50–105 

111TH CONGRESS REPT. 111–137 " ! HOUSE OF REPRESENTATIVES 1st Session Part 1 

AMERICAN CLEAN ENERGY AND SECURITY ACT OF 2009 

JUNE 5, 2009.—Ordered to be printed 

Mr. WAXMAN, from the Committee on Energy and Commerce, 

submitted the following 

R E P O R T 

together with 

MINORITY AND ADDITIONAL VIEWS 

[To accompany H.R. 2454] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Energy and Commerce, to whom was referred 

the bill (H.R. 2454) to create clean energy jobs, achieve energy 

independence, reduce global warming pollution and transition to a 

clean energy economy, having considered the same, report favorably thereon with an amendment and recommend that the bill as 

amended do pass. 

CONTENTS 

Page 

Purpose and Summary ............................................................................................ 277 

Background and Need for Legislation .................................................................... 278 

Legislative History .................................................................................................. 318 

Committee Consideration ........................................................................................ 320 

Committee Votes ...................................................................................................... 320 

Application of Law to the Legislative Branch ....................................................... 357 

Statement of Oversight Findings and Recommendations of the Committee ...... 357 

Statement of General Performance Goals and Objectives .................................... 357 

Constitutional Authority Statement ...................................................................... 357 

Advisory Committee Statement .............................................................................. 357 

Federal Mandates Statement ................................................................................. 357 

Earmarks and Tax and Tariff Benefits .................................................................. 358 

Committee Cost Estimate ....................................................................................... 358 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 358 

Congressional Budget Office Cost Estimate .......................................................... 358 

Section-By-Section ................................................................................................... 393 

Explanation of Amendments ................................................................................... 426 

Changes in Existing Law Made by the Bill, as Reported ..................................... 435 

Minority and Additional Views ............................................................................... 725 


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The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘American Clean Energy and Security Act of 2009’’. 

(b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Definitions. 

Sec. 3. International participation. 

TITLE I—CLEAN ENERGY 

Subtitle A—Combined Efficiency and Renewable Electricity Standard 

Sec. 101. Combined efficiency and renewable electricity standard. 

Sec. 102. Clarifying State authority to adopt renewable energy incentives. 

Subtitle B—Carbon Capture and Sequestration 

Sec. 111. National strategy. 

Sec. 112. Regulations for geologic sequestration sites. 

‘‘Sec. 813. Geologic sequestration sites. 

Sec. 113. Studies and reports. 

Sec. 114. Carbon capture and sequestration demonstration and early deployment program. 

Sec. 115. Commercial deployment of carbon capture and sequestration technologies. 

‘‘Sec. 786. Commercial deployment of carbon capture and sequestration technologies. 

Sec. 116. Performance standards for coal-fueled power plants. 

‘‘Sec. 812. Performance standards for new coal-fired power plants. 

Subtitle C—Clean Transportation 

Sec. 121. Electric vehicle infrastructure. 

Sec. 122. Large-scale vehicle electrification program. 

Sec. 123. Plug-in electric drive vehicle manufacturing. 

Sec. 124. Investment in clean vehicles. 

Sec. 125. Advanced technology vehicle manufacturing incentive loans. 

Sec. 126. Amendment to renewable fuels standard. 

Sec. 127. Open fuel standard. 

Sec. 128. Temporary Vehicle Trade-in Program. 

Sec. 129. Diesel emissions reduction. 

Sec. 130. Loan guarantees for projects to construct renewable fuel pipelines. 

Subtitle D—State Energy and Environment Development Accounts 

Sec. 131. Establishment of SEED Accounts. 

Sec. 132. Support of State renewable energy and energy efficiency programs. 

Subtitle E—Smart Grid Advancement 

Sec. 141. Definitions. 

Sec. 142. Assessment of Smart Grid cost effectiveness in products. 

Sec. 143. Inclusions of Smart Grid capability on appliance ENERGY GUIDE labels. 

Sec. 144. Smart Grid peak demand reduction goals. 

Sec. 145. Reauthorization of energy efficiency public information program to include Smart Grid information. 

Sec. 146. Inclusion of Smart Grid features in appliance rebate program. 

Subtitle F—Transmission Planning 

Sec. 151. Transmission planning. 

Sec. 152. Net metering for Federal agencies. 

Sec. 153. Support for qualified advanced electric transmission manufacturing plants, qualified high efficiency 

transmission property, and qualified advanced electric transmission property. 

Subtitle G—Technical Corrections to Energy Laws 

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

Sec. 162. Technical corrections to Energy Policy Act of 2005. 

Subtitle H—Energy and Efficiency Centers 

Sec. 171. Clean Energy Innovation Centers. 

Sec. 172. Building Assessment Centers. 

Sec. 173. Centers for Energy and Environmental Knowledge and Outreach. 

Subtitle I—Nuclear and Advanced Technologies 

Sec. 181. Revisions to loan guarantee program authority. 

Sec. 182. Purpose. 

Sec. 183. Definitions. 

Sec. 184. Clean Energy Investment Fund. 

Sec. 185. Energy technology deployment goals. 

Sec. 186. Clean Energy Deployment Administration. 

Sec. 187. Direct support. 

Sec. 188. Federal credit authority. 

Sec. 189. General provisions. 

Subtitle J—Miscellaneous 

Sec. 191. Study of ocean renewable energy and transmission planning and siting. 


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Sec. 192. Clean technology business competition grant program. 

Sec. 193. National Bioenergy Partnership. 

Sec. 194. Office of Consumer Advocacy. 

TITLE II—ENERGY EFFICIENCY 

Subtitle A—Building Energy Efficiency Programs 

Sec. 201. Greater energy efficiency in building codes. 

Sec. 202. Building retrofit program. 

Sec. 203. Energy efficient manufactured homes. 

Sec. 204. Building energy performance labeling program. 

Sec. 205. Tree planting programs. 

Sec. 206. Energy efficiency for data center buildings. 

Subtitle B—Lighting and Appliance Energy Efficiency Programs 

Sec. 211. Lighting efficiency standards. 

Sec. 212. Other appliance efficiency standards. 

Sec. 213. Appliance efficiency determinations and procedures. 

Sec. 214. Best-in-Class Appliances Deployment Program. 

Sec. 215. WaterSense. 

Sec. 216. Federal procurement of water efficient products. 

Sec. 217. Water efficient product rebate programs. 

Sec. 218. Certified stoves program. 

Sec. 219. Energy Star standards. 

Subtitle C—Transportation Efficiency 

Sec. 221. Emissions standards. 

‘‘PART B—MOBILE SOURCES

‘‘Sec. 821. Greenhouse gas emission standards for mobile sources. 

Sec. 222. Greenhouse gas emissions reductions through transportation efficiency. 

‘‘PART D—PLANNING REQUIREMENTS

‘‘Sec. 841. Greenhouse gas emissions reductions through transportation efficiency. 

Sec. 223. SmartWay transportation efficiency program. 

‘‘Sec. 822. SmartWay transportation efficiency program. 

Sec. 224. State vehicle fleets. 

Subtitle D—Industrial Energy Efficiency Programs 

Sec. 241. Industrial plant energy efficiency standards. 

Sec. 242. Electric and thermal waste energy recovery award program. 

Sec. 243. Clarifying election of waste heat recovery financial incentives. 

Sec. 244. Motor market assessment and commercial awareness program. 

Sec. 245. Motor efficiency rebate program. 

Subtitle E—Improvements in Energy Savings Performance Contracting 

Sec. 251. Energy savings performance contracts. 

Subtitle F—Public Institutions 

Sec. 261. Public institutions. 

Sec. 262. Community energy efficiency flexibility. 

Sec. 263. Small community joint participation. 

Sec. 264. Low income community energy efficiency program. 

Subtitle G—Miscellaneous 

Sec. 271. Energy efficient information and communications technologies. 

Sec. 272. National energy efficiency goals. 

Sec. 273. Affiliated island energy independence team. 

Sec. 274. Product carbon disclosure program. 

TITLE III—REDUCING GLOBAL WARMING POLLUTION 

Sec. 301. Short title. 

Subtitle A—Reducing Global Warming Pollution 

Sec. 311. Reducing global warming pollution. 

‘‘TITLE VII—GLOBAL WARMING POLLUTION REDUCTION PROGRAM 

‘‘PART A—GLOBAL WARMING POLLUTION REDUCTION GOALS AND TARGETS

‘‘Sec. 701. Findings and purpose. 

‘‘Sec. 702. Economy-wide reduction goals. 

‘‘Sec. 703. Reduction targets for specified sources. 

‘‘Sec. 704. Supplemental pollution reductions. 

‘‘Sec. 705. Review and program recommendations. 

‘‘Sec. 706. National Academy review. 

‘‘Sec. 707. Presidential response and recommendations. 

‘‘PART B—DESIGNATION AND REGISTRATION OF GREENHOUSE GASES

‘‘Sec. 711. Designation of greenhouse gases. 

‘‘Sec. 712. Carbon dioxide equivalent value of greenhouse gases. 

‘‘Sec. 713. Greenhouse gas registry. 

‘‘PART C—PROGRAM RULES

‘‘Sec. 721. Emission allowances. 


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‘‘Sec. 722. Prohibition of excess emissions. 

‘‘Sec. 723. Penalty for noncompliance. 

‘‘Sec. 724. Trading. 

‘‘Sec. 725. Banking and borrowing. 

‘‘Sec. 726. Strategic reserve. 

‘‘Sec. 727. Permits. 

‘‘Sec. 728. International emission allowances. 

‘‘PART D—OFFSETS

‘‘Sec. 731. Offsets Integrity Advisory Board. 

‘‘Sec. 732. Establishment of offsets program. 

‘‘Sec. 733. Eligible project types. 

‘‘Sec. 734. Requirements for offset projects. 

‘‘Sec. 735. Approval of offset projects. 

‘‘Sec. 736. Verification of offset projects. 

‘‘Sec. 737. Issuance of offset credits. 

‘‘Sec. 738. Audits. 

‘‘Sec. 739. Program review and revision. 

‘‘Sec. 740. Early offset supply. 

‘‘Sec. 741. Environmental considerations. 

‘‘Sec. 742. Trading. 

‘‘Sec. 743. International offset credits. 

‘‘PART E—SUPPLEMENTAL EMISSIONS REDUCTIONS FROM REDUCED DEFORESTATION

‘‘Sec. 751. Definitions. 

‘‘Sec. 752. Findings. 

‘‘Sec. 753. Supplemental emissions reductions through reduced deforestation. 

‘‘Sec. 754. Requirements for international deforestation reduction program. 

‘‘Sec. 755. Reports and reviews. 

‘‘Sec. 756. Legal effect of part. 

Sec. 312. Definitions. 

‘‘Sec. 700. Definitions. 

Subtitle B—Disposition of Allowances 

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

‘‘PART H—DISPOSITION OF ALLOWANCES

‘‘Sec. 781. Allocation of allowances for supplemental reductions. 

‘‘Sec. 782. Allocation of emission allowances. 

‘‘Sec. 783. Electricity consumers. 

‘‘Sec. 784. Natural gas consumers. 

‘‘Sec. 785. Home heating oil and propane consumers. 

‘‘Sec. 787. Allocations to refineries. 

‘‘Sec. 788. øSECTION RESERVED¿. ‘‘Sec. 789. Climate change consumer refunds. 

‘‘Sec. 790. Exchange for State-issued allowances. 

‘‘Sec. 791. Auction procedures. 

‘‘Sec. 792. Auctioning allowances for other entities. 

‘‘Sec. 793. Establishment of funds. 

‘‘Sec. 794. Oversight of allocations. 

Subtitle C—Additional Greenhouse Gas Standards 

Sec. 331. Greenhouse gas standards. 

‘‘TITLE VIII—ADDITIONAL GREENHOUSE GAS STANDARDS 

‘‘Sec. 801. Definitions. 

‘‘PART A—STATIONARY SOURCE STANDARDS

‘‘Sec. 811. Standards of performance. 

‘‘PART C—EXEMPTIONS FROM OTHER PROGRAMS

‘‘Sec. 831. Criteria pollutants. 

‘‘Sec. 832. International air pollution. 

‘‘Sec. 833. Hazardous air pollutants. 

‘‘Sec. 834. New source review. 

‘‘Sec. 835. Title V permits. 

Sec. 332. HFC Regulation. 

Sec. 333. Black carbon. 

‘‘PART E—BLACK CARBON

‘‘Sec. 851. Black carbon. 

Sec. 334. States. 

Sec. 335. State programs. 

‘‘PART F—MISCELLANEOUS

‘‘Sec. 861. State programs. 

‘‘Sec. 862. Grants for support of air pollution control programs. 

Sec. 336. Enforcement. 

Sec. 337. Conforming amendments. 

Sec. 338. Davis-Bacon compliance. 

Subtitle D—Carbon Market Assurance 

Sec. 341. Carbon market assurance. 

Subtitle E—Additional Market Assurance 

Sec. 351. Regulation of certain transactions in derivatives involving energy commodities. 


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Sec. 352. No effect on authority of the Federal Energy Regulatory Commission. 

Sec. 353. Inspector General of the Commodity Futures Trading Commission. 

Sec. 354. Settlement and clearing through registered derivatives clearing organizations. 

Sec. 355. Limitation on eligibility to purchase a credit default swap. 

Sec. 356. Transaction fees. 

Sec. 357. No effect on authority of the Federal Trade Commission. 

Sec. 358. Regulation of carbon derivatives markets. 

Sec. 359. Cease-and-desist authority. 

TITLE IV—TRANSITIONING TO A CLEAN ENERGY ECONOMY 

Subtitle A—Ensuring Real Reductions in Industrial Emissions 

Sec. 401. Ensuring real reductions in industrial emissions. 

‘‘PART F—ENSURING REAL REDUCTIONS IN INDUSTRIAL EMISSIONS

‘‘Sec. 761. Purposes. 

‘‘Sec. 762. International negotiations. 

‘‘Sec. 763. Definitions. 

‘‘SUBPART 1—EMISSION ALLOWANCE REBATE PROGRAM

‘‘Sec. 764. Eligible industrial sectors. 

‘‘Sec. 765. Distribution of emission allowance rebates. 

‘‘SUBPART 2—INTERNATIONAL RESERVE ALLOWANCE PROGRAM

‘‘Sec. 766. International reserve allowance program. 

‘‘SUBPART 3—PRESIDENTIAL DETERMINATION

‘‘Sec. 767. Presidential reports and determinations. 

Subtitle B—Green Jobs and Worker Transition 

PART 1—GREEN JOBS

Sec. 421. Clean energy curriculum development grants. 

Sec. 422. Increased funding for energy worker training program. 

PART 2—CLIMATE CHANGE WORKER ADJUSTMENT ASSISTANCE

Sec. 425. Petitions, eligibility requirements, and determinations. 

Sec. 426. Program benefits. 

Sec. 427. General provisions. 

Subtitle C—Consumer Assistance 

Sec. 431. Energy tax credit. 

Sec. 432. Energy refund program for low-income consumers. 

Subtitle D—Exporting Clean Technology 

Sec. 441. Findings and purposes. 

Sec. 442. Definitions. 

Sec. 443. Governance. 

Sec. 444. Determination of eligible countries. 

Sec. 445. Qualifying activities. 

Sec. 446. Assistance. 

Subtitle E—Adapting to Climate Change 

PART 1—DOMESTIC ADAPTATION

SUBPART A—NATIONAL CLIMATE CHANGE ADAPTATION PROGRAM

Sec. 451. National Climate Change Adaptation Program. 

Sec. 452. Climate services. 

Sec. 453. State programs to build resilience to climate change impacts. 

SUBPART B—PUBLIC HEALTH AND CLIMATE CHANGE

Sec. 461. Sense of Congress on public health and climate change. 

Sec. 462. Relationship to other laws. 

Sec. 463. National strategic action plan. 

Sec. 464. Advisory board. 

Sec. 465. Reports. 

Sec. 466. Definitions. 

Sec. 467. Climate Change Health Protection and Promotion Fund. 

SUBPART C—NATURAL RESOURCE ADAPTATION

Sec. 471. Purposes. 

Sec. 472. Natural resources climate change adaptation policy. 

Sec. 473. Definitions. 

Sec. 474. Council on Environmental Quality. 

Sec. 475. Natural Resources Climate Change Adaptation Panel. 

Sec. 476. Natural Resources Climate Change Adaptation Strategy. 

Sec. 477. Natural resources adaptation science and information. 

Sec. 478. Federal natural resource agency adaptation plans. 

Sec. 479. State natural resources adaptation plans. 

Sec. 480. Natural Resources Climate Change Adaptation Fund. 

Sec. 481. National Wildlife Habitat and Corridors Information Program. 

Sec. 482. Additional provisions regarding Indian tribes. 

PART 2—INTERNATIONAL CLIMATE CHANGE ADAPTATION PROGRAM

Sec. 491. Findings and purposes. 


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Sec. 492. Definitions. 

Sec. 493. International Climate Change Adaptation Program. 

Sec. 494. Distribution of allowances. 

Sec. 495. Bilateral assistance. 

SEC. 2. DEFINITIONS. 

For purposes of this Act: 

(1) ADMINISTRATOR.—The term ‘‘Administrator’’ means the Administrator of 

the Environmental Protection Agency. 

(2) STATE.—The term ‘‘State’’ has the meaning given that term in section 302 

of the Clean Air Act. 

SEC. 3. INTERNATIONAL PARTICIPATION. 

The Administrator, in consultation with the Department of State and the United 

States Trade Representative, shall annually prepare and certify a report to the Congress regarding whether China and India have adopted greenhouse gas emissions 

standards at least as strict as those standards required under this Act. If the Administrator determines that China and India have not adopted greenhouse gas 

emissions standards at least as stringent as those set forth in this Act, the Administrator shall notify each Member of Congress of his determination, and shall release 

his determination to the media. 

TITLE I—CLEAN ENERGY 

Subtitle A—Combined Efficiency and Renewable 

Electricity Standard 

SEC. 101. COMBINED EFFICIENCY AND RENEWABLE ELECTRICITY STANDARD. 

(a) IN GENERAL.—Title VI of the Public Utility Regulatory Policies Act of 1978 (16 

U.S.C. 2601 and following) is amended by adding at the end the following: 

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

‘‘(a) DEFINITIONS.—For purposes of this section: 

‘‘(1) CHP SAVINGS.—The term ‘CHP savings’ means— 

‘‘(A) CHP system savings from a combined heat and power system that 

commences operation after the date of enactment of this section; and 

‘‘(B) the increase in CHP system savings from, at any time after the date 

of the enactment of this section, upgrading, replacing, expanding, or increasing the utilization of a combined heat and power system that commenced operation on or before the date of enactment of this section. 

‘‘(2) CHP SYSTEM SAVINGS.—The term ‘CHP system savings’ means the electric output, and the electricity saved due to the mechanical output, of a combined heat and power system, adjusted to reflect any increase in fuel consumption by that system as compared to the fuel that would have been required to 

produce an equivalent useful thermal energy output in a separate thermal-only 

system. 

‘‘(3) COMBINED HEAT AND POWER SYSTEM.—The term ‘combined heat and 

power system’ means a system that uses the same energy source both for the 

generation of electrical or mechanical power and the production of steam or another form of useful thermal energy, provided that— 

‘‘(A) the system meets such requirements relating to efficiency and other 

operating characteristics as the Commission may promulgate by regulation; 

and 

‘‘(B) the net sales of electricity by the facility to customers not consuming 

the thermal output from that facility will not exceed 50 percent of total annual electric generation by the facility. 

‘‘(4) CUSTOMER FACILITY SAVINGS.—The term ‘customer facility savings’ means 

a reduction in end-use electricity consumption (including recycled energy savings) at a facility of an end-use consumer of electricity served by a retail electric 

supplier, as compared to— 

‘‘(A) in the case of a new facility, consumption at a reference facility of 

average efficiency; 

‘‘(B) in the case of an existing facility, consumption at such facility during 

a base period, except as provided in subparagraphs (C) and (D); 

‘‘(C) in the case of new equipment that replaces existing equipment with 

remaining useful life, the projected consumption of the existing equipment 

for the remaining useful life of such equipment, and thereafter, consumpVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00006 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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tion of new equipment of average efficiency of the same equipment type; 

and 

‘‘(D) in the case of new equipment that replaces existing equipment at the 

end of the useful life of the existing equipment, consumption by new equipment of average efficiency of the same equipment type. 

‘‘(5) DISTRIBUTED RENEWABLE GENERATION FACILITY.—The term ‘distributed 

renewable generation facility’ means a facility that— 

‘‘(A) generates renewable electricity; 

‘‘(B) primarily serves 1 or more electricity consumers at or near the facility site; and 

‘‘(C) is no greater than— 

‘‘(i) 2 megawatts in capacity; or 

‘‘(ii) 4 megawatts in capacity, in the case of a facility that is placed 

in service after the date of enactment of this section and generates electricity from a renewable energy resource other than by means of combustion. 

‘‘(6) ELECTRICITY SAVINGS.—The term ‘electricity savings’ means reductions in 

electricity consumption, relative to business-as-usual projections, achieved 

through measures implemented after the date of enactment of this section, limited to— 

‘‘(A) customer facility savings of electricity, adjusted to reflect any associated increase in fuel consumption at the facility; 

‘‘(B) reductions in distribution system losses of electricity achieved by a 

retail electricity distributor, as compared to losses attributable to new or replacement distribution system equipment of average efficiency; 

‘‘(C) CHP savings; and 

‘‘(D) fuel cell savings. 

‘‘(7) FEDERAL LAND.—The term ‘Federal land’ means land owned by the 

United States, other than land held in trust for an Indian or Indian tribe. 

‘‘(8) FEDERAL RENEWABLE ELECTRICITY CREDIT.—The term ‘Federal renewable 

electricity credit’ means a credit, representing one megawatt hour of renewable 

electricity, issued pursuant to subsection (e). 

‘‘(9) FUEL CELL.—The term ‘fuel cell’ means a device that directly converts the 

chemical energy of a fuel and an oxidant into electricity by electrochemical processes occurring at separate electrodes in the device. 

‘‘(10) FUEL CELL SAVINGS.—The term ‘fuel cell savings’ means the electricity 

saved by a fuel cell that is installed after the date of enactment of this section, 

or by upgrading a fuel cell that commenced operation on or before the date of 

enactment of this section, as a result of the greater efficiency with which the 

fuel cell transforms fuel into electricity as compared with sources of electricity 

delivered through the grid, provided that— 

‘‘(A) the fuel cell meets such requirements relating to efficiency and other 

operating characteristics as the Commission may promulgate by regulation; 

and 

‘‘(B) the net sales of electricity from the fuel cell to customers not consuming the thermal output from the fuel cell, if any, do not exceed 50 percent of the total annual electricity generation by the fuel cell. 

‘‘(11) HIGH CONSERVATION PRIORITY LAND.—The term ‘high conservation priority land’ means land that is not Federal land and is— 

‘‘(A) globally or State ranked as critically imperiled or imperiled under a 

State Natural Heritage Program; or 

‘‘(B) old-growth or late-successional forest, as identified by the office of 

the relevant State Forester or relevant State agency with regulatory jurisdiction over forestry activities. 

‘‘(12) OTHER QUALIFYING ENERGY RESOURCE.—The term ‘other qualifying energy resource’ means any of the following: 

‘‘(A) Landfill gas. 

‘‘(B) Wastewater treatment gas. 

‘‘(C) Coal mine methane used to generate electricity at or near the mine 

mouth. 

‘‘(D) Qualified waste-to-energy. 

‘‘(13) QUALIFIED HYDROPOWER.—The term ‘qualified hydropower’ means— 

‘‘(A) energy produced from increased efficiency achieved, or additions of 

capacity made, on or after January 1, 1992, at a hydroelectric facility that 

was placed in service before that date and does not include additional energy generated as a result of operational changes not directly associated 

with efficiency improvements or capacity additions; or 

‘‘(B) energy produced from generating capacity added to a dam on or after 

January 1, 1992, provided that the Commission certifies that— 


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‘‘(i) the dam was placed in service before the date of the enactment 

of this section and was operated for flood control, navigation, or water 

supply purposes and was not producing hydroelectric power prior to the 

addition of such capacity; 

‘‘(ii) the hydroelectric project installed on the dam is licensed (or is 

exempt from licensing) by the Commission and is in compliance with 

the terms and conditions of the license or exemption, and with other 

applicable legal requirements for the protection of environmental quality, including applicable fish passage requirements; and 

‘‘(iii) the hydroelectric project installed on the dam is operated so that 

the water surface elevation at any given location and time that would 

have occurred in the absence of the hydroelectric project is maintained, 

subject to any license or exemption requirements that require changes 

in water surface elevation for the purpose of improving the environmental quality of the affected waterway. 

‘‘(14) QUALIFIED WASTE-TO-ENERGY.—The term ‘qualified waste-to-energy’ 

means energy from the combustion of municipal solid waste or construction, 

demolition, or disaster debris, or from the gasification or pyrolization of such 

waste or debris and the combustion of the resulting gas at the same facility, 

provided that— 

‘‘(A) such term shall include only the energy derived from the non-fossil 

biogenic portion of such waste or debris; 

‘‘(B) the Commission determines, with the concurrence of the Administrator of the Environmental Protection Agency, that the total lifecycle 

greenhouse gas emissions attributable to the generation of electricity from 

such waste or debris are lower than those attributable to the likely alternative method of disposing of such waste or debris; and 

‘‘(C) the owner or operator of the facility generating electricity from such 

energy provides to the Commission, on an annual basis— 

‘‘(i) a certification that the facility is in compliance with all applicable 

State and Federal environmental permits; 

‘‘(ii) in the case of a facility that commenced operation before the date 

of enactment of this section, a certification that the facility meets emissions standards promulgated under sections 112 or 129 of the Clean Air 

Act (42 U.S.C. 7412 or 7429) that apply as of the date of enactment of 

this section to new facilities within the relevant source category; and 

‘‘(iii) in the case of the combustion, pyrolization, or gasification of municipal solid waste, a certification that each local government unit from 

which such waste originates operates, participates in the operation of, 

contracts for, or otherwise provides for, recycling services for its residents. 

‘‘(15) RECYCLED ENERGY SAVINGS.—The term ‘recycled energy savings’ means 

a reduction in electricity consumption that results from a modification of an industrial or commercial system that commenced operation before the date of enactment of this section, in order to recapture electrical, mechanical, or thermal 

energy that would otherwise be wasted. 

‘‘(16) RENEWABLE BIOMASS.—The term ‘renewable biomass’ means any of the 

following: 

‘‘(A) Plant material, including waste material, harvested or collected from 

actively managed agricultural land that was in cultivation, cleared, or fallow and nonforested on January 1, 2009. 

‘‘(B) Plant material, including waste material, harvested or collected from 

pastureland that was nonforested on January 1, 2009. 

‘‘(C) Nonhazardous vegetative matter derived from waste, including separated yard waste, landscape right-of-way trimmings, construction and demolition debris or food waste (but not municipal solid waste, recyclable waste 

paper, painted, treated or pressurized wood, or wood contaminated with 

plastic or metals). 

‘‘(D) Animal waste or animal byproducts, including products of animal 

waste digesters. 

‘‘(E) Algae. 

‘‘(F) Trees, brush, slash, residues, or any other vegetative matter removed 

from within 600 feet of any building, campground, or route designated for 

evacuation by a public official with responsibility for emergency preparedness, or from within 300 feet of a paved road, electric transmission line, 

utility tower, or water supply line. 

‘‘(G) Residues from or byproducts of milled logs. 

‘‘(H) Any of the following removed from forested land that is not Federal 

and is not high conservation priority land: 


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‘‘(i) Trees, brush, slash, residues, interplanted energy crops, or any 

other vegetative matter removed from an actively managed tree plantation established— 

‘‘(I) prior to January 1, 2009; or 

‘‘(II) on land that, as of January 1, 2009, was cultivated or fallow 

and non-forested. 

‘‘(ii) Trees, logging residue, thinnings, cull trees, pulpwood, and brush 

removed from naturally-regenerated forests or other non-plantation forests, including for the purposes of hazardous fuel reduction or preventative treatment for reducing or containing insect or disease infestation. 

‘‘(iii) Logging residue, thinnings, cull trees, pulpwood, brush and species that are non-native and noxious, from stands that were planted 

and managed after January 1, 2009, to restore or maintain native forest types. 

‘‘(iv) Dead or severely damaged trees removed within 5 years of fire, 

blowdown, or other natural disaster, and badly infested trees. 

‘‘(I) Materials, pre-commercial thinnings, or removed invasive species 

from National Forest System land and public lands (as defined in section 

103 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 

1702)), including those that are byproducts of preventive treatments (such 

as trees, wood, brush, thinnings, chips, and slash), that are removed as part 

of a federally recognized timber sale, or that are removed to reduce hazardous fuels, to reduce or contain disease or insect infestation, or to restore 

ecosystem health, and that are— 

‘‘(i) not from components of the National Wilderness Preservation 

System, Wilderness Study Areas, Inventoried Roadless Areas, old 

growth or mature forest stands, components of the National Landscape 

Conservation System, National Monuments, National Conservation 

Areas, Designated Primitive Areas, or Wild and Scenic Rivers corridors; 

‘‘(ii) harvested in environmentally sustainable quantities, as determined by the appropriate Federal land manager; and 

‘‘(iii) harvested in accordance with Federal and State law and applicable land management plans. 

‘‘(17) RENEWABLE ELECTRICITY.—The term ‘renewable electricity’ means electricity generated (including by means of a fuel cell) from a renewable energy 

resource or other qualifying energy resources. 

‘‘(18) RENEWABLE ENERGY RESOURCE.—The term ‘renewable energy resource’ 

means each of the following: 

‘‘(A) Wind energy. 

‘‘(B) Solar energy. 

‘‘(C) Geothermal energy. 

‘‘(D) Renewable biomass. 

‘‘(E) Biogas derived exclusively from renewable biomass. 

‘‘(F) Biofuels derived exclusively from renewable biomass. 

‘‘(G) Qualified hydropower. 

‘‘(H) Marine and hydrokinetic renewable energy, as that term is defined 

in section 632 of the Energy Independence and Security Act of 2007 (42 

U.S.C. 17211). 

‘‘(19) RETAIL ELECTRIC SUPPLIER.— 

‘‘(A) IN GENERAL.—The term ‘retail electric supplier’ means, for any given 

year, an electric utility that sold not less than 4,000,000 megawatt hours 

of electric energy to electric consumers for purposes other than resale during the preceding calendar year. 

‘‘(B) INCLUSIONS AND LIMITATIONS.—For purposes of determining whether 

an electric utility qualifies as a retail electric supplier under subparagraph 

(A)— 

‘‘(i) the sales of any affiliate of an electric utility to electric consumers, other than sales to the affiliate’s lessees or tenants, for purposes other than resale shall be considered to be sales of such electric 

utility; and 

‘‘(ii) sales by any electric utility to an affiliate, lessee, or tenant of 

such electric utility shall not be treated as sales to electric consumers. 

‘‘(C) AFFILIATE.—For purposes of this paragraph, the term ‘affiliate’ when 

used in relation to a person, means another person that directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or control with, such person, as determined under regulations promulgated by the Commission. 

‘‘(20) RETAIL ELECTRIC SUPPLIER’S BASE AMOUNT.—The term ‘retail electric 

supplier’s base amount’ means the total amount of electric energy sold by the 


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retail electric supplier, expressed in megawatt hours, to electric customers for 

purposes other than resale during the relevant calendar year, excluding— 

‘‘(A) electricity generated by a hydroelectric facility that is not qualified 

hydropower; 

‘‘(B) electricity generated by a nuclear generating unit placed in service 

after the date of enactment of this section; and 

‘‘(C) the proportion of electricity generated by a fossil-fueled generating 

unit that is equal to the proportion of greenhouse gases produced by such 

unit that are captured and geologically sequestered. 

‘‘(21) RETIRE AND RETIREMENT.—The terms ‘retire’ and ‘retirement’ with respect to a Federal renewable electricity credit, means to disqualify such credit 

for any subsequent use under this section, regardless of whether the use is a 

sale, transfer, exchange, or submission in satisfaction of a compliance obligation. 

‘‘(22) THIRD-PARTY EFFICIENCY PROVIDER.—The term ‘third-party efficiency 

provider’ means any retailer, building owner, energy service company, financial 

institution or other commercial, industrial or nonprofit entity that is capable of 

providing electricity savings in accordance with the requirements of this section. 

‘‘(23) TOTAL ANNUAL ELECTRICITY SAVINGS.—The term ‘total annual electricity 

savings’ means electricity savings during a specified calendar year from measures that were placed into service since the date of the enactment of this section, taking into account verified measure lifetimes or verified annual savings 

attrition rates, as determined in accordance with such regulations as the Commission may promulgate and measured in megawatt hours. 

‘‘(b) ANNUAL COMPLIANCE OBLIGATION.— 

‘‘(1) IN GENERAL.—For each of calendar years 2012 through 2039, not later 

than March 31 of the following calendar year, each retail electric supplier shall 

submit to the Commission an amount of Federal renewable electricity credits 

and demonstrated total annual electricity savings that, in the aggregate, is 

equal to such retail electric supplier’s annual combined target as set forth in 

subsection (d), except as otherwise provided in subsection (g). 

‘‘(2) DEMONSTRATION OF SAVINGS.—For purposes of this subsection, submission of demonstrated total annual electricity savings means submission of a report that demonstrates, in accordance with the requirements of subsection (f), 

the total annual electricity savings achieved by the retail electric supplier within the relevant compliance year. 

‘‘(3) RENEWABLE ELECTRICITY CREDITS PORTION.—Except as provided in paragraph (4), each retail electric supplier must submit Federal renewable electricity credits equal to at least three quarters of the retail electric supplier’s annual combined target. 

‘‘(4) STATE PETITION.— 

‘‘(A) IN GENERAL.—Upon written request from the Governor of any State 

(including, for purposes of this paragraph, the Mayor of the District of Columbia), the Commission shall increase, to not more than two fifths, the 

proportion of the annual combined targets of retail electric suppliers located 

within such State that may be met through submission of demonstrated 

total annual electricity savings, provided that such increase shall be effective only with regard to the portion of a retail electric supplier’s annual 

combined target that is attributable to electricity sales within such State. 

‘‘(B) CONTENTS.—A Governor’s request under this paragraph shall include 

an explanation of the Governor’s rationale for determining, after consultation with the relevant State regulatory authority and other retail electricity 

ratemaking authorities within the State, to make such request. The request 

shall specify the maximum proportion of annual combined targets (not more 

than two fifths) that can be met through demonstrated total annual electricity savings, and the period for which such proportion shall be effective. 

‘‘(C) REVISION.—The Governor of any State may, after consultation with 

the relevant State regulatory authority and other retail electricity ratemaking authorities within the State, submit a written request for revocation or revision of a previous request submitted under this paragraph. The 

Commission shall grant such request, provided that— 

‘‘(i) any revocation or revision shall not apply to the combined annual 

target for any year that is any earlier than 2 calendar years after the 

calendar year in which such request is submitted, so as to provide retail electric suppliers with adequate notice of such change; and 

‘‘(ii) any revision shall meet the requirements of subparagraph (A). 

‘‘(c) ESTABLISHMENT OF PROGRAM.—Not later than 1 year after the date of enactment of this section, the Commission shall promulgate regulations to implement and 


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enforce the requirements of this section. In promulgating such regulations, the Commission shall, to the extent practicable— 

‘‘(1) preserve the integrity, and incorporate best practices, of existing State renewable electricity and energy efficiency programs; 

‘‘(2) rely upon existing and emerging State or regional tracking systems that 

issue and track non-Federal renewable electricity credits; and 

‘‘(3) cooperate with the States to facilitate coordination between State and 

Federal renewable electricity and energy efficiency programs and to minimize 

administrative burdens and costs to retail electric suppliers. 

‘‘(d) ANNUAL COMPLIANCE REQUIREMENT.— 

‘‘(1) ANNUAL COMBINED TARGETS.—For each of calendar years 2012 through 

2039, a retail electric supplier’s annual combined target shall be the product 

of— 

‘‘(A) the required annual percentage for such year, as set forth in paragraph (2); and 

‘‘(B) the retail electric supplier’s base amount for such year. 

‘‘(2) REQUIRED ANNUAL PERCENTAGE.—For each of calendar years 2012 

through 2039, the required annual percentage shall be as follows: 

‘‘Calendar year Required annual percentage 

2012 ........................................................................................................................ 6.0

2013 ........................................................................................................................ 6.0

2014 ........................................................................................................................ 9.5

2015 ........................................................................................................................ 9.5

2016 ........................................................................................................................ 13.0 

2017 ........................................................................................................................ 13.0 

2018 ........................................................................................................................ 16.5 

2019 ........................................................................................................................ 16.5 

2020 ........................................................................................................................ 20.0 

2021 through 2039 ................................................................................................ 20.0 

‘‘(e) FEDERAL RENEWABLE ELECTRICITY CREDITS.— 

‘‘(1) IN GENERAL.—The regulations promulgated under this section shall include provisions governing the issuance, tracking, and verification of Federal renewable electricity credits. Except as provided in paragraphs (2), (3), and (4) of 

this subsection, the Commission shall issue to each generator of renewable electricity, 1 Federal renewable electricity credit for each megawatt hour of renewable electricity generated by such generator after December 31, 2011. The Commission shall assign a unique serial number to each Federal renewable electricity credit. 

‘‘(2) GENERATION FROM CERTAIN STATE RENEWABLE ELECTRICITY PROGRAMS.— 

Where renewable electricity is generated with the support of payments from a 

retail electric supplier pursuant to a State renewable electricity program 

(whether through State alternative compliance payments or through payments 

to a State renewable electricity procurement fund or entity), the Commission 

shall issue Federal renewable electricity credits to such retail electric supplier 

for the proportion of the relevant renewable electricity generation that is attributable to the retail electric supplier’s payments, as determined pursuant to regulations issued by the Commission. For any remaining portion of the relevant 

renewable electricity generation, the Commission shall issue Federal renewable 

electricity credits to the generator, as provided in paragraph (1), except that in 

no event shall more than 1 Federal renewable electricity credit be issued for the 

same megawatt hour of electricity. In determining how Federal renewable electricity credits will be apportioned among retail electric suppliers and generators 

in such circumstances, the Commission shall consider information and guidance 

furnished by the relevant State or States. 

‘‘(3) CERTAIN POWER SALES CONTRACTS.—When a generator has sold renewable electricity to a retail electric supplier under a contract for power from a 

facility placed in service before the date of enactment of this section, and the 

contract does not provide for the determination of ownership of the Federal renewable electricity credits associated with such generation, the Commission 

shall issue such Federal renewable electricity credits to the retail electric supplier for the duration of the contract. 

‘‘(4) CREDIT MULTIPLIER FOR DISTRIBUTED RENEWABLE GENERATION.— 

‘‘(A) IN GENERAL.—Except as provided in subparagraph (B), the Commission shall issue 3 Federal renewable electricity credits for each megawatt 

hour of renewable electricity generated by a distributed renewable generation facility. 


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‘‘(B) ADJUSTMENT.—Except as provided in subparagraph (C), not later 

than January 1, 2014, and not less frequently than every 4 years thereafter, the Commission shall review the effect of this paragraph and shall, 

as necessary, reduce the number of Federal renewable electricity credits per 

megawatt hour issued under this paragraph for any given energy source or 

technology, but not below 1, to ensure that such number is no higher than 

the Commission determines is necessary to make distributed renewable 

generation facilities using such source or technology cost competitive with 

other sources of renewable electricity generation. 

‘‘(C) FACILITIES PLACED IN SERVICE AFTER ENACTMENT.—For any distributed renewable generation facility placed in service after the date of enactment of this section, subparagraph (B) shall not apply for the first 10 years 

after the date on which the facility is placed in service. For each year during such 10-year period, the Commission shall issue to the facility the same 

number of Federal renewable electricity credits per megawatt hour as are 

issued to that facility in the year in which such facility is placed in service. 

After such 10-year period, the Commission shall issue Federal renewable 

electricity credits to the facility in accordance with the current multiplier 

as determined pursuant to subparagraph (B). 

‘‘(5) CREDITS BASED ON QUALIFIED HYDROPOWER.—For purposes of this subsection, the number of Federal renewable electricity credits issued for qualified 

hydropower shall be calculated— 

‘‘(A) based solely on the increase in average annual generation directly 

resulting from the efficiency improvements or capacity additions described 

in subsection (a)(13)(A); and 

‘‘(B) using the same water flow information used to determine a historic 

average annual generation baseline for the hydroelectric facility, as certified 

by the Commission. 

‘‘(6) GENERATION FROM MIXED RENEWABLE AND NONRENEWABLE RESOURCES.— 

If electricity is generated using both a renewable energy resource or other qualifying energy resource and an energy source that is not a renewable energy resource or other qualifying energy resource (as, for example, in the case of cofiring of renewable biomass and fossil fuel), the Commission shall issue Federal 

renewable electricity credits based on the proportion of the electricity that is attributable to the renewable energy resource or other qualifying energy resource. 

‘‘(7) PROHIBITION AGAINST DOUBLE-COUNTING.—Except as provided in paragraph (4) of this subsection, the Commission shall ensure that no more than 1 

Federal renewable electricity credit will be issued for any megawatt hour of renewable electricity and that no Federal renewable electricity credit will be used 

more than once for compliance with this section. 

‘‘(8) TRADING.—The lawful holder of a Federal renewable electricity credit 

may sell, exchange, transfer, submit for compliance in accordance with subsection (b), or submit such credit for retirement by the Commission. 

‘‘(9) BANKING.—A Federal renewable electricity credit may be submitted in 

satisfaction of the compliance obligation set forth in subsection (b) for the compliance year in which the credit was issued or for any of the 3 immediately subsequent compliance years. The Commission shall retire any Federal renewable 

electricity credit that has not been retired by April 2 of the calendar year that 

is 3 years after the calendar year in which the credit was issued. 

‘‘(10) RETIREMENT.—The Commission shall retire a Federal renewable electricity credit immediately upon submission by the lawful holder of such credit, 

whether in satisfaction of a compliance obligation under subsection (b) or on 

some other basis. 

‘‘(f) ELECTRICITY SAVINGS.— 

‘‘(1) STANDARDS FOR MEASUREMENT OF SAVINGS.—As part of the regulations 

promulgated under this section, the Commission shall prescribe standards and 

protocols for defining and measuring electricity savings and total annual electricity savings that can be counted towards the compliance obligation set forth 

in subsection (b). Such protocols and standards shall, at minimum— 

‘‘(A) specify the types of energy efficiency and energy conservation measures that can be counted; 

‘‘(B) require that energy consumption estimates for customer facilities or 

portions of facilities in the applicable base and current years be adjusted, 

as appropriate, to account for changes in weather, level of production, and 

building area; 

‘‘(C) account for the useful life of measures; 

‘‘(D) include deemed savings values for specific, commonly used measures; 

‘‘(E) allow for savings from a program to be estimated based on extrapolation from a representative sample of participating customers; 


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‘‘(F) include procedures for counting CHP savings, recycled energy savings, and fuel cell savings; 

‘‘(G) include procedures for counting electricity savings achieved by solar 

water heating and solar light pipe technology that has the capability to provide measureable data on the amount of megawatt-hours displaced; 

‘‘(H) avoid double-counting of savings used for compliance with this section, including savings that are transferred pursuant to paragraph (3); 

‘‘(I) ensure that, except as provided in subparagraph (K), the retail electric supplier claiming the savings played a significant role in achieving the 

savings (including through the activities of a designated agent of the supplier or through the purchase of transferred savings); 

‘‘(J) include savings from programs administered by a retail electric supplier (or a retail electricity distributor that is not a retail electric supplier) 

that are funded by State, Federal, or other sources; 

‘‘(K) in any State in which the State regulatory authority has designated 

1 or more entities to administer electric ratepayer-funded efficiency programs approved by such State regulatory authority, provide that electricity 

savings achieved through such programs shall be distributed equitably 

among retail electric suppliers in accordance with the direction of the relevant State regulatory authority; and 

‘‘(L) exclude savings achieved as a result of compliance with mandatory 

appliance and equipment efficiency standards or building codes. 

‘‘(2) STANDARDS FOR THIRD-PARTY VERIFICATION OF SAVINGS.—The regulations 

promulgated under this section shall establish procedures and standards requiring third-party verification of all reported electricity savings, including requirements for accreditation of third-party verifiers to ensure that such verifiers are 

professionally qualified and have no conflicts of interest. 

‘‘(3) TRANSFERS OF SAVINGS.— 

‘‘(A) BILATERAL CONTRACTS FOR SAVINGS TRANSFERS.—Subject to the limitations of this paragraph, a retail electric supplier may use electricity savings transferred, pursuant to a bilateral contract, from another retail electric supplier, an owner of an electric distribution facility that is not a retail 

electric supplier, a State, or a third-party efficiency provider to meet the applicable compliance obligation under subsection (b). 

‘‘(B) REQUIREMENTS.—Electricity savings transferred and used for compliance pursuant to this paragraph shall be— 

‘‘(i) measured and verified in accordance with the procedures specified under this subsection; 

‘‘(ii) reported in accordance with paragraph (4) of this subsection; and 

‘‘(iii) achieved within the same State as is served by the retail electric 

supplier. 

‘‘(C) REGULATORY APPROVAL.—Nothing in this paragraph shall limit or affect the authority of a State regulatory authority to require a retail electric 

supplier that is regulated by such authority to obtain such authority’s authorization or approval of a contract for transfer of savings under this paragraph. 

‘‘(4) REPORTING SAVINGS.— 

‘‘(A) REQUIREMENTS.—The regulations promulgated under this section 

shall establish requirements governing the submission of reports to demonstrate, in accordance with the protocols and standards for measurement 

and third-party verification established under this subsection, the total annual electricity savings achieved by a retail electric supplier within the relevant year. 

‘‘(B) REVIEW AND APPROVAL.—The Commission shall review each report 

submitted to the Commission by a retail electric supplier and shall exclude 

any electricity savings that have not been adequately demonstrated in accordance with the requirements of this subsection. 

‘‘(5) STATE ADMINISTRATION.— 

‘‘(A) DELEGATION OF AUTHORITY.—Upon receipt of an application from the 

Governor of a State (including, for purposes of this subsection, the Mayor 

of the District of Columbia), the Commission may delegate to the State the 

authority to review and verify reported electricity savings for purposes of 

determining demonstrated total annual electricity savings that may be 

counted towards a retail electric supplier’s compliance obligation under subsection (b). The Commission shall make a substantive determination approving or disapproving a State application under this subparagraph, after 

notice and comment, within 180 days of receipt of a complete application. 

‘‘(B) ALTERNATIVE MEASUREMENT AND VERIFICATION PROCEDURES AND

STANDARDS.—As part of an application submitted under subparagraph (A), 


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a State may request to use alternative measurement and verification procedures and standards to those specified in paragraphs (1) and (2), provided 

the State demonstrates that such alternative procedures and standards provide a level of accuracy of measurement and verification at least equivalent 

to the Federal procedures and standards promulgated under paragraphs (1) 

and (2). 

‘‘(C) REVIEW OF STATE IMPLEMENTATION.—The Commission shall, not less 

frequently than once every 4 years, review each State’s implementation of 

delegated authority under this paragraph to ensure conformance with the 

requirements of this section. The Commission may, at any time, revoke the 

delegation of authority under this section upon a finding that the State is 

not implementing its delegated responsibilities in conformity with this 

paragraph. As a condition of maintaining its delegated authority under this 

paragraph, the Commission may require a State to submit a revised application under subparagraph (A) if the Commission has— 

‘‘(i) promulgated new or substantially revised measurement and 

verification procedures and standards under this subsection; or 

‘‘(ii) otherwise substantially revised the program established under 

this section. 

‘‘(g) ALTERNATIVE COMPLIANCE PAYMENTS.— 

‘‘(1) IN GENERAL.—A retail electric supplier may satisfy the requirements of 

subsection (b) in whole or in part by submitting in accordance with this subsection, in lieu of each Federal renewable electricity credit or megawatt hour 

of demonstrated total annual electricity savings that would otherwise be due, 

a payment equal to $25, adjusted for inflation on January 1 of each year following calendar year 2009, in accordance with such regulations as the Commission may promulgate. 

