
[(c) This section]
(3) Applicability.--
(A) Foreign countries.--This section shall
apply only to a foreign country which the
Administrator determines has given the United
States essentially the same rights with respect
to the prevention or control of air pollution
occurring in that country as is given that
country by this section.
(B) Greenhouse gases.--This section does not
apply to any greenhouse gas with respect to the
effects of the greenhouse gas on climate
change.
* * * * * * *
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: limit 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. 169. For purposes of this part--
(1) The term ``major emitting facility'' means any of
the following stationary sources of air pollutants
which emit, or have the potential to emit, one hundred
tons per year or more of any air pollutant,(other than
any greenhouse gas), and 25,000 tons per year of carbon
dioxide equivalent for any greenhouse gas or
combination of greenhouse gases from the following
types of stationary sources: fossil-fuel fired steam
electric plants of more than two hundred and fifty
million British thermal units per hour heat input, coal
cleaning plants (thermal dryers), kraft pulp mills,
Portland Cement plants, primary zinc smelters, iron and
steel mill plants, primary aluminum ore reduction
plants, primary copper smelters, municipal incinerators
capable of charging more than fifty tons of refuse per
day, hydrofluoric, sulfuric, and nitric acid plants,
petroleum refineries, lime plants, phosphate rock
processing plants, coke oven batteries, sulfur recovery
plants, carbon black plants (furnace process) primary
lead smelters, fuel conversion plants, sintering
plants, secondary metal production facilities, chemical
process plants, fossil-fuel boilers of more than two
hundred and fifty million British thermal units per
hour heat input, petroleum storage and transfer
facilities with a capacity exceeding three hundred
thousand barrels, taconite ore processing facilities,
glass fiber processing plants, charcoal production
facilities. Such term also includes any other source
with the potential to emit two hundred and fifty tons
per year or more of any air pollutant(other than any
greenhouse gas), and 25,000 tons per year of carbon
dioxide equivalent for any greenhouse gas or
combination of greenhouse gases. This term shall not
include new or modified facilities which are nonprofit
health or education institutions which have been
exempted by the State.
* * * * * * *
Sec. 201
TITLE II--EMISSION STANDARDS FOR MOVING SOURCES
* * * * * * *
Sec. 202. (a) Except as otherwise provided in subsection
(b)--
(1)* * *
* * * * * * *
Sec. 209. (a) * * *
* * * * * * *
(f) Taxicabs.--(1) Notwithstanding subsection (a), a State or
political subdivision thereof may adopt and enforce standards
for the control of emissions from new motor vehicles that are
taxicabs and other vehicles if such standards will be, in the
aggregate, at least as protective of public health and welfare
as applicable Federal standards and if such taxicabs and other
vehicles--
(A) are passenger motor vehicles that are capable of
transporting not more than 10 individuals, including
the driver;
(B) are commercially available or are designed and
manufactured pursuant to a contract with such State or
political subdivision thereof;
(C) are operated for hire pursuant to an operating or
regulatory license, permit, or other authorization
issued by such State or political subdivision thereof;
(D) provide local transportation for a fare
determined on the basis of the time or distance
traveled or a combination of time and distance
traveled; and
(E) do not exclusively provide transportation to and
from airports.
(2) If each standard of a State or political subdivision
thereof is at least as stringent as the comparable applicable
Federal standard, such standard of such State or political
subdivision thereof shall be deemed at least as protective of
health and welfare as such Federal standards for purposes of
this subsection.
* * * * * * *
Sec. 211. (a) * * *
* * * * * * *
(o) Renewable Fuel Program.--
(1) Definitions.--In this section:
(A) Cellulosic biomass ethanol.--* * *
* * * * * * *
(B) Advanced biofuel.--
(i) In general.--The term ``advanced
biofuel'' means renewable fuel, other
than ethanol derived from corn starch,
that has lifecycle greenhouse gas
emissions, as determined by the
Administrator, after notice and
opportunity for comment, that are at
least 50 percent less than baseline
lifecycle greenhouse gas emissions.
(ii) Inclusions.--The types of fuels
eligible for consideration as
``advanced biofuel'' may include any of
the following:
(I) Ethanol derived from
cellulose, hemicellulose, or
lignin.
(II) Ethanol derived from
sugar or starch (other than
corn starch).
(III) Ethanol derived from
waste material, including crop
residue, other vegetative waste
material, animal waste, and
food waste and yard waste.
(IV) Biomass-based diesel.
(V) Biogas (including
landfill gas and sewage waste
treatment gas) produced through
the conversion of organic
matter from renewable biomass.
(VI) Butanol or other
alcohols produced through the
conversion of organic matter
from renewable biomass.
(VII) Other fuel derived from
[cellulosic biomass]advanced
green.
* * * * * * *
(C) Advanced green biofuel.--The term
`advanced green biofuel' means renewable fuel
that--
(i) is derived from renewable
biomass; and
(ii) has lifecycle greenhouse gas
emissions that are at least 60 percent
less than the baseline lifecycle
greenhouse gas emissions.
[(C)](D) Baseline lifecycle greenhouse gas
emissions.--The term ``baseline lifecycle
greenhouse gas emissions'' means the average
lifecycle greenhouse gas emissions, as
determined by the Administrator, after notice
and opportunity for comment, for gasoline or
diesel (whichever is being replaced by the
renewable fuel) sold or distributed as
transportation fuel in 2005.
[(D)](E) Biomass-based diesel.--The term
``biomass-based diesel'' means renewable fuel
that is biodiesel as defined in section 312(f)
of the Energy Policy Act of 1992 (42 U.S.C.
13220(f)) and that has lifecycle greenhouse gas
emissions, as determined by the Administrator,
after notice and opportunity for comment, that
are at least 50 percent less than the baseline
lifecycle greenhouse gas emissions.
Notwithstanding the preceding sentence,
renewable fuel derived from co-processing
biomass with a petroleum feedstock shall be
advanced biofuel if it meets the requirements
of subparagraph (B), but is not biomass-based
diesel.
[(E) Cellulosic biofuel.--The term
``cellulosic biofuel'' means renewable fuel
derived from any cellulose, hemicellulose, or
lignin that is derived from renewable biomass
and that has lifecycle greenhouse gas
emissions, as determined by the Administrator,
that are at least 60 percent less than the
baseline lifecycle greenhouse gas emissions.]
(2) Renewable fuel program.--
(A) Regulations.--
(i) In general.--Not later than 1
year after the date of enactment of
this paragraph, the Administrator shall
promulgate regulations to ensure that
gasoline sold or introduced into
commerce in the United States (except
in noncontiguous States or
territories), on an annual average
basis, contains the applicable volume
of renewable fuel determined in
accordance with subparagraph (B). Not
later than 1 year after the date of
enactment of this sentence, the
Administrator shall revise the
regulations under this paragraph to
ensure that transportation fuel sold or
introduced into commerce in the United
States (except in noncontiguous States
or territories), on an annual average
basis, contains at least the applicable
volume of renewable fuel, advanced
biofuel, [cellulosic]advanced green
biofuel, and biomass-based diesel,
determined in accordance with
subparagraph (B) and, in the case of
any such renewable fuel produced from
new facilities that commence
construction after the date of
enactment of this sentence, achieves at
least a 20 percent reduction in
lifecycle greenhouse gas emissions
compared to baseline lifecycle
greenhouse gas emissions.
* * * * * * *
(B) Applicable volumes.--
(i) Calendar years after 2005.--* * *
* * * * * * *
(III) [Cellulosic]Advanced
Green biofuel.--For the purpose
of subparagraph (A), of the
volume of advanced biofuel
required under subclause (II),
the applicable volume of
[cellulosic]advanced green
biofuel for the calendar years
2010 through 2022 shall be
determined in accordance with
the following table:
Applicable volume of [cellulosic]advanced green biofuel
* * * * * * *
(ii) Other calendar years.--For the
purposes of subparagraph (A), the
applicable volumes of each fuel
specified in the tables in clause (i)
for calendar years after the calendar
years specified in the tables shall be
determined by the Administrator, in
coordination with the Secretary of
Energy and the Secretary of
Agriculture, based on a review of the
implementation of the program during
calendar years specified in the tables,
and an analysis of--
(I) the impact of the
production and use of renewable
fuels on the environment,
including on air quality,
climate change, conversion of
wetlands, ecosystems, wildlife
habitat, water quality, and
water supply;
(II) the impact of renewable
fuels on the energy security of
the United States;
(III) the expected annual
rate of future commercial
production of renewable fuels,
including advanced biofuels in
each category
([cellulosic]advanced green
biofuel and biomass-based
diesel);
* * * * * * *
(iv) Applicable volume of
[cellulosic]advanced green biofuel.--
For the purpose of making the
determinations in clause (ii), for each
calendar year, the applicable volume of
[cellulosic]advanced green biofuel
established by the Administrator shall
be based on the assumption that the
Administrator will not need to issue a
waiver for such years under paragraph
(7)(D).
* * * * * * *
(3) Applicable percentages.--
(A) Provision of estimate of volumes of
gasoline sales.--Not later than October 31 of
each of calendar years 2005 through 2021, the
Administrator of the Energy Information
Administration shall provide to the
Administrator of the Environmental Protection
Agency an estimate, with respect to the
following calendar year, of the volumes of
transportation fuel, biomass-based diesel, and
[cellulosic]advanced green biofuel projected to
be sold or introduced into commerce in the
United States.
(B) Determination of applicable
percentages.--
(i) * * *
* * * * * * *
(4) Modification of greenhouse gas reduction
percentages.--
(A) In general.--The Administrator may, in
the regulations under the last sentence of
paragraph (2)(A)(i), adjust the 20 percent, 50
percent, and 60 percent reductions in lifecycle
greenhouse gas emissions specified in
paragraphs (2)(A)(i) (relating to renewable
fuel), (1)(D) (relating to biomass-based
diesel), (1)(B)(i) (relating to advanced
biofuel), and (1)(E) (relating to
[cellulosic]advanced green biofuel) to a lower
percentage. For the 50 and 60 percent
reductions, the Administrator may make such an
adjustment only if he determines that generally
such reduction is not commercially feasible for
fuels made using a variety of feedstocks,
technologies, and processes to meet the
applicable reduction.
(B) Amount of adjustment.--In promulgating
regulations under this paragraph, the specified
50 percent reduction in greenhouse gas
emissions from advanced biofuel and in biomass-
based diesel may not be reduced below 40
percent. The specified 20 percent reduction in
greenhouse gas emissions from renewable fuel
may not be reduced below 10 percent, and the
specified 60 percent reduction in greenhouse
gas emissions from [cellulosic]advanced green
biofuel may not be reduced below 50 percent.
* * * * * * *
(7) Waivers.--
(A) * * *
* * * * * * *
(D) [Cellulosic]advanced green biofuel.--(i)
For any calendar year for which the projected
volume of [cellulosic]advanced green biofuel
production is less than the minimum applicable
volume established under paragraph (2)(B), as
determined by the Administrator based on the
estimate provided under paragraph (3)(A), not
later than November 30 of the preceding
calendar year, the Administrator shall reduce
the applicable volume of [cellulosic]advanced
green biofuel required under paragraph (2)(B)
to the projected volume available during that
calendar year. For any calendar year in which
the Administrator makes such a reduction, the
Administrator may also reduce the applicable
volume of renewable fuel and advanced biofuels
requirement established under paragraph (2)(B)
by the same or a lesser volume.
(ii)* * *
* * * * * * *
Sec. 301. (a)(1)* * *
* * * * * * *
Sec. 304.(a) * * *
* * * * * * *
(f) For purposes of this section, the term ``emission
standard or limitation under this Act'' means--
(1) a schedule or timetable of compliance, emission
limitation, standard of performance or emission
standard,
(2) a control or prohibition respecting a motor
vehicle fuel or fuel additive, which is in effect under
this Act (including a requirement applicable by reason
of section 118) or under an applicable implementation
plan, or
(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
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),,\1\ any investigation,
monitoring, reporting requirement, entry, compliance
inspection, or administrative enforcement proceeding under
the\2\ 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.
---------------------------------------------------------------------------
\1\Amendment made by section 703 of Public Law 101-549 (104 Stat.
2681) resulted in double commas.
\2\Probably should read ``this Act''.
---------------------------------------------------------------------------
(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[,,],\1\ 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[,,],\2\ 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.Any person may
file a petition for review of action by the Administrator as
provided in this subsection. 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.
---------------------------------------------------------------------------
\1\Public Law 95-95 inserted the additional comma after the words
``under section 111''.
\2\Section 706(2) of Public Law 101-549 (104 Stat. 2682) inserted
the additional comma after the words ``under section 112,''.
---------------------------------------------------------------------------
(2) Action of the Administrator with respect to which
review could have been obtained under paragraph (1) shall not
be subject to judicial review in civil or criminal proceedings
for enforcement. Where a final decision by the Administrator
defers performance of any nondiscretionary statutory action to
a later time, any person may challenge the deferral pursuant to
paragraph (1).
(c) In any judicial proceeding in which review is sought of
a determination under this Act required to be made on the
record after notice and opportunity for hearing, if any party
applies to the court for leave to adduce additional evidence,
and shows to the satisfaction of the court that such additional
evidence is material and that there were reasonable grounds for
the failure to adduce such evidence in the proceeding before
the Administrator, the court may order such additional evidence
(and evidence in rebuttal thereof) to be taken before the
Administrator, in such manner and upon such terms and
conditions as to\1\ the court may deem proper. The
Administrator may modify his findings as to the facts, or make
new findings, by reason of the additional evidence so taken and
he shall file such modified or new findings, and his
recommendation, if any, for the modification or setting aside
of his original determination, with the return of such
additional evidence.
---------------------------------------------------------------------------
\1\So in original. The word ``to'' probably should not appear.
---------------------------------------------------------------------------
(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.
(4) If the court determines that any action of the
Administrator is arbitrary, capricious, or otherwise
unlawful, and remands the matter to the Administrator,
the Administrator shall complete final action on remand
within an expeditious time period not longer than the
time originally allowed for the action or 1 year,
whichever is less, unless the court on motion
determines that a shorter or longer period is
necessary, appropriate, and consistent with the
purposes of this Act. The court of appeals shall have
jurisdiction to enforce a deadline for action on remand
under this paragraph.
* * * * * * *
(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) The record for judicial review shall consist
exclusively of the material referred to in paragraph (3),
clause (i) of paragraph (4)(B), and subparagraphs (A) and (B)
of paragraph (6).
(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 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)). 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)). 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 V--PERMITS
Sec. 501. Definitions.
Sec. 502. Permit programs.
Sec. 503. Permit applications.
Sec. 504. Permit requirements and conditions.
Sec. 505. Notification to Administrator and contiguous States.
Sec. 506. Other authorities.
Sec. 507. Small business stationary source technical and environmental
compliance assistance program.
SEC. 501. DEFINITIONS.
* * * * * * *
SEC. 508. EMISSIONS OF GREENHOUSE GASES.
Notwithstanding any provision of this title or title III, no
stationary source shall be required to apply for, or operate
pursuant to, a permit under this title solely because the
stationary source, including an agricultural source, emits less
than 25,000 tons per year of any greenhouse gas or combination
of greenhouse gases that are regulated solely because of the
effect of those gases on climate change.
* * * * * * *
TITLE VI--STRATOSPHERIC OZONE PROTECTION
Table of Contents
Sec. 601.* * *
* * * * * * *
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) has been used, recovered, and recycled;
(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
As used in this subsection, the term ``refrigerant'' means any
class II substance used for heat transfer in a refrigerating
system.
(4) is listed as acceptable for use as a fire
suppression agent for nonresidential applications in
accordance with section 612(c).
SEC. 608. NATIONAL RECYCLING AND EMISSION REDUCTION PROGRAM.
(a) In General.--(1) * * *
* * * * * * *
(c) Prohibitions.--(1) Effective July 1, 1992, it shall be
unlawful for any person, in the course of maintaining,
servicing, repairing, or disposing of an appliance or
industrial process refrigeration, to knowingly vent or
otherwise knowingly release or dispose of any class I or class
II substance used as a refrigerant in such appliance (or
industrial process refrigeration) in a manner which permits
such substance to enter the environment. De minimis releases
associated with good faith attempts to recapture and recycle or
safely dispose of any such substance shall not be subject to
the prohibition set forth in the preceding sentence.
(2) Effective 5 years after the enactment of the Clean Air
Act Amendments of 1990, paragraph (1) shall also apply to the
venting, release, or disposal of any substitute substance for a
class I or class II substance by any person maintaining,
servicing, repairing, or disposing of an appliance or
industrial process refrigeration which contains and uses as a
refrigerant any such substance, unless the Administrator
determines that venting, releasing, or disposing of such
substance does not pose a threat to the environment. For
purposes of this paragraph, the term ``appliance'' includes any
device which contains and uses as a refrigerant a substitute
substance and which is used for household or commercial
purposes, including any air conditioner, refrigerator, chiller,
or freezer.
(3) Containers of Class I and Class II Substances.--
(A) Definition of refillable container.--In this
paragraph, the term `refillable container' means a
container that is designed to be refilled.
(B) Regulations.--Not later than 2 years after the
date of enactment of this paragraph, the Administrator
shall revise regulations promulgated under this section
to require that only a refillable container may be used
to hold 20 pounds or more of a class I substance or
class II substance.
SEC. 609. SERVICING OF MOTOR VEHICLE AIR CONDITIONERS.
(a) Regulations.--Within 1 year after the enactment of the
Clean Air Act Amendments of 1990, the Administrator shall
promulgate regulations in accordance with this section
establishing standards and requirements regarding the servicing
of motor vehicle air conditioners.
(b) * * *
* * * * * * *
(e) Small Containers of Class I or Class II, group I, 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 IIsubstance 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. 618. MISCELLANEOUS PROVISIONS.
For purposes of section 116, requirements concerning the
areas addressed by this title for the protection of the
stratosphere against ozone layer depletion shall be treated as
requirements for the control and abatement of air pollution.
For purposes of section 118, the requirements of this title and
corresponding State, interstate, and local requirements,
administrative authority, and process, and sanctions respecting
the protection of the stratospheric ozone layer shall be
treated as requirements for the control and abatement of air
pollution within the meaning of section 118.
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 limits.--To maintain the
integrity of the class II, group II limits, 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 consumption
allowance, production 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)(A), 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) Not later than 1 year 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 metric 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)(A), 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 3 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)(ii)(III), 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 year 2004, 2005, or
2006, less exportation, less
transfers and sales to persons
who produced class II
substances in the United States
during calendar year 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
year 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, or to allocate such allowances
for essential uses pursuant to subsection (d).
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 and governing the
allocation of withheld allowances for essential
uses subject to the criteria under subsection
(d).
(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.
(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 required to be 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
by promulgating new regulations. 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 by promulgating new regulations. 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 or 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 or consumption is
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
metric 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 limits
and the integrity of the class II, group II
limits. 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, pursuant to the requirements of part D of
title VII and based on the carbon dioxide
equivalent value of the substance destroyed,
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. If such projects are added
to the list under section 733, the issuance of
offset credits for such projects under part D
of title VII shall be governed by the
requirements of such part D, while the issuance
of offset credits for such projects under this
paragraph shall be governed by the requirements
of this paragraph. 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 the
provisions of this section regarding auction and nonauction
sale of allowances, to the extent consistent with any
applicable multilateral agreement to which the United States is
a party or otherwise adheres, the Administrator may allocate
(and in the case of medical devices, shall determine whether to
allocate) allowances withheld from auction or nonauction sale
under subsection (b)(4)(E) for essential uses pursuant to the
following requirements:
(1) Medical devices.--The Administrator, after notice
and opportunity for public comment, and in consultation
with the Commissioner of Food and Drugs, shall
determine whether to allocate withheld allowances for
the production and consumption of class II, group II
substances solely for use in medical devices approved
and determined to be essential by the Commissioner. Not
later than 20 months after the date of enactment of
this title, the Commissioner shall approve and
determine essential medical devices. For purposes of
this section, section 601(8)(A) shall not apply to
metered dose inhalers.
(2) Aviation and space vehicle safety.--The
Administrator, after notice and opportunity for public
comment, and in consultation with the Administrator of
the Federal Aviation Administration or the
Administrator of the National Aeronautics and Space
Administration, may allocate withheld allowances for
the production and consumption of class II, group II
substances solely for aviation and space flight safety
purposes.
(3) Fire suppression.--The Administrator, after
notice and opportunity for public comment, may allocate
withheld allowances for the production and consumption
of class II, group II substances solely for fire
suppression purposes. Paragraphs (1) and (2) of
subsection (g) of section 604 shall apply to class II,
group II substances in the same manner and to the same
extent as such provisions apply to the substances
specified in such subsection.
(4) National security.--The Administrator, after
notice and opportunity for public comment, and in
consultation with the Secretary of Defense, may
allocate withheld allowances for the production and
consumption of class II, group II substances for use as
may be necessary to protect the national security
interests of the United States if the Administrator, in
consultation with the Secretary of Defense, finds that
adequate substitutes are not available and that the
production or consumption of such substance is
necessary to protect such national security interest.
(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 section 616, 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 or 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 year 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 year 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 year 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 use 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 or consumption of class II, group II
substances, the Administrator may use 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 may use funds
to establish and carry out a program, to be
known as the `Best-in-Class Appliances
Deployment Program'--
(i) to provide bonus payments to
retailers or distributors for sales of
best-in-class high-efficiency household
appliance models, high-efficiency
installed building equipment, and high-
efficiency consumer electronics, with
the goals of--
(I) accelerating the
reduction in consumption of
hydrochlorofluorocarbons
(measured on a global warming
potential-weighted basis);
(II) reducing life-cycle
costs for consumers;
(III) encouraging innovation;
and
(IV) maximizing energy
savings and public benefit;
(ii) to provide bounties to retailers
and manufacturers for the replacement,
retirement, and recycling of old,
inefficient, and environmentally
harmful products; and
(iii) to provide premium awards to
manufacturers for developing and
producing new super-efficient best-in-
class products.
(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 of products.--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 AND INVESTMENT 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 credit.
(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)(i) Any stationary source that produces
petroleum-based or coal-based liquid fuel,
petroleum coke, or natural gas liquid, the
combustion of which would emit 25,000 or more
tons of carbon dioxide equivalent, as
determined by the Administrator.
(ii) Any entity that (or any group of 2 or
more affiliated entities that, in the
aggregate) imports petroleum-based or coal-
based liquid fuel, petroleum coke, or natural
gas liquid, the combustion of which would emit
25,000 or more 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
(v).
(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;
beneficiation or other processing
(including agglomeration) of metal
ores; 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.--
(A) In general.--The term `domestic offset
credit' means an offset credit issued under
part D, other than an international offset
credit.
(B) Exclusion.--The term `domestic offset
credit' does not include a term 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 726(g)(2).
(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, offset credit, or term 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 744.
(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) Market stability reserve allowance.--The term
`market stability reserve allowance' means an emission
allowance reserved for, transferred to, or deposited in
the market stability reserve, or established, under
section 726.
(36) 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.
(37) Natural gas liquid.--The term `natural gas
liquid' means ethane, butane, isobutane, natural
gasoline, and propane which is ready for commercial
sale or use.
(38) 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)).
(39) Offset credit.--
(A) In general.--The term `offset credit'
means an offset credit issued under part D.
(B) Exclusion.--The term `offset credit' does
not include a term offset credit.
(40) 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 or may be issued under part D.
(41) 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).
(42) Qualified r&d facility.--The term `qualified R&D
facility' means a facility that conducts research and
development, that was in operation as of the date of
enactment of this title, and that is part of a covered
entity subject to paragraphs (1) through (8) of section
722(b).
(43) Petroleum.--The term `petroleum' includes crude
oil, tar sands, oil shale, and heavy oils.
(44) Repeated intentional reversals.--The term
`repeated intentional reversals' means at least 3
intentional reversals, as determined by the
Administrator or a court under section
734(b)(3)(B)(ii).
(45) Research and development.--The term `research
and development' means activities--
(A) that are conducted in process units or at
laboratory bench-scale settings;
(B) whose purpose is to conduct research and
development for new processes, technologies, or
products that contribute to lower greenhouse
gas emissions; and
(C) that do not manufacture products for
sale.
(46) 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.
(47) Retire.--The term `retire', with respect to an
allowance, offset credit, or term 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, offset credit, or term offset credit to
satisfy a compliance obligation.
(48) Reversal.--The term `reversal' means an
intentional or unintentional loss of sequestered
greenhouse gases to the atmosphere.
(49) 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.
(50) Small business refiner.--
(A) In general.--The term `small business
refiner' means a refiner that meets the
applicable Federal refinery capacity and
employee limitations criteria described in
section 45H(c)(1) of the Internal Revenue Code
of 1986 (as in effect on the date of enactment
of this section and without regard to section
45H(d)).
(B) Eligibility.--Eligibility of a small
business refiner under this paragraph shall not
be recalculated or disallowed on account of--
(i) a merger of the small business
refiner with 1 or more other small
business refiners after December 31,
2002; or
(ii) the acquisition by a small
business refiner of another small
business refiner (or refinery of such
refiner) after December 31, 2002.
(51) 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.
(52) Ton.--The term `ton' means a metric ton.
(53) Uncapped emissions.--The term `uncapped
emissions' means emissions of greenhouse gases emitted
after December 31, 2011, that are not capped emissions.
(54) 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.
(55) 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 thermal energy and electricity
during normal operation and that supplies \1/3\
or less of its potential electric output
capacity and 25 megawatts 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.
(56) 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 market stability
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.
Congress finds that--
(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 countries;
(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;
(3) 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;
(4) accordingly, controlling emissions in small as
well as large quantities is essential to prevent, slow
the pace of, reduce the threats from, and mitigate
global warming and its adverse effects;
(5) 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
relating 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;
(6) the fact that many of those 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;
(7) the fact 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;
(8) countries of the world look to the United States
for leadership in addressing the threat of and harm
from global warming;
(9) full implementation of this title is critical to
engage other countries in an international effort to
mitigate the threat of and harm from global warming;
and
(10) 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 this title is fully implemented and
enforced in an expeditious manner.
SEC. 702. ECONOMYWIDE REDUCTION GOALS.
The goals of this title, and the Clean Energy Jobs and
American Power Act (and the amendments made by that 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 limit 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 80 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 of Greenhouse Gas Emissions From Such Sources
in 2005.--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 a
percentage specified in section 771(c) 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 753(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 up-to-date
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
Clean Energy Jobs and American Power Act (and the
amendments made by that Act);
(3) an analysis of the status of worldwide greenhouse
gas reduction efforts, including implementation of the
Clean Energy Jobs and American Power 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; and
(4) an analysis, to be conducted by the Secretary of
Energy in accordance with subsection (f) and submitted
to the Administrator for inclusion in each report under
this subsection, of the technological feasibility of
achieving additional reductions in greenhouse gas
emissions.
(b) Exception.--Subsection (a)(3) shall not apply to the
first report submitted under subsection (a).
(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 365 of the Clean Energy Jobs
and American Power Act, and Federal agencies, and the
European Union's global temperature data assessment;
(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, tribal culture, 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 socioeconomic 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, subsistence, and
tribal culture;
(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 pollution
reduction and investment 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 emission
reductions by entities regulated by performance
standards;
(4) quantification of aggregate net emissions and
emission 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 the Clean Energy Jobs
and American Power Act (and the amendments made by that
Act) and other Federal statutes are resulting in
sufficient United States greenhouse gas emission
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) Technological Information.--The analysis required under
subsection (a)(4) 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 Secretary
determines to be relevant; and
(4) review and compare the emission 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.
(g) 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.
(h) 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) 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 emission 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).
(d) 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
emission 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.
SEC. 708. CONSULTATION WITH STATES.
In the development of any regulations required to implement
the global warming pollution and reduction investment program
pursuant to this title, and in the implementation of that
program, the Administrator shall consult with the States in the
Regional Greenhouse Gas Initiative, the Western Climate
Initiative, and the Mid-West Governors Accord.
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 that is an 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.
(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 in a
calendar year a significant quantity, as
determined by the Administrator (which in no
case shall be less than \1/2\ ton of such
fluorinated gas), 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)(3)(B)(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 disclosure of which would
likely cause substantial harm to the
competitive position of the person from
which the information was obtained,
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--
(aa) the State or
Indian tribe has first
provided to the
Administrator a written
opinion from the chief
legal officer or
counsel of the
requesting State
agency, or comparable
tribal legal counsel,
stating that under
applicable State or
tribal law, the State
or Indian tribe has the
authority to compel a
business that possesses
such information to
disclose the
information to the
State or Indian tribe;
or
(bb) each affected
business is informed of
disclosures under this
part that pertain to
the business, and the
State or Indian tribe
has demonstrated to the
chief legal officer of
the Environmental
Protection Agency that
the use and disclosure
by the State or Indian
tribe, as applicable,
of such information
will be governed by
State or tribal law and
procedures that will
provide adequate
protection to the
interests of affected
businesses;
(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.
SEC. 714. PERFLUOROCARBON AND OTHER NONHYDROFLUOROCARBON FLUORINATED
SUBSTANCE PRODUCTION REGULATION.
(a) Definitions.--In this section:
(1) Best achievable performance standard.--The term
`best achievable performance standard' means a
limitation on total emissions based on the maximum
degree of reduction of fluorinated gases that are
greenhouse gases subject to regulation under this Act
emitted during the production of nonhydrofluorocarbon
fluorinated substances at covered entities that the
Administrator, taking into consideration energy,
environmental, economic impacts, and other costs,
determines to be achievable for covered entities
through application of production process optimization
and available methods, control technologies or systems,
and management techniques or practices.
(2) Nonhydrofluorocarbon fluorinated substance.--The
term `nonhydrofluorocarbon fluorinated substance' means
a substance included on the list under subsection (d)
that--
(A) is not listed as a class I or class II
substance under title VI; and
(B) is not--
(i) sulfur hexafluoride; or
(ii) nitrogen trifluoride.
(b) Determination by Administrator.--
(1) In general.--Not later than 1 year after the date
of enactment of this section, the Administrator shall
determine, based on the criteria described in paragraph
(2), whether fluorinated gases that are greenhouse
gases emitted during the production of
nonhydrofluorocarbon fluorinated substances should be
regulated in accordance with--
(A) subsection (c); or
(B) the applicable requirements of section
722 relating to emissions of greenhouse gases
during fluorinated substance production at
covered entities.
(2) Criteria for determination.--In making the
determination under paragraph (1), the Administrator
shall take into consideration--
(A) whether an equivalent or greater level of
total emissions reductions could be achieved
under subsection (c), as compared to the
emissions reductions that would be achieved
under the applicable requirements of section
722 relating to emissions of greenhouse gases
during fluorinated substance production at
covered entities; and
(B) such other criteria as the Administrator
determines to be appropriate.
(c) Greenhouse Gas Emissions From Nonhydrofluorocarbon
Fluorinated Substance Production.--
(1) In general.--If the Administrator makes the
determination described in subsection (b)(1)(A), not
later than 18 months after the date of enactment of
this section, the Administrator shall promulgate
regulations applicable to covered entities that require
fluorinated gases that are greenhouse gases emitted
during the production of nonhydrofluorocarbon
fluorinated substances at those covered entities to
meet the best achievable performance standard.