‘‘(2) PAYMENT TO STATE FUNDS.—Except as otherwise provided in this paragraph, payments made under this subsection shall be made directly to the State 

or States in which the retail electric supplier is located, in proportion to the portion of the retail electric supplier’s base amount that is sold within each relevant State, provided that such payments are deposited directly into a fund in 

the State treasury established for this purpose and that the State uses such 

funds in accordance with paragraphs (3) and (4). If the Commission determines 

at any time that a State is in substantial noncompliance with paragraph (3) or 

(4), the Commission shall direct that any future alternative compliance payments that would otherwise be paid to such State under this subsection shall 

instead be paid to the Commission and deposited in the United States Treasury. 

‘‘(3) STATE USE OF FUNDS.—As a condition of continued receipt of alternative 

compliance payments pursuant to this subsection, a State shall use such payments exclusively for the purposes of— 

‘‘(A) deploying technologies that generate electricity from renewable energy resources; or 

‘‘(B) implementing cost-effective energy efficiency programs to achieve 

electricity savings. 

‘‘(4) REPORTING.—As a condition of continued receipt of alternative compliance 

payments pursuant to this subsection, a State shall, within 12 months of receipt 

of any such payments and at 12-month intervals thereafter until such payments 

are expended, provide a report to the Commission, in accordance with such regulations as the Commission may prescribe, giving a full accounting of the use 

of such payments, including a detailed description of the activities funded thereby. 

‘‘(h) INFORMATION COLLECTION.—The Commission may require any retail electric 

supplier, renewable electricity generator, or such other entities as the Commission 

deems appropriate, to provide any information the Commission determines appropriate to carry out this section. Failure to submit such information or submission 

of false or misleading information under this subsection shall be a violation of this 

section. 

‘‘(i) ENFORCEMENT AND JUDICIAL REVIEW.— 

‘‘(1) FAILURE TO SUBMIT CREDITS OR DEMONSTRATE SAVINGS.—If any person 

fails to comply with the requirements of subsection (b) or (g), such person shall 

be liable to pay to the Commission a civil penalty equal to the product of— 

‘‘(A) double the alternative compliance payment calculated under subsection (g)(1), and 

‘‘(B) the aggregate quantity of Federal renewable electricity credits, total 

annual electricity savings, or equivalent alternative compliance payments 

that the person failed to submit in violation of the requirements of subsections (b) and (g). 


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‘‘(2) ENFORCEMENT.—The Commission shall assess a civil penalty under paragraph (1) in accordance with the procedures described in section 31(d) of the 

Federal Power Act (16 U.S.C. 823b(d)). 

‘‘(3) VIOLATION OF REQUIREMENT OF REGULATIONS OR ORDERS.—Any person 

who violates, or fails or refuses to comply with, any requirement of a regulation 

promulgated or order issued under this section shall be subject to a civil penalty 

under section 316A(b) of the Federal Power Act (16 U.S.C. 825o–1). Such penalty shall be assessed by the Commission in the same manner as in the case 

of a violation referred to in section 316A(b) of such Act. 

‘‘(j) JUDICIAL REVIEW.—Any person aggrieved by a final action taken by the Commission under this section, other than the assessment of a civil penalty under subsection (i), may use the procedures for review described in section 313 of the Federal 

Power Act (16 U.S.C. 825l). For purposes of this paragraph, references to an order 

in section 313 of such Act shall be deemed to refer also to all other final actions 

of the Commission under this section other than the assessment of a civil penalty 

under subsection (i). 

‘‘(k) SAVINGS PROVISIONS.—Nothing in this section shall— 

‘‘(1) diminish or qualify any authority of a State or political subdivision of a 

State to— 

‘‘(A) adopt or enforce any law or regulation respecting renewable electricity or energy efficiency, including any law or regulation establishing requirements more stringent than those established by this section, provided 

that no such law or regulation may relieve any person of any requirement 

otherwise applicable under this section; or 

‘‘(B) regulate the acquisition and disposition of Federal renewable electricity credits by retail electric suppliers within the jurisdiction of such 

State or political subdivision, including the authority to require such retail 

electric supplier to acquire and submit to the Secretary for retirement Federal renewable electricity credits in excess of those submitted under this 

section; or 

‘‘(2) affect the application of, or the responsibility for compliance with, any 

other provision of law or regulation, including environmental and licensing requirements. 

‘‘(l) SUNSET.—This section expires on December 31, 2040.’’. 

(b) CONFORMING AMENDMENT.—The table of contents set forth in section 1(b) of 

the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 and following) is 

amended by inserting after the item relating to section 609 the following: 

‘‘Sec. 610. Combined efficiency and renewable electricity standard.’’. 

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

Section 210 of the Public Utility Regulatory Policies Act of 1978 is amended by 

adding at the end thereof: 

‘‘(o) CLARIFICATION OF STATE AUTHORITY TO ADOPT RENEWABLE ENERGY INCENTIVES.—Notwithstanding any other provision of this Act or the Federal Power Act, 

a State legislature or regulatory authority may set the rates for a sale of electric 

energy by a facility generating electric energy from renewable energy sources pursuant to a State-approved production incentive program under which the facility voluntarily sells electric energy. For purposes of this subsection, ‘State-approved production incentive program’ means a requirement imposed pursuant to State law, or 

by a State regulatory authority acting within its authority under State law, that an 

electric utility purchase renewable energy (as defined in section 609 of this Act) at 

a specified rate.’’. 

Subtitle B—Carbon Capture and Sequestration 

SEC. 111. NATIONAL STRATEGY. 

(a) IN GENERAL.—Not later than 1 year after the date of enactment of this Act, 

the Administrator, in consultation with the Secretary of Energy and the heads of 

such other relevant Federal agencies as the President may designate, shall submit 

to Congress a report setting forth a unified and comprehensive strategy to address 

the key legal, regulatory and other barriers to the commercial-scale deployment of 

carbon capture and sequestration. 

(b) BARRIERS.— The report under this section shall— 

(1) identify those regulatory, legal, and other gaps and barriers that could be 

addressed by a Federal agency using existing statutory authority, those, if any, 

that require Federal legislation, and those that would be best addressed at the 

State or regional level; 


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(2) identify regulatory implementation challenges, including those related to 

approval of State programs and delegation of authority for permitting; and 

(3) recommend rulemakings, Federal legislation, or other actions that should 

be taken to further evaluate and address such barriers. 

SEC. 112. REGULATIONS FOR GEOLOGIC SEQUESTRATION SITES. 

(a) COORDINATED CERTIFICATION AND PERMITTING PROCESS.—Title VIII of the 

Clean Air Act, as added by section 331 of this Act, is amended by adding after section 812 (as added by section 116 of this Act) the following: 

‘‘SEC. 813. GEOLOGIC SEQUESTRATION SITES. 

‘‘(a) COORDINATED PROCESS.—The Administrator shall establish a coordinated approach to certifying and permitting geologic sequestration, taking into consideration 

all relevant statutory authorities. In establishing such approach, the Administrator 

shall— 

‘‘(1) take into account, and reduce redundancy with, the requirements of section 1421 of the Safe Drinking Water Act (42 U.S.C. 300h), as amended by section 112(b) of the American Clean Energy and Security Act of 2009, including 

the rulemaking for geologic sequestration wells described at 73 Fed. Reg. 43491- 

541 (July 25, 2008); and 

‘‘(2) to the extent practicable, reduce the burden on certified entities and implementing authorities. 

‘‘(b) REGULATIONS.—Not later than 2 years after the date of enactment of this 

title, the Administrator shall promulgate regulations to protect human health and 

the environment by minimizing the risk of escape to the atmosphere of carbon dioxide injected for purposes of geologic sequestration. 

‘‘(c) REQUIREMENTS.—The regulations under subsection (b) shall include— 

‘‘(1) a process to obtain certification for geologic sequestration under this section; and 

‘‘(2) requirements for— 

‘‘(A) monitoring, record keeping, and reporting for emissions associated 

with injection into, and escape from, geologic sequestration sites, taking 

into account any requirements or protocols developed under section 713; 

‘‘(B) public participation in the certification process that maximizes transparency; 

‘‘(C) the sharing of data between States, Indian tribes, and the Environmental Protection Agency; and 

‘‘(D) other elements or safeguards necessary to achieve the purpose set 

forth in subsection (b). 

‘‘(d) REPORT.—Not later than 2 years after the promulgation of regulations under 

subsection (b), and at 3-year intervals thereafter, the Administrator shall deliver to 

the Committee on Energy and Commerce of the House of Representatives and the 

Committee on Environment and Public Works of the Senate a report on geologic sequestration in the United States, and, to the extent relevant, other countries in 

North America. Such report shall include— 

‘‘(1) data regarding injection, emissions to the atmosphere, if any, and performance of active and closed geologic sequestration sites, including those where 

enhanced hydrocarbon recovery operations occur; 

‘‘(2) an evaluation of the performance of relevant Federal environmental regulations and programs in ensuring environmentally protective geologic sequestration practices; 

‘‘(3) recommendations on how such programs and regulations should be improved or made more effective; and 

‘‘(4) other relevant information.’’. 

(b) SAFE DRINKING WATER ACT STANDARDS.—Section 1421 of the Safe Drinking 

Water Act (42 U.S.C. 300h) is amended by inserting after subsection (d) the following: 

‘‘(e) CARBON DIOXIDE GEOLOGIC SEQUESTRATION WELLS.— 

‘‘(1) IN GENERAL.—Not later than 1 year after the date of enactment of this 

subsection, the Administrator shall promulgate regulations under subsection (a) 

for carbon dioxide geologic sequestration wells. 

‘‘(2) FINANCIAL RESPONSIBILITY.—The regulations referred to in paragraph (1) 

shall include requirements for maintaining evidence of financial responsibility, 

including financial responsibility for emergency and remedial response, well 

plugging, site closure, and post-injection site care. Financial responsibility may 

be established for carbon dioxide geologic sequestration wells in accordance with 

regulations promulgated by the Administrator by any one, or any combination, 

of the following: insurance, guarantee, trust, standby trust, surety bond, letter 

of credit, qualification as a self-insurer, or any other method satisfactory to the 

Administrator.’’. 


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SEC. 113. STUDIES AND REPORTS. 

(a) STUDY OF LEGAL FRAMEWORK FOR GEOLOGIC SEQUESTRATION SITES.— (1) ESTABLISHMENT OF TASK FORCE.—As soon as practicable, but not later 

than 6 months after the date of enactment of this Act, the Administrator shall 

establish a task force to be composed of an equal number of subject matter experts, nongovernmental organizations with expertise in environmental policy, 

academic experts with expertise in environmental law, State officials with environmental expertise, representatives of State Attorneys General, and members 

of the private sector, to conduct a study of— 

(A) existing Federal environmental statutes, State environmental statutes, and State common law that apply to geologic sequestration sites for 

carbon dioxide, including the ability of such laws to serve as risk management tools; 

(B) the existing statutory framework, including Federal and State laws, 

that apply to harm and damage to the environment or public health at 

closed sites where carbon dioxide injection has been used for enhanced hydrocarbon recovery; 

(C) the statutory framework, environmental health and safety considerations, implementation issues, and financial implications of potential models for Federal, State, or private sector assumption of liabilities and financial responsibilities with respect to closed geologic sequestration sites; 

(D) private sector mechanisms, including insurance and bonding, that 

may be available to manage environmental, health and safety risk from 

closed geologic sequestration sites; and 

(E) the subsurface mineral rights, water rights, or property rights issues 

associated with geologic sequestration of carbon dioxide. 

(2) REPORT.—Not later than 18 months after the date of enactment of this 

Act, the task force established under paragraph (1) shall submit to Congress a 

report describing the results of the study conducted under that paragraph including any consensus recommendations of the task force. 

(b) ENVIRONMENTAL STATUTES.— (1) STUDY.—The Administrator shall conduct a study examining how, and 

under what circumstances, the environmental statutes for which the Environmental Protection Agency has responsibility would apply to carbon dioxide injection and geologic sequestration activities. 

(2) REPORT.—Not later than 1 year after the date of enactment of this Act, 

the Administrator shall submit to Congress a report describing the results of 

the study conducted under paragraph (1). 

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

(a) DEFINITIONS.—For purposes of this section: 

(1) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Energy. 

(2) DISTRIBUTION UTILITY.—The term ‘‘distribution utility’’ means an entity 

that distributes electricity directly to retail consumers under a legal, regulatory, 

or contractual obligation to do so. 

(3) ELECTRIC UTILITY.—The term ‘‘electric utility’’ has the meaning provided 

by section 3(22) of the Federal Power Act (16 U.S.C. 796(22)). 

(4) FOSSIL FUEL-BASED ELECTRICITY.—The term ‘‘fossil fuel-based electricity’’ 

means electricity that is produced from the combustion of fossil fuels. 

(5) FOSSIL FUEL.—The term ‘‘fossil fuel’’ means coal, petroleum, natural gas 

or any derivative of coal, petroleum, or natural gas. 

(6) CORPORATION.—The term ‘‘Corporation’’ means the Carbon Storage Research Corporation established in accordance with this section. 

(7) QUALIFIED INDUSTRY ORGANIZATION.—The term ‘‘qualified industry organization’’ means the Edison Electric Institute, the American Public Power Association, the National Rural Electric Cooperative Association, a successor organization of such organizations, or a group of owners or operators of distribution 

utilities delivering fossil fuel-based electricity who collectively represent at least 

20 percent of the volume of fossil fuel-based electricity delivered by distribution 

utilities to consumers in the United States. 

(8) RETAIL CONSUMER.—The term ‘‘retail consumer’’ means an end-user of 

electricity. 

(b) CARBON STORAGE RESEARCH CORPORATION.— 

(1) ESTABLISHMENT.— 

(A) REFERENDUM.—Qualified industry organizations may conduct, at 

their own expense, a referendum among the owners or operators of distribution utilities delivering fossil fuel-based electricity for the creation of a Carbon Storage Research Corporation. Such referendum shall be conducted by 

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tions. Voting rights in such referendum shall be based on the quantity of 

fossil fuel-based electricity delivered to consumers in the previous calendar 

year or other representative period as determined by the Secretary pursuant to subsection (f). Upon approval of those persons representing twothirds of the total quantity of fossil fuel-based electricity delivered to retail 

consumers, the Corporation shall be established unless opposed by the 

State regulatory authorities pursuant to subparagraph (B). All distribution 

utilities voting in the referendum shall certify to the independent auditing 

firm the quantity of fossil fuel-based electricity represented by their vote. 

(B) STATE REGULATORY AUTHORITIES.—Upon its own motion or the petition of a qualified industry organization, each State regulatory authority 

shall consider its support or opposition to the creation of the Corporation 

under subparagraph (A). State regulatory authorities may notify the independent auditing firm referred to in subparagraph (A) of their views on the 

creation of the Corporation within 180 days after the date of enactment of 

this Act. If 40 percent or more of the State regulatory authorities submit 

to the independent auditing firm written notices of opposition, the Corporation shall not be established notwithstanding the approval of the qualified 

industry organizations as provided in subparagraph (A). 

(2) TERMINATION.—The Corporation shall be authorized to collect assessments 

and conduct operations pursuant to this section for a 10-year period from the 

date 6 months after the date of enactment of this Act. After such 10-year period, 

the Corporation is no longer authorized to collect assessments and shall be dissolved on the date 15 years after such date of enactment, unless the period is 

extended by an Act of Congress. 

(3) GOVERNANCE.—The Corporation shall operate as a division or affiliate of 

the Electric Power Research Institute (referred to in this section as ‘‘EPRI’’) and 

be managed by a Board of not more than 15 voting members responsible for its 

operations, including compliance with this section. EPRI, in consultation with 

the Edison Electric Institute, the American Public Power Association and the 

National Rural Electric Cooperative Association shall appoint the Board members under clauses (i), (ii), and (iii) of subparagraph (A) from among candidates 

recommended by those organizations. At least a majority of the Board members 

appointed by EPRI shall be representatives of distribution utilities subject to 

assessments under subsection (d). 

(A) MEMBERS.—The Board shall include at least one representative of 

each of the following: 

(i) Investor-owned utilities. 

(ii) Utilities owned by a State agency or a municipality. 

(iii) Rural electric cooperatives. 

(iv) Fossil fuel producers. 

(v) Nonprofit environmental organizations. 

(vi) Independent generators or wholesale power providers. 

(vii) Consumer groups. 

(B) NONVOTING MEMBERS.—The Board shall also include as additional 

nonvoting Members the Secretary of Energy or his designee and 2 representatives of State regulatory authorities as defined in section 3(17) of the 

Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602(17)), each 

designated by the National Association of State Regulatory Utility Commissioners from States that are not within the same transmission interconnection. 

(4) COMPENSATION.—Corporation Board members shall receive no compensation for their services, nor shall Corporation Board members be reimbursed for 

expenses relating to their service. 

(5) TERMS.—Corporation Board members shall serve terms of 4 years and 

may serve not more than 2 full consecutive terms. Members filling unexpired 

terms may serve not more than a total of 8 consecutive years. Former members 

of the Corporation Board may be reappointed to the Corporation Board if they 

have not been members for a period of 2 years. Initial appointments to the Corporation Board shall be for terms of 1, 2, 3, and 4 years, staggered to provide 

for the selection of 3 members each year. 

(6) STATUS OF CORPORATION.—The Corporation shall not be considered to be 

an agency, department, or instrumentality of the United States, and no officer 

or director or employee of the Corporation shall be considered to be an officer 

or employee of the United States Government, for purposes of title 5 or title 31 

of the United States Code, or for any other purpose, and no funds of the Corporation shall be treated as public money for purposes of chapter 33 of title 31, 

United States Code, or for any other purpose. 

(c) FUNCTIONS AND ADMINISTRATION OF THE CORPORATION.— 


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(1) IN GENERAL.—The Corporation shall establish and administer a program 

to accelerate the commercial availability of carbon dioxide capture and storage 

technologies and methods, including technologies which capture and store, or 

capture and convert, carbon dioxide. Under such program competitively awarded grants, contracts, and financial assistance shall be provided and entered into 

with eligible entities. Except as provided in paragraph (8), the Corporation shall 

use all funds derived from assessments under subsection (d) to issue grants and 

contracts to eligible entities. 

(2) PURPOSE.—The purposes of the grants, contracts, and assistance under 

this subsection shall be to support commercial-scale demonstrations of carbon 

capture or storage technology projects capable of advancing the technologies to 

commercial readiness. Such projects should encompass a range of different coal 

and other fossil fuel varieties, be geographically diverse, involve diverse storage 

media, and employ capture or storage, or capture and conversion, technologies 

potentially suitable either for new or for retrofit applications. The Corporation 

shall seek, to the extent feasible, to support at least 5 commercial-scale demonstration projects integrating carbon capture and sequestration or conversion 

technologies. 

(3) ELIGIBLE ENTITIES.—Entities eligible for grants, contracts or assistance 

under this subsection may include distribution utilities, electric utilities and 

other private entities, academic institutions, national laboratories, Federal research agencies, State research agencies, nonprofit organizations, or consortiums of 2 or more entities. Pilot-scale and similar small-scale projects are not 

eligible for support by the Corporation. Owners or developers of projects supported by the Corporation shall, where appropriate, share in the costs of such 

projects. 

(4) GRANTS FOR EARLY MOVERS.—Fifty percent of the funds raised under this 

section shall be provided in the form of grants to electric utilities that had, prior 

to the award of any grant under this section, committed resources to deploy a 

large scale electricity generation unit with integrated carbon capture and sequestration or conversion applied to a substantial portion of the unit’s carbon 

dioxide emissions. Grant funds shall be provided to defray costs incurred by 

such electricity utilities for at least 5 such electricity generation units. 

(5) ADMINISTRATION.—The members of the Board of Directors of the Corporation shall elect a Chairman and other officers as necessary, may establish committees and subcommittees of the Corporation, and shall adopt rules and bylaws for the conduct of business and the implementation of this section. The 

Board shall appoint an Executive Director and professional support staff who 

may be employees of the Electric Power Research Institute (EPRI). After consultation with the Technical Advisory Committee established under subsection 

(j), the Secretary, and the Director of the National Energy Technology Laboratory to obtain advice and recommendations on plans, programs, and project selection criteria, the Board shall establish priorities for grants, contracts, and assistance; publish requests for proposals for grants, contracts, and assistance; 

and award grants, contracts, and assistance competitively, on the basis of merit, 

after the establishment of procedures that provide for scientific peer review by 

the Technical Advisory Committee. The Board shall give preference to applications that reflect the best overall value and prospect for achieving the purposes 

of the section, such as those which demonstrate an integrated approach for capture and storage or capture and conversion technologies. The Board members 

shall not participate in making grants or awards to entities with whom they 

are affiliated. 

(6) USES OF GRANTS, CONTRACTS, AND ASSISTANCE.—A grant, contract, or other 

assistance provided under this subsection may be used to purchase carbon dioxide when needed to conduct tests of carbon dioxide storage sites, in the case of 

established projects that are storing carbon dioxide emissions, or for other purposes consistent with the purposes of this section. The Corporation shall make 

publicly available at no cost information learned as a result of projects which 

it supports financially. 

(7) INTELLECTUAL PROPERTY.—The Board shall establish policies regarding 

the ownership of intellectual property developed as a result of Corporation 

grants and other forms of technology support. Such policies shall encourage individual ingenuity and invention. 

(8) ADMINISTRATIVE EXPENSES.—Up to 5 percent of the funds collected in any 

fiscal year under subsection (d) may be used for the administrative expenses of 

operating the Corporation (not including costs incurred in the determination 

and collection of the assessments pursuant to subsection (d)). 

(9) PROGRAMS AND BUDGET.—Before August 1 each year, the Corporation, 

after consulting with the Technical Advisory Committee and the Secretary and 


hsrobinson on PROD1PC76 with HEARING
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the Director of the Department’s National Energy Technology Laboratory and 

other interested parties to obtain advice and recommendations, shall publish for 

public review and comment its proposed plans, programs, project selection criteria, and projects to be funded by the Corporation for the next calendar year. 

The Corporation shall also publish for public review and comment a budget plan 

for the next calendar year, including the probable costs of all programs, 

projects, and contracts and a recommended rate of assessment sufficient to 

cover such costs. The Secretary may recommend programs and activities the 

Secretary considers appropriate. The Corporation shall include in the first publication it issues under this paragraph a strategic plan or roadmap for the 

achievement of the purposes of the Corporation, as set forth in paragraph (2). 

(10) RECORDS; AUDITS.—The Corporation shall keep minutes, books, and 

records that clearly reflect all of the acts and transactions of the Corporation 

and make public such information. The books of the Corporation shall be audited by a certified public accountant at least once each fiscal year and at such 

other times as the Corporation may designate. Copies of each audit shall be provided to the Congress, all Corporation board members, all qualified industry organizations, each State regulatory authority and, upon request, to other members of the industry. If the audit determines that the Corporation’s practices fail 

to meet generally accepted accounting principles the assessment collection authority of the Corporation under subsection (d) shall be suspended until a certified public accountant renders a subsequent opinion that the failure has been 

corrected. The Corporation shall make its books and records available for review 

by the Secretary or the Comptroller General of the United States. 

(11) PUBLIC ACCESS.—The Corporation Board’s meetings shall be open to the 

public and shall occur after at least 30 days advance public notice. Meetings of 

the Board of Directors may be closed to the public where the agenda of such 

meetings includes only confidential matters pertaining to project selection, the 

award of grants or contracts, personnel matters, or the receipt of legal advice. 

The minutes of all meetings of the Corporation shall be made available to and 

readily accessible by the public. 

(12) ANNUAL REPORT.—Each year the Corporation shall prepare and make 

publicly available a report which includes an identification and description of 

all programs and projects undertaken by the Corporation during the previous 

year. The report shall also detail the allocation or planned allocation of Corporation resources for each such program and project. The Corporation shall provide 

its annual report to the Congress, the Secretary, each State regulatory authority, and upon request to the public. The Secretary shall, not less than 60 days 

after receiving such report, provide to the President and Congress a report assessing the progress of the Corporation in meeting the objectives of this section. 

(d) ASSESSMENTS.— (1) AMOUNT.—(A) In all calendar years following its establishment, the Corporation shall collect an assessment on distribution utilities for all fossil fuelbased electricity delivered directly to retail consumers (as determined under 

subsection (f)). The assessments shall reflect the relative carbon dioxide emission rates of different fossil fuel-based electricity, and initially shall be not less 

than the following amounts for coal, natural gas, and oil: 

Fuel type Rate of assessment per kilowatt 

hour 

Coal ............................................................................................................ $0.00043 

Natural Gas .............................................................................................. $0.00022 

Oil .............................................................................................................. $0.00032. 

(B) The Corporation is authorized to adjust the assessments on fossil fuelbased electricity to reflect changes in the expected quantities of such electricity 

from different fuel types, such that the assessments generate not less than $1.0 

billion and not more than $1.1 billion annually. The Corporation is authorized 

to supplement assessments through additional financial commitments. 

(2) INVESTMENT OF FUNDS.—Pending disbursement pursuant to a program, 

plan, or project, the Corporation may invest funds collected through assessments under this subsection, and any other funds received by the Corporation, 

only in obligations of the United States or any agency thereof, in general obligations of any State or any political subdivision thereof, in any interest-bearing 

account or certificate of deposit of a bank that is a member of the Federal Reserve System, or in obligations fully guaranteed as to principal and interest by 

the United States. 

(3) REVERSION OF UNUSED FUNDS.—If the Corporation does not disburse, dedicate or assign 75 percent or more of the available proceeds of the assessed fees 

in any calendar year 7 or more years following its establishment, due to an absence of qualified projects or similar circumstances, it shall reimburse the reVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00020 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

hsrobinson on PROD1PC76 with HEARING
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maining undedicated or unassigned balance of such fees, less administrative 

and other expenses authorized by this section, to the distribution utilities upon 

which such fees were assessed, in proportion to their collected assessments. 

(e) ERCOT.— 

(1) ASSESSMENT, COLLECTION, AND REMITTANCE.—(A) Notwithstanding any 

other provision of this section, within ERCOT, the assessment provided for in 

subsection (d) shall be— 

(i) levied directly on qualified scheduling entities, or their successor entities; 

(ii) charged consistent with other charges imposed on qualified scheduling 

entities as a fee on energy used by the load-serving entities; and 

(iii) collected and remitted by ERCOT to the Corporation in the amounts 

and in the same manner as set forth in subsection (d). 

(B) The assessment amounts referred to in subparagraph (A) shall be— 

(i) determined by the amount and types of fossil fuel-based electricity delivered directly to all retail customers in the prior calendar year beginning 

with the year ending immediately prior to the period described in subsection (b)(2); and 

(ii) take into account the number of renewable energy credits retired by 

the load-serving entities represented by a qualified scheduling entity within 

the prior calendar year. 

(2) ADMINISTRATION EXPENSES.—Up to 1 percent of the funds collected in any 

fiscal year by ERCOT under the provisions of this subsection may be used for 

the administrative expenses incurred in the determination, collection and remittance of the assessments to the Corporation. 

(3) AUDIT.—ERCOT shall provide a copy of its annual audit pertaining to the 

administration of the provisions of this subsection to the Corporation. 

(4) DEFINITIONS.—For the purposes of this subsection: 

(A) The term ‘‘ERCOT’’ means the Electric Reliability Council of Texas. 

(B) The term ‘‘load-serving entities’’ has the meaning adopted by ERCOT 

Protocols and in effect on the date of enactment of this Act. 

(C) The term ‘‘qualified scheduling entities’’ has the meaning adopted by 

ERCOT Protocols and in effect on the date of enactment of this Act. 

(D) The term ‘‘renewable energy credit’’ has the meaning as promulgated 

and adopted by the Public Utility Commission of Texas pursuant to section 

39.904(b) of the Public Utility Regulatory Act of 1999, and in effect on the 

date of enactment of this Act. 

(f) DETERMINATION OF FOSSIL FUEL-BASED ELECTRICITY DELIVERIES.— 

(1) FINDINGS.—The Congress finds that: 

(A) The assessments under subsection (d) are to be collected based on the 

amount of fossil fuel-based electricity delivered by each distribution utility. 

(B) Since many distribution utilities purchase all or part of their retail 

consumer’s electricity needs from other entities, it may not be practical to 

determine the precise fuel mix for the power sold by each individual distribution utility. 

(C) It may be necessary to use average data, often on a regional basis 

with reference to Regional Transmission Organization (‘‘RTO’’) or NERC regions, to make the determinations necessary for making assessments. 

(2) DOE PROPOSED RULE.—The Secretary, acting in close consultation with 

the Energy Information Administration, shall issue for notice and comment a 

proposed rule to determine the level of fossil fuel electricity delivered to retail 

customers by each distribution utility in the United States during the most recent calendar year or other period determined to be most appropriate. Such proposed rule shall balance the need to be efficient, reasonably precise, and timely, 

taking into account the nature and cost of data currently available and the nature of markets and regulation in effect in various regions of the country. Different methodologies may be applied in different regions if appropriate to obtain 

the best balance of such factors. 

(3) FINAL RULE.—Within 6 months after the date of enactment of this Act, 

and after opportunity for comment, the Secretary shall issue a final rule under 

this subsection for determining the level and type of fossil fuel-based electricity 

delivered to retail customers by each distribution utility in the United States 

during the appropriate period. In issuing such rule, the Secretary may consider 

opportunities and costs to develop new data sources in the future and issue recommendations for the Energy Information Administration or other entities to 

collect such data. After notice and opportunity for comment the Secretary may, 

by rule, subsequently update and modify the methodology for making such determinations. 


hsrobinson on PROD1PC76 with HEARING
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(4) ANNUAL DETERMINATIONS.—Pursuant to the final rule issued under paragraph (3), the Secretary shall make annual determinations of the amounts and 

types for each such utility and publish such determinations in the Federal Register. Such determinations shall be used to conduct the referendum under subsection (b) and by the Corporation in applying any assessment under this subsection. 

(5) REHEARING AND JUDICIAL REVIEW.—The owner or operator of any distribution utility that believes that the Secretary has misapplied the methodology in 

the final rule in determining the amount and types of fossil fuel electricity delivered by such distribution utility may seek rehearing of such determination 

within 30 days of publication of the determination in the Federal Register. The 

Secretary shall decide such rehearing petitions within 30 days. The Secretary’s 

determinations following rehearing shall be final and subject to judicial review 

in the United States Court of Appeals for the District of Columbia. 

(g) COMPLIANCE WITH CORPORATION ASSESSMENTS.—The Corporation may bring 

an action in the appropriate court of the United States to compel compliance with 

an assessment levied by the Corporation under this section. A successful action for 

compliance under this subsection may also require payment by the defendant of the 

costs incurred by the Corporation in bringing such action. 

(h) MIDCOURSE REVIEW.—Not later than 5 years following establishment of the 

Corporation, the Comptroller General of the United States shall prepare an analysis, and report to Congress, assessing the Corporation’s activities, including project 

selection and methods of disbursement of assessed fees, impacts on the prospects 

for commercialization of carbon capture and storage technologies, adequacy of funding, and administration of funds. The report shall also make such recommendations 

as may be appropriate in each of these areas. The Corporation shall reimburse the 

Government Accountability Office for the costs associated with performing this midcourse review. 

(i) RECOVERY OF COSTS.— 

(1) IN GENERAL.—A distribution utility whose transmission, delivery, or sales 

of electric energy are subject to any form of rate regulation shall not be denied 

the opportunity to recover the full amount of the prudently incurred costs associated with complying with this section, consistent with applicable State or Federal law. 

(2) RATEPAYER REBATES.—Regulatory authorities that approve cost recovery 

pursuant to paragraph (1) may order rebates to ratepayers to the extent that 

distribution utilities are reimbursed undedicated or unassigned balances pursuant to subsection (d)(3). 

(j) TECHNICAL ADVISORY COMMITTEE.— 

(1) ESTABLISHMENT.—There is established an advisory committee, to be 

known as the ‘‘Technical Advisory Committee’’. 

(2) MEMBERSHIP.—The Technical Advisory Committee shall be comprised of 

not less than 7 members appointed by the Board from among academic institutions, national laboratories, independent research institutions, and other qualified institutions. No member of the Committee shall be affiliated with EPRI or 

with any organization having members serving on the Board. At least one member of the Committee shall be appointed from among officers or employees of 

the Department of Energy recommended to the Board by the Secretary of Energy. 

(3) CHAIRPERSON AND VICE CHAIRPERSON.—The Board shall designate one 

member of the Technical Advisory Committee to serve as Chairperson of the 

Committee and one to serve as Vice Chairperson of the Committee. 

(4) COMPENSATION.—The Board shall provide compensation to members of the 

Technical Advisory Committee for travel and other incidental expenses and 

such other compensation as the Board determines to be necessary. 

(5) PURPOSE.—The Technical Advisory Committee shall provide independent 

assessments and technical evaluations, as well as make non-binding recommendations to the Board, concerning Corporation activities, including but not 

limited to the following: 

(A) Reviewing and evaluating the Corporation’s plans and budgets described in subsection (c)(9), as well as any other appropriate areas, which 

could include approaches to prioritizing technologies, appropriateness of engineering techniques, monitoring and verification technologies for storage, 

geological site selection, and cost control measures. 

(B) Making annual non-binding recommendations to the Board concerning any of the matters referred to in subparagraph (A), as well as what 

types of investments, scientific research, or engineering practices would 

best further the goals of the Corporation. 


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(6) PUBLIC AVAILABILITY.—All reports, evaluations, and other materials of the 

Technical Advisory Committee shall be made available to the public by the 

Board, without charge, at time of receipt by the Board. 

(k) LOBBYING RESTRICTIONS.—No funds collected by the Corporation shall be used 

in any manner for influencing legislation or elections, except that the Corporation 

may recommend to the Secretary and the Congress changes in this section or other 

statutes that would further the purposes of this section. 

(l) DAVIS-BACON COMPLIANCE.—The Corporation shall ensure that entities receiving grants, contracts, or other financial support from the Corporation for the project 

activities authorized by this section are in compliance with the Davis-Bacon Act (40 

U.S.C. 276a–276a–5). 

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

Part H of title VII of the Clean Air Act (as added by section 321 of this Act) is 

amended by adding the following new section after section 785: 

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

‘‘(a) REGULATIONS.—Not later than 2 years after the date of enactment of this 

title, the Administrator shall promulgate regulations providing for the distribution 

of emission allowances allocated pursuant to section 782(f), pursuant to the requirements of this section, to support the commercial deployment of carbon capture and 

sequestration technologies in both electric power generation and industrial operations. 

‘‘(b) ELIGIBILITY CRITERIA.—To be eligible to receive emission allowances under 

this section, the owner or operator of a project must— 

‘‘(1) implement carbon capture and sequestration technology— 

‘‘(A) at an electric generating unit that— 

‘‘(i) has a nameplate capacity of 200 megawatts or more; 

‘‘(ii) in the case of a retrofit application, applies the carbon capture 

and sequestration technology to the flue gas from at least 200 

megawatts of the total nameplate generating capacity of the unit, provided that clause (i) shall apply without exception; 

‘‘(iii) derives at least 50 percent of its annual fuel input from coal, 

petroleum coke, or any combination of these 2 fuels; and 

‘‘(iv) upon implementation of capture and sequestration technology, 

will achieve an emission limit that is at least a 50 percent reduction 

in emissions of the carbon dioxide produced by— 

‘‘(I) the unit, measured on an annual basis, determined in accordance with section 812(b)(2); or 

‘‘(II) in the case of retrofit applications under clause (ii), the 

treated portion of flue gas from the unit, measured on an annual 

basis, determined in accordance with section 812(b)(2); or 

‘‘(B) at an industrial source that— 

‘‘(i) absent carbon capture and sequestration, would emit greater 

than 50,000 tons per year of carbon dioxide; 

‘‘(ii) upon implementation, will achieve an emission limit that is at 

least a 50 percent reduction in emissions of the carbon dioxide produced by the emission point, measured on an annual basis, determined 

in accordance with section 812(b)(2); and 

‘‘(iii) does not produce a liquid transportation fuel from a solid fossilbased feedstock; 

‘‘(2) geologically sequester carbon dioxide at a site that meets all applicable 

permitting and certification requirements for geologic sequestration, or, pursuant to such requirements as the Administrator may prescribe by regulation, 

convert captured carbon dioxide to a stable form that will safely and permanently sequester such carbon dioxide; 

‘‘(3) meet all other applicable State and Federal permitting requirements; and 

‘‘(4) be located in the United States. 

‘‘(c) PHASE I DISTRIBUTION TO ELECTRIC GENERATING UNITS.— 

‘‘(1) APPLICATION.—This subsection shall apply only to projects at the first 6 

gigawatts of electric generating units, measured in cumulative generating capacity of such units. 

‘‘(2) DISTRIBUTION.—The Administrator shall distribute emission allowances 

allocated under section 782(f) to the owner or operator of each eligible project 

at an electric generating unit in a quantity equal to the quotient obtained by 

dividing— 

‘‘(A) the product obtained by multiplying— 


hsrobinson on PROD1PC76 with HEARING
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‘‘(i) the number of metric tons of carbon dioxide emissions avoided 

through capture and sequestration of emissions by the project, as determined pursuant to such methodology as the Administrator shall prescribe by regulation; and 

‘‘(ii) a bonus allowance value, pursuant to paragraph (3); by 

‘‘(B) the average fair market value of an emission allowance during the 

preceding year. 

‘‘(3) BONUS ALLOWANCE VALUES.— 

‘‘(A) For a generating unit achieving the capture and sequestration of 85 

percent or more of the carbon dioxide that otherwise would be emitted by 

such unit, the bonus allowance value shall be $90. 

‘‘(B) The Administrator shall by regulation establish a bonus allowance 

value for each rate of lower capture and sequestration achieved by a generating unit, from a minimum of $50 per ton for a 50 percent rate and varying directly with increasing rates of capture and sequestration up to $90 

per ton for an 85 percent rate. 

‘‘(C) For a generating unit that achieves the capture and sequestration 

of at least 50 percent of the carbon dioxide that otherwise would be emitted 

by such unit by not later than January 1, 2017, the otherwise applicable 

bonus allowance value under this paragraph shall be increased by $10, provided that the owner of such unit notifies the Administrator of its intent 

to achieve such rate of capture and sequestration by not later than January 

1, 2012. 

‘‘(D) For a carbon capture and sequestration project sequestering in a geological formation for purposes of enhanced hydrocarbon recovery, the Administrator shall, by regulation, reduce the applicable bonus allowance 

value under this paragraph to reflect the lower net cost of the project when 

compared to sequestration into geological formations solely for purposes of 

sequestration. 

‘‘(E) All monetary values in this section shall be adjusted annually for inflation. 

‘‘(d) PHASE II DISTRIBUTION TO ELECTRIC GENERATING UNITS.— 

‘‘(1) APPLICATION.—This subsection shall apply only to the distribution of 

emission allowances to carbon capture and sequestration projects at electric 

generating units after the capacity threshold identified in subsection (c)(1) is 

reached. 

‘‘(2) REGULATIONS.—Not later than 2 years prior to the date on which the capacity threshold identified in subsection (c)(1) is projected to be reached, the Administrator shall promulgate regulations to govern the distribution of emission 

allowances to the owners or operators of eligible projects under this subsection. 

‘‘(3) REVERSE AUCTIONS.— 

‘‘(A) IN GENERAL.—Except as provided in paragraph (4), the regulations 

promulgated under paragraph (2) shall provide for the distribution of emission allowances to the owners or operators of eligible projects under this 

subsection through reverse auctions, which shall be held no less frequently 

than once each calendar year. The Administrator may establish a separate 

auction for each of no more than 5 different project categories, defined on 

the basis of coal type, capture technology, geological formation type, new 

unit versus retrofit application, such other factors as the Administrator 

may prescribe, or any combination thereof. The Administrator may establish appropriate minimum rates of capture and sequestration in implementing this paragraph. 

‘‘(B) AUCTION PROCESS.—At each reverse auction— 

‘‘(i) the Administrator shall solicit bids from eligible projects; 

‘‘(ii) eligible projects participating in the auction shall submit a bid 

including the desired level of carbon dioxide sequestration incentive per 

ton and the estimated quantity of carbon dioxide that the project will 

permanently sequester over 10 years; and 

‘‘(iii) the Administrator shall select bids, within each auction, for the 

sequestration amount submitted, beginning with the eligible project 

submitting the bid for the lowest level of sequestration incentive on a 

per ton basis and meeting such other requirements as the Administrator may specify, until the amount of funds available for the reverse 

auction is committed. 

‘‘(C) FORM OF DISTRIBUTION.—The Administrator shall provide deployment incentives to the owners or operators of eligible projects selected 

through a reverse auction under this paragraph pursuant to a formula 

equivalent to that described in subsection (c)(2), except that the incentive 


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level that is bid by the entity shall be substituted for the bonus allowance 

value. 

‘‘(4) ALTERNATIVE DISTRIBUTION METHOD.— ‘‘(A) IN GENERAL.—If the Administrator determines that reverse auctions 

would not provide for efficient and cost-effective commercial deployment of 

carbon capture and sequestration technologies, the Administrator may instead, through regulations promulgated under paragraph (2) or (5), prescribe a schedule for the award of bonus allowances to the owners or operators of eligible projects under this subsection, in accordance with the requirements of this paragraph. 

‘‘(B) MULTIPLE TRANCHES.—The Administrator shall divide emission allowances available for distribution to the owners or operators of eligible 

projects into a series of tranches, each supporting the deployment of a specified quantity of cumulative electric generating capacity utilizing carbon 

capture and sequestration technology, each of which shall not be greater 

than 6 gigawatts. 

‘‘(C) METHOD OF DISTRIBUTION.—The Administrator shall distribute emission allowances within each tranche, on a first-come, first-served basis— 

‘‘(i) based on the date of full-scale operation of capture and sequestration technology; and 

‘‘(ii) pursuant to a formula, similar to that set forth in subsection 

(c)(2) (except that the Administrator shall prescribe bonus allowance 

values different than those set forth in subsection (c)(2)), establishing 

the number of allowances to be distributed per ton of carbon dioxide 

sequestered by the project. 

‘‘(D) REQUIREMENTS.—For each tranche established pursuant to subparagraph (A), the Administrator shall establish a schedule for distributing 

emission allowances that— 

‘‘(i) is based on a sliding scale that provides higher bonus allowance 

values for projects achieving higher rates of capture and sequestration; 

‘‘(ii) for each capture and sequestration rate, establishes a bonus allowance value that is lower than that established for such rate in the 

previous tranche (or, in the case of the first tranche, than that established for such rate under subsection (c)(3)); and 

‘‘(iii) may establish different bonus allowance levels for no more than 

5 different project categories, defined by coal type, capture technology, 

geological formation type, new unit versus retrofit application, such 

other factors as the Administrator may prescribe, or any combination 

thereof. 

‘‘(E) CRITERIA FOR ESTABLISHING BONUS ALLOWANCE VALUES.—In setting 

bonus allowance values under this paragraph, the Administrator shall seek 

to cover no more than the reasonable incremental capital and operating 

costs of a project that are attributable to implementation of carbon capture, 

transportation, and sequestration technologies, taking into account— 

‘‘(i) the reduced cost of compliance with section 722 of this Act; 

‘‘(ii) the reduced cost associated with sequestering in a geological formation for purposes of enhanced hydrocarbon recovery when compared 

to sequestration into geological formations solely for purposes of sequestration; 

‘‘(iii) the relevant factors defining the project category; and 

‘‘(iv) such other factors as the Administrator determines are appropriate. 

‘‘(5) REVISION OF REGULATIONS.—The Administrator shall review, and as appropriate revise, the applicable regulations under this subsection no less frequently than every 8 years. 

‘‘(e) LIMITS FOR CERTAIN ELECTRIC GENERATING UNITS.— 

‘‘(1) DEFINITIONS.—For purposes of this subsection, the terms ‘covered EGU’ 

and ‘initially permitted’ shall have the meaning given those terms in section 

812 of this Act. 

‘‘(2) COVERED EGUS INITIALLY PERMITTED FROM 2009 THROUGH 2014.—For a covered EGU that is initially permitted on or after January 1, 2009, and before 

January 1, 2015, the Administrator shall reduce the quantity of emission allowances that the owner or operator of such covered EGU would otherwise be eligible to receive under this section as follows: 

‘‘(A) In the case of a unit commencing operation on or before January 1, 

2019, if the date in clause (ii)(I) is earlier than the date in clause (ii)(II), 

by the product of— 

‘‘(i) 20 percent; and 

‘‘(ii) the number of years, if any, that have elapsed between— 


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‘‘(I) the earlier of January 1, 2020, or the date that is 5 years 

after the commencement of operation of such covered EGU; and 

‘‘(II) the first year that such covered EGU achieves (and thereafter maintains) an emission limit that is at least a 50 percent reduction in emissions of the carbon dioxide produced by the unit, 

measured on an annual basis, as determined in accordance with 

section 812(b)(2). 

‘‘(B) In the case of a unit commencing operation after January 1, 2019, 

by the product of— 

‘‘(i) 20 percent; and 

‘‘(ii) the number of years between— 

‘‘(I) the commencement of operation of such covered EGU; and 

‘‘(II) the first year that such covered EGU achieves (and thereafter maintains) an emission limit that is at least a 50 percent reduction in emissions of the carbon dioxide produced by the unit, 

measured on an annual basis, as determined in accordance with 

section 812(b)(2). 

‘‘(3) COVERED EGUS INITIALLY PERMITTED FROM 2015 THROUGH 2019.—The 

owner or operator of a covered EGU that is initially permitted on or after January 1, 2015, and before January 1, 2020, shall be ineligible to receive emission 

allowances pursuant to this section if such unit, upon commencement of operations (and thereafter), does not achieve and maintain an emission limit that 

is at least a 50 percent reduction in emissions of the carbon dioxide produced 

by the unit, measured on an annual basis, as determined in accordance with 

section 812(b)(2). 

‘‘(f) INDUSTRIAL SOURCES.— 

‘‘(1) ALLOWANCES.—The Administrator may distribute not more than 15 percent of the allowances allocated under section 782(a) for any vintage year to the 

owners or operators of eligible industrial sources to support the commercialscale deployment of carbon capture and sequestration technologies at such 

sources. 

‘‘(2) DISTRIBUTION.—The Administrator shall, by regulation, prescribe requirements for the distribution of emission allowances to the owners or operators of 

industrial sources under this subsection, based on a bonus allowance formula 

that awards allowances to qualifying projects on the basis of tons of carbon dioxide captured and permanently sequestered. The Administrator may provide 

for the distribution of emission allowances pursuant to— 

‘‘(A) a reverse auction method, similar to that described under subsection 

(d)(3), including the use of separate auctions for different project categories; 

or 

‘‘(B) an incentive schedule, similar to that described under subsection 

(d)(4), which shall ensure that incentives are set so as to satisfy the requirement described in subsection (d)(4)(E). 

‘‘(3) REVISION OF REGULATIONS.—The Administrator shall review, and as appropriate revise, the applicable regulations under this subsection no less frequently than every 8 years. 

‘‘(g) LIMITATIONS.—Allowances may be distributed under this section only for tons 

of carbon dioxide emissions that have already been captured and sequestered. A 

qualifying project may receive annual emission allowances under this section only 

for the first 10 years of operation. No greater than 72 gigawatts of total cumulative 

generating capacity (including industrial applications, measured by such equivalent 

metric as the Administrator may designate) may receive emission allowances under 

this section. Upon reaching the limit described in the preceding sentence, any emission allowances that are allocated for carbon capture and sequestration deployment 

under section 782(f) and are not yet obligated under this section shall be treated 

as allowances not designated for distribution for purposes of section 782(r). 