(2) Best achievable performance standard review.--The
Administrator shall, at the discretion of the
Administrator--
(A) not later than 2 years after the date of
establishment of a best achievable performance
standard, and every 2 years thereafter--
(i) review the best achievable
performance standard; and
(ii) as necessary, establish a more
stringent best available performance
standard that reduces emissions, to the
maximum extent practicable, in
accordance with the economy-wide
reduction goals referred to in section
702; or
(B) not later than 2 years after the date of
establishment of a best achievable performance
standard, and every 10 years thereafter,
establish a 10-year schedule under which each
applicable covered entity shall incrementally
implement a more stringent best achievable
performance standard that reduces, to the
maximum extent practicable, emissions in
accordance with the economy-wide reduction
goals referred to in section 702.
(3) Exclusivity.--If the Administrator makes the
determination described in subsection (b)(1)(A), the
requirements of this subsection relating to control of
emissions of fluorinated gases that are greenhouse
gases during the production of nonhydrofluorocarbon
fluorinated substances shall apply in lieu of the
requirements of section 722 relating to emissions of
fluorinated gases that are greenhouse gases during
fluorinated substance production at covered entities.
(d) List of Nonhydrofluorocarbon Fluorinated Substances.--
(1) Initial list.--If the Administrator makes the
determination described in subsection (b)(1)(A), not
later than 2 years after the date of enactment of this
section, the Administrator shall publish a list of
nonhydrofluorocarbon fluorinated substances subject to
regulation under this section.
(2) Additions to list.--The Administrator may include
on the list published under paragraph (1) any substance
that meets the requirements described in subsection
(a)(2).
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 quantities 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,
offset credits, or term offset credits.
(3) Other provisions unaffected.--Except as otherwise
specified in this Act, nothing in this Act relating to
allowances, offset credits, or term 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 or
tribal law regulating electric utility rates and charges, or as
affecting any State or tribal law regarding such State
regulation, or as limiting State or tribal regulation
(including any prudency review) under such a State or tribal
law. Nothing in this part shall be construed as modifying the
Federal Power Act (16 U.S.C. 791a et seq.) 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 (MtCO2e)
2012................................. 4,627
2013................................. 4,544
2014................................. 5,053
2015................................. 5,003
2016................................. 5,482
2017................................. 5,261
2018................................. 5,132
2019................................. 5,002
2020................................. 4,873
2021................................. 4,739
2022................................. 4,605
2023................................. 4,471
2024................................. 4,337
2025................................. 4,203
2026................................. 4,069
2027................................. 3,935
2028................................. 3,801
2029................................. 3,667
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 calendar year 1,035
thereafter.
(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.--
(1) In general.--Not later than March 31, 2014, the
Administrator shall conduct an assessment of the
regulation of non-hydrofluorocarbon fluorinated gases
under this title to determine whether the most
appropriate point of regulation of those gases is at--
(A) the gas manufacturer or importer level;
or
(B) the downstream source of the emissions.
(2) Modification of definition.--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-
hydrofluorocarbon fluorinated gases can best be
regulated by designating downstream emission sources as
covered entities with compliance obligations under
section 722, the Administrator shall--
(A) after providing notice and an opportunity
for comment, modify the definition of the term
`covered entity' with respect to fluorinated
gases (other than hydrofluorocarbons)
accordingly; and
(B) establish such requirements as are
necessary to ensure compliance by the covered
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.
(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.
(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
(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.
(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) R&D facilities.--
(A) In general.--For a qualified R&D facility
that emitted 25,000 tons per year or more
carbon dioxide equivalent in the previous
calendar year, 1 emission allowance for each
ton of carbon dioxide equivalent of greenhouse
gas that such facility emitted in the previous
calendar year.
(B) Treatment.--A qualified R&D facility
shall be treated as a separate covered entity
solely for purposes of applying the
requirements of this subsection.
(10) Algae-based fuels.--Where carbon dioxide (or
another greenhouse gas) generated by a covered entity
is used as an input in the production of algae-based
fuels, the Administrator shall ensure that emission
allowances are required to be held either for the
carbon dioxide generated by a covered entity used to
grow the algae or for the portion of the carbon dioxide
emitted from combustion of the fuel produced from such
algae that is attributable to carbon dioxide generated
by a covered entity, but not for both.
(11) 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 limits on emissions.
(12) 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.
(13) 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.
(14) 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) Small business refiners.--The prohibition under
subsection (a) shall first apply to a covered entity
described in section 700(13)(F)(viii) that is a small
business refiner with respect to emissions during
calendar year 2015.
(3) 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) Credits.--
(i) In general.--Covered entities
collectively may, in accordance with
this paragraph, use offset credits to
demonstrate compliance for up to a
maximum of 2,000,000,000 tons of
greenhouse gas emissions annually.
(ii) Demonstration of compliance.--In
any calendar year, a covered entity may
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), up to a
total number of offset credits
described in subparagraph (B).
(B) Applicable percentage.--
(i) In general.--The total number of
offset credits referred to in
subparagraph (A)(ii) for a covered
entity for a given calendar year shall
be determined by--
(I) dividing--
(aa) the tons of
carbon dioxide
equivalent of
greenhouse gas
emissions of the
covered entity (except
for the types of
emissions excluded
under subparagraphs (A)
through (D) of
subsection (b)(1),
subparagraphs (A)
through (E) of
subsection (b)(6), and
subparagraphs (A)
through (D) of
subsection (b)(7)) and
attributable greenhouse
gas emissions for the
year before the
preceding calendar
year; by
(bb) the sum of the
tons of carbon dioxide
equivalent of
greenhouse gas
emissions of all
covered entities
(except for the types
of emissions excluded
under subparagraphs (A)
through (D) of
subsection (b)(1),
subparagraphs (A)
through (E) of
subsection (b)(6), and
subparagraphs (A)
through (D) of
subsection (b)(7)) and
attributable greenhouse
gas emissions for the
year before the
preceding calendar
year; and
(II) multiplying the quotient
obtained under subclause (I) by
2,000,000,000.
(ii) Applicability.--Clause (i) shall
apply to a covered entity (including a
covered entity that commenced operation
during the preceding calendar year)
even if the covered entity had no
greenhouse gas emissions or
attributable greenhouse gas emissions
described in that clause.
(iii) Offset credits.--Not more than
\3/4\ of the applicable percentage
under this paragraph may be used by
holding domestic offset credits, and
not more than \1/4\ 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 900,000,000 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 1,500,000,000 exceeds the number of
domestic offset credits the Administrator
determines is available for that year, up to a
maximum of 750,000,000 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 2,000,000,000
specified in subparagraphs (A) and (B) should
be increased or decreased.
(2) Term offset credits.--
(A) In general.--Covered entities may, in
accordance with this paragraph, use non-expired
term offset credits instead of domestic offset
credits for purposes of temporarily
demonstrating compliance with this section.
(B) Amount.--The combined quantity of term
offset credits and domestic offset credits used
by a covered entity to demonstrate compliance
for its emissions or attributable greenhouse
gas emissions in any given year shall not
exceed the quantity of domestic offset credits
that a covered entity is entitled to use for
that year to demonstrate compliance in
accordance with paragraph (1).
(C) Expiration.--A term offset credit shall
expire in the year after its term ends. The
term of a term offset credit shall be
calculated by adding to the year of issuance
the number of years equal to the length of the
crediting period for the practice or project
for which the term offset credit was issued,
but in no case shall be later than the date 5
years from the date of issuance.
(D) Demonstrating compliance upon expiration
of term offset credit.--With respect to the
emissions for which a covered entity is using
term offset credits to demonstrate compliance
temporarily with 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 the calendar year in which a
term offset credit expires, the owner or
operator holds--
(i) for purposes of finally
demonstrating compliance, an allowance
or a domestic offset credit; or
(ii) for purposes of temporarily
demonstrating compliance, a non-expired
term offset credit.
(E) Inapplicability of percentage
limitations.--Domestic offset credits used for
purposes of finally demonstrating compliance
under this subparagraph shall not be subject to
the percentage limitations in subparagraph (B).
(F) Financial assurance.--A covered entity
may not use a term offset credit to demonstrate
compliance temporarily unless it simultaneously
provides to the Administrator financial
assurance that, at the end of the term offset
credit`s crediting term, the covered entity
will have sufficient resources to obtain the
quantity of allowances or credits necessary to
demonstrate final compliance. The Administrator
shall issue regulations establishing
requirements for such financial assurance,
which shall take into account the increased
risk associated with longer crediting terms.
These regulations shall take into account the
total number of tons of carbon dioxide
equivalent of greenhouse gas emissions for
which a covered entity is demonstrating
compliance temporarily, and may set a limit on
this amount. In the event that a covered entity
that used term offset credits to demonstrate
compliance temporarily fails to meet the
requirements of subparagraph (D) at the end of
the term offset credits' crediting term, if the
financial assurance mechanism fails to provide
to the Administrator the number of allowances
or offset credits for which the crediting term
has expired, then the Administrator shall
retire that number of allowances with the
vintage year 2 years after the year in which
the term offset credit expires in the same
amount. Allowances so retired shall not be
counted as emission allowances established for
that calendar year under section 721(a).
(3) 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).
(4) 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. In the event that a
covered entity fails to demonstrate compliance at the
expiration of a term of offset credits crediting term as
required by section 722(d)(2)(D), the year of the violation
shall be the year in which the term offset credit expires.
(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, offset credits,
and term 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 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, credit, or term offset
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, credits, or term offset
credits or the allowance tracking system.
(2) General rule.--An allowance, credit, or term
offset 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 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. MARKET STABILITY RESERVE.
(a) Market Stability 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 market
stability 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 Market Stability Reserve
Auctions.--
(1) Filling the market stability reserve initially.--
The Administrator shall, not later than 2 years after
the date of enactment of this title, establish a market
stability reserve account, and shall place in that
account a quantity of emission allowances established
under section 771(d)(9).
(2) Supplementing the market stability reserve.--The
Administrator shall also--
(A) at the end of each calendar year,
transfer to the market stability reserve
account each emission allowance that was
offered for sale but not sold at any auction
conducted under section 778; and
(B) transfer emission allowances established
under subsection (g) from auction proceeds, and
deposit them into the market stability reserve,
to the extent necessary to maintain the reserve
at its original size.
(c) Minimum Market Stability Reserve Auction Price.--
(1) In general.--At each market stability 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 market stability reserve auction price'.
(2) Initial minimum market stability reserve auction
prices.--The minimum market stability reserve auction
price shall be $28 (in constant 2005 dollars) for the
market stability reserve auctions held in 2012. For the
market stability reserve auctions held in 2013 through
2017, the minimum market stability reserve auction
price shall be the market stability 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 market stability reserve auction price in
subsequent years.--For each market stability reserve
auction held in 2018 and each year thereafter, the
minimum market stability reserve auction price shall be
the market stability reserve auction price for the
previous year increased by 7 percent, plus the rate of
inflation (as measured by the Consumer Price Index for
All Urban Consumers).
(d) Quantity of Emission Allowances Released From the Market
Stability Reserve.--
(1) Initial limits.--Subject to paragraph (4), for
each of calendar years 2012 through 2016, the annual
limit on the number of emission allowances from the
market stability reserve account that may be auctioned
is an amount equal to 15 percent of the emission
allowances established for that calendar year under
section 721(a). This limit does not apply to offset
credits sold on consignment pursuant to subsection (h).
(2) Limits in subsequent years.--Subject to paragraph
(4), for calendar year 2017 and each year thereafter,
the annual limit on the number of emission allowances
from the market stability reserve account that may be
auctioned is an amount equal to 25 percent of the
emission allowances established for that calendar year
under section 721(a). This limit does not apply to
offset credits sold on consignment pursuant to
subsection (h).
(3) Allocation of limitation.--One-fourth of each
year's annual market stability reserve auction limit
under this subsection shall be made available for
auction in each quarter. Any allowances from the market
stability 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 market
stability reserve account.
(4) Authority to adjust limitation.--The
Administrator may adjust the limits in paragraphs (1)
or (2) if the Administrator determines an adjustment is
required to prevent disruptively high prices or to
preserve the integrity of the market stability reserve.
(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 market stability
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 market stability
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 market stability
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 market stability 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 market stability reserve fund.--The
proceeds from market stability reserve auctions shall
be placed in the Market Stability Reserve Fund
established by subsection (j), and shall be available
without further appropriation or fiscal year limitation
for the purposes described in this subsection.
(2) Offset credits.--The Administrator shall use the
proceeds from each market stability reserve auction to
purchase offset credits, including domestic offset
credits and international offset credits issued
pursuant to section 744. The Administrator shall retire
those offset credits and establish a number of emission
allowances equal to 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 market stability reserve, except that, with
respect to any such emission allowances in excess of
the amount necessary to fill the market stability
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; 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 market stability reserve account under subsection
(b)(1).
(h) Availability of Offset Credits for Auction.--
(1) In general.--The regulations promulgated under
section 721(h) shall allow any entity holding offset
credits to request that the Administrator include such
offset credits in an upcoming market stability reserve
auction. The regulations shall provide that--
(A) upon sale of such offset credits, the
Administrator shall retire those offset
credits, and establish and provide to the
purchasers a number of emission allowances
equal to the number of offset credits so
retired, which allowances shall be in addition
to those established under section 721(a); and
(B) for offset credits sold pursuant to this
subsection, the proceeds for the entity that
offered the offset credits for sale shall be
the lesser of--
(i) the average daily closing price
for 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 market
stability reserve auction at which they
were auctioned, with the remaining
funds collected upon the sale of the
offset credits deposited in the
Treasury; and
(ii) the amount received for the
offset credits at the auction.
(2) Proceeds.--For 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 offset
credits for sale. No funds transferred from a purchaser
to a seller of 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
offset credits, the Administrator is not obligated to
obtain the highest price possible for the offset
credits, and instead shall auction such offset credits
in the same manner and pursuant to the same rules
(except as modified in paragraph (1)) as set forth for
auctioning market stability reserve allowances.
Entities requesting that such offset credits be offered
for sale at a market stability reserve auction may not
set a minimum reserve price for their offset credits
that is different than the minimum market stability
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) Market Stability Reserve Fund.--There are established in
the Treasury of the United States a fund to be known as the
`Market Stability Reserve Fund'.
(k) 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)(3) 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)(3) 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)(3), consistent with the purposes of the
Clean Energy Jobs and American Power 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 President shall establish an
independent Offsets Integrity Advisory Board. The Advisory
Board shall make recommendations to the President for use in
promulgating and revising regulations under this part, 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 President 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 President 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;
(D) any beneficial or adverse environmental,
public health, welfare, social, economic, or
energy effects associated with an offset
project type;
(E) the extent to which, as of the date of
submission of the report, the project or
activity types within each category--
(i) are required by law (including a
regulation); or
(ii) represent business-as-usual
(absent funding from offset credits)
practices for a relevant land area,
industry sector, or forest, soil or
facility type;
(2) make available to the President its advice and
comments on offset methodologies that should be
considered under regulations promulgated pursuant to
subsection (a) and (b) of section 734, including
methodologies to address the issues of additionality,
activity baselines, measurement, leakage, uncertainty,
permanence, and environmental integrity;
(3) make available to the President, 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 744;
(4) make available to the President, and other
relevant Federal agencies, its advice and comments
regarding scientific, technical, and methodological
issues associated with the implementation of this part;
(5) make available to the President 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
describe the research efforts necessary to provide the
required information; and
(6) make available to the President its advice and
comments on other ways to improve or safeguard the
environmental integrity of programs established under
this part.
(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
President and make available to the public an analysis of
relevant scientific and technical information related to this
part. 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 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 President 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 President, 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
President 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;
(5) include as reductions in greenhouse gases
reductions achieved through the destruction of methane
and its conversion to carbon dioxide, and reductions
achieved through destruction of chlorofluorocarbons or
other ozone depleting substances, if permitted by the
President under section 619(b)(9) and subject to the
conditions specified in section 619(b)(9), based on the
carbon dioxide equivalent value of the substance
destroyed; and
(6) establish a process to accept and respond to
comments from third parties regarding programs
established under this part in a timely manner.
(c) Coordination to Minimize Negative Effects.--In
promulgating and implementing regulations under this part, the
President 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 President 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 President shall assess fees payable by offset
project developers in an amount necessary to cover the
administrative costs and the enforcement costs to the
Environmental Protection Agency and the Department of Justice
of carrying out the activities under this part. Amounts
collected for such fees shall be available to the President and
the Attorney General for carrying out the activities under this
part to the extent provided in advance in appropriations Acts.
(g) Secretary of Agriculture.--The President shall designate
the Secretary of Agriculture to serve as the lead agency in--
(1) the implementation of elements of the offset
program, in coordination with the Administrator, for
agriculture and forestry projects in the United States
authorized under this part, including project types and
methodologies; and
(2) working directly with farmers, ranchers, and
foresters to implement agriculture and forestry
projects.
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 President 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 President 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 President shall
establish the initial eligibility list under paragraph
(1) not later than one year after the date of enactment
of this title for which there are well developed
methodologies that the President determines would meet
the criteria of section 734.
(4) Project types to be considered for initial
list.--In determining the initial list, the President
shall give priority to consideration of offset project
types that are recommended by the Advisory Board, and
shall consider--
(A) methane collection and combustion
projects at active coal mines;
(B) methane collection and combustion
projects at landfills;
(C) capture of venting, flaring, and fugitive
emissions from oil and natural gas systems;
(D) nonlandfill methane collection,
combustion and avoidance projects involving
organic waste streams that would have otherwise
emitted methane in the atmosphere, including
manure management and biogas capture and
combustion;
(E) projects involving afforestation or
reforestation of acreage not forested as of
January 1, 2009;
(F) forest management resulting in an
increase in forest carbon stores, including
harvested wood products;
(G) agricultural, grassland, and rangeland
sequestration and management practices,
including--
(i) altered tillage practices,
including avoided abandonment of such
practices;
(ii) winter cover cropping,
continuous cropping, and other means to
increase biomass returned to soil in
lieu of planting followed by fallowing;
(iii) reduction of nitrogen
fertilizer use or increase in nitrogen
use efficiency;
(iv) reduction in the frequency and
duration of flooding of rice paddies;
(v) reduction in carbon emissions
from organic soils;
(vi) reduction in greenhouse gas
emissions from manure and effluent;
(vii) reduction in greenhouse gas
emissions due to changes in animal
management practices, including dietary
modifications;
(viii) planting and cultivation of
permanent tree crops;
(ix) greenhouse gas emission
reductions from improvements and
upgrades to mobile or stationary
equipment (including engines);
(x) practices to reduce and eliminate
soil tillage;
(xi) reductions in greenhouse gas
emissions through restoration of
wetlands, forestland, and grassland;
and
(xii) sequestration of greenhouse
gases through management of tree crops;
and
(H) changes in carbon stocks attributed to
land use change and forestry activities,
including--
(i) management of peatland or
wetland;
(ii) conservation of grassland and
forested land;
(iii) improved forest management,
including accounting for carbon stored
in wood products;
(iv) reduced deforestation or avoided
forest conversion;
(v) urban tree-planting and
maintenance;
(vi) agroforestry; and
(vii) adaptation of plant traits or
new technologies that increase
sequestration by forests.
(5) Methodologies.--In issuing methodologies pursuant
to section 734, the President shall give priority to
methodologies for offset types included on the initial
eligibility list.
(b) Modification of List.--The President--
(1) shall add additional project types to the list
not later than 2 years after the date of enactment of
this title;
(2) may at any time, by rule, add a project type to
the list established under subsection (a) if the
President, 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;
(3) 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
(4) shall consider adding to or removing from the
list established under subsection (a), at a minimum,
project types proposed to the President--
(A) by petition pursuant to subsection (c);
or
(B) by the Advisory Board.
(c) Petition Process.--Any person may petition the President
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 President shall
either grant or deny the petition and publish a written
explanation of the reasons for the President's decision. The
President may not deny a petition under this subsection on the
basis of inadequate 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 President 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
President has made an affirmative
determination under section 740(a)(2);
or
(ii) activities that are readily
reversible, with respect to which the
President may set an alternative
earlier date under this subparagraph
that is not earlier than January 1,
2001, where the President 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 section
323 of division A, or section 206 of division
B, of the Clean Energy Jobs and American Power
Act; 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 President 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) Accounting.--
(A) In general.--After issuance of offset
credits for a project, pursuant to section 733,
the offset project developer shall, in a timely
manner, report any reversal that occurs.
(B) Intentional reversals.--An offset project
developer shall not engage in repeated
intentional reversals.
(2) Regulations.--As part of the regulations
promulgated under section 732(a), for each type of
sequestration project listed under section 733, the
President 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;
(C) provisions to discourage repeated
intentional reversals by offset project
developers, including but not limited to the
assessment of administrative fees, temporary
suspension, or disqualification of an offset
project developer from the program; and
(D) any other provisions the President
determines necessary to account for and address
reversals.
(3) Mechanisms.--The President 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 President shall
prescribe at least one of the following mechanisms to
meet the requirements of this paragraph:
(A) An offsets reserve, pursuant to paragraph
(4).
(B) Insurance that provides for purchase and
provision to the President 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 President
determines satisfies the requirements of this
part.
(4) Offsets reserve.--
(A) In general.--An offsets reserve referred
to in paragraph (3)(A) is a program under
which, before issuance of offset credits under
this part, the President shall subtract and
reserve from the quantity to be issued a
quantity of offset credits based on the risk of
reversal. The President 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 President
shall remove offset credits or emission
allowances 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
President 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 President 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.
(iv) Petition.--Any person may
petition the President for a
determination that an offsets reversal
has occurred. Any such petition shall
include a showing by the petitioner
that there is adequate data or other
evidence to support the petition. Not
later than 90 days after the date of
receipt of the petition, the President
shall take final action determining
either that the reversal has occurred
or that the reversal has not occurred.
Such determination shall be accompanied
by a statement of the basis for the
determination.
(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.
(5) Term offset credits.--
(A) Applicability.--With respect to a
practice listed under section 733 that
sequesters greenhouse gases and has a crediting
period of not more than 5 years, the President
may address reversals pursuant to this
paragraph in lieu of permanently accounting for
reversals pursuant to paragraphs (2) and (3).
(B) Accounting for reversals.--For such
practices or projects implementing the
practices described in subparagraph (A), the
President shall require only reversals that
occur during the crediting period to be
accounted for and addressed pursuant to
paragraphs (2) and (3).
(C) Credits issued.--For practices or
projects regulated pursuant to subparagraph
(B), the President shall issue under section
737 a term offset credit, in lieu of an offset
credit, for each ton of carbon dioxide
equivalent that has been sequestered.
(c) Crediting Periods.--
(1) In general.--As part of the regulations
promulgated under section 732(a), for each offset
project type, the President shall specify a crediting
period, and establish provisions for petitions for new
crediting periods, in accordance with this subsection.
(2) Duration.--
(A) In general.--The crediting period shall
be not less than 5 and not greater than 10
years for any project type other than those
involving sequestration or term offsets.
(B) Forestry projects.--The crediting period
for a forestry offset project shall not exceed
20 years.
(C) Term offset credits.--The crediting
period for a term offset credit issued shall
not exceed 5 years.
(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).
(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 President may
grant such petition after public notice and opportunity
for comment. The President 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 President shall apply
conservative assumptions or methods to maximize the certainty
that the environmental integrity of the greenhouse gas
limitations established under section 703 is not compromised.
(e) Pre-existing Methodologies.--In promulgating requirements
under this section, the President shall give due consideration
to methodologies for offset projects existing as of the date of
enactment of this title.
(f) Added Project Types.--The President 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 signed by a
responsible official (who shall certify the accuracy of the
information submitted) and providing such information as the
President 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
President under subsection (a) not 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 President 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;
(2) designation of a party who is authorized to
provide access to the appropriate officials or an
authorized representative to the offset project; and
(3) any other information that the President
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 President shall make the approval petition publicly
available on the internet, approve or deny the petition in
writing, and, if the petition is denied, provide the reasons
for the denial and make the President's decision publicly
available on the internet. 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 President shall establish procedures for
appeal and review of determinations made under subsection (d).
(f) Voluntary Preapproval Review.--The President may
establish a voluntary preapproval review procedure, to allow an
offset project developer to request the President to conduct a
preliminary eligibility review for an offset project. Findings
of such reviews shall not be binding upon the President. The
voluntary preapproval review procedure--
(1) shall require the offset project developer to
submit such basic project information as the President
requires to provide a meaningful review; and
(2) shall require a response from the President 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 President 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 President 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 President shall prescribe a schedule for
the submission of verification reports under subsection (a).
(c) Verification Report Requirements.--The President 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 President
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 President 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 with offset project developers.
(2) Standards.--
(A) American national standards institute
accreditation.--The President 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 President shall accredit, or accept
for accreditation, verifiers under this
subparagraph only if the President 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 President 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
President.
(4) Revocation.--The regulations concerning
accreditation of third-party verifiers required under
paragraph (1) shall establish a process for the
President to revoke the accreditation of any third-
party verifier that the President finds fails to
maintain professional qualifications or to avoid a
conflict of interest, or for other good cause.
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 President shall--
(1) make the report publicly available on the
Internet;
(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 and make such determination publicly
available on the Internet.
(b) Issuance of Offset Credits.--The President shall issue
one offset credit to an offset project developer for each ton
of carbon dioxide equivalent that the President 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 President 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 President 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 President
under subsection (a).
(e) Registration.--The President 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 President shall, on an ongoing basis,
conduct random audits of offset projects and offset credits.
The President shall conduct audits of the practices of third-
party verifiers. In each year, the President shall conduct
audits, at minimum, for a representative sample of project
types and geographic areas.
(b) Delegation.--The President may delegate to a State or
Indian tribe the responsibility for conducting audits under
this section if the President finds that the program proposed
by the State or Indian tribe provides assurances equivalent to
those provided by the auditing program of the President, and
that the integrity of the offset program under this part will
be maintained. Nothing in this subsection shall prevent the
President from conducting any audit the President considers
necessary and appropriate.
(c) Audit Requirements.--As part of the regulations
promulgated under section 732(a), the President shall establish
requirements and protocols for an auditing program, whether
undertaken by the President or an authorized representative,
concerning project developers, third party verifiers, and
reports submitted by those persons, including the offset
project approval petition and verification report. Such
regulations shall include--
(1) the components of the offset project, which shall
be evaluated against the offset approval petition and
the verification report;
(2) the minimum experience or training of the
auditors;
(3) the form in which reports shall be completed;
(4) requirements for delegating auditing functions to
States or Indian tribes, including requiring periodic
reports from States or Indian tribes on their auditing
activities and findings; and
(5) any other information that the appropriate
officials considers to be necessary to achieve the
purpose of the Act.
SEC. 739. PROGRAM REVIEW AND REVISION.
At least once every 5 years, the President 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), after
public notice and opportunity for comment, the President 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 President determines--
(A) was established under State or tribal law
or regulation prior to January 1, 2009, or has
been approved by the President 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 President.
(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, sequestration of greenhouse gases, or
destruction of chlorofluorocarbons (subject to the
conditions specified in section 619(b)(9) and based on
the carbon dioxide equivalent value of the substance
destroyed), 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 President 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) In general.--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 President to be
approved under this subsection as an eligible program
for early offset credits under this section.
(2) Approval.--The President shall approve any such
program that the President 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 President determines
meet the criteria of subsection (a)(2). The President
shall 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 President determines meet the criteria of
subsection (a)(2). The President shall make a
determination on any application received under this
subsection by not later than 180 days from the date of
receipt of the application.
SEC. 741. ENVIRONMENTAL CONSIDERATIONS.
If the President lists forestry or other relevant land
management-related offset projects as eligible offset project
types under section 733, the President, in consultation with
appropriate Federal agencies, shall promulgate regulations to
establish criteria for such 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, State, or tribal invasive plant authority
within the applicable region, State, or land of Indian
tribes;
(5) in the case of forestry offset projects, in
accordance with widely accepted, environmentally
sustainable forestry practices;
(6) to ensure that the offset project area was not
converted from native ecosystems, such as a forest,
grassland, scrubland or wetland, to generate offsets,
unless such conversation took place at least 10 years
prior to the date of enactment of this title or before
January 1, 2009, whichever date is earlier; and
(7) to the maximum extent practicable, ensure that
the use of offset credits would be eligible to satisfy
emission reduction commitments made by the United
States in multilateral agreements, such as the United
Nations Framework Convention on Climate Change, done at
New York on May 9, 1992 (or any successor agreement).
SEC. 742. TRADING.
Section 724 shall apply to the trading of offset credits.
SEC. 743. OFFICE OF OFFSETS INTEGRITY.
(a) Establishment.--There is established within the Office of
the Assistant Attorney General of the Environment and Natural
Resources Division in the Department of Justice a Carbon
Offsets Integrity Unit, to be headed by a Special Counsel
(hereinafter referred to as the `Special Counsel'). The Carbon
Offsets Integrity Unit and the Special Counsel shall be
responsible to and shall report directly to the Assistant
Attorney General of the Environment and Natural Resources
Division.
(b) Appointment.--The Special Counsel shall be appointed by
the President, by and with the advice and consent of the
Senate.
(c) Responsibilities.--The Special Counsel shall--
(1) supervise and coordinate investigations and civil
enforcement within the Department of Justice of the
carbon offsets program under this part;
(2) ensure that Federal law relating to civil
enforcement of the carbon offsets program is used to
the fullest extent authorized; and
(3) ensure that adequate resources are made available
for the investigation and enforcement of civil
violations of the carbon offsets program.
(d) Compensation.--The Special Counsel shall be paid at the
basic pay payable for level V of the Executive Schedule under
section 5316 of title 5, United States Code.
(e) Assignment of Personnel.--There shall be assigned to the
Carbon Offsets Integrity Unit such personnel as the Attorney
General determines to be necessary to provide an appropriate
level of enforcement activity in the area of carbon offsets.
SEC. 744. 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, taking into
consideration specific factors relevant to the
determination of eligible international offset project
types and the implementation of international
methodologies for each offset type approved. 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;
(ii) provides for the appropriate
distribution of international offset
credits issued; and
(iii) provides that the offset
project developer be eligible to
receive service of process in the
United States for the purpose of all
civil and regulatory actions in Federal
courts, if such service is made in
accordance with the Federal rules for
service of process in the States in
which the case or regulatory action is
brought.
(3) Supplemental international offset categories.--
(A) In general.--In order to ensure a
sufficient supply of international offsets and
to reduce the cost of compliance with this
title, the Administrator may establish
categories of international offsets in addition
to those described in subsections (c), (d), and
(e), if--
(i) for 2 consecutive years, the
auction price for allowances reaches
the market stability reserve auction
price under section 726(c); and
(ii) the Administrator determines
that the total amount of international
offsets held by covered entities for
each of the 2 years referred to in
clause (i) does not exceed the limit on
international offsets established under
section 722(d)(1)(B)(iii).
(B) Supplemental categories.--
(i) In general.--Any supplemental
categories of international offsets
established pursuant to subparagraph
(A) shall--
(I) satisfy all applicable
provisions of this part,
including subsection (b)(2) of
this section and sections 733
and 734; and
(II) meet the criteria
described in clause (ii).
(ii) Criteria.--The criteria referred
to in clause (i)(II) are that--
(I) the country in which the
activities in the offset
category would take place has
developed and is implementing a
low carbon development plan
that includes provisions for
the activities described in the
offset category;
(II) the activities in the
offset category are not
activities included under
subsection (c), (d) or (e); and
(III) the activities in the
offset category satisfy
specific criteria relevant to
methodologies and institutional
and technical capacities
associated with developing
country contexts to ensure
adequate treatment of leakage,
additionality, and permanence.