‘‘(h) EXHAUSTION OF ACCOUNT AND ANNUAL ROLL-OVER OF SURPLUS ALLOWANCES.— 

‘‘(1) In distributing bonus allowances under this subsection, the Administrator 

shall ensure that qualifying projects receiving allowances receive distributions 

for 10 years. 

‘‘(2) If the Administrator determines that the allowances allocated under section 782(f) with a vintage year that matches the year of distribution will be exhausted once the estimated full 10-year distributions will be provided to current 

eligible participants, the Administrator shall provide to new eligible projects allowances from vintage years after the year of the distribution. 

‘‘(i) RETROFIT APPLICATIONS.—(1) In calculating bonus allowance values for retrofit 

applications eligible under subsections (b)(1)(A)(ii) and (b)(1)(A)(iv)(II), the AdminisVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00026 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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trator shall apply the required capture rates with respect to the treated portion of 

flue gas from the unit. 

‘‘(2) No additional projects shall be eligible for allowances under subsections 

(b)(1)(A)(ii) and (b)(1)(A)(iv)(II) as of such time as the Administrator reports, pursuant to section 812(d), that carbon capture and sequestration retrofit projects at electric generating units that are eligible for allowances under this section have been 

applied, in the aggregate, to the flue gas generated by 1 gigawatt of total cumulative 

generating capacity. 

‘‘(j) DAVIS-BACON COMPLIANCE.—All laborers and mechanics employed on projects 

funded directly by or assisted in whole or in part by this section through the use 

of bonus allowances shall be paid wages at rates not less than those prevailing on 

projects of a character similar in the locality as determined by the Secretary of 

Labor in accordance with subchapter IV, chapter 31, part A of subtitle II of title 

40, United States Code. With respect to the labor standards specified in this section, 

the Secretary of Labor shall have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and section 3145 

of title 40, United States Code.’’. 

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

(a) IN GENERAL.—Title VIII of the Clean Air Act (as added by section 331 of this 

Act) is amended by adding the following new section after section 811: 

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

‘‘(a) DEFINITIONS.—For purposes of this section: 

‘‘(1) COVERED EGU.—The term ‘covered EGU’ means a utility unit that is required to have a permit under section 503(a) and is authorized under state or 

federal law to derive at least 30 percent of its annual heat input from coal, petroleum coke, or any combination of these fuels. 

‘‘(2) INITIALLY PERMITTED.—The term ‘initially permitted’ means that the 

owner or operator has received a Clean Air Act preconstruction approval or permit, for the covered EGU as a new (not a modified) source, but administrative 

review or appeal of such approval or permit has not been exhausted. A subsequent modification of any such approval or permits, ongoing administrative or 

court review, appeals, or challenges, or the existence or tolling of any time to 

pursue further review, appeals, or challenges shall not affect the date on which 

a covered EGU is considered to be initially permitted under this paragraph. 

‘‘(b) STANDARDS.—(1) A covered EGU that is initially permitted on or after January 1, 2020, shall achieve an emission limit that is a 65 percent reduction in emissions of the carbon dioxide produced by the unit, as measured on an annual 

basis, or meet such more stringent standard as the Administrator may establish 

pursuant to subsection (c). 

‘‘(2) A covered EGU that is initially permitted after January 1, 2009, and before 

January 1, 2020, shall, by the applicable compliance date established under this 

paragraph, achieve an emission limit that is a 50 percent reduction in emissions of 

the carbon dioxide produced by the unit, as measured on an annual basis. Compliance with the requirement set forth in this paragraph shall be required by the earliest of the following: 

‘‘(A) Four years after the date the Administrator has published pursuant to 

subsection (d) a report that there are in commercial operation in the United 

States electric generating units or other stationary sources equipped with carbon capture and sequestration technology that, in the aggregate— 

‘‘(i) have a total of at least 4 gigawatts of nameplate generating capacity 

of which— 

‘‘(I) at least 3 gigawatts must be electric generating units; and 

‘‘(II) up to 1 gigawatt may be industrial applications, for which capture and sequestration of 3 million tons of carbon dioxide per year on 

an aggregate annualized basis shall be considered equivalent to 1 

gigawatt; 

‘‘(ii) include at least 2 electric generating units, each with a nameplate 

generating capacity of 250 megawatts or greater, that capture, inject, and 

sequester carbon dioxide into geologic formations other than oil and gas 

fields; and 

‘‘(iii) are capturing and sequestering in the aggregate at least 12 million 

tons of carbon dioxide per year, calculated on an aggregate annualized 

basis. 

‘‘(B) January 1, 2025. 

‘‘(3) If the deadline for compliance with paragraph (2) is January 1, 2025, the Administrator may extend the deadline for compliance by a covered EGU by up to 18 

months if the Administrator makes a determination, based on a showing by the 

owner or operator of the unit, that it will be technically infeasible for the unit to 


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meet the standard by the deadline. The owner or operator must submit a request 

for such an extension by no later than January 1, 2022, and the Administrator shall 

provide for public notice and comment on the extension request. 

‘‘(c) REVIEW AND REVISION OF STANDARDS.—Not later than 2025 and at 5-year intervals thereafter, the Administrator shall review the standards for new covered 

EGUs under this section and shall, by rule, reduce the maximum carbon dioxide 

emission rate for new covered EGUs to a rate which reflects the degree of emission 

limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair 

quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated. 

‘‘(d) REPORTS.—Not later than the date 18 months after the date of enactment of 

this title and semiannually thereafter, the Administrator shall publish a report on 

the nameplate capacity of units (determined pursuant to subsection (b)(2)(A)) in 

commercial operation in the United States equipped with carbon capture and sequestration technology, including the information described in subsection (b)(2)(A) 

(including the cumulative generating capacity to which carbon capture and sequestration retrofit projects meeting the criteria described in section 786(b)(1)(A)(ii) and 

(b)(1)(A)(iv)(II) has been applied and the quantities of carbon dioxide captured and 

sequestered by such projects). 

‘‘(e) REGULATIONS.—Not later than 2 years after the date of enactment of this 

title, the Administrator shall promulgate regulations to carry out the requirements 

of this section.’’. 

Subtitle C—Clean Transportation 

SEC. 121. ELECTRIC VEHICLE INFRASTRUCTURE. 

(a) AMENDMENT OF PURPA.—Section 111(d) of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) is amended by adding at the end the following: 

‘‘(20) PLUG-IN ELECTRIC DRIVE VEHICLE INFRASTRUCTURE.— ‘‘(A) UTILITY PLAN FOR INFRASTRUCTURE.—Each electric utility shall develop a plan to support the use of plug-in electric drive vehicles, including 

heavy-duty hybrid electric vehicles. The plan may provide for deployment 

of electrical charging stations in public or private locations, including street 

parking, parking garages, parking lots, homes, gas stations, and highway 

rest stops. Any such plan may also include— 

‘‘(i) battery exchange, fast charging infrastructure and other services; 

‘‘(ii) triggers for infrastructure deployment based upon market penetration of plug-in electric drive vehicles; and 

‘‘(iii) such other elements as the State determines necessary to support plug-in electric drive vehicles. 

Each plan under this paragraph shall provide for the deployment of the 

charging infrastructure or other infrastructure necessary to adequately support the use of plug-in electric drive vehicles. 

‘‘(B) SUPPORT REQUIREMENTS.—Each State regulatory authority (in the 

case of each electric utility for which it has ratemaking authority) and each 

utility (in the case of a nonregulated utility) shall— 

‘‘(i) require that charging infrastructure deployed is interoperable 

with products of all auto manufacturers to the extent possible; and 

‘‘(ii) consider adopting minimum requirements for deployment of electrical charging infrastructure and other appropriate requirements necessary to support the use of plug-in electric drive vehicles. 

‘‘(C) COST RECOVERY.—Each State regulatory authority (in the case of 

each electric utility for which it has ratemaking authority) and each utility 

(in the case of a nonregulated utility) shall consider whether, and to what 

extent, to allow cost recovery for plans and implementation of plans. 

‘‘(D) SMART GRID INTEGRATION.—The State regulatory authority (in the 

case of each electric utility for which it has ratemaking authority) and each 

utility (in the case of a nonregulated utility) shall, in accordance with regulations issued by the Federal Energy Regulatory Commission pursuant to 

section 1305(d) of the Energy Independence and Security Act of 2007— 

‘‘(i) establish any appropriate protocols and standards for integrating 

plug-in electric drive vehicles into an electrical distribution system, including Smart Grid systems and devices as described in title XIII of the 

Energy Independence and Security Act of 2007; 

‘‘(ii) include, to the extent feasible, the ability for each plug-in electric 

drive vehicle to be identified individually and to be associated with its 

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cle is plugged in, for purposes of appropriate billing for any electricity 

required to charge the vehicle’s batteries as well as any crediting for 

electricity provided to the electric utility from the vehicle’s batteries; 

and 

‘‘(iii) review the determination made in response to section 1252 of 

the Energy Policy Act of 2005 in light of this section, including whether 

time-of-use pricing should be employed to enable the use of plug-in 

electric drive vehicles to contribute to meeting peak-load and ancillary 

service power needs.’’. 

(b) COMPLIANCE.— 

(1) TIME LIMITATIONS.—Section 112(b) of the Public Utility Regulatory Policies 

Act of 1978 (16 U.S.C. 2622(b)) is amended by adding the following at the end 

thereof: 

‘‘(7)(A) Not later than 3 years after the date of enactment of this paragraph, each 

State regulatory authority (with respect to each electric utility for which it has ratemaking authority) and each nonregulated utility shall commence the consideration 

referred to in section 111, or set a hearing date for consideration, with respect to 

the standard established by paragraph (20) of section 111(d). 

‘‘(B) Not later than 4 years after the date of enactment of the this paragraph, each 

State regulatory authority (with respect to each electric utility for which it has ratemaking authority), and each nonregulated electric utility, shall complete the consideration, and shall make the determination, referred to in section 111 with respect 

to the standard established by paragraph (20) of section 111(d).’’. 

(2) FAILURE TO COMPLY.—Section 112(c) of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2622(c)) is amended by adding the following at the 

end: ‘‘In the case of the standards established by paragraph (20) of section 

111(d), the reference contained in this subsection to the date of enactment of 

this Act shall be deemed to be a reference to the date of enactment of such 

paragraph.’’. 

(3) PRIOR STATE ACTIONS.—Section 112(d) of the Public Utility Regulatory 

Policies Act of 1978 (16 U.S.C. 2622(d)) is amended by striking ‘‘(19)’’ and inserting ‘‘(20)’’ before ‘‘of section 111(d)’’. 

SEC. 122. LARGE-SCALE VEHICLE ELECTRIFICATION PROGRAM. 

(a) DEPLOYMENT PROGRAM.—The Secretary of Energy shall establish a program 

to deploy and integrate plug-in electric drive vehicles into the electricity grid in multiple regions. In carrying out the program, the Secretary may provide financial assistance described under subsection (d), consistent with the goals under subsection 

(b). The Secretary shall select regions based upon applications for assistance received pursuant to subsection (c). 

(b) GOALS.—The goals of the program established pursuant to subsection (a) shall 

be— 

(1) to demonstrate the viability of a vehicle-based transportation system that 

is not overly dependent on petroleum as a fuel and contributes to lower carbon 

emissions than a system based on conventional vehicles; 

(2) to facilitate the integration of advanced vehicle technologies into electricity 

distribution areas to improve system performance and reliability; 

(3) to demonstrate the potential benefits of coordinated investments in vehicle 

electrification on personal mobility and a regional grid; 

(4) to demonstrate protocols and standards that facilitate vehicle integration 

into the grid; and 

(5) to investigate differences in each region and regulatory environment regarding best practices in implementing vehicle electrification. 

(c) APPLICATIONS.—Any State, Indian tribe, or local government (or group of State, 

Indian tribe, or local governments) may apply to the Secretary of Energy for financial assistance in furthering the regional deployment and integration into the electricity grid of plug-in electric drive vehicles. Such applications may be jointly sponsored by electric utilities, automobile manufacturers, technology providers, car sharing companies or organizations, or other persons or entities. 

(d) USE OF FUNDS.—Pursuant to applications received under subsection (c), the 

Secretary may make financial assistance available to any applicant or joint sponsor 

of the application to be used for any of the following: 

(1) Assisting persons located in the regional deployment area, including fleet 

owners, in the purchase of new plug-in electric drive vehicles by offsetting in 

whole or in part the incremental cost of such vehicles above the cost of comparable conventionally fueled vehicles. 

(2) Supporting the use of plug-in electric drive vehicles by funding projects for 

the deployment of any of the following: 


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(A) Electrical charging infrastructure for plug-in electric drive vehicles, 

including battery exchange, fast charging infrastructure, and other services, 

in public or private locations, including street parking, parking garages, 

parking lots, homes, gas stations, and highway rest stops. 

(B) Smart Grid equipment and infrastructure, as described in title XIII 

of the Energy Independence and Security Act of 2007, to facilitate the 

charging and integration of plug-in electric drive vehicles. 

(3) Such other projects as the Secretary determines appropriate to support the 

large-scale deployment of plug-in electric drive vehicles in regional deployment 

areas. (e) PROGRAM REQUIREMENTS.—The Secretary, in consultation with the Administrator and the Secretary of Transportation, shall determine design elements and requirements of the program established pursuant to subsection (a), including— 

(1) the type of financial mechanism with which to provide financial assistance; 

(2) criteria for evaluating applications submitted under subsection (c), including the anticipated ability to promote deployment and market penetration of vehicles that are less dependent on petroleum as a fuel source; and 

(3) reporting requirements for entities that receive financial assistance under 

this section, including a comprehensive set of performance data characterizing 

the results of the deployment program. 

(f) INFORMATION CLEARINGHOUSE.—The Secretary shall, as part of the program 

established pursuant to subsection (a), collect and make available to the public information regarding the cost, performance, and other technical data regarding the 

deployment and integration of plug-in electric drive vehicles. 

(g) AUTHORIZATION.—There are authorized to be appropriated to carry out this 

section such sums as may be necessary. 

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

(a) VEHICLE MANUFACTURING ASSISTANCE PROGRAM.—The Secretary of Energy 

shall establish a program to provide financial assistance to automobile manufacturers to facilitate the manufacture of plug-in electric drive vehicles, as defined in section 131(a)(5) of the Energy Independence and Security Act of 2007, that are developed and produced in the United States. 

(b) FINANCIAL ASSISTANCE.—The Secretary of Energy may provide financial assistance to an automobile manufacturer under the program established pursuant to 

subsection (a) for— 

(1) the reconstruction or retooling of facilities for the manufacture of plug-in 

electric drive vehicles that are developed and produced in the United States; 

and 

(2) if appropriate, the purchase of domestically produced vehicle batteries to 

be used in the manufacture of vehicles manufactured pursuant to paragraph (1). 

(c) COORDINATION WITH REGIONAL DEPLOYMENT.—The Secretary may provide financial assistance under subsection (b) in conjunction with the award of financial 

assistance under the large scale vehicle electrification program established pursuant 

to section 122 of this Act. 

(d) PROGRAM REQUIREMENTS.—The Secretary shall determine design elements and 

requirements of the program established pursuant to subsection (a), including— 

(1) the type of financial mechanism with which to provide financial assistance; 

(2) criteria, in addition to the criteria described under subsection (e), for evaluating applications for financial assistance; and 

(3) reporting requirements for automobile manufacturers that receive financial assistance under this section. 

(e) CRITERIA.—In selecting recipients of financial assistance from among applicant 

automobile manufacturers, the Secretary shall give preference to proposals that— 

(1) are most likely to be successful; and 

(2) are located in local markets that have the greatest need for the facility. 

(f) REPORTS.—The Secretary shall annually submit to Congress a report on the 

program established pursuant to this section. 

(g) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

such sums as are necessary to carry out this section. 

SEC. 124. INVESTMENT IN CLEAN VEHICLES. 

(a) DEFINITIONS.—In this section: 

(1) ADVANCED TECHNOLOGY VEHICLES AND QUALIFYING COMPONENTS.—The 

terms ‘‘advanced technology vehicles’’ and ‘‘qualifying components’’ shall have 

the definition of such terms in section 136 of the Energy Independence and Security Act of 2007, except that for purposes of this section, the average base 

year as described in such section 136(a)(1)(C) shall be the following: 


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(A) In each of the years 2012 through 2016, model year 2009. 

(B) In 2017, the Administrator shall, notwithstanding such section 

136(a)(1)(C), determine an appropriate baseline based on technological and 

economic feasibility. 

(2) PLUG-IN ELECTRIC DRIVE VEHICLE.—The term ‘‘plug-in electric drive vehicle’’ shall have the definition of such term in section 131 of the Energy Independence and Security Act of 2007. 

(b) DISTRIBUTION OF ALLOWANCES.—The Administrator shall, in accordance with 

this section, distribute emission allowances allocated pursuant to section 782(i) of 

the Clean Air Act not later than September 30 of 2012 and each calendar year 

thereafter through 2025. 

(c) PLUG-IN ELECTRIC DRIVE VEHICLE MANUFACTURING AND DEPLOYMENT.— 

(1) IN GENERAL.—The Administrator shall, at the direction of the Secretary 

of Energy, provide emission allowances allocated pursuant to section 782(i) to 

applicants, joint sponsors and automobile manufacturers pursuant to sections 

122 and 123 of this Act. 

(2) ANNUAL AMOUNT.—In each of the years 2012 through 2017, one-quarter 

of the portion of the emission allowances allocated pursuant to section 782(i) of 

the Clean Air Act shall be available to carry out paragraph (1) such that— 

(A) one-eighth of the portion shall be available to carry out section 122; 

and, 

(B) one-eighth of the portion shall be available to carry out section 123. 

(3) PREFERENCE.—In directing the provision of emission allowances under this 

subsection to carry out section 122, the Secretary shall give preference to applications under section 122(c) that are jointly sponsored by one or more automobile manufacturers. 

(4) MULTI-YEAR COMMITMENTS.—The Administrator shall commit to providing 

emission allowances to an applicant, joint sponsor, or automobile manufacturer 

for up to five consecutive years if— 

(A) an application under section 122 or 123 of this Act requests a multiyear commitment; 

(B) such application meets the criteria for support established by the Secretary of Energy under sections 122 or 123 of this Act; 

(C) the Administrator confirms to the Secretary that emission allowances 

will be available for a multi-year commitment; 

(D) the Secretary of Energy determines that a multi-year commitment for 

such application will advance the goals of section 122 or 123; and 

(E) the Secretary of Energy directs the Administrator to make a multiyear commitment. 

(5) INSUFFICIENT APPLICATIONS.—If, in any year, emission allowances available under paragraph (2) cannot be provided because of insufficient numbers of 

submitted applications that meet the criteria for support established by the Secretary of Energy under sections 122 or 123 of this Act, the remaining emission 

allowances shall be distributed according to subsection (d). 

(d) ADVANCED TECHNOLOGY VEHICLES.— 

(1) IN GENERAL.—The Administrator shall, at the direction of the Secretary 

of Energy, provide any emission allowances allocated pursuant to section 782(i) 

of the Clean Air Act that are not provided under subsection (c) to automobile 

manufacturers and component suppliers to pay not more than 30 percent of the 

cost of— 

(A) reequipping, expanding, or establishing a manufacturing facility in 

the United States to produce— 

(i) qualifying advanced technology vehicles; or 

(ii) qualifying components; and 

(B) engineering integration performed in the United States of qualifying 

vehicles and qualifying components. 

(2) PREFERENCE.—In directing the provision of emission allowances under this 

subsection during the years 2012 through 2017, the Secretary shall give preference to applications for projects that save the maximum number of gallons of 

fuel. 

SEC. 125. ADVANCED TECHNOLOGY VEHICLE MANUFACTURING INCENTIVE LOANS. 

Section 136(d)(1) of the Energy Independence and Security Act of 2007 (42 U.S.C. 

17013(d)(1)) is amended by striking ‘‘$25,000,000,000’’ and inserting 

‘‘$50,000,000,000’’. 

SEC. 126. AMENDMENT TO RENEWABLE FUELS STANDARD. 

(a) DEFINITION OF RENEWABLE BIOMASS.—Section 211(o)(1)(I) of the Clean Air Act 

(42 U.S.C. 7545(o)) is amended to read as follows: 


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‘‘(I) RENEWABLE BIOMASS.—The term ‘renewable biomass’ means any of 

the following: 

‘‘(i) Plant material, including waste material, harvested or collected 

from actively managed agricultural land that was in cultivation, 

cleared, or fallow and nonforested on January 1, 2009. 

‘‘(ii) Plant material, including waste material, harvested or collected 

from pastureland that was nonforested on January 1, 2009. 

‘‘(iii) Nonhazardous vegetative matter derived from waste, including 

separated yard waste, landscape right-of-way trimmings, construction 

and demolition debris or food waste (but not recyclable waste paper, 

painted, treated or pressurized wood, or wood contaminated with plastic or metals). 

‘‘(iv) Animal waste or animal byproducts, including products of animal waste digesters. 

‘‘(v) Algae. 

‘‘(vi) Trees, brush, slash, residues, or any other vegetative matter removed from within 600 feet of any building, campground, or route designated for evacuation by a public official with responsibility for emergency preparedness, or from within 300 feet of a paved road, electric 

transmission line, utility tower, or water supply line. 

‘‘(vii) Residues from or byproducts of milled logs. 

‘‘(viii) Any of the following removed from forested land that is not 

Federal and is not high conservation priority land: 

‘‘(I) Trees, brush, slash, residues, interplanted energy crops, or 

any other vegetative matter removed from an actively managed 

tree plantation established— 

‘‘(aa) prior to January 1, 2009; or 

‘‘(bb) on land that, as of January 1, 2009, was cultivated or 

fallow and non-forested. 

‘‘(II) Trees, logging residue, thinnings, cull trees, pulpwood, and 

brush removed from naturally-regenerated forests or other nonplantation forests, including for the purposes of hazardous fuel reduction or preventative treatment for reducing or containing insect 

or disease infestation. 

‘‘(III) Logging residue, thinnings, cull trees, pulpwood, brush and 

species that are non-native and noxious, from stands that were 

planted and managed after January 1, 2009, to restore or maintain 

native forest types. 

‘‘(IV) Dead or severely damaged trees removed within 5 years of 

fire, blowdown, or other natural disaster, and badly infested trees. 

‘‘(ix) Materials, pre-commercial thinnings, or removed invasive species from National Forest System land and public lands (as defined in 

section 103 of the Federal Land Policy and Management Act of 1976 

(43 U.S.C. 1702)), including those that are byproducts of preventive 

treatments (such as trees, wood, brush, thinnings, chips, and slash), 

that are removed as part of a federally recognized timber sale, or that 

are removed to reduce hazardous fuels, to reduce or contain disease or 

insect infestation, or to restore ecosystem health, and that are— 

‘‘(I) not from components of the National Wilderness Preservation 

System, Wilderness Study Areas, Inventoried Roadless Areas, old 

growth or mature forest stands, components of the National Landscape Conservation System, National Monuments, National Conservation Areas, Designated Primitive Areas, or Wild and Scenic 

Rivers corridors; 

‘‘(II) harvested in environmentally sustainable quantities, as determined by the appropriate Federal land manager; and 

‘‘(III) harvested in accordance with Federal and State law and 

applicable land management plans.’’. 

(b) DEFINITION OF HIGH CONSERVATION PRIORITY LAND.—Section 211(o)(1) of the 

Clean Air Act (42 U.S.C. 7545(o)) is amended by inserting the following at the end 

thereof: 

‘‘(M) HIGH CONSERVATION PRIORITY LAND.—The term ‘high conservation 

priority land’ means land that is not Federal land and is— 

‘‘(i) globally or State ranked as critically imperiled or imperiled under 

a State Natural Heritage Program; or 

‘‘(ii) old-growth or late-successional forest, as identified by the office 

of the State Forester or relevant State agency with regulatory jurisdiction over forestry activities.’’. 


hsrobinson on PROD1PC76 with HEARING
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SEC. 127. OPEN FUEL STANDARD. 

(a) FINDINGS.—The Congress finds that— 

(1) the status of oil as a strategic commodity, which derives from its domination of the transportation sector, presents a clear and present danger to the 

United States; 

(2) in a prior era, when salt was a strategic commodity, salt mines conferred 

national power and wars were fought over the control of such mines; 

(3) technology, in the form of electricity and refrigeration, decisively ended 

salt’s monopoly of meat preservation and greatly reduced its strategic importance; 

(4) fuel competition and consumer choice would similarly serve to end oil’s 

monopoly in the transportation sector and strip oil of its strategic status; 

(5) the current closed fuel market has allowed a cartel of petroleum exporting 

countries to inflate fuel prices, effectively imposing a harmful tax on the economy of the United States; 

(6) much of the inflated petroleum revenues the oil cartel earns at the expense of the people of the United States are used for purposes antithetical to 

the interests of the United States and its allies; 

(7) alcohol fuels, including ethanol and methanol, could potentially provide 

significant supplies of additional fuels that could be produced in the United 

States and in many other countries in the Western Hemisphere that are friendly to the United States; 

(8) alcohol fuels can only play a major role in securing the energy independence of the United States if a substantial portion of vehicles in the United 

States are capable of operating on such fuels; 

(9) it is not in the best interest of United States consumers or the United 

States Government to be constrained to depend solely upon petroleum resources 

for vehicle fuels if alcohol fuels are potentially available; 

(10) existing technology, in the form of flexible fuel vehicles, allows internal 

combustion engine cars and trucks to be produced at little or no additional cost, 

which are capable of operating on conventional gasoline, alcohol fuels, or any 

combination of such fuels, as availability or cost advantage dictates, providing 

a platform on which fuels can compete; 

(11) the necessary distribution system for such alcohol fuels will not be developed in the United States until a substantial fraction of the vehicles in the 

United States are capable of operating on such fuels; 

(12) the establishment of such a vehicle fleet and distribution system would 

provide a large market that would mobilize private resources to substantially 

advance the technology and expand the production of alcohol fuels in the United 

States and abroad; 

(13) the United States has an urgent national security interest to develop alcohol fuels technology, production, and distribution systems as rapidly as possible; 

(14) new cars sold in the United States that are equipped with an internal 

combustion engine should allow for fuel competition by being flexible fuel vehicles, and new diesel cars should be capable of operating on biodiesel; and 

(15) such an open fuel standard would help to protect the United States economy from high and volatile oil prices and from the threats caused by global instability, terrorism, and natural disaster. 

(b) OPEN FUEL STANDARD FOR TRANSPORTATION.—(1) Chapter 329 of title 49, 

United States Code, is amended by adding at the end the following: 

‘‘§ 32920. Open fuel standard for transportation 

‘‘(a) DEFINITIONS.—In this section: 

‘‘(1) E85.—The term ‘E85’ means a fuel mixture containing 85 percent ethanol 

and 15 percent gasoline by volume. 

‘‘(2) FLEXIBLE FUEL AUTOMOBILE.—The term ‘flexible fuel automobile’ means 

an automobile that has been warranted by its manufacturer to operate on gasoline, E85, and M85. 

‘‘(3) FUEL CHOICE-ENABLING AUTOMOBILE.—The term ‘fuel choice-enabling 

automobile’ means— 

‘‘(A) a flexible fuel automobile; or 

‘‘(B) an automobile that has been warranted by its manufacturer to operate on biodiesel. 

‘‘(4) LIGHT-DUTY AUTOMOBILE.—The term ‘light-duty automobile’ means— 

‘‘(A) a passenger automobile; or 

‘‘(B) a non-passenger automobile. 

‘‘(5) LIGHT-DUTY AUTOMOBILE MANUFACTURER’S ANNUAL COVERED INVENTORY.—The term ‘light-duty automobile manufacturer’s annual covered invenVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00033 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

hsrobinson on PROD1PC76 with HEARING
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tory’ means the number of light-duty automobiles powered by an internal combustion engine that a manufacturer, during a given calendar year, manufactures in the United States or imports from outside of the United States for sale 

in the United States. 

‘‘(6) M85.—The term ‘M85’ means a fuel mixture containing 85 percent methanol and 15 percent gasoline by volume. 

‘‘(b) OPEN FUEL STANDARD FOR TRANSPORTATION.— 

‘‘(1) IN GENERAL.—The Secretary may promulgate regulations to require each 

light-duty automobile manufacturer’s annual covered inventory to be comprised 

of a minimum percentage of fuel-choice enabling automobiles, with sufficient 

lead time, if the Secretary, in coordination with the Secretary of Energy and 

the Administrator of the Environmental Protection Agency, determines such requirement is a cost-effective way to achieve the Nation’s energy independence 

and environmental objectives. The cost-effective determination shall consider 

the future availability of both alternative fuel supply and infrastructure to deliver the alternative fuel to the fuel-choice enabling vehicles. 

‘‘(2) TEMPORARY EXEMPTION FROM REQUIREMENTS.— 

‘‘(A) APPLICATION.—A manufacturer may request an exemption from the 

requirement described in paragraph (1) by submitting an application to the 

Secretary, at such time, in such manner, and containing such information 

as the Secretary may require by regulation. Each such application shall 

specify the models, lines, and types of automobiles affected. 

‘‘(B) EVALUATION.—After evaluating an application received from a manufacturer, the Secretary may at any time, under such terms and conditions, 

and to such extent as the Secretary considers appropriate, temporarily exempt, or renew the exemption of, a light-duty automobile from the requirement described in paragraph (1) if the Secretary determines that unavoidable events not under the control of the manufacturer prevent the manufacturer of such automobile from meeting its required production volume of 

fuel choice-enabling automobiles, including— 

‘‘(i) a disruption in the supply of any component required for compliance with the regulations; 

‘‘(ii) a disruption in the use and installation by the manufacturer of 

such component; or 

‘‘(iii) application to plug-in electric drive vehicles causing such vehicles to fail to meet State air quality requirements. 

‘‘(C) CONSOLIDATION.—The Secretary may consolidate applications received from multiple manufacturers under subparagraph (A) if they are of 

a similar nature. 

‘‘(D) CONDITIONS.—Any exemption granted under subparagraph (B) shall 

be conditioned upon the manufacturer’s commitment to recall the exempted 

automobiles for installation of the omitted components within a reasonable 

time proposed by the manufacturer and approved by the Secretary after 

such components become available in sufficient quantities to satisfy both 

anticipated production and recall volume requirements. 

‘‘(E) NOTICE.—The Secretary shall publish in the Federal Register— 

‘‘(i) notice of each application received from a manufacturer; 

‘‘(ii) notice of each decision to grant or deny a temporary exemption; 

and 

‘‘(iii) the reasons for granting or denying such exemptions.’’. 

(2) The table of contents in chapter 329 of such title is amended adding at the 

end the following: 

‘‘32920. Open fuel standard for transportation.’’. 

SEC. 128. TEMPORARY VEHICLE TRADE-IN PROGRAM. 

(a) ESTABLISHMENT.—There is established in the National Highway Traffic Safety 

Administration a program to be known as the ‘‘Cash for Clunkers Temporary Vehicle Trade-in Program’’ through which the Secretary, in accordance with this section 

and the regulations promulgated under subsection (d), shall— 

(1) authorize the issuance of an electronic voucher, subject to the specifications set forth in subsection (c), to offset the purchase price or lease price for 

a qualifying lease of a new fuel efficient automobile upon the surrender of an 

eligible trade-in vehicle to a dealer participating in the Program; 

(2) certify dealers for participation in the Program and require that all certified dealers— 

(A) accept vouchers as provided in this section as partial payment or 

down payment for the purchase or qualifying lease of any new fuel efficient 

automobile offered for sale or lease by that dealer; and 


hsrobinson on PROD1PC76 with HEARING
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(B) in accordance with subsection (c)(2), dispose of each eligible trade-in 

vehicle surrendered to the dealer under the Program; 

(3) in consultation with the Secretary of the Treasury, make payments to 

dealers for vouchers accepted by such dealers prior to April 1, 2010, in accordance with the regulations issued under subsection (d); 

(4) in consultation with the Secretary of the Treasury, provide for the payment of rebates to persons who qualify for a rebate under subsection (c)(3); and 

(5) in consultation with the Secretary of the Treasury and the Inspector General of the Department of Transportation, establish and provide for the enforcement of measures to prevent and penalize fraud under the Program. 

(b) QUALIFICATIONS FOR AND VALUE OF VOUCHERS.—A voucher issued under the 

Program shall have a value that may be applied to offset the purchase price or lease 

price for a qualifying lease of a new fuel efficient automobile as follows: 

(1) $3,500 VALUE.—The voucher may be used to offset the purchase price or 

lease price of the new fuel efficient automobile by $3,500 if— 

(A) the new fuel efficient automobile is a passenger automobile and the 

combined fuel economy value of such automobile is at least 4 miles per gallon higher than the combined fuel economy value of the eligible trade-in vehicle; 

(B) the new fuel efficient automobile is a category 1 truck and the combined fuel economy value of such truck is at least 2 miles per gallon higher 

than the combined fuel economy value of the eligible trade-in vehicle; 

(C) the new fuel efficient automobile is a category 2 truck that has a combined fuel economy value of at least 15 miles per gallon and— 

(i) the eligible trade-in vehicle is a category 2 truck and the combined 

fuel economy value of the new fuel efficient automobile is at least 1 

mile per gallon higher than the combined fuel economy value of the eligible trade-in vehicle; or 

(ii) the eligible trade-in vehicle is a category 3 truck of model year 

2001 or earlier; or 

(D) the new fuel efficient automobile is a category 3 truck and the eligible 

trade-in vehicle is a category 3 truck of model year of 2001 or earlier and 

is of similar size or larger than the new fuel efficient automobile as determined in a manner prescribed by the Secretary. 

(2) $4,500 VALUE.—The voucher may be used to offset the purchase price or 

lease price of the new fuel efficient automobile by $4,500 if— 

(A) the new fuel efficient automobile is a passenger automobile and the 

combined fuel economy value of such automobile is at least 10 miles per 

gallon higher than the combined fuel economy value of the eligible tradein vehicle; 

(B) the new fuel efficient automobile is a category 1 truck and the combined fuel economy value of such truck is at least 5 miles per gallon higher 

than the combined fuel economy value of the eligible trade-in vehicle; or 

(C) the new fuel efficient automobile is a category 2 truck that has a combined fuel economy value of at least 15 miles per gallon and the combined 

fuel economy value of such truck is at least 2 miles per gallon higher than 

the combined fuel economy value of the eligible trade-in vehicle and the eligible trade-in vehicle is a category 2 truck. 

(c) PROGRAM SPECIFICATIONS.— 

(1) LIMITATIONS.— 

(A) GENERAL PERIOD OF ELIGIBILITY.—A voucher issued under the Program shall be used only for the purchase or qualifying lease of new fuel efficient automobiles that occur between March 30, 2009, and March 31, 2010. 

(B) NUMBER OF VOUCHERS PER PERSON AND PER TRADE-IN VEHICLE.—Not 

more than 1 voucher may be issued for a single person and not more than 

1 voucher may be issued for the joint registered owners of a single eligible 

trade-in vehicle. 

(C) NO COMBINATION OF VOUCHERS.—Only 1 voucher issued under the 

Program may be applied toward the purchase or qualifying lease of a single 

new fuel efficient automobile. 

(D) CAP ON FUNDS FOR CATEGORY 3 TRUCKS.—Not more than 7.5 percent 

of the total funds made available for the Program shall be used for vouchers 

for the purchase or qualifying lease of category 3 trucks. 

(E) COMBINATION WITH OTHER INCENTIVES PERMITTED.—The availability 

or use of a Federal, State, or local incentive or a State-issued voucher for 

the purchase or lease of a new fuel efficient automobile shall not limit the 

value or issuance of a voucher under the Program to any person otherwise 

eligible to receive such a voucher. 


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(F) NO ADDITIONAL FEES.—A dealer participating in the program may not 

charge a person purchasing or leasing a new fuel efficient automobile any 

additional fees associated with the use of a voucher under the Program. 

(G) NUMBER AND AMOUNT.—The total number and value of vouchers 

issued under the Program may not exceed the amounts appropriated for 

such purpose. 

(2) DISPOSITION OF ELIGIBLE TRADE-IN VEHICLES.— (A) IN GENERAL.—For each eligible trade-in vehicle, the title of which is 

transferred to a dealer under the Program, the dealer shall certify to the 

Secretary, in such manner as the Secretary shall prescribe by rule, that the 

vehicle, including the engine and drive train— 

(i) will be crushed or shredded within such period and in such manner as the Secretary prescribes, or will be transferred to an entity that 

will ensure that the vehicle will be crushed or shredded within such period and in such manner as the Secretary prescribes; and 

(ii) has not been, and will not be, sold, leased, exchanged, or otherwise disposed of for use as an automobile in the United States or in 

any other country, or has been or will be transferred, in such manner 

as the Secretary prescribes, to an entity that will ensure that the vehicle has not been, and will not be, sold, leased, exchanged, or otherwise 

disposed of for use as an automobile in the United States or in any 

other country. 

(B) SAVINGS PROVISION.—Nothing in subparagraph (A) may be construed 

to preclude a person who dismantles or disposes of the vehicle from— 

(i) selling any parts of the disposed vehicle other than the engine 

block and drive train (unless the engine or drive train has been crushed 

or shredded); or 

(ii) retaining the proceeds from such sale. 

(C) COORDINATION.—The Secretary shall coordinate with the Attorney 

General to ensure that the National Motor Vehicle Title Information System and other publicly accessible and commercially available systems are 

appropriately updated to reflect the crushing or shredding of vehicles under 

this section and appropriate re-classification of the vehicles’ titles. 

(3) ELIGIBLE PURCHASES OR LEASES PRIOR TO DATE OF ENACTMENT.—A person 

who purchased or leased a new fuel efficient vehicle after March 30, 2009, and 

before the date of enactment of this section is eligible for a cash rebate equivalent to the amount described in subsection (b)(1) if the person provides proof 

satisfactory to the Secretary that— 

(A) the person was the registered owner of an eligible trade-in vehicle; 

and 

(B) such vehicle has been disposed of in accordance with clauses (i) and 

(ii) of paragraph (2)(A). 

(d) REGULATIONS.—Notwithstanding the requirements of section 553 of title 5, 

United States Code, the Secretary shall promulgate final regulations to implement 

the Program not later than 30 days after the date of the enactment of this section. 

Such regulations shall— 

(1) provide for a means of certifying dealers for participation in the program; 

(2) establish procedures for the reimbursement of dealers participating in the 

Program to be made through electronic transfer of funds for both the amount 

of the vouchers and any reasonable administrative costs incurred by the dealer 

as soon as practicable but no longer than 10 days after the submission of a 

voucher for the new fuel efficient automobile to the Secretary; 

(3) prohibit a dealer from using the voucher to offset any other rebate or discount offered by that dealer or the manufacturer of the new fuel efficient automobile; 

(4) require dealers to disclose to the person trading in an eligible trade in vehicle the best estimate of the scrappage value of such vehicle and to permit the 

dealer to retain $50 of any amounts paid to the dealer for scrappage of the automobile as payment for any administrative costs to the dealer associated with 

participation in the Program; 

(5) establish a process by which persons who qualify for a rebate under subsection (c)(3) may apply for such rebate; 

(6) consistent with subsection (c)(2), establish requirements and procedures 

for the disposal of eligible trade-in vehicles and provide such information as 

may be necessary to entities engaged in such disposal to ensure that such vehicles are disposed of in accordance with such requirements and procedures, including— 

(A) requirements for the removal and appropriate disposition of refrigerants, antifreeze, lead products, mercury switches, and such other toxic or 


hsrobinson on PROD1PC76 with HEARING
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hazardous vehicle components prior to the crushing or shredding of an eligible trade-in vehicle, in accordance with rules established by the Secretary 

in consultation with the Administrator, and in accordance with other applicable Federal or State requirements; and 

(B) a mechanism for dealers to certify to the Secretary that eligible tradein vehicles are disposed of, or transferred to an entity that will ensure that 

the vehicle is disposed of, in accordance with such requirements and procedures and to submit the vehicle identification numbers of the vehicles disposed of and the new fuel efficient automobile purchased with each voucher; 

(7) consistent with subsection (c)(2), establish requirements and procedures 

for the disposal of eligible trade-in vehicles and provide such information as 

may be necessary to entities engaged in such disposal to ensure that such vehicles are disposed of in accordance with such requirements and procedures; and 

(8) provide for the enforcement of the penalties described in subsection (e). 

(e) ANTI-FRAUD PROVISIONS.— (1) VIOLATION.—It shall be unlawful for any person to violate any provision 

under this section or any regulations issued pursuant to subsection (d). 

(2) PENALTIES.—Any person who commits a violation described in paragraph 

(1) shall be liable to the United States Government for a civil penalty of not 

more than $25,000 for each violation. 

(f) INFORMATION TO CONSUMERS AND DEALERS.—Not later than 30 days after the 

date of enactment of this section, and promptly upon the update of any relevant information, the Secretary shall make available on an Internet website and through 

other means determined by the Secretary information about the Program, including— 

(1) how to determine if a vehicle is an eligible trade-in vehicle; 

(2) how to participate in the Program, including how to determine participating dealers; and 

(3) a comprehensive list, by make and model, of new fuel efficient automobiles 

meeting the requirements of the Program. 

Once such information is available, the Secretary shall conduct a public awareness 

campaign to inform consumers about the Program and where to obtain additional 

information. 

(g) RECORDKEEPING AND REPORT.— 

(1) DATABASE.—The Secretary shall maintain a database of the vehicle identification numbers of all new fuel efficient vehicles purchased or leased and all 

eligible trade-in vehicles disposed of under the Program. 

(2) REPORT.—Not later than June 30, 2010, the Secretary shall submit a report to the Committee on Energy and Commerce of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate describing the efficacy of the Program, including— 

(A) a description of program results, including— 

(i) the total number and amount of vouchers issued for purchase or 

lease of new fuel efficient automobiles by manufacturer (including aggregate information concerning the make, model, model year) and category of automobile; 

(ii) aggregate information regarding the make, model, model year, 

and manufacturing location of vehicles traded in under the Program; 

and 

(iii) the location of sale or lease; 

(B) an estimate of the overall increase in fuel efficiency in terms of miles 

per gallon, total annual oil savings, and total annual greenhouse gas reductions, as a result of the Program; and 

(C) an estimate of the overall economic and employment effects of the 

Program. 

(h) DEFINITIONS.—As used in this section— 

(1) the term ‘‘passenger automobile’’ means a passenger automobile, as defined in section 32901(a)(18) of title 49, United States Code, that has a combined fuel economy value of at least 22 miles per gallon; 

(2) the term ‘‘category 1 truck’’ means a nonpassenger automobile, as defined 

in section 32901(a)(17) of title 49, United States Code, that has a combined fuel 

economy value of at least 18 miles per gallon, except that such term does not 

include a category 2 truck; 

(3) the term ‘‘category 2 truck’’ means a large van or a large pickup, as categorized by the Secretary using the method used by the Environmental Protection Agency and described in the report entitled ‘‘Light-Duty Automotive Technology and Fuel Economy Trends: 1975 through 2008’’; 

(4) the term ‘‘category 3 truck’’ means a work truck, as defined in section 

32901(a)(19) of title 49, United States Code; 


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(5) the term ‘‘combined fuel economy value’’ means— 

(A) with respect to a new fuel efficient automobile, the number, expressed 

in miles per gallon, centered below the words ‘‘Combined Fuel Economy’’ on 

the label required to be affixed or caused to be affixed on a new automobile 

pursuant to subpart D of part 600 of title 40 Code of Federal Regulations; 

(B) with respect to an eligible trade-in vehicle, the equivalent of the number described in subparagraph (A), and posted under the words ‘‘Estimated 

New EPA MPG’’ and above the word ‘‘Combined’’ for vehicles of model year 

1984 through 2007, or posted under the words ‘‘New EPA MPG’’ and above 

the word ‘‘Combined’’ for vehicles of model year 2008 or later on the 

fueleconomy.gov website of the Environmental Protection Agency for the 

make, model, and year of such vehicle; or 

(C) with respect to an eligible trade-in vehicle manufactured between 

model years 1978 through 1984, the equivalent of the number described in 

subparagraph (A) as determined by the Secretary (and posted on the 

website of the National Highway Traffic Safety Administration) using data 

maintained by the Environmental Protection Agency for the make, model, 

and year of such vehicle; 

(6) the term ‘‘dealer’’ means a person licensed by a State who engages in the 

sale of new automobiles to ultimate purchasers; 

(7) the term ‘‘eligible trade-in vehicle’’ means an automobile or a work truck 

(as such terms are defined in section 32901(a) of title 49, United States Code) 

that, at the time it is presented for trade-in under this section— 

(A) is in drivable condition; 

(B) has been continuously insured consistent with the applicable State 

law and registered to the same owner for a period of not less than 1 year 

immediately prior to such trade-in; and 

(C) has a combined fuel economy value of 18 miles per gallon or less; 

(8) the term ‘‘new fuel efficient automobile’’ means an automobile described 

in paragraph (1), (2), (3), or (4)— 

(A) the equitable or legal title of which has not been transferred to any 

person other than the ultimate purchaser; 

(B) that carries a manufacturer’s suggested retail price of $45,000 or less; 

(C) that— 

(i) for new fuel efficient automobiles weighing up to 8,500 pounds, is 

certified to applicable standards under section 86.1811-04 of title 40, 

Code of Federal Regulations; or 

(ii) for category 3 trucks, is certified to the applicable vehicle or engine standards under section 86.1816-08, 86-007-11, or 86.008-10 of 

title 40, Code of Federal Regulations; and 

(D) that has the combined fuel economy value of— 

(i) 22 miles per gallon for a passenger automobile; 

(ii) 18 miles per gallon for a category 1 truck; and 

(iii) 15 miles per gallon for a category 2 truck; 

(9) the term ‘‘Program’’ means the Cash for Clunkers Temporary Vehicle 

Trade-in Program established by this section; 

(10) the term ‘‘qualifying lease’’ means a lease of an automobile for a period 

of not less than 5 years; 

(11) the term ‘‘scrappage value’’ means the amount received by the dealer for 

a vehicle upon transferring title of such vehicle to the person responsible for ensuring the dismantling and destroying the vehicle; 

(12) the term ‘‘Secretary’’ means the Secretary of Transportation acting 

through the National Highway Traffic Safety Administration; 

(13) the term ‘‘ultimate purchaser’’ means, with respect to any new automobile, the first person who in good faith purchases such automobile for purposes other than resale; and 

(14) the term ‘‘vehicle identification number’’ means the 17 character number 

used by the automobile industry to identify individual automobiles. 

(i) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to be appropriated to 

the Secretary $4,000,000,000 to carry out this section. 

SEC. 129. DIESEL EMISSIONS REDUCTION. 

Subtitle G of title VII of the Energy Policy Act of 2005 (42 U.S.C. 16131 et seq.) 

is amended— 

(1) in the matter preceding clause (i) in section 791(3)(B), by inserting ‘‘in any 

State’’ after ‘‘nonprofit organization or institution’’; 

(2) in section 791(9), by striking ‘‘The term ‘State’ includes the District of Columbia.’’ and inserting ‘‘The term ‘State’ includes the District of Columbia, 


hsrobinson on PROD1PC76 with HEARING
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American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, 

Puerto Rico, and the Virgin Islands.’’; and 

(3) in section 793(c)— 

(A) in paragraph (2)(A), by striking ‘‘51 States’’ and inserting ‘‘56 States’’; 

(B) in paragraph (2)(A), by striking ‘‘1.96 percent’’ and inserting ‘‘1.785 

percent’’; 

(C) in paragraph (2)(B), by striking ‘‘51 States’’ and inserting ‘‘56 States’’; 

and 

(D) in paragraph (2)(B), by amending clause (ii) to read as follows: 

‘‘(ii) the amount of funds remaining after each State described in 

paragraph (1) receives the 1.785-percent allocation under this paragraph.’’. 

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

(a) DEFINITIONS.—Section 1701 of the Energy Policy Act of 2005 (42 U.S.C. 16511) 

is amended by adding at the end the following: 

‘‘(6) RENEWABLE FUEL.—The term ‘renewable fuel’ has the meaning given the 

term in section 211(o)(1) of the Clean Air Act (42 U.S.C. 7545(o)(1)), except that 

the term shall include all ethanol and biodiesel. 