(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, or combinations of
sectors, within 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 limitations
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.
(ix) The issuance of offsets for
activities that are--
(I) in addition to nationally
appropriate mitigation actions
taken by developing countries
pursuant to the low-carbon
development plans of the
countries; and
(II) on a sectoral basis.
(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 or sectors
of the economy relative to a baseline level of
emissions established in an agreement or
arrangement described in subsection (b)(2)(A)
for the sector.
(B) Baseline.--The baseline for a sector
shall--
(i) 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;
(ii) be used to determine
additionality and performance;
(iii) account for all significant
sources of emissions from a sector;
(iv) be adjusted over time to reflect
changing circumstances;
(v) be developed taking into
consideration such factors as--
(I) any established emissions
performance level for the
sector;
(II) the current performance
of the sector in the country;
(III) expected future trends
of the sector in the country;
and
(IV) historical data and
other factors to ensure
additionality; and
(vi) be designed to produce
significant deviations from business-
as-usual emissions, consistent with
nationally appropriate mitigation
commitments or actions, in a way that
equitably contributes to meeting
thresholds identified in section
705(e)(2).
(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. Beginning on
January 1, 2016, the Administrator shall issue no
offset credit pursuant to this subsection if the
activity generating the greenhouse gas emission
reductions or avoidance, or greenhouse gas
sequestration, occurs in a country and sector
identified by the Administrator under subsection (c),
unless the offset credit issued by the international
body is consistent with section 744(c).
(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 Administrator has determined that the
country within which the activity occurs has in
place a publicly available strategic plan that
includes the criteria listed in paragraph
(2)(C);
(F) the activity is designed, carried out,
and managed--
(i) in accordance with forest
management practices that--
(I) improve the livelihoods
of forest communities;
(II) maintain the natural
biodiversity, resilience, and
carbon storage capacity of
forests; and
(III) do not adversely impact
the permanence of forest carbon
stocks or emission reductions;
(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;
(v) with transparent and equitable
sharing of profits and benefits derived
from offset credits with local
communities, indigenous peoples, and
forest-dependent communities;
(vi) with full transparency, third-
party independent oversight, and public
dissemination of related financial and
contractual arrangements, and
(vii) so that the social and
environmental impacts of these
activities are monitored and reported
in sufficient detail to allow
appropriate officials to determine
compliance with the requirements of
this section;
(G) 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, done at New York
on May 9, 1992; and
(H) in the case that offsets are determined
by comparing the national emissions from
deforestation relative to a national, state-
level, or province-level deforestation baseline
as provided in paragraph (4) or (5)--
(i) a list of activities to reduce
deforestation is provided to the
Administrator and made publicly
available;
(ii) the social and environmental
impacts of these activities are
monitored and reported in sufficient
detail to allow the Administrator to
determine compliance with the
requirements of this section; and
(iii) the distribution of revenues
for activities to reduce deforestation
is transparent, subject to independent
third-party oversight, and publicly
disseminated.
(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 ensure
transparency and third-party independent
oversight of offset activities and revenues,
and the transparent and equitable distribution
of offset revenues 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 and
a timeline for data collection,
monitoring, and institutional capacity
necessary to implement an effective
national deforestation reduction
program that meets the criteria set
forth in this section (including a
national deforestation baseline);
(iv) establishes a timeline for
implementing the program and
transitioning forest-based economies to
low-emissions development pathways with
respect to emissions from forest and
land use activities;
(v) includes a national policy for
consultations with, and full
participation of, all stakeholders,
especially indigenous and forest-
dependent communities, in its design,
planning, and implementation of
activities, whether at the national or
local level, to reduce deforestation in
the country (including a national
process for addressing grievances if
stakeholders have been caused social,
environmental, or economic harm);
(vi) provides for the distribution of
revenues for activities to reduce
deforestation transparently and
publicly, subject to independent third-
party oversight; and
(vii) includes a national platform or
a type of registry for information
relating to deforestation and
degradation policy and program
implementation processes, including a
mechanism for the monitoring and
reporting of the social and
environmental impacts of those
activities.
(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 undertake due
diligence 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 transparent and 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 that only
reductions that are in addition to such
commitments or actions will generate offsets;
(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, including a spatially
explicit land use plan that identifies intact
and primary forest areas and managed forest
areas that are to remain while the country is
reaching the zero net deforestation trajectory;
(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 753.
(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 is
undertaking deforestation reduction
activities;
(iii) the state or province has the
capacity to engage in deforestation
reduction activities at the state or
province level, including--
(I) the technical capacity to
monitor and measure forest
carbon fluxes for all
significant sources of
greenhouse gas emissions from
deforestation with an
acceptable amount of
uncertainty, including a
spatially explicit land use
plan that identifies intact and
primary forest areas and
managed forest areas that are
to remain while the country is
reaching the zero net
deforestation trajectory; and
(II) the institutional
capacity to reduce emissions
from deforestation, including
strong forest governance and
mechanisms to deliver forest
conservation resources for
local actions;
(iv) the state or province meets the
eligibility criteria in paragraphs (2)
and (3) for the geographic area under
its jurisdiction; and
(v) the country--
(I) demonstrates that efforts
are underway to transition to a
national program within 5
years; or
(II) in the determination of
the Administrator, is making a
good-faith effort to develop a
land use or forest sector
strategic national plan or
program 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 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, so
that only reductions that are in
addition to those commitments or
actions will generate offsets;
(ii) be developed 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;
(iii) 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
(iv) 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 through
monitoring of major forested areas in
the host country and other areas of the
host country susceptible to leakage.
(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;
(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); and
(iii) has made, or in the
determination of the Administrator, is
making, a good-faith effort to develop,
through the implementation of
activities under this section, a
monitoring program for major forested
areas in a host country and other areas
in a host country susceptible to
leakage, including a spatially explicit
land use plan that identifies intact
and primary forest areas and managed
forest areas that are to remain while
country is reaching the zero net
deforestation trajectory.
(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, so that only reductions that
are in addition to such commitments or
actions will generate offsets;
(ii) be developed 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;
(iii) be designed to account for all
significant sources of greenhouse gas
emissions from deforestation in the
project or program boundary; and
(iv) be adjusted to fully account for
emissions leakage outside the project
or program boundary, including--
(I) estimation through
monitoring of major forested
areas in a host country and
other areas in a host country
susceptible to leakage,
pursuant to section 744(e)(5);
and
(II) a spatially explicit
land use plan that identifies
intact and primary forest areas
and managed forest areas that
are to remain while country is
reaching the zero net
deforestation trajectory
(D) Phase-out.--
(i) In general.--Beginning on the
date that is 8 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) Extension.--The Administrator
may extend the phase out deadline for
the issuance of international offset
credits under this section by up to 5
years with respect to eligible
activities taking place in a least
developed country, 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 country--
(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) Offset credit issuance.--Requirements under this
subsection to issue international offset credits only
if the quantity of the international offset credits is
determined by reference to a national, State-level, or
province-level deforestation baseline do not preclude
the Administrator from issuing a portion of the total
quantity of those credits directly to an offset project
developer for use in carrying out activities in
accordance with this section that contributed to a
reduction in emissions, if that issuance is authorized
by--
(A) the agreement or arrangement described in
subsection (b)(2)(A); and
(B) if the credits are issued pursuant to
paragraph (5), by the State or provincial
government.
(8) Expansion of scope.--In implementing this
subsection, the Administrator, taking into
consideration the recommendations of the Advisory
Board, may expand the scope of creditable activities to
include activities that reduce emissions from land use,
such as those that address forest degradation or soil
carbon losses associated with forested wetlands or
peatlands.
(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 or would
result in the creation of offset credits that would not be
eligible to satisfy emissions reduction commitments made by the
United States pursuant to the United Nations Framework
Convention on Climate Change, done at New York on May 9, 1992
(or any successor agreement). 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 limitations
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 771(c) 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 EMISSION REDUCTIONS
SEC. 751. DEFINITIONS.
In this part:
(1) Administrator.--The term `Administrator' means
the Administrator of the United States Agency for
International Development.
(2) Deforestation.--The term `deforestation' means a
change in land use from a forest to any other land use.
``(3) Degradation.--The term `degradation', with
respect to a forest, is any reduction in the carbon
stock of a forest due to the impact of human land-use
activities.
(4) Emission reductions.--The term `emission
reductions' means greenhouse gas emission reductions
achieved from reduced or avoided deforestation under
this title.
(5) 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.
SEC. 752. PURPOSES.
The purposes of this part are to provide United States
assistance to developing countries--
(1) to develop, implement and improve nationally
appropriate greenhouse gas mitigation policies and
actions that reduce deforestation and forest
degradation or conserve or restore forest ecosystems,
in a measurable, reportable, and verifiable manner; and
(2) in a manner that is consistent with and enhances
the implementation of complementary United States
policies that support the good governance of forests,
biodiversity conservation, and environmentally
sustainable development, while taking local
communities, most vulnerable populations and
communities, particularly forest-dependent communities
and indigenous peoples into consideration.
SEC. 753. EMISSION REDUCTIONS FROM REDUCED DEFORESTATION.
(a) In General.--Not later than 2 years after the date of the
enactment of this part, the Administrator, in consultation with
the Administrator of the Environmental Protection Agency, the
Secretary of Agriculture, and the head of any other appropriate
agency, shall establish a program to provide assistance to
reduce greenhouse gas emissions from deforestation in
developing countries, in accordance with this title.
(b) Objectives.--The objectives of the program established
under this section shall be--
(1) to reduce greenhouse gas emissions from
deforestation in developing countries by at least
720,000,000 tons of carbon dioxide equivalent in 2020,
and a cumulative quantity of at least 6,000,000,000
tons of carbon dioxide equivalent by December 31, 2025,
with additional reductions in subsequent years;
(2) to assist developing countries in preparing to
participate in international markets for international
offset credits for reduced emissions from
deforestation; and
(3) to preserve existing forest carbon stocks in
countries where such forest carbon may be vulnerable to
international leakage.
(c) Not Eligible for Offset Credit.--Activities that receive
support under this part shall not be issued offset credits for
the greenhouse gas emissions reductions or avoidance, or
greenhouse gas sequestration, produced by such activities.
* * * * * * *
PART F--ENSURING REAL REDUCTIONS IN INDUSTRIAL EMISSIONS
SEC. 761. PURPOSES.
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;
(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;
(3) to provide a rebate to 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;
(4) 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
(5) 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. 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 763(b) to
be eligible to receive emission allowance rebates under
this part.
(3) Industrial sector.--
(A) In general.--The term `industrial sector'
means any sector that--
(i) is in the manufacturing sector
(as defined in NAICS codes 31, 32, and
33); or
(ii) is part of, or an entire, sector
that beneficiates or otherwise
processes (including agglomeration)
metal ores, including iron and copper
ores, soda ash, or phosphate.
(B) Exclusion.--The term `industrial sector'
does not include any part of a sector that
extracts metal ores, soda ash, or phosphate.
(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.
SEC. 763. 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 764.
(2) Subsequent lists.--Not later than February 1,
2013, and every 4 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 part.
(2) Presumptively eligible industrial sectors.--
(A) Eligibility criteria.--
(i) In general.--An owner or operator
of an entity shall be eligible to
receive emission allowance rebates
under this part 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
(ii) and (iii), or the criteria in
clause (iv).
(ii) 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 (D); 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 (D); by
(bb) the value of the
shipments of the
sector, based on data
described in
subparagraph (D).
(iii) 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 (D).
(iv) 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
(ii)(I) or (II), of at least 20
percent.
(B) Metal and phosphate production classified
under more than one naics code.--For purposes
of this section, the Administrator shall--
(i) aggregate data for the
beneficiation or other processing
(including agglomeration) of metal
ores, including iron and copper ores,
soda ash, or phosphate with subsequent
steps in the process of metal and
phosphate manufacturing, regardless of
the NAICS code under which 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.
(C) Exclusion.--The petroleum refining sector
shall not be an eligible industrial sector.
(D) 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 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
or Economic Census 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 or Economic
Census data pertaining to a broader
industrial category classified in the
NAICS. If data relating to the
beneficiation or other processing
(including agglomeration) of metal
ores, including iron and copper ores,
soda ash, or phosphate are not
available from the specified data
sources, the Administrator shall use
the best available Federal or State
government data and may use, to the
extent necessary, representative data
submitted by entities that perform such
beneficiation or other processing
(including agglomeration), in making a
determination. 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. If data from
the United States International Trade
Commission 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 United States
International Trade Commission data
pertaining to a broader industrial
category classified in the NAICS.
(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)(ii)(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) Updated trade intensity data.--The
Administrator shall designate as eligible to
receive emission allowance rebates under this
part an industrial sector that--
(i) met the energy or greenhouse gas
intensity criteria in paragraph
(2)(A)(ii) as of the date of
promulgation of the rule under
paragraph (1); and
(ii) meets the trade intensity
criteria in paragraph (2)(A)(iii),
using data from any year after 2006.
(B) Individual showing petition.--
(i) Petition.--In addition to
designation under paragraph (2) or
subparagraph (A) of this paragraph, the
owner or operator of an entity in an
industrial sector may petition the
Administrator to designate as eligible
industrial sectors under this part 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 (ii)
and (iii) of paragraph (2)(A),
or the eligibility criteria in
clause (iv) 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)(D).
(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 primarily
virgin material to be a separate
subsector from another entity or group
of entities that manufacture the same
product primarily from recycled
material.
(iv) Use of most recent data.--In
determining whether to designate a
sector or subsector as an eligible
industrial sector under this
subparagraph, the Administrator shall
use the most recent data available from
the sources described in paragraph
(2)(D), rather than the data from the
years specified in paragraph (2)(D), to
determine the trade intensity of such
sector or subsector, but only for
determining such trade intensity.
(v) Final action.--The Administrator
shall take final action on such
petition no later than 6 months after
the petition is received by the
Administrator.
SEC. 764. DISTRIBUTION OF EMISSION ALLOWANCE REBATES.
(a) Distribution Schedule.--
(1) In general.--For each vintage year, the
Administrator shall distribute pursuant to this section
emission allowances made available under section
771(a)(5), not 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
pursuant to the entity's indirect carbon factor
as calculated under subsection (b)(3);
(B) for vintage year 2026 and thereafter, the
distribution shall be pursuant to the amount
calculated under subsection (b) multiplied by,
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) 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 763(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 763(b)(3)(A).
(3) Cessation of qualifying activities.--If, as
determined by the Administrator, a facility is no
longer in an eligible industrial sector designated
under section 763--
(A) the Administrator shall not distribute
emission allowances to the owner or operator of
such facility under this section; and
(B) the owner or operator of such facility
shall return to the Administrator all
allowances that have been distributed to it for
future vintage years and a pro-rated amount of
allowances distributed to the facility under
this section for the vintage year in which the
facility ceases to be in an eligible industrial
sector designated under section 763.
(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 annual output of the covered
entity for the 2 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 annual
output of the entity for the 2 years preceding
the year 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.--
(i) In general.--Each person selling
electricity to the owner or operator of
an entity in any sector designated as
an eligible industrial sector under
section 763(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--
(aa) the electricity
purchased by the entity
from that person in
each hour (expressed in
kilowatt hours);
multiplied by
(bb) the marginal or
weighted average tons
of carbon dioxide
equivalent per kilowatt
hour that are reflected
in the electricity
charges to the entity,
as determined by the
entity's retail rate
arrangements; by
(II) the total kilowatt hours
of electricity purchased by the
entity from that person during
that year.
(ii) Use of other data to determine
factor.--Where it is not possible to
determine the precise electricity
emissions intensity factor for an
entity using the methodology in clause
(i), the person selling electricity
shall use the monthly average data
reported by the Energy Information
Administration or collected and
reported by the Administrator for the
utility serving the entity to determine
the electricity emissions intensity
factor.
(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
771(a)(1), 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 eligible 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 and the
electricity efficiency factor for all covered entities
in each eligible industrial sector every 4 years, using
an average of the 5 most recent years of the best
available data, from up to 7 years prior to the year in
which such calculations are made. For the purpose of
determining sector averages that are representative of
typical market conditions during the previous 7 years
of operations, such averages shall exclude data from
individual years with the highest and the lowest direct
greenhouse gas emissions per unit of output and
electricity efficiency factors. For purposes of the
lists required to be published not later than February
1, 2013, the Administrator shall use the best available
data for the maximum number of years, up to 5 years,
for which data are available.
(5) Determination of sectors for purposes of sectoral
averages.--
(A) In general.--Notwithstanding the criteria
used to determine eligible sectors under
paragraphs (2) and (3)(C), not later than June
30, 2011, the Administrator shall, by rule,
identify sectors or subsectors for purposes of
calculating sector averages under paragraphs
(2)(B), (3)(C), and (4), based upon, to the
extent practicable in achieving the purposes of
this part--
(i) product produced;
(ii) process employed, including
distinctions based upon the extent of
integration or exclusion of process
steps; and
(iii) the extent of use of combined
heat and power technologies.
(B) Consideration of criteria.--In
determining what entities are comparable to a
new entity under paragraph (1)(C)(i), the
Administrator shall consider, to the extent
practicable, the criteria set forth in
subparagraph (A).
(6) 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;
(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; and
(C) limit the electricity efficiency factor,
calculated under paragraph (3)(C), for any
eligible industrial sector to an amount that is
not greater than it was in any previous
calculation under this subsection.
(7) Data sources.--For the purposes of this
subsection--
(A) the Administrator shall use data from the
greenhouse gas registry established under
section 713, where that data 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 765
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
765, 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
765.
(d) Iron and Steel Sector.--For purposes of this section, the
Administrator shall consider as in different industrial
sectors--
(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.
(e) Metal, Soda Ash, or Phosphate Production Classified Under
More Than One Naics Code.--For purposes of this section, the
Administrator shall not aggregate data for the beneficiation or
other processing (including agglomeration) of metal ores, soda
ash, or phosphate with subsequent steps in the process of
metal, soda ash, or phosphate manufacturing. The Administrator
shall consider the beneficiation or other processing (including
agglomeration) of metal ores, soda ash, or phosphate to be in
separate industrial sectors from the metal, soda ash, or
phosphate manufacturing sectors. Industrial sectors that
beneficiate or otherwise process (including agglomeration)
metal ores, soda ash, or phosphate shall not receive emission
allowance rebates under this section related to the activity of
extracting metal ores, soda ash, or phosphate.
(f) Combined Heat and Power.--For purposes of this section,
and to achieve the purpose set forth in section 761(4),(the
Administrator may consider entities to be in different
industrial sectors or otherwise take into account the
differences among entities in the same industrial sector, based
upon the extent to which such entities use combined heat and
power technologies.
SEC. 765. INTERNATIONAL TRADE.
It is the sense of the Senate that this Act will contain a
trade title that will include a border measure that is
consistent with our international obligations and designed to
work in conjunction with provisions that allocate allowances to
energy-intensive and trade-exposed industries.
PART G--DISPOSITION OF ALLOWANCES
SEC. 771. ALLOCATION OF EMISSION ALLOWANCES.
(a) Allocation.--Subject to subsection (d), of the total
quantity of emission allowances established for each vintage
year under section 721(a), the Administrator shall allocate
emission allowances for the purposes and for the vintage years
and corresponding percentages specified as follows:
(1) For the program for electricity consumers
pursuant to section 772, as described in the following
tables:
(A) For distribution to electricity consumers
in accordance with subsections (b), (c), and
(d) of section 772, the percentages specified
in the following table:
Electricity consumers
Vintage Year Percentage of allowances
2012................................. 43.75
2013................................. 43.75
2014................................. 38.89
2015................................. 38.89
2016................................. 35.00
2017................................. 35.00
2018................................. 35.00
2019................................. 35.00
2020................................. 35.00
2021................................. 35.00
2022................................. 35.00
2023................................. 35.00
2024................................. 35.00
2025................................. 35.00
2026................................. 28.00
2027................................. 21.00
2028................................. 14.00
2029................................. 7.00
(B) For distribution to small LDCs under
section 772(e), the percentages specified in
the following table:
Small LDCs
Vintage Year Percentage of allowances
2012................................. 0.50
2013................................. 0.50
2014................................. 0.50
2015................................. 0.50
2016................................. 0.50
2017................................. 0.50
2018................................. 0.50
2019................................. 0.50
2020................................. 0.50
2021................................. 0.50
2022................................. 0.50
2023................................. 0.50
2024................................. 0.50
2025................................. 0.50
2026................................. 0.40
2027................................. 0.30
2028................................. 0.20
2029................................. 0.10
(2) For the program for natural gas consumers
pursuant to section 773, as described in the following
table:
Natural gas consumers
Vintage Year Percentage of allowances
2012................................. 0.00
2013................................. 0.00
2014................................. 0.00
2015................................. 0.00
2016................................. 9.00
2017................................. 9.00
2018................................. 9.00
2019................................. 9.00
2020................................. 9.00
2021................................. 9.00
2022................................. 9.00
2023................................. 9.00
2024................................. 9.00
2025................................. 9.00
2026................................. 7.20
2027................................. 5.40
2028................................. 3.60
2029................................. 1.80
(3) For the program for home heating oil and propane
consumers pursuant to section 774, as described in the
following table:
Home heating oil and propane consumers
Vintage Year Percentage of allowances
2012................................. 1.88
2013................................. 1.88
2014................................. 1.67
2015................................. 1.67
2016................................. 1.50
2017................................. 1.50
2018................................. 1.50
2019................................. 1.50
2020................................. 1.50
2021................................. 1.50
2022................................. 1.50
2023................................. 1.50
2024................................. 1.50
2025................................. 1.50
2026................................. 1.20
2027................................. 0.90
2028................................. 0.60
2029................................. 0.30
(4) For the program for domestic fuel production,
including petroleum refiners and small business
refiners, under section 775, for each of vintage years
2014 through 2026, for allocation and distribution in
accordance with section 775--
(A) 1.25 percent of the emission allowances
established for each vintage year under section
721(a) to domestic petroleum refineries that
are covered entities described in section
700(13)(F)(viii); and
(B) an additional 1.0 percent of the emission
allowances established for each vintage year
under section 721(a) to small business refiners
that are covered entities described in section
700(13)(F)(viii).
(5) In addition to emission allowances reserved under
subsection (d)(5), subject to subparagraph (G), for the
program to ensure real reductions in industrial
emissions under part F, as follows:
(A) For each of vintage years 2012 and 2013,
up to 4.0 percent of the emission allowances
established for each year under section 721(a).
(B) For vintage year 2014, up to 15 percent
of the emission allowances established for that
year under section 721(a).
(C) For vintage year 2015, up to the product
of--
(i) the quantity specified in
subparagraph (B); multiplied by
(ii) 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).
(D) For vintage year 2016, up to the product
obtained by multiplying--
(i) the quantity specified in
subparagraph (C); and
(ii) 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).
(E) For vintage years 2017 through 2025, up
to the product obtained by multiplying--
(i) the quantity specified in
subparagraph (D); and
(ii) 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).
(F) For vintage years 2026 through 2050, up
to the product of the quantity specified in
subparagraph (D)--
(i) 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
(ii) multiplied by a factor that
shall equal 90 percent for 2026 and
decline 10 percent for each year
thereafter until reaching 0.
(G) If the Administrator has not distributed
all of the allowances allocated pursuant to
this paragraph for a given vintage year by the
end of that year, any emission allowances
allocated to entities in eligible industrial
sectors pursuant to this paragraph that have
not been so distributed shall, in accordance
with subsection (e), be exchanged for
allowances from the following vintage year and
treated as part of the allocation to such
entities for that later vintage year.
(6)(A) Subject to subparagraph (B), for the program
for commercial deployment of carbon capture and
sequestration technologies under section 780, as
described in the following table:
Deployment of carbon capture and sequestration technology
Vintage Year Percentage of allowances
2012................................. 0.00
2013................................. 0.00
2014................................. 1.75
2015................................. 1.75
2016................................. 1.75
2017................................. 1.75
2018................................. 4.75
2019................................. 4.75
Each of vintage years 2020 through 5.00
2050.
(B) If the Administrator has not distributed all of
the allowances allocated pursuant to this paragraph for
a given vintage year by the end of that year, all such
undistributed emission allowances shall, in accordance
with subsection (e), be exchanged for allowances from
the following vintage year and treated as part of the
allocation for the deployment of carbon capture and
sequestration technology under this subsection for that
later vintage year.
(7) For the program for early action recognition
pursuant to section 782, 2.0 percent of the emission
allowances for each of vintage years 2012 and 2013.
(8) For the program for investment in clean vehicle
technology under section 201 of division B of the Clean
Energy Jobs and American Power Act--
(A) for each of vintage years 2012 through
2017, 2.4 percent of the emission allowances;
and
(B) for each of vintage years 2018 through
2025, 0.8 percent of the emission allowances.
(9)(A) In addition to the emission allowances
reserved under subsection (d)(6), subject to
subparagraph (B), for the program for State and local
investment in energy efficiency and renewable energy
under section 202 of division B of the Clean Energy
Jobs and American Power Act, as described in the
following table:
Investment in energy efficiency and renewable energy
Vintage Year Percentage of allowances
2012................................. 10.35
2013................................. 10.35
2014................................. 8.55
2015................................. 8.55
2016................................. 5.85
2017................................. 6.12
2018................................. 5.22
2019................................. 5.22
2020................................. 4.95
2021................................. 4.95
2022................................. 0.90
2023................................. 0.90
2024................................. 0.90
2025................................. 0.90
Each of vintage years 2026 through 4.05
2050.
(B) At the time at which allowances are distributed
under subparagraph (A) for each of vintage years 2022
through 2025, 3.2 percent of emission allowances
established under section 721(a) for the vintage year
that is 4 years after that vintage year shall also be
distributed (which shall be in addition to the emission
allowances distributed under subparagraph (A) for
vintage years 2026 through 2050.
(10) For the program for energy efficiency in
building codes under section 163 of division A, and
section 203 of division B, of the Clean Energy Jobs and
American Power Act, 0.50 percent of the emission
allowances for each of vintage years 2012 through 2050.
(11) For the program for Energy Innovation Hubs
pursuant to section 204 of division B of the Clean
Energy Jobs and American Power Act--
(A) for each of vintage years 2012 through
2015, 0.75 percent of the emission allowances;
and
(B) for each of vintage years 2016 through
2050, 0.45 percent of the emission allowances.
(12) For the program for ARPA-E research pursuant to
section 205 of division B of the Clean Energy Jobs and
American Power Act--
(A) for each of vintage years 2012 and 2013,
3.25 percent of the emission allowances; and
(B) for each of vintage years 2014 through
2050, 1.25 percent of the emission allowances.
(13) For the International Clean Energy Deployment
Program under section 323 of division A, and section
206 of division B, of the Clean Energy Jobs and
American Power Act--
(A) for each of vintage years 2012 through
2021, 1.0 percent of the emission allowances;
(B) for each of vintage years 2022 through
2026, 2.0 percent of the emission allowances;
and
(C) for each of vintage years 2027 through
2050, 3.0 percent of the emission allowances.
(14) In addition to the emission allowances reserved
under subsection (d)(8), for the international climate
change adaptation and global security program under
section 324 of division A, and section 207 of division
B, of the Clean Energy Jobs and American Power Act--
(A) for each of vintage years 2012 through
2021, 1.0 percent of the emission allowances;
(B) for each of vintage years 2022 through
2026, 2.0 percent of the emission allowances;
and
(C) for each of vintage years 2027 through
2050, 5.0 percent of the emission allowances.
(15) For State programs for greenhouse gas reduction
and climate adaptation pursuant to section 210(d) of
division B of the Clean Energy Jobs and American Power
Act, as described in the following table:
State programs for greenhouse gas reduction and adaptation
Vintage Year Percentage of allowances
2012................................. 1.34
2013................................. 1.34
2014................................. 0.50
2015................................. 0.50
2016................................. 0.50
2017................................. 0.50
2018................................. 0.50
2019................................. 0.50
2020................................. 0.50
2021................................. 0.50
2022................................. 1.06
2023................................. 1.06
2024................................. 1.06
2025................................. 1.06
2026................................. 1.06
Each of vintage years 2027 through 2.18
2050.
(16) For State programs for natural resource
adaptation activities under the program for climate
change safeguards for natural resources conservation
under section 370(a)(1) of division A, and section 216
of division B, of the Clean Energy Jobs and American
Power Act, as described in the following table:
State programs for natural resource adaptation
Vintage Year Percentage of allowances
2012................................. 0.39
2013................................. 0.39
2014................................. 0.39
2015................................. 0.39
2016................................. 0.39
2017................................. 0.39
2018................................. 0.39
2019................................. 0.39
2020................................. 0.39
2021................................. 0.39
2022................................. 0.77
2023................................. 0.77
2024................................. 0.77
2025................................. 0.77
2026................................. 0.77
Each of vintage years 2027 through 1.54
2050.
(b) Auctions.--Subject to subsection (d), of the total
quantity of emission allowances established for each calendar
year under section 721(a), the Administrator shall auction,
pursuant to section 778, emission allowances for the purposes
and for the vintage or calendar years and corresponding
percentages specified as follows:
(1) Emission allowances reserved under subsection
(d)(9) for the Market Stability Reserve Fund under
section 726.
(2) For the program for climate change consumer
refunds and low- and moderate-income consumers pursuant
to section 776--
(A) emission allowances for consumer rebates
under section 776(a), pursuant to subsection
(e)(2); and
(B) emission allowances for energy refunds
under section 776(b), as follows:
(i) For each of calendar years 2012
through 2029, 15.00 percent of the
emission allowances.
(ii) For each of calendar years 2030
through 2050, 18.50 percent of the
emission allowances.
(iii) For calendar year 2051 and each
calendar year thereafter, 15.00 percent
of the emission allowances.
(3) For the program for investment in clean vehicle
technology under section 201 of division B of the Clean
Energy Jobs and American Power Act--
(A) for each of calendar years 2012 through
2017, 0.6 percent of the emission allowances;
and
(B) for each of calendar years 2018 through
2025, 0.2 percent of the emission allowances.
(4) For the program for energy efficiency and
renewable energy worker training under section 208 of
division B of the Clean Energy Jobs and American Power
Act--
(A) for each of calendar years 2012 and 2013,
1.0 percent of the emission allowances; and
(B) for each of calendar years 2014 and 2015,
0.05 percent of the emission allowances.
(5) For the program for worker transition under part
2 of subtitle A of title III of division A, and section
209 of division B, of the Clean Energy Jobs and
American Power Act--
(A) for each of calendar years 2012 through
2021, 0.5 percent of the emission allowances;
and
(B) for each of calendar years 2022 through
2050, 1.0 percent of the emission allowances.
(6) For the program for public health and climate
change under subpart B of part 1 of subtitle C of title
III of division A, and section 211 of division B, of
the Clean Energy Jobs and American Power Act, 0.10
percent of the emission allowances for each of calendar
years 2012 through 2050.
(7) For the Natural Resources Climate Change
Adaptation Account under the program for climate change
safeguards for natural resources conservation under
section 370(a)(2) of division A, and section 212 of
division B, of the Clean Energy Jobs and American Power
Act, as described in the following table:
Natural Resources Climate Change Adaptation Account
Calendar Year Percentage of allowances
2012................................. 0.62
2013................................. 0.62
2014................................. 0.62
2015................................. 0.62
2016................................. 0.62
2017................................. 0.62
2018................................. 0.62
2019................................. 0.62
2020................................. 0.62
2021................................. 0.62
2022................................. 1.23
2023................................. 1.23
2024................................. 1.23
2025................................. 1.23
2026................................. 1.23
Each of calendar years 2027 through 2.46
2050.