‘‘(7) RENEWABLE FUEL PIPELINE.—The term ‘renewable fuel pipeline’ means a 

common carrier pipeline for transporting renewable fuel.’’. 

(b) RENEWABLE FUEL PIPELINE ELIGIBILITY.—Section 1703(b) the Energy Policy 

Act of 2005 (42 U.S.C. 16513) is amended by adding at the end the following: 

‘‘(11) Renewable fuel pipelines.’’. 

Subtitle D—State Energy and Environment 

Development Accounts 

SEC. 131. ESTABLISHMENT OF SEED ACCOUNTS. 

(a) DEFINITIONS.—In this section: 

(1) SEED ACCOUNT.—The term ‘‘SEED Account’’ means a State Energy and 

Environment Development Account established pursuant to this section. 

(2) STATE ENERGY OFFICE.—The term ‘‘State Energy Office’’ means a State entity eligible for grants under part D of title III of the Energy Policy and Conservation Act (42 U.S.C. 6321 et seq.). 

(b) ESTABLISHMENT OF PROGRAM.—The Administrator shall establish a program 

under which a State, through its State Energy Office or other State agency designated by the State, may operate a State Energy and Environment Development 

Account. 

(c) PURPOSE.—The purpose of each SEED Account is to serve as a common Statelevel repository for managing and accounting for emission allowances provided to 

States designated for renewable energy and energy efficiency purposes. 

(d) REGULATIONS.—Not later than one year after the date of enactment of this Act, 

the Administrator shall promulgate regulations to carry out this section, including 

regulations— 

(1) to ensure that each State operates its SEED Account and any subaccounts 

thereof efficiently and in accordance with this Act and applicable State and Federal laws; 

(2) to prevent waste, fraud, and abuse; 

(3) to indicate the emission allowances that may be deposited in a State’s 

SEED Account pending distribution or use; 

(4) to indicate the programs and objectives authorized by Federal law for 

which emission allowances in a SEED Account may be distributed or used; 

(5) to identify the forms of financial assistance and incentives that States may 

provide through distribution or use of SEED Accounts; and 

(6) to prescribe the form and content of reports that the States are required 

to submit under this section on the use of SEED Accounts. 

(e) OPERATION.— 

(1) DEPOSITS.— 

(A) IN GENERAL.—In the allowance tracking system established pursuant 

to section 724(d) of the Clean Air Act, the Administrator shall establish a 

SEED Account for each State and place in it the allowances allocated pursuant to section 782(g) of the Clean Air Act to be distributed to States pursuant to sections 132 and 201 of this Act. 

(B) FINANCIAL ACCOUNT.—A State may create a financial account associated with its SEED Account to deposit, retain, and manage any proceeds 

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ture or disbursement of those proceeds for purposes permitted under this 

section. The funds in such an account shall not be commingled with other 

funds not derived from the sale of allowances provided to the State; however, loans made by the State from such funds pursuant to paragraph 

(2)(C)(i) may be repaid into such a financial account, including any interest 

charged. 

(2) WITHDRAWALS.— (A) IN GENERAL.—All allowances distributed pursuant to sections 132 and 

201, including the proceeds of any sale of such allowances, shall support renewable energy and energy efficiency programs authorized or approved by 

the Federal Government. 

(B) DEDICATED ALLOWANCES.—Allowances distributed pursuant to sections 132 and 201 that are required by law to be used for specific purposes 

for a specified period shall be used according to those requirements during 

that period. 

(C) UNDEDICATED ALLOWANCES.—To the extent that allowances distributed pursuant to sections 132 and 201 are not required by law to be used 

for specific purposes for a specified period as described in subparagraph (B), 

such allowances or the proceeds of their sale may be used for any of the 

following purposes: 

(i) LOANS.—Loans of allowances, or the proceeds from the sale of allowances, may be provided, interest on commercial loans may be subsidized at an interest rate as low as zero, and other credit support may 

be provided to support programs authorized to use SEED Account allowance value or any other renewable energy or energy efficiency purpose authorized or approved by the Federal Government. 

(ii) GRANTS.—Grants of allowances or the proceeds of their sale may 

be provided to support programs authorized to use SEED Account allowance value or any other renewable energy or energy efficiency purpose authorized or approved by the Federal Government. 

(iii) OTHER FORMS OF SUPPORT.—Allowances or the proceeds of the 

sale of allowances may be provided for other forms of support for programs authorized to use SEED Account allowance value or any other 

renewable energy or energy efficiency purpose authorized or approved 

by the Federal Government. 

(iv) ADMINISTRATIVE COSTS.—Except to the extent provided in Federal law authorizing or allocating allowances deposited in a SEED Account, not more than 5 percent of the allowance value in a SEED Account in any year may be used to cover administrative expenses of the 

SEED Account. 

(D) SUBACCOUNTS.—A State may request that the Administrator establish accounts for local governments that request such subaccounts to hold 

allowances distributed to local governments for renewable energy or energy 

efficiency programs authorized or approved by the Federal Government. 

(E) INTENDED USE PLANS.— 

(i) IN GENERAL.—After providing for public review and comment, each 

State administering a SEED Account shall annually prepare a plan 

that identifies the intended uses of the allowances or proceeds from the 

sale of allowances in its SEED Account. 

(ii) CONTENTS.—An intended use plan shall include— 

(I) a list of the projects or programs for which withdrawals from 

the SEED Account are intended in the next fiscal year that begins 

after the date of the plan, including a description of each project; 

(II) the relationship of each of the projects or programs to an 

identified Federal purpose authorized by this Act, or any other 

Federal statute; 

(III) the expected terms of use of allowance value to provide assistance; 

(IV) the criteria and methods established for the distribution of 

allowances or allowance value; 

(V) a description of the equivalent financial value and status of 

the SEED Account; and 

(VI) a statement of the mid-term and long-term goals of the State 

for use of its SEED Account. 

(3) ACCOUNTABILITY AND TRANSPARENCY.— 

(A) CONTROLS AND PROCEDURES.—Any State that has a SEED Account 

shall establish fiscal controls and recordkeeping and accounting procedures 

for the SEED Account sufficient to ensure proper accounting during appropriate accounting periods for distributions into the SEED Account, transfers 


hsrobinson on PROD1PC76 with HEARING
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from the SEED Account, and SEED Account balances, including any related 

financial accounts. Such controls and procedures shall conform to generally 

accepted government accounting principles. Any State that has a SEED Account shall retain records for a period of at least 5 years. 

(B) AUDITS.—Any State that has a SEED Account shall have an annual 

audit conducted of the SEED Account by an independent public accountant 

in accordance with generally accepted auditing standards, and shall transmit the results of that audit to the Administrator. 

(C) STATE REPORT.—Each State administering a SEED Account shall 

make publicly available and submit to the Administrator a report every 2 

years on its activities related to its SEED Account. 

(D) PUBLIC INFORMATION.—Any— 

(i) controls and procedures established under subparagraph (A); and 

(ii) information obtained through audits conducted under subparagraph (B), except to the extent that it would be protected from disclosure, if it were information held by the Federal Government, under section 552(b) of title 5, United States Code, 

shall be made publicly available. 

(E) OTHER PROTECTIONS.—The Administrator shall require such additional procedures and protections as are necessary to ensure that any State 

that has a SEED Account will operate the SEED Account in an accountable 

and transparent manner. 

(f) REQUIREMENTS FOR ELIGIBILITY.—A State’s eligibility to receive allowances in 

its SEED Account shall depend on that State’s compliance with the requirements 

of this Act (and the amendments made by this Act). 

(g) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

to the Administrator such sums as may be necessary for SEED Account operations. 

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

(a) DEFINITIONS.—For purposes of this section: 

(1) COST-EFFECTIVE.—The term ‘‘cost-effective’’, with respect to an energy efficiency program, means that the program meets the Total Resource Cost Test, 

which requires that the net present value of economic benefits over the life of 

the program or measure, including avoided supply and delivery costs and deferred or avoided investments, is greater than the net present value of the economic costs over the life of the program, including program costs and incremental costs borne by the energy consumer. 

(2) RENEWABLE ENERGY RESOURCE.—The term ‘‘renewable energy resource’’ 

shall have the meaning given that term in section 610 of the Public Utility Regulatory Policies Act of 1978 (as added by section 101 of this Act). 

(b) DISTRIBUTION AMONG STATES.—For each vintage year from 2012 through 2050, 

the Administrator shall, in accordance with this section, distribute emission allowances allocated pursuant to section 782(g)(1) of the Clean Air Act not later than 

September 30 of the year preceding the vintage year. The Administrator shall distribute the emission allowances to States for renewable energy and energy efficiency 

programs to be deposited in and administered through the State Energy and Environment Development (SEED) Accounts established pursuant to section 131. The 

Administrator shall distribute allowances among the States under this section each 

year in accordance with the following formula: 

(1) One third of the allowances shall be divided equally among the States. 

(2) One third of the allowances shall be distributed ratably among the States 

based on the population of each State, as contained in the most recent reliable 

census data available from the Bureau of the Census, Department of Commerce, 

for all States at the time the Administrator calculates the formula for distribution. 

(3) One third of the allowances for shall be distributed ratably among the 

States on the basis of the energy consumption of each State as contained in the 

most recent State Energy Data Report available from the Energy Information 

Administration (or such alternative reliable source as the Administrator may 

designate). 

(c) USES.—The allowances distributed to each State pursuant to this section shall 

be used exclusively for the purposes listed in this subsection, as set forth below: 

(1) Not less than 12.5 percent shall be distributed by the State to units of 

local government within such State to be used exclusively to support the energy 

efficiency and renewable energy purposes listed in paragraphs (2), (3), and (4). 

(2) Not less than 15 percent shall be used exclusively for the following energy 

efficiency purposes: 

(A) Implementation and enforcement of building codes adopted in compliance with section 201. 


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(B) Implementation of the energy efficient manufactured homes program 

established pursuant to section 203. 

(C) Implementation of the building energy performance labeling program 

established pursuant to section 204. 

(D) Enabling the development of a Smart Grid (as described in section 

1301 of the Energy Independence and Security Act of 2007 (42 U.S.C. 

17381)) for State, local government, and other public buildings and facilities, including integration of renewable energy resources and distributed 

generation, demand response, demand side management, and systems analysis. 

(E) Transportation planning pursuant to section 841 of the Clean Air Act. 

(F) Low-income community energy efficiency programs that are consistent 

with the grant program established under section 264 of this Act. 

(G) Other cost-effective energy efficiency programs for end-use consumers 

of electricity, natural gas, home heating oil, or propane, including, where 

appropriate, programs or mechanisms administered by local governments 

and entities other than the State. 

(3) Not less than 5 percent shall be used exclusively for implementation of 

the Retrofit for Energy and Environmental Performance (REEP) program established pursuant to section 202. 

(4) Not less than 20 percent shall be used exclusively for capital grants, tax 

credits, production incentives, loans, loan guarantees, forgivable loans, and interest rate buy-downs for— 

(A) re-equipping, expanding, or establishing a manufacturing facility that 

receives certification from the Secretary of Energy pursuant to section 1302 

of the American Recovery and Reinvestment Act of 2009 for the production 

of— 

(i) property designed to be used to produce energy from renewable 

energy sources; and 

(ii) electricity storage systems; 

(B) deployment of technologies to generate electricity from renewable energy sources; and 

(C) deployment of facilities or equipment, such as solar panels, to generate electricity or thermal energy from renewable energy resources in and 

on buildings in an urban environment. 

(5) The remaining 47.5 percent shall be used exclusively for any of the purposes described in subparagraphs (A) through (F) of paragraph (2) and in paragraphs (3) and (4), provided that each State receiving emission allowances 

under this section shall use not less than 1 percent of such allowances for the 

purpose described in paragraph (2)(F). 

(d) REPORTING.—Each State receiving emission allowances under this section shall 

include in its biennial reports required under section 131, in accordance with such 

requirements as the Administrator may prescribe— 

(1) a list of entities receiving allowances or allowance value under this section; 

(2) the amount and nature of allowances or allowance value received by each 

recipient; 

(3) the specific purposes for which such allowances or allowance value was 

conveyed; 

(4) the amount of energy savings, emission reductions, renewable energy deployment, or new or retooled manufacturing capacity resulting from such allowances or allowance value; and 

(5) an assessment of the cost-effectiveness of any energy efficiency program 

supported under subsection (c)(2)(F). 

(e) ENFORCEMENT.—If the Administrator determines that a State is not in compliance with this section, the Administrator may withhold up to twice the number of 

allowances that the State failed to use in accordance with the requirements of this 

section, that such State would otherwise be eligible to receive under this section in 

later years. Allowances withheld pursuant to this subsection shall be distributed 

among the remaining States in accordance with the requirements of subsection (b). 

Subtitle E—Smart Grid Advancement 

SEC. 141. DEFINITIONS. 

For purposes of this subtitle: 

(1) The term ‘‘applicable baseline’’ means the average of the highest three annual peak demands a load-serving entity has experienced during the 5 years immediately prior to the date of enactment of this Act. 


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(2) The term ‘‘Commission’’ means Federal Energy Regulatory Commission. 

(3) The term ‘‘load-serving entity’’ means an entity that provides electricity 

directly to retail consumers with the responsibility to assure power quality and 

reliability, including such entities that are investor-owned, publicly owned, 

owned by rural electric cooperatives, or other entities. 

(4) The term ‘‘peak demand’’ means the highest point of electricity demand, 

net of any distributed electricity generation or storage from sources on the loadserving entity’s customers’ premises, during any hour on the system of a load 

serving entity during a calendar year, expressed in Megawatts (MW), or more 

than one such high point as a function of seasonal demand changes. 

(5) The term ‘‘peak demand reduction’’ means the reduction in annual peak 

demand as compared to a previous baseline year or period, expressed in 

Megawatts (MW), whether accomplished by diminishing the end-use requirements for electricity or by use of locally stored or generated electricity to meet 

those requirements from distributed resources on the load-serving entity’s customers’ premises and without use of high-voltage transmission. 

(6) The term ‘‘peak demand reduction plan’’ means a plan developed by or for 

a load-serving entity that it will implement to meet its peak demand reduction 

goals. 

(7) The term ‘‘peak period’’ means the time period on the system of a loadserving entity relative to peak demand that may warrant special measures or 

electricity resources to maintain system reliability while meeting peak demand. 

(8) The term ‘‘Secretary’’ means the Secretary of Energy. 

(9) The term ‘‘Smart Grid’’ has the meaning provided by section 1301 of the 

Energy Independence and Security Act of 2007 (15 U.S.C. 17381). 

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

(a) ASSESSMENT.—Within one year after the date of enactment of this Act, the 

Secretary and the Administrator shall each assess the potential for cost-effective integration of Smart Grid technologies and capabilities in all products that are reviewed by the Department of Energy and the Environmental Protection Agency, respectively, for potential designation as Energy Star products. 

(b) ANALYSIS.—(1) Within 2 years after the date of enactment of this Act, the Secretary and the Administrator shall each prepare an analysis of the potential energy 

savings, greenhouse gas emission reductions, and electricity cost savings that could 

accrue for each of the products identified by the assessment in subsection (a) in the 

following optimal circumstances: 

(A) The products possessed Smart Grid capability and interoperability that is 

tested and proven reliable. 

(B) The products were utilized in an electricity utility service area which had 

Smart Grid capability and offered customers rate or program incentives to use 

the products. 

(C) The utility’s rates reflected national average costs, including average peak 

and valley seasonal and daily electricity costs. 

(D) Consumers using such products took full advantage of such capability. 

(E) The utility avoided incremental investments and rate increases related to 

such savings. 

(2) The analysis under paragraph (1) shall be considered the ‘‘best case’’ Smart 

Grid analysis. On the basis of such an analysis for each product, the Secretary and 

the Administrator shall determine whether the installation of Smart Grid capability 

for such a product would be cost effective. For purposes of this paragraph, the term 

‘‘cost effective’’ means that the cumulative savings from using the product under the 

best case Smart Grid circumstances for a period of one-half of the product’s expected 

useful life will be greater than the incremental cost of the Smart Grid features included in the product. 

(3) To the extent that including Smart Grid capability in any products analyzed 

under paragraph (2) is found to be cost effective in the best case, the Secretary and 

the Administrator shall, not later than 3 years after the date of enactment of this 

Act take each of the following actions: 

(A) Inform the manufacturer of such product of such finding of cost effectiveness. 

(B) Assess the potential contributions the development and use of products 

with Smart Grid technologies bring to reducing peak demand and promoting 

grid stability. 

(C) Assess the potential national energy savings and electricity cost savings 

that could be realized if Smart Grid potential were installed in the relevant 

products reviewed by the Energy Star program. 


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(D) Assess and identify options for providing consumers information on products with Smart Grid capabilities, including the necessary conditions for costeffective savings. 

(E) Submit a report to Congress summarizing the results of the assessment 

for each class of products, and presenting the potential energy and greenhouse 

gas savings that could result if Smart Grid capability were installed and utilized on such products. 

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

Section 324(a)(2) of the Energy Policy and Conservation Act (42 U.S.C. 6294(a)(2)) 

is amended by adding the following at the end: 

‘‘(J)(i) Not later than 3 years after the date of enactment of this subparagraph, the Federal Trade Commission shall initiate a rulemaking to consider making a special note in a prominent manner on any ENERGY 

GUIDE label for any product actually including Smart Grid capability 

that— 

‘‘(I) Smart Grid capability is a feature of that product; 

‘‘(II) the use and value of that feature depended on the Smart Grid 

capability of the utility system in which the product was installed and 

the active utilization of that feature by the customer; and 

‘‘(III) on a utility system with Smart Grid capability, the use of the 

product’s Smart Grid capability could reduce the customer’s cost of the 

product’s annual operation by an estimated dollar amount range representing the result of incremental energy and electricity cost savings 

that would result from the customer taking full advantage of such 

Smart Grid capability. 

‘‘(ii) Not later than 3 years after the date of enactment of this subparagraph, the Commission shall complete the rulemaking initiated under 

clause (i).’’. 

SEC. 144. SMART GRID PEAK DEMAND REDUCTION GOALS. 

(a) GOALS.—Not later than one year after the date of enactment of this Act, loadserving entities, or, at their option, States with respect to load-serving entities that 

they regulate, shall determine and publish peak demand reduction goals for any 

load-serving entities that have an applicable baseline in excess of 250 megawatts. 

(b) BASELINES.—(1) The Commission, in consultation with the Secretary and the 

Administrator, shall develop and publish, after an opportunity for public comment, 

a methodology to provide for adjustments or normalization to a load-serving entity’s 

applicable baseline over time to reflect changes in the number of customers served, 

weather conditions, general economic conditions, and any other appropriate factors 

external to peak demand management, as determined by the Commission. 

(2) The Commission shall support load-serving entities (including any load-serving 

entities with an applicable baseline of less than 250 megawatts that volunteer to 

participate in achieving the purposes of this section) in determining their applicable 

baselines, and in developing their peak demand reduction goals. 

(3) The Secretary, in consultation with the Commission, the Administrator, and 

the North American Electric Reliability Corporation, shall develop a system and 

rules for measurement and verification of demand reductions. 

(c) PEAK DEMAND REDUCTION GOALS.—(1) Peak demand reduction goals may be 

established for an individual load-serving entity, or, at the determination of a State 

or regional entity, by that State or regional entity for a larger region that shares 

a common system peak demand and for which peak demand reduction measures 

would offer regional benefit. 

(2) A State or regional entity establishing peak demand reduction goals shall cooperate, as necessary and appropriate, with the Commission, the Secretary, State 

regulatory commissions, State energy offices, the North American Electric Reliability Corporation, and other relevant authorities. 

(3) In determining the applicable peak demand reduction goals, States and other 

jurisdictional entities may utilize the results of the 2009 National Demand Response 

Potential Assessment, as authorized by section 571 of the National Energy Conservation Policy Act (42 U.S.C. 8279). 

(4) The applicable peak demand reduction goals shall provide that— 

(A) load-serving entities will reduce or mitigate peak demand by a minimum 

percentage amount from the applicable baseline to a lower peak demand during 

calendar year 2012; 

(B) load-serving entities will reduce or mitigate peak demand by a minimum 

percentage greater amount from the applicable baseline to a lower peak demand 

during calendar year 2015; and 

(C) the minimum percentage reductions established as peak demand reduction goals shall be the maximum reductions that are realistically achievable 


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with an aggressive effort to deploy Smart Grid and peak demand reduction 

technologies and methods, including but not limited to those listed in subsection 

(d). 

(d) PLAN.—Each load-serving entity shall prepare a peak demand reduction plan 

that demonstrates its ability to meet each applicable goal by any or a combination 

of the following options: 

(1) Direct reduction in megawatts of peak demand through energy efficiency 

measures (including efficient transmission wire technologies which significantly 

reduce line loss compared to traditional wire technology) with reliable and continued application during peak demand periods. 

(2) Demonstration that an amount of megawatts equal to a stated portion of 

the applicable goal is contractually committed to be available for peak reduction 

through one or more of the following: 

(A) Megawatts enrolled in demand response programs. 

(B) Megawatts subject to the ability of a load-serving entity to call on demand response programs, smart appliances, smart electricity storage devices, distributed generation resources on the entity’s customers’ premises, 

or other measures directly capable of actively, controllably, reliably, and dynamically reducing peak demand (‘‘dynamic peak management control’’). 

(C) Megawatts available from distributed dynamic electricity storage 

under agreement with the owner of that storage. 

(D) Megawatts committed from dispatchable distributed generation demonstrated to be reliable under peak period conditions and in compliance 

with air quality regulations. 

(E) Megawatts available from smart appliances and equipment with 

Smart Grid capability available for direct control by the utility through 

agreement with the customer owning the appliances or equipment. 

(F) Megawatts from a demonstrated and assured minimum of distributed 

solar electric generation capacity in instances where peak period and peak 

demand conditions are directly related to solar radiation and accompanying 

heat. 

(3) If any of the methods listed in subparagraph (C), (D), or (E) of paragraph 

(2) are relied upon to meet its peak demand reduction goals, the load-serving 

entity must demonstrate this capability by operating a test during the applicable calendar year. 

(4) Nothing in this section shall require the publication in peak demand reduction goals or in any peak demand reduction plan of any information that is 

confidential for competitive or other reasons or that identifies individual customers. 

(e) EXISTING AUTHORITY AND REQUIREMENTS.—Nothing in this section diminishes 

or supersedes any authority of a State or political subdivision of a State to adopt 

or enforce any law or regulation respecting peak demand management, demand response, distributed storage, use of distributed generation, or the regulation of loadserving entities. The Commission, in consultation with States having such peak 

management, demand response and distributed storage programs, shall to the maximum extent practicable, facilitate coordination between the Federal program and 

such State programs. 

(f) RELIEF.—The Commission may, for good cause, grant relief to load-serving entities from the requirements of this section. 

(g) OTHER LAWS.—Except as provided in subsections (e) and (f), no law or regulation shall relieve any person of any requirement otherwise applicable under this section. 

(h) COMPLIANCE.—(1) The Commission shall within one year after the date of enactment of this Act establish a public website where the Commission will provide 

information and data demonstrating compliance by States, regional entities, and 

load-serving entities with this section, including the success of load-serving entities 

in meeting applicable peak demand reduction goals. 

(2) The Commission shall, by April 1 of each year beginning in 2012, provide a 

report to Congress on compliance with this section and success in meeting applicable peak demand reduction goals and, as appropriate, shall make recommendations 

as to how to increase peak demand reduction efforts. 

(3) The Commission shall note in each such report any State, political subdivision 

of a State, or load-serving entity that has failed to comply with this section, or is 

not a part of any region or group of load-serving entities serving a region that has 

complied with this section. 

(4) The Commission shall have and exercise the authority to take reasonable steps 

to modify the process of establishing peak demand reduction goals and to accept adjustments to them as appropriate when sought by load-serving entities. 

(i) ASSISTANCE TO STATES AND FUNDING.— 


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(1) ASSISTANCE TO STATES.—Any costs incurred by States for activities undertaken pursuant to this section shall be supported by the use of emission allowances allocated to the States’ SEED Accounts pursuant to section 132 of this 

Act. To the extent that a State provides allowances to local governments within 

the State to implement this program, that shall be deemed a distribution of 

such allowances to units of local government pursuant to subsection (c)(1) of 

that section. 

(2) FUNDING.—There are authorized to be appropriated such sums as may be 

necessary to the Commission, the Secretary, and the Administrator to carry out 

the provisions of this section. 

SEC. 145. REAUTHORIZATION OF ENERGY EFFICIENCY PUBLIC INFORMATION PROGRAM TO 

INCLUDE SMART GRID INFORMATION. 

(a) IN GENERAL.—Section 134 of the Energy Policy Act of 2005 (42 U.S.C. 15832) 

is amended as follows: 

(1) By amending the section heading to read as follows: ‘‘ENERGY EFFICIENCY AND SMART GRID PUBLIC INFORMATION INITIATIVE’’. 

(2) In paragraph (1) of subsection (a) by striking ‘‘reduce energy consumption 

during the 4-year period beginning on the date of enactment of this Act’’ and 

inserting ‘‘increase energy efficiency and to adopt Smart Grid technology and 

practices’’. 

(3) In paragraph (2) of subsection (a) by striking ‘‘benefits to consumers of reducing’’ and inserting ‘‘economic and environmental benefits to consumers and 

the United States of optimizing’’. 

(4) In subsection (a) by inserting at the beginning of paragraph (3) ‘‘the effect 

of energy efficiency and Smart Grid capability in reducing energy and electricity 

prices throughout the economy, together with’’. 

(5) In subsection (a)(4) by redesignating subparagraph (D) as (E), by striking 

‘‘and’’ at the end of subparagraph (C), and by inserting after subparagraph (C) 

the following: 

‘‘(D) purchasing and utilizing equipment that includes Smart Grid features and capability; and’’. 

(6) In subsection (c), by striking ‘‘Not later than July 1, 2009,’’ and inserting, 

‘‘For each year when appropriations pursuant to the authorization in this section exceed $10,000,000,’’. 

(7) In subsection (d) by striking ‘‘2010’’ and inserting ‘‘2020’’. 

(8) In subsection (e) by striking ‘‘2010’’ and inserting ‘‘2020’’. 

(b) TABLE OF CONTENTS.—The item relating to section 134 in the table of contents 

for the Energy Policy Act of 2005 (42 U.S.C. 15801 and following) is amended to 

read as follows: 

‘‘Sec. 134. Energy efficiency and Smart Grid public information initiative.’’. 

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

(a) AMENDMENTS.—Section 124 of the Energy Policy Act of 2005 (42 U.S.C. 15821) 

is amended as follows: 

(1) By amending the section heading to read as follows: ‘‘ENERGY EFFICIENT AND SMART APPLIANCE REBATE PROGRAM.’’. 

(2) By redesignating paragraphs (4) and (5) of subsection (a) as paragraphs 

(5) and (6), respectively, and inserting after paragraph (3) the following: 

‘‘(4) SMART APPLIANCE.—The term ‘smart appliance’ means a product that the 

Administrator of the Environmental Protection Agency or the Secretary of Energy has determined qualifies for such a designation in the Energy Star program pursuant to section 142 of the American Clean Energy and Security Act 

of 2009, or that the Secretary or the Administrator has separately determined 

includes the relevant Smart Grid capabilities listed in section 1301 of the Energy Independence and Security Act of 2007 (15 U.S.C. 17381).’’. 

(3) In subsection (b)(1) by inserting ‘‘and smart’’ after ‘‘efficient’’ and by inserting after ‘‘products’’ the first place it appears ‘‘, including products designated 

as being smart appliances’’. 

(4) In subsection (b)(3), by inserting ‘‘the administration of’’ after ‘‘carry out’’. 

(5) In subsection (d), by inserting ‘‘the administration of’’ after ‘‘carrying out’’ 

and by inserting ‘‘, and up to 100 percent of the value of the rebates provided 

pursuant to this section’’ before the period at the end. 

(6) In subsection (e)(3), by inserting ‘‘, with separate consideration as applicable if the product is also a smart appliance,’’ after ‘‘Energy Star product’’ the 

first place it appears and by inserting ‘‘or smart appliance’’ before the period 

at the end. 

(7) In subsection (f), by striking ‘‘$50,000,000’’ through the period at the end 

and inserting ‘‘$100,000,000 for each fiscal year from 2010 through 2015.’’. 


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(b) TABLE OF CONTENTS.—The item relating to section 124 in the table of contents 

for the Energy Policy Act of 2005 (42 U.S.C. 15801 and following) is amended to 

read as follows: 

‘‘Sec. 124. Energy efficient and smart appliance rebate program.’’. 

Subtitle F—Transmission Planning 

SEC. 151. TRANSMISSION PLANNING. 

Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended by adding 

after section 216 the following new section: 

‘‘SEC. 216A. TRANSMISSION PLANNING. 

‘‘(a) FEDERAL POLICY.— ‘‘(1) OBJECTIVES.—It is the policy of the United States that regional electric 

grid planning should facilitate the deployment of renewable and other zero-carbon energy sources for generating electricity to reduce greenhouse gas emissions 

while ensuring reliability, reducing congestion, ensuring cyber-security, and providing for cost-effective electricity services throughout the United States. 

‘‘(2) OPTIONS.—In addition to the policy under paragraph (1), it is the policy 

of the United States that regional electric grid planning to meet these objectives 

should take into account all significant demand-side and supply-side options, including energy efficiency, distributed generation, renewable energy and zerocarbon electricity generation technologies, smart-grid technologies and practices, 

demand response, electricity storage, voltage regulation technologies, high capacity conductors with at least 25 percent greater efficiency than traditional 

ACSR (aluminum stranded conductors steel reinforced) conductors, superconductor technologies, underground transmission technologies, and new conventional electric transmission capacity and corridors. 

‘‘(b) PLANNING.— ‘‘(1) PLANNING PRINCIPLES.—Not later than 1 year after the date of enactment 

of this section, the Commission shall adopt, after notice and opportunity for 

comment, national electricity grid planning principles derived from the Federal 

policy established under subsection (a) to be applied in ongoing and future 

transmission planning that may implicate interstate transmission of electricity. 

‘‘(2) REGIONAL PLANNING ENTITIES.—Not later than 3 months after the date 

of adoption by the Commission of national electricity grid planning principles 

pursuant to paragraph (1), entities that conduct or may conduct transmission 

planning pursuant to State or Federal law or regulation, including States, entities designated by States, public utility transmission providers, operators and 

owners, regional organizations, and electric utilities, and that are willing to incorporate the national electricity grid planning principles adopted by the Commission in their electric grid planning, shall identify themselves and the regions 

for which they propose to develop plans to the Commission. 

‘‘(3) COORDINATION OF REGIONAL PLANNING ENTITIES.—The Commission shall 

encourage regional planning entities described under paragraph (2) to cooperate 

and coordinate across regions and to harmonize regional electric grid planning 

with planning in adjacent or overlapping jurisdictions to the maximum extent 

feasible. The Commission shall work with States, public utilities transmission 

providers, load-serving entities, transmission operators, and other organizations 

to resolve any conflict or competition among proposed planning entities in order 

to build consensus and promote the Federal policy established under subsection 

(a). The Commission shall seek to ensure that planning that is consistent with 

the national electricity grid planning principles adopted pursuant to paragraph 

(1) is conducted in all regions of the United States and the territories. 

‘‘(4) RELATION TO EXISTING PLANNING POLICY.—In implementing the Federal 

policy established under subsection (a), the Commission shall— 

‘‘(A) incorporate any ongoing planning efforts undertaken pursuant to section 217; and 

‘‘(B) consult with and invite the participation of the Secretary of Energy 

in relationship to the Secretary’s duties pursuant to section 216. 

‘‘(5) ASSISTANCE.— 

‘‘(A) IN GENERAL.—The Commission shall provide support to and participate in the regional grid planning processes conducted by regional planning 

entities. The Commission may provide planning resources and assistance as 

required or as requested by regional planning entities, including system 

data, cost information, system analysis, technical expertise, modeling support, dispute resolution services, and other assistance to regional planning 

entities, as appropriate. 


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‘‘(B) AUTHORIZATION.—There are authorized to be appropriated such sums 

as may be necessary to carry out this paragraph. 

‘‘(6) CONFLICT RESOLUTION.—In the event that regional grid plans conflict, the 

Commission shall assist the regional planning entities in resolving such conflicts in order to achieve the objectives of the Federal policy established under 

subsection (a). 

‘‘(7) SUBMISSION OF PLANS.—The Commission shall require regional planning 

entities to submit initial regional electric grid plans to the Commission not later 

than 18 months after the date the Commission promulgates national electricity 

grid planning principles pursuant to paragraph (1). Regional electric grid plans 

should, in general, be developed from sub-regional requirements and plans, including planning input reflecting individual utility service areas. Regional plans 

may then in turn be combined into larger regional plans, up to interconnectionwide and national plans, as appropriate and necessary as determined by the 

Commission. The Commission shall review such plans for consistency with the 

national grid planning principles and may return a plan to one or more planning entities for further consideration, along with the Commission’s own recommendations for resolution of any conflict or for improvement. To the extent 

practicable, all plans submitted to the Commission shall be public documents 

and available on the Commission’s website. 

‘‘(8) MULTI-REGIONAL MEETINGS.—As regional grid plans are submitted to the 

Commission, the Commission may convene multi-regional meetings to discuss 

regional grid plan consistency and integration, including requirements for 

multi-regional projects, and to resolve any conflicts that emerge from such 

multi-regional projects. The Commission shall provide its recommendations for 

eliminating any inter-regional conflicts. 

‘‘(9) REPORT TO CONGRESS.—Not later than 3 years after the date of enactment of this section, the Commission shall provide a report to Congress containing the results of the regional grid planning process, including summaries 

of the adopted regional plans. The Commission shall provide an electronic 

version of its report on its website with links to all regional and sub-regional 

plans taken into account. The Commission shall note and provide its recommended resolution for any conflicts not resolved during the planning process. 

The Commission shall make any recommendations to Congress on the appropriate Federal role or support required to address the needs of the electric grid, 

including recommendations for addressing any needs that are beyond the reach 

of existing State and Federal authority.’’. 

SEC. 152. NET METERING FOR FEDERAL AGENCIES. 

(a) STANDARD.—Subsection (b) of section 113 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2623) is amended by adding the following new paragraph 

at the end thereof: 

‘‘(6) NET METERING FOR FEDERAL AGENCIES.—Each electric utility shall offer 

to arrange (either directly or through a third party) to make interconnection 

and net metering available to Federal Government agencies, offices, or facilities 

in accordance with the requirements of section 115(j). The standard under this 

paragraph shall apply only to electric utilities that sold over 4,000,000 megawatt hours of electricity in the preceding year to the ultimate consumers thereof. In the case of a standard under this paragraph, a period of 1 year after the 

date of the enactment of this section shall be substituted for the 2-year period 

referred to in other provisions of this section.’’. 

(b) SPECIAL RULES.—Section 115 of the Public Utility Regulatory Policies Act of 

1978 (16 U.S.C. 2625) is amended by adding the following new subsection at the 

end thereof: 

‘‘(j) NET METERING FOR FEDERAL AGENCIES.—(1) The standard under paragraph 

(6) of section 113(b) shall require that rates and charges and contract terms and 

conditions for the sale of electric energy to the Federal Government or agency shall 

be the same as the rates and charges and contract terms and conditions that would 

be applicable if the agency did not own or operate a qualified generation unit and 

use a net metering system. 

‘‘(2)(A) The standard under paragraph (6) of section 113(b) shall require that each 

electric utility shall arrange to provide to the Government office or agency that 

qualifies for net metering an electrical energy meter capable of net metering and 

measuring, to the maximum extent practicable, the flow of electricity to or from the 

customer, using a single meter and single register, the cost of which shall be recovered from the customer. 

‘‘(B) In a case in which it is not practicable to provide a meter under subparagraph (A), the utility (either directly or through a third party) shall, at the expense 

of the utility install 1 or more of those electric energy meters. 


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‘‘(3)(A) The standard under paragraph (6) of section 113(b) shall require that each 

electric utility shall calculate the electric energy consumption for the Government 

office or agency using a net metering system that meets the requirements of this 

subsection and paragraph (6) of section 113(b) and shall measure the net electricity 

produced or consumed during the billing period using the metering installed in accordance with this paragraph. 

‘‘(B) If the electricity supplied by the retail electric supplier exceeds the electricity 

generated by the Government office or agency during the billing period, the Government office or agency shall be billed for the net electric energy supplied by the retail 

electric supplier in accordance with normal billing practices. 

‘‘(C) If electric energy generated by the Government office or agency exceeds the 

electric energy supplied by the retail electric supplier during the billing period, the 

Government office or agency shall be billed for the appropriate customer charges for 

that billing period and credited for the excess electric energy generated during the 

billing period, with the credit appearing as a kilowatt-hour credit on the bill for the 

following billing period. 

‘‘(D) Any kilowatt-hour credits provided to the Government office or agency as provided in this subsection shall be applied to the Government office or agency electric 

energy consumption on the following billing period bill (except for a billing period 

that ends in the next calendar year). At the beginning of each calendar year, any 

unused kilowatt-hour credits remaining from the preceding year will carry over to 

the new year. 

‘‘(4) The standard under paragraph (6) of section 113(b) shall require that each 

electric utility shall offer a meter and retail billing arrangement that has time-differentiated rates. The kilowatt-hour credit shall be based on the ratio representing 

the difference in retail rates for each time-of-use rate, or the credits shall be reflected on the bill of the Government office or agency as a monetary credit reflecting 

retail rates at the time of generation of the electric energy by the customer-generator. 

‘‘(5) The standard under paragraph (6) of section 113(b) shall require that the 

qualified generation unit, interconnection standards, and net metering system used 

by the Government office or agency shall meet all applicable safety and performance 

and reliability standards established by the National Electrical Code, the Institute 

of Electrical and Electronics Engineers, Underwriters Laboratories, and the American National Standards Institute. 

‘‘(6) The standard under paragraph (6) of section 113(b) shall require that electric 

utilities shall not make additional charges, including standby charges, for equipment or services for safety or performance that are in addition to those necessary 

to meet the other standards and requirements of this subsection and paragraph (6) 

of section 113(b). 

‘‘(7) For purposes of this subsection and paragraph (6) of section 113(b): 

‘‘(A) The term ‘Government’ means any office, facility, or agency of the Federal Government. 

‘‘(B) The term ‘customer-generator’ means the owner or operator of a electricity generation unit. 

‘‘(C) The term ‘electric generation unit’ means any renewable electric generation unit that is owned, operated, or sited on a Federal Government facility. 

‘‘(D) The term ‘net metering’ means the process of— 

‘‘(i) measuring the difference between the electricity supplied to a customer-generator and the electricity generated by the customer-generator 

that is delivered to a utility at the same point of interconnection during an 

applicable billing period; and 

‘‘(ii) providing an energy credit to the customer-generator in the form of 

a kilowatt-hour credit for each kilowatt-hour of electricity produced by the 

customer-generator from an electric generation unit.’’. 

(c) SAVINGS PROVISION.—If this section or a portion of this section is determined 

to be invalid or unenforceable, that shall not affect the validity or enforceability of 

any other provision of this Act. 

SEC. 153. SUPPORT FOR QUALIFIED ADVANCED ELECTRIC TRANSMISSION MANUFACTURING 

PLANTS, QUALIFIED HIGH EFFICIENCY TRANSMISSION PROPERTY, AND QUALIFIED ADVANCED ELECTRIC TRANSMISSION PROPERTY. 

(a) LOAN GUARANTEES PRIOR TO SEPTEMBER 30, 2011.—Section 1705(a) of the Energy Policy Act of 2005 (42 U.S.C. 16515(a)), as added by section 406 of the American Recovery and Reinvestment Act of 2009 (Public Law 109-58; 119 Stat. 594) is 

amended by adding the following new paragraph at the end thereof: 

‘‘(5) The development, construction, acquisition, retrofitting, or engineering integration of a qualified advanced electric transmission manufacturing plant or 

the construction of a qualified high efficiency transmission property or a qualiVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00049 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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fied advanced electric transmission property (whether by construction of new facilities or the modification of existing facilities). For purposes of this paragraph: 

‘‘(A) The term ‘qualified advanced electric transmission property’ means 

any high voltage electric transmission cable, related substation, converter 

station, or other integrated facility that— 

‘‘(i) utilizes advanced ultra low resistance superconductive material 

or other advanced technology that has been determined by the Secretary of Energy as— 

‘‘(I) reasonably likely to become commercially viable within 10 

years after the date of enactment of this paragraph; 

‘‘(II) capable of reliably transmitting at least 5 gigawatts of highvoltage electric energy for distances greater than 300 miles with 

energy losses not exceeding 3 percent of the total power transported; and 

‘‘(III) not creating an electromagnetic field; 

‘‘(ii) has been determined by an appropriate energy regulatory body, 

upon application, to be in the public interest and thereby eligible for 

inclusion in regulated rates; and 

‘‘(iii) can be located safely and economically in a permanent underground right of way not to exceed 25 feet in width. 

The term ‘qualified advanced electric transmission property’ shall not include any property placed in service after December 31, 2016. 

‘‘(B)(i) The term ‘qualified high efficiency transmission property’ means 

any high voltage overhead electric transmission line, related substation, or 

other integrated facility that— 

‘‘(I) utilizes advanced conductor core technology that— 

‘‘(aa) has been determined by the Secretary of Energy as reasonably likely to become commercially viable within 10 years after the 

date of enactment of this paragraph; 

‘‘(bb) is suitable for use on transmission lines up to 765kV; and 

‘‘(cc) exhibits power losses at least 30 percent lower than that of 

transmission lines using conventional ‘ACSR’ conductors; 

‘‘(II) has been determined by an appropriate energy regulatory body, 

upon application, to be in the public interest and thereby eligible for 

inclusion in regulated rates; and 

‘‘(III) can be located safely and economically in a right of way not to 

exceed that used by conventional ‘ACSR’ conductors; and 

‘‘(ii) The term ‘qualified high efficiency transmission property’ shall not 

include any property placed in service after December 31, 2016. 

‘‘(C) The term ‘qualified advanced electric transmission manufacturing 

plant’ means any industrial facility located in the United States which can 

be equipped, re-equipped, expanded, or established to produce in whole or 

in part qualified advanced electric transmission property.’’. 

(b) ADDITIONAL LOAN GUARANTEE AUTHORITY.—Section 1703 of the Energy Policy 

Act of 2005 (42 U.S.C. 16513) is amended by adding the following new paragraph 

at the end of subsection (b): 

‘‘(12) The development, construction, acquisition, retrofitting, or engineering 

integration of a qualified advanced electric transmission manufacturing plant or 

the construction of a qualified advanced electric transmission property (whether 

by construction of new facilities or the modification of existing facilities). For 

purposes of this paragraph, the terms ‘qualified advanced electric transmission 

property’ and ‘qualified advanced electric transmission manufacturing plant’ 

have the meanings provided by section 1705(a)(5).’’. 

(c) GRANTS.—The Secretary of Energy is authorized to provide grants for up to 

50 percent of costs incurred in connection with the development, construction, acquisition of components for, or engineering of a qualified advanced electric transmission 

property defined in paragraph (5) of section 1705(a) of the Energy Policy Act of 2005 

(42 U.S.C. 16515(a)). Such grants may only be made to the first project which qualifies under that paragraph. There are authorized to be appropriated for purposes of 

this subsection not more than $100,000,000 for fiscal year 2010. The United States 

shall take no equity or other ownership interest in the qualified advanced electric 

transmission manufacturing plant or qualified advanced electric transmission property for which funding is provided under this subsection. 


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Subtitle G—Technical Corrections to Energy Laws 

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

2007. 

(a) TITLE III—ENERGY SAVINGS THROUGH IMPROVED STANDARDS FOR APPLIANCE

AND LIGHTING.—(1) Section 325(u) of the Energy Policy and Conservation Act (42 

U.S.C. 6295(u)) (as amended by section 301(c) of the Energy Independence and Security Act of 2007 (121 Stat. 1550)) is amended— 

(A) by redesignating paragraph (7) as paragraph (4); and 

(B) in paragraph (4) (as so redesignated), by striking ‘‘supplies is’’ and inserting ‘‘supply is’’. 

(2) Section 302 of the Energy Independence and Security Act of 2007 (121 Stat. 

1551)) is amended— 

(A) in subsection (a), by striking ‘‘end of the paragraph’’ and inserting ‘‘end 

of subparagraph (A)’’; and 

(B) in subsection (b), by striking ‘‘6313(a)’’ and inserting ‘‘6314(a)’’. 

(3) Section 343(a)(1) of the Energy Policy and Conservation Act (42 U.S.C. 

6313(a)(1)) (as amended by section 302(b) of the Energy Independence and Security 

Act of 2007 (121 Stat. 1551)) is amended— 

(A) by striking ‘‘TEST PROCEDURES’’ and all that follows through ‘‘At least 

once’’ and inserting ‘‘TEST PROCEDURES.—At least once’’; and 

(B) by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively (and by moving the margins of such subparagraphs 2 ems to the left). 

(4) Section 342(a)(6) of the Energy Policy and Conservation Act (42 U.S.C. 

6313(a)(6)) (as amended by section 305(b)(2) of the Energy Independence and Security Act of 2007 (121 Stat. 1554)) is amended— 

(A) in subparagraph (B)— 

(i) by striking ‘‘If the Secretary’’ and inserting the following: 

‘‘(i) IN GENERAL.—If the Secretary’’; 

(ii) by striking ‘‘clause (ii)(II)’’ and inserting ‘‘subparagraph (A)(ii)(II)’’; 

(iii) by striking ‘‘clause (i)’’ and inserting ‘‘subparagraph (A)(i)’’; and 

(iv) by adding at the end the following: 

‘‘(ii) FACTORS.—In determining whether a standard is economically 

justified for the purposes of subparagraph (A)(ii)(II), the Secretary 

shall, after receiving views and comments furnished with respect to the 

proposed standard, determine whether the benefits of the standard exceed the burden of the proposed standard by, to the maximum extent 

practicable, considering— 

‘‘(I) the economic impact of the standard on the manufacturers 

and on the consumers of the products subject to the standard; 

‘‘(II) the savings in operating costs throughout the estimated average life of the product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance 

expenses of, the products that are likely to result from the imposition of the standard; 

‘‘(III) the total projected quantity of energy savings likely to result directly from the imposition of the standard; 

‘‘(IV) any lessening of the utility or the performance of the products likely to result from the imposition of the standard; 

‘‘(V) the impact of any lessening of competition, as determined in 

writing by the Attorney General, that is likely to result from the 

imposition of the standard; 

‘‘(VI) the need for national energy conservation; and 

‘‘(VII) other factors the Secretary considers relevant. 

‘‘(iii) ADMINISTRATION.— 

‘‘(I) ENERGY USE AND EFFICIENCY.—The Secretary may not prescribe any amended standard under this paragraph that increases 

the maximum allowable energy use, or decreases the minimum required energy efficiency, of a covered product. 

‘‘(II) UNAVAILABILITY.— 

‘‘(aa) IN GENERAL.—The Secretary may not prescribe an 

amended standard under this subparagraph if the Secretary 

finds (and publishes the finding) that interested persons have 

established by a preponderance of the evidence that a standard 

is likely to result in the unavailability in the United States in 

any product type (or class) of performance characteristics (including reliability, features, sizes, capacities, and volumes) 


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that are substantially the same as those generally available in 

the United States at the time of the finding of the Secretary. 

‘‘(bb) OTHER TYPES OR CLASSES.—The failure of some types 

(or classes) to meet the criterion established under this subclause shall not affect the determination of the Secretary on 

whether to prescribe a standard for the other types or classes.’’; and 

(B) in subparagraph (C)(iv), by striking ‘‘An amendment prescribed under this 

subsection’’ and inserting ‘‘Notwithstanding subparagraph (D), an amendment 

prescribed under this subparagraph’’. 