(8) For nuclear worker training under section 132 of
division A, and section 213 of division B, of the Clean
Energy Jobs and American Power Act--
(A) for each of calendar years 2012 and 2013,
0.5 percent of the emission allowances; and
(B) for each of calendar years 2014 and 2015,
0.05 percent of the emission allowances.
(9) In addition to the emission allowances reserved
under subsection (d)(3), for the supplemental
agriculture, abandoned mine land, renewable energy, and
forestry greenhouse gas reduction and renewable energy
program under section 155 of division A, and section
214 of division B, of the Clean Energy Jobs and
American Power Act--
(A) for each of calendar years 2012 and 2013,
1.0 percent of the emission allowances; and
(B) for each of calendar years 2014 through
2016, 0.28 percent of the emission allowances.
(10) Transportation greenhouse gas reduction.--In
addition to the emission allowances reserved under
subsection (d)(4), for the transportation greenhouse
gas reduction program under sections 831 and 832 of
this Act, and 215 of division B, of the Clean Energy
Jobs and American Power Act, as described in the
following table:
Transportation greenhouse gas reduction
Calendar Year Percentage of allowances
2012................................. 2.21
2013................................. 2.21
2014................................. 1.35
2015................................. 1.35
2016................................. 1.05
2017................................. 1.08
2018................................. 0.98
2019................................. 0.98
2020................................. 0.95
2021................................. 0.95
2022................................. 0.94
2023................................. 0.94
2024................................. 0.94
2025................................. 0.94
2026................................. 1.64
2027................................. 2.52
2028................................. 2.52
2029................................. 2.52
Each of calendar years 2030 through 2.17
2050.
(c) Supplemental Reductions.--
(1) In general.--Subject to subsection (d) and
paragraphs (2) and (3), the Administrator shall
allocate allowances for each vintage year to achieve
supplemental reductions pursuant to section 753, as
follows:
(A) For each of calendar years 2012 through
2025, 5.0 percent of the emission allowances.
(B) For each of calendar years 2026 through
2030, 3.0 percent of the emission allowances.
(C) For each of calendar years 2031 through
2050, 2.0 percent of the emission allowances.
(2) Adjustment.--The Administrator shall modify the
allowances allocated under paragraph (1) as necessary
to ensure the achievement of the annual supplemental
emissions reduction objective for 2020 and the
cumulative reduction objective through 2025 set forth
in section 753(b)(1).
(3) 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, all such undistributed emission allowances
shall, in accordance with subsection (e), be exchanged
for allowances from the following vintage year and
treated as part of the allocation for supplemental
reductions under this section for that later vintage
year.
(d) Initial Reservation of Allowances.--
(1) In general.--Before allocating emission
allowances under subsections (a) through (c) for each
calendar year, the Administrator shall reserve from the
total quantity of emission allowances established for
the calendar year under section 721(a) the percentages
of allowances specified in paragraphs (2) through (9),
for use for the purposes described in those paragraphs.
(2) Deficit reduction.--For auction pursuant to
section 778 to ensure that this title does not
contribute to the deficit for a calendar year, with
proceeds of the auction to be deposited immediately
upon receipt in the Deficit Reduction Fund established
by section 783, the Administrator shall reserve--
(A) for each of calendar years 2012 through
2029, 10 percent of the emission allowances;
(B) for each of calendar years 2030 through
2039, 22 percent of the emission allowances;
and
(C) for each of calendar years 2040 through
2050, 25 percent of the emission allowances.
(3) Supplemental agriculture, abandoned mine land,
renewable energy, and forestry.--For the supplemental
agriculture, abandoned mine land, renewable energy, and
forestry greenhouse gas reduction and renewable energy
program under section 155 of division A, and section
214 of division B, of the Clean Energy Jobs and
American Power Act, the Administrator shall reserve 1.0
percent of the emission allowances for each of calendar
years 2012 through 2050.
(4) Transportation greenhouse gas reduction.--For the
transportation greenhouse gas reduction program under
sections 831 and 832 of this Act, and section 215 of
division B of the Clean Energy Jobs and American Power
Act, the Administrator shall reserve for each of
calendar years 2012 through 2050, 1.0 percent of the
emission allowances.
(5) Industrial emissions.--For the program to ensure
real reductions in industrial emissions under part F,
the Administrator shall reserve 0.50 percent of the
emission allowances for each of calendar years 2012
through 2050.
(6) State and local investment in energy efficiency
and renewable energy.--For the program for State and
local investment in energy efficiency and renewable
energy under section 202 of division B of the Clean
Energy Jobs and American Power Act, the Administrator
shall reserve 0.50 percent of the emission allowances
for each of calendar years 2012 through 2050.
(7) Electricity consumers; small ldcs.--For
distribution to small LDCs under the program for
electricity consumers under section 772(e), the
Administrator shall reserve--
(A) for each of calendar years 2012 through
2025, 0.50 percent of the emission allowances;
(B) for calendar year 2026, 0.40 percent of
the emission allowances;
(C) for calendar year 2027, 0.30 percent of
the emission allowances;
(D) for calendar year 2028, 0.20 percent of
the emission allowances; and
(E) for calendar year 2029, 0.10 percent of
the emission allowances.
(8) International climate change adaptation and
global security program.--For the international climate
change adaptation and global security program under
section 324 of division A, and section 207 of division
B, of the Clean Energy Jobs and American Power Act, the
Administrator shall reserve 0.25 percent of the
emission allowances for each of calendar years 2012
through 2026.
(9) Market stability reserve fund.--For the Market
Stability Reserve Fund under section 726, the
Administrator shall reserve--
(A) for each of calendar years 2012 through
2019, 2.0 percent of the emission allowances;
and
(B) for each of calendar years 2020 through
2050, 3.0 percent of the emission allowances.
(e) Treatment of Carryover Allowances.--
(1) In general.--If there are undistributed
allowances from a vintage year for eligible industrial
sectors pursuant to subsection (a)(5), deployment of
carbon capture and sequestration technology pursuant to
subsection (a)(6), or supplemental reductions pursuant
to subsection (c), the Administrator shall--
(A) use the undistributed allowances to
increase for the same vintage year--
(i) the allocation of allowances to
be auctioned, with the proceeds to be
deposited immediately upon receipt in
the Deficit Reduction Fund established
by section 783;
(ii) the allocation of allowances for
the program for climate change consumer
refunds and low- and moderate-income
consumers pursuant to subsection
(b)(2); or
(iii) a combination the purposes
described in clauses (i) and (ii); and
(B) except as provided in paragraph (2)--
(i) decrease by the same quantity for
the following vintage year the
allocation for the purpose for which
the allocation was increased pursuant
to subparagraph (A); and
(ii) increase by the same quantity
for the following vintage year the
allocation for the purpose for which
the undistributed allowances were
originally allocated.
(2) Excess undistributed allowances.--
(A) In general.--For each vintage year for
which this subsection applies, the
Administrator shall determine whether--
(i) the total quantity of
undistributed allowances for that
vintage year that were allocated
pursuant to paragraphs (5)(G) and
(6)(B) of subsection (a), and
subsection (c); exceeds
(ii) the total quantity of allowances
allocated pursuant to subsections
(b)(2) and (d)(2) for the following
vintage year, decreased by the quantity
of allowances for that following
vintage year set aside for the reserve
established by section 778(f).
(B) Determination of exceedance.--If the
Administrator determines under subparagraph (A)
that the quantity described in subparagraph
(A)(i) exceeds the quantity described in
subparagraph (A)(ii)--
(i) paragraph (1)(B)(ii) shall not
apply; and
(ii) for each purpose described in
paragraphs (5)(G) and (6)(B) of
subsection (a), and subsection (c), for
which undistributed allowances for a
given vintage year were allocated, the
Administrator shall increase the
allocation for the following vintage
year by the quantity that equals the
product obtained by multiplying--
(iii) the number of undistributed
allowances for that purpose; and
(iv) the quantity described in
subparagraph (A)(ii) divided by the
quantity described in subparagraph
(A)(i).
(f) Remaining Allowances.--After making the allocations of
emission allowances under subsections (a) through (e) for a
calendar year, the Administrator shall allocate any emission
allowances remaining from the total quantity of emission
allowances established for the calendar year under section
721(a)--
(1) for each of calendar years 2012 through 2025, for
auction in accordance with section 778 and deposit in
the Deficit Reduction Fund established by section 783;
and
(2) for each of calendar years 2026 through 2050, for
the program for climate change consumer refunds and
low- and moderate-income consumers pursuant to section
776.
SEC. 772. ELECTRICITY CONSUMERS.
(a) Definitions.--In 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 increment of electric output of a
combined heat and power system that is attributable to
the higher efficiency of the combined system (as
compared to the efficiency of separate production of
the electric and thermal outputs).
(3) Coal-fueled unit.--The term `coal-fueled unit'
means a utility unit that derives at least 85 percent
of its heat input from coal, petroleum coke, or any
combination of those 2 fuels.
(4) 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.
(5) 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 an electric cooperative, are regulated
or set by--
(i) a State regulatory authority;
(ii) a State or political subdivision
thereof (or an agency or
instrumentality of, or corporation
wholly owned by, either of the
foregoing); or
(iii) an Indian tribe pursuant to
tribal law.
(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) 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.
(8) 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 Federal Energy
Regulatory 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.
(9) Independent power production facility.--The term
`independent power production facility' means a
facility--
(A) that is used for the generation of
electric energy, at least 80 percent of which
is sold at wholesale; and
(B) the sales of the output of which are not
subject to retail rate regulation or setting of
retail rates by--
(i) a State regulatory authority;
(ii) a State or political subdivision
thereof (or an agency or
instrumentality of, or corporation
wholly owned by, either of the
foregoing);
(iii) an electric cooperative; or
(iv) an Indian tribe pursuant to
tribal law.
(10) Long-term contract generator.--
(A) In general.--The term `long-term contract
generator' means a qualifying small power
production facility, a qualifying cogeneration
facility ), an independent power production
facility, or a facility for the production of
electric energy for sale to others that is
owned and operated by an electric cooperative
that is--
(i) a covered entity; and
(ii) as of the date of enactment of
this title--
(I) a facility with 1 or more
sales or tolling agreements
executed before March 1, 2007,
that govern the facility's
electricity sales and provide
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,
provided that such agreements
are not between entities that
were affiliates of one another
at the time at which the
agreements were entered into;
or
(II) a facility consisting of
1 or more cogeneration units
that makes useful thermal
energy available to an
industrial or commercial
process with 1 or more sales
agreements executed before
March 1, 2007, that govern the
facility's useful thermal
energy sales and provide for
sales at a price (whether a
fixed price or price formula)
for useful thermal energy that
does not allow for recovery of
the costs of compliance with
the limitation on greenhouse
gas emissions under this title,
provided that such agreements
are not between entities that
were affiliates of one another
at the time at which the
agreements were entered into.
(B) Affiliate.--In this paragraph, the term
`affiliate', when used in relation to a covered
entity, means another entity that directly or
indirectly owned or controlled, was owned or
controlled by, or that had 50 percent or more
of its equity interests under common ownership
or control with, the covered entity.
(11) Merchant coal unit.--The term `merchant coal
unit' means a coal-fueled unit that--
(A) is or is part of a covered entity;
(B) is not owned by a Federal, State, or
regional agency or power authority; and
(C) generates electricity solely for sale to
others, provided that all or a portion of such
sales are made by a separate legal entity
that--
(i) has a full or partial ownership
or leasehold interest in the unit, as
certified in accordance with such
requirements as the Administrator shall
prescribe; and
(ii) is not subject to retail rate
regulation or setting of retail rates
by--
(I) a State regulatory
authority;
(II) a State or political
subdivision thereof (or an
agency or instrumentality of,
or corporation wholly owned by,
either of the foregoing);
(III) an electric
cooperative; or
(IV) an Indian tribe pursuant
to tribal law.
(12) Merchant coal unit sales.--The term `merchant
coal unit sales' means sales to others of electricity
generated by a merchant coal unit that are made by the
owner or leaseholder described in paragraph (11)(C).
(13) New coal-fueled unit.--The term `new coal-fueled
unit' means a coal-fueled unit that commenced operation
on or after January 1, 2009 and before January 1, 2013.
(14) New merchant coal unit.--The term `new merchant
coal unit' means a merchant coal unit--
(A) that commenced operation on or after
January 1, 2009 and before January 1, 2013; and
(B) the actual, on-site construction of which
commenced prior to January 1, 2009.
(15) Qualified hydropower.--The term `qualified
hydropower' means--
(A) energy produced from increased efficiency
achieved, or additions of capacity made, on or
after January 1, 1988, 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, 1988,
provided that the Federal Energy Regulatory
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 Federal
Energy Regulatory 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.
(16) Qualifying small power production facility;
qualifying cogeneration facility.--The terms
`qualifying small power production facility' and
`qualifying cogeneration facility' have the meanings
given those terms in section 3(17)(C) and 3(18)(B) of
the Federal Power Act (16 U.S.C. 796(17)(C) and
796(18)(B)).
(17) 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).
(18) Small ldc.--The term `small LDC' means, for any
given year, an electricity local distribution company
that delivered less than 4,000,000 megawatt hours of
electric energy directly to retail consumers in the
preceding year.
(19) 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)).
(20) Useful thermal energy.--The term `useful thermal
energy' has the meaning given that term in section
371(7) of the Energy Policy and Conservation Act (42
U.S.C. 6341(7)).
(b) Electricity Local Distribution Companies.--
(1) Distribution of allowances.--The Administrator
shall distribute to electricity local distribution
companies for the benefit of retail ratepayers the
quantity of emission allowances allocated for the
following vintage year pursuant to section
771(a)(1)(A). Notwithstanding the preceding sentence,
the Administrator shall withhold from distribution
under this subsection a quantity of emission allowances
equal to the lesser of 14.3 percent of the quantity of
emission allowances allocated under section 771(a)(1)
for the relevant vintage year, or 105 percent of the
emission allowances for the relevant vintage year that
the Administrator anticipates will be distributed to
merchant coal units and to long-term contract
generators, respectively, under subsections (c) and
(d), on the condition that the Administrator shall be
authorized to distribute future vintage year allowances
available to long-term contract generators under
subsection (d) in the case of a shortfall of allowances
in any vintage year, subject to section 772(d)(2). If
not required by subsections (c) and (d) to distribute
all of these reserved allowances, the Administrator
shall distribute any remaining emission allowances to
electricity local distribution companies in accordance
with this subsection.
(2) Distribution based on emissions.--
(A) In general.--For each vintage year, 50
percent of the emission allowances available
for distribution under paragraph (1), after
reserving allowances for distribution under
subsections (c) and (d), 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;
(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; or
(III) calendar year 2012, in
the case of a local
distribution company that--
(aa) is located
outside of the Pacific
Northwest (as defined
in section 3 of the
Pacific Northwest
Electric Power Planning
and Conservation Act
(16 U.S.C. 839a)), and
purchased long-term
excess Federal power
and Hungry Horse
Reservation power from
the Bonneville Power
Administration; and
(bb) will no longer
have long-term excess
Federal power or Hungry
Horse Reservation power
from the Bonneville
Power Administration
after October 1, 2011.
(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) calendar year 2012, in
the case of--
(aa) an electricity
local distribution
company that owns, co-
owns, or purchases
through a power
purchase agreement
(whether directly or
through a cooperative
arrangement) a
substantial portion of
the electricity
generated by a new
coal-fueled unit, on
the condition that such
company timely informs
the Administrator of
its election to use
2012 as its base
period; or
(bb) any small local
distribution company
that is located outside
of the Pacific
Northwest (as defined
in section 3 of the
Pacific Northwest
Electric Power Planning
and Conservation Act
(16 U.S.C. 839a)), that
purchased long-term
excess Federal power
and Hungry Horse
Reservation power from
the Bonneville Power
Administration, and
that will no longer
have long-term excess
Federal power or Hungry
Horse Reservation power
from the Bonneville
Power Administration
after October 1, 2011,
on the condition that
such company timely
informs the
Administrator of its
election to use 2012 as
its base period.
(C) Determination of emissions.--
(i) Determination for 1999-2008.--As
part of the regulations promulgated
pursuant to subsection (g), 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 2008, taking into
account entities' electricity
generation, electricity purchases, and
electricity sales. In the case of any
electricity local distribution company
that owns, co-owns, or purchases
through a power purchase agreement
(whether directly or through a
cooperative arrangement) a substantial
portion of the electricity generated
by, a coal-fueled unit that commenced
operation after January 1, 2006, and
before December 31, 2008, the
Administrator shall adjust the
emissions attributable to such
company's retail deliveries in calendar
years 2006 through 2008 to reflect the
emissions that would have occurred if
the relevant unit were in operation
during the entirety of such 3-year
period.
(ii) Adjustments for new coal-fueled
units.--
(I) Vintage years 2012 and
2013.--For purposes of emission
allowance distributions for
vintage years 2012 and 2013, in
the case of any electricity
local distribution company that
owns, co-owns, or purchases
through a power purchase
agreement (whether directly or
through a cooperative
arrangement) a substantial
portion of the electricity
generated by, a new coal-fueled
unit, the Administrator shall
adjust the emissions
attributable to such company's
retail deliveries in the
applicable base period to
reflect the emissions that
would have occurred if the new
coal-fueled unit were in
operation during such period.
(II) Vintage year 2014 and
thereafter.--Not later than
necessary for use in making
emission allowance
distributions under this
subsection for vintage year
2014, the Administrator shall,
for any electricity local
distribution company that owns,
co-owns, or purchases through a
power purchase agreement
(whether directly or through a
cooperative arrangement) a
substantial portion of the
electricity generated by a new
coal-fueled unit and has
selected calendar year 2012 as
its base period pursuant to
subparagraph (B)(ii)(II),
determine the amount of carbon
dioxide emissions attributable
to generation of electricity
delivered at retail by such
company in calendar year 2012.
If the relevant new coal-fueled
unit was not yet operational by
January 1, 2012, the
Administrator shall adjust such
determination to reflect the
emissions that would have
occurred if such unit were in
operation for all of calendar
year 2012.
(iii) Requirements.--Determinations
under this paragraph 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 based on deliveries.--
(A) Initial formula.--Except as provided in
subparagraph (B), for each vintage year, the
Administrator shall distribute 50 percent of
the emission allowances available for
distribution under paragraph (1), after
reserving allowances for distribution under
subsections (c) and (d), among individual
electricity local distribution companies
ratably based on each electricity local
distribution company's annual average retail
electricity deliveries for calendar years 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 year emission allowances under this
paragraph and at 3-year intervals thereafter,
the Administrator shall update the distribution
formula under this paragraph 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
subparagraph.
(4) Prohibition against excess distributions.--The
regulations promulgated under subsection (g) shall
ensure that, notwithstanding paragraphs (2) and (3), no
electricity local distribution company shall receive a
greater quantity of allowances under this subsection
than is necessary to offset any increased electricity
costs to such company's retail ratepayers, including
increased costs attributable to purchased power costs,
due to enactment of this title. Any emission allowances
withheld from distribution to an electricity local
distribution company pursuant to this paragraph shall
be distributed among all remaining electricity local
distribution companies ratably based on emissions
pursuant to paragraph (2).
(5) 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 subsection
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.--In general, 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) Residential and industrial ratepayers.--
Notwithstanding subparagraph (C), if compliance
with the requirements of this title results (or
would otherwise result) in an increase in
electricity costs for residential or industrial
retail ratepayers of any given electricity
local distribution company (including entities
that receive emission allowances pursuant to
part F), such electricity local distribution
company--
(i) shall pass through to residential
retail ratepayers as a class their
ratable share (based on deliveries to
each ratepayer class) of the value of
the emission allowances that reduce
electricity cost impacts on such
ratepayers; and
(ii) shall pass through to industrial
ratepayers as a class their ratable
share (based on deliveries to each
ratepayer class) of the value of the
emission allowances that reduce
electricity cost impacts on such
ratepayers. The electricity local
distribution company may do so based on
the quantity of electricity delivered
to individual industrial retail
ratepayers.
(E) Guidelines.--As part of the regulations
promulgated under subsection (g), the
Administrator shall, after consultation with
State and tribal regulatory authorities,
prescribe guidelines for the implementation of
the requirements of this paragraph. Such
guidelines shall include--
(i) requirements to ensure that
residential and industrial retail
ratepayers (including entities that
receive emission allowances under part
F) receive their ratable share of the
value of the allowances distributed to
each electricity local distribution
company pursuant to this subsection;
and
(ii) requirements for measurement,
verification, reporting, and approval
of methods used to assure the use of
allowance values to benefit retail
ratepayers.
(6) Regulatory proceedings.--
(A) Requirement.--No electricity local
distribution company shall be eligible to
receive emission allowances under this
subsection or subsection (e) unless the State
regulatory authority with authority over such
company's retail rates, or the entity with
authority to regulate or set retail electricity
rates of an electricity local distribution
company not regulated by a State regulatory
authority, has--
(i) after public notice and an
opportunity for comment, 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 (5) of
this subsection and the requirements of
subsection (e); and
(ii) made available to the
Administrator and the public a report
describing, in adequate detail, the
manner in which the requirements of
paragraph (5) and the requirements of
subsection (e) 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 , after public notice
and an opportunity for comment, and a new
report be made available to the Administrator
and the public, pursuant to subparagraph (A),
not less frequently than every 5 years.
(7) Plans and reporting.--
(A) Regulations.--As part of the regulations
promulgated under subsection (g), 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 tor setting 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 and subsection (e),
in accordance with the requirements of this
subsection and subsection (e). Such plan shall
include a description of the manner in which
the company will provide to industrial retail
ratepayers (including entities that receive
emission allowances under part F) their ratable
share of the value of such allowances.
(C) Reports.--Not later than June 30, 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 or setting
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 and subsection (e), 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 any such
emission allowances;
(iii) the manner in which the
company's disposition of any such
emission allowances complies with the
requirements of this subsection and of
subsection (e), including each of the
requirements of paragraph (5) of this
subsection, including the requirement
that industrial retail ratepayers
(including entities that receive
emission allowances under part F)
receive their ratable share of the
value of such allowances; 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.
(8) Administrator audit reports.--
(A) In general.--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 and of subsection (e), including the
requirement that residential and industrial
retail ratepayers (including entities that
receive emission allowances under part F)
receive their ratable share of the value of
such allowances. The Administrator shall assess
the degree to which electric local distribution
companies have maintained a marginal electric
price signal while protecting consumers on
total cost using the value of emissions
allowances. 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.
(B) GAO audit report.--Not later than April
30, 2015, and every 3 years thereafter through
2026, the Comptroller General of the United
States, incorporating results from the
Administrators' audit report and other relevant
information including distribution company
reports, shall conduct an in-depth evaluation
and make available to the public a report on
the investments made pursuant to paragraph (5).
Said report shall be made available to the
State regulatory authority, or the entity with
authority to regulate or set retail electricity
rates in the case of an electricity
distribution company that is not regulated by a
State regulatory authority, and shall include a
description of how the distribution companies
in the audit meet or fail to meet the
requirement of paragraph (5), including for
investments made in cost-effective end-use
energy efficiency programs, the lifetime and
annual energy saving benefits, and capacity
benefits of said programs.
(C) Administrator cost containment report.--
Not later than April 30, 2015 and every 3 years
thereafter through 2026, the Administrator
shall transmit a report to Congress containing
an evaluation of the disposition of the value
of emission allowances received pursuant to
this subsection and subsection (e) and
recommendations of ways to more effectively
direct the value of allowances to reduce costs
for consumers, contain the overall costs of the
greenhouse gas emissions reduction program, and
meet the pollution reduction targets of the
Act. The Administrator shall make available to
the public such report, including by publishing
such report on the Internet.
(9) Enforcement.--A violation of any requirement of
this subsection or of subsection (e), irrespective of
approval by a State regulatory authority, shall be a
violation of this Act. Each emission allowance the
value of which is used in violation of the requirements
of this subsection or of subsection (e) shall be a
separate violation.
(c) Merchant Coal Units.--
(1) Qualifying emissions.--The qualifying emissions
for a merchant coal unit for a given calendar year
shall be the product of the number of megawatt hours of
merchant coal unit sales generated by such unit in such
calendar year and the average carbon dioxide emissions
per megawatt hour generated by such unit during the
base period under paragraph (2), 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 unit's carbon dioxide
emissions that are either--
(A) captured and sequestered in such calendar
year; or
(B) attributable to the combustion or
gasification of biomass, to the extent that the
owner or operator of the unit is not required
to hold emission allowances for such emissions.
(2) Base period.--For purposes of this subsection,
the base period for a merchant coal unit shall be--
(A) calendar years 2006 through 2008; or
(B) in the case of a new merchant coal unit--
(i) the first full calendar year of
operation of such unit, if such unit
commences operation before January 1,
2012;
(ii) calendar year 2012, if such unit
commences operation on or after January
1, 2012, and before October 1, 2012; or
(iii) calendar year 2013, if such
unit commences operation on or after
October 1, 2012, and before January 1,
2013.
(3) Phase-down schedule.--The Administrator shall
identify an annual phase-down factor, applicable to
distributions to merchant coal units for each of
vintage years 2012 through 2029, that corresponds to
the overall decline in the amount of emission
allowances allocated to the electricity sector in such
years pursuant to section 771(a)(1). 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 under section
771(a)(1) for such vintage year;
divided by
(ii) the quantity of emission
allowances allocated under section
771(a)(1) for vintage year 2012.
(4) 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 unit described in
subsection (a)(11)(C) in an amount equal to the product
of--
(A) 0.5;
(B) the qualifying emissions for such
merchant coal unit for the preceding year, as
determined under paragraph (1); and
(C) the phase-down factor for the preceding
calendar year, as identified under paragraph
(3).
(5) Adjustment.--
(A) Study.--Not later than 5 years after the
date of enactment of the Clean Energy Jobs and
American Power Act, the Administrator, in
consultation with the Federal Energy Regulatory
Commission, shall issue a study to determine
whether the allocation formula under paragraph
(3) is resulting 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.
(6) Limitation on allowances.--Notwithstanding
paragraph (4) or (5), for each 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
771(a)(1). If the quantity of emission allowances that
would otherwise be distributed pursuant to paragraph
(4) or (5) for any vintage year would exceed such
limit, the Administrator shall distribute 10 percent of
the total emission allowances available for
distribution under section 771(a)(1) for such vintage
year ratably among merchant coal generators based on
the applicable formula under paragraph (4) or (5).
(7) Eligibility.--The owner or operator of a merchant
coal unit shall not be eligible to receive emission
allowances under this subsection for any vintage year
for which such owner or operator has elected to receive
emission allowances for the same unit under subsection
(d).
(d) Long-term Contract Generators.--
(1) Distribution.--Not later than March 1, 2013, and
each calendar year through 2030, the Administrator
shall distribute to the owner or operator of each long-
term contract generator a quantity of emission
allowances of the preceding vintage year that is equal
to the sum of--
(A) the number of tons of carbon dioxide
emitted as a result of a qualifying electricity
sales agreement referred to in subsection
(a)(10)(B)(i); and
(B) the incremental number of tons of carbon
dioxide emitted solely as a result of a
qualifying thermal sales agreement referred to
in subsection (a)(10)(B)(ii), provided that in
no event shall the Administrator distribute
more than 1 emission allowance for the same ton
of emissions.
(2) Limitation on allowances.--
(A) In general.--Notwithstanding paragraph
(1), for each vintage year the Administrator
shall distribute under this subsection no more
than 4.3 percent of the total quantity of
emission allowances available for such vintage
year for distribution to the electricity sector
under section 771(a)(1).
(B) Future vintage year allowances.--
(i) In general.--To the extent that
any quantity of allowances that would
otherwise be distributed pursuant to
paragraph (1) would exceed 4.3 percent
in any vintage year, the Administrator
shall distribute future vintage year
allowances reserved for long-term
contract generators under this section
to satisfy any such shortfall in
available allowances, subject to
projections by the Administrator of
required allowance needs for long-term
contract generators in future vintage
years.
(ii) Maintenance of year.--Future
vintage year allowances distributed
pursuant to this subsection shall
maintain the future vintage year
assigned to those allowances.
(C) Shortfall.--If the quantity of emission
allowances that would otherwise be distributed
pursuant to paragraph (1) for any vintage year
would result in a shortfall based on a
consideration of available allowances under
this subsection over the entire allocation
period, as determined by the Administrator, the
Administrator shall distribute the emission
allowances available for distribution under
section 771(a)(1) for such vintage year ratably
among long-term contract generators in
accordance with paragraph (1).
(3) Eligibility.--
(A) Facility eligibility.--The owner or
operator of a facility shall cease to be
eligible to receive emission allowances under
this subsection upon the earliest date on which
the facility no longer meets each and every
element of the definition of a long-term
contract generator under subsection (a)(10).
(B) Contract eligibility.--The owner or
operator of a facility shall cease to be
eligible to receive emission allowances under
this subsection based on an electricity or
thermal sales agreement referred to in
subsection (a)(10)(B) upon the earliest date
that such agreement--
(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 or
thermal energy sold under such
agreement, the quantity of electricity
or thermal energy sold under the
agreement, or the expiration or
termination date of the agreement.
(4) Demonstration of 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 each qualifying
electricity or thermal sales agreement referred
to in subsection (a)(10)(B).
(F) A copy of each qualifying electricity or
thermal sales agreement referred to in
subsection (a)(10)(B).
(5) Notification.--Not later than 30 days after, in
accordance with paragraph (3), a facility or an
agreement ceases to meet the eligibility requirements
for distribution of emission allowances pursuant to
this subsection, the designated representative of such
facility shall notify the Administrator in writing
when, and on what basis, such facility or agreement
ceased to meet such requirements.
(e) Small LDCs.--
(1) Distribution.--The Administrator shall, in
accordance with this subsection, distribute emission
allowances allocated pursuant to section 771(a)(1)(B)
for the following vintage year. Such allowances shall
be distributed ratably among small LDCs based on
historic emissions in accordance with the same measure
of such emissions applied to each such small LDC for
the relevant vintage year under subsection (b)(2) of
this section.
(2) Uses.--A small LDC receiving allowances under
this section shall use such allowances exclusively for
the following purposes:
(A) Cost-effective programs to achieve
electricity savings, provided that such savings
shall not be transferred or used for compliance
with any renewable electricity standard
established under the Public Utility Regulatory
Policies Act of 1978 (16 U.S.C. 2601 et seq.).
(B) Deployment of technologies to generate
electricity from renewable energy resources,
provided that any Federal renewable electricity
credits issued based on generation supported
under this section shall be submitted to the
Federal Energy Regulatory Commission for
voluntary retirement and shall not be used for
compliance with the Public Utility Regulatory
Policies Act of 1978 (16 U.S.C. 2601 et seq.).
(C) Assistance programs to reduce electricity
costs for low-income residential ratepayers of
such small LDC, provided that such assistance
is made available equitably to all residential
ratepayers below a certain income level, which
shall not be higher than 200 percent of the
poverty line (as that term is defined in
section 673(2) of the Community Services Block
Grant Act (42 U.S.C. 9902(2)).
(D) Costs of compliance associated with the
enactment of this title.