(5) Section 342(a)(6)(B)(iii) of the Energy Policy and Conservation Act (as added 

by section 306(c) of the Energy Independence and Security Act of 2007) is transferred and redesignated as clause (vi) of section 342(a)(6)(C) of the Energy Policy 

and Conservation Act (as amended by section 305(b)(2) of the Energy Independence 

and Security Act of 2007). 

(6) Section 340 of the Energy Policy and Conservation Act (42 U.S.C. 6311) (as 

amended by sections 312(a)(2) and 314(a) of the Energy Independence and Security 

Act of 2007 (121 Stat. 1564, 1569)) is amended by redesignating paragraphs (22) 

and (23) (as added by section 314(a) of that Act) as paragraphs (23) and (24), respectively. 

(7) Section 345 of the Energy Policy and Conservation Act (42 U.S.C. 6316) (as 

amended by section 312(e) of the Energy Independence and Security Act of 2007 

(121 Stat. 1567)) is amended— 

(A) by striking ‘‘subparagraphs (B) through (G)’’ each place it appears and inserting ‘‘subparagraphs (B), (C), (D), (I), (J), and (K)’’; 

(B) by striking ‘‘part A’’ each place it appears and inserting ‘‘part B’’; and 

(C) in subsection (h)(3), by striking ‘‘section 342(f)(3)’’ and inserting ‘‘section 

342(f)(4)’’. 

(8) Section 340(13) of the Energy Policy and Conservation Act (42 U.S.C. 6311(13)) 

(as amended by section 313(a) of the Energy Independence and Security Act of 2007 

(121 Stat. 1568)) is amended— 

(A) by striking subparagraphs (A) and (B) and inserting the following: 

‘‘(A) IN GENERAL.—The term ‘electric motor’ means any motor that is— 

‘‘(i) a general purpose T-frame, single-speed, foot-mounting, polyphase squirrel-cage induction motor of the National Electrical Manufacturers Association, Design A and B, continuous rated, operating on 230/ 

460 volts and constant 60 Hertz line power as defined in NEMA Standards Publication MG1-1987; or 

‘‘(ii) a motor incorporating the design elements described in clause (i), 

but is configured to incorporate one or more of the following variations— 

‘‘(I) U-frame motor; 

‘‘(II) NEMA Design C motor; 

‘‘(III) close-coupled pump motor; 

‘‘(IV) footless motor; 

‘‘(V) vertical solid shaft normal thrust motor (as tested in a horizontal configuration); 

‘‘(VI) 8-pole motor; or 

‘‘(VII) poly-phase motor with a voltage rating of not more than 

600 volts (other than 230 volts or 460 volts, or both, or can be operated on 230 volts or 460 volts, or both).’’; and 

(B) by redesignating subparagraphs (C) through (I) as subparagraphs (B) 

through (H), respectively. 

(9)(A) Section 342(b) of the Energy Policy and Conservation Act (42 U.S.C. 

6313(b)) is amended— 

(i) in paragraph (1), by striking ‘‘paragraph (2)’’ and inserting ‘‘paragraph (3)’’; 

(ii) by redesignating paragraphs (2) and (3) as paragraphs (3) and (4); 

(iii) by inserting after paragraph (1) the following: 

‘‘(2) STANDARDS EFFECTIVE BEGINNING DECEMBER 19, 2010.— 

‘‘(A) IN GENERAL.—Except for definite purpose motors, special purpose 

motors, and those motors exempted by the Secretary under paragraph (3) 

and except as provided for in subparagraphs (B), (C), and (D), each electric 

motor manufactured with power ratings from 1 to 200 horsepower (alone 

or as a component of another piece of equipment) on or after December 19, 

2010, shall have a nominal full load efficiency of not less than the nominal 

full load efficiency described in NEMA MG-1 (2006) Table 12-12. 

‘‘(B) FIRE PUMP ELECTRIC MOTORS.—Except for those motors exempted by 

the Secretary under paragraph (3), each fire pump electric motor manufactured with power ratings from 1 to 200 horsepower (alone or as a compoVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00052 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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nent of another piece of equipment) on or after December 19, 2010, shall 

have a nominal full load efficiency that is not less than the nominal full 

load efficiency described in NEMA MG-1 (2006) Table 12-11. 

‘‘(C) NEMA DESIGN B ELECTRIC MOTORS.—Except for those motors exempted by the Secretary under paragraph (3), each NEMA Design B electric motor with power ratings of more than 200 horsepower, but not greater 

than 500 horsepower, manufactured (alone or as a component of another 

piece of equipment) on or after December 19, 2010, shall have a nominal 

full load efficiency of not less than the nominal full load efficiency described 

in NEMA MG-1 (2006) Table 12-11. 

‘‘(D) MOTORS INCORPORATING CERTAIN DESIGN ELEMENTS.—Except for 

those motors exempted by the Secretary under paragraph (3), each electric 

motor described in section 340(13)(A)(ii) manufactured with power ratings 

from 1 to 200 horsepower (alone or as a component of another piece of 

equipment) on or after December 19, 2010, shall have a nominal full load 

efficiency of not less than the nominal full load efficiency described in 

NEMA MG-1 (2006) Table 12-11.’’; and 

(iv) in paragraph (3) (as redesignated by clause (ii)), by striking ‘‘paragraph (1)’’ 

each place it appears in subparagraphs (A) and (D) and inserting ‘‘paragraphs (1) 

and (2)’’. 

(B) Section 313 of the Energy Independence and Security Act of 2007 (121 Stat. 

1568) is repealed. 

(C) The amendments made by— 

(i) subparagraph (A) shall take effect on December 19, 2010; and 

(ii) subparagraph (B) shall take effect on December 19, 2007. 

(10) Section 321(30)(D)(i)(III) of the Energy Policy and Conservation Act (42 

U.S.C. 6291(30)(D)(i)(III)) (as amended by section 321(a)(1)(A) of the Energy Independence and Security Act of 2007 (121 Stat. 1574)) is amended by inserting before 

the semicolon the following: ‘‘or, in the case of a modified spectrum lamp, not less 

than 232 lumens and not more than 1,950 lumens’’. 

(11) Section 321(30)(T) of the Energy Policy and Conservation Act (42 U.S.C. 

6291(30)(T) (as amended by section 321(a)(1)(B) of the Energy Independence and Security Act of 2007 (121 Stat. 1574)) is amended— 

(A) in clause (i)— 

(i) by striking the comma after ‘‘household appliance’’ and inserting ‘‘and’’; 

and 

(ii) by striking ‘‘and is sold at retail,’’; and 

(B) in clause (ii), by inserting ‘‘when sold at retail,’’ before ‘‘is designated’’. 

(12) Section 325 of the Energy Policy and Conservation Act (42 U.S.C. 6295) (as 

amended by sections 321(a)(3)(A) and 322(b) of the Energy Independence and Security Act of 2007 (121 Stat. 1577, 1588)) is amended by striking subsection (i) and 

inserting the following: 

‘‘(i) GENERAL SERVICE FLUORESCENT LAMPS, GENERAL SERVICE INCANDESCENT

LAMPS, INTERMEDIATE BASE INCANDESCENT LAMPS, CANDELABRA BASE INCANDESCENT LAMPS, AND INCANDESCENT REFLECTOR LAMPS.— 

‘‘(1) ENERGY EFFICIENCY STANDARDS.— 

‘‘(A) IN GENERAL.—Each of the following general service fluorescent 

lamps, general service incandescent lamps, intermediate base incandescent 

lamps, candelabra base incandescent lamps, and incandescent reflector 

lamps manufactured after the effective date specified in the tables listed in 

this subparagraph shall meet or exceed the following lamp efficacy, new 

maximum wattage, and CRI standards: 

‘‘FLUORESCENT LAMPS 

Lamp Type 

Nominal 

Lamp Wattage 

Minimum 

CRI 

Minimum Average 

Lamp Efficacy (LPW) 

Effective 

Date (Period of 

Months) 

4-foot medium bi-pin ....................... >35 W 69 75.0 36 

........................................................... ≤35 W 45 75.0 36 

2-foot U-shaped ............................... >35 W 69 68.0 36 

........................................................... ≤35 W 45 64.0 36 

8-foot slimline .................................. 65 W 69 80.0 18 

........................................................... ≤65 W 45 80.0 18 

8-foot high output ............................ >100 W 69 80.0 18 

........................................................... ≤100 W 45 80.0 18 


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‘‘INCANDESCENT REFLECTOR LAMPS 

Nominal Lamp Wattage Minimum Average 

Lamp Efficacy (LPW) 

Effective 

Date (Period of 

Months) 

40–50 ...................................................................................................... 10.5 36 

51–66 ...................................................................................................... 11.0 36 

67–85 ...................................................................................................... 12.5 36 

86–115 .................................................................................................... 14.0 36 

116–155 .................................................................................................... 14.5 36 

156–205 .................................................................................................... 15.0 36 

‘‘GENERAL SERVICE INCANDESCENT LAMPS 

Rated Lumen Ranges 

Maximum 

Rated Wattage 

Minimum 

Rated 

Lifetime 

Effective 

Date 

1490–2600 72 1,000 hrs 1/1/2012 

1050–1489 53 1,000 hrs 1/1/2013 

750–1049 43 1,000 hrs 1/1/2014 

310–749 29 1,000 hrs 1/1/2014 

‘‘MODIFIED SPECTRUM GENERAL SERVICE INCANDESCENT LAMPS 

Rated Lumen Ranges Maximum 

Rated Wattage 

Minimum 

Rated 

Lifetime 

Effective 

Date 

1118–1950 72 1,000 hrs 1/1/2012 

788–1117 53 1,000 hrs 1/1/2013 

563–787 43 1,000 hrs 1/1/2014 

232–562 29 1,000 hrs 1/1/2014 

‘‘(B) APPLICATION.— ‘‘(i) APPLICATION CRITERIA.—This subparagraph applies to each lamp 

that— 

‘‘(I) is intended for a general service or general illumination application (whether incandescent or not); 

‘‘(II) has a medium screw base or any other screw base not defined in ANSI C81.61–2006; 

‘‘(III) is capable of being operated at a voltage at least partially 

within the range of 110 to 130 volts; and 

‘‘(IV) is manufactured or imported after December 31, 2011. 

‘‘(ii) REQUIREMENT.—For purposes of this paragraph, each lamp described in clause (i) shall have a color rendering index that is greater 

than or equal to— 

‘‘(I) 80 for nonmodified spectrum lamps; or 

‘‘(II) 75 for modified spectrum lamps. 

‘‘(C) CANDELABRA INCANDESCENT LAMPS AND INTERMEDIATE BASE INCAN- DESCENT LAMPS.— ‘‘(i) CANDELABRA BASE INCANDESCENT LAMPS.—Effective beginning 

January 1, 2012, a candelabra base incandescent lamp shall not exceed 

60 rated watts. 

‘‘(ii) INTERMEDIATE BASE INCANDESCENT LAMPS.—Effective beginning 

January 1, 2012, an intermediate base incandescent lamp shall not exceed 40 rated watts. 

‘‘(D) EXEMPTIONS.— 

‘‘(i) STATUTORY EXEMPTIONS.—The standards specified in subparagraph (A) shall not apply to the following types of incandescent reflector lamps: 

‘‘(I) Lamps rated at 50 watts or less that are ER30, BR30, BR40, 

or ER40 lamps. 

‘‘(II) Lamps rated at 65 watts that are BR30, BR40, or ER40 

lamps. 

‘‘(III) R20 incandescent reflector lamps rated 45 watts or less. 

‘‘(ii) ADMINISTRATIVE EXEMPTIONS.— 


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‘‘(I) PETITION.—Any person may petition the Secretary for an exemption for a type of general service lamp from the requirements 

of this subsection. 

‘‘(II) CRITERIA.—The Secretary may grant an exemption under 

subclause (I) only to the extent that the Secretary finds, after a 

hearing and opportunity for public comment, that it is not technically feasible to serve a specialized lighting application (such as 

a military, medical, public safety, or certified historic lighting application) using a lamp that meets the requirements of this subsection. 

‘‘(III) ADDITIONAL CRITERION.—To grant an exemption for a product under this clause, the Secretary shall include, as an additional 

criterion, that the exempted product is unlikely to be used in a 

general service lighting application. 

‘‘(E) EXTENSION OF COVERAGE.— 

‘‘(i) PETITION.—Any person may petition the Secretary to establish 

standards for lamp shapes or bases that are excluded from the definition of general service lamps. 

‘‘(ii) INCREASED SALES OF EXEMPTED LAMPS.—The petition shall include evidence that the availability or sales of exempted incandescent 

lamps have increased significantly since the date on which the standards on general service incandescent lamps were established. 

‘‘(iii) CRITERIA.—The Secretary shall grant a petition under clause (i) 

if the Secretary finds that— 

‘‘(I) the petition presents evidence that demonstrates that commercial availability or sales of exempted incandescent lamp types 

have increased significantly since the standards on general service 

lamps were established and likely are being widely used in general 

lighting applications; and 

‘‘(II) significant energy savings could be achieved by covering exempted products, as determined by the Secretary based in part on 

sales data provided to the Secretary from manufacturers and importers. 

‘‘(iv) NO PRESUMPTION.—The grant of a petition under this subparagraph shall create no presumption with respect to the determination of 

the Secretary with respect to any criteria under a rulemaking conducted under this section. 

‘‘(v) EXPEDITED PROCEEDING.—If the Secretary grants a petition for a 

lamp shape or base under this subparagraph, the Secretary shall— 

‘‘(I) conduct a rulemaking to determine standards for the exempted lamp shape or base; and 

‘‘(II) complete the rulemaking not later than 18 months after the 

date on which notice is provided granting the petition. 

‘‘(F) EFFECTIVE DATES.— 

‘‘(i) IN GENERAL.—In this paragraph, except as otherwise provided in 

a table contained in subparagraph (A) or in clause (ii), the term ‘effective date’ means the last day of the month specified in the table that 

follows October 24, 1992. 

‘‘(ii) SPECIAL EFFECTIVE DATES.— 

‘‘(I) ER, BR, AND BPAR LAMPS.—The standards specified in subparagraph (A) shall apply with respect to ER incandescent reflector 

lamps, BR incandescent reflector lamps, BPAR incandescent reflector lamps, and similar bulb shapes on and after January 1, 2008, 

or the date that is 180 days after the date of enactment of the Energy Independence and Security Act of 2007. 

‘‘(II) LAMPS BETWEEN 2.25–2.75 INCHES IN DIAMETER.—The standards specified in subparagraph (A) shall apply with respect to incandescent reflector lamps with a diameter of more than 2.25 

inches, but not more than 2.75 inches, on and after the later of 

January 1, 2008, or the date that is 180 days after the date of enactment of the Energy Independence and Security Act of 2007. 

‘‘(2) COMPLIANCE WITH EXISTING LAW.—Notwithstanding section 332(a)(5) and 

section 332(b), it shall not be unlawful for a manufacturer to sell a lamp that 

is in compliance with the law at the time the lamp was manufactured. 

‘‘(3) RULEMAKING BEFORE OCTOBER 24, 1995.— 

‘‘(A) IN GENERAL.—Not later than 36 months after October 24, 1992, the 

Secretary shall initiate a rulemaking procedure and shall publish a final 

rule not later than the end of the 54-month period beginning on October 


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24, 1992, to determine whether the standards established under paragraph 

(1) should be amended. 

‘‘(B) ADMINISTRATION.—The rule shall contain the amendment, if any, 

and provide that the amendment shall apply to products manufactured on 

or after the 36-month period beginning on the date on which the final rule 

is published. 

‘‘(4) RULEMAKING BEFORE OCTOBER 24, 2000.— 

‘‘(A) IN GENERAL.—Not later than 8 years after October 24, 1992, the Secretary shall initiate a rulemaking procedure and shall publish a final rule 

not later than 9 years and 6 months after October 24, 1992, to determine 

whether the standards in effect for fluorescent lamps and incandescent 

lamps should be amended. 

‘‘(B) ADMINISTRATION.—The rule shall contain the amendment, if any, 

and provide that the amendment shall apply to products manufactured on 

or after the 36-month period beginning on the date on which the final rule 

is published. 

‘‘(5) RULEMAKING FOR ADDITIONAL GENERAL SERVICE FLUORESCENT LAMPS.— 

‘‘(A) IN GENERAL.—Not later than the end of the 24-month period beginning on the date labeling requirements under section 324(a)(2)(C) become 

effective, the Secretary shall— 

‘‘(i) initiate a rulemaking procedure to determine whether the standards in effect for fluorescent lamps and incandescent lamps should be 

amended so that the standards would be applicable to additional general service fluorescent lamps; and 

‘‘(ii) publish, not later than 18 months after initiating the rulemaking, a final rule including the amended standards, if any. 

‘‘(B) ADMINISTRATION.—The rule shall provide that the amendment shall 

apply to products manufactured after a date which is 36 months after the 

date on which the rule is published. 

‘‘(6) STANDARDS FOR GENERAL SERVICE LAMPS.— 

‘‘(A) RULEMAKING BEFORE JANUARY 1, 2014.— 

‘‘(i) IN GENERAL.—Not later than January 1, 2014, the Secretary shall 

initiate a rulemaking procedure to determine whether— 

‘‘(I) standards in effect for general service lamps should be 

amended; and 

‘‘(II) the exclusions for certain incandescent lamps should be 

maintained or discontinued based, in part, on excluded lamp sales 

collected by the Secretary from manufacturers. 

‘‘(ii) SCOPE.—The rulemaking— 

‘‘(I) shall not be limited to incandescent lamp technologies; and 

‘‘(II) shall include consideration of a minimum standard of 45 

lumens per watt for general service lamps. 

‘‘(iii) AMENDED STANDARDS.—If the Secretary determines that the 

standards in effect for general service lamps should be amended, the 

Secretary shall publish a final rule not later than January 1, 2017, 

with an effective date that is not earlier than 3 years after the date 

on which the final rule is published. 

‘‘(iv) PHASED-IN EFFECTIVE DATES.—The Secretary shall consider 

phased-in effective dates under this subparagraph after considering— 

‘‘(I) the impact of any amendment on manufacturers, retiring and 

repurposing existing equipment, stranded investments, labor contracts, workers, and raw materials; and 

‘‘(II) the time needed to work with retailers and lighting designers to revise sales and marketing strategies. 

‘‘(v) BACKSTOP REQUIREMENT.—If the Secretary fails to complete a 

rulemaking in accordance with clauses (i) through (iv) or if the final 

rule does not produce savings that are greater than or equal to the savings from a minimum efficacy standard of 45 lumens per watt, effective 

beginning January 1, 2020, the Secretary shall prohibit the manufacture of any general service lamp that does not meet a minimum efficacy 

standard of 45 lumens per watt. 

‘‘(vi) STATE PREEMPTION.—Neither section 327(c) nor any other provision of law shall preclude California or Nevada from adopting, effective 

beginning on or after January 1, 2018— 

‘‘(I) a final rule adopted by the Secretary in accordance with 

clauses (i) through (iv); 

‘‘(II) if a final rule described in subclause (I) has not been adopted, the backstop requirement under clause (v); or 


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‘‘(III) in the case of California, if a final rule described in subclause (I) has not been adopted, any California regulations relating 

to these covered products adopted pursuant to State statute in effect as of the date of enactment of the Energy Independence and 

Security Act of 2007. 

‘‘(B) RULEMAKING BEFORE JANUARY 1, 2020.— ‘‘(i) IN GENERAL.—Not later than January 1, 2020, the Secretary shall 

initiate a rulemaking procedure to determine whether— 

‘‘(I) standards in effect for general service lamps should be 

amended; and 

‘‘(II) the exclusions for certain incandescent lamps should be 

maintained or discontinued based, in part, on excluded lamp sales 

data collected by the Secretary from manufacturers. 

‘‘(ii) SCOPE.—The rulemaking shall not be limited to incandescent 

lamp technologies. 

‘‘(iii) AMENDED STANDARDS.—If the Secretary determines that the 

standards in effect for general service lamps should be amended, the 

Secretary shall publish a final rule not later than January 1, 2022, 

with an effective date that is not earlier than 3 years after the date 

on which the final rule is published. 

‘‘(iv) PHASED-IN EFFECTIVE DATES.—The Secretary shall consider 

phased-in effective dates under this subparagraph after considering— 

‘‘(I) the impact of any amendment on manufacturers, retiring and 

repurposing existing equipment, stranded investments, labor contracts, workers, and raw materials; and 

‘‘(II) the time needed to work with retailers and lighting designers to revise sales and marketing strategies. 

‘‘(7) FEDERAL ACTIONS.— 

‘‘(A) COMMENTS OF SECRETARY.— 

‘‘(i) IN GENERAL.—With respect to any lamp to which standards are 

applicable under this subsection or any lamp specified in section 346, 

the Secretary shall inform any Federal entity proposing actions that 

would adversely impact the energy consumption or energy efficiency of 

the lamp of the energy conservation consequences of the action. 

‘‘(ii) CONSIDERATION.—The Federal entity shall carefully consider the 

comments of the Secretary. 

‘‘(B) AMENDMENT OF STANDARDS.—Notwithstanding section 325(n)(1), the 

Secretary shall not be prohibited from amending any standard, by rule, to 

permit increased energy use or to decrease the minimum required energy 

efficiency of any lamp to which standards are applicable under this subsection if the action is warranted as a result of other Federal action (including restrictions on materials or processes) that would have the effect of either increasing the energy use or decreasing the energy efficiency of the 

product. 

‘‘(8) COMPLIANCE.— 

‘‘(A) IN GENERAL.—Not later than the date on which standards established pursuant to this subsection become effective, or, with respect to highintensity discharge lamps covered under section 346, the effective date of 

standards established pursuant to that section, each manufacturer of a 

product to which the standards are applicable shall file with the Secretary 

a laboratory report certifying compliance with the applicable standard for 

each lamp type. 

‘‘(B) CONTENTS.—The report shall include the lumen output and wattage 

consumption for each lamp type as an average of measurements taken over 

the preceding 12-month period. 

‘‘(C) OTHER LAMP TYPES.—With respect to lamp types that are not manufactured during the 12-month period preceding the date on which the standards become effective, the report shall— 

‘‘(i) be filed with the Secretary not later than the date that is 12 

months after the date on which manufacturing is commenced; and 

‘‘(ii) include the lumen output and wattage consumption for each such 

lamp type as an average of measurements taken during the 12-month 

period.’’. 

(13) Section 325(l)(4)(A) of the Energy Policy and Conservation Act (42 U.S.C. 

6295(l)(4)(A)) (as amended by section 321(a)(3)(B) of the Energy Independence and 

Security Act of 2007 (121 Stat. 1581)) is amended by striking ‘‘only’’. 

(14) Section 327(b)(1)(B) of the Energy Policy and Conservation Act (42 U.S.C. 

6297(b)(1)(B)) (as amended by section 321(d)(3) of the Energy Independence and Security Act of 2007 (121 Stat. 1585)) is amended— 


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(A) in clause (i), by inserting ‘‘and’’ after the semicolon at the end; 

(B) in clause (ii), by striking ‘‘; and’’ and inserting a period; and 

(C) by striking clause (iii). 

(15) Section 321(e) of the Energy Independence and Security Act of 2007 (121 

Stat. 1586) is amended— 

(A) in the matter preceding paragraph (1), by striking ‘‘is amended’’ and inserting ‘‘(as amended by section 306(b)) is amended’’; and 

(B) by striking paragraphs (1) and (2) and inserting the following: 

‘‘(1) in paragraph (5), by striking ‘or’ after the semicolon at the end; 

‘‘(2) in paragraph (6), by striking the period at the end and inserting ‘; or’; 

and’’. 

(16) Section 332(a) of the Energy Policy and Conservation Act (42 U.S.C. 6302(a)) 

(as amended by section 321(e) of the Energy Independence and Security Act of 2007 

(121 Stat. 1586)) is amended by redesignating the second paragraph (6) as paragraph (7). 

(17) Section 321(30)(C)(ii) of the Energy Policy and Conservation Act (42 U.S.C. 

6291(30)(C)(ii)) (as amended by section 322(a)(1)(B) of the Energy Independence and 

Security Act of 2007 (121 Stat. 1587)) is amended by inserting a period after ‘‘40 

watts or higher’’. 

(18) Section 322(b) of the Energy Independence and Security Act of 2007 (121 

Stat. 1588)) is amended by striking ‘‘6995(i)’’ and inserting ‘‘6295(i)’’. 

(19) Section 327(c) of the Energy Policy and Conservation Act (42 U.S.C. 6297(c)) 

(as amended by sections 324(f) of the Energy Independence and Security Act of 2007 

(121 Stat. 1594)) is amended— 

(A) in paragraph (6), by striking ‘‘or’’ after the semicolon at the end; 

(B) in paragraph (8)(B), by striking ‘‘and’’ after the semicolon at the end; 

(C) in paragraph (9)— 

(i) by striking ‘‘except that—’’ and all that follows through ‘‘if the Secretary fails to issue’’ and inserting ‘‘except that if the Secretary fails to 

issue’’; 

(ii) by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively (and by moving the margins of such subparagraphs 2 ems to the 

left); and 

(iii) by striking the period at the end and inserting a semicolon; and 

(D) by adding at the end the following: 

‘‘(10) is a regulation for general service lamps that conforms with Federal 

standards and effective dates; 

‘‘(11) is an energy efficiency standard for general service lamps enacted into 

law by the State of Nevada prior to December 19, 2007, if the State has not 

adopted the Federal standards and effective dates pursuant to subsection 

(b)(1)(B)(ii); or’’. 

(20) Section 325(b) of the Energy Independence and Security Act of 2007 (121 

Stat. 1596)) is amended by striking ‘‘6924(c)’’ and inserting ‘‘6294(c)’’. 

(b) TITLE IV—ENERGY SAVINGS IN BUILDINGS AND INDUSTRY.—(1) Section 401 of 

the Energy Independence and Security Act of 2007 (42 U.S.C. 17061) is amended— 

(A) in paragraph (2), by striking ‘‘484’’ and inserting ‘‘494’’; and 

(B) in paragraph (13), by striking ‘‘Agency’’ and inserting ‘‘Administration’’. 

(2) Section 422 of the Energy Conservation and Production Act (42 U.S.C. 6872) 

(as amended by section 411(a) of the Energy Independence and Security Act of 2007 

(121 Stat. 1600)) is amended by striking 1 of the 2 periods at the end of paragraph 

(5). 

(3) Section 305(a)(3)(D)(i) of the Energy Conservation and Production Act (42 

U.S.C. 6834(a)(3)(D)(i)) (as amended by section 433(a) of the Energy Independence 

and Security Act of 2007 (121 Stat. 1612)) is amended— 

(A) in subclause (I)— 

(i) by striking ‘‘in fiscal year 2003 (as measured by Commercial Buildings 

Energy Consumption Survey or Residential Energy Consumption Survey 

data from the Energy Information Agency’’ and inserting ‘‘as measured by 

the calendar year 2003 Commercial Buildings Energy Consumption Survey 

or the calendar year 2005 Residential Energy Consumption Survey data 

from the Energy Information Administration’’; and 

(ii) in the table at the end, by striking ‘‘Fiscal Year’’ and inserting ‘‘Calendar Year’’; and 

(B) in subclause (II)— 

(i) by striking ‘‘(II) Upon petition’’ and inserting the following: 

‘‘(II) DOWNWARD ADJUSTMENT OF NUMERIC REQUIREMENT.— 

‘‘(aa) IN GENERAL.—On petition’’; and 

(ii) by striking the last sentence and inserting the following: 


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‘‘(bb) EXCEPTIONS TO REQUIREMENT FOR CONCURRENCE OF

SECRETARY.— ‘‘(AA) IN GENERAL.—The requirement to petition and obtain the concurrence of the Secretary under this subclause 

shall not apply to any Federal building with respect to 

which the Administrator of General Services is required to 

transmit a prospectus to Congress under section 3307 of 

title 40, United States Code, or to any other Federal building designed, constructed, or renovated by the Administrator if the Administrator certifies, in writing, that meeting the applicable numeric requirement under subclause 

(I) with respect to the Federal building would be technically impracticable in light of the specific functional 

needs for the building. 

‘‘(BB) ADJUSTMENT.—In the case of a building described 

in subitem (AA), the Administrator may adjust the applicable numeric requirement of subclause (I) downward with 

respect to the building.’’. 

(4) Section 436(c)(3) of the Energy Independence and Security Act of 2007 (42 

U.S.C. 17092(c)(3)) is amended by striking ‘‘474’’ and inserting ‘‘494’’. 

(5) Section 440 of the Energy Independence and Security Act of 2007 (42 U.S.C. 

17096) is amended by striking ‘‘and 482’’. 

(6) Section 373(c) of the Energy Policy and Conservation Act (42 U.S.C. 6343(c)) 

(as amended by section 451(a) of the Energy Independence and Security Act of 2007 

(121 Stat. 1628)) is amended by striking ‘‘Administrator’’ and inserting ‘‘Secretary’’. 

(c) DATE OF ENACTMENT.—Section 1302 of the Energy Independence and Security 

Act of 2007 (42 U.S.C. 17382) is amended in the first sentence by striking ‘‘enactment’’ and inserting ‘‘the date of enactment of this Act’’. 

(d) REFERENCE.—Section 1306(c)(3) of the Energy Independence and Security Act 

of 2007 (42 U.S.C. 17386(c)(3)) is amended by striking ‘‘section 1307 (paragraph (17) 

of section 111(d) of the Public Utility Regulatory Policies Act of 1978)’’ and inserting 

‘‘paragraph (19) of section 111(d) of the Public Utility Regulatory Policies Act of 

1978 (16 U.S.C. 2621(d))’’. 

(e) EFFECTIVE DATE.—This section and the amendments made by this section take 

effect as if included in the Energy Independence and Security Act of 2007 (Public 

Law 110–140; 121 Stat. 1492). 

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

(a) TITLE I—ENERGY EFFICIENCY.—Section 325(g)(8)(C)(ii) of the Energy Policy 

and Conservation Act (42 U.S.C. 6295(g)(8)(C)(ii)) (as added by section 135(c)(2)(B) 

of the Energy Policy Act of 2005) is amended by striking ‘‘20°F’’ and inserting 

‘‘¥20°F’’. 

(b) EFFECTIVE DATE.—This section and the amendments made by this section take 

effect as if included in the Energy Policy Act of 2005 (Public Law 109–58; 119 Stat. 

594). 

Subtitle H—Energy and Efficiency Centers 

SEC. 171. CLEAN ENERGY INNOVATION CENTERS. 

(a) PURPOSE.—The Secretary shall carry out a program to establish Clean Energy 

Innovation Centers to enhance the Nation’s economic, environmental, and energy security by promoting commercial deployment of clean, indigenous energy alternatives 

to oil and other fossil fuels, reducing greenhouse gas emissions, and ensuring that 

the United States maintains a technological lead in developing and deploying stateof-the-art energy technologies. To achieve these purposes the program shall— 

(1) leverage the expertise and resources of the university and private research 

communities, industry, venture capital, national laboratories, and other participants in energy innovation to support cross-disciplinary research and development in areas not being served by the private sector in order to develop and 

transfer innovative clean energy technologies into the marketplace; 

(2) expand the knowledge base and human capital necessary to transition to 

a low-carbon economy; and 

(3) promote regional economic development by cultivating clusters of clean energy technology firms, private research organizations, suppliers, and other complementary groups and businesses. 

(b) DEFINITIONS.—For purposes of this section: 

(1) ALLOWANCE.—The term ‘‘allowance’’ means an emission allowance established under section 721 of the Clean Air Act. 


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(2) CENTER.—The term ‘‘Center’’ means a Clean Energy Innovation Center established in accordance with this section. 

(3) CLEAN ENERGY TECHNOLOGY.—The term ‘‘clean energy technology’’ means 

a technology that— 

(A) produces energy from solar, wind, geothermal, biomass, tidal, wave, 

ocean, and other renewable energy resources (as such term is defined in 

section 610 of the Public Utility Regulatory Policies Act of 1978); 

(B) more efficiently transmits, distributes, or stores energy; 

(C) enhances energy efficiency for buildings and industry, including combined heat and power; 

(D) enables the development of a Smart Grid (as described in section 

1301 of the Energy Independence and Security Act of 2007 (42 U.S.C. 

17381)), including integration of renewable energy resources and distributed generation, demand response, demand side management, and systems 

analysis; 

(E) produces an advanced or sustainable material with energy or energy 

efficiency applications; 

(F) enhances water security through improved water management, conservation, distribution, and end use applications; or 

(G) improves energy efficiency for transportation, including electric vehicles. 

(4) CLUSTER.—The term ‘‘cluster’’ means a concentration of firms directly involved in the research, development, finance, and commercialization of clean energy technologies whose geographic proximity facilitates utilization and sharing 

of skilled human resources, infrastructure, research facilities, educational and 

training institutions, venture capital, and input suppliers. 

(5) PROJECT.—The term ‘‘project’’ means an activity with respect to which a 

Center provides support under subsection (e). 

(6) QUALIFYING ENTITY.—The term ‘‘qualifying entity’’ means each of the following: 

(A) A research university. 

(B) A State institution with a focus on the advancement of clean energy 

technologies. 

(C) A nongovernmental organization with research or commercialization 

expertise in clean energy technology development. 

(7) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Energy. 

(8) TECHNOLOGY FOCUS.—The term ‘‘technology focus’’ means the unique technology area in which a Center will specialize, and may include solar electricity, 

fuels from solar energy, batteries and energy storage, electricity grid systems 

and devices, energy efficient building systems and design, advanced materials, 

modeling and simulation, and other clean energy technology areas designated 

by the Secretary. 

(9) TRANSLATIONAL RESEARCH.—The term ‘‘translational research’’ means 

clean energy technology research to coordinate basic or applied research with 

technical and commercial applications to enable promising discoveries or inventions to attract investment sufficient for market penetration and diffusion. 

(c) ROLE OF THE SECRETARY.—The Secretary shall— 

(1) have ultimate responsibility for, and oversight of, all aspects of the program under this section; 

(2) provide for the distribution of allowances to consortia for the establishment of 8 Centers pursuant to this section, with each Center designated a 

unique technology focus area; 

(3) coordinate the innovation activities of Centers with those occurring 

through other Department of Energy entities, including the National Laboratories, the Advanced Research Projects Agency—Energy, and Energy Frontier 

Research Centers, and within industry, and to avoid duplication of research, by 

annually— 

(A) issuing guidance regarding national energy research and development 

priorities and strategic objectives; and 

(B) convening a conference of staff of the Department of Energy and representatives from such other entities to share research results, program 

plans, and opportunities for collaboration. 

(d) CONSORTIUM.—A consortium shall be eligible to receive allowances to support 

the establishment of a Center under this section if— 

(1) it is composed of— 

(A) 2 research universities with a combined annual research budget of 

$500,000,000; and 

(B) no fewer than 1 additional qualifying entity; 

(2) its members have established a binding agreement that documents— 


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(A) the structure of the partnership agreement; 

(B) the governance and management structure to enable cost-effective implementation of the program; 

(C) an intellectual property management policy; 

(D) a conflicts of interest policy consistent with subsection (e)(4); 

(E) an accounting structure that meets the requirements of the Department and can be audited under subsection (f)(3); and 

(F) that it has an Advisory Board consistent with subsection (e)(3); 

(3) it receives financial contributions from States, consortium participants, or 

other non-Federal sources, to be used pursuant to subsection (e)(2); 

(4) it is part of an existing cluster or demonstrates high potential to develop 

a new cluster; and 

(5) it operates as a nonprofit organization. 

(e) CLEAN ENERGY INNOVATION CENTERS.— (1) ROLE.—Centers shall provide support to activities leading to commercial 

deployment of clean energy technologies pursuant to the purposes of this section 

through issuance of awards to projects managed by qualifying entities and other 

entities meeting the Center’s project criteria, including national laboratories. 

Each Center shall— 

(A) develop and publish for public review and comment proposed plans, 

programs, and project selection criteria; 

(B) submit an annual report to the Secretary summarizing the Center’s 

activities, organizational expenditures, and Board members, which shall include a certification of compliance with conflict of interest policies and a description of each project in the research portfolio; 

(C) establish policies— 

(i) regarding intellectual property developed as a result of Center 

awards and other forms of technology support that encourage individual ingenuity and invention while speeding knowledge transfer and 

facilitating the establishment of rapid commercialization pathways; 

(ii) to prevent resources provided to the Center from being used to 

displace private sector investment likely to otherwise occur, including 

investment from private sector entities which are members of the consortium; 

(iii) to facilitate the participation of private investment firms or other 

private entities that invest in clean energy technologies to perform due 

diligence on award proposals, to participate in the award review process, and to provide guidance to projects supported by the Center; and 

(iv) to facilitate the participation of entrepreneurs with a demonstrated history of commercializing clean energy technologies; 

(D) oversee project solicitations, review proposed projects, and select 

projects for awards; and 

(E) monitor project implementation. 

(2) USE AND DISTRIBUTION OF AWARDS BY CENTERS.—A Center shall allocate 

awards and other support for— 

(A) clean energy technology projects conducting translational research 

and related activities, at least 40 percent of which shall be utilized for 

projects related to the Center’s technology focus; and 

(B) administrative expenses, which may constitute no more than 10 percent of the award. 

(3) ADVISORY BOARDS.— 

(A) IN GENERAL.—Each Center shall establish an Advisory Board whose 

members shall have extensive and relevant scientific, technical, industry, financial, or research management expertise. The Advisory Board shall review the Center’s proposed plans, programs, project selection criteria, and 

projects and shall ensure that projects selected for awards meet the conflict 

of interest policies of the Center. Advisory Board members other than those 

representing consortium members shall serve for no more than three years 

and must comply with conflict of interest provisions. 

(B) MEMBERS.—Each Advisory Board shall consist of— 

(i) 5 members selected by the consortium’s research universities; 

(ii) 2 members selected by the consortium’s other qualifying entities; 

and 

(iii) 2 members selected at large by other Board members to represent the entrepreneur and venture capital communities. 

Individuals appointed under clause (iii) shall not be State or Federal employees or affiliated with the consortium’s qualified entities. 

(C) NONVOTING MEMBERS.—The Board shall also include 1 nonvoting 

member appointed by the Secretary. 


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(D) COMPENSATION.—Members of an Advisory Board may receive reimbursement for travel expenses and a reasonable stipend. 

(4) CONFLICT OF INTEREST.— 

(A) PROCEDURES.—Centers shall establish procedures to ensure that employees or consortia designees for Center activities who are in decisionmaking capacities shall— 

(i) disclose any financial interests in, or financial relationships with, 

applicants for or recipients of awards under paragraph (1), including 

those of his or her spouse or minor child, unless such relationships or 

interests would be considered to be remote or inconsequential; and 

(ii) recuse himself or herself from any funding decision for projects 

in which he or she has a personal financial interest. 

(B) DISQUALIFICATION AND REVOCATION.—The Secretary may disqualify 

an application or revoke allowances distributed to the Center or awards 

provided under paragraph (1), if cognizant officials of the Center fail to 

comply with procedures required under subparagraph (A). 

(f) DISTRIBUTION OF ALLOWANCES TO CLEAN ENERGY INNOVATION CENTERS.— 

(1) SELECTION AND SCHEDULE.—Allowances to support the establishment of a 

Center shall be distributed through a competitive process. Not later than 120 

days after the date of enactment of this Act, the Secretary shall solicit proposals 

from eligible consortia to establish Centers, which shall be submitted not later 

than 180 days after the date of enactment of this Act. The Secretary shall select 

the program consortia not later than 270 days after the date of enactment of 

this Act pursuant to subsection (d). The Secretary shall award 3 grants for the 

establishment of 3 Centers to be located on the campus of 1890 Land Grant Institution (as defined in section 2 of the Agricultural Research, Extension, and 

Education Reform Act of 1998 (7 U.S.C. 7061)). 

(2) TERM AND USE OF ALLOWANCES.—Allowances distributed to Centers shall 

be used to provide awards pursuant to subsection (e)(1). The amount of allowances distributed to support the establishment of a Center under this section 

shall not be less than 10 and not more than 30 percent of the allowances allocated under section 782(h) of the Clean Air Act, each year for a 6 year period. 

Centers shall be eligible to compete for additional allowance distribution after 

the expiration of the initial period. Centers shall establish award periods for individual awards. The transfer of allowances to a Center shall occur at the start 

of each calendar year. 

(3) AUDIT.—Each Center shall conduct an annual audit to determine the extent to which allowances distributed to the Center, and awards under subsection (e) have been utilized in a manner consistent with this section. The 

auditor shall transmit a report of the results of the audit to the Secretary and 

to the Government Accountability Office. The Secretary shall include such report in the annual report to Congress, along with a plan to remedy any deficiencies cited in the report. The Government Accountability Office may review 

such audits as appropriate and shall have full access to the books, records, and 

personnel of the Center to ensure that allowances distributed to the Center, and 

awards made under subsection (e), have been utilized in a manner consistent 

with this section. 

SEC. 172. BUILDING ASSESSMENT CENTERS. 

(a) IN GENERAL.—The Secretary of Energy (in this section referred to as the ‘‘Secretary’’) shall provide funding to institutions of higher education for Building Assessment Centers to— 

(1) identify opportunities for optimizing energy efficiency and environmental 

performance in existing buildings; 

(2) promote high-efficiency building construction techniques and materials options; 

(3) promote applications of emerging concepts and technologies in commercial 

and institutional buildings; 

(4) train engineers, architects, building scientists, and building technicians in 

energy-efficient design and operation; 

(5) assist local community colleges, trade schools, registered apprenticeship 

programs and other accredited training programs in training building technicians; 

(6) promote research and development for the use of alternative energy 

sources to supply heat and power, for buildings, particularly energy-intensive 

buildings; and 

(7) coordinate with and assist State-accredited technical training centers and 

community colleges, while ensuring appropriate services to all regions of the 

United States. 


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(b) COORDINATION WITH REGIONAL CENTERS FOR ENERGY AND ENVIRONMENTAL

KNOWLEDGE AND OUTREACH.—A Building Assessment Center may serve as a Center 

for Energy and Environmental Knowledge and Outreach established pursuant to 

section 173. 

(c) COORDINATION AND DUPLICATION.—The Secretary shall coordinate efforts 

under this section with other programs of the Department of Energy and other Federal agencies to avoid duplication of effort. 

(d) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

to the Secretary to carry out this section $50,000,000 for fiscal year 2010 and each 

fiscal year thereafter. 

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

(a) REGIONAL CENTERS FOR ENERGY AND ENVIRONMENTAL KNOWLEDGE AND OUTREACH.— 

(1) ESTABLISHMENT.—The Secretary shall establish not more than 10 regional 

Centers for Energy and Environmental Knowledge and Outreach at institutions 

of higher education to coordinate with and advise industrial research and assessment centers, Building Assessment Centers, and Clean Energy Application 

Centers located in the region of such Center for Energy and Environmental 

Knowledge and Outreach. 

(2) TECHNICAL ASSISTANCE PROGRAMS.—Each Center for Energy and Environmental Knowledge and Outreach shall consist of at least one, new or existing, 

high performing, of the following: 

(A) An industrial research and assessment center. 

(B) A Clean Energy Application Center. 

(C) A Building Assessment Center. 

(3) SELECTION CRITERIA.—The Secretary shall select Centers for Energy and 

Environmental Knowledge and Outreach through a competitive process, based 

on the following: 

(A) Identification of the highest performing industrial research and assessment centers, Clean Energy Application Centers, and Building Assessment Centers. 

(B) The degree to which an institution of higher education maintains 

credibility among regional private sector organizations such as trade associations, engineering associations, and environmental organizations. 

(C) The degree to which an institution of higher education is providing 

or has provided technical assistance, academic leadership, and market leadership in the energy arena in a manner that is consistent with the areas 

of focus of industrial research and assessment centers, Clean Energy Application Centers, and Building Assessment Centers. 

(D) The presence of an additional industrial research and assessment center, Clean Energy Application Center, or Building Assessment Center at the 

institution of higher education. 

(4) GEOGRAPHIC DIVERSITY.—In selecting Centers for Energy and Environmental Knowledge and Outreach under this subsection, the Secretary shall ensure such Centers are distributed geographically in a relatively uniform manner 

to ensure all regions of the Nation are represented. 

(5) REGIONAL LEADERSHIP.—Each Center for Energy and Environmental 

Knowledge and Outreach shall, to the extent possible, provide leadership to all 

other industrial research and assessment centers, Clean Energy Application 

Centers, and Building Assessment Centers located in the Center’s geographic 

region, as determined by the Secretary. Such leadership shall include— 

(A) developing regional goals specific to the purview of the industrial research and assessment centers, Clean Energy Application Centers, and 

Building Assessment Centers programs; 

(B) developing regionally specific technical resources; and 

(C) outreach to interested parties in the region to inform them of the information, resources, and services available through the associated industrial research and assessment centers, Clean Energy Application Centers, 

and Building Assessment Centers. 

(6) FURTHER COORDINATION.—To increase the value and capabilities of the regionally associated industrial research and assessment centers, Clean Energy 

Application Centers, and Building Assessment Centers programs, Centers for 

Energy and Environmental Knowledge and Outreach shall— 

(A) coordinate with Manufacturing Extension Partnership Centers of the 

National Institute of Science and Technology; 

(B) coordinate with the relevant programs in the Department of Energy, 

including the Building Technology Program and Industrial Technologies 

Program; 


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(C) increase partnerships with the National Laboratories of the Department of Energy to leverage the expertise and technologies of the National 

Laboratories to achieve the goals of the industrial research and assessment 

centers, Clean Energy Application Centers, and Building Assessment Centers; 

(D) work with relevant municipal, county, and State economic development entities to leverage relevant financial incentives for capital investment and other policy tools for the protection and growth of local business 

and industry; 

(E) partner with local professional and private trade associations and 

business development interests to leverage existing knowledge of local business challenges and opportunities; 

(F) work with energy utilities and other administrators of publicly funded 

energy programs to leverage existing energy efficiency and clean energy 

programs; 

(G) identify opportunities for reducing greenhouse gas emissions; and 

(H) promote sustainable business practices for those served by the industrial research and assessment centers, Clean Energy Application Centers, 

and Building Assessment Centers. 

(7) WORKFORCE TRAINING.— 

(A) IN GENERAL.—The Secretary shall require each Center for Energy and 

Environmental Knowledge and Outreach to establish or maintain an internship program for the region of such Center, designed to encourage students 

who perform energy assessments to continue working with a particular 

company, building, or facility to help implement the recommendations contained in any such assessment provided to such company, building, or facility. Each Center for Energy and Environmental Knowledge and Outreach 

shall act as internship coordinator to help match students to available opportunities. 

(B) FEDERAL SHARE.—The Federal share of the cost of carrying out internship programs described under subparagraph (A) shall be 50 percent. 

(C) FUNDING.—Subject to the availability of appropriations, of the funds 

made available to carry out this subsection, the Secretary shall use to carry 

out this paragraph not less than $5,000,000 for fiscal year 2010 and each 

fiscal year thereafter. 

(8) SMALL BUSINESS LOANS.—The Administrator of the Small Business Administration shall, to the maximum practicable, expedite consideration of applications from eligible small business concerns for loans under the Small Business 

Act (15 U.S.C. 631 et seq.) for loans to implement recommendations of any industrial research and assessment center, Clean Energy Application Center, or 

Building Assessment Center. 

(9) DEFINITIONS.—In this subsection: 

(A) INDUSTRIAL RESEARCH AND ASSESSMENT CENTER.—The term ‘‘industrial research and assessment center’’ means a center established or maintained pursuant to section 452(e) of the Energy Independence and Security 

Act of 2007 (42 U.S.C. 17111(e)). 

(B) CLEAN ENERGY APPLICATION CENTER.—The term ‘‘Clean Energy Application Center’’ means a center redesignated and described section under 

section 375 of the Energy Policy and Conservation Act (42 U.S.C. 6345). 

(C) BUILDING ASSESSMENT CENTER.—The term ‘‘Building Assessment Center’’ means an institution of higher education-based center established pursuant to section 172. 

(D) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Energy. 