(3) Requirements.--As part of the regulations
promulgated under subsection (g), the Administrator
shall prescribe--
(A) after consultation with the Federal
Energy Regulatory Commission, requirements to
ensure that programs and projects under
paragraph (2)(A) and (B) are consistent with
the standards established by, and effectively
supplement electricity savings and generation
of electricity from renewable energy resources
achieved by, the Combined Efficiency and
Renewable Electricity Standard established by
law;
(B) eligibility criteria and guidelines for
consumer assistance programs for low-income
residential ratepayers under paragraph (2)(C);
and
(C) such other requirements as the
Administrator determines appropriate to ensure
compliance with the requirements of this
subsection.
(4) Reporting.--Reports submitted under subsection
(b)(7) shall include, in accordance with such
requirements as the Administrator may prescribe--
(A) a description of any facilities deployed
under paragraph (2)(A), the quantity of
resulting electricity generation from renewable
energy resources;
(B) an assessment demonstrating the cost-
effectiveness of, and electricity savings
achieved by, programs supported under paragraph
(2)(B); and
(C) a description of assistance provided to
low-income retail ratepayers under paragraph
(2)(C).
(f) Rural Electric Cooperatives, Consumer, or Publicly Owned
Small LDCs.--
(1) Distribution.--
(A) In general.--The Administrator shall, in
accordance with this subsection, distribute
emission allowances allocated pursuant to
section 771(d)(7) for the following vintage
year.
(B) Method.--Allowances described in
subparagraph (A) shall be distributed ratably,
among rural electric cooperatives and consumer-
owned or publicly owned electricity local
distribution companies that meet the definition
of the term `small LDC' based on historic
emissions, in accordance with the same measure
of those emissions applied to each such rural
electric cooperative for the relevant vintage
year under subsection (b)(2).
(2) Uses.--A small LDC receiving allowances under
this section shall use the allowances only for--
(A) cost-effective programs to achieve
electricity savings, on the condition that such
savings shall not be transferred or used for
compliance with any renewable electricity
standard established under the Public Utility
Regulatory Policies Act of 1978 (16 U.S.C. 2601
et seq.);
(B) deployment of technologies to generate
electricity from renewable energy resources, on
the condition that any Federal renewable
electricity credits issued based on generation
supported under this section shall--
(i) be submitted to the Federal
Energy Regulatory Commission for
voluntary retirement; and
(ii) not be used for compliance with
the Public Utility Regulatory Policies
Act of 1978 (16 U.S.C. 2601 et seq.);
and
(C) assistance programs to reduce electricity
costs for low-income residential ratepayers of
the small LDC, on the condition that the
assistance is made available equitably to all
residential ratepayers below a certain income
level, which shall not be higher than 200
percent of the poverty line (as defined in
section 673 of the Community Services Block
Grant Act (42 U.S.C. 9902).
(g) 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. 773. NATURAL GAS CONSUMERS.
(a) Definition.--For purposes of this section, 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, 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 771(a)(2). 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 on a pro rata basis 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 on a pro rata
basis 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 on a pro rata
basis 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) Certain intracompany deliveries.--If a natural
gas local distribution company makes an intracompany
delivery of natural gas to a customer that is not a
covered entity, for which such company is required to
hold emission allowances under section 722, such
customer shall, for purposes of this section, be
considered to be a retail ratepayer and a member of a
ratepayer class to be determined by the relevant State
regulatory authority (or other entity with authority to
regulate or set natural gas rates, in the case of a
company not regulated by a State regulatory authority).
(6) 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, 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, 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) Auditing.--
(1) Administrator audit report.--Each year, the
Administrator shall audit a significant 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.
(2) GAO audit report.--Not later April 30, 2015 and
every 3 years thereafter through April 30, 2026, the
Comptroller General of the United States, incorporating
results from the Administrators' audit report and other
relevant information including distribution company
reports, shall conduct an in-depth evaluation and make
available to the public a report on the investments
made pursuant to subsection (c). Said report shall be
made available to the State regulatory authority, or
the entity with authority to regulate or set retail
natural gas rates in the case of a natural gas
distribution company that is not regulated by a State
regulatory authority, and shall include a description
how the distribution companies in the audit meet or
fail to meet the requirement of subsection (c),
including for investments made in cost-effective end-
use energy efficiency programs, the lifetime and annual
energy saving benefits, and capacity benefits of said
programs.
(3) Administrator cost containment report.--Not later
April 30, 2015, and every 3 years thereafter through
April 30, 2026, the Administrator shall transmit a
report to Congress containing an evaluation of the
disposition of the value of emission allowances
received pursuant to this subsection and
recommendations of ways to more effectively direct the
value of allowances to reduce costs for consumers,
contain the overall costs of the greenhouse gas
emissions reduction program, and meet the pollution
reduction targets of the Act. The Administrator shall
make available to the public such report, including by
publishing such report on the Internet.
(g) Enforcement.--A violation of any requirement of this
section, irrespective of approval by a State regulatory
authority, 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. 774. 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 773(a).
(b) Allocation.--The Administrator shall distribute among the
States, in accordance with this section, the quantity of
emission allowances allocated pursuant to section 771(a)(3).
The Administrator shall distribute a percentage of such
allowances determined by the Administrator, after consultation
with the Secretary of the Interior, pursuant to subsection (f).
(c) Distribution Among States.--The Administrator shall
distribute emission allowances among the States under this
section each year on a pro rata basis 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) Distribution to Indian Tribes.--Not later than 18 months
after the date of enactment of this title, the Administrator
shall, in consultation with the Secretary of the Interior and
Indian tribes, promulgate regulations establishing a program to
distribute the emission allowances made available to Indian
tribes under this section.
(g) Enforcement.--
(1) In general.--If the Administrator determines that
a State or Indian tribe 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 or Indian tribe failed to use in accordance with
the requirements of this section, that such State or
Indian tribe would otherwise be eligible to receive
under this section in later years.
(2) Withheld allowances.--
(A) States.--Allowances withheld from States
pursuant to this subsection shall be
distributed among the remaining States on a pro
rata basis in accordance with the formula in
subsection (c).
(B) Indian tribes.--Allowances withheld from
Indian tribes pursuant to this subsection shall
be distributed among the remaining Indian
tribes on a pro rata basis in accordance with
the program established under subsection (f).
SEC. 775. DOMESTIC FUEL PRODUCTION.
(a) Purpose.--The purpose of this section is to provide
emission allowance rebates to petroleum refineries 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' includes direct
emissions from fuel combustion, process emissions, and
indirect emissions from the generation of electricity,
steam, and hydrogen used to produce the output of a
petroleum refinery or the petroleum refinery sector.
(2) Petroleum refinery.--The term `petroleum
refinery' means a facility classified under code 324110
of the North American Industrial Classification System
of 2002.
(3) Small business refiner.--The term `small business
refiner' means a refiner that meets the applicable
Federal refinery capacity and employee limitations
criteria described in section 45H(c)(1) of the Internal
Revenue Code of 1986 (as in effect on the date of
enactment of this section and without regard to section
45H(d)). Eligibility of a small business refiner under
this paragraph shall not be recalculated or disallowed
on account of (i) its merger with another small
business refiner or refiners after December 31, 2002 or
(ii) its acquisition of another small business refiner
(or refinery of such refiner) after December 31, 2002.
(c) Distribution of Allowances.--The Administrator shall
distribute allowances pursuant to this section to owners and
operators of petroleum refineries, including small business
refiners, in the United States.
(d) Distribution Schedule.--The Administrator shall
distribute emission allowances pursuant to the regulations
issued under subsection (e) for each vintage year no later than
October 31 of the preceding calendar year.
(e) Regulations.--
(1) In general.--Not later than 3 years after the
date of enactment of this title, the Administrator, in
consultation with the Administrator of the Energy
Information Administration, shall promulgate
regulations in accordance with the purpose of this
section that establish separate formulas for
distribution of emission allowances provided to--
(A) petroleum refineries pursuant to section
771(a)(4)(A); and
(B) small business refiners pursuant to
section 771(a)(4)(B).
(2) Considerations.--In establishing the formulas
under paragraph (1), the Administrator shall consider--
(A) the relative complexity of refinery
processes and appropriate mechanisms to take
energy efficiency and greenhouse gas reductions
into account;
(B) direct emissions from fuel combustion;
(C) process emissions;
(D) indirect emissions for the generation of
electricity, steam, and hydrogen used to
produce the output of a petroleum refinery; and
(E) emissions from the combustion of products
produced at a petroleum refinery or by the
petroleum refinery sector.
(3) Excess distribution.--If the electricity provider
for a petroleum refinery received a free allocation of
emission allowances pursuant to section 771(a)(1), the
Administrator shall take the free allocation into
account when establishing the applicable formula under
this subsection to avoid rebates to a petroleum
refinery for costs that the Administrator determines
were not incurred by the petroleum refinery because the
allowances were--
(A) freely allocated to the electricity
provider of the petroleum refinery; and
(B) used for the benefit of the petroleum
refinery.
SEC. 776. CONSUMER PROTECTION.
(a) Consumer Rebates.--
(1) Establishment of fund.--There is established in
the Treasury a separate account, to be known as the
`Consumer Rebate Fund').
(2) Availability of amounts.--All amounts deposited
in the Consumer Rebate Fund shall be available without
further appropriation or fiscal year limitation.
(3) Distribution of amounts.--Beginning in 2026, for
each year after deposits are made in the Consumer
Rebate Fund pursuant to section 771(b)(2)(A), the
President shall use the funds in accordance with
Federal statutory authority to provide relief to
consumers and others affected by the enactment of the
Clean Energy Jobs and American Power Act (and
amendments made by that Act).
(b) Energy Refund Program.--
(1) Establishment of fund.--There is established in
the Treasury a separate account, to be known as the
`Energy Refund Account').
(2) Availability of amounts.--All amounts deposited
in the Energy Refund Account shall be available without
further appropriation or fiscal year limitation.
(3) Distribution of amounts.--For each year after
deposits are made to the Energy Refund Account pursuant
to section 771(b)(2)(B), the President shall use the
funds in accordance with Federal statutory authority to
offset energy cost impacts on low- and moderate-income
households.
SEC. 777. EXCHANGE FOR STATE-ISSUED ALLOWANCES.
(a) In General.--Not later than 1 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 the
later of December 31, 2011, or the date that is 9 months after
the first auction under section 778, 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;
(3) provide that the Federal emission allowances
disbursed pursuant to this section shall be deducted
from the allowances to be auctioned pursuant to section
771(b); and
(4) require that, once exchanged, the credit or other
instrument be retired for purposes of use under the
program by or for which it was originally issued.
(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. 778. 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 4 years after the year in which
the auction is being conducted.
(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)
by promulgating new regulations. 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 2005 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.
(f) Small Business Refiner Reserve.--The Administrator shall,
in accordance with this subsection, issue regulations setting
aside a specified number of allowances, as determined by the
Administrator, that small business refiners may purchase at the
average auction price and may use to demonstrate compliance
pursuant to section 722. These regulations shall provide the
following:
(1) Amount.--The Administrator shall place in the
small business refiner reserve account allowances that
are to be sold at auction pursuant to the allocations
under section 771 in an amount equal to--
(A) for each of vintage years 2012 and 2013,
6.2 percent of the emission allowances
established under section 721(a);
(B) for each of vintage years 2014 and 2015,
5.4 percent of the emission allowances
established under section 721(a); and
(C) for each of vintage years 2016 through
2024, 4.9 percent of the emission allowances
established under section 721(a).
(2) Allowed purchases.--From January 1 of the
calendar year that matches the vintage year for which
allowances have been placed in the reserve, through
January 14 of the following year, small business
refiners (as defined in section 775(b)) may purchase
allowances from this reserve at the price determined
pursuant to paragraph (3).
(3) Price.--The price for allowances purchased from
this reserve shall be the average auction price for
allowances of the same vintage year purchased at
auctions conducted pursuant to this section during the
12 months preceding the purchase of the allowances.
(4) Use of allowances.--Allowances purchased from
this reserve shall only be used by the purchaser to
demonstrate compliance pursuant to section 722 for
attributable greenhouse gas emissions in the calendar
year that matches the vintage year of the purchased
allowance. Allowances purchased from this reserve may
not be banked, traded or borrowed.
(5) Limitations on purchase amount.--The
Administrator, by regulation adopted after public
notice and an opportunity for comment, shall establish
procedures to distribute the ability to purchase
allowances from the reserve fairly among all small
business refiners interested in purchasing allowances
from this reserve so as to address the potential that
requests to purchase allowances exceed the number of
allowances available in the reserve. This regulation
may place limits on the number of allowances a small
business refiner may purchase from the reserve.
(6) Unsold allowances.--Vintage year allowances not
sold from the reserve on or before January 15 of the
calendar year following the vintage year shall be sold
at an auction conducted pursuant to this section no
later than March 31 of the calendar year following the
vintage year. If significantly more allowances are
being placed in the reserve than are being purchased
from the reserve several years in a row, the
Administrator may adjust either the percent of
allowances placed in the reserve or the date by which
allowances may be purchased from the reserve.
SEC. 779. AUCTIONING ALLOWANCES FOR OTHER ENTITIES.
(a) Consignment.--Any entity holding emission allowances or
compensatory allowances may request that the Administrator
auction, pursuant to section 778, 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 778.
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 778(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. 780. COMMERCIAL DEPLOYMENT OF CARBON CAPTURE AND PERMANENT
SEQUESTRATION TECHNOLOGIES.
(a) Definitions.--In this section:
(1) Carbon capture and permanent sequestration.--The
term `carbon capture and permanent sequestration'
shall--
(A) have such meaning as the Administrator
shall determine by regulation; and
(B) include--
(i) permanent geological
sequestration; and
(ii) conversion of captured carbon
dioxide to a stable form that will
safely and permanently sequester the
carbon dioxide.
(2) Enhanced hydrocarbon recovery.--
(A) In general.--The term `enhanced
hydrocarbon recovery' means a process by which
oil, methane, or other natural gases are
recovered by the injection of carbon dioxide
into a geologic formation.
(B) Exclusion.--The term `enhanced
hydrocarbon recovery' does not include the in
situ generation of a new hydrocarbon.
(3) Qualifying electric generating unit.--The term
`qualifying electric generating unit' means an electric
utility unit--
(A) that derives at least 50 percent of the
annual fuel input of the unit from--
(i) coal or waste coal;
(ii) petroleum coke; or
(iii) any combination of those 2
fuels; and
(B)(i) that has a nameplate capacity of 200
megawatts or more; or
(ii) in the case of retrofit applications,
the carbon capture and permanent sequestration
technology of which is applied to the flue gas
or fuel gas stream from at least 200 megawatts
of the total nameplate generating capacity of
the unit.
(4) Qualifying industrial source.--The term
`qualifying industrial source' means a source that--
(A) is not a qualifying electric generating
unit;
(B) absent carbon capture and permanent
sequestration, would emit greater than 50,000
tons per year of carbon dioxide; and
(C) does not produce a liquid transportation
fuel from a solid fossil-based feedstock.
(5) Treated generating capacity.--
(A) In general.--The term `treated generating
capacity' means the portion of the total
generating capacity of an electric generating
unit (or industrial source, measured by such
method as the Administrator may designate to be
equivalent to the calculation under
subparagraph (B)) for which the flue gas or
fuel gas is treated by the carbon capture and
permanent sequestration technology.
(B) Calculation.--In determining the treated
portion of flue gas or fuel gas of an electric
generating unit under subparagraph (A), the
Administrator shall multiply the nameplate
capacity of the unit by the ratio that--
(i) the mass of flue gas or fuel gas
that is treated by the carbon capture
and permanent sequestration technology;
bears to
(ii) the total mass of the flue gas
or fuel gas that is produced when the
unit is operating at maximum capacity.
(b) 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 under section 771(a)(6), pursuant to the
requirements of this section, to support the commercial
deployment of carbon capture and permanent sequestration
technologies in electric power generation and industrial
operations.
(c) Eligibility Criteria and Method of Distribution.--
(1) Eligibility.--For an owner or operator of a
project to be eligible to receive emission allowances
under this section, the project shall--
(A) implement carbon capture and permanent
sequestration technology--
(i) at a qualifying electric
generating unit that, upon
implementation of the carbon capture
and permanent sequestration technology,
will achieve an emission limitation
that is at least a 50-percent reduction
in emissions of the carbon dioxide
produced by--
(I) the unit, measured on an
annual basis, as determined by
the Administrator; or
(II) in the case of retrofit
applications described in
subsection (a)(2)(B)(ii), the
treated portion of flue gas
from the unit, measured on an
annual basis, as determined by
the Administrator; or
(ii) at a qualifying industrial
source that, upon implementation, will
achieve an emission limitation that is
at least a 50-percent reduction in
emissions of the carbon dioxide
produced by the emission point,
measured on an annual basis, as
determined by the Administrator;
(B)(i) geologically sequester carbon dioxide
at a site that meets all applicable permitting
and certification requirements for permanent
geological sequestration; or
(ii) 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
the carbon dioxide;
(C) meet all other applicable State, tribal,
and Federal permitting requirements; and
(D) be located in the United States.
(2) Method of distribution.--
(A) Period.--The Administrator shall
distribute emission allowances allocated under
section 771(a)(6) to eligible projects for each
of the first 10 calendar years for which each
eligible project is in commercial operation.
(B) Bonus allowance formula for electric
generating units.--
(i) Phase i distribution.--For each
project that is certified under
subsection (h), the quantity of
emission allowances that the
Administrator shall distribute for a
calendar year to the owner or operator
of the eligible project shall be equal
to the quotient obtained by dividing--
(I) the product obtained by
multiplying--
(aa) the number of
metric tons of carbon
dioxide emissions
avoided through carbon
capture and permanent
sequestration of
emissions by the
project for a
particular year, as
determined pursuant to
such methodology as the
Administrator shall
prescribe by
regulation; and
(bb) a bonus
allowance value that is
assigned to the project
under subsection
(d)(2); by
(II) the average fair market
value of an emission allowance
during the calendar year
preceding the earlier of--
(aa) the year during
which the project
captured and
sequestered the carbon
dioxide emissions; or
(bb) the year in
which the project
receives an advanced
distribution of
emission allowances
under subsection
(h)(3)(B).
(ii) Phase ii distribution.--For each
project that qualifies under subsection
(e), the quantity of emission
allowances that the Administrator shall
distribute for a calendar year to the
owner or operator of the eligible
project shall be determined through--
(I) reverse auction, as
prescribed by regulation under
subsection (e)(3); or
(II) if the Administrator
decides not to distribute
allowances through a reverse
auction, an alternate
distribution method established
by regulation under subsection
(e)(4).
(C) Formula for industrial sources.--For each
project that qualifies under subsection (g),
the quantity of emission allowances that the
Administrator shall distribute for a calendar
year to the owner or operator of the eligible
project shall be determined in accordance with
subsection (g)(2).
(D) Consistency.--The Administrator shall
develop a method of distribution for each
category of eligible projects under this
paragraph in a manner that is consistent with
the certification and distribution requirements
under subsection (h).
(d) Phase I Distribution to Electric Generating Units.--
(1) Applicability.--
(A) In general.--Subject to subparagraph (B),
this subsection shall apply to projects that
are undertaken at qualifying electric
generating units that the Administrator
determines to be eligible to receive emission
allowances under this section.
(B) Capacity.--The total cumulative
generating capacity of the projects described
in subparagraph (A) shall be equal to
approximately 20 gigawatts of the treated
generating capacity.
(2) Bonus allowance values.--
(A) First tranche.--
(i) In general.--The first tranche
shall include the first 10 gigawatts of
treated generating capacity undertaken
at qualifying electric generating units
that receive emission allowances under
this section.
(ii) Certain units.--For an eligible
project achieving carbon capture and
permanent sequestration of 90 percent
or more of the carbon dioxide that
otherwise would be emitted by the unit,
the bonus allowance value shall be $96
per ton of carbon dioxide emissions
avoided through the use of carbon
capture and permanent sequestration.
(iii) Bonus allowance value.--The
Administrator shall establish, by
regulation, a bonus allowance value for
each rate of carbon capture and
permanent sequestration achieved by an
eligible project--
(I) beginning at a minimum of
$50 per ton for a 50-percent
rate; and
(II) varying in direct
proportion with increasing
rates of carbon capture and
permanent sequestration up to
$96 per ton for an 90-percent
rate.
(B) Second tranche.--
(i) In general.--The second tranche
shall include the second 10 gigawatts
of treated generating capacity
undertaken at qualifying electric
generating units that receive emission
allowances under this section.
(ii) Certain units.--For an eligible
project achieving the carbon capture
and permanent sequestration of 90
percent or more of the carbon dioxide
that otherwise would be emitted by the
eligible project, the bonus allowance
value shall be $85 per ton of carbon
dioxide emissions avoided through the
use of capture and permanent
sequestration.
(iii) Bonus allowance value.--The
Administrator shall establish, by
regulation, a bonus allowance value for
each rate of carbon capture and
permanent sequestration achieved by an
eligible project--
(I) beginning at a minimum of
$50 per ton for a 50-percent
rate; and
(II) varying in direct
proportion with increasing
rates of carbon capture and
permanent sequestration up to
$85 per ton for a 90-percent
rate.
(C) Increase in bonus allowance value.--For
an eligible project that commences commercial
operation by not later than January 1, 2017,
and that meets the eligibility criteria under
subsection (c), the otherwise-applicable bonus
allowance value under this paragraph shall be
increased by $10, if the owner or operator of
the eligible project submits to the
Administrator by not later than January 1,
2012, a notification of the intent to implement
carbon capture and permanent sequestration
technology at a qualifying electric generating
unit in accordance with subsection (c).
(D) Reduction.--
(i) In general.--For a carbon capture
and permanent sequestration project
sequestering in a geological formation
for purposes of enhanced hydrocarbon
recovery, the Administrator, by
regulation, shall reduce the applicable
bonus allowance value under this
paragraph to reflect the lower net cost
of the project, as compared to
permanent sequestration into geological
formations solely for purposes of
sequestration.
(ii) Assessment of net cost.--For the
purpose of this subparagraph, an
assessment of net cost of a project
shall account for the cost of the
injection of carbon dioxide, or other
method of enhanced hydrocarbon
recovery, that would have otherwise
been undertaken in the absence of the
carbon capture and permanent
sequestration project under
consideration.
(E) Adjustments.--The Administrator shall
annually adjust for monetary inflation the
bonus allowance values established under this
paragraph.
(F) Measurement.--The Administrator shall
measure the tranches and capture levels for
assigning the bonus allowance values under this
subsection based on the treated generating
capacity of the qualifying electric generating
units and qualifying industrial sources that
receive emission allowances under this
subsection.
(G) Average fair market value.--
(i) In general.--The Administrator
and the Secretary of Energy may jointly
determine that the average fair market
value for emission allowances or the
bonus allowances have been too low or
too high to achieve efficient and cost-
effective commercial deployment of
carbon capture and permanent
sequestration technology in a given
calendar year.
(ii) Action on determination.--On
making a determination under clause
(i), the Administrator may--
(I) promulgate regulations to
adjust the bonus allowance
value under this paragraph; or
(II) distribute an
appropriate quantity of
emission allowances allocated
under section 771(a)(6) from
any future vintage year.
(e) Phase II Distribution to Electric Generating Units.--
(1) Application.--This subsection shall apply only to
the distribution of emission allowances for carbon
capture and permanent sequestration projects undertaken
at qualifying electric generating units and qualifying
industrial sources after the treated generating
capacity threshold identified under subsection (d)(1)
is reached.
(2) Regulations.--Not later than 2 years before the
date on which the capacity threshold identified in
subsection (d)(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
pursuant to paragraph (2) shall provide for the
distribution of emission allowances to the
owners or operators of eligible projects under
this subsection through at least 2 reverse
auctions, each of which shall be held not less
frequently than once each calendar year.
(B) Requirements.--
(i) Projects at industrial sources.--
The Administrator shall annually
establish a reverse auction for
projects at industrial sources, which
may not participate in other auctions.
(ii) Other auctions.--The
Administrator may establish a separate
auction for each of not more than 5
different project categories, as
defined based on--
(I) coal type;
(II) capture technology;
(III) geological formation
type;
(IV) new unit versus retrofit
application;
(V) such other factors as the
Administrator may prescribe; or
(VI) any combination of the
factors described in subclauses
(I) through (V).
(iii) Efficient distribution.--The
Administrator shall establish
procedures for the auction of emission
allowances under this subparagraph to
ensure that the establishment of
separate auctions for different project
categories will not unduly impede the
efficient and expeditious distribution
of emission allowances to eligible
projects under this subsection.
(iv) Minimum rates.--The
Administrator may establish appropriate
minimum rates of carbon capture and
permanent sequestration for the treated
generating capacity of a project in
implementing this subparagraph.
(C) Auction process.--At each reverse auction
under this paragraph--
(i) the Administrator shall solicit
bids from eligible projects;
(ii) owners or operators of eligible
projects participating in the auction
shall submit a bid, including the
desired level of carbon dioxide
permanent sequestration incentive per
ton and the estimated quantity of
carbon dioxide that the project will
permanently sequester during a 10-year
period; and
(iii) the Administrator shall select
bids within each auction for the
permanent sequestration quantity
submitted, beginning with the eligible
project for which the bid is submitted
for the lowest level of permanent
sequestration incentive on a per-ton
basis and meeting such other
requirements as the Administrator may
specify, until the amounts available
for the reverse auction are committed.
(D) Form of distribution.--The Administrator
shall distribute emission allowances to the
owners or operators of eligible projects
selected through a reverse auction under this
paragraph pursuant to a formula equivalent to
the formula contained in subsection (c)(2)(B),
except that the bonus allowance value that is
bid by the applicable entity shall be
substituted for the bonus allowance values
described in subsection (c)(2).
(4) Alternative distribution method.--
(A) In general.--If the Administrator
determines that a reverse auction will not
result in efficient and cost-effective
commercial deployment of carbon capture and
permanent sequestration technologies, the
Administrator, pursuant to regulations under
paragraph (2) or (5), shall prescribe a
schedule for the provision 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 of which--
(i) shall support the deployment of a
specified quantity of cumulative
electric generating capacity using
carbon capture and permanent
sequestration technology; and
(ii) shall not be greater than 10
gigawatts of treated generating
capacity.
(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 carbon capture and
permanent sequestration technology; and
(ii) pursuant to a formula that--
(I) is similar to the formula
contained in subsection
(c)(2)(C), except that the
Administrator may prescribe
bonus allowance values
different than those described
in subsection (c)(2) based on
the criteria established under
subparagraph (E); and
(II) establishes the number
of emission allowances to be
distributed per ton of carbon
dioxide sequestered by the
project.
(D) Requirements.--For each tranche
established pursuant to subparagraph (B), 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
carbon capture and permanent
sequestration for the treated
generation capacity at the unit;
(ii) for each carbon capture and
permanent sequestration rate,
establishes a bonus allowance value
that is lower than that established for
the applicable rate for the previous
tranche (or, in the case of the first
tranche, than that established for the
applicable rate under subsection
(d)(2)); and
(iii) may establish different bonus
allowance levels for not more than 5
different project categories, as
defined based on--
(I) coal type;
(II) capture and
transportation technology;
(III) geological formation
type;
(IV) new unit versus retrofit
application;
(V) such other factors as the
Administrator may prescribe; or
(VI) any combination of the
factors described in subclauses
(I) through (V).
(E) Criteria for establishing bonus allowance
values.--In establishing bonus allowance values
under this paragraph, the Administrator shall
seek to cover not more than the reasonable
incremental capital and operating costs of a
project that are attributable to implementation
of carbon capture and permanent sequestration
technologies and carbon transportation
technologies, taking into account--
(i) the reduced cost of compliance
with section 722;
(ii) the reduced cost associated with
sequestering in a geological formation
for purposes of enhanced hydrocarbon
recovery, as compared to permanent
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 to be
appropriate.
(5) Revision of regulations.--The Administrator shall
review and, as appropriate, revise the applicable
regulations under this subsection not less frequently
than once every 8 years.
(f) Limits for Certain Electric Generating Units.--
(1) Definitions.--In this subsection, the terms
`covered EGU' and `initially permitted' have the
meanings given those terms in section 812.
(2) Covered egus initially permitted from 2009
through 2014.--For a covered EGU that is initially
permitted during the period beginning on January 1,
2009, and ending on December 31, 2014, the
Administrator shall reduce the quantity of emission
allowances that the owner or operator of the covered
EGU would otherwise be eligible to receive under this
section as follows:
(A) In the case of a covered EGU 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 obtained by
multiplying--
(i) 20 percent; and
(ii) the number of years, if any,
that have elapsed between--
(I) the earlier of--
(aa) January 1, 2020;
and
(bb) the date that is
5 years after the
commencement of
operation of the
covered EGU; and
(II) the first year that the
covered EGU achieves (and
thereafter maintains) an
emission limitation that is at
least a 50-percent reduction in
emissions of 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 covered EGU commencing
operation after January 1, 2019, by the product
obtained by multiplying--
(i) 20 percent; and
(ii) the number of years, if any,
that have elapsed between--
(I) the commencement of
operation of the covered EGU;
and
(II) the first year that the
covered EGU achieves (and
thereafter maintains) an
emission limitation that is at
least a 50-percent reduction in
emissions of 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 during the period beginning
on January 1, 2015, and ending on December 31, 2019,
shall be ineligible to receive emission allowances
under this section if the covered EGU, on commencement
of operations (and thereafter), does not achieve and
maintain an emission limitation that is at least a 50-
percent reduction in emissions of carbon dioxide
produced by the covered EGU, measured on an annual
basis, as determined in accordance with section
812(b)(2).
(4) Egus receiving advanced distribution.--
(A) In general.--For an EGU that receives an
advanced distribution of emission allowances,
the Administrator shall reduce and recover, as
applicable, the quantity of emission allowances
that the owner or operator of the EGU has
received and remains eligible to receive under
this section, which shall be equal to the
product obtained by multiplying--
(i) 20 percent; and
(ii) the number of years, if any,
that have elapsed between--
(I) the date that is 18
months after--
(aa) in the case of
an EGU that was
initially permitted
during the period
beginning on January 1,
2009, and ending on
December 31, 2014, the
date of commencement of
operation of the EGU;
or
(bb) in the case of
an EGU that was
initially permitted
prior to January 1,
2009, the date that is
3 years after the date
on which the project
owner receives an
advanced distribution
for that EGU under
subsection (h)(3)(B);
and
(II) the first year that the
EGU achieves (and thereafter
maintains) an emission
limitation that is at least a
50-percent reduction in
emissions of carbon dioxide
produced by the EGU, measured
on an annual basis.
(B) Extension.--
(i) In general.--If an owner or
operator of an EGU that receives an
advanced distribution of emission
allowances determines that the owner or
operator will not be able to achieve at
least a 50-percent reduction in
emissions of carbon dioxide produced by
the EGU, as measured on an annual
basis, by the date specified in
subparagraph (A)(ii)(I), the owner or
operator may petition the Administrator
to extend that date by not more than 18
months.
(ii) Time of submission of
petition.--The owner or operator shall
submit a petition described in clause
(i) to the Administrator as soon as
practicable after the date on which the
basis for the petition arises.
(iii) Conditions for extension.--The
Administrator shall prescribe, by
regulation, the conditions under which
an extension under clause (i) may be
granted, including--
(I) an inability of an EGU to
sequester at the site, despite
due diligence having been
undertaken; and
(II) legal challenges to the
implementation of the carbon
capture and permanent
sequestration technology.