(10) FUNDING.—There are authorized to be appropriated to the Secretary to 

carry out this subsection $10,000,000 for fiscal year 2010 and each fiscal year 

thereafter. Subject to the availability of appropriations, of the funds made available to carry out this subsection, the Secretary shall provide to each Center for 

Energy and Environmental Knowledge and Outreach not less than $500,000 for 

fiscal year 2010 and each fiscal year thereafter. 

(b) INTEGRATION OF OTHER TECHNICAL ASSISTANCE PROGRAMS.— 

(1) CLEAN ENERGY APPLICATION CENTERS.—Section 375 of the Energy Policy 

and Conservation Act (42 U.S.C. 6345) is amended— 

(A) by redesignating subsection (f) as subsection (g); and 

(B) by adding after subsection (e) the following new subsection: 

‘‘(f) COORDINATION WITH CENTERS FOR ENERGY AND ENVIRONMENTAL KNOWLEDGE

AND OUTREACH.—A Clean Energy Application Center may serve as a Center for Energy and Environmental Knowledge and Outreach established pursuant to section 

173 of the American Clean Energy and Security Act of 2009.’’. 


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(2) INDUSTRIAL RESEARCH AND ASSESSMENT CENTERS.—Section 452(e) of the 

Energy Independence and Security Act of 2007 (42 U.S.C. 17111(e)) is amended— 

(A) by striking ‘‘The Secretary’’ and all that follows through ‘‘shall be— 

’’ and inserting the following: 

‘‘(1) IN GENERAL.—The Secretary shall provide funding to institution of higher 

education-based industrial research and assessment centers, whose purposes 

shall be—’’; 

(B) by redesignating paragraphs (1) through (5) as subparagraphs (A) 

through (E), respectively (and by moving the margins of such subparagraphs 2 ems to the right); and 

(C) by adding at the end the following new paragraph: 

‘‘(2) COORDINATION WITH CENTERS FOR ENERGY AND ENVIRONMENTAL KNOWL- EDGE AND OUTREACH.—An industrial research and assessment center may serve 

as a Center for Energy and Environmental Knowledge and Outreach established pursuant to section 173 of the American Clean Energy and Security Act 

of 2009.’’. 

(c) ADDITIONAL FUNDING FOR CLEAN ENERGY APPLICATION CENTERS.—Subsection 

(g) of section 375 of the Energy Policy and Conservation Act (42 U.S.C. 6345(f)), as 

redesignated by subsection (b)(1) of this section, is amended by striking 

‘‘$10,000,000 for each of fiscal years 2008 through 2012’’ and inserting ‘‘$30,000,000 

for fiscal year 2010 and each fiscal year thereafter’’. 

Subtitle I—Nuclear and Advanced Technologies 

SEC. 181. REVISIONS TO LOAN GUARANTEE PROGRAM AUTHORITY. 

(a) DEFINITION OF CONDITIONAL COMMITMENT.—Section 1701 of the Energy Policy 

Act of 2005 (42 U.S.C. 16511), as amended by section 130(a) of this Act, is amended 

by adding after paragraph (7) the following: 

‘‘(8) CONDITIONAL COMMITMENT.—The term ‘conditional commitment’ means a 

final term sheet negotiated between the Secretary and a project sponsor or 

sponsors, which term sheet shall be binding on both parties and become a final 

loan guarantee agreement if all conditions precedent established in the term 

sheet, which shall include the acquisition of all necessary permits and licenses, 

are satisfied.’’. 

(b) SPECIFIC APPROPRIATION OR CONTRIBUTION.—Section 1702 of the Energy Policy Act of 2005 (42 U.S.C. 16512) is amended by striking subsection (b) and inserting the following: 

‘‘(b) SPECIFIC APPROPRIATION OR CONTRIBUTION.— ‘‘(1) IN GENERAL.—No guarantee shall be made unless— 

‘‘(A) an appropriation for the cost has been made; 

‘‘(B) the Secretary has received from the borrower a payment in full for 

the cost of the obligation and deposited the payment into the Treasury; or 

‘‘(C) a combination of appropriations or payments from the borrower has 

been made sufficient to cover the cost of the obligation. 

‘‘(2) LIMITATION.—The source of payments received from a borrower under 

paragraph (1)(B) shall not be a loan or other debt obligation that is made or 

guaranteed by the Federal Government.’’. 

(c) FEES.—Section 1702(h) of the Energy Policy Act of 2005 (42 U.S.C. 16512(h)) 

is amended by striking paragraph (2) and inserting the following: 

‘‘(2) AVAILABILITY.—Fees collected under this subsection shall— 

‘‘(A) be deposited by the Secretary into a special fund in the Treasury to 

be known as the ‘Incentives For Innovative Technologies Fund’; and 

‘‘(B) remain available to the Secretary for expenditure, without further 

appropriation or fiscal year limitation, for administrative expenses incurred 

in carrying out this title.’’. 

(d) WAGE RATE REQUIREMENTS.—Section 1702 of the Energy Policy Act of 2005 

(42 U.S.C. 16512) is amended by adding at the end the following new subsection: 

‘‘(k) WAGE RATE REQUIREMENTS.—No loan guarantee shall be made under this 

title unless the borrower has provided to the Secretary reasonable assurances that 

all laborers and mechanics employed by contractors and subcontractors in the performance of construction work financed in whole or in part by the guaranteed loan 

will be paid wages at rates not less than those prevailing on projects of a character 

similar to the contract work in the civil subdivision of the State in which the contract work is to be performed as determined by the Secretary of Labor in accordance 

with subchapter IV of chapter 31 of part A of subtitle II of title 40, United States 

Code. With respect to the labor standards specified in this subsection, the Secretary 

of Labor shall have the authority and functions set forth in Reorganization Plan 


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Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and section 3145 of title 40, 

United States Code.’’. 

SEC. 182. PURPOSE. 

The purpose of sections 183 through 189 of this subtitle is to promote the domestic development and deployment of clean energy technologies required for the 21st 

century through the establishment of a self-sustaining Clean Energy Deployment 

Administration that will provide for an attractive investment environment through 

partnership with and support of the private capital market in order to promote access to affordable financing for accelerated and widespread deployment of— 

(1) clean energy technologies; 

(2) advanced or enabling energy infrastructure technologies; 

(3) energy efficiency technologies in residential, commercial, and industrial 

applications, including end-use efficiency in buildings; and 

(4) manufacturing technologies for any of the technologies or applications described in this section. 

SEC. 183. DEFINITIONS. 

In this subtitle: 

(1) ADMINISTRATION.—The term ‘‘Administration’’ means the Clean Energy 

Deployment Administration established by section 186. 

(2) ADVISORY COUNCIL.—The term ‘‘Advisory Council’’ means the Energy 

Technology Advisory Council of the Administration. 

(3) BREAKTHROUGH TECHNOLOGY.—The term ‘‘breakthrough technology’’ 

means a clean energy technology that— 

(A) presents a significant opportunity to advance the goals developed 

under section 185, as assessed under the methodology established by the 

Advisory Council; but 

(B) has generally not been considered a commercially ready technology as 

a result of high perceived technology risk or other similar factors. 

(4) CLEAN ENERGY TECHNOLOGY.—The term ‘‘clean energy technology’’ means 

a technology related to the production, use, transmission, storage, control, or 

conservation of energy— 

(A) that will contribute to a stabilization of atmospheric greenhouse gas 

concentrations thorough reduction, avoidance, or sequestration of energy-related emissions and— 

(i) reduce the need for additional energy supplies by using existing 

energy supplies with greater efficiency or by transmitting, distributing, 

or transporting energy with greater effectiveness through the infrastructure of the United States; or 

(ii) diversify the sources of energy supply of the United States to 

strengthen energy security and to increase supplies with a favorable 

balance of environmental effects if the entire technology system is considered; and 

(B) for which, as determined by the Administrator, insufficient commercial lending is available to allow for widespread deployment. 

(5) COST.—The term ‘‘cost’’ has the meaning given the term in section 502 of 

the Federal Credit Reform Act of 1990 (2 U.S.C. 661a). 

(6) DIRECT LOAN.—The term ‘‘direct loan’’ has the meaning given the term in 

section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a). 

(7) FUND.—The term ‘‘Fund’’ means the Clean Energy Investment Fund established by section 184(a). 

(8) LOAN GUARANTEE.—The term ‘‘loan guarantee’’ has the meaning given the 

term in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a). 

(9) NATIONAL LABORATORY.—The term ‘‘National Laboratory’’ has the meaning 

given the term in section 2 of the Energy Policy Act of 2005 (42 U.S.C. 15801). 

(10) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Energy. 

(11) STATE.—The term ‘‘State’’ means— 

(A) a State; 

(B) the District of Columbia; 

(C) the Commonwealth of Puerto Rico; and 

(D) any other territory or possession of the United States. 

(12) TECHNOLOGY RISK.—The term ‘‘technology risk’’ means the risks during 

construction or operation associated with the design, development, and deployment of clean energy technologies (including the cost, schedule, performance, reliability and maintenance, and accounting for the perceived risk), from the perspective of commercial lenders, that may be increased as a result of the absence 

of adequate historical construction, operating, or performance data from commercial applications of the technology. 


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SEC. 184. CLEAN ENERGY INVESTMENT FUND. 

(a) ESTABLISHMENT.—There is established in the Treasury of the United States 

a revolving fund, to be known as the ‘‘Clean Energy Investment Fund’’, consisting 

of— 

(1) such amounts as are deposited in the Fund under this subtitle; and 

(2) such sums as may be appropriated to supplement the Fund. 

(b) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

to the Fund such sums as are necessary to carry out this subtitle. 

(c) EXPENDITURES FROM FUND.— 

(1) IN GENERAL.—Amounts in the Fund shall be available to the Administrator of the Administration for obligation without fiscal year limitation, to remain available until expended. 

(2) ADMINISTRATIVE EXPENSES.— 

(A) FEES.—Fees collected for administrative expenses shall be available 

without limitation to cover applicable expenses. 

(B) FUND.—To the extent that administrative expenses are not reimbursed through fees, an amount not to exceed 1.5 percent of the amounts 

in the Fund as of the beginning of each fiscal year shall be available to pay 

the administrative expenses for the fiscal year necessary to carry out this 

subtitle. 

(d) TRANSFERS OF AMOUNTS.— 

(1) IN GENERAL.—The amounts required to be transferred to the Fund under 

this section shall be transferred at least monthly from the general fund of the 

Treasury to the Fund on the basis of estimates made by the Secretary of the 

Treasury. 

(2) ADJUSTMENTS.—Proper adjustment shall be made in amounts subsequently transferred to the extent prior estimates were in excess of or less than 

the amounts required to be transferred. 

SEC. 185. ENERGY TECHNOLOGY DEPLOYMENT GOALS. 

(a) GOALS.—Not later than 1 year after the date of enactment of this Act, the Secretary, after consultation with the Advisory Council, shall develop and publish for 

review and comment in the Federal Register near-, medium-, and long-term goals 

(including numerical performance targets at appropriate intervals to measure 

progress toward those goals) for the deployment of clean energy technologies 

through the credit support programs established by section 187 to promote— 

(1) sufficient electric generating capacity using clean energy technologies to 

meet the energy needs of the United States; 

(2) clean energy technologies in vehicles and fuels that will substantially reduce the reliance of the United States on foreign sources of energy and insulate 

consumers from the volatility of world energy markets; 

(3) a domestic commercialization and manufacturing capacity that will establish the United States as a world leader in clean energy technologies across 

multiple sectors; 

(4) installation of sufficient infrastructure to allow for the cost-effective deployment of clean energy technologies appropriate to each region of the United 

States; 

(5) the transformation of the building stock of the United States to zero net 

energy consumption; 

(6) the recovery, use, and prevention of waste energy; 

(7) domestic manufacturing of clean energy technologies on a scale that is sufficient to achieve price parity with conventional energy sources; 

(8) domestic production of commodities and materials (such as steel, chemicals, polymers, and cement) using clean energy technologies so that the United 

States will become a world leader in environmentally sustainable production of 

the commodities and materials; 

(9) a robust, efficient, and interactive electricity transmission grid that will 

allow for the incorporation of clean energy technologies, distributed generation, 

and demand-response in each regional electric grid; 

(10) sufficient availability of financial products to allow owners and users of 

residential, retail, commercial, and industrial buildings to make energy efficiency and distributed generation technology investments with reasonable payback periods; and 

(11) such other goals as the Secretary, in consultation with the Advisory 

Council, determines to be consistent with the purpose stated in section 182. 

(b) REVISIONS.—The Secretary shall revise the goals established under subsection 

(a), from time to time as appropriate, to account for advances in technology and 

changes in energy policy. 


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SEC. 186. CLEAN ENERGY DEPLOYMENT ADMINISTRATION. 

(a) ESTABLISHMENT.— (1) IN GENERAL.—There is established in the Department of Energy an administration to be known as the Clean Energy Deployment Administration, under 

the direction of the Administrator of the Administration and the Board of Directors. 

(2) STATUS.— (A) IN GENERAL.—The Administration (including officers, employees, and 

agents of the Administration) shall not be responsible to, or subject to the 

authority, direction, or control of, any other officer, employee, or agent of 

the Department of Energy other than the Secretary, acting through the Administrator of the Administration. 

(B) EXEMPTION FROM REORGANIZATION.—The Administration shall be exempt from the reorganization authority provided under section 643 of the 

Department of Energy Reorganization Act (42 U.S.C. 7253). 

(C) INSPECTOR GENERAL.—Section 12 of the Inspector General Act of 1978 

(5 U.S.C. App.) is amended— 

(i) in paragraph (1), by inserting ‘‘the Administrator of the Clean Energy Deployment Administration;’’ after ‘‘Export-Import Bank;’’; and 

(ii) in paragraph (2), by inserting ‘‘the Clean Energy Deployment Administration,’’ after ‘‘Export-Import Bank,’’. 

(3) OFFICES.— 

(A) PRINCIPAL OFFICE.—The Administration shall— 

(i) maintain the principal office of the Administration in the District 

of Columbia; and 

(ii) for purposes of venue in civil actions, be considered to be a resident of the District of Columbia. 

(B) OTHER OFFICES.—The Administration may establish other offices in 

such other places as the Administration considers necessary or appropriate 

for the conduct of the business of the Administration. 

(b) ADMINISTRATOR.— 

(1) IN GENERAL.—The Administrator of the Administration shall be— 

(A) appointed by the President, with the advice and consent of the Senate, for a 5-year term; and 

(B) compensated at the annual rate of basic pay prescribed for level II 

of the Executive Schedule under section 5313 of title 5, United States Code. 

(2) DUTIES.—The Administrator of the Administration shall— 

(A) serve as the Chief Executive Officer of the Administration and Chairman of the Board; 

(B) ensure that— 

(i) the Administration operates in a safe and sound manner, including maintenance of adequate capital and internal controls (consistent 

with section 404 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7262)); 

(ii) the operations and activities of the Administration foster liquid, 

efficient, competitive, and resilient energy and energy efficiency finance 

markets; 

(iii) the Administration carries out the purpose stated in section 182 

only through activities that are authorized under and consistent with 

sections 182 through 189; and 

(iv) the activities of the Administration and the manner in which the 

Administration is operated are consistent with the public interest; 

(C) develop policies and procedures for the Administration that will— 

(i) promote a self-sustaining portfolio of investments that will maximize the value of investments to effectively promote clean energy technologies; 

(ii) promote transparency and openness in Administration operations; 

(iii) afford the Administration with sufficient flexibility to meet the 

purpose stated in section 182; and 

(iv) provide for the efficient processing of applications; and 

(D) with the concurrence of the Board, set expected loss reserves for the 

support provided by the Administration consistent with section 187(c). 

(c) BOARD OF DIRECTORS.— 

(1) IN GENERAL.—The Board of Directors of the Administration shall consist 

of— 

(A) the Secretary or the designee of the Secretary, who shall serve as an 

ex-officio voting member of the Board of Directors; 

(B) the Administrator of the Administration, who shall serve as the 

Chairman of the Board of Directors; and 

(C) 7 additional members who shall— 


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(i) be appointed by the President, with the advice and consent of the 

Senate, for staggered 5-year terms; and 

(ii) have experience in banking, financial services, technology assessment, energy regulation, or risk management, including individuals 

with substantial experience in the development of energy projects, the 

electricity generation sector, the transportation sector, the manufacturing sector, and the energy efficiency sector. 

(2) DUTIES.—The Board of Directors shall— 

(A) oversee the operations of the Administration and ensure industry best 

practices are followed in all financial transactions involving the Administration; 

(B) consult with the Administrator of the Administration on the general 

policies and procedures of the Administration to ensure the interests of the 

taxpayers are protected; 

(C) ensure the portfolio of investments are consistent with purpose stated 

in section 182 and with the long-term financial stability of the Administration; 

(D) ensure that the operations and activities of the Administration are 

consistent with the development of a robust private sector that can provide 

commercial loans or financing products; and 

(E) not serve on a full-time basis, except that the Board of Directors shall 

meet at least quarterly to review, as appropriate, applications for credit 

support and set policies and procedures as necessary. 

No member of the Board shall take part in any review or decision of any project 

as to which that member or member’s immediate family has a financial or other 

interest. 

(3) REMOVAL.—An appointed member of the Board of Directors may be removed from office by the President for good cause. 

(4) VACANCIES.—An appointed seat on the Board of Directors that becomes 

vacant shall be filled by appointment by the President, but only for the unexpired portion of the term of the vacating member. 

(5) COMPENSATION OF MEMBERS.—An appointed member of the Board of Directors shall be compensated at a rate equal to the daily equivalent of the annual rate of basic pay prescribed for level III of the Executive Schedule under 

section 5314 of title 5, United States Code, for each day (including travel time) 

during which the member is engaged in the performance of the duties of the 

Board of Directors. 

(d) ENERGY TECHNOLOGY ADVISORY COUNCIL.— 

(1) IN GENERAL.—The Administration shall have an Energy Technology Advisory Council consisting of— 

(A) 5 members selected by the Secretary; and 

(B) 3 members selected by the Board of Directors of the Administration. 

(2) QUALIFICATIONS.—The members of the Advisory Council shall— 

(A) have relevant scientific expertise; and 

(B) in the case of the members selected by the Secretary under paragraph 

(1)(A), include representatives of— 

(i) the academic community; 

(ii) the private research community; 

(iii) National Laboratories; 

(iv) the technology or project development community; and 

(v) the commercial energy financing and operations sector. 

(3) DUTIES.—The Advisory Council shall— 

(A) develop and publish for comment in the Federal Register a methodology for assessment of clean energy technologies that will allow the Administration to evaluate projects based on the progress likely to be achieved 

per-dollar invested in maximizing the attributes of the definition of clean 

energy technology, taking into account the extent to which support for a 

clean energy technology is likely to accrue subsequent benefits that are attributable to a commercial scale deployment taking place earlier than that 

which otherwise would have occurred without the support; and 

(B) advise on the technological approaches that should be supported by 

the Administration to meet the technology deployment goals established by 

the Secretary pursuant to section 185. 

(4) TERM.— 

(A) IN GENERAL.—Members of the Advisory Council shall have 5-year 

staggered terms, as determined by the Secretary and the Administrator of 

the Administration. 

(B) REAPPOINTMENT.—A member of the Advisory Council may be reappointed. 


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(5) COMPENSATION.—A member of the Advisory Council, who is not otherwise 

compensated as a Federal employee, shall be compensated at a rate equal to 

the daily equivalent of the annual rate of basic pay prescribed for level IV of 

the Executive Schedule under section 5315 of title 5, United States Code, for 

each day (including travel time) during which the member is engaged in the 

performance of the duties of the Advisory Council. 

(e) STAFF.— 

(1) IN GENERAL.—The Administrator of the Administration, in consultation 

with the Board of Directors, may— 

(A) appoint and terminate such officers, attorneys, employees, and agents 

as are necessary to carry out this subtitle; and 

(B) vest those personnel with such powers and duties as the Administrator of the Administration may determine. 

(2) DIRECT HIRE AUTHORITY.— 

(A) IN GENERAL.—Notwithstanding section 3304 and sections 3309 

through 3318 of title 5, United States Code, the Administrator of the Administration may, on a determination that there is a severe shortage of candidates or a critical hiring need for particular positions, recruit and directly 

appoint highly qualified critical personnel with specialized knowledge important to the function of the Administration into the competitive service. 

(B) EXCEPTION.—The authority granted under subparagraph (A) shall not 

apply to positions in the excepted service or the Senior Executive Service. 

(C) REQUIREMENTS.—In exercising the authority granted under subparagraph (A), the Administrator of the Administration shall ensure that any 

action taken by the Administrator of the Administration— 

(i) is consistent with the merit principles of section 2301 of title 5, 

United States Code; and 

(ii) complies with the public notice requirements of section 3327 of 

title 5, United States Code. 

(D) TERMINATION OF EFFECTIVENESS.—The authority provided by this 

paragraph terminates effective on the date that is 2 years after the date 

of enactment of this Act. 

(3) CRITICAL PAY AUTHORITY.— 

(A) IN GENERAL.—Notwithstanding section 5377 of title 5, United States 

Code, and without regard to the provisions of that title governing appointments in the competitive service or the Senior Executive Service and chapters 51 and 53 of that title (relating to classification and pay rates), the Administrator of the Administration may establish, fix the compensation of, 

and appoint individuals to critical positions needed to carry out the functions of the Administration, if the Administrator of the Administration certifies that— 

(i) the positions require expertise of an extremely high level in a financial, technical, or scientific field; 

(ii) the Administration would not successfully accomplish an important mission without such an individual; and 

(iii) exercise of the authority is necessary to recruit an individual who 

is exceptionally well qualified for the position. 

(B) LIMITATIONS.—The authority granted under subparagraph (A) shall 

be subject to the following conditions: 

(i) The number of critical positions authorized by subparagraph (A) 

may not exceed 20 at any 1 time in the Administration. 

(ii) The term of an appointment under subparagraph (A) may not exceed 4 years. 

(iii) An individual appointed under subparagraph (A) may not have 

been an Administration employee at any time during the 2-year period 

preceding the date of appointment. 

(iv) Total annual compensation for any individual appointed under 

subparagraph (A) may not exceed the highest total annual compensation payable at the rate determined under section 104 of title 3, United 

States Code. 

(v) An individual appointed under subparagraph (A) may not be considered to be an employee for purposes of subchapter II of chapter 75 

of title 5, United States Code. 

(C) NOTIFICATION.—Each year, the Administrator of the Administration 

shall submit to Congress a notification that lists each individual appointed 

under this paragraph. 


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SEC. 187. DIRECT SUPPORT. 

(a) IN GENERAL.—The Administration may issue direct loans, letters of credit, and 

loan guarantees to deploy clean energy technologies if the Administrator of the Administration has determined that deployment of the technologies would benefit or 

be accelerated by the support. 

(b) ELIGIBILITY CRITERIA.—In carrying out this section and awarding credit support to projects, the Administrator of the Administration shall account for— 

(1) how the technology rates based on an evaluation methodology established 

by the Advisory Council; 

(2) how the project fits with the goals established under section 185; and 

(3) the potential for the applicant to successfully complete the project. 

(c) RISK.— 

(1) EXPECTED LOAN LOSS RESERVE.—The Administrator of the Administration 

shall establish an expected loan loss reserve to account for estimated losses attributable to activities under this section that is consistent with the purposes 

of— 

(A) developing breakthrough technologies to the point at which technology risk is largely mitigated; 

(B) achieving widespread deployment and advancing the commercial viability of clean energy technologies; and 

(C) advancing the goals established under section 185. 

(2) INITIAL EXPECTED LOAN LOSS RESERVE.—Until such time as the Administrator of the Administration determines sufficient data exist to establish an expected loan loss reserve that is appropriate, the Administrator of the Administration shall consider establishing an initial rate of 10 percent for the portfolio 

of investments under this subtitle. 

(3) PORTFOLIO INVESTMENT APPROACH.—The Administration shall— 

(A) use a portfolio investment approach to mitigate risk and diversify investments across technologies and ensure that no particular technology is 

provided more than 30 percent of the financial support available; 

(B) to the maximum extent practicable and consistent with long-term 

self-sufficiency, weigh the portfolio of investments in projects to advance the 

goals established under section 185; 

(C) consistent with the expected loan loss reserve established under this 

subsection, the purpose stated in section 182, and section 186(b)(2)(B), provide the maximum practicable percentage of support to promote breakthrough technologies; and 

(D) give the highest priority to investments that promote technologies 

that will achieve the maximum greenhouse gas emission reductions within 

a reasonable period of time per dollar invested and the earliest reductions 

in greenhouse gas emissions. 

(4) LOSS RATE REVIEW.— 

(A) IN GENERAL.—The Board of Directors shall review on an annual basis 

the loss rates of the portfolio to determine the adequacy of the reserves. 

(B) REPORT.—Not later than 90 days after the date of the initiation of the 

review, the Administrator of the Administration shall submit to the Committee on Energy and Natural Resources of the Senate and the Committee 

on Energy and Commerce of the House of Representatives a report describing the results of the review and any recommended policy changes. 

(5) FEDERAL COST SHARE.—A loan guarantee by the Administration shall not 

exceed an amount equal to 80 percent of the project cost of the facility that is 

the subject of the guarantee, as estimated at the time at which the guarantee 

is issued. 

(d) APPLICATION REVIEW.— 

(1) IN GENERAL.—To the maximum extent practicable and consistent with 

sound business practices, the Administration shall seek to consolidate reviews 

of applications for credit support under this subtitle such that final decisions 

on applications can generally be issued not later than 180 days after the date 

of submission of a completed application. 

(2) ENVIRONMENTAL REVIEW.—In carrying out this subtitle, the Administration shall, to the maximum extent practicable— 

(A) avoid duplicating efforts that have already been undertaken by other 

agencies (including State agencies acting under Federal programs); and 

(B) with the advice of the Council on Environmental Quality and any 

other applicable agencies, use the administrative records of similar reviews 

conducted throughout the executive branch to develop the most expeditious 

review process practicable. 

(e) WAGE RATE REQUIREMENTS.— 


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(1) IN GENERAL.—No credit support shall be issued under this section unless 

the borrower has provided to the Administrator of the Administration reasonable assurances that all laborers and mechanics employed by contractors and 

subcontractors in the performance of construction work financed in whole or in 

part by the Administration will be paid wages at rates not less than those prevailing on projects of a character similar to the contract work in the civil subdivision of the State in which the contract work is to be performed as determined by the Secretary of Labor in accordance with subchapter IV of chapter 

31 of part A of subtitle II of title 40, United States Code. 

(2) LABOR STANDARDS.—With respect to the labor standards specified in this 

subsection, the Secretary of Labor shall have the authority and functions set 

forth in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. 

App.) and section 3145 of title 40, United States Code. 

SEC. 188. FEDERAL CREDIT AUTHORITY. 

(a) PAYMENTS OF LIABILITIES.— (1) IN GENERAL.—Any payment made to discharge liabilities arising from 

agreements under this subtitle shall be paid out of the Fund or the associated 

credit account, as appropriate. 

(2) SECURITY.—The full faith and credit of the United States is pledged to the 

payment of all obligations entered into by the Administration pursuant to this 

subtitle. 

(b) FEES.— (1) IN GENERAL.—Consistent with achieving the purpose stated in section 182, 

the Administrator of the Administration shall charge fees or collect compensation generally in accordance with commercial rates. 

(2) AVAILABILITY OF FEES.—All fees collected by the Administration may be 

retained by the Administration and placed in the Fund and may remain available to the Administration, without further appropriation or fiscal year limitation, for use in carrying out the purpose stated in section 182. 

(3) BREAKTHROUGH TECHNOLOGIES.—The Administration shall charge the 

minimum amount in fees or compensation practicable for breakthrough technologies, consistent with the long-term viability of the Administration, unless 

the Administration first determines that a higher charge will not impede the 

development of the technology. 

(4) ALTERNATIVE FEE ARRANGEMENTS.—The Administration may use such alternative arrangements (such as profit participation, contingent fees, and other 

valuable contingent interests) as the Administration considers appropriate to 

compensate the Administration for the expenses of the Administration and the 

risk inherent in the support of the Administration. 

(c) COST TRANSFER AUTHORITY.—Amounts collected by the Administration for the 

cost of a loan or loan guarantee shall be transferred by the Administration to the 

respective credit accounts. 

SEC. 189. GENERAL PROVISIONS. 

(a) IMMUNITY FROM IMPAIRMENT, LIMITATION, OR RESTRICTION.— 

(1) IN GENERAL.—All rights and remedies of the Administration (including 

any rights and remedies of the Administration on, under, or with respect to any 

mortgage or any obligation secured by a mortgage) shall be immune from impairment, limitation, or restriction by or under— 

(A) any law (other than a law enacted by Congress expressly in limitation 

of this paragraph) that becomes effective after the acquisition by the Administration of the subject or property on, under, or with respect to which 

the right or remedy arises or exists or would so arise or exist in the absence 

of the law; or 

(B) any administrative or other action that becomes effective after the acquisition. 

(2) STATE LAW.—The Administrator of the Administration may conduct the 

business of the Administration without regard to any qualification or law of any 

State relating to incorporation. 

(b) USE OF OTHER AGENCIES.—With the consent of a department, establishment, 

or instrumentality (including any field office), the Administration may— 

(1) use and act through any department, establishment, or instrumentality; 

and 

(2) use, and pay compensation for, information, services, facilities, and personnel of the department, establishment, or instrumentality. 

(c) PROCUREMENT.—The Administrator of the Administration shall be the senior 

procurement officer for the Administration for purposes of section 16(a) of the Office 

of Federal Procurement Policy Act (41 U.S.C. 414(a)). 

(d) FINANCIAL MATTERS.— 


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(1) INVESTMENTS.—Funds of the Administration may be invested in such investments as the Board of Directors may prescribe. 

(2) FISCAL AGENTS.—Any Federal Reserve bank or any bank as to which at 

the time of the designation of the bank by the Administrator of the Administration there is outstanding a designation by the Secretary of the Treasury as a 

general or other depository of public money, may be designated by the Administrator of the Administration as a depositary or custodian or as a fiscal or other 

agent of the Administration. 

(e) JURISDICTION.—Notwithstanding section 1349 of title 28, United States Code, 

or any other provision of law— 

(1) the Administration shall be considered a corporation covered by sections 

1345 and 1442 of title 28, United States Code; 

(2) all civil actions to which the Administration is a party shall be considered 

to arise under the laws of the United States, and the district courts of the 

United States shall have original jurisdiction of all such actions, without regard 

to amount or value; and 

(3) any civil or other action, case or controversy in a court of a State, or in 

any court other than a district court of the United States, to which the Administration is a party may at any time before trial be removed by the Administration, without the giving of any bond or security and by following any procedure 

for removal of causes in effect at the time of the removal— 

(A) to the district court of the United States for the district and division 

embracing the place in which the same is pending; or 

(B) if there is no such district court, to the district court of the United 

States for the district in which the principal office of the Administration is 

located. 

(f) PERIODIC REPORTS.—Not later than 1 year after commencement of operation 

of the Administration and at least biannually thereafter, the Administrator of the 

Administration shall submit to the Committee on Energy and Natural Resources of 

the Senate and the Committee on Energy and Commerce of the House of Representatives a report that includes a description of— 

(1) the technologies supported by activities of the Administration and how the 

activities advance the purpose stated in section 182; and 

(2) the performance of the Administration on meeting the goals established 

under section 185. 

(g) AUDITS BY THE COMPTROLLER GENERAL.— 

(1) IN GENERAL.—The programs, activities, receipts, expenditures, and financial transactions of the Administration shall be subject to audit by the Comptroller General of the United States under such rules and regulations as may 

be prescribed by the Comptroller General. 

(2) ACCESS.—The representatives of the Government Accountability Office 

shall— 

(A) have access to the personnel and to all books, accounts, documents, 

records (including electronic records), reports, files, and all other papers, 

automated data, things, or property belonging to, under the control of, or 

in use by the Administration, or any agent, representative, attorney, advisor, or consultant retained by the Administration, and necessary to facilitate the audit; 

(B) be afforded full facilities for verifying transactions with the balances 

or securities held by depositories, fiscal agents, and custodians; 

(C) be authorized to obtain and duplicate any such books, accounts, documents, records, working papers, automated data and files, or other information relevant to the audit without cost to the Comptroller General; and 

(D) have the right of access of the Comptroller General to such information pursuant to section 716(c) of title 31, United States Code. 

(3) ASSISTANCE AND COST.— 

(A) IN GENERAL.—For the purpose of conducting an audit under this subsection, the Comptroller General may, in the discretion of the Comptroller 

General, employ by contract, without regard to section 3709 of the Revised 

Statutes (41 U.S.C. 5), professional services of firms and organizations of 

certified public accountants for temporary periods or for special purposes. 

(B) REIMBURSEMENT.— 

(i) IN GENERAL.—On the request of the Comptroller General, the Administration shall reimburse the Government Accountability Office for 

the full cost of any audit conducted by the Comptroller General under 

this subsection. 

(ii) CREDITING.—Such reimbursements shall— 


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(I) be credited to the appropriation account entitled ‘‘Salaries and 

Expenses, Government Accountability Office’’ at the time at which 

the payment is received; and 

(II) remain available until expended. 

(h) ANNUAL INDEPENDENT AUDITS.— (1) IN GENERAL.—The Administrator of the Administration shall— 

(A) have an annual independent audit made of the financial statements 

of the Administration by an independent public accountant in accordance 

with generally accepted auditing standards; and 

(B) submit to the Secretary the results of the audit. 

(2) CONTENT.—In conducting an audit under this subsection, the independent 

public accountant shall determine and report on whether the financial statements of the Administration— 

(A) are presented fairly in accordance with generally accepted accounting 

principles; and 

(B) comply with any disclosure requirements imposed under this subtitle. 

(i) FINANCIAL REPORTS.— (1) IN GENERAL.—The Administrator of the Administration shall submit to the 

Secretary annual and quarterly reports of the financial condition and operations 

of the Administration, which shall be in such form, contain such information, 

and be submitted on such dates as the Secretary shall require. 

(2) CONTENTS OF ANNUAL REPORTS.—Each annual report shall include— 

(A) financial statements prepared in accordance with generally accepted 

accounting principles; 

(B) any supplemental information or alternative presentation that the 

Secretary may require; and 

(C) an assessment (as of the end of the most recent fiscal year of the Administration), signed by the chief executive officer and chief accounting or 

financial officer of the Administration, of— 

(i) the effectiveness of the internal control structure and procedures 

of the Administration; and 

(ii) the compliance of the Administration with applicable safety and 

soundness laws. 

(3) SPECIAL REPORTS.—The Secretary may require the Administrator of the 

Administration to submit other reports on the condition (including financial condition), management, activities, or operations of the Administration, as the Secretary considers appropriate. 

(4) ACCURACY.—Each report of financial condition shall contain a declaration 

by the Administrator of the Administration or any other officer designated by 

the Board of Directors of the Administration to make the declaration, that the 

report is true and correct to the best of the knowledge and belief of the officer. 

(5) AVAILABILITY OF REPORTS.—Reports required under this section shall be 

published and made publicly available as soon as is practicable after receipt by 

the Secretary. 

(j) SCOPE AND TERMINATION OF AUTHORITY.— (1) NEW OBLIGATIONS.—The Administrator of the Administration shall not initiate any new obligations under this subtitle on or after January 1, 2029. 

(2) REVERSION TO SECRETARY.—The authorities and obligations of the Administration shall revert to the Secretary on January 1, 2029. 

Subtitle J—Miscellaneous 

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

SITING. 

(a) DEFINITIONS.—In this section: 

(1) MARINE SPATIAL PLAN.—The term ‘‘marine spatial plan’’ means the analysis and allocation of ocean space for various uses to achieve ecological, economic, and social objectives, based on the principle of ecosystem-based management. 

(2) MARINE SPATIAL PLANNING.—The term ‘‘marine spatial planning’’ means 

the process of developing a marine spatial plan. 

(3) ECOSYSTEM-BASED MANAGEMENT.—The term ‘‘ecosystem-based management’’ means a management approach that ensures the future ecological and 

economic sustainability of natural resources by— 

(A) accounting for all ecosystem interactions and direct, indirect, and cumulative impacts of human activities on the ecosystem; 

(B) emphasizing protection of ecosystem structure, functions, patterns, 

and processes; and 


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(C) maintaining ecosystems in a healthy and resilient condition. 

(4) OFFSHORE RENEWABLE ENERGY.—The term ‘‘offshore renewable energy’’ 

means energy generated from offshore wind or offshore hydrokinetic (wave, 

tidal, ocean current, and tidal-current) energy technologies. 

(5) OFFSHORE RENEWABLE ENERGY FACILITY.—The term ‘‘offshore renewable 

energy facility’’ means a facility that generates offshore renewable energy or 

any offshore transmission line associated with such facility. 

(b) STUDY.— (1) IN GENERAL.—As soon as practicable after the date of enactment of this 

section, the Federal Energy Regulatory Commission, the Secretary of the Interior, and the National Oceanic and Atmospheric Administration, in consultation 

with the Council on Environmental Quality and, as appropriate, coastal States, 

regional organizations of coastal States, and relevant nongovernmental organizations, shall jointly conduct a study of the potential for marine spatial planning to facilitate the development of offshore renewable energy facilities in a 

manner that protects and maintains coastal and marine ecosystem health. 

(2) REQUIREMENTS.—The study under paragraph (1) shall include— 

(A) identification of the steps involved in regional marine spatial planning for the siting of offshore renewable energy facilities; 

(B) a recommended approach for the development of regional marine spatial plans for the siting of offshore renewable energy facilities that provides 

for— 

(i) the participation of relevant Federal agencies and State governments; 

(ii) coordination, to the maximum extent practicable, with any marine spatial planning undertaken by States; 

(iii) public input; and 

(iv) the periodic revision of such plans as necessary to account for significant new information and ensure achievement of plan objectives; 

(C) identification of required elements of such regional marine spatial 

plans, including rules that Federal agencies shall apply to applications for 

any authorizations required under existing Federal law to construct or operate offshore renewable energy facilities within areas covered by such 

plans; 

(D) an assessment of the adequacy of existing data, including baseline environmental data, to support such marine spatial planning and identification of gaps in such data and the studies needed to fill such gaps; 

(E) an assessment of the resources required to carry out such marine spatial planning; 

(F) recommended mechanisms for the formal adoption and implementation of regional marine spatial plans for the development of offshore renewable energy facilities by relevant Federal agencies; 

(G) identification of any additional authority relevant Federal agencies 

would need to adopt and implement regional marine spatial plans for the 

development of offshore renewable energy facilities; and 

(H) such other recommendations as appropriate. 

(3) REPORT.—Not later than 6 months after the date of enactment of this section, the Federal Energy Regulatory Commission, the Secretary of the Interior, 

and the National Oceanic and Atmospheric Administration shall jointly publish 

the findings and recommendations of the study conducted pursuant to this subsection and shall accept public comment for at least 30 days after such publication. Following consideration of any public comments, and not later than 8 

months after the date of enactment of this section, the Federal Energy Regulatory Commission, the Secretary of the Interior, and the National Oceanic and 

Atmospheric Administration shall jointly submit to Congress and the Council on 

Environmental Quality the findings and recommendations of the study conducted pursuant to this subsection. 

(c) ASSESSMENT OF REPORT.— 

(1) IN GENERAL.—Not later than 4 months after the date of submission of the 

report required under subsection (b)(3), the Council on Environmental Quality 

shall assess the recommendations of such report, issue a written determination 

as to whether the recommended approach to marine spatial planning should be 

implemented, and transmit such written determination to the relevant Federal 

agencies and Congress. 

(2) COORDINATION FOR RECOMMENDED APPROACH.—If the Council on Environmental Quality determines that the recommended approach to marine spatial 

planning should be implemented, the relevant Federal agencies shall implement 

such approach and complete the development of marine spatial plans pursuant 

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quired by paragraph (1), and the Council on Environmental Quality shall coordinate such implementation. At the time of the written determination required by paragraph (1), the Council on Environmental Quality shall notify 

Congress if the relevant Federal agencies lack authority to carry out any aspect 

of the recommended approach. 

(3) ALTERNATIVE APPROACH.—If the Council on Environmental Quality determines that the recommended approach to marine spatial planning should not 

be implemented, the Council on Environmental Quality shall formulate an alternative approach and submit such alternative approach to the relevant Federal agencies and Congress at the time of the written determination required 

by paragraph (1). 

(d) RELATIONSHIP TO EXISTING LAW.—Nothing in this section shall affect or be 

construed to affect any law, regulation, or memoranda of understanding governing 

the development of offshore renewable energy facilities in effect prior to the implementation of the recommended or alternative approach pursuant to subsection (c). 

(e) AUTHORIZATION.—There are authorized to be appropriated such sums as may 

be necessary to carry out this section. 

SEC. 192. CLEAN TECHNOLOGY BUSINESS COMPETITION GRANT PROGRAM. 

(a) IN GENERAL.—The Secretary of Energy is authorized to provide grants to organizations to conduct business competitions that provide incentives, training, and 

mentorship to entrepreneurs and early stage start-up companies throughout the 

United States to meet high priority economic, environmental, and energy security 

goals in areas to include energy efficiency, renewable energy, air quality, water 

quality and conservation, transportation, smart grid, green building, and waste 

management. Such competitions shall have the purpose of accelerating the development and deployment of clean technology businesses and green jobs; stimulating 

green economic development; providing business training and mentoring to early 

stage clean technology companies; and strengthening the competitiveness of United 

States clean technology industry in world trade markets. Priority shall be given to 

business competitions that are private sector led, encourage regional and interregional cooperation, and can demonstrate market-driven practices and show the 

creation of cost-effective green jobs through an annual publication of competition activities and directory of companies. 

(b) ELIGIBILITY.—An organization eligible for a grant under subsection (a) is— 

(1) any organization described in section 501(c)(3) of the Internal Revenue 

Code of 1986 and exempt from tax under section 501(a) of such Code; and 

(2) any sponsored entity of an organization described in paragraph (1) that 

is operated as a nonprofit entity. 

(c) PRIORITY.—In making grants under this section, the Secretary shall give priority to those organizations that can demonstrate broad funding support from private and other non-Federal funding sources to leverage Federal investment. 

(d) AUTHORIZATION OF APPROPRIATIONS.—For the purpose of carrying out this section, there are authorized to be appropriated $20,000,000. 

SEC. 193. NATIONAL BIOENERGY PARTNERSHIP. 

(a) IN GENERAL.—The Secretary of Energy shall establish a National Bioenergy 

Partnership to provide coordination among programs of State governments, the Federal Government, and the private sector that support the institutional and physical 

infrastructure necessary to promote the deployment of sustainable biomass fuels 

and bioenergy technologies for the United States. 

(b) PROGRAM.—The National Bioenergy Partnership shall consist of five regions, 

to be administered by the CONEG Policy Research Center, the Council of Great 

Lakes Governors, the Southern States Energy Board, the Western Governors Association, and the Pacific Regional Biomass Energy Partnership led by the Washington State University Energy Program. 

(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

for each of fiscal years 2010 through 2014 to carry out this section— 

(1) $5,000,000, to be allocated among the 5 regions described in subsection (b) 

on the basis of the number of States in each region, for distribution among the 

member States of that region based on procedures developed by the member 

States of the region; and 

(2) $2,500,000, to be allocated equally among the 5 regions described in subsection (b) for region-wide activities, including technical assistance and regional 

studies and coordination. 

SEC. 194. OFFICE OF CONSUMER ADVOCACY. 

(a) OFFICE.— 

(1) ESTABLISHMENT.—There is an Office of Consumer Advocacy established 

within the Commission to serve as an advocate for the public interest. 


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(2) DIRECTOR.—The Office shall be headed by a Director to be appointed by 

the President, who is admitted to the Federal Bar, with experience in public 

utility proceedings, and by and with the advice and consent of the Senate. 

(3) DUTIES.—The Office may— 

(A) represent, and appeal on behalf of, energy customers on matters concerning rates or service of public utilities and natural gas companies under 

the jurisdiction of the Commission— 

(i) at hearings of the Commission; 

(ii) in judicial proceedings in the courts of the United States; and 

(iii) at hearings or proceedings of other Federal regulatory agencies 

and commissions; 

(B) monitor and review energy customer complaints and grievances on 

matters concerning rates or service of public utilities and natural gas companies under the jurisdiction of the Commission; 

(C) investigate independently, or within the context of formal proceedings, the services provided by, the rates charged by, and the valuation 

of the properties of, public utilities and natural gas companies under the 

jurisdiction of the Commission; 

(D) develop means, such as public dissemination of information, consultative services, and technical assistance, to ensure, to the maximum extent 

practicable, that the interests of energy consumers are adequately represented in the course of any hearing or proceeding described in subparagraph (A); 

(E) collect data concerning rates or service of public utilities and natural 

gas companies under the jurisdiction of the Commission; and 

(F) prepare and issue reports and recommendations. 

(4) COMPENSATION AND POWERS.—The Director may— 

(A) employ and fix the compensation of such staff personnel as is deemed 

necessary; and 

(B) procure temporary and intermittent services as needed. 

(5) ACCESS TO INFORMATION.—Each department, agency, and instrumentality 

of the Federal Government is authorized and directed to furnish to the Director 

such reports and other information as he deems necessary to carry out his functions under this section. 

(b) CONSUMER ADVOCACY ADVISORY COMMITTEE.— 

(1) ESTABLISHMENT.—The Director shall establish an advisory committee to 

be known as Consumer Advocacy Advisory Committee (in this section referred 

to as the ‘‘Advisory Committee’’) to review rates, services, and disputes and to 

make recommendations to the Director. 

(2) COMPOSITION.—The Director shall appoint 5 members to the Advisory 

Committee including— 

(A) 2 individuals representing State Utility Consumer Advocates; and 

(B) 1 individual, from a nongovernmental organization, representing consumers. 

(3) MEETINGS.—The Advisory Committee shall meet at such frequency as may 

be required to carry out its duties. 

(4) REPORTS.—The Director shall provide for publication of recommendations 

of the Advisory Committee on the public website established for the Office. 

(5) DURATION.—Notwithstanding any other provision of law, the Advisory 

Committee shall continue in operation during the period in which the Office exists. 

(6) APPLICATION OF FACA.—Except as otherwise specifically provided, the Advisory Committee shall be subject to the Federal Advisory Committee Act. 

(c) DEFINITIONS.— 

(1) COMMISSION.—The term ‘‘Commission’’ means the Federal Energy Regulatory Commission. 

(2) ENERGY CUSTOMER.—The term ‘‘energy customer’’ means a residential customer or a small commercial customer that receives products or services from 

a public utility or natural gas company under the jurisdiction of the Commission. 

(3) NATURAL GAS COMPANY.—The term ‘‘natural gas company’’ has the meaning given the term in section 2 of the Natural Gas Act (15 U.S.C. 717a), as 

modified by section 601(a) of the Natural Gas Policy Act of 1978 (15 U.S.C. 

3431(a)). 

(4) OFFICE.—The term ‘‘Office’’ means the Office of Consumer Advocacy established by subsection (a)(1). 

(5) PUBLIC UTILITY.—The term ‘‘public utility’’ has the meaning given the 

term in section 201(e) of the Federal Power Act (16 U.S.C. 824(e)). 


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(6) SMALL COMMERCIAL CUSTOMER.—The term ‘‘small commercial customer’’ 

means a commercial customer that has a peak demand of not more than 1,000 

kilowatts per hour. 

(d) AUTHORIZATION OF APPROPRIATIONS.—There are authorized such sums as necessary to carry out this section. 

(e) SAVINGS CLAUSE.—Nothing in this section affects the rights or obligations of 

State Utility Consumer Advocates. 

TITLE II—ENERGY EFFICIENCY 

Subtitle A—Building Energy Efficiency Programs 

SEC. 201. GREATER ENERGY EFFICIENCY IN BUILDING CODES. 