(g) Industrial Sources.--
(1) Emission allowances.--The Administrator--
(A) may distribute not more than 15 percent
of the emission allowances allocated under
section 771(a)(6) for any vintage year to the
owners or operators of eligible industrial
sources to support the commercial-scale
deployment of carbon capture and permanent
sequestration technologies at those sources;
and
(B) notwithstanding any other provision of
law--
(i) may distribute to eligible
industrial sources not more than 15
percent of the emission allowances
allocated under section 771(a)(6) for
any vintage year in the second tranche
of phase I; but
(ii) may not distribute those
allowances for any vintage year in the
first tranche of phase I.
(2) Distribution.--
(A) In general.--The Administrator shall
prescribe, by regulation, 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 emission allowances to
qualifying projects on the basis of tons of
carbon dioxide captured and permanently
sequestered.
(B) Method.--The Administrator may provide
for the distribution of emission allowances
pursuant to--
(i) a reverse auction method similar
to the method described in subsection
(e)(3), including the use of separate
auctions for different project
categories; or
(ii) an incentive schedule similar to
the schedule described in subsection
(e)(4), which shall ensure that
incentives are established so as to
satisfy the requirement described in
subsection (e)(4)(E).
(3) Revision of regulations.--The Administrator shall
review and, as appropriate, revise the regulations
under this subsection not less frequently than once
every 8 years.
(h) Certification and Distribution.--
(1) Certification.--
(A) Request.--
(i) Phase i; alternative distribution
method.--In the case of a qualifying
project that is eligible to receive
allowances under phase I or under
subsection (e)(4), at any time prior to
placing a carbon capture and permanent
sequestration project into commercial
operation, the owner or operator of the
planned project may request from the
Administrator a certification that the
project is eligible to receive emission
allowances under this section.
(ii) Reverse auctions.--In the case
of a qualifying project that wins a
reverse auction under subsection (e) or
(g), within a reasonably brief period
following completion of the auction (as
specified by the Administrator), the
owner or operator of the qualifying
project shall request from the
Administrator a certification that the
project is eligible to receive emission
allowances under this section.
(iii) Eligible projects.--Eligible
projects in phase I and phase II may
receive certification under this
paragraph.
(iv) Issuance.--Not later than 90
days after the date on which the
Administrator determines that the owner
or operator of the planned project has
submitted complete documentation
pursuant to subparagraph (B), the
Administrator shall issue a
certification described in this
subparagraph--
(I) if the owner or operator
demonstrates a commitment to
construct and operate a project
that satisfies--
(aa) the eligibility
criteria of subsection
(c); and
(bb) the requirements
of this paragraph; and
(II) that is based on the
consideration by the
Administrator of the
documentation submitted
pursuant to subparagraph (B),
as well as other relevant
information, as determined by
the Administrator, in
consultation with the owner or
operator.
(B) Documentation.--
(i) In general.--The Administrator
shall prescribe, by regulation, the
documentation necessary for making a
determination of project eligibility
for the certification under
subparagraph (A), including--
(I) in the case of a planned
project receiving an advanced
distribution of emission
allowances, a commitment to
implement carbon and permanent
sequestration technology upon
commencement of operation, to
meet the eligibility
requirements of (c)(1) by not
later than 18 months after the
date of commencement of
operation;
(II) technical information
regarding the carbon capture
and permanent sequestration
technology, coal type,
geological formation type (if
applicable), and other relevant
design features that are
planned for the project;
(III) the annual reductions
in carbon dioxide emissions
that the carbon capture and
permanent sequestration
technology is projected to
achieve during each of the
first 10 years that the project
achieves commercial operation;
(IV) a demonstration that the
owner or operator is committed
to both constructing and
operating the planned project
on a timeline marked by
reasonable milestones, through
the completion of 1 of the
actions specified in
subparagraph (C)(iii);
(V) the amount of Federal
funding the project owner has
received, if any, to cover the
costs of constructing a project
that is eligible under this
paragraph; and
(VI) an assessment of the
costs of constructing the
project, which shall serve as a
basis for the determination of
the Administrator regarding
advanced distributions under
paragraph (3)(C).
(ii) Nonretrofit application.--In the
case of a project that is not a
retrofit application, the assessment of
costs described in clause (i)(VI) shall
include an assessment of the costs of
constructing the electric generating
unit or industrial source that will
produce the flue gas or fuel gas to be
treated by the carbon capture and
permanent sequestration technology.
(C) Commitment.--
(i) In general.--Subject to clause
(ii), the completion of any 1 of the
qualifying actions specified under
clause (iii) shall constitute a
commitment to construct and operate a
planned carbon capture and permanent
sequestration project.
(ii) Condition.--In the case of a
qualifying action specified in
subclause (I) or (II) of clause (iii),
the completion of such an action may be
subject to a condition that the
Administrator will issue a
certification under this paragraph for
the distribution of emission allowances
to the project.
(iii) Qualifying actions.--Qualifying
actions under this subparagraph shall
include--
(I) the execution of--
(aa) a commitment by
lenders or other
appropriate entities to
finance the project,
which may be subject to
customary closing
conditions that are
associated with the
execution of the
commitment;
(bb) an authorization
by a State regulatory
authority to allow
recovery, from the
retail customers of
such electric utility,
of the costs of the
project by a State-
regulated electric
utility that plans to
construct the project;
or
(cc) an authorization
by a State legislature
to allow recovery, from
the retail customers of
electric utilities that
are required to
purchase some or all of
the electricity from
the project pursuant to
State law, of the costs
of the project, on the
conditions that the
project has been
approved by the
legislature and, under
State law, retail
electric providers are
required collectively
to purchase all of the
net electric output
from the project; and
(II) a commitment by the
owner or operator of the
project to execute a surety
bond in sufficient amounts by
not later than 2 years after
the date on which the
Administrator issues the
certification for the project.
(D) Content of certification.--The
Administrator shall prescribe, by regulation,
the required content of each certification
issued under this paragraph, including--
(i) the annual reductions in carbon
dioxide emissions that the carbon
capture and sequestration technology
the owner or operator of the planned
project commits to achieve during each
of the first 10 years that the project
is in commercial operation, as
specified in section 812;
(ii) the construction and operating
milestones to which the owner or
operator of the planned project
commits;
(iii) a certification that the
documentation submitted under
subparagraph (B) is true and accurate;
(iv) for those sources that have
received advanced distribution of
emission allowances under paragraph
(3)(B), the repayment periods that the
Administrator has specified pursuant to
paragraph (3)(D)(v) as of the effective
date of the certification; and
(v) such other requirements as may be
necessary to govern the advanced
distribution of emission allowances
between the Administrator and the owner
or operator of the planned project,
subject to the requirements of this
subsection.
(E) Failure to request certification.--
(i) In general.--An owner or operator
may elect not to request a
certification on the eligibility of a
planned project under subparagraph (A)
prior to the commercial operation of
the project.
(ii) Determination by
administrator.--If an owner or operator
elects not to request a certification
under clause (i), the Administrator
shall make a determination regarding
whether the project satisfies the
eligibility requirements of subsection
(c) at the time that the Administrator
makes a determination regarding the
annual distribution of emission
allowances under paragraph (3)(A).
(2) Reservation of emission allowances.--
(A) Amount.--
(i) In general.--For each project
that receives a certification of
eligibility under paragraph (1), the
Administrator shall reserve on a first-
come, first-served basis a portion of
the emission allowances that are
allocated for the deployment of carbon
capture and permanent sequestration
technology under section 771(a)(6).
(ii) Determination.--The reservation
of emission allowances for a particular
eligible project under this paragraph
shall be equal to the number of
emission allowances that the project
would be entitled to receive under the
applicable distribution method under
this section upon commercial operation
of the carbon capture and permanent
sequestration technology, as determined
by the Administrator based on--
(I) the applicable bonus
allowance value;
(II) the number of tons of
carbon dioxide emissions
projected to be avoided through
the use of carbon capture and
permanent sequestration
technologies during each
calendar year under paragraph
(1)(B)(i)(II); and
(III) a discount rate to
account for the increase in the
monetary inflation that may be
expected to occur during each
of the relevant 10 calendar
years, as determined by the
Administrator.
(B) Termination of reservation.--
(i) In general.--A reservation of
emission allowances for a particular
project under subparagraph (A) shall
terminate if the Administrator
determines that the owner or operator
has failed to achieve a reasonable
number of milestones for commencing
construction or commercial operation of
the project, as specified under
paragraph (1)(B)(i)(III).
(ii) Reduced quantity of carbon
dioxide captured and sequestered.--If
the quantity of carbon dioxide
emissions avoided through the operation
of the carbon capture and permanent
sequestration project on average over 3
consecutive calendar years is less than
the quantity specified for those
calendar years under subparagraph (A),
the reservation of emission allowances
for the project under subparagraph (A)
shall be reduced in future years by the
difference between--
(I) the quantity of carbon
dioxide emissions avoided
through operation of the carbon
capture and permanent
sequestration project on
average over the applicable 3
consecutive years; and
(II) the quantity specified
under subparagraph (A) for the
applicable years.
(iii) Availability.--The
Administrator shall immediately make
available to other eligible projects
emission allowances for which the
Administrator has terminated an
emission allowance reservation for a
particular project under this
subparagraph.
(3) Distribution process.--
(A) Annual distribution.--
(i) In general.--The Administrator
shall distribute the emission
allowances to eligible projects on an
annual basis.
(ii) Basis.--The annual distribution
of emission allowances shall be based
on the total tons of carbon dioxide
emissions avoided through operation of
the carbon capture and permanent
sequestration project during each of
the first 10 years of commercial
operation, in accordance with
subsection (c)(2).
(iii) Total distribution amount.--The
total amount of emission allowances
distributed to an eligible project for
each of the first 10 years of
commercial operation may be greater
than, or less than, the quantity of
emissions allowances that the
Administrator has reserved for the
eligible project under paragraph (2).
(iv) Reports.--
(I) In general.--Except as
provided in subparagraph (B),
the Administrator shall make
each annual distribution of
emission allowances by not
later than 90 days after the
date on which the owner or
operator of a project submits
to the Administrator a report
regarding the tons of carbon
dioxide emissions avoided for
that year through operation of
the carbon capture and
permanent sequestration
project.
(II) Requirement.--A report
under subclause (I) shall be
verified in accordance with
regulations to be promulgated
by the Administrator.
(B) Advanced distribution.--
(i) In general.--The Administrator
may provide an advanced distribution of
emission allowances to the projects--
(I) that receive emission
allowances under the phase I
distributions authorized by
subsection (d); and
(II) for which the
Administrator has issued a
certification of eligibility
under paragraph (1).
(ii) Requirements.--An advanced
distribution of emission allowances for
a particular project shall be
provided--
(I) prior to the operational
phase of the project, at an
appropriate milestone that best
ensures the expeditious
deployment of the carbon
capture and permanent
sequestration technology, as
determined by the
Administrator;
(II) in a quantity that
equals a percentage, as
specified in subparagraph (C),
of the total number of emission
allowances that the
Administrator has reserved for
that project during the 10-year
period of commercial operation;
and
(III) using allowances that
are drawn--
(aa) from the current
vintage year; or
(bb) if the
allowances are
exhausted from the
current vintage year,
in order from
successive vintage
years, beginning with
the most proximate
future vintage year.
(iii) Reports.--
(I) In general.--The owner or
operator of a planned project
that receives an advanced
distribution of emission
allowances shall submit to the
Administrator, not later than
90 days after the end of each
calendar year, a report
describing the tons of carbon
dioxide emissions avoided for
that year through operation of
the carbon capture and
permanent sequestration project
, compared to the total tons of
carbon dioxide emissions
generated by the unit on which
the planned project is
implemented.
(II) Requirement.--A report
under subclause (I) shall be
verified in accordance with
regulations promulgated by the
Administrator.
(III) Avoidance of
duplicative reporting.--If the
unit on which a planned project
is implemented already submits
the information required by
subclause (I) to the
Administrator pursuant to
another reporting requirement,
the owner or operator of the
planned project may refer the
Administrator to the other
submission in which the
required information is
provided.
(C) Percentages.--
(i) In general.--Subject to clauses
(ii) and (iii), the Administrator shall
apply the following percentages for
determining the advanced distribution
of emission allowances:
(I) 70 percent of the
emission allowance reservation
for the first tranche under
subsection (d)(2)(A).
(II) 50 percent of the
emission allowance reservation
for the second tranche under
subsection (d)(2)(B).
(ii) Costs less than value of
allowances.--If the costs described in
clause (iii) are less than the monetary
value of allowances represented by the
percentages described in clause (i) at
the time of advanced distribution, the
advanced distribution shall be limited
to an amount that is equivalent to the
costs described in clause (iii).
(iii) Costs.--
(I) In general.--For retrofit
projects, the advanced
distribution shall equate to
100 percent of the costs of
permitting, design or
engineering, labor, materials,
land, and equipment associated
with the construction and
installation of the system to
capture, compress, transport,
and store carbon dioxide
(including design changes to
the associated generating unit
needed to accommodate the
carbon dioxide capture and
compression system).
(II) New electric generating
units.--For new projects--
(aa) the advanced
distribution shall
equate to 100 percent
of the incremental
permitting, design or
engineering, labor,
materials, land, and
equipment cost
differences between--
(AA) a new
coal power
plant with
carbon capture
and storage;
and
(BB) a new
coal power
plant without
carbon capture
and storage in
the location
where the new
coal power
plant is being
constructed,
and for the
same intended
service
territory
absent carbon
capture and
storage; and
(bb) it shall be the
responsibility of the
organization that is
requesting advanced
distributions to
provide to the
Administrator a cost
estimate for both the
new coal power plant
with carbon capture and
storage and a new coal
power plant without
carbon capture and
storage.
(III) Reduction.--For the
purposes of this subparagraph,
the costs under this clause
shall be reduced by the amounts
documented under paragraph
(1)(B)(i)(V).
(D) Reconciliation for advanced payments.--
(i) In general.--In the case of a
project that receives an advanced
distribution of emission allowances
under this paragraph, the Administrator
shall distribute annually the remainder
of emission allowances reserved under
paragraph (2) once the carbon capture
and permanent sequestration technology
begins commercial operation.
(ii) Timing of distribution.--The
annual distribution of emission
allowances under clause (i) shall take
place not later than 60 days after the
end of each calendar year.
(iii) Calculation of remaining
distribution.--Subject to clauses (iv)
and (v), the remaining distribution
referred to in clause (i) shall
annually be calculated upward or
downward as the difference between--
(I) the number of allowances
that were reserved for the
project in the relevant
calendar year under paragraph
(2)(A)(ii)(II); and
(II) the number of allowances
that the project would be
eligible to receive under the
bonus allowance formula
described in subsection
(c)(2)(B)(i) based on the tons
of carbon dioxide emissions
that were avoided through
operation of the carbon capture
and permanent sequestration
project during the relevant
calendar year.
(iv) Number of allowances.--For
purposes of clauses (iii)(II) and
(viii)(I), for the purposes of
calculating the number of allowances
under subsection (c)(2)(B)(i), the
Administrator shall enter the average
fair market value of emission
allowances in the year specified under
subsection (c)(2)(B)(i)(II)(bb)).
(v) Methods of reconciliation.--
(I) In general.--If, in any
calendar year, the number of
tons of carbon dioxide
emissions projected to be
avoided for that year under
paragraph (1)(B)(i)(III) is
greater than the number of tons
of carbon dioxide emissions
that were actually avoided by a
project during that year, based
on the report submitted to the
Administrator under paragraph
(3)(B)(iii), the difference may
be accounted for by--
(aa) the owner or
operator of the project
capturing and storing
an additional quantity
of emissions that
cumulatively exceeds
the difference
between--
(AA) the
number of tons
of carbon
dioxide
emissions that
were projected
to be avoided
for the
relevant
calendar year
under paragraph
(1)(B)(i)(II);
and
(BB) the
number of tons
of carbon
dioxide
emissions that
were actually
avoided through
operation of
the project
during that
year;
(bb) the
Administrator adjusting
the annual
distributions under
clause (iii), on the
condition that the
reduction shall be
sufficient to account
for the difference
described in this
subclause within the
period specified by the
Administrator in
subclause (II); or
(cc) the owner or
operator of the project
making a repayment in
accordance with clause
(vi).
(II) Period.--Compliance with
subclause (I)(aa) shall occur
over a period to be specified
by the Administrator, but not
to exceed 18 months.
(III) Interest.--The
Administrator may apply an
appropriate rate of interest to
the repayment requirement under
this clause.
(vi) Alternate repayment by
allowances or cash.--If the owner or
operator of the project elects to
comply by repaying in accordance with
clause (v)(I)(aa), during the period
specified by the Administrator under
clause (v)(II), the owner or operator
shall repay the Administrator an amount
of allowances or cash (as calculated
under clause (viii)) if--
(I) the number of tons of
carbon dioxide emissions that
were actually avoided through
operation of the project during
that period is less than the
number necessary to rectify the
difference described in clause
(v)(I); and
(II) the number of allowances
remaining reserved for a
project is insufficient to
adjust for the difference under
clause (iii).
(vii) Milestones.--If the
Administrator determines that the owner
or operator failed to achieve a
milestone for commencing construction
or commercial operation of the project
(as specified in paragraph (1)(B)), the
owner or operator shall repay the
Administrator an amount of allowances
or cash calculated under clause (viii).
(viii) Calculation.--The repayments
required under clauses (vi)(I) and
(vii) shall be equal to, at the option
of the owner or operator of the
project--
(I) the difference between
the numbers of allowances
described in subclauses (I) and
(II) of clause (iii); or
(II) a cash payment in an
amount equal to the product
obtained by multiplying--
(aa) the difference
between the numbers of
allowances described in
subclauses (I) and (II)
of clause (iii); and
(bb) the average fair
market value of an
emission allowance
during the year in
which the repayment
would be made under
clause (vi).
(ix) Use of repaid amounts.--The
Administrator shall use amounts
received as repayments under this
subparagraph to support the deployment
of carbon capture and permanent
sequestration.
(i) Limitations.--
(1) In general.--Emission allowances shall be
distributed under this section only for tons of carbon
dioxide emissions that are captured and sequestered in
accordance with this section.
(2) Period.--A qualifying project may receive annual
emission allowances under this section only for the
first 10 years of operation.
(3) Capacity.--
(A) In general.--Approximately 72 gigawatts
of total cumulative treated generating capacity
may receive emission allowances under this
section.
(B) Allowance surplus.--On reaching the
cumulative capacity described in subparagraph
(A), any emission allowances that are allocated
for carbon capture and permanent sequestration
deployment under section 771(a)(6) and are not
yet obligated under this section shall be
treated as emission allowances not designated
for distribution for purposes of section
771(b)(2).
(j) Exhaustion of Account and Annual Roll-over of Surplus
Emission Allowances.--
(1) In general.--In distributing emission allowances
under this section, the Administrator shall ensure that
eligible projects receive distributions of emission
allowances for the first 10 years of commercial
operation.
(2) Different vintage years.--
(A) Determination.--If the Administrator
determines that the emission allowances
allocated under section 771(a)(6) 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 emission allowances from vintage years
after the year of the distribution.
(B) Diversity factors.--If the Administrator
provides allowances to new eligible projects
under subparagraph (A), the Administrator shall
promulgate regulations to prioritize new
eligible projects that are distinguished from
prior recipients of allowances by 1 or more of
the following diversity factors (without regard
to order):
(i) Location in a coal-producing
region that provides a majority of coal
to the project.
(ii) Coal type, including waste coal.
(iii) Capture and transportation
technologies.
(iv) Geological formations.
(v) New units and retrofit
applications.
(k) Davis-Bacon Compliance.--
(1) In general.--All laborers and mechanics employed
on projects funded directly by or assisted in whole or
in part by this section through the use of emission
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 of chapter 31 of title
40, United States Code.
(2) Authority.--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. 781. 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.
SEC. 782. EARLY ACTION RECOGNITION.
(a) In General.--Emission allowances allocated pursuant to
section 771(a)(7) shall be distributed by the Administrator in
accordance with this section. Not later than 1 year after the
date of enactment of this title, the Administrator shall issue
regulations allowing--
(1) any person in the United States to exchange
instruments in the nature of offset credits issued
before January 1, 2009, by a State, local, or voluntary
offset program with respect to which the Administrator
has made an affirmative determination under section
740(a)(2), for emission allowances established by the
Administrator under section 721(a); and
(2) the Administrator to provide compensation in the
form of emission allowances to entities, including
units of local government, that do not meet the
criteria of paragraph (1) and meet the criteria of this
paragraph for documented early reductions or avoidance
of greenhouse gas emissions or greenhouse gases
sequestered before January 1, 2009, from projects or
process improvements begun before January 1, 2009,
where--
(A) the entity publicly stated greenhouse gas
reduction goals and publicly reported against
those goals;
(B) the entity demonstrated entity-wide net
greenhouse gas reductions; and
(C) the entity demonstrates the actual
projects or process improvements undertaken to
make reductions and documents the reductions
(such as through documentation of engineering
projects).
(b) Regulations.--Regulations issued under subsection (a)
shall--
(1) provide that a person exchanging credits under
subsection (a)(1) receive emission allowances
established under section 721(a) in an amount for which
the monetary value is equivalent to the average
monetary value of the credits during the period from
January 1, 2006, to January 1, 2009, as adjusted for
inflation to reflect current dollar values at the time
of the exchange;
(2) provide that a person receiving compensation for
documented early action under subsection (a)(2) shall
receive emission allowances established under section
721(a) in an amount that is approximately equivalent in
value to the carbon dioxide equivalent per ton value
received by entities in exchange for credits under
paragraph (1) (as adjusted for inflation to reflect
current dollar values at the time of the exchange), as
determined by the Administrator;
(3) provide that only reductions or avoidance of
greenhouse gas emissions, or sequestration of
greenhouse gases, achieved by activities in the United
States between January 1, 2001, and January 1, 2009,
may be compensated under this section, and only credits
issued for such activities may be exchanged under this
section;
(4) provide that only credits that have not been
retired or otherwise used to meet a voluntary or
mandatory commitment, and have not expired, may be
exchanged under subsection (a)(1);
(5) require that, once exchanged, the credit be
retired for purposes of use under the program by or for
which it was originally issued; and
(6) establish a deadline by which persons must
exchange the credits or request compensation for early
action under this section.
(c) Participation.--Participation in an exchange of credits
for allowances or compensation for early action authorized by
this section shall not preclude any person from participation
in an offset credit program established under part D.
SEC. 783. ESTABLISHMENT OF DEFICIT REDUCTION FUND.
(a) Deficit Reduction Fund.--There is established in the
Treasury of the United States a fund, to be known as the
`Deficit Reduction Fund'.
(b) Disbursements.--No disbursement shall be made from the
Deficit Reduction Fund except pursuant to an appropriation Act.
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
meanings given those terms in title VII.
PART A--STATIONARY SOURCE STANDARDS
SEC. 811. STANDARDS OF PERFORMANCE.
(a) Definition of Uncapped Greenhouse Gas Emissions.--In this
section, the term `uncapped greenhouse gas emissions' means
those greenhouse gas emissions to which section 722 does not
apply.
(b) Standards.--Before January 1, 2020, the Administrator
shall not promulgate new source performance standards for
greenhouse gases under section 111 that are applicable to any
stationary source that--
(1) emits uncapped greenhouse gas emissions; and
(2) qualifies as an eligible offset project pursuant
to section 733 that is eligible to receive an offset
credit pursuant to section 737.
* * * * * * *
SEC. 812. PERFORMANCE STANDARDS FOR NEW COAL-FIRED POWER PLANTS.
(a) Definitions.--In this section:
(1) Covered egu.--The term `covered EGU' means a
utility unit that is--
(A) required to have a permit under section
503(a); and
(B) authorized under State or Federal law to
derive at least 30 percent of the annual heat
input of the unit from--
(i) coal;
(ii) petroleum coke; or
(iii) any combination of those fuels.
(2) Initially permitted.--
(A) In general.--The term `initially
permitted', with respect to a covered EGU,
means that--
(i) the owner or operator of the
covered EGU has received a
preconstruction approval or permit
under this Act as a new (not modified)
source; but
(ii) administrative review or appeal
of the approval or permit has not been
exhausted.
(B) Calculation.--A subsequent modification
of any approval or permit described in
subparagraph (A), ongoing administrative or
court review, appeals, challenges, or the
existence or tolling of any time to pursue
additional review, appeals, or challenges shall
not affect the date on which a covered EGU is
considered to be initially permitted for
purposes of this paragraph.
(b) Standards.--
(1) In general.--A covered EGU that is initially
permitted on or after January 1, 2020, shall--
(A) achieve an emission limitation that
represents a 65-percent reduction in emissions
of the carbon dioxide produced by the covered
EGU, as measured on an annual basis; or
(B) meet such more-stringent standard as the
Administrator may establish pursuant to
subsection (c).
(2) Certain covered egus.--
(A) In general.--A covered EGU that is
initially permitted during the period beginning
on January 1, 2009, and ending on December 31,
2019, shall achieve, by the applicable
compliance date established under this
paragraph, an emission limitation that
represents a 50-percent reduction in emissions
of the carbon dioxide produced by the covered
EGU, as measured on an annual basis.
(B) Date of requirement.--Compliance with the
requirement described in subparagraph (A) shall
be required by the earlier of--
(i) the date that is 4 years after
the date on which 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 permanent sequestration technology
that, in the aggregate--
(I) have a total of at least
10 gigawatts of capacity
(including at least 3 gigawatts
which shall be through electric
generating units, and up to 1
gigawatt which may be through
industrial applications (for
which capture and permanent
sequestration of 3,000,000 tons
of carbon dioxide per year on
an aggregate annualized basis
shall be considered equivalent
to 1 gigawatt)), measured as
the sum of--
(aa) the treated
generating capacity (as
defined in section
780(a)) for electric
generating unit
retrofits and
industrial sources; and
(bb) the nameplate
capacity for new
electric generating
units;
``(II) include at least 3
electric generating units, each
with a nameplate generating
capacity of 250 megawatts or
greater, that capture, inject,
and sequester carbon dioxide
into geological formations
other than oil and gas fields;
and
(III) are capturing and
sequestering at least
12,000,000 tons of carbon
dioxide per year, calculated on
an aggregate annualized basis;
or
(ii) January 1, 2020.
(3) Progress review.--
(A) In general.--Not later than June 30,
2017, the Administrator and the Secretary of
Energy shall jointly prepare and submit to
Congress a review of the status of commercial
deployment of carbon capture and permanent
sequestration technology that specifies--
(i) the number of and size of units
in the United States that are capturing
and permanently sequestering carbon
dioxide;
(ii) the tons of carbon dioxide being
captured and permanently sequestered by
those units; and
(iii) the geographical and
technological diversity represented by
those units and that technology.
(B) Finding.--To accompany the report under
subparagraph (A), the Administrator and the
Secretary of Energy shall make a finding that,
in light of the status of commercial deployment
of carbon capture and permanent sequestration
technology, the date set forth in paragraph
(2)(B)(ii) should--
(i) remain in effect; or
(ii) in accordance with subparagraph
(C), be extended to January 1, 2022.
(C) Conditions for extension.--The date set
forth in paragraph (2)(B)(ii) shall be extended
to January 1, 2022, only if--
(i) the Administrator and the
Secretary jointly find, pursuant to
subparagraph (B), that the extension
should occur; and
(ii) Congress acts to approve the
finding by not later than January 1,
2018.
(4) Unit-specific extension.--
(A) In general.--If the deadline for
compliance with paragraph (2) is the date
specified in paragraph (2)(B), the
Administrator may extend the deadline for
compliance by a covered EGU by not more than 18
months if the Administrator makes a
determination, based on a showing by the owner
or operator of the covered EGU, that it will be
technically infeasible for the covered EGU to
meet the standard by that date.
(B) Request.--An owner or operator of a
covered EGU shall submit to the Administrator a
request for an extension under subparagraph (A)
by not later than June 1, 2018.
(C) Public comment.--The Administrator shall
provide for public notice and comment on each
extension request submitted under subparagraph
(B).
(c) Review and Revision of Standards.--Not later than the
date specified in subsection (b)(2)(B), and not less frequently
than once every 5 years thereafter, the Administrator shall--
(1) review the standards for new covered EGUs under
this section; and
(2) by rule, reduce the maximum carbon dioxide
emission rate for new covered EGUs to a rate that
reflects the degree of emission limitation achievable
through the application of the best system of emission
reduction that (taking into account the cost of
achieving the 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 that is 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 storage technology, including
the information described in subsection (b)(2)(A) (including
the cumulative generating capacity to which carbon capture and
storage retrofit projects meeting the criteria described in
section 780(c)(1)(A) has been applied and the quantities of
carbon dioxide captured and sequestered by those 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. GEOLOGICAL STORAGE SITES.
(a) Coordinated Process.--
(1) In general.--The Administrator shall establish a
coordinated approach to certifying and permitting
geological storage, taking into consideration all
relevant statutory authorities.
(2) Requirements.--In establishing such approach, the
Administrator shall--
(A) take into account, and reduce redundancy
with, the requirements of section 1421 of the
Safe Drinking Water Act (42 U.S.C. 300h),
including the rulemaking for geological storage
wells described in the proposed rule entitled
`Federal Requirements Under the Underground
Injection Control (UIC) Program for Carbon
Dioxide (CO2) Geologic Sequestration (GS)
Wells' (73 Fed. Reg. 43492 (July 25, 2008));
and
(B) to the maximum 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 geological storage.
(c) Requirements.--The regulations under subsection (b) shall
include--
(1) a process to obtain certification for geological
storage under this section; and
(2) requirements for--
(A) monitoring, recordkeeping, and reporting
for emissions associated with injection into,
and escape from, geological storage 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 among States, Indian
tribes, and the Environmental Protection
Agency; and
(D) other elements or safeguards necessary to
achieve the purpose described in subsection
(b).
(d) Report.--
(1) In general.--Not later than 2 years after the
date of promulgation of regulations pursuant to
subsection (b), and not less frequently than once every
3 years thereafter, the Administrator shall submit 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 describing
geological storage in the United States, and, to the
extent relevant, other countries in North America.
(2) Inclusions.--Each report under paragraph (1)
shall include--
(A) data regarding injection, emissions to
the atmosphere, if any, and performance of
active and closed geological storage sites,
including those at which enhanced hydrocarbon
recovery operations occur;
(B) an evaluation of the performance of
relevant Federal environmental regulations and
programs in ensuring environmentally protective
geological storage practices;
(C) recommendations on how those programs and
regulations should be improved or made more
effective; and
(D) 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 at the earliest possible date
after such period as the Administrator finds necessary to
permit the development and application of the requisite
technology, giving appropriate consideration to the cost of
compliance within such period, the applicable compliance dates
for other standards, and other appropriate factors, including
the period of time appropriate for the transfer of applicable
technology from other applications, including motor vehicles,
and the period of time in which previously promulgated
regulations have been in effect.
(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) 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.
(d) 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.
(e) 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 Transportation
Efficiency 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) Verification 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 Secretary of Transportation 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) SmartWay Passenger Transport Study.--
(1) In general.--Not later than 1 year after the date
of enactment of this section, the Administrator shall
submit to the Committee on Environment and Public Works
of the Senate and the Committee on Energy and Commerce
of the House of Representatives a report that describes
the results of a study of the commercial passenger
carrier industry, including tour, charter, intercity,
commuter, and other passenger operations.