Section 304 of the Energy Conservation and Production Act (42 U.S.C. 6833) is 

amended to read as follows: 

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

‘‘(a) ENERGY EFFICIENCY TARGETS.— 

‘‘(1) IN GENERAL.—Except as provided in paragraph (2) or (3), the national 

building code energy efficiency target for the national average percentage improvement of a building’s energy performance when built to a code meeting the 

target shall be— 

‘‘(A) effective on the date of enactment of the American Clean Energy and 

Security Act of 2009, 30 percent reduction in energy use relative to a comparable building constructed in compliance with the baseline code; 

‘‘(B) effective January 1, 2014, for residential buildings, and January 1, 

2015, for commercial buildings, 50 percent reduction in energy use relative 

to the baseline code; and 

‘‘(C) effective January 1, 2017, for residential buildings, and January 1, 

2018, for commercial buildings, and every 3 years thereafter, respectively, 

through January 1, 2029, and January 1, 2030, 5 percent additional reduction in energy use relative to the baseline code. 

‘‘(2) CONSENSUS-BASED CODES.—If on any effective date specified in paragraph 

(1)(A), (B), or (C) a successor code to the baseline codes provides for greater reduction in energy use than is required under paragraph (1), the overall percentage reduction in energy use provided by that successor code shall be the national building code energy efficiency target. 

‘‘(3) TARGETS ESTABLISHED BY SECRETARY.—The Secretary may by rule establish a national building code energy efficiency target for residential or commercial buildings achieving greater reductions in energy use than the targets prescribed in paragraph (1) or (2) if the Secretary determines that such greater reductions in energy use can be achieved with a code that is life cycle cost-justified and technically feasible. The Secretary may by rule establish a national 

building code energy efficiency target for residential or commercial buildings 

achieving a reduction in energy use that is greater than zero but less than the 

targets prescribed in paragraph (1) or (2) if the Secretary determines that such 

lesser target is the maximum reduction in energy use that can be achieved 

through a code that is life cycle cost-justified and technically feasible. 

‘‘(4) ADDITIONAL REDUCTIONS IN ENERGY USE.—Effective on January 1, 2033, 

and once every 3 years thereafter, the Secretary shall determine, after notice 

and opportunity for comment, whether further energy efficiency building code 

improvements for residential or commercial buildings, respectively, are life cycle 

cost-justified and technically feasible, and shall establish updated national 

building code energy efficiency targets that meet such criteria. 

‘‘(5) ZERO-NET-ENERGY BUILDINGS.—In setting targets under this subsection, 

the Secretary shall consider ways to support the deployment of distributed renewable energy technology, and shall seek to achieve the goal of zero-net-energy 

commercial buildings established in section 422 of the Energy Independence 

and Security Act of 2007 (42 U.S.C. 17082). 

‘‘(6) BASELINE CODE.—For purposes of this section, the term ‘baseline code’ 

means— 

‘‘(A) for residential buildings, the 2006 International Energy Conservation 

Code (IECC) published by the International Code Council; and 

‘‘(B) for commercial buildings, the code published in ASHRAE Standard 

90.1-2004. 


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‘‘(7) CONSULTATION.—In establishing the targets required by this section, the 

Secretary shall consult with the Director of the National Institute of Standards 

and Technology. 

‘‘(b) NATIONAL ENERGY EFFICIENCY BUILDING CODES.— ‘‘(1) REQUIREMENT.— ‘‘(A) IN GENERAL.—There shall be established national energy efficiency 

building codes under this subsection, for residential and commercial buildings, sufficient to meet each of the national building code energy efficiency 

targets established under subsection (a), not later than the date that is one 

year after the deadline for establishment of each such target. 

‘‘(B) EXISTING CODE.—If the Secretary finds prior to the date one year 

after the deadline for establishing a target that one or more energy efficiency building codes published by a recognized consensus-based code development organization meet or exceed the established target, the Secretary 

shall select the code that meets the target with the highest efficiency in the 

most cost-effective manner, and such code shall be the national energy efficiency building code. 

‘‘(C) REQUIREMENT TO ESTABLISH CODE.—If the Secretary does not make 

a finding under subparagraph (B), the national energy efficiency building 

code shall be established by rule by the Secretary under paragraph (2). 

‘‘(2) ESTABLISHMENT BY SECRETARY.— 

‘‘(A) PROCEDURE.—In order to establish a national energy efficiency building code as required under paragraph (1)(C), the Secretary shall— 

‘‘(i) not later than six months prior to the effective date for each target, review existing and proposed codes published or under review by 

recognized consensus-based code development organizations; 

‘‘(ii) determine the percentage of energy efficiency improvements that 

are or would be achieved in such published or proposed code versions 

relative to the target; 

‘‘(iii) propose improvements to such published or proposed code 

versions sufficient to meet or exceed the target; and 

‘‘(iv) unless a finding is made under paragraph (1)(B) with respect to 

a code published by a recognized consensus-based code development organization, adopt a code that meets or exceeds the relevant national 

building code energy efficiency target by not later than one year after 

the effective date of such target. 

‘‘(B) CALCULATIONS.—Each code established by the Secretary under this 

paragraph shall be set at the maximum level the Secretary determines is 

life cycle cost-justified and technically feasible, in accordance with the following: 

‘‘(i) SAVINGS CALCULATIONS.—Calculations of energy savings shall 

take into account the typical lifetimes of different products, measures, 

and system configurations. 

‘‘(ii) COST-EFFECTIVENESS CALCULATIONS.—Calculations of life cycle 

cost-effectiveness shall be based on life cycle cost methods and procedures under section 544 of the National Energy Conservation Policy Act 

(42 U.S.C. 8254), but shall incorporate to the extent feasible 

externalities such as impacts on climate change and on peak energy demand that are not already incorporated in assumed energy costs. 

‘‘(C) CONSIDERATIONS.—In developing a national energy efficiency building code under this paragraph, the Secretary shall consider— 

‘‘(i) for residential codes— 

‘‘(I) residential building standards published or proposed by 

ASHRAE; 

‘‘(II) residential building codes published or proposed in the 

International Energy Conservation Code (IECC); 

‘‘(III) data from the Residential Energy Services Network 

(RESNET) on compliance measures utilized by consumers to qualify for the residential energy efficiency tax credits established 

under the Energy Policy Act of 2005; 

‘‘(IV) data and information from the Department of Energy’s 

Building America Program; 

‘‘(V) data and information from the Energy Star New Homes program; 

‘‘(VI) data and information from the New Building Institute and 

similar organizations; and 

‘‘(VII) standards for practices and materials to achieve cool roofs 

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tion in global warming from increased solar reflectance from buildings, and cool roofs criteria in State and local building codes and 

in national and local voluntary programs; and 

‘‘(ii) for commercial codes— 

‘‘(I) commercial building standards proposed by ASHRAE; 

‘‘(II) commercial building codes proposed in the International Energy Conservation Code (IECC); 

‘‘(III) the Core Performance Criteria published by the New Buildings Institute; 

‘‘(IV) data and information developed by the Director of the Commercial High-Performance Green Building Office of the Department of Energy and any public-private partnerships established 

under that Office; 

‘‘(V) data and information from the Energy Star for Buildings 

program; 

‘‘(VI) data and information from the New Building Institute, 

RESNET, and similar organizations; and 

‘‘(VII) standards for practices and materials to achieve cool roofs 

in commercial buildings, taking into consideration reduced air conditioning energy use as a function of cool roofs, the potential reduction in global warming from increased solar reflectance from buildings, and cool roofs criteria in State and local building codes and 

in national and local voluntary programs. 

‘‘(D) CONSULTATION.—In establishing any national energy efficiency building code required by this section, the Secretary shall consult with the Director of the National Institute of Standards and Technology. 

‘‘(3) CONSENSUS STANDARD ASSISTANCE.—(A) To support the development of 

consensus standards that may provide the basis for national energy efficiency 

building codes, minimize duplication of effort, encourage progress through consensus, and facilitate the development of greater building efficiency, the Secretary shall provide assistance to recognized consensus-based code development 

organizations to develop, and where the relevant code has been adopted as the 

national code, disseminate consensus based energy efficiency building codes as 

provided in this paragraph. 

‘‘(B) Upon a finding by the Secretary that a code developed by such an organization meets a target established under subsection (a), the Secretary shall— 

‘‘(i) send notice of the Secretary’s finding to all duly authorized or appointed State and local code agencies; and 

‘‘(ii) provide sufficient support to such an organization to make the code 

available on the Internet, or to accomplish distribution of such code to all 

such State and local code agencies at no cost to the State and local code 

agencies. 

‘‘(C) The Secretary may contract with such an organization and with other organizations with expertise on codes to provide training for State and local code 

officials and building inspectors in the implementation and enforcement of such 

code. 

‘‘(D) The Secretary may provide grants and other support to such an organization to— 

‘‘(i) develop appropriate refinements to such code; and 

‘‘(ii) support analysis of options for improvements in the code to meet the 

next scheduled target. 

‘‘(4) CODE DEVELOPED BY SECRETARY.—If the Secretary establishes a national 

energy efficiency building code under paragraph (2), the Secretary shall— 

‘‘(A) to the extent that such code is based on a prior code developed by 

a recognized consensus-based code development organization, negotiate and 

provide appropriate compensation to such organization for the use of the 

code materials that remain in the code established by the Secretary; and 

‘‘(B) disseminate the national energy efficiency building codes to State 

and local code officials, and support training and provide guidance and 

technical assistance to such officials as appropriate. 

‘‘(c) STATE ADOPTION OF ENERGY EFFICIENCY BUILDING CODES.— 

‘‘(1) REQUIREMENT.—Not later than 1 year after a national energy efficiency 

building code for residential or commercial buildings is established or revised 

under subsection (b), each State— 

‘‘(A) shall— 

‘‘(i) review and update the provisions of its building code regarding 

energy efficiency to meet or exceed the target met in the new national 

code, to achieve equivalent or greater energy savings; 


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‘‘(ii) document, where local governments establish building codes, 

that local governments representing not less than 80 percent of the 

State’s urban population have adopted the new national code, or have 

adopted local codes that meet or exceed the target met in the new national code to achieve equivalent or greater energy savings; or 

‘‘(iii) adopt the new national code; and 

‘‘(B) shall provide a certification to the Secretary demonstrating that energy efficiency building code provisions that apply throughout the State 

meet or exceed the target met by the new national code, to achieve equivalent or greater energy savings. 

‘‘(2) CONFIRMATION.— 

‘‘(A) REQUIREMENT.—Not later than 90 days after a State certification is 

provided under paragraph (1)(B), the Secretary shall determine whether the 

State’s energy efficiency building code provisions meet the requirements of 

this subsection. 

‘‘(B) ACCEPTANCE BY SECRETARY.—If the Secretary determines under subparagraph (A) that the State’s energy efficiency building code or codes meet 

the requirements of this subsection, the Secretary shall accept the certification. 

‘‘(C) DEFICIENCY NOTICE.—If the Secretary determines under subparagraph (A) that the State’s building code or codes do not meet the requirements of this subsection, the Secretary shall identify the deficiency in meeting the national building code energy efficiency target, and, to the extent 

possible, indicate areas where further improvement in the State’s code provisions would allow the deficiency to be eliminated. 

‘‘(D) REVISION OF CODE AND RECERTIFICATION.—A State may revise its 

code or codes and submit a recertification under paragraph (1)(B) to the 

Secretary at any time. 

‘‘(3) COMPLIANT CODE.—For the purposes of meeting the target described in 

subsection (a)(1)(A) for residential buildings, a State that adopts the code represented in California’s Title 24-2009 by the date two years after the date of 

enactment of the American Clean Energy and Security Act of 2009 shall be considered to have met the requirements of this subsection for the applicable period. 

‘‘(d) APPLICATION OF NATIONAL CODE TO STATE AND LOCAL JURISDICTIONS.— 

‘‘(1) IN GENERAL.—Upon the expiration of 1 year after a national energy efficiency building code is established under subsection (b), in any jurisdiction 

where the State has not had a certification relating to that code accepted by 

the Secretary under subsection (c)(2)(B), and the local government has not had 

a certification relating to that code accepted by the Secretary under subsection 

(e)(6)(B), the national code shall become the applicable energy efficiency building code for such jurisdiction. 

‘‘(2) STATE LEGISLATIVE ADOPTION.—In a State in which the relevant building 

energy code is adopted legislatively, the deadline in paragraph (1) shall not be 

earlier than 1 year after the first day that the legislature meets following establishment of a national energy efficiency building code. 

‘‘(3) VIOLATIONS.—Violations of this section shall be defined as follows: 

‘‘(A) If the building is subject to the requirements of a State energy efficiency building code with respect to which a certification has been accepted 

by the Secretary under subsection (c)(2)(B) or a local energy efficiency 

building code with respect to which a certification has been accepted by the 

Secretary pursuant to subsection (e)(6)(B), a violation shall be determined 

pursuant to the relevant provisions of the State or local code. 

‘‘(B) If the building is subject to the requirements of a national energy 

efficiency building code adopted under subsection (c)(1)(A)(i) or made applicable under paragraph (1) of this subsection, a violation shall be defined by 

the Secretary pursuant to subsection (g). 

‘‘(e) STATE ENFORCEMENT OF ENERGY EFFICIENCY BUILDING CODES.— 

‘‘(1) IN GENERAL.—Each State, or where applicable under State law each local 

government, shall implement and enforce applicable State or local codes with 

respect to which a certification was accepted by the Secretary under subsection 

(c)(2)(B) or paragraph (6)(B) of this subsection, or the national energy efficiency 

building codes, as provided in this subsection. 

‘‘(2) STATE CERTIFICATION.—Not later than 2 years after the date of a certification under subsection (c)(1) or the establishment of a national energy efficiency building code under subsection (b), each State shall certify that it has— 

‘‘(A) achieved compliance with— 


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‘‘(i) State codes, or, as provided under State law, local codes, with respect to which a certification was accepted by the Secretary under subsection (c)(2)(B); or 

‘‘(ii) the national energy efficiency building code, as applicable; or 

‘‘(B) for any certification submitted within 7 years after the date of enactment of the American Clean Energy and Security Act of 2009, made significant progress toward achieving such compliance. 

‘‘(3) ACHIEVING COMPLIANCE.—A State shall be considered to achieve compliance with a code described in paragraph (2)(A) if at least 90 percent of new and 

substantially renovated building space in that State in the preceding year upon 

inspection meets the requirements of the code. A certification under paragraph 

(2) shall include documentation of the rate of compliance based on— 

‘‘(A) independent inspections of a random sample of the new and substantially renovated buildings covered by the code in the preceding year; or 

‘‘(B) an alternative method that yields an accurate measure of compliance 

as determined by the Secretary. 

‘‘(4) SIGNIFICANT PROGRESS.—A State shall be considered to have made significant progress toward achieving compliance with a code described in paragraph 

(2)(A) if— 

‘‘(A) the State has developed a plan, including for hiring enforcement 

staff, providing training, providing manuals and checklists, and instituting 

enforcement programs, designed to achieve full compliance within 5 years 

after the date of the adoption of the code; 

‘‘(B) the State is taking significant, timely, and measurable action to implement that plan; 

‘‘(C) the State has not reduced its expenditures for code enforcement; and 

‘‘(D) at least 50 percent of new and substantially renovated building space 

in the State in the preceding year upon inspection meets the requirements 

of the code. 

‘‘(5) SECRETARY’S DETERMINATION.—Not later than 90 days after a State certification under paragraph (2), the Secretary shall determine whether the State 

has demonstrated that it has complied with the requirements of this subsection, 

including accurate measurement of compliance, or that it has made significant 

progress toward compliance. If such determination is positive, the Secretary 

shall accept the certification. If the determination is negative, the Secretary 

shall identify the areas of deficiency. 

‘‘(6) OUT OF COMPLIANCE.— 

‘‘(A) IN GENERAL.—Any State for which the Secretary has not accepted a 

certification under paragraph (5) by a deadline established under this subsection is out of compliance with this section. 

‘‘(B) LOCAL COMPLIANCE.—In any State that is out of compliance with this 

section as provided in subparagraph (A), a local government may be in compliance with this section by meeting all certification requirements applicable to the State. 

‘‘(C) NONCOMPLIANCE.—Any State that is not in compliance with this section, as provided in subparagraph (A), shall, until the State regains such 

compliance, be ineligible to receive— 

‘‘(i) emission allowances pursuant to subsection (h)(1); 

‘‘(ii) Federal funding in excess of that State’s share (calculated according to the allocation formula in section 363 of the Energy Policy 

and Conservation Act (42 U.S.C. 6323)) of $125,000,000 each year; and 

‘‘(iii) for— 

‘‘(I) the first year for which the State is out of compliance, 25 percent of any additional funding or other items of monetary value 

otherwise provided under the American Clean Energy and Security 

Act of 2009; 

‘‘(II) the second year for which the State is out of compliance, 50 

percent of any additional funding or other items of monetary value 

otherwise provided under the American Clean Energy and Security 

Act of 2009; 

‘‘(III) the third year for which the State is out of compliance, 75 

percent of any additional funding or other items of monetary value 

otherwise provided under the American Clean Energy and Security 

Act of 2009; and 

‘‘(IV) the fourth and subsequent years for which the State is out 

of compliance, 100 percent of any additional funding or other items 

of monetary value otherwise provided under the American Clean 

Energy and Security Act of 2009. 


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‘‘(f) FEDERAL ENFORCEMENT.—Where a State fails and local governments in that 

State also fail to enforce the applicable State or national energy efficiency building 

codes, the Secretary shall enforce such codes, as follows: 

‘‘(1) The Secretary shall establish, by rule, within 2 years after the date of 

enactment of the American Clean Energy and Security Act of 2009, an energy 

efficiency building code enforcement capability. 

‘‘(2) Such enforcement capability shall be designed to achieve 90 percent compliance with such code in any State within 1 year after the date of the Secretary’s determination that such State is out of compliance with this section. 

‘‘(3) The Secretary may set and collect reasonable inspection fees to cover the 

costs of inspections required for such enforcement. Revenue from fees collected 

shall be available to the Secretary to carry out the requirements of this section 

upon appropriation. 

‘‘(g) ENFORCEMENT PROCEDURES.—The Secretary shall propose and, not later than 

three years after the date of enactment of the American Clean Energy and Security 

Act of 2009, shall determine and adopt by rule what shall constitute violations of 

the energy efficiency building codes to be enforced pursuant to this section, and the 

penalties that shall apply to violators. To the extent that the Secretary determines 

that the authority to adopt and impose such violations and penalties by rule requires further statutory authority, the Secretary shall report such determination to 

Congress as soon as such determination is made, but not later than one year after 

the enactment of the American Clean Energy and Security Act of 2009. 

‘‘(h) FEDERAL SUPPORT.— 

‘‘(1) ALLOWANCE ALLOCATION FOR STATE COMPLIANCE.—For each vintage year 

from 2012 through 2050, the Administrator shall distribute allowances allocated 

pursuant to section 782(g)(2) of the Clean Air Act to the SEED Account for each 

State that the Secretary identifies as a State from which he has accepted the 

State’s certification under subsection (e)(5) for compliance with the then current 

national energy efficiency building codes. Such allowances shall be distributed 

according to a formula established by the Secretary as follows: 

‘‘(A) One-fifth in an equal amount to each of the 50 States and United 

States territories. 

‘‘(B) Two-fifths as a function of the relative energy use in all buildings 

in each State in the most recent year for which data is available. 

‘‘(C) Two-fifths based on the number of building construction starts recorded in each State, the number of new building permits applied for in 

each State, or other relevant available data indicating building activity in 

each State, in the judgment of the Secretary, for the year prior to the year 

of the distribution. 

‘‘(2) ALLOWANCE ALLOCATION TO LOCAL GOVERNMENTS.—In the instance that 

the Secretary certifies that one or more local governments are in compliance 

with this section pursuant to subsection (e)(6)(B), the Administrator shall provide to each such local government the portion of the emission allowances that 

would have been provided to that State as a function of the population of that 

locality as a proportion of the population of that State as a whole. 

‘‘(3) UNALLOCATED ALLOWANCES.—To the extent that allowances are not provided to State or local governments for lack of certification in any year, those 

allowances shall be added to the amount provided to those States and local governments that are certified as eligible in that year. 

‘‘(4) USE OF ALLOWANCES.—Each State or each local government shall use 

such emission allowances as it receives pursuant to this section exclusively for 

the purposes of this section, including covering a reasonable portion of the costs 

of the development, adoption, implementation, and enforcement of a State or 

local energy efficiency building code with respect to which a certification is accepted by the Secretary under subsection (c)(2)(B) or subsection (e)(6)(B), or the 

national energy efficiency building code. In a State where local governments 

provide building code enforcement, a minimum of 50 percent of the allowance 

value received pursuant to this section shall be distributed to local governments 

as a function of the relative populations of such localities. 

‘‘(i) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

to the Secretary of Energy $100,000,000 for each of fiscal years 2010 through 2020 

and such sums thereafter as may be necessary to support the purposes of this section. 

‘‘(j) ANNUAL REPORTS BY SECRETARY.—The Secretary shall annually submit to 

Congress, and publish in the Federal Register, a report on— 

‘‘(1) the status of national building energy efficiency codes; 

‘‘(2) the status of energy efficiency building code adoption and compliance in 

the States; 

‘‘(3) the implementation of this section; and 


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‘‘(4) impacts of past action under this section, and potential impacts of further 

action, on lifetime energy use by buildings, including resulting energy and cost 

savings.’’. 

SEC. 202. BUILDING RETROFIT PROGRAM. 

(a) DEFINITIONS.—For purposes of this section: 

(1) NONRESIDENTIAL BUILDING.—The term ‘‘nonresidential building’’ means a 

building with a primary use or purpose other than residential housing, including commercial offices, schools, academic and other public and private institutions, nonprofit organizations, hospitals, hotels, and houses of worship. Such 

buildings shall include mixed-use properties used for both residential and nonresidential purposes in which more than half of building floor space is nonresidential. 

(2) PERFORMANCE-BASED BUILDING RETROFIT PROGRAM.—The term ‘‘performance-based building retrofit program’’ means a program that determines building energy efficiency success based on actual measured savings after a retrofit 

is complete, as evidenced by energy invoices or evaluation protocols. 

(3) PRESCRIPTIVE BUILDING RETROFIT PROGRAM.—The term ‘‘prescriptive building retrofit program’’ means a program that projects building retrofit energy efficiency success based on the known effectiveness of measures prescribed to be 

included in a retrofit. 

(4) RECOMMISSIONING; RETROCOMMISSIONING.—The terms ‘‘recommissioning’’ 

and ‘‘retrocommissioning’’ have the meaning given those terms in section 

543(f)(1) of the National Energy Conservation Policy Act (42 U.S.C. 8253(f)(1)). 

(5) RESIDENTIAL BUILDING.—The term ‘‘residential building’’ means a building 

whose primary use is residential. Such buildings shall include single-family 

homes (both attached and detached), owner-occupied units in larger buildings 

with their own dedicated space-conditioning systems, and buildings used for 

both residential and nonresidential purposes in which more than half of building floor space is residential. 

(6) STATE ENERGY PROGRAM.—The term ‘‘State Energy Program’’ means the 

program under part D of title III of the Energy Policy and Conservation Act (42 

U.S.C. 6321 et seq.). 

(b) ESTABLISHMENT.—The Administrator shall develop and implement, in consultation with the Secretary of Energy, standards for a national energy and environmental building retrofit policy for single-family and multifamily residences. The Administrator shall develop and implement, in consultation with the Secretary of Energy and the Director of Commercial High-Performance Green Buildings, standards 

for a national energy and environmental building retrofit policy for nonresidential 

buildings. The programs to implement the residential and nonresidential policies 

based on the standards developed under this section shall together be known as the 

Retrofit for Energy and Environmental Performance (REEP) program. 

(c) PURPOSE.—The purpose of the REEP program is to facilitate the retrofitting 

of existing buildings across the United States to achieve maximum cost-effective energy efficiency improvements and significant improvements in water use and other 

environmental attributes. 

(d) FEDERAL ADMINISTRATION.— 

(1) EXISTING PROGRAMS.— In creating and operating the REEP program— 

(A) the Administrator shall make appropriate use of existing programs, 

including the Energy Star program and in particular the Environmental 

Protection Agency Energy Star for Buildings program; and 

(B) the Secretary of Energy shall make appropriate use of existing programs, including delegating authority to the Director of Commercial HighPerformance Green Buildings appointed under section 421 of the Energy 

Independence and Security Act of 2007 (42 U.S.C. 17081), who shall designate and provide funding to support a high-performance green building 

partnership consortium pursuant to subsection (f) of such section to support 

efforts under this section. 

(2) CONSULTATION AND COORDINATION.—The Administrator and the Secretary 

of Energy shall consult with and coordinate with the Secretary of Housing and 

Urban Development in carrying out the REEP program. 

(3) ASSISTANCE.—The Administrator and the Secretary of Energy shall provide consultation and assistance to State and local agencies for the establishment of revolving loan funds, loan guarantees, or other forms of financial assistance under this section. 

(e) STATE AND LOCAL ADMINISTRATION.— 

(1) DESIGNATION AND DELEGATION.—A State may designate one or more agencies or entities, including those regulated by the State, to carry out the purposes 

of this section, but shall designate one entity or individual as the principal point 


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of contact for the Administrator regarding the REEP Program. The designated 

State agency, agencies, or entities may delegate performance of appropriate elements of the REEP program, upon their request and subject to State law, to 

counties, municipalities, appropriate public agencies, and other divisions of local 

government, as well as to entities regulated by the State. In making any such 

designation or delegation, a State shall give priority to entities that administer 

existing comprehensive retrofit programs, including those under the supervision 

of State utility regulators. States shall maintain responsibility for meeting the 

standards and requirements of the REEP program. In any State that elects not 

to administer the REEP program, a unit of local government may propose to 

do so within its jurisdiction, and if the Administrator finds that such local government is capable of administering the program, the Administrator may provide allowances to that local government, prorated according to the population 

of the local jurisdiction relative to the population of the State, for purposes of 

the REEP program. 

(2) EMPLOYMENT.—States and local government entities may administer a 

REEP program in a manner that authorizes public or regulated investor-owned 

utilities, building auditors and inspectors, contractors, nonprofit organizations, 

for-profit companies, and other entities to perform audits and retrofit services 

under this section. A State may provide incentives for retrofits without direct 

participation by the State or its agents, so long as the resulting savings are 

measured and verified. A State or local administrator of a REEP program shall 

seek to ensure that sufficient qualified entities are available to support retrofit 

activities so that building owners have a competitive choice among qualified 

auditors, raters, contractors, and providers of services related to retrofits. Nothing in this section is intended to preclude or preempt the right of a building 

owner to choose the specific providers of retrofit services to engage for a retrofit 

project in that owner’s building. 

(3) EQUAL INCENTIVES FOR EQUAL IMPROVEMENT.—In general, the States 

should strive to offer the same levels of incentives for retrofits that meet the 

same efficiency improvement goals, regardless of whether the State, its agency 

or entity, or the building owner has conducted the retrofit achieving the improvement, provided the improvement is measured and verified. 

(f) ELEMENTS OF REEP PROGRAM.—The Administrator, in consultation with the 

Secretary of Energy, shall establish goals, guidelines, practices, and standards for 

accomplishing the purpose stated in subsection (c), and shall annually review and, 

as appropriate, revise such goals, guidelines, practices, and standards. The program 

under this section shall include the following: 

(1) Residential Energy Services Network (RESNET) or Building Performance 

Institute (BPI) analyst certification of residential building energy and environment auditors, inspectors, and raters, or an equivalent certification system as 

determined by the Administrator. 

(2) BPI certification or licensing by States of residential building energy and 

environmental retrofit contractors, or an equivalent certification or licensing 

system as determined by the Administrator. 

(3) Provision of BPI, RESNET, or other appropriate information on equipment 

and procedures, as determined by the Administrator, that contractors can use 

to test the energy and environmental efficiency of buildings effectively (such as 

infrared photography and pressurized testing, and tests for water use and indoor air quality). 

(4) Provision of clear and effective materials to describe the testing and retrofit processes for typical buildings. 

(5) Guidelines for offering and managing prescriptive building retrofit programs and performance-based building retrofit programs for residential and 

nonresidential buildings. 

(6) Guidelines for applying recommissioning and retrocommissioning principles to improve a building’s operations and maintenance procedures. 

(7) A requirement that building retrofits conducted pursuant to a REEP program utilize, especially in all air-conditioned buildings, roofing materials with 

high solar energy reflectance, unless inappropriate due to green roof management, solar energy production, or for other reasons identified by the Administrator, in order to reduce energy consumption within the building, increase the 

albedo of the building’s roof, and decrease the heat island effect in the area of 

the building. 

(8) Determination of energy savings in a performance-based building retrofit 

program through— 

(A) for residential buildings, comparison of before and after retrofit scores 

on the Home Energy Rating System (HERS) Index, where the final score 

is produced by an objective third party; 


hsrobinson on PROD1PC76 with HEARING
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(B) for nonresidential buildings, Environmental Protection Agency Portfolio Manager benchmarks; or 

(C) for either residential or nonresidential buildings, use of an Administrator-approved simulation program by a contractor with the appropriate 

certification, subject to appropriate software standards and verification of 

at least 15 percent of all work done, or such other percentage as the Administrator may determine. 

(9) Guidelines for utilizing the Energy Star Portfolio Manager, the Home Energy Rating System (HERS) rating system, Home Performance with Energy 

Star program approvals, and any other tools associated with the retrofit program. 

(10) Requirements and guidelines for post-retrofit inspection and confirmation 

of work and energy savings. 

(11) Detailed descriptions of funding options for the benefit of State and local 

governments, along with model forms, accounting aids, agreements, and guides 

to best practices. 

(12) Guidance on opportunities for— 

(A) rating or certifying retrofitted buildings as Energy Star buildings, or 

as green buildings under a recognized green building rating system; 

(B) assigning Home Energy Rating System (HERS) or similar ratings; 

and 

(C) completing any applicable building performance labels. 

(13) Sample materials for publicizing the program to building owners, including public service announcements and advertisements. 

(14) Processes for tracking the numbers and locations of buildings retrofitted 

under the REEP program, with information on projected and actual savings of 

energy and its value over time. 

(g) REQUIREMENTS.—As a condition of receiving allowances for the REEP program 

pursuant to this Act, a State or qualifying local government shall— 

(1) adopt the standards for training, certification of contractors, certification 

of buildings, and post-retrofit inspection as developed by the Administrator for 

residential and nonresidential buildings, respectively, except as necessary to 

match local conditions, needs, efficiency opportunities, or other local factors, or 

to accord with State laws or regulations, and then only after the Administrator 

approves such a variance; and 

(2) establish fiscal controls and accounting procedures (which conform to generally accepted government accounting principles) sufficient to ensure proper accounting during appropriate accounting periods for payments received and disbursements, and for fund balances. 

The Administrator shall conduct or require each State to have such independent financial audits of REEP-related funding as the Administrator considers necessary or 

appropriate to carry out the purposes of this section. 

(h) OPTIONS TO SUPPORT REEP PROGRAM.—The emission allowances provided 

pursuant to this Act to the States’ SEED Accounts shall support the implementation 

through State REEP programs of alternate means of creating incentives for, or reducing financial barriers to, improved energy and environmental performance in 

buildings, consistent with this section, including— 

(1) implementing prescriptive building retrofit programs and performancebased building retrofit programs; 

(2) providing credit enhancement, interest rate subsidies, loan guarantees, or 

other credit support; 

(3) providing initial capital for public revolving fund financing of retrofits, 

with repayments by beneficiary building owners over time through their tax 

payments, calibrated to create net positive cash flow to the building owner; 

(4) providing funds to support utility-operated retrofit programs with repayments over time through utility rates, calibrated to create net positive cash flow 

to the building owner, and transferable from one building owner to the next 

with the building’s utility services; 

(5) providing funds to local government programs to provide REEP services 

and financial assistance; and 

(6) other means proposed by State and local agencies, subject to the approval 

of the Administrator. 

(i) SUPPORT FOR PROGRAM.— 

(1) USE OF ALLOWANCES.—Direct Federal support for the REEP program is 

provided through the emission allowances allocated to the States’ SEED Accounts pursuant to section 132 of this Act. To the extent that a State provides 

allowances to local governments within the State to implement elements of the 

REEP Program, that shall be deemed a distribution of such allowances to units 

of local government pursuant to subsection (c)(1) of that section. 


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(2) INITIAL AWARD LIMITS.—Except as provided in paragraph (3), State and 

local REEP programs may make per-building direct expenditures for retrofit improvements, or their equivalent in indirect or other forms of financial support, 

from funds derived from the sale of allowances received directly from the Administrator in amounts not to exceed the following: 

(A) RESIDENTIAL BUILDING PROGRAM.— 

(i) AWARDS.—For residential buildings— 

(I) support for a free or low-cost detailed building energy audit 

that prescribes, as part of a energy-reducing measures sufficient to 

achieve at least a 20 percent reduction in energy use, by providing 

an incentive equal to the documented cost of such audit, but not 

more than $200, in addition to any earned by achieving a 20 percent or greater efficiency improvement; 

(II) a total of $1,000 for a combination of measures, prescribed 

in an audit conducted under subclause (I), designed to reduce energy consumption by more than 10 percent, and $2,000 for a combination of measures prescribed in such an audit, designed to reduce energy consumption by more than 20 percent; 

(III) $3,000 for demonstrated savings of 20 percent, pursuant to 

a performance-based building retrofit program; and 

(IV) $1,000 for each additional 5 percentage points of energy savings achieved beyond savings for which funding is provided under 

subclause (II) or (III). 

Funding shall not be provided under clauses (II) and (III) for the same 

energy savings. 

(ii) MAXIMUM PERCENTAGE.—Awards under clause (i) shall not exceed 

50 percent of retrofit costs for each building. For buildings with multiple residential units, awards under clause (i) shall not be greater than 

50 percent of the total cost of retrofitting the building, prorated among 

individual residential units on the basis of relative costs of the retrofit. 

(iii) ADDITIONAL AWARDS.—Additional awards may be provided for 

purposes of increasing energy efficiency, for buildings achieving at least 

20 percent energy savings using funding provided under clause (i), in 

the form of grants of not more than $600 for measures projected or 

measured (using an appropriate method approved by the Administrator) to achieve at least 35 percent potable water savings through 

equipment or systems with an estimated service life of not less than 

seven years, and not more than an additional $20 may be provided for 

each additional one percent of such savings, up to a maximum total 

grant of $1,200. 

(B) NONRESIDENTIAL BUILDING PROGRAM.— 

(i) AWARDS.—For nonresidential buildings— 

(I) support for a free or low-cost detailed building energy audit 

that prescribes, as part of a energy-reducing measures sufficient to 

achieve at least a 20 percent reduction in energy use, by providing 

an incentive equal to the documented cost of such audit, but not 

more than $500, in addition to any award earned by achieving a 

20 percent or greater efficiency improvement; 

(II) $0.15 per square foot of retrofit area for demonstrated energy 

use reductions from 20 percent to 30 percent; 

(III) $0.75 per square foot for demonstrated energy use reductions from 30 percent to 40 percent; 

(IV) $1.60 per square foot for demonstrated energy use reductions from 40 percent to 50 percent; and 

(V) $2.50 per square foot for demonstrated energy use reductions 

exceeding 50 percent. 

(ii) MAXIMUM PERCENTAGE.—Amounts provided under subclauses (II) 

through (V) of clause (i) combined shall not exceed 50 percent of the 

total retrofit cost of a building. In nonresidential buildings with multiple units, such awards shall be prorated among individual units on 

the basis of relative costs of the retrofit. 

(iii) ADDITIONAL AWARDS.—Additional awards may be provided, for 

buildings achieving at least 20 percent energy savings using funding 

provided under clause (i), as follows: 

(I) WATER.—For purposes of increasing energy efficiency, grants 

may be made for whole building potable water use reduction (using 

an appropriate method approved by the Secretary of Energy) for up 

to 50 percent of the total retrofit cost, including amounts up to— 


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(aa) $24.00 per thousand gallons per year of potable water 

savings of 40 percent or more; 

(bb) $27.00 per thousand gallons per year of potable water 

savings of 50 percent or more; and 

(cc) $30.00 per thousand gallons per year of potable water 

savings of 60 percent or more. 

(II) ENVIRONMENTAL IMPROVEMENTS.—Additional awards of up to 

$1,000 may be granted for the inclusion of other environmental attributes that the Secretary, in consultation with the Administrator, 

identifies as contributing to energy efficiency. Such attributes may 

include, but are not limited to waste diversion and the use of environmentally preferable materials (including salvaged, renewable, or 

recycled materials, and materials with no or low-VOC content). The 

Administrator may recommend that States develop such standards 

as are necessary to account for local or regional conditions that 

may affect the feasibility or availability of identified resources and 

attributes. 

(iv) INDOOR AIR QUALITY MINIMUM.—Nonresidential buildings receiving incentives under this section must satisfy at a minimum the most 

recent version of ASHRAE Standard 62.1 for ventilation, or the equivalent as determined by the Administrator. A State may issue a waiver 

from this requirement to a building project on a showing that such 

compliance is infeasible due to the physical constraints of the building’s 

existing ventilation system, or such other limitations as may be specified by the Administrator. 

(C) HISTORIC BUILDINGS.—Notwithstanding subparagraphs (A) and (B), a 

building in or eligible for the National Register of Historic Places shall be 

eligible for awards under this paragraph in amounts up to 120 percent of 

the amounts set forth in subparagraphs (A) and (B). 

(D) SUPPLEMENTAL SUPPORT.—State and local governments may supplement the per-building expenditures under this paragraph with funding 

from other sources. 

(3) ADJUSTMENT.—The Administrator may adjust the specific dollar limits 

funded by the sale of allowances pursuant to paragraph (2) in years subsequent 

to the second year after the date of enactment of this Act, and every 2 years 

thereafter, as the Administrator determines necessary to achieve optimum costeffectiveness and to maximize incentives to achieve energy efficiency within the 

total building award amounts provided in that paragraph, and shall publish and 

hold constant such revised limits for at least 2 years. 

(j) REPORT TO CONGRESS.—The Administrator shall conduct an annual assessment 

of the achievements of the REEP program in each State, shall prepare an annual 

report of such achievements and any recommendations for program modifications, 

and shall provide such report to Congress at the end of each fiscal year during 

which funding or other resources were made available to the States for the REEP 

Program. 

(k) OTHER SOURCES OF FEDERAL SUPPORT.— 

(1) ADDITIONAL STATE ENERGY PROGRAM FUNDS.—Any Federal funding provided to a State Energy Program that is not required to be expended for a different federally designated purpose may be used to support a REEP program. 

(2) PROGRAM ADMINISTRATION.—State Energy Offices or designated State 

agencies may expend up to 10 percent of available allowance value provided 

under this section for program administration. 

(3) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated for the purposes of this section, for each of fiscal years 2010, 2011, 2012, 

and 2013— 

(A) $50,000,000 to the Administrator for program administration costs; 

and 

(B) $20,000,000 to the Secretary of Energy for program administration 

costs. 

SEC. 203. ENERGY EFFICIENT MANUFACTURED HOMES. 

(a) DEFINITIONS.—In this section: 

(1) MANUFACTURED HOME.—The term ‘‘manufactured home’’ has the meaning 

given such term in section 603 of the National Manufactured Housing Construction and Safety Standards Act of 1974 (42 U.S.C. 5402). 

(2) ENERGY STAR QUALIFIED MANUFACTURED HOME.—The term ‘‘Energy Star 

qualified manufactured home’’ means a manufactured home that has been designed, produced, and installed in accordance with Energy Star’s guidelines by 

an Energy Star certified plant. 


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(b) PURPOSE.—The purpose of this section is to assist low-income households residing in manufactured homes constructed prior to 1976 to save energy and energy 

expenditures by providing support toward the purchase of new Energy Star qualified manufactured homes. 

(c) STATE IMPLEMENTATION OF PROGRAM.— (1) MANUFACTURED HOME REPLACEMENT PROGRAM.—Any State may provide to 

the owner of a manufactured home constructed prior to 1976 a rebate to use 

toward the purchase of a new Energy Star qualified manufactured home pursuant to this section. 

(2) USE OF ALLOWANCES.—Direct Federal support for the program established 

in this section is provided through the emission allowances allocated to the 

States’ SEED Accounts pursuant to section 132 of this Act. To the extent that 

a State provides allowances to local governments within the State to implement 

this program, that shall be deemed a distribution of such allowances to units 

of local government pursuant to subsection (c)(1) of that section. 

(3) REBATES.— (A) PRIMARY RESIDENCE REQUIREMENT.—A rebate described under paragraph (1) may only be made to an owner of a manufactured home constructed prior to 1976 that is used on a year-round basis as a primary residence. 

(B) DISMANTLING AND REPLACEMENT.—A rebate described under paragraph (1) may be made only if the manufactured home constructed prior to 

1976 will be— 

(i) rendered unusable for human habitation (including appropriate recycling); and 

(ii) replaced, in the same general location, as determined by the applicable State agency, with an Energy Star qualified manufactured 

home. 

(C) SINGLE REBATE.—A rebate described under paragraph (1) may not be 

provided to any owner of a manufactured home constructed prior to 1976 

that was or is a member of a household for which any other member of the 

household was provided a rebate pursuant to this section. 

(D) ELIGIBLE HOUSEHOLDS.—To be eligible to receive a rebate described 

under paragraph (1), an owner of a manufactured home constructed prior 

to 1976 shall demonstrate to the applicable State agency that the total income of all members the owner’s household does not exceed 200 percent of 

the Federal poverty level for income in the applicable area. 

(E) ADVANCE AVAILABILITY.—A rebate may be provided under this section 

in a manner to facilitate the purchase of a new Energy Star qualified manufactured home. 

(4) REBATE LIMITATION.—Rebates provided by States under this section shall 

not exceed $7,500 per manufactured home from any value derived from the use 

of emission allowances provided to the State pursuant to section 132. 

(5) USE OF STATE FUNDS.—A State providing rebates under this section may 

supplement the amount of such rebates under paragraph (4) by any additional 

amount is from State funds and other sources, including private donations or 

grants from charitable organizations. 

(6) COORDINATION WITH SIMILAR PROGRAMS.— 

(A) STATE PROGRAMS.—A State conducting an existing program that has 

the purpose of replacing manufactured homes constructed prior to 1976 

with Energy Star qualified manufactured homes, may use allowance value 

provided under section 782 of the Clean Air Act to support such a program, 

provided such funding does not exceed the rebate limitation amount under 

paragraph (4). 

(B) FEDERAL PROGRAMS.—The Secretary of Energy shall coordinate with 

and seek to achieve the purpose of this section through similar Federal programs including— 

(i) the Weatherization Assistance Program under part A of title IV 

of the Energy Conservation and Production Act (42 U.S.C. 6861 et 

seq.); and 

(ii) the program under part D of title III of the Energy Policy and 

Conservation Act (42 U.S.C. 6321 et seq.). 

(C) COORDINATION WITH OTHER STATE AGENCIES.—A State agency using 

allowance value to administer the program under this section may coordinate its efforts, and share funds for administration, with other State agencies involved in low-income housing programs. 

(7) ADMINISTRATIVE EXPENSES.—A State using allowance value under this section may expend not more than 10 percent of such value for administrative expenses related to this program. 


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SEC. 204. BUILDING ENERGY PERFORMANCE LABELING PROGRAM. 

(a) ESTABLISHMENT.— 

(1) PURPOSE.—The Administrator shall establish a building energy performance labeling program with broad applicability to the residential and commercial markets to enable and encourage knowledge about building energy performance by owners and occupants and to inform efforts to reduce energy consumption nationwide. 

(2) COMPONENTS.—In developing such program, the Administrator shall— 

(A) consider existing programs, such as Environmental Protection Agency’s Energy Star program, the Home Energy Rating System (HERS) Index, 

and programs at the Department of Energy; 

(B) support the development of model performance labels for residential 

and commercial buildings; and 

(C) utilize incentives and other means to spur use of energy performance 

labeling of public and private sector buildings nationwide. 

(b) DATA ASSESSMENT FOR BUILDING ENERGY PERFORMANCE.— 

(1) INITIAL REPORT.—Not later than 90 days after the date of enactment of 

this Act, the Administrator shall provide to Congress, as well as to the Secretary of Energy and the Office of Management and Budget, a report identifying— 

(A) all principal building types for which statistically significant energy 

performance data exists to serve as the basis of measurement protocols and 

labeling requirements for achieved building energy performance; and 

(B) those building types for which additional data are required to enable 

the development of such protocols and requirements. 

(2) ADDITIONAL REPORTS.—Additional updated reports shall be provided under 

this subsection as often as The Administrator considers practicable, but not less 

than every 2 years. 

(c) BUILDING DATA ACQUISITION.— 

(1) RESOURCE REQUIREMENTS.—For all principal building types identified 

under subsection (b), the Secretary of Energy, not later than 90 days after a 

report by the Administrator under subsection (b), shall provide to Congress, the 

Administrator, and the Office of Management and Budget a statement of additional resources needed, if any, to fully develop the relevant data, as well as 

the anticipated timeline for data development. 

(2) CONSULTATION.—The Secretary of Energy shall consult with the Administrator concerning the Administrator’s ability to use data series for these additional building types to support the achieved performance component in the labeling program. 

(3) IMPROVEMENTS TO BUILDING ENERGY CONSUMPTION DATABASES.— 

(A) COMMERCIAL DATABASE.—The Secretary of Energy shall support improvements to the Commercial Buildings Energy Consumption Survey 

(CBECS) as authorized by section 205(k) of the Department of Energy Organization Act (42 U.S.C. 7135(k))— 

(i) to enable complete and robust data for the actual energy performance of principal building types currently covered by survey; 

(ii) to cover additional building types as identified by the Administrator under subsection (b)(1)(B), to enable the development of achieved 

performance measurement protocols are developed for at least 90 percent of all major commercial building types within 5 years after the 

date of enactment of this Act; and 

(iii) to include third-party audits of random data samplings to ensure 

the quality and accuracy of survey information. 

(B) RESIDENTIAL DATABASES.—The Administrator, in consultation with 

the Energy Information Administration and the Secretary of Energy, shall 

support improvements to the Residential Energy Consumption Survey 

(RECS) as authorized by section 205(k) of the Department of Energy Organization Act (42 U.S.C. 7135(k)), or such other residential energy performance databases as the Administrator considers appropriate, to aid the development of achieved performance measurement protocols for residential 

building energy use for at least 90 percent of the residential market within 

5 years after the date of enactment of this Act. 

(C) CONSULTATION.—The Secretary of Energy and the Administrator shall 

consult with public, private, and nonprofit sector representatives from the 

building industry and real estate industry to assist in the evaluation and 

improvement of building energy performance databases and labeling programs. 

(d) IDENTIFICATION OF MEASUREMENT PROTOCOLS FOR ACHIEVED PERFORMANCE.— 


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(1) PROPOSED PROTOCOLS AND REQUIREMENTS.—At the earliest practicable 

date, but not later than 1 year after identifying a building type under subsection (b)(1)(A), the Administrator shall propose a measurement protocol for 

that building type and a requirement detailing how to use that protocol in completing applicable commercial or residential performance labels created pursuant to this section. 

(2) FINAL RULE.—After providing for notice and comment, the Administrator 

shall publish a final rule containing a measurement protocol and the corresponding requirements for applying that protocol. Such a rule— 

(A) shall define the minimum period for measurement of energy use by 

buildings of that type and other details for determining achieved performance, to include leased buildings or parts thereof; 

(B) shall identify necessary data collection and record retention requirements; and 

(C) may specify transition rules and exemptions for classes of buildings 

within the building type. 

(e) PROCEDURES FOR EVALUATING DESIGNED PERFORMANCE.—The Administrator 

shall develop protocols for evaluating the designed performance of individual building types. The Administrator may conduct such feasibility studies and demonstration projects as are necessary to evaluate the sufficiency of proposed protocols for 

designed performance. 