(2) Inclusions.--The study under paragraph (1) shall
include--
(A) an identification of options for
commercial passenger carriers to promote
energy-efficient, low-greenhouse gas emission
transportation; and
(B) at the discretion of the Administrator,
support for a partnership and recognition
program for those commercial passenger carrier
companies that demonstrate and achieve superior
levels of greenhouse gas emissions performance.
(f) 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 (h).
(g) Purposes.--Under the SmartWay Financing Program, eligible
entities shall--
(1) use funds awarded by the Administrator to provide
flexible loan and/or lease terms that increase approval
rates or lower the costs of loans and/or leases in
accordance with guidance developed by the
Administrator;
(2) make such loans and/or 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; and
(3) use funds provided by the Administrator for
electrification of freight transportation systems in
major national goods movement corridors, giving
priority to electrification of transportation systems
in areas that are gateways for high volumes of
international and national freight transport and
require substantial criteria pollutant emission
reductions in order to attain national ambient air
quality standards.
(h) 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 and/or contracts;
(2) the designation of eligible entities to receive
funding, such as 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; and
(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 and/or rates.
(i) Authorization of Appropriations.--Such sums as necessary
are authorized to be appropriated to the Administrator to carry
out this section.
PART C--TRANSPORTATION EMISSIONS
SEC. 831. GREENHOUSE GAS EMISSION REDUCTIONS THROUGH TRANSPORTATION
EFFICIENCY.
(a) In General.--The Administrator, in consultation with the
Secretary of Transportation (referred to in this part as the
``Secretary''), shall promulgate, and update from time to time,
regulations to establish--
(1) national transportation-related greenhouse gas
emission reduction goals that are commensurate with the
emission reduction goals established under the Clean
Energy Jobs and American Power Act and amendments made
by that Act;
(2) standardized emission models and related methods,
to be used by States, metropolitan planning
organizations, and air quality agencies to address
emission reduction goals, including--
(A) the development of surface
transportation-related greenhouse gas emission
reduction targets pursuant to sections 134 and
135 of title 23, and sections 5303 and 5304 of
title 49, United States Code;
(B) the assessment of projected surface
transportation-related greenhouse gas emissions
from transportation strategies;
(C) the assessment of projected surface
transportation-related greenhouse gas emissions
from State and regional transportation plans;
(D) the establishment of surface
transportation-related greenhouse gas emission
baselines at a national, State, and regional
levels; and
(E) the measurement and assessment of actual
surface transportation-related emissions to
assess progress toward achievement of emission
targets at the State and regional levels;
(3) methods for collection of data on transportation-
related greenhouse gas emissions; and
(4) publication and distribution of successful
strategies employed by States, Indian tribes,
metropolitan planning organizations, and other entities
to reduce transportation-related greenhouse gas
emissions.
(b) Role of Department of Transportation.--The Secretary, in
consultation with the Administrator, shall promulgate, and
update from time to time, regulations--
(1) to improve the ability of transportation planning
models and tools, including travel demand models, to
address greenhouse gas emissions;
(2) to assess projected surface transportation-
related travel activity and transportation strategies
from State and regional transportation plans; and
(3) to update transportation planning requirements
and approval of transportation plans as necessary to
carry out this section.
(c) Consultation and Models.--In promulgating the
regulations, the Administrator and the Secretary--
(1) shall consult with States, Indian tribes,
metropolitan planning organizations, and air quality
agencies;
(2) may use existing models and methodologies if the
models and methodologies are widely considered to
reflect the best practicable modeling or methodological
approach for assessing actual and projected
transportation-related greenhouse gas emissions from
transportation plans and projects; and
(3) shall consider previously developed plans that
were based on models and methodologies for reducing
greenhouse gas emissions in applying those regulations
to the first approvals after promulgation.
(d) Timing.--The Administrator and the Secretary shall--
(1) publish proposed regulations under subsections
(a) and (b) not later than 1 year after the date of
enactment of this section; and
(2) promulgate final regulations under subsections
(a) and (b) not later than 18 months after the date of
enactment of this section.
(e) Assessment.--
(1) In general.--At least every 6 years after
promulgating final regulations under subsections (a)
and (b), the Administrator and the Secretary shall
jointly assess current and projected progress in
reducing national transportation-related greenhouse gas
emissions.
(2) Requirements.--The assessment shall examine the
contributions to emission reductions attributable to--
(A) improvements in vehicle efficiency;
(B) greenhouse gas performance of
transportation fuels;
(C) reductions in vehicle miles traveled;
(D) changes in consumer demand and use of
transportation management systems; and
(E) any other greenhouse gas-related
transportation policies enacted by Congress.
(3) Results of assessment.--The Secretary and the
Administrator shall consider--
(A) the results of the assessment conducted
under this subsection; and
(B) based on those results, whether technical
or other updates to regulations required under
this section and sections 134 and 135 of title
23, and sections 5303 and 5304 of title 49,
United States Code, are necessary.
* * * * * * *
SEC. 832. TRANSPORTATION GREENHOUSE GAS EMISSION REDUCTION PROGRAM
GRANTS.
(a) In General.--The Secretary of Transportation (referred to
in this section as the `Secretary') shall provide grants to
States and metropolitan planning organizations to carry out the
purposes of this section for each fiscal year--
(1) to support the developing and updating of
transportation greenhouse gas reduction targets and
strategies; and
(2) to provide financial assistance to implement
plans approved pursuant to--
(A) sections 134(k)(6) and 135(f)(9) of title
23, United States Code; and
(B) sections 5303(k)(6) and 5304(f)(9) of
title 49, United States Code.
(b) Planning Grants.--
(1) In general.--Subject to paragraph (2), the
Secretary shall allocate not more than 10 percent of
the funds available to carry out this section for a
fiscal year for metropolitan planning organizations to
develop and update transportation plans, including
targets and strategies for greenhouse gas emission
reduction under--
(A) sections 134(k)(6) and 135(f)(9) of title
23, United States Code; and
(B) sections 5303(k)(6) and 5304(f)(9) of
title 49, United States Code.
(2) Eligible organizations.--The Secretary shall
distribute the funds available in (1) to metropolitan
planning organizations (as defined in section 134(k)(7)
of title 23, United States Code) in the proportion
that--
(A) the population within such a metropolitan
planning organization; bears to
(B) the total population of all such
metropolitan planning organizations.
(c) Performance Grants.--
(1) In general.--After allocating funds pursuant to
subsection (b)(1), and subject to subsection (h), the
Secretary shall use the remainder of amounts made
available to carry out this section to provide grants
to States and metropolitan planning organizations.
(2) Criteria.--In providing grants under this
subsection, the Secretary, in consultation with the
Administrator, shall develop criteria for providing the
grants, taking into consideration, with respect to
areas to be covered by the grants--
(A) the quantity of total greenhouse gas
emissions to be reduced as a result of
implementation of a plan, within a covered
area, as determined by methods established
under section 831(a);
(B) the quantity of total greenhouse gas
emissions to be reduced per capita as a result
of implementation of a plan, within the covered
area, as determined by methods established
under section 831(a);
(C) the cost-effectiveness of reducing
greenhouse gas emissions during the life of the
plan;
(D) progress toward achieving emission
reductions target established under--
(i) sections 134(k)(6) and 135(f)(9)
of title 23, United States Code; and
(ii) sections 5303(k)(6) and
5304(f)(9) of title 49, United States
Code;
(E) reductions in greenhouse gas emissions
previously achieved by States and metropolitan
planning organizations during the 5-year period
beginning on the date of enactment of this Act;
(F) plans that increase transportation
options and mobility, particularly for low-
income individuals, minorities, the elderly,
households without motor vehicles, cost-
burdened households, and the disabled; and
(G) other factors, including innovative
approaches, minimization of costs, and
consideration of economic development, revenue
generation, consumer fuel cost-savings, and
other economic, environmental and health
benefits, as the Secretary determines to be
appropriate.
(d) Requirement for Reduced Emissions.--A performance grant
under subsection (c) may be used only to fund strategies that
demonstrate a reduction in greenhouse gas emissions that is
sustainable over the life of the applicable transportation
plan.
(e) Cost-sharing.--The Federal share of the costs of a
project receiving Federal financial assistance under this
section shall be 80 percent.
(f) Compliance With Applicable Laws.--
(1) In general.--Subject to paragraph (2), a project
receiving funds under this section shall comply with
all applicable Federal laws (including regulations),
including--
(A) subchapter IV of chapter 31 of title 40,
United States Code; and
(B) applicable requirements of titles 23 and
49, United States Code.
(2) Eligibility.--Project eligibility shall be
determined in accordance with this section.
(3) Determination of applicable modal requirements.--
The Secretary shall--
(A) have the discretion to designate the
specific modal requirements that shall apply to
a project; and
(B) be guided by the predominant modal
characteristics of the project in the event
that a project has cross-modal application.
(g) Additional Requirements.--
(1) In general.--As a condition on the receipt of
financial assistance under this section, the interests
of public transportation employees affected by the
assistance shall be protected under arrangements that
the Secretary of Labor determines--
(A) to be fair and equitable; and
(B) to provide benefits equal to the benefits
established under section 5333(b) of title 49,
United States Code.
(2) Wages and benefits.--Laborers and mechanics
employed on projects funded with amounts made available
under this section shall be paid wages and benefits not
less than those determined by the Secretary of Labor
under subchapter IV of chapter 31 of title 40, United
States Code, to be prevailing in the same locality.
(h) Administrative Expenses.--Not more than 5 percent of the
funds made available to carry out this section may be used by
the Secretary to pay the administrative expenses necessary to
carry out this section for a fiscal year.
(i) Miscellaneous.--
(1) Road-use and congestion pricing measures.--All
projects funded by amounts made available under this
section shall be eligible to receive amounts collected
through road-use and congestion pricing measures.
(2) Limitations.--The Administrator may not approve
any transportation plan for a project that would be
inconsistent with existing design, procurement, and
construction guidelines established by the Department
of Transportation.
(3) Subgrantees.--With the approval of the Secretary,
recipients of funding under this section may enter into
agreements providing for the transfer of funds to
private transportation providers or noneligible public
entities (such as local governments, air quality
agencies, zoning commissions, special districts and
transit agencies) that have statutory responsibility or
authority for actions necessary to implement the
strategies pursuant to--
(A) sections 134(k)(6) and 135(f)(9) of title
23, United States Code; and
(B) sections 5303(k)(6) and 5304(f)(9) of
title 49, United States Code.
* * * * * * *
Part D--Plan Requirements for Nonattainment Areas
* * * * * * *
PART E--BLACK CARBON
SEC. 851. BLACK CARBON.
(a) Domestic Black Carbon Mitigation.--
(1) In general.--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, the Administrator shall--
(A) not later than 2 years after the date of
enactment of this part, propose--
(i) regulations applicable to
emissions of black carbon under the
existing authorities of this Act; or
(ii) a finding that existing
regulations promulgated pursuant to
this Act adequately regulate black
carbon emissions, which finding may be
based on a finding that existing
regulations, in the judgment of the
Administrator--
(I) address those sources
that both contribute
significantly to the total
emissions of black carbon and
provide the greatest potential
for significant and cost-
effective reductions in
emissions of black carbon,
under the existing authorities;
and
(II) reflect the greatest
degree of emission reduction
achievable through application
of technology that will be
available for such sources,
giving appropriate
consideration to cost, energy,
and safety factors associated
with the application of such
technology; and
(B) not later than 3 years after the date of
enactment of this part, promulgate final
regulations under the existing authorities of
this Act or finalize the proposed finding.
(2) Applicability of regulations.--Regulations
promulgated under paragraph (1) shall not apply to
specific types, classes, categories, or other suitable
groupings of emission sources that the Administrator
finds are subject to adequate regulation.
(b) Authorization of Appropriations.--There are authorized to
be appropriated such sums as are necessary to carry out this
section.
* * * * * * *
PART F--MISCELLANEOUS
SEC. 861. STATE PROGRAMS.
(a) In General.--Notwithstanding section 116, if a Federal
auction is conducted, by the deadline of March 31, 2011, as
established in section 778, no State or political subdivision
thereof shall implement or enforce a comprehensive greenhouse
gas emission limitation program that covers any capped
emissions emitted during the years 2012 through 2017.
(b) Deadline.--Notwithstanding section 116, in the event the
March 31, 2011 auction is delayed, no State or political
subdivision thereof shall enforce a comprehensive greenhouse
gas emission limitation program that covers any capped
emissions emitted during the period that commences at least 9
months after the date of the first auction as set out in
section 778, through 2017.
(c) Definition of Comprehensive Greenhouse Gas Emission
Limitation Program.--For purposes of this section, the term
`comprehensive greenhouse gas emission limitation 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 tradable
instruments for each unit of greenhouse gases emitted during a
compliance period. For purposes of this section, a
`comprehensive greenhouse gas emission limitation 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 tradable instruments in the nature of
emission allowances. For purposes of this section, the term
`comprehensive greenhouse gas emission limitation 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 Clean Energy Jobs and
American Power Act.
SEC. 863. REDUCING ACID RAIN AND MERCURY POLLUTION.
(a) In General.--Not later than 18 months after the date of
enactment of this part, the Administrator shall submit to
Congress a report that analyzes the effects of different carbon
dioxide reduction strategies and technologies on the emissions
of mercury, sulfur dioxide, and nitrogen oxide, which cause
acid rain, particulate matter, ground-level ozone, mercury
contamination, and other environmental problems.
(b) Inclusions.--The report under subsection (a) shall
include--
(1) an assessment of a variety of carbon reduction
technologies, including the application of various
carbon capture and sequestration technologies for new
and existing power plants;
(2) an assessment of the current scientific and
technical understanding of the interplay between the
various technologies and emissions of air pollutants;
(3) identification of hurdles to strategies that
could cost-effectively reduce emissions of multiple
pollutants; and
(4) appropriate recommendations of the Administrator,
if any.
* * * * * * *
[TITLE IV--NOISE POLLUTION]TITLE IX--NOISE POLLUTION
Sec. [401]901. This title may be cited as the ``Noise
Pollution and Abatement Act of 1970''.
Sec. [402]902. (a) The Administrator shall establish within
the the Environmental Protection Agency an Office of Noise
Abatement and Control, and shall carry out through such Office
a full and complete investigation and study of noise and its
effect on the public health and welfare in order to (1)
identify and classify causes and sources of noise, and (2)
determine--
(A) effects at various levels;
(B) projected growth of noise levels in urban areas
through the year 2000;
(C) the psychological and physiological effect on
humans;
(D) effects of sporadic extreme noise (such as jet
noise near airports) as compared with constant noise;
(E) effect on wildlife and property (including
values);
(F) effect of sonic booms on property (including
values); and
(G) such other matters as may be of interest in the
public welfare.
(b) In conducting such investigation, the Administrator shall
hold public hearings, conduct research, experiments,
demonstrations, and studies. The Administrator shall report the
results of such investigation and study, together with his
recommendations for legislation or other action, to the
President and the Congress not later than one year after the
date of enactment of this title.
(c) In any case where any Federal department or a agency is
carrying out or sponsoring any activity resulting in noise
which the administrator determines amounts to a public nuisance
or is otherwise objectionable, such department or agency shall
consult with the Administrator to determine possible means of
abating such noise.
Sec. [403]903. There is authorized to be appropriated such
amount, not to exceed $30,000,000, as may be necessary for the
purposes of this title.
* * * * * * *
Chapter 1 of Title 23, United States Code
* * * * * * *
Sec. 134
Metropolitan transportation planning
(a) Policy.--It is in the national interest to--
(1) encourage and promote the safe and efficient
management, operation, and development of surface
transportation systems that will serve the mobility
needs of people and freight and foster economic growth
and development within and between States and urbanized
areas, while [minimizing]reducing transportation-
related fuel consumption, reliance on oil, impacts on
the environment, transportation-related greenhouse gas
emissions, and air pollution through metropolitan and
statewide transportation planning processes identified
in this chapter; and
* * * * * * *
(h) Scope of Planning Process.--
(1) In general.--The metropolitan planning process
for a metropolitan planning area under this section
shall provide for consideration of projects and
strategies that will--
(A) support the economic vitality of the
metropolitan area, especially by enabling
global competitiveness, productivity, and
efficiency;
(B) increase the safety of the transportation
system for motorized and nonmotorized users;
(C) increase the security of the
transportation system for motorized and
nonmotorized users;
(D) increase the accessibility and mobility
of people and for freight;
(E) protect and enhance the environment,
promote energy conservation, sustainability,
and livability, reduce surface transportation-
related greenhouse gas emissions and reliance
on oil, adapt to the effects of climate change,
improve the quality of life and public health,
and promote consistency between transportation
improvements and State and local planned growth
and economic development patterns,including
housing and land use patterns;
* * * * * * *
(i) Development of Transportation Plan.--
(1) In general.--* * *
* * * * * * *
(4) Consultation.--
(A) In general.--In each metropolitan area,
the metropolitan planning organization shall
[consult, as appropriate,]cooperate with State
and local agencies responsible
fortransportation, public transportation, air
quality, and housing, and shall consult, as
appropriate, with State and local agencies and
Indian tribes responsible for land use
management, natural resources, environmental
protection, conservation,public health, and
historic preservation concerning the
development of a long-range transportation
plan.
(B) Issues.--The consultation shall involve,
as appropriate--
(i) comparison of transportation
plans with State conservation plans or
maps, if available; or
(ii) comparison of transportation
plans to inventories of natural or
historic resources, if available.
(5) Participation by interested parties.--
(A) In general.--Each metropolitan planning
organization shall provide citizens, affected
public agencies, representatives of public
transportation employees, freight shippers,
providers of freight transportation services,
private providers of transportation,
representatives of users of public
transportation, representatives of users of
pedestrian walkways and bicycle transportation
facilities, representatives of the disabled,
and other interested parties with a reasonable
opportunity to comment on the transportation
plan.
(B) Contents of participation plan.--A
participation plan--
(i) shall be developed in
consultation with all interested
parties; and
(ii) shall provide that all
interested parties have reasonable
opportunities to comment on the
contents of the transportation plan.
(C) Methods.--In carrying out subparagraph
(A), the metropolitan planning organization
shall, to the maximum extent practicable--
(i) hold any public meetings at
convenient and accessible locations and
times;
(ii) employ visualization techniques
to describe plans; and
(iii) make public information
available in electronically accessible
format and means, such as the World
Wide Web, as appropriate to afford
reasonable opportunity for
consideration of public information
under subparagraph (A).
(6) Publication.--A transportation plan involving
Federal participation shall be published or otherwise
made readily available by the metropolitan planning
organization for public review, including (to the
maximum extent practicable) in electronically
accessible formats and means, such as the World Wide
Web and through the website of the metropolitan
planning organization, including emission reduction
targets and strategies developed under subsection (k)
(6), including an analysis of the anticipated effects
of the targets and strategies,, approved by the
metropolitan planning organization and submitted for
information purposes to the Governor at such times and
in such manner as the Secretary shall establish.
(7) Selection of projects from illustrative list.--
Notwithstanding paragraph (2)(C), a State or
metropolitan planning organization shall not be
required to select any project from the illustrative
list of additional projects included in the financial
plan under paragraph (2)(C).
* * * * * * *
(k) Transportation Management Areas.--
(1) Identification and designation.--
(A) Required identification.--* * *
* * * * * * *
(6) Transportation greenhouse gas reduction
efforts.--
(A) In general.--Within a metropolitan
planning area serving a transportation
management area, the transportation planning
process under this section shall address
transportation-related greenhouse gas emissions
by including emission reduction targets and
strategies to meet those targets.
(B) Eligible organizations.--
(i) MPOS within tmas.--All provisions
and requirements of this section,
including the requirements of the
transportation greenhouse gas reduction
efforts, shall apply to metropolitan
planning organizations that also serve
as transportation management areas.
(ii) Other mpos.--A metropolitan
planning organization that does not
serve as a transportation management
area--
(I) may develop
transportation greenhouse gas
emission reduction targets and
strategies to meet those
targets; and
(II) if those targets and
strategies are developed, shall
be subject to all applicable
provisions and requirements of
this section and the Clean
Energy Jobs and American Power
Act, including requirements of
the transportation greenhouse
gas reduction efforts.
(C) Establishment of targets and criteria.--
(i) In general.--Not later than 2
years after the promulgation of the
final regulations required under
section 831 of the Clean Air Act, each
metropolitan planning organization that
also serves as a transportation
management area shall develop surface
transportation-related greenhouse gas
emission reduction targets, as well as
strategies to meet those targets, in
consultation with State air agencies
and Indian tribes as part of the
metropolitan transportation planning
process under this section.
(ii) Multiple designations.--If more
than 1 metropolitan planning
organization has been designated within
a metropolitan area, each metropolitan
planning organization shall coordinate
with other metropolitan planning
organizations in the same metropolitan
area to develop the targets and
strategies described in clause (i).
(iii) Minimum requirements.--Each
metropolitan transportation plan
developed by a metropolitan planning
organization under clause (i) shall,
within the plan, demonstrate progress
in stabilizing and reducing
transportation-related greenhouse gas
emissions so as to contribute to the
achievement of State targets pursuant
to section 135(f)(9).
(iv) Requirements for targets and
strategies.--The targets and strategies
developed under this subparagraph
shall, at a minimum--
(I) be based on the emission
and travel demand models and
related methodologies
established in the final
regulations required under
section 831 of the Clean Air
Act;
(II) inventory all sources of
surface transportation-related
greenhouse gas emissions;
(III) apply to those modes of
surface transportation that are
addressed in the planning
process under this section;
(IV) be integrated and
consistent with regional
transportation plans and
transportation improvement
programs; and
(V) be selected through
scenario analysis, and include,
pursuant to the requirements of
the transportation planning
process under this section,
transportation investment and
management strategies that
reduce greenhouse gas emissions
from the transportation sector
over the life of the plan, such
as--
(aa) efforts to
increase public
transportation
ridership, including
through service
improvements, capacity
expansions, and access
enhancement;
(bb) efforts to
increase walking,
bicycling, and other
forms of nonmotorized
transportation;
(cc) implementation
of zoning and other
land use regulations
and plans to support
infill, transit-
oriented development,
redevelopment, or mixed
use development;
(dd) travel demand
management programs
(including carpool,
vanpool, or car-share
projects),
transportation pricing
measures, parking
policies, and programs
to promote
telecommuting, flexible
work schedules, and
satellite work centers;
(ee) surface
transportation system
operation improvements,
including intelligent
transportation systems
or other operational
improvements to reduce
long-term greenhouse
gas emissions through
reduced congestion and
improved system
management;
(ff) intercity
passenger rail
improvements;
(gg) intercity bus
improvements;
(hh) freight rail
improvements;
(ii) use of materials
or equipment associated
with the construction
or maintenance of
transportation projects
that reduce greenhouse
gas emissions;
(jj) public
facilities for
supplying electricity
to electric or plug-in
hybrid-electric
vehicles; or
(kk) any other effort
that demonstrates
progress in reducing
transportation-related
greenhouse gas
emissions in each
metropolitan planning
organization under this
subsection.
(D) Review and approval.--Not later than 180
days after the date of submission of a plan
under this section--
(i) the Secretary and the
Administrator shall review the plan;
and
(ii) the Secretary shall make a
determination that the plan submitted
by a metropolitan planning organization
meets the requirements of subparagraph
(C) if--
(I) the Secretary finds that
a metropolitan planning
organization has developed,
submitted, and published the
plan of the metropolitan
planning organization pursuant
to this section;
(II) the Secretary, in
consultation with the
Administrator, determines that
the plan is likely to achieve
the targets established by the
metropolitan planning
organization under this
subsection; and
(III) the development of the
plan complies with the minimum
requirements established under
clauses (iii) and (iv) of
subparagraph (C).
(E) Certification.--
(i) In general.--Only metropolitan
planning organizations that meet the
requirements of subparagraph (C) shall
be eligible to receive performance
grants under section 113(c).
(ii) Failure to comply.--Failure to
comply with the requirements under
subparagraph (C) shall not impact
certification standards under paragraph
(5).
(7) Definition of metropolitan planning
organization.--In this subsection, the term
`metropolitan planning organization' means a
metropolitan planning organization described in clause
(i) or (ii) of paragraph (6)(B).
(8) Scenario analysis.--The term `scenario analysis'
means the use of a planning tool that--
(A) develops a range of scenarios
representing various combinations of
transportation and land use strategies, and
estimates of how each of those scenarios would
perform in meeting the greenhouse gas emission
reduction targets based on analysis of various
forces (such as health, transportation,
economic or environmental factors, and land
use) that affect growth;
(B) may include features such as--
(i) the involvement of the general
public, key stakeholders, and elected
officials on a broad scale;
(ii) the creation of an opportunity
for those participants to educate each
other as to growth trends and trade-
offs, as a means to incorporate values
and feedback into future plans; and
(iii) the use of continuing efforts
and ongoing processes; and
(C) may include key elements such as--
(i) identification of the driving
forces behind planning decisions and
outcomes;
(ii) determination of patterns of
interaction;
(iii) creation of scenarios for
discussion purposes;
(iv) analysis of implications;
(v) evaluation of scenarios; and
(vi) use of monitoring indicators.
* * * * * * *
Sec. 135
Statewide transportation planning
(a) General Requirements.--
(1) Development of plans and programs.--* * *
* * * * * * *
(d) Scope of Planning Process.--
(1) In general.--Each State shall carry out a
statewide transportation planning process that provides
for consideration and implementation of projects,
strategies, and services that will--
(A) support the economic vitality of the
United States, the States, nonmetropolitan
areas, and metropolitan areas, especially by
enabling global competitiveness, productivity,
and efficiency;
(B) increase the safety of the transportation
system for motorized and nonmotorized users;
(C) increase the security of the
transportation system for motorized and
nonmotorized users;
(D) increase the accessibility and mobility
of people and freight;
(E) protect and enhance the environment,
promote energy conservation,sustainability, and
livability, reduce surface transportation-
related greenhouse gas emissions and reliance
on oil, adapt to the effects of climate change,
improve the quality of lifeand public health,
and promote consistency between transportation
improvements and State and local planned growth
and economic development patterns, including
housing and land use patterns;
* * * * * * *
(f) Long-Range Statewide Transportation Plan.--
(1) Development.--Each State shall develop a long-
range statewide transportation plan, with a minimum 20-
year forecast period for all areas of the State, that
provides for the development and implementation of the
intermodal transportation system of the State.
(2) Consultation with governments.--
(A) Metropolitan areas.--The statewide
transportation plan shall be developed for each
metropolitan area in the State in cooperation
with the metropolitan planning organization
designated for the metropolitan area under
section 134.
(B) Nonmetropolitan areas.--With respect to
nonmetropolitan areas, the statewide
transportation plan shall be developed in
consultation with affected nonmetropolitan
officials with responsibility for
transportation. The Secretary shall not review
or approve the consultation process in each
State.
(C) Indian tribal areas.--With respect to
each area of the State under the jurisdiction
of an Indian tribal government, the statewide
transportation plan shall be developed in
consultation with the tribal government and the
Secretary of the Interior.
(D) Consultation, comparison, and
consideration.--
(i) In general.--The long-range
transportation plan shall be
developed[, as appropriate, in
consultation] in cooperation with State
and local agencies and Indian tribes
responsible for transportation, public
transportation, air quality, and
housing and in consultation with State,
tribal, and local agencies responsible
for land use management, natural
resources, environmental protection,
conservation,public health, and
historic preservation.
* * * * * * *
(3) Participation by interested parties.--
(A) In general.--In developing the statewide
transportation plan, the State shall provide
citizens, affected public agencies,
representatives of public transportation
employees, freight shippers, private providers
of transportation, representatives of users of
public transportation, representatives of users
of pedestrian walkways and bicycle
transportation facilities, representatives of
the disabled, providers of freight
transportation services, and other interested
parties with a reasonable opportunity to
comment on the proposed plan.
(B) Methods.--In carrying out subparagraph
(A), the State shall, to the maximum extent
practicable--
(i) hold any public meetings at
convenient and accessible locations and
times;
(ii) employ visualization techniques
to describe plans; and
(iii) make public information
available in electronically accessible
format and means, such as the World
Wide Weband through the website of the
State, including emission reduction
targets and strategies developed under
paragraph (9) and an analysis of the
anticipated effects of the targets and
strategies, as appropriate to afford
reasonable opportunity for
consideration of public information
under subparagraph (A).
* * * * * * *
(8) Publication of long-range transportation plans.--
Each long-range transportation plan prepared by a State
shall be published or otherwise made available,
including (to the maximum extent practicable) in
electronically accessible formats and means, such as
the World Wide Web.
(9) Transportation greenhouse gas reduction
efforts.--
(A) In general.--Within a State, the
transportation planning process under this
section, shall address transportation-related
greenhouse gas emissions by including emission
reduction targets and strategies to meet those
targets.
(B) Establishment of targets and criteria.--
(i) In general.--Not later than 2
years after the promulgation of the
final regulations required under
section 831 of the Clean Air Act, each
State shall develop surface
transportation-related greenhouse gas
emission reduction targets, as well as
strategies to meet those targets, in
consultation with State air agencies
and Indian tribes as part of the
transportation planning process under
this section.
(ii) Minimum requirements.--Each
transportation plan developed by a
State under clause (i) shall, within
the plan, demonstrate progress in
stabilizing and reducing
transportation-related greenhouse gas
emissions in the State so as to
contribute to the achievement of
national goals pursuant to section
831(a)(1) of the Clean Air Act.
(iii) Requirements for targets and
strategies.--The targets and strategies
developed under this subparagraph
shall, at a minimum--
(I) be based on the emission
models and related
methodologies established in
the final regulations required
under section 831 of the Clean
Air Act;
(II) inventory all sources of
surface transportation-related
greenhouse gas emissions;
(III) apply to those modes of
surface transportation that are
addressed in the planning
process under this section;
(IV) be integrated and
consistent with statewide
transportation plans and
statewide transportation
improvement programs; and
(V) be selected through
scenario analysis (as defined
in section 134(k)), and
include, pursuant to the
requirements of the
transportation planning process
under this section,
transportation investment and
management strategies that
reduce greenhouse gas emissions
from the transportation sector
over the life of the plan, such
as--
(aa) efforts to
increase public
transportation
ridership, including
through service
improvements, capacity
expansions, and access
enhancement;
(bb) efforts to
increase walking,
bicycling, and other
forms of nonmotorized
transportation;
(cc) implementation
of zoning and other
land use regulations
and plans to support
infill, transit-
oriented development,
redevelopment, or mixed
use development;
(dd) travel demand
management programs
(including carpool,
vanpool, or car-share
projects),
transportation pricing
measures, parking
policies, and programs
to promote
telecommuting, flexible
work schedules, and
satellite work centers;
(ee) surface
transportation system
operation improvements,
including intelligent
transportation systems
or other operational
improvements to reduce
congestion and improve
system management;
(ff) intercity
passenger rail
improvements;
(gg) intercity bus
improvements;
(hh) freight rail
improvements;
(ii) use of materials
or equipment associated
with the construction
or maintenance of
transportation projects
that reduce greenhouse
gas emissions;
(jj) public
facilities for
supplying electricity
to electric or plug-in
hybrid-electric
vehicles; or
(kk) any other effort
that demonstrates
progress in reducing
transportation-related
greenhouse gas
emissions.
(C) Coordination and consultation with public
agencies.--Transportation greenhouse gas
targets and plans pursuant to this section
shall be developed--
(i) in coordination with--
(I) all metropolitan planning
organizations covered by this
section within the State; and
(II) transportation and air
quality agencies within the
State;
(ii) in consultation with
representatives of State and local
housing, economic development, and land
use agencies; and
(iii) in consultation with Indian
tribes contiguous to the State.
(D) Enforcement.--Not later than 180 days
after the date of submission of a plan under
this section--
(i) the Secretary and the
Administrator shall review the plan;
and
(ii) the Secretary shall make a
determination that the plan submitted
by a State meets the requirements of
subparagraph (B) if--
(I) the Secretary finds that
a State has developed,
submitted, and published the
plan pursuant to this section;
(II) the Secretary, in
consultation with the
Administrator, determines that
the plan is likely to achieve
the targets established by the
State under this subsection;
and
(III) the development of the
plan complies with the minimum
requirements established under
clauses (ii) and (iii) of
subparagraph (B).
(E) Planning finding.--
(i) In general.--Only States that
meet the requirements of subparagraph
(B) shall be eligible to receive
performance grants under section
113(c).
(ii) Failure to comply.--Failure to
comply with the requirements under
subparagraph (B) shall not impact the
planning finding under subsection
(g)(7).
* * * * * * *
TITLE 49, UNITED STATES CODE
* * * * * * *
Sec. 5303
Metropolitan transportation planning
(a) Policy.--It is in the national interest to--
(1) encourage and promote the safe and efficient
management, operation, and development of surface
transportation systems that will serve the mobility
needs of people and freight and foster economic growth
and development within and between States and urbanized
areas, while [minimizing]reducing transportation-
related fuel consumption, reliance on oil, impacts on
the environment, transportation-related greenhouse gas
emissions and air pollution through metropolitan and
statewide transportation planning processes identified
in this chapter; and
* * * * * * *
(h) Scope of Planning Process.--
(1) In general.--The metropolitan planning process
for a metropolitan planning area under this section
shall provide for consideration of projects and
strategies that will--
(A) support the economic vitality of the
metropolitan area, especially by enabling
global competitiveness, productivity, and
efficiency;
(B) increase the safety of the transportation
system for motorized and nonmotorized users;
(C) increase the security of the
transportation system for motorized and
nonmotorized users;
(D) increase the accessibility and mobility
of people and for freight;
(E) protect and enhance the environment,
promote energy conservation, sustainability,
and livability, reduce surface transportation-
related greenhouse gas emissions and reliance
on oil, adapt to the effects of climate change,
improve the quality of life and public health,
and promote consistency between transportation
improvements and State and local planned growth
and economic development patterns, including
housing and land use patterns;
* * * * * * *
(i) Development of Transportation Plan.--
(1) In general.--* * *
* * * * * * *
(4) Consultation.--
(A) In general.--In each metropolitan area,
the metropolitan planning organization shall
[consult, as appropriate,]cooperate with State
and local agencies responsible for
transportation, public transportation, air
quality, and housing, and shall consult, as
appropriate, with State and local agencies and
Indian tribes responsible for land use
management, natural resources, environmental
protection, conservation, public health, and
historic preservation concerning the
development of a long-range transportation
plan.
* * * * * * *
(5) Participation by interested parties.--
(A) In general.--Each metropolitan planning
organization shall provide citizens, affected
public agencies, representatives of public
transportation employees, freight shippers,
providers of freight transportation services,
private providers of transportation,
representatives of users of public
transportation, representatives of users of
pedestrian walkways and bicycle transportation
facilities, representatives of the disabled,
and other interested parties with a reasonable
opportunity to comment on the transportation
plan.
(B) Contents of participation plan.--A
participation plan--
(i) shall be developed in
consultation with all interested
parties; and
(ii) shall provide that all
interested parties have reasonable
opportunities to comment on the
contents of the transportation plan.
(C) Methods.--In carrying out subparagraph
(A), the metropolitan planning organization
shall, to the maximum extent practicable--
(i) hold any public meetings at
convenient and accessible locations and
times;
(ii) employ visualization techniques
to describe plans; and
(iii) make public information
available in electronically accessible
format and means, such as the World
Wide Web and through the website of the
metropolitan planning organization,
including emission reduction targets
and strategies developed under
subsection (k)(6), including an
analysis of the anticipated effects of
the targets and strategies, as
appropriate to afford reasonable
opportunity for consideration of public
information under subparagraph (A).
* * * * * * *
(k) Transportation Management Areas.--* * *
* * * * * * *
(5) Certification.--
(A) In general.--The Secretary shall--
(i) ensure that the metropolitan
planning process of a metropolitan
planning organization serving a
transportation management area is being
carried out in accordance with
applicable provisions of Federal law;
and
(ii) subject to subparagraph (B),
certify, not less often than once every
4 years, that the requirements of this
paragraph are met with respect to the
metropolitan planning process.
(B) Requirements for certification.--The
Secretary may make the certification under
subparagraph (A) if--
(i) the transportation planning
process complies with the requirements
of this section and other applicable
requirements of Federal law; and
(ii) there is a TIP for the
metropolitan planning area that has
been approved by the metropolitan
planning organization and the Governor.
(C) Effect of failure to certify.--
(i) Withholding of project funds.--If
a metropolitan planning process of a
metropolitan planning organization
serving a transportation management
area is not certified, the Secretary
may withhold up to 20 percent of the
funds attributable to the metropolitan
planning area of the metropolitan
planning organization for projects
funded under this chapter and title 23.
(ii) Restoration of withheld funds.--
The withheld funds shall be restored to
the metropolitan planning area at such
time as the metropolitan planning
process is certified by the Secretary.
(D) Review of certification.--In making
certification determinations under this
paragraph, the Secretary shall provide for
public involvement appropriate to the
metropolitan area under review.
(6) Transportation greenhouse gas reduction
efforts.--
(A) In general.--Within a metropolitan
planning area serving a transportation
management area, the transportation planning
process under this section shall address
transportation-related greenhouse gas emissions
by including emission reduction targets and
strategies to meet those targets.
(B) Eligible organizations.--
(i) In general.--The requirements of
the transportation greenhouse gas
reduction efforts shall apply only to
metropolitan planning organizations
within a transportation management
area.
(ii) Development of plan.--A
metropolitan planning organization that
does not serve as a transportation
management area--
(I) may develop
transportation greenhouse gas
emission reduction targets and
strategies to meet those
targets; and
(II) if those targets and
strategies are developed, shall
be subject to all provisions
and requirements of this
section, including requirements
of the transportation
greenhouse gas reduction
efforts.
(C) Establishment of targets and criteria.--
(i) In general.--Not later than 2
years after the promulgation of the
final regulations required under
section 831 of the Clean Air Act, each
metropolitan planning organization
shall develop surface transportation-
related greenhouse gas emission
reduction targets, as well as
strategies to meet those targets, in
consultation with State air agencies
and Indian tribes as part of the
metropolitan transportation planning
process under this section.
(ii) Multiple designations.--If more
than 1 metropolitan planning
organization has been designated within
a metropolitan area, each metropolitan
planning organization shall coordinate
with other metropolitan planning
organizations in the same metropolitan
area to develop the targets and
strategies described in clause (i).
(iii) Minimum requirements.--Each
metropolitan transportation plan
developed by a metropolitan planning
organization under clause (i) shall,
within the plan, demonstrate progress
in stabilizing and reducing
transportation-related greenhouse gas
emissions so as to contribute to the
achievement of State targets pursuant
to section 135(f)(9) of title 23.
(iv) Requirements for targets and
strategies.--The targets and strategies
developed under this subparagraph
shall, at a minimum--
(I) be based on the emission
models and related
methodologies established in
the final regulations required
under section 831 of the Clean
Air Act;
(II) inventory all sources of
surface transportation-related
greenhouse gas emissions;
(III) apply to those modes of
surface transportation that are
addressed in the planning
process under this section;
(IV) be integrated and
consistent with regional
transportation plans and
transportation improvement
programs; and
(V) be selected through
scenario analysis (as defined
in section 134(k) of title 23),
and include, pursuant to the
requirements of the
transportation planning process
under this section,
transportation investment and
management strategies that
reduce greenhouse gas emissions
from the transportation sector
over the life of the plan, such
as--
(aa) efforts to
increase public
transportation
ridership, including
through service
improvements, capacity
expansions, and access
enhancement;
(bb) efforts to
increase walking,
bicycling, and other
forms of nonmotorized
transportation;
(cc) implementation
of zoning and other
land use regulations
and plans to support
infill, transit-
oriented development,
redevelopment, or mixed
use development;
(dd) travel demand
management programs
(including carpool,
vanpool, or car-share
projects),
transportation pricing
measures, parking
policies, and programs
to promote
telecommuting, flexible
work schedules, and
satellite work centers;
(ee) surface
transportation system
operation improvements,
including intelligent
transportation systems
or other operational
improvements to reduce
long-term greenhouse
gas emissions through
reduced congestion and
improved system
management;
(ff) intercity
passenger rail
improvements;
(gg) intercity bus
improvements;
(hh) freight rail
improvements;
(ii) use of materials
or equipment associated
with the construction
or maintenance of
transportation projects
that reduce greenhouse
gas emissions;
(jj) public
facilities for
supplying electricity
to electric or plug-in
hybrid-electric
vehicles; or
(kk) any other effort
that demonstrates
progress in reducing
transportation-related
greenhouse gas
emissions in each
metropolitan planning
organization under this
subsection.
(D) Review and approval.--Not later than 180
days after the date of submission of a plan
under this section--
(i) the Secretary and the
Administrator shall review the plan;
and
(ii) the Secretary shall make a
determination that the plan submitted
by a metropolitan planning organization
meets the requirements of subparagraph
(C) if--
(I) the Secretary finds that
a metropolitan planning
organization has developed,
submitted, and published the
plan of the metropolitan
planning organization pursuant
to this section;
(II) the Secretary, in
consultation with the
Administrator, determines that
the plan is likely to achieve
the targets established by the
metropolitan planning
organization under this
subsection; and
(III) the development of the
plan complies with the minimum
requirements established under
clauses (iii) and (iv) of
subparagraph (C).
(E) Certification.--
(i) In general.--Only metropolitan
planning organizations that meet the
requirements of subparagraph (C) shall
be eligible to receive performance
grants under section 113(c).
(ii) Failure to comply.--Failure to
comply with the requirements under
subparagraph (C) shall not impact
certification standards under paragraph
(5).
(7) Definition of metropolitan planning
organization.--In this subsection, the term
`metropolitan planning organization' means a
metropolitan planning organization described in clause
(i) or (ii) of paragraph (6)(B).
Sec. 5304
Statewide transportation planning
(a) General Requirements.--
(1) Development of plans and programs.--* * *
* * * * * * *
(d) Scope of Planning Process.--
(1) In general.--Each State shall carry out a
statewide transportation planning process that provides
for consideration and implementation of projects,
strategies, and services that will--
(A) support the economic vitality of the
United States, the States, nonmetropolitan
areas, and metropolitan areas, especially by
enabling global competitiveness, productivity,
and efficiency;
(B) increase the safety of the transportation
system for motorized and nonmotorized users;
(C) increase the security of the
transportation system for motorized and
nonmotorized users;
(D) increase the accessibility and mobility
of people and freight;
(E) protect and enhance the environment,
promote energy conservation, sustainability,
and livability, reduce surface transportation-
related greenhouse gas emissions and reliance
on oil, adapt to the effects of climate change,
improve the quality of life and public health,
and promote consistency between transportation
improvements and State and local planned growth
and economic development patterns, including
housing and land use patterns;
* * * * * * *
(f) Long-Range Statewide Transportation Plan.--
(1) Development.--Each State shall develop a long-
range statewide transportation plan, with a minimum 20-
year forecast period for all areas of the State, that
provides for the development and implementation of the
intermodal transportation system of the State.
(2) Consultation with governments.--
(A) Metropolitan areas.--The statewide
transportation plan shall be developed for each
metropolitan area in the State in cooperation
with the metropolitan planning organization
designated for the metropolitan area under
section 5303.
(B) Nonmetropolitan areas.--With respect to
nonmetropolitan areas, the statewide
transportation plan shall be developed in
consultation with affected nonmetropolitan
officials with responsibility for
transportation. The Secretary shall not review
or approve the consultation process in each
State.
(C) Indian tribal areas.--With respect to
each area of the State under the jurisdiction
of an Indian tribal government, the statewide
transportation plan shall be developed in
consultation with the tribal government and the
Secretary of the Interior.
(D) Consultation, comparison, and
consideration.--
(i) In general.--The long-range
transportation plan shall be
developed[, as appropriate, in
consultation]in cooperation with State
and local agencies and Indian tribes
responsible for transportation, public
transportation, air quality, and
housing and in consultation with State,
tribal, and local agencies responsible
for land use management, natural
resources, environmental protection,
conservation, public health, and
historic preservation.
* * * * * * *
(3) Participation by interested parties.--
(A) In general.--In developing the statewide
transportation plan, the State shall provide
citizens, affected public agencies,
representatives of public transportation
employees, freight shippers, private providers
of transportation, representatives of users of
public transportation, representatives of users
of pedestrian walkways and bicycle
transportation facilities, representatives of
the disabled, providers of freight
transportation services, and other interested
parties with a reasonable opportunity to
comment on the proposed plan.
(B) Methods.--In carrying out subparagraph
(A), the State shall, to the maximum extent
practicable--
(i) hold any public meetings at
convenient and accessible locations and
times;
(ii) employ visualization techniques
to describe plans; and
(iii) make public information
available in electronically accessible
format and means, such as the World
Wide Web and through the website of the
State, including emission reduction
targets and strategies developed under
paragraph (9) and an analysis of the
anticipated effects of the targets and
strategies, as appropriate to afford
reasonable opportunity for
consideration of public information
under subparagraph (A).
* * * * * * *
(8) Publication of long-range transportation plans.--
Each long-range transportation plan prepared by a State
shall be published or otherwise made available,
including (to the maximum extent practicable) in
electronically accessible formats and means, such as
the World Wide Web.
(9) Transportation greenhouse gas reduction
efforts.--
(A) In general.--Within a State, the
transportation planning process under this
section, shall address transportation-related
greenhouse gas emissions by including emission
reduction targets and strategies to meet those
targets.
(B) Establishment of targets and criteria.--
(i) In general.--Not later than 2
years after the promulgation of the
final regulations required under
section 831 of the Clean Air Act, each
State shall develop surface
transportation-related greenhouse gas
emission reduction targets, as well as
strategies to meet those targets, in
consultation with State air agencies
and Indian tribes as part of the
transportation planning process under
this section.
(ii) Minimum requirements.--Each
transportation plan developed by a
State under clause (i) shall, within
the plan, demonstrate progress in
stabilizing and reducing
transportation-related greenhouse gas
emissions in the State so as to
contribute to the achievement of
national targets pursuant to section
831(a)(1) of the Clean Air Act.
(iii) Requirements for targets and
strategies.--The targets and strategies
developed under this subparagraph
shall, at a minimum--
(I) be based on the emission
models and related
methodologies established in
the final regulations required
under section 831 of the Clean
Air Act;
(II) inventory all sources of
surface transportation-related
greenhouse gas emissions;
(III) apply to those modes of
surface transportation that are
addressed in the planning
process under this section;
(IV) be integrated and
consistent with statewide
transportation plans and
statewide transportation
improvement programs; and
(V) be selected through
scenario analysis (as defined
in section 134(k) of title 23),
and include, pursuant to the
requirements of the
transportation planning process
under this section,
transportation investment and
management strategies that
reduce greenhouse gas emissions
from the transportation sector
over the life of the plan, such
as--
(aa) efforts to
increase public
transportation
ridership, including
through service
improvements, capacity
expansions, and access
enhancement;
(bb) efforts to
increase walking,
bicycling, and other
forms of nonmotorized
transportation;
(cc) implementation
of zoning and other
land use regulations
and plans to support
infill, transit-
oriented development,
redevelopment, or mixed
use development;
(dd) travel demand
management programs
(including carpool,
vanpool, or car-share
projects),
transportation pricing
measures, parking
policies, and programs
to promote
telecommuting, flexible
work schedules, and
satellite work centers;
(ee) surface
transportation system
operation improvements,
including intelligent
transportation systems
or other operational
improvements to reduce
congestion and improve
system management;
(ff) intercity
passenger rail
improvements;
(gg) intercity bus
improvements;
(hh) freight rail
improvements;
(ii) use of materials
or equipment associated
with the construction
or maintenance of
transportation projects
that reduce greenhouse
gas emissions;
(jj) public
facilities for
supplying electricity
to electric or plug-in
hybrid-electric
vehicles; or
(kk) any other effort
that demonstrates
progress in reducing
transportation-related
greenhouse gas
emissions.
(C) Coordination and consultation with public
agencies.--Transportation greenhouse gas
targets and plans pursuant to this section
shall be developed--
(i) in coordination with--
(I) all metropolitan planning
organizations covered by this
section within the State; and
(II) transportation and air
quality agencies within the
State;
(ii) in consultation with
representatives of State and local
housing, economic development, and land
use agencies; and
(iii) in consultation with Indian
tribes contiguous to the State.
(D) Enforcement.--Not later than 180 days
after the date of submission of a plan under
this section--
(i) the Secretary and the
Administrator shall review the plan;
and
(ii) the Secretary shall make a
determination that the plan submitted
by a State meets the requirements of
subparagraph (B) if--
(I) the Secretary finds that
a State has developed,
submitted, and published the
plan pursuant to this section;
(II) the Secretary, in
consultation with the
Administrator, determines that
the plan is likely to achieve
the targets established by the
State under this subsection;
and
(III) the development of the
plan complies with the minimum
requirements established under
clauses (ii) and (iii) of
subparagraph (B).
(E) Planning finding.--
(i) In general.--Only States that
meet the requirements of subparagraph
(B) shall be eligible to receive
performance grants under section
113(c).
(ii) Failure to comply.--Failure to
comply with the requirements under
subparagraph (B) shall not impact the
planning finding under subsection
(g)(7).
* * * * * * *
Sec. 32919
Preemption
(a) General.--When an average fuel economy standard
prescribed under this chapter is in effect, a State or a
political subdivision of a State may not adopt or enforce a law
or regulation related to fuel economy standards or average fuel
economy standards for automobiles covered by an average fuel
economy standard under this chapter.
(b) Requirements Must Be Identical.--When a requirement under
section 32908 of this title is in effect, a State or a
political subdivision of a State may adopt or enforce a law or
regulation on disclosure of fuel economy or fuel operating
costs for an automobile covered by section 32908 only if the
law or regulation is identical to that requirement.
(c) State and Political Subdivision Automobiles.--A State or
a political subdivision of a State may prescribe requirements
for fuel economy for automobiles obtained for its own use.
(d) Taxicabs.--Notwithstanding subsection (a), a State or
political subdivision of a State may prescribe requirements for
fuel economy for taxicabs and other automobiles if such
requirements are at least as stringent as applicable Federal
requirements and if such taxicabs and other automobiles--
(1) are automobiles that are capable of transporting
not more than 10 individuals, including the driver;
(2) are commercially available or are designed and
manufactured pursuant to a contract with such State or
political subdivision of such State;
(3) are operated for hire pursuant to an operating or
regulatory license, permit, or other authorization
issued by such State or political subdivision of such
State;
(4) provide local transportation for a fare
determined on the basis of the time or distance
traveled or a combination of time and distance
traveled; and
(5) do not exclusively provide transportation to and
from airports.
* * * * * * *
SAFE DRINKING WATER ACT
Sec. 1400.
* * * * * * *
Sec. 1421. (a)(1) The Administrator shall publish proposed
regulations for State underground injection control programs
within 180 days after the date of enactment of this title.
Within 180 days after publication of such proposed regulations,
he shall promulgate such regulations with such modifications as
he deems appropriate. Any regulation under this subsection may
be amended from time to time.
(2) * * *
* * * * * * *
(e) Carbon Dioxide Geological Storage 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 geological storage wells.
(2) Financial responsibility.--
(A) In general.--The regulations under
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.
(B) Regulations.--Financial responsibility
may be established for carbon dioxide
geological wells in accordance with regulations
promulgated by the Administrator by any 1, or
any combination, of the following:
(i) Insurance.
(ii) Guarantee.
(iii) Trust.
(iv) Standby trust.
(v) Surety bond.
(vi) Letter of credit.
(vii) Qualification as a self-
insurer.
(viii) Any other method satisfactory
to the Administrator.
* * * * * * *
PUBLIC WORKS AND ECONOMIC DEVELOPMENT ACT OF 1965
* * * * * * *
Sec. 1. Short title; table of contents.
Sec. 2. Findings and declarations.
Sec. 3. Definitions.
TITLE I--ECONOMIC DEVELOPMENT PARTNERSHIPS COOPERATION AND COORDINATION
Sec. 101. Establishment of economic development partnerships.
Sec. 102. Cooperation of Federal agencies.
Sec. 103. Coordination.
TITLE II--GRANTS FOR PUBLIC WORKS AND ECONOMIC DEVELOPMENT
Sec. 201. Grants for public works and economic development.
Sec. 202. Base closings and realignments.
Sec. 203. Grants for planning and grants for administrative expenses.
Sec. 204. Cost sharing.
Sec. 205. Supplementary grants.
Sec. 206. Regulations on relative needs and allocations.
Sec. 207. Grants for training, research, and technical assistance.
[Sec. 208. Repealed]
Sec. 209. Grants for economic adjustment.
Sec. 210. Changed project circumstances.
Sec. 211. Use of funds in projects constructed under projected cost.
Sec. 212. Reports by recipients.
Sec. 213. Prohibition on use of funds for attorney's and consultant's
fees.
Sec. 214. Special impact areas.
Sec. 215. Performance awards.
Sec. 216. Planning performance awards.
Sec. 217. Direct expenditure or redistribution by recipient.
Sec. 218. Brightfields demonstration program.
Sec. 219. Economic Development Climate Change Fund.
TITLE II--GRANTS FOR PUBLIC WORKS AND ECONOMIC DEVELOPMENT
SEC. 201* * *
* * * * * * *
SEC. 218. BRIGHTFIELDS DEMONSTRATION PROGRAM.
(a) Definition of Brightfield Site.--In this section, the
term ``brightfield site'' means a brownfield site that is
redeveloped through the incorporation of 1 or more solar energy
technologies.
(b) Demonstration Program.--On the application of an eligible
recipient, the Secretary may make a grant for a project for the
development of a brightfield site if the Secretary determines
that the project will--
(1) use 1 or more solar energy technologies to
develop abandoned or contaminated sites for commercial
use; and
(2) improve the commercial and economic opportunities
in the area in which the project is located.
(c) Savings Clause.--To the extent that any portion of a
grant awarded under subsection (b) involves remediation, the
remediation shall be subject to section 612.
(d) Authorization of Appropriations.--There is authorized to
be appropriated to carry out this section $5,000,000 for each
of fiscal years 2004 through 2008, to remain available until
expended.
SEC. 219. ECONOMIC DEVELOPMENT CLIMATE CHANGE FUND.
(a) In General.--On the application of an eligible recipient,
the Secretary may provide technical assistance, make grants,
enter into contracts, or otherwise provide amounts for
projects--
(1) to promote energy efficiency to enhance economic
competitiveness;
(2) to increase the use of renewable energy resources
to support sustainable economic development and job
growth;
(3) to support the development of conventional energy
resources to produce alternative transportation fuels,
electricity and heat;
(4) to develop energy efficient or environmentally
sustainable infrastructure;
(5) to promote environmentally sustainable economic
development practices and models;
(6) to support development of energy efficiency and
alternative energy development plans, studies or
analysis, including enhancement of new and existing
Comprehensive Economic Development Strategies funded
under this Act; and
(7) to supplement other Federal grants, loans, or
loan guarantees for purposes described in paragraphs
(1) through (6).
(b) Federal Share.--The Federal share of the cost of any
project carried out under this section shall not exceed 80
percent, except that the Federal share of a Federal grant,
loan, or loan guarantee provided under subsection (a)(7) may be
100 percent.
(c) Authorization of Appropriations.--There is authorized to
be appropriated to carry out this section $50,000,000 for each
of fiscal years 2009 through 2013, to remain available until
expended.
ENERGY POLICY ACT OF 2005
* * * * * * *
SEC. 791. DEFINITIONS.
In this subtitle:
(1) Administrator.--The term ``Administrator'' means
the Administrator of the Environmental Protection
Agency.
(2) Certified engine configuration.--The term
``certified engine configuration'' means a new,
rebuilt, or remanufactured engine configuration--
(A) that has been certified or verified by--
(i) the Administrator; or
(ii) the California Air Resources
Board;
(B) that meets or is rebuilt or
remanufactured to a more stringent set of
engine emission standards, as determined by the
Administrator; and
(C) in the case of a certified engine
configuration involving the replacement of an
existing engine or vehicle, an engine
configuration that replaced an engine that
was--
(i) removed from the vehicle; and
(ii) returned to the supplier for
remanufacturing to a more stringent set
of engine emissions standards or for
scrappage.
(3) Eligible entity.--The term ``eligible entity''
means--
(A) a regional, State, local, or tribal
agency or port authority with jurisdiction over
transportation or air quality; [and]
(B) a nonprofit organization or institution
that--
(i) represents or provides pollution
reduction or educational services to
persons or organizations that own or
operate diesel fleets; or
(ii) has, as its principal purpose,
the promotion of transportation or air
quality[.]; and
(C) any person that is the owner of record of
a diesel fleet.
* * * * * * *
SEC. 792. NATIONAL GRANT AND LOAN PROGRAMS.
(a) In General.--The Administrator shall use 70 percent of
the funds made available to carry out this subtitle for each
fiscal year to provide grants and low-cost revolving loans, as
determined by the Administrator, on a competitive basis, to
eligible entities to achieve significant reductions in diesel
emissions in terms of--
(1)* * *
* * * * * * *
(d) Use of [Funds.--
(1) In general.--An eligible entity] Funds.--An
eligible entity may use a grant or loan provided under
this section to fund the costs of--
[(A)](1) a retrofit technology (including any
incremental costs of a repowered or new diesel
engine) that significantly reduces emissions
through development and implementation of a
certified engine configuration, verified
technology, or emerging technology for--
[(i)](A) a bus;
[(ii)](B) a medium-duty truck or a
heavy-duty truck;
[(iii)](C) a marine engine;
[(iv)](D) a locomotive; or
[(v)](E) a nonroad engine or vehicle
used in--
[(I)](i) construction;
[(II)](ii) handling of cargo
(including at a port or
airport);
[(III)](iii) agriculture;
[(IV)](iv) mining; or
[(V)](v) energy production;
or
[(B)](2) programs or projects to reduce long-
duration idling using verified technology
involving a vehicle or equipment described in
[subparagraph (A)]paragraph (1).
[(2) Regulatory programs.--
[(A) In general.--Notwithstanding paragraph
(1), 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 State implementation plan of a
State.]
* * * * * * *
SEC. 795. OUTREACH AND INCENTIVES.
(a) Definition of Eligible Technology.--In this section, the
term ``eligible technology'' means--
(1) a verified technology; or
(2) an emerging technology.
(b) Technology Transfer Program.--
(1) In general.--The Administrator shall establish a
program under which the Administrator--
(A) informs stakeholders of the benefits of
eligible technologies; and
(B) develops nonfinancial incentives to
promote the use of eligible technologies.
(2) Eligible stakeholders.--Eligible stakeholders
under this section include--
(A) equipment owners and operators;
(B) emission and pollution control technology
manufacturers;
(C) engine and equipment manufacturers;
(D) State and local officials responsible for
air quality management;
(E) community organizations; and
(F) public health, educational, and
environmental organizations.
(c) State Implementation Plans.--The Administrator shall
develop appropriate guidance to provide credit to a State for
emission reductions in the State created by the use of eligible
technologies through a State implementation plan under section
110 of the Clean Air Act (42 U.S.C. 7410).
(d) International Markets.--The Administrator, in
coordination with the Department of Commerce and industry
stakeholders, shall inform foreign countries with air quality
problems of the potential of technology developed or used in
the United States to provide emission reductions in those
countries.
SEC. 795A. BLACK CARBON REDUCTION GRANT PROGRAM.
(a) Definitions.--In this section:
(1) Administrator.--The term `Administrator' means
the Administrator of the Environmental Protection
Agency.
(2) Black carbon.--The term `black carbon' means a
primary light-absorbing aerosol, as determined by the
Administrator based on the best available science.
(3) Diesel particulate filter.--The term `diesel
particulate filter' means a pollution control
technology that reduces at least 85 percent of black
carbon, as verified by the Administrator or the
California Air Resources Board.
(4) Eligible entity.--The term `eligible entity'
means a person that is the owner of record of a heavy
duty vehicle.
(5) Heavy duty vehicle.--The term `heavy duty
vehicle' has the meaning given the term in section
202(b)(3) of the Clean Air Act (42 U.S.C. 7521(b)(3)).
(6) Program.--The term `program' means the Black
Carbon Reduction Program established under this
section.
(b) Establishment.--The Administrator shall establish a
voluntary grant program, to be known as the `Black Carbon
Reduction Program'--
(1) to cost effectively mitigate the adverse
consequences of global warming by means of early action
to reduce black carbon emissions from diesel-powered
heavy-duty vehicles placed in service prior to 2007;
and
(2) under which the Administrator, in accordance with
this section (including regulations promulgated under
subsection (g)), shall authorize the provision of
grants in accordance with subsection (c) to cover 100
percent of the cost of purchasing and installing diesel
particulate filters on heavy duty vehicles.
(c) Program Specifications.--
(1) In general.--A grant may be issued under the
program only to cover the costs of the purchase and
installation of a diesel particulate filter.
(2) Maximum amount.--The total amount of grants
issued for a fiscal year under the program may not
exceed the amounts made available for the program for
the fiscal year under subsection (h).
(d) Evaluation and Report.--
(1) In general.--Not later than 2 years after the
date of enactment of this section and biennially
thereafter, the Administrator shall submit to Congress
a report evaluating the implementation of the program.
(2) Inclusions.--The report shall include a
description of--
(A) the total number of grant applications
received;
(B) the total dollar value of all grants
issued;
(C) the estimated benefits of grants provided
under the program, including estimates of the
total number of tons of black carbon reduced,
cost-effectiveness, and cost-benefits; and
(D) any other information the Administrator
considers to be appropriate.
(e) Exclusion of Grants From Income.--A grant issued under
the program shall not be considered gross income of the
purchaser of technology for purposes of the Internal Revenue
Code of 1986.
(f) Effect of Section.--Nothing in this section affects any
authority under the Clean Air Act (42 U.S.C. 7401 et seq.) as
in existence on the day before the date of enactment of this
section.
(g) Regulations.--
(1) In general.--As soon as practicable after the
date of enactment of this section, the Administrator
shall promulgate regulations to implement the program.
(2) Requirements.--The regulations promulgated under
paragraph (1) shall--
(A) establish streamlined procedures for the
provision of grants to eligible entities
participating in the program for the amount of
the purchase and installation of diesel
particulate filters as soon as practicable, but
not later than 30 days after the date of
submission of an application for a grant;
(B) include a list of diesel particulate
filters the purchase and installation of which
are eligible to be funded through the program;
and
(C) include a list of vehicles by model year
that are eligible to be retrofitted under the
program.
(h) Funding.--The Administrator shall use to carry out the
program all of the funding provided for each fiscal year under
section 201(g)(1) of division B of the Clean Energy Jobs and
American Power Act.
* * * * * * *
SEC. 797. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated to carry out this
subtitle $200,000,000 for each of fiscal years 2007 through
[2011]2021, to remain available until expended.
* * * * * * *
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