(f) CREATION OF BUILDING ENERGY PERFORMANCE LABELING PROGRAM.— 

(1) MODEL LABEL.—Not later than 1 year after the date of enactment of this 

Act, the Administrator shall propose a model building energy label that provides a format— 

(A) to display achieved performance and designed performance data; 

(B) that may be tailored for residential and commercial buildings, and for 

single-occupancy and multitenanted buildings; and 

(C) to display other appropriate elements identified during the development of measurement protocols under subsections (d) and (e). 

(2) INCLUSIONS.—Nothing in this section shall require the inclusion on such 

a label of designed performance data where impracticable or not cost effective, 

or to preclude the display of both achieved performance and designed performance data for a particular building where both such measures are available, 

practicable, and cost effective. 

(3) EXISTING PROGRAMS.—In developing the model label, the Administrator 

shall consider existing programs, including— 

(A) the Environmental Protection Agency’s Energy Star Portfolio Manager program and the California HERS II Program Custom Approach for 

the achieved performance component of the label; 

(B) the Home Energy Rating System (HERS) Index system for the designed performance component of the label; and 

(C) other Federal and State programs, including the Department of Energy’s related programs on building technologies and those of the Federal Energy Management Program. 

(4) FINAL RULE.—After providing for notice and comment, the Administrator 

shall publish a final rule containing the label applicable to covered building 

types. 

(g) DEMONSTRATION PROJECTS FOR LABELING PROGRAM.— 

(1) IN GENERAL.—The Administrator shall conduct building energy performance labeling demonstration projects for different building types— 

(A) to ensure the sufficiency of the current Commercial Buildings Energy 

Consumption Survey and other data to serve as the basis for new measurement protocols for the achieved performance component of the building energy performance labeling program; 

(B) to inform the development of measurement protocols for building 

types not currently covered by the Commercial Buildings Energy Consumption Survey; and 

(C) to identify any additional information that needs to be developed to 

ensure effective use of the model label. 

(2) PARTICIPATION.—Such demonstration projects shall include participation 

of— 

(A) buildings from diverse geographical and climate regions; 

(B) buildings in both urban and rural areas; 

(C) single-family residential buildings; 

(D) multihousing residential buildings with more than 50 units, including 

at least one project that provides affordable housing to individuals of diverse incomes; 

(E) single-occupant commercial buildings larger than 30,000 square feet; 


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(F) multitenanted commercial buildings larger than 50,000 square feet; 

and 

(G) buildings from both the public and private sectors. 

(3) PRIORITY.—Priority in the selection of demonstration projects shall be 

given to projects that facilitate large-scale implementation of the labeling program for samples of buildings across neighborhoods, geographic regions, cities, 

or States. 

(4) FINDINGS.—The Administrator shall report any findings from demonstration projects under this subsection, including an identification of any areas of 

needed data improvement, to the Department of Energy’s Energy Information 

Administration and Building Technologies Program. 

(5) COORDINATION.—The Administrator and the Secretary of Energy shall coordinate demonstration projects undertaken pursuant to this subsection with 

those undertaken as part of the Zero-Net-Energy Commercial Buildings Initiative adopted under section 422 of the Energy Independence and Security Act of 

2007 (42 U.S.C. 17082). 

(h) IMPLEMENTATION OF LABELING PROGRAM.— (1) IN GENERAL.—The Administrator, in consultation with the Secretary of 

Energy, shall work with all State Energy Offices established pursuant to part 

D of title III of the Energy Policy and Conservation Act (42 U.S.C. 6321 et seq.) 

or other State authorities as necessary for the purpose of implementing the labeling program established under this section for commercial and residential 

buildings. 

(2) OUTREACH TO LOCAL AUTHORITIES.—The Administrator shall, acting in 

consultation and coordination with the respective States, encourage use of the 

labeling program by counties and other localities to broaden access to information about building energy use, for example, through disclosure of building label 

contents in tax, title, and other records those localities maintain. For this purpose, the Administrator shall develop an electronic version of the label and information that can be readily transmitted and read in widely-available computer programs but is protected from unauthorized manipulation. 

(3) MEANS OF IMPLEMENTATION.—In adopting the model labeling program established under this section, a State shall seek to ensure that labeled information be made accessible to the public in a manner so that owners, lenders, tenants, occupants, or other relevant parties can utilize it. Such accessibility may 

be accomplished through— 

(A) preparation, and public disclosure of the label through filing with tax 

and title records at the time of— 

(i) a building audit conducted with support from Federal or State 

funds; 

(ii) a building energy-efficiency retrofit conducted in response to such 

an audit; 

(iii) a final inspection of major renovations or additions made to a 

building in accordance with a building permit issued by a local government entity; 

(iv) a sale that is recorded for title and tax purposes consistent with 

paragraph (8); 

(v) a new lien recorded on the property for more than a set percentage of the assessed value of the property, if that lien reflects public financial assistance for energy-related improvements to that building; or 

(vi) a change in ownership or operation of the building for purposes 

of utility billing; or 

(B) other appropriate means. 

(4) STATE IMPLEMENTATION OF PROGRAM.— 

(A) ELIGIBILITY.—A State may become eligible to utilize allowance value 

to implement this program by— 

(i) adopting by statute or regulation a requirement that buildings be 

assessed and labeled, consistent with the labeling requirements of the 

program established under this section; or 

(ii) adopting a plan to implement a model labeling program consistent with this section within one year of enactment of this Act, including the establishment of that program within 3 years after the date 

of enactment of this Act, and demonstrating continuous progress under 

that plan. 

(B) USE OF ALLOWANCES.—Direct Federal support for the program established in this section is provided through the emission allowances allocated 

to the States’ SEED Accounts pursuant to section 132 of this Act. To the 

extent that a State provides allowances to local governments within the 

State to implement this program, that shall be deemed a distribution of 


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such allowances to units of local government pursuant to subsection (c)(1) 

of that section. 

(5) GUIDANCE.—The Administrator may create or identify model programs 

and resources to provide guidance to offer to States and localities for creating 

labeling programs consistent with the model program established under this 

section. 

(6) PROGRESS REPORT.—The Administrator, in consultation with the Secretary 

of Energy, shall provide a progress report to Congress not later than 3 years 

after the date of enactment of this Act that— 

(A) evaluates the effectiveness of efforts to advance use of the model labeling program by States and localities; 

(B) recommends any legislative changes necessary to broaden the use of 

the model labeling program; and 

(C) identifies any changes to broaden the use of the model labeling program that the Administrator has made or intends to make that do not require additional legislative authority. 

(7) STATE INFORMATION.—The Administrator may require States to report to 

the Administrator information that the Administrator requires to provide the 

report required under paragraph (6). 

(8) PREVENTION OF DISRUPTION OF SALES TRANSACTIONS.—No State shall implement a new labeling program pursuant to this section in a manner that requires the labeling of a building to occur after a contract has been executed for 

the sale of that building and before the sales transaction is completed. 

(i) IMPLEMENTATION OF LABELING PROGRAM IN FEDERAL BUILDINGS.— 

(1) USE OF LABELING PROGRAM.—The Secretary of Energy and the Administrator shall use the labeling program established under this section to evaluate 

energy performance in the facilities of the Department of Energy and the Environmental Protection Agency, respectively, to the extent practicable, and shall 

encourage and support implementation efforts in other Federal agencies. 

(2) ANNUAL PROGRESS REPORT.—The Secretary of Energy and Administrator 

shall provide an annual progress report to Congress and the Office of Management and Budget detailing efforts to implement this subsection, as well as any 

best practices or needed resources identified as a result of such efforts. 

(j) PUBLIC OUTREACH.—The Secretary of Energy and the Administrator, in consultation with nonprofit and industry stakeholders with specialized expertise, and 

in conjunction with other energy efficiency public awareness efforts, shall establish 

a business and consumer education program to increase awareness about the importance of building energy efficiency and to facilitate widespread use of the labeling 

program established under this section. 

(k) DEFINITIONS.—In this section: 

(1) BUILDING TYPE.—The term ‘‘building type’’ means a grouping of buildings 

as identified by their principal building activities, or as grouped by their use, 

including office buildings, laboratories, libraries, data centers, retail establishments, hotels, warehouses, and educational buildings. 

(2) MEASUREMENT PROTOCOL.—The term ‘‘measurement protocol’’ means the 

methodology, prescribed by the Administrator, for defining a benchmark for 

building energy performance for a specific building type and for measuring that 

performance against the benchmark. 

(3) ACHIEVED PERFORMANCE.—The term ‘‘achieved performance’’ means the 

actual energy consumption of a building as compared to a baseline building of 

the same type and size, determined by actual consumption data normalized for 

appropriate variables. 

(4) DESIGNED PERFORMANCE.—The term ‘‘designed performance’’ means the 

energy consumption performance a building would achieve if operated consistent with its design intent for building energy use, utilizing a standardized 

set of operational conditions informed by data collected or confirmed during an 

energy audit. 

(l) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated— 

(1) to the Administrator $50,000,000 for implementation of this section for 

each fiscal year from 2010 through 2020; and 

(2) to the Secretary of Energy $20,000,000 for implementation of this section 

for fiscal year 2010 and $10,000,000 for fiscal years 2011 through 2020. 

SEC. 205. TREE PLANTING PROGRAMS. 

(a) FINDINGS.—The Congress finds that— 

(1) the utility sector is the largest single source of greenhouse gas emissions 

in the United States today, producing approximately one-third of the country’s 

emissions; 


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(2) heating and cooling homes accounts for nearly 60 percent of residential 

electricity usage in the United States; 

(3) shade trees planted in strategic locations can reduce residential cooling 

costs by as much as 30 percent; 

(4) shade trees have significant clean-air benefits associated with them; 

(5) every 100 healthy large trees removes about 300 pounds of air pollution 

(including particulate matter and ozone) and about 15 tons of carbon dioxide 

from the air each year; 

(6) tree cover on private property and on newly-developed land has declined 

since the 1970s, even while emissions from transportation and industry have 

been rising; and 

(7) in over a dozen test cities across the United States, increasing urban tree 

cover has generated between two and five dollars in savings for every dollar invested in such tree planting. 

(b) DEFINITIONS.—As used in this section: 

(1) The term ‘‘Secretary’’ refers to the Secretary of Energy. 

(2) The term ‘‘retail power provider’’ means any entity authorized under applicable State or Federal law to generate, distribute, or provide retail electricity, 

natural gas, or fuel oil service. 

(3) The term ‘‘tree-planting organization’’ means any nonprofit or not-for-profit group which exists, in whole or in part, to— 

(A) expand urban and residential tree cover; 

(B) distribute trees for planting; 

(C) increase awareness of the environmental and energy-related benefits 

of trees; 

(D) educate the public about proper tree planting, care, and maintenance 

strategies; or 

(E) carry out any combination of the foregoing activities. 

(4) The term ‘‘tree-siting guidelines’’ means a comprehensive list of sciencebased measurements outlining the species and minimum distance required between trees planted pursuant to this section, in addition to the minimum required distance to be maintained between such trees and— 

(A) building foundations; 

(B) air conditioning units; 

(C) driveways and walkways; 

(D) property fences; 

(E) preexisting utility infrastructure; 

(F) septic systems; 

(G) swimming pools; and 

(H) other infrastructure as deemed appropriate. 

(5) The terms ‘‘small office’’, ‘‘small office buildings’’, and ‘‘small office settings’’ means nonresidential buildings or structures zoned for business purposes 

that are 20,000 square feet or less in total area. 

(c) PURPOSES.—The purpose of this section is to establish a grant program to assist retail power providers with the establishment and operation of targeted treeplanting programs in residential and small office settings, for the following purposes: 

(1) Reducing the peak-load demand for electricity from residences and small 

office buildings during the summer months through direct shading of buildings 

provided by strategically planted trees. 

(2) Reducing wintertime demand for energy from residences and small office 

buildings by blocking cold winds from reaching such structures, which lowers 

interior temperatures and drives heating demand. 

(3) Protecting public health by removing harmful pollution from the air. 

(4) Utilizing the natural photosynthetic and transpiration process of trees to 

lower ambient temperatures and absorb carbon dioxide, thus mitigating the effects of climate change. 

(5) Lowering electric bills for residential and small office ratepayers by limiting electricity consumption without reducing benefits. 

(6) Relieving financial and demand pressure on retail power providers that 

stems from large peak-load energy demand. 

(7) Protecting water quality and public health by reducing stormwater runoff 

and keeping harmful pollutants from entering waterways. 

(8) Ensuring that trees are planted in locations that limit the amount of public money needed to maintain public and electric infrastructure. 

(d) GENERAL AUTHORITY.— 

(1) ASSISTANCE.—The Secretary is authorized to provide financial, technical, 

and related assistance to retail power providers to assist with the establishment 


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of new, or continued operation of existing, targeted tree-planting programs for 

residences and small office buildings. 

(2) PUBLIC RECOGNITION INITIATIVE.—In carrying out the authority provided 

under this section, the Secretary shall also create a national public recognition 

initiative to encourage participation in tree-planting programs by retail power 

providers. 

(3) ELIGIBILITY.—Only those programs which utilize targeted, strategic treesiting guidelines to plant trees in relation to building location, sunlight, and 

prevailing wind direction shall be eligible for assistance under this section. 

(4) REQUIREMENTS.—In order to qualify for assistance under this section, a 

tree-planting program shall meet each of the following requirements: 

(A) The program shall provide free or discounted shade-providing or 

wind-reducing trees to residential and small office consumers interested in 

lowering their home energy costs. 

(B) The program shall optimize the electricity-consumption reduction benefit of each tree by planting in strategic locations around a given residence 

or small office. 

(C) The program shall either— 

(i) provide maximum amounts of shade during summer intervals 

when residences and small offices are exposed to the most sun intensity; or 

(ii) provide maximum amounts of wind protection during fall and 

winter intervals when residences and small offices are exposed to the 

most wind intensity. 

(D) The program shall use the best available science to create tree siting 

guidelines which dictate where the optimum tree species are best planted 

in locations that achieve maximum reductions in consumer energy demand 

while causing the least disruption to public infrastructure, considering overhead and underground facilities. 

(E) The program shall receive certification from the Secretary that it is 

designed to achieve the goals set forth in subparagraphs (A) through (D). 

In designating criteria for such certification, the Secretary shall collaborate 

with the United States Forest Service’s Urban and Community Forestry 

Program to ensure that certification requirements are consistent with such 

above goals. 

(5) NEW PROGRAM FUNDING SHARE.—The Secretary shall ensure that no less 

than 30 percent of the funds made available under this section are distributed 

to retail power providers which— 

(A) have not previously established or operated qualified tree-planting 

programs; or 

(B) are operating qualified tree-planting programs which were established 

no more than three years prior to the date of enactment of this section. 

(e) AGREEMENTS BETWEEN ELECTRICITY PROVIDERS AND TREE-PLANTING ORGANIZATIONS.— 

(1) GRANT AUTHORIZATION.—In providing assistance under this section, the 

Secretary is authorized to award grants only to retail power providers that have 

entered into binding legal agreements with nonprofit tree-planting organizations. 

(2) CONDITIONS OF AGREEMENT.—Those agreements between retail power providers and tree-planting organizations shall set forth conditions under which 

nonprofit tree-planting organizations shall provide targeted tree-planting programs which may require these organizations to— 

(A) participate in local technical advisory committees responsible for 

drafting general tree-siting guidelines and choosing the most effective species of trees to plant in given locations; 

(B) coordinate volunteer recruitment to assist with the physical act of 

planting trees in residential locations; 

(C) undertake public awareness campaigns to educate local residents 

about the benefits, cost savings, and availability of free shade trees; 

(D) establish education and information campaigns to encourage recipients to maintain their shade trees over the long term; 

(E) serve as the point of contact for existing and potential residential participants who have questions or concerns regarding the tree-planting program; 

(F) require tree recipients to sign agreements committing to voluntary 

stewardship and care of provided trees; 

(G) monitor and report on the survival, growth, overall health, and estimated energy savings of provided trees up until the end of their establishment period which shall be no less than five years; and 


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(H) ensure that trees planted near existing power lines will not interfere 

with energized electricity distribution lines when mature, and that no new 

trees will be planted under or adjacent to high-voltage electric transmission 

lines without prior consultation with the applicable retail power provider 

receiving assistance under this section. 

(3) LACK OF NONPROFIT ORGANIZATION.—If qualified nonprofit or not-for-profit 

tree planting organizations do not exist or operate within areas served by retail 

power providers applying for assistance under this section, the requirements of 

this section shall apply to binding legal agreements entered into by such retail 

power providers and one of the following entities: 

(A) Local municipal governments with jurisdiction over the urban or suburban forest. 

(B) The State Forester for the State in which the tree planting program 

will operate. 

(C) The United States Forest Service’s Urban and Community Forestry 

representative for the State in which the tree-planting program will operate. 

(D) A landscaping services company that is— 

(i) identified in consultation with a national or State nonprofit or notfor-profit tree-planting organization; 

(ii) licensed to operate in the State in which the tree-planting program will operate; and 

(iii) a business as defined by the United States Census Bureau’s 2007 

North American Industry Classification System Code 561730. 

(f) TECHNICAL ADVISORY COMMITTEES.— 

(1) DESCRIPTION.—In order to qualify for assistance under this section, the retail power provider shall establish and consult with a local technical advisory 

committee which shall provide advice and consultation to the program, and 

may— 

(A) design and adopt an approved plant list that emphasizes the use of 

hardy, noninvasive tree species and, where geographically appropriate, the 

use of native, or site-adapted, or low water-use shade trees; 

(B) design and adopt planting, installation, and maintenance specifications and create a process for inspection and quality control; 

(C) ensure that tree recipients are educated to care for and maintain 

their trees over the long term; 

(D) help the public become more engaged and educated in the planting 

and care of shade trees; 

(E) prioritize which sites receive trees, giving preference to locations with 

the most potential for energy conservation and secondary preference to 

areas where the average annual income is below the regional median; and 

(F) assist with monitoring and collection of data on tree health, tree survival, and energy conservation benefits generated under this section. 

(2) COMPENSATION.—Individuals serving on local technical advisory committees shall not receive compensation for their service. 

(3) COMPOSITION.—Local technical advisory committees shall be composed of 

representatives from public, private, and nongovernmental agencies with expertise in demand-side energy efficiency management, urban forestry, or arboriculture, and shall be composed of the following: 

(A) Up to 4 persons, but no less than one person, representing the retail 

power provider receiving assistance under this section. 

(B) Up to 4 persons, but no less than one person, representing the local 

tree-planting organization which will partner with the retail power provider 

to carry out this section. 

(C) Up to 3 persons representing local nonprofit conservation or environmental organizations. Preference shall be given to those entities which are 

organized under section 501(c)(3) of the Internal Revenue Code of 1986, and 

which have demonstrated expertise engaging the public in energy conservation, energy efficiency, or green building practices or a combination thereof, 

such that no single organization is represented by more than one individual 

under this paragraph. 

(D) Up to 2 persons representing a local affordable housing agency, affordable housing builder, or community development corporation. 

(E) Up to 3, but no less than one, persons representing local city or county government for each municipality where a shade tree-planting program 

will take place; at least one of these representatives shall be the city or 

county forester, city or county arborist, or functional equivalent. 

(F) Up to one person representing the local government agency responsible for management of roads, sewers, and infrastructure, including but 


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not limited to public works departments, transportation agencies, or equivalents. 

(G) Up to 3 persons representing the nursery and landscaping industry. 

(H) Up to 3 persons representing the research community or academia 

with expertise in natural resources or energy management issues. 

(4) CHAIRPERSON.—Each local technical advisory committee shall elect a 

chairperson to preside over Committee meetings, act as a liaison to governmental and other outside entities, and direct the general operation of the committee; only committee representatives from paragraph (3)(A) or paragraph 

(3)(B) of this subsection shall be eligible to act as local technical advisory committee chairpersons. 

(5) CREDENTIALS.—At least one of the members of each local technical advisory committee shall be certified with one or more of the following credentials: 

International Society of Arboriculture; Certified Arborist, ISA; Certified Arborist 

Municipal Specialist, ISA; Certified Arborist Utility Specialist, ISA; Board Certified Master Arborist; or Registered Landscape Architect recommended by the 

American Society of Landscape Architects. 

(g) COST-SHARE PROGRAM.— 

(1) FEDERAL SHARE.—The Federal share of support for projects funded under 

this section shall not exceed 50 percent of the cost of such project and shall be 

provided on a matching basis. 

(2) NON-FEDERAL SHARE.—The non-Federal share of such costs may be paid 

or contributed by any governmental or nongovernmental entity other than from 

funds derived directly or indirectly from an agency or instrumentality of the 

United States. 

(h) RULEMAKING.— 

(1) RULEMAKING PERIOD.—The Secretary shall be authorized to solicit comments and initiate a rulemaking period that shall last no more than 6 months 

after the date of enactment of this section. 

(2) COMPETITIVE GRANT RULE.—At the conclusion of the rulemaking period 

under paragraph (1), the Secretary shall promulgate a rule governing a public, 

competitive grants process through which retail power providers may apply for 

Federal support under this section. 

(i) NONDUPLICITY.—Nothing in this section shall be construed to supersede, duplicate, cancel, or negate the programs or authorities provided under section 9 of the 

Cooperative Forestry Assistance Act of 1978 (92 Stat. 369; Public Law 95–313; 16 

U.S.C. 2105). 

(j) AUTHORIZATION OF APPROPRIATIONS.—There are hereby authorized to be appropriated such sums as may be necessary for the implementation of this section. 

SEC. 206. ENERGY EFFICIENCY FOR DATA CENTER BUILDINGS. 

Section 453(c)(1) of the Energy Independence and Security Act of 2007 (42 U.S.C. 

17112(c)(1)) is amended by inserting ‘‘but not later than 2 years after the date of 

enactment of this Act’’ after ‘‘described in subsection (b)’’. 

Subtitle B—Lighting and Appliance Energy 

Efficiency Programs 

SEC. 211. LIGHTING EFFICIENCY STANDARDS. 

(a) OUTDOOR LIGHTING.— 

(1) DEFINITIONS.— 

(A) Section 340(1) of the Energy Policy and Conservation Act (42 U.S.C. 

6311(1)) is amended by striking subparagraph (L) and inserting the following: 

‘‘(L) Outdoor luminaires. 

‘‘(M) Outdoor high light output lamps. 

‘‘(N) Any other type of industrial equipment which the Secretary classifies 

as covered equipment under section 341(b).’’. 

(B) Section 340 of the Energy Policy and Conservation Act (42 U.S.C. 

6311) is amended as adding at the end the following: 

‘‘(25) The term ‘luminaire’ means a complete lighting unit consisting of one 

or more light sources and ballast(s), together with parts designed to distribute 

the light, to position and protect such lamps, and to connect such light sources 

to the power supply. 

‘‘(26) The term ‘outdoor luminaire’ means a luminaire that is listed as suitable 

for wet locations pursuant to Underwriters Laboratories Inc. standard UL 1598 

and is labeled as ‘Suitable for Wet Locations’ consistent with section 410.4(A) 


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of the National Electrical Code 2005, or is designed for roadway illumination 

and meets the requirements of Addendum A for IESNA TM-15-07: Backlight, 

Uplight, and Glare (BUG) Ratings, except for— 

‘‘(A) luminaires designed for outdoor video display images that cannot be 

used in general lighting applications; 

‘‘(B) portable luminaires designed for use at construction sites; 

‘‘(C) luminaires designed for continuous immersion in swimming pools 

and other water features; 

‘‘(D) seasonal luminaires incorporating solely individual lamps rated at 10 

watts or less; 

‘‘(E) luminaires designed to be used in emergency conditions that incorporate a means of charging a battery and a device to switch the power supply to emergency lighting loads automatically upon failure of the normal 

power supply; 

‘‘(F) components used for repair of installed luminaries and that meet the 

requirements of section 342(h); 

‘‘(G) a luminaire utilizing an electrode-less fluorescent lamp as the light 

source; 

‘‘(H) decorative gas lighting systems; 

‘‘(I) luminaires designed explicitly for lighting for theatrical purposes, including performance, stage, film production, and video production; 

‘‘(J) luminaires designed as theme elements in theme/amusement parks 

and that cannot be used in most general lighting applications; 

‘‘(K) luminaires designed explicitly for vehicular roadway tunnels designed to comply with ANSI/IESNA RP-22-05; 

‘‘(L) luminaires designed explicitly for hazardous locations meeting UL 

Standard 844; 

‘‘(M) searchlights; 

‘‘(N) luminaires that are designed to be recessed into a building, and that 

cannot be used in most general lighting applications; 

‘‘(O) a luminaire rated only for residential applications utilizing a light 

source or sources regulated under the amendments made by section 321 of 

the Energy Independence and Security Act of 2007 and with a light output 

no greater than 2,600 lumens; 

‘‘(P) a residential pole-mounted luminaire that is not rated for commercial 

use utilizing a light source or sources meeting the efficiency requirements 

of section 231 of the Energy Independence and Security Act of 2007 and 

mounted on a post or pole not taller than 10.5 feet above ground and with 

a light output not greater than 2,600 lumens; 

‘‘(Q) a residential fixture with E12 (Candelabra) bases that is rated for 

not more than 300 watts total; or 

‘‘(R) a residential fixture with medium screw bases that is rated for not 

more than 145 watts. 

‘‘(27) The term ‘outdoor high light outputlamp’ means a lamp that— 

‘‘(A) has a rated lumen output not less than 2601 lumens; 

‘‘(B) is capable of being operated at a voltage not less than 110 volts and 

not greater than 300 volts, or driven at a constant current of 6.6 amperes; 

‘‘(C) is not a Parabolic Aluminized Reflector lamp; and 

‘‘(D) is not a J-type double-ended (T-3) halogen quartz lamp, utilizing R7S bases, that is manufactured before January 1, 2015. 

‘‘(28) The term ‘outdoor lighting control’ means a device incorporated in a luminaire that receives a signal, from either a sensor (such as an occupancy sensor, motion sensor, or daylight sensor) or an input signal (including analog or 

digital signals communicated through wired or wireless technology), and can adjust the light level according to the signal.’’. 

(2) STANDARDS.— Section 342 of the Energy Policy and Conservation Act (42 

U.S.C. 6313) is amended by adding at the end the following: 

‘‘(g) OUTDOOR LUMINAIRES.— 

‘‘(1) Each outdoor luminaire manufactured on or after January 1, 2011, 

shall— 

‘‘(A) have an initial luminaire efficacy of at least 50 lumens per watt; and 

‘‘(B) be designed to use a light source with a lumen maintenance, calculated as mean rated lumens divided by initial lumens, of at least 0.6. 

‘‘(2) Each outdoor luminaire manufactured on or after January 1, 2013, 

shall— 

‘‘(A) have an initial luminaire efficacy of at least 70 lumens per watt; and 

‘‘(B) be designed to use a light source with a lumen maintenance, calculated as mean rated lumens divided by initial lumens, of at least 0.6. 


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‘‘(3) Each outdoor luminaire manufactured on or after January 1, 2015, 

shall— 

‘‘(A) have an initial luminaire efficacy of at least 80 lumens per watt; and 

‘‘(B) be designed to use a light source with a lumen maintenance, calculated as mean rated lumens divided by initial lumens, of at least 0.65. 

‘‘(4) In addition to the requirements of paragraphs (1) through (3), each outdoor luminaire manufactured on or after January 1, 2011, shall have the capability of producing at least two different light levels, including 100 percent and 

60 percent of full lamp output as tested with the maximum rated lamp per 

UL1598 or the manufacturer’s maximum specified for the luminaire under test. 

‘‘(5)(A) Not later than January 1, 2017, the Secretary shall issue a final rule 

amending the applicable standards established in paragraphs (3) and (4) if technologically feasible and economically justified. 

‘‘(B) A final rule issued under subparagraph (A) shall establish efficiency 

standards at the maximum level that is technically feasible and economically 

justified, as provided in subsections (o) and (p) of section 325. The Secretary 

may also, in such rulemaking, amend or discontinue the product exclusions listed in section 340(26)(A) through (P), or amend the lumen maintenance requirements in paragraph (3) if the Secretary determines that such amendments are 

consistent with the purposes of this Act. 

‘‘(C) If the Secretary issues a final rule under subparagraph (A) establishing 

amended standards, the final rule shall provide that the amended standards 

apply to products manufactured on or after January 1, 2020, or one year after 

the date on which the final amended standard is published, whichever is later. 

‘‘(h) OUTDOOR HIGH LIGHT OUTPUT LAMPS.—Each outdoor high light output lamp 

manufactured on or after January 1, 2012, shall have a lighting efficiency of at least 

45 lumens per watt.’’. 

(3) TEST PROCEDURES.— Section 343(a) of the Energy Policy and Conservation 

Act (42 U.S.C. 6314(a)) is amended by adding at the end the following: 

‘‘(10) OUTDOOR LIGHTING.— 

‘‘(A) With respect to outdoor luminaires and outdoor high light output 

lamps, the test procedures shall be based upon the test procedures specified 

in illuminating engineering society procedures LM–79 as of March 1, 2009, 

and LM-31, and/or other appropriate consensus test procedures developed 

by the Illuminating Engineering Society or other appropriate consensus 

standards bodies. 

‘‘(B) If illuminating engineering society procedure LM—79 is amended, 

the Secretary shall amend the test procedures established in subparagraph 

(A) as necessary to be consistent with the amended LM–79 test procedure, 

unless the Secretary determines, by rule, published in the Federal Register 

and supported by clear and convincing evidence, that to do so would not 

meet the requirements for test procedures under paragraph (2). 

‘‘(C) The Secretary may revise the test procedures for outdoor luminaires 

or outdoor high light output lamps by rule consistent with paragraph (2), 

and may incorporate as appropriate consensus test procedures developed by 

the Illuminating Engineering Society or other appropriate consensus standards bodies.’’. 

(4) PREEMPTION.— Section 345 of the Energy Policy and Conservation Act (42 

U.S.C. 6316) is amended by adding at the end the following: 

‘‘(i)(1) Except as provided in paragraph (2), section 327 shall apply to outdoor 

luminaires to the same extent and in the same manner as the section applies under 

part B. 

‘‘(2) Any State standard that is adopted on or before January 1, 2015, pursuant 

to a statutory requirement to adopt efficiency standards for reducing outdoor lighting energy use enacted prior to January 31, 2008, shall not be preempted.’’. 

(5) ENERGY EFFICIENCY STANDARDS FOR CERTAIN LUMINAIRES.—Not later than 

1 year after the date of enactment of this Act, the Secretary of Energy shall, 

in consultation with the National Electrical Manufacturers Association, collect 

data for United States sales of luminaires described in section 340(26)(H) and 

(M) of the Energy Policy and Conservation Act, to determine the historical 

growth rate. If the Secretary finds that the growth in market share of such 

luminaires exceeds twice the year to year rate of the average of the previous 

three years, then the Secretary shall within 12 months initiate a rulemaking 

to determine if such exclusion should be eliminated, if substitute products exist 

that perform more efficiently and fulfill the performance functions of these 

luminaires. 

(b) PORTABLE LIGHTING.— 

(1) PORTABLE LIGHT FIXTURES.— 


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(A) DEFINITIONS.—Section 321 of the Energy Policy and Conservation Act 

(42 U.S.C. 6291) is amended by adding at the end the following: 

‘‘(67) ART WORK LIGHT FIXTURE.—The term ‘art work light fixture’ means a 

light fixture designed only to be mounted directly to an art work and for the 

purpose of illuminating that art work. 

‘‘(68) LED LIGHT ENGINE.—The term ‘LED light engine’ or ‘LED light engine 

with integral heat sink’ means a subsystem of an LED light fixture that— 

‘‘(A) includes 1 or more LED components, including— 

‘‘(i) an LED driver power source with electrical and mechanical interfaces; and 

‘‘(ii) an integral heat sink to provide thermal dissipation; and 

‘‘(B) may be designed to accept additional components that provide aesthetic, optical, and environmental control. 

‘‘(69) LED LIGHT FIXTURE.—The term ‘LED light fixture’ means a complete 

lighting unit consisting of— 

‘‘(A) an LED light source with 1 or more LED lamps or LED light engines; and 

‘‘(B) parts— 

‘‘(i) to distribute the light; 

‘‘(ii) to position and protect the light source; and 

‘‘(iii) to connect the light source to electrical power. 

‘‘(70) LIGHT FIXTURE.—The term ‘light fixture’ means a product designed to 

provide light that includes— 

‘‘(A) at least 1 lamp socket; and 

‘‘(B) parts— 

‘‘(i) to distribute the light; 

‘‘(ii) position and protect 1 or more lamps; and 

‘‘(iii) to connect 1 or more lamps to a power supply. 

‘‘(71) PORTABLE LIGHT FIXTURE.— 

‘‘(A) IN GENERAL.—The term ‘portable light fixture’ means a light fixture 

that has a flexible cord and an attachment plug for connection to a nominal 

120-volt circuit that— 

‘‘(i) allows the user to relocate the product without any rewiring; and 

‘‘(ii) typically can be controlled with a switch located on the product 

or the power cord of the product. 

‘‘(B) EXCLUSIONS.—The term ‘portable light fixture’ does not include— 

‘‘(i) direct plug-in night lights, sun or heat lamps, medical or dental 

lights, portable electric hand lamps, signs or commercial advertising 

displays, photographic lamps, germicidal lamps, or light fixtures for 

marine use or for use in hazardous locations (as those terms are defined in ANSI/NFPA 70 of the National Electrical Code); or 

‘‘(ii) decorative lighting strings, decorative lighting outfits, or electric 

candles or candelabra without lamp shades that are covered by Underwriter Laboratories (UL) standard 588, ‘Seasonal and Holiday Decorative Products’.’’. 

(B) COVERAGE.— 

(i) IN GENERAL.—Section 322(a) of the Energy Policy and Conservation Act (42 U.S.C. 6292(a)) is amended— 

(I) by redesignating paragraph (20) as paragraph (24); and 

(II) by inserting after paragraph (19) the following: 

‘‘(20) Portable light fixtures.’’. 

(ii) CONFORMING AMENDMENTS.—Section 325(l) of the Energy Policy 

and Conservation Act (42 U.S.C. 6295(l)) is amended by striking ‘‘paragraph (19)’’ each place it appears in paragraphs (1) and (2) and inserting ‘‘paragraph (24)’’. 

(C) TEST PROCEDURES.—Section 323(b) of the Energy Policy and Conservation Act (42 U.S.C. 6293(b)) is amended by adding at the end the following: 

‘‘(19) LED FIXTURES AND LED LIGHT ENGINES.—Test procedures for LED fixtures and LED light engines shall be based on Illuminating Engineering Society 

of North America (IESNA) test procedure LM–79, Approved Method for Electrical and Photometric Testing of Solid-State Lighting Devices, and IESNA-approved test procedure for testing LED light engines.’’. 

(D) STANDARDS.—Section 325 of the Energy Policy and Conservation Act 

(42 U.S.C. 6295) is amended— 

(i) by redesignating subsection (ii) as subsection (oo); 

(ii) in subsection (oo)(2), as redesignated in clause (i) of this subparagraph, by striking ‘‘(hh)’’ each place it appears and inserting ‘‘(mm)’’; 

and 


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(iii) by inserting after subsection (hh) the following: 

‘‘(ii) PORTABLE LIGHT FIXTURES.— ‘‘(1) IN GENERAL.—Subject to paragraphs (2) and (3), portable light fixtures 

manufactured on or after January 1, 2012, shall meet 1 or more of the following 

requirements: 

‘‘(A) Be a fluorescent light fixture that meets the requirements of the Energy Star Program for Residential Light Fixtures, Version 4.2. 

‘‘(B) Be equipped with only 1 or more GU–24 line-voltage sockets, not be 

rated for use with incandescent lamps of any type (as defined in ANSI 

standards), and meet the requirements of version 4.2 of the Energy Star 

program for residential light fixtures. 

‘‘(C) Be an LED light fixture or a light fixture with an LED light engine 

and comply with the following minimum requirements: 

‘‘(i) Minimum light output: 200 lumens (initial). 

‘‘(ii) Minimum LED light engine efficacy: 40 lumens/watt installed in 

fixtures that meet the minimum light fixture efficacy of 29 lumens/watt 

or, alternatively, a minimum LED light engine efficacy of 60 lumens/ 

watt for fixtures that do not meet the minimum light fixture efficacy 

of 29 lumens/watt. 

‘‘(iii) All portable fixtures shall have a minimum LED light fixture efficacy of 29 lumens/watt and a minimum LED light engine efficacy of 

60 lumens/watt by January 1, 2016. 

‘‘(iv) Color Correlated Temperature (CCT): 2700K through 4000K. 

‘‘(v) Minimum Color Rendering Index (CRI): 75. 

‘‘(vi) Power factor equal to or greater than 0.70. 

‘‘(vii) Portable luminaries that have internal power supplies shall 

have zero standby power when the luminaire is turned off. 

‘‘(viii) LED light sources shall deliver at least 70 percent of initial 

lumens for at least 25,000 hours. 

‘‘(D)(i) Be equipped with an ANSI-designated E12, E17, or E26 screwbased socket and be prepackaged and sold together with 1 screw-based compact fluorescent lamp or screw-based LED lamp for each screw-based socket 

on the portable light fixture. 

‘‘(ii) The compact fluorescent or LED lamps prepackaged with the light 

fixture shall be fully compatible with any light fixture controls incorporated 

into the light fixture (for example, light fixtures with dimmers shall be 

packed with dimmable lamps). 

‘‘(iii) Compact fluorescent lamps prepackaged with light fixtures shall 

meet the requirements of the Energy Star Program for CFLs Version 4.0. 

‘‘(iv) Screw-based LED lamps shall comply with the minimum requirements described in subparagraph (C). 

‘‘(E) Be equipped with 1 or more single-ended, non-screw based halogen 

lamp sockets (line or low voltage), a dimmer control or high-low control, and 

be rated for a maximum of 100 watts. 

‘‘(2) REVIEW.— 

‘‘(A) REVIEW.—The Secretary shall review the criteria and standards established under paragraph (1) to determine if revised standards are technologically feasible and economically justified. 

‘‘(B) COMPONENTS.—The review shall include consideration of— 

‘‘(i) whether a separate compliance procedure is still needed for halogen fixtures described in subparagraph (E) and, if necessary, what an 

appropriate standard for halogen fixtures shall be; 

‘‘(ii) whether the specific technical criteria described in subparagraphs (A), (C), and (D)(iii) should be modified; and 

‘‘(iii) which fixtures should be exempted from the light fixture efficacy 

standard as of January 1, 2016, because the fixtures are primarily decorative in nature (as defined by the Secretary) and, even if exempted, 

are likely to be sold in limited quantities. 

‘‘(C) TIMING.— 

‘‘(i) DETERMINATION.—Not later than January 1, 2014, the Secretary 

shall publish amended standards, or a determination that no amended 

standards are justified, under this subsection. 

‘‘(ii) STANDARDS.—Any standards under this paragraph shall take effect on January 1, 2016. 

‘‘(3) ART WORK LIGHT FIXTURES.—Art work light fixtures manufactured on or 

after January 1, 2012, shall— 

‘‘(A) comply with paragraph (1); or 

‘‘(B)(i) contain only ANSI-designated E12 screw-based line-voltage sockets; 


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‘‘(ii) have not more than 3 sockets; 

‘‘(iii) be controlled with an integral high/low switch; 

‘‘(iv) be rated for not more than 25 watts if fitted with 1 socket; and 

‘‘(v) be rated for not more than 15 watts per socket if fitted with 2 or 3 

sockets. 

‘‘(4) EXCEPTION FROM PREEMPTION.—Notwithstanding section 327, Federal 

preemption shall not apply to a regulation concerning portable light fixtures 

adopted by the California Energy Commission on or before January 1, 2014.’’. 

(2) GU–24 BASE LAMPS.— 

(A) DEFINITIONS.—Section 321 of the Energy Policy and Conservation Act 

(42 U.S.C. 6291) (as amended by paragraph (1)(A)) is amended by adding 

at the end the following: 

‘‘(72) GU–24.—The term ‘GU–24’ means the designation of a lamp socket, 

based on a coding system by the International Electrotechnical Commission, 

under which— 

‘‘(A) ‘G’ indicates a holder and socket type with 2 or more projecting contacts, such as pins or posts; 

‘‘(B) ‘U’ distinguishes between lamp and holder designs of similar type 

that are not interchangeable due to electrical or mechanical requirements; 

and 

‘‘(C) 24 indicates the distance in millimeters between the electrical contact posts. 

‘‘(73) GU-24 ADAPTOR.— 

‘‘(A) IN GENERAL.—The term ‘GU-24 Adaptor’ means a 1-piece device, pigtail, wiring harness, or other such socket or base attachment that— 

‘‘(i) connects to a GU-24 socket on 1 end and provides a different type 

of socket or connection on the other end; and 

‘‘(ii) does not alter the voltage. 

‘‘(B) EXCLUSION.—The term ‘GU-24 Adaptor’ does not include a fluorescent ballast with a GU–24 base. 

‘‘(74) GU–24 BASE LAMP.—‘GU–24 base lamp’ means a light bulb designed to 

fit in a GU–24 socket.’’. 

(B) STANDARDS.—Section 325 of the Energy Policy and Conservation Act 

(42 U.S.C. 6295) (as amended by paragraph (1)(D)) is amended by inserting 

after subsection (ii) the following: 

‘‘(jj) GU–24 BASE LAMPS.— 

‘‘(1) IN GENERAL.—A GU–24 base lamp shall not be an incandescent lamp as 

defined by ANSI. 

‘‘(2) GU-24 ADAPTORS.—GU–24 adaptors shall not adapt a GU–24 socket to 

any other line voltage socket.’’. 

(3) STANDARDS FOR CERTAIN INCANDESCENT REFLECTOR LAMPS.—Section 325(i) 

of the Energy Policy and Conservation Act (42 U.S.C. 6295(i)), as amended by 

section 161(a)(12) of this Act, is amended by adding at the end the following: 

‘‘(9) CERTAIN INCANDESCENT REFLECTOR LAMPS.—(A) No later than 12 months 

after enactment of this paragraph, the Secretary shall publish a final rule establishing standards for incandescent reflector lamp types described in paragraph (1)(D). Such standards shall be effective on July 1, 2013. 

‘‘(B) Any rulemaking for incandescent reflector lamps completed after enactment of this section shall consider standards for all incandescent reflector 

lamps, inclusive of those specified in paragraph (1)(C). 

‘‘(10) REFLECTOR LAMPS.—No later than January 1, 2015, the Secretary shall 

publish a final rule establishing and amending standards for reflector lamps, 

including incandescent reflector lamps. Such standards shall be effective no 

sooner than three years after publication of the final rule. Such rulemaking 

shall consider incandescent and nonincandescent technologies. Such rulemaking 

shall consider a new metric other than lumens-per-watt based on the photometric distribution of light from such lamps.’’. 

SEC. 212. OTHER APPLIANCE EFFICIENCY STANDARDS. 

(a) STANDARDS FOR WATER DISPENSERS, HOT FOOD HOLDING CABINETS, AND PORTABLE ELECTRIC SPAS.— 

(1) DEFINITIONS.—Section 321 of the Energy Policy and Conservation Act (42 

U.S.C. 6291), as amended by section 211 of this Act, is further amended by adding at the end the following: 

‘‘(75) The term ‘water dispenser’ means a factory-made assembly that mechanically cools and heats potable water and that dispenses the cooled or heated 

water by integral or remote means. 


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‘‘(76) The term ‘bottle-type water dispenser’ means a drinking water dispenser 

designed for dispensing both hot and cold water that uses a removable bottle 

or container as the source of potable water. 

‘‘(77) The term ‘commercial hot food holding cabinet’ means a heated, fullyenclosed compartment with one or more solid or glass doors that is designed to 

maintain the temperature of hot food that has been cooked in a separate appliance. Such term does not include heated glass merchandizing cabinets, drawer 

warmers, commercial hot food holding cabinets with interior volumes of less 

than 8 cubic feet, or cook-and-hold appliances. 

‘‘(78) The term ‘portable electric spa’ means a factory-built electric spa or hot 

tub, supplied with equipment for heating and circulating water.’’. 

(2) COVERAGE.—Section 322(a) of the Energy Policy and Conservation Act (42 

U.S.C. 6292(a)), as amended by section 211(b)(1)(B) of this Act, is further 

amended by inserting after paragraph (20) the following new paragraphs: 

‘‘(21) Bottle type water dispensers. 

‘‘(22) Commercial hot food holding cabinets. 

‘‘(23) Portable electric spas.’’. 

(3) TEST PROCEDURES.—Section 323(b) of the Energy Policy and Conservation 

Act (42 U.S.C. 6293(b)), as amended by section 211(b)(1)(C) of this Act, is further amended by adding at the end the following: 

‘‘(20) BOTTLE TYPE WATER DISPENSERS.—Test procedures for bottle type water 

dispensers shall be based on ‘Energy Star Program Requirements for Bottled 

Water Coolers version 1.1’ published by the Environmental Protection Agency. 

Units with an integral, automatic timer shall not be tested using section 4D, 

‘Timer Usage,’ of the test criteria. 

‘‘(21) COMMERCIAL HOT FOOD HOLDING CABINETS.—Test procedures for commercial hot food holding cabinets shall be based on the test procedures described in ANSI/ASTM F2140–01 (Test for idle energy rate-dry test). Interior 

volume shall be based on the method shown in the Environmental Protection 

Agency’s ‘Energy Star Program Requirements for Commercial Hot Food Holding 

Cabinets’ as in effect on August 15, 2003. 

‘‘(22) PORTABLE ELECTRIC SPAS.—Test procedures for portable electric spas 

shall be based on the test method for portable electric spas contained in section 

1604, title 20, California Code of Regulations as amended on December 3, 2008. 

When the American National Standards Institute publishes a test procedure for 

portable electric spas, the Secretary shall revise the Department of Energy’s 

procedure.’’. 

(4) STANDARDS.—Section 325 of the Energy Policy and Conservation Act (42 

U.S.C. 6295), as amended by section 211 of this Act, is further amended by adding after subsection (jj) the following: 

‘‘(kk) BOTTLE TYPE WATER DISPENSERS.—Effective January 1, 2012, bottle-type 

water dispensers designed for dispensing both hot and cold water shall not have 

standby energy consumption greater than 1.2 kilowatt-hours per day. 

‘‘(ll) COMMERCIAL HOT FOOD HOLDING CABINETS.—Effective January 1, 2012, commercial hot food holding cabinets with interior volumes of 8 cubic feet or greater 

shall have a maximum idle energy rate of 40 watts per cubic foot of interior volume. 

‘‘(mm) PORTABLE ELECTRIC SPAS.—Effective January 1, 2012, portable electric 

spas shall not have a normalized standby power greater than 5(V2⁄3) Watts where 

V=the fill volume in gallons. 

‘‘(nn) REVISIONS.—The Secretary of Energy shall consider revisions to the standards in subsections (kk), (ll), and (mm) in accordance with subsection (o) and publish 

a final rule no later than January 1, 2013 establishing such revised standards, or 

make a finding that no revisions are technically feasible and economically justified. 

Any such revised standards shall take effect January 1, 2016.’’. 

(b) COMMERCIAL FURNACE EFFICIENCY STANDARDS.—Section 342(a) of the Energy 

Policy and Conservation Act (42 U.S.C. 6312(a)) is amended by inserting after paragraph (10) the following new paragraph: 

‘‘(11) WARM AIR FURNACES.—Each warm air furnace with an input rating of 

225,000 Btu per hour or more and manufactured after January 1, 2011, shall 

meet the following standard levels: 

‘‘(A) GAS-FIRED UNITS.— 

‘‘(i) Minimum thermal efficiency of 80 percent. 

‘‘(ii) Include an interrupted or intermittent ignition device. 

‘‘(iii) Have jacket losses not exceeding 0.75 percent of the input rating. 

‘‘(iv) Have either power venting or a flue damper. 

‘‘(B) OIL-FIRED UNITS.— 

‘‘(i) Minimum thermal efficiency of 81 percent. 

‘‘(ii) Have jacket losses not exceeding 0.75 percent of the input rating. 


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‘‘(iii) Have either power venting or a flue damper.’’. 

SEC. 213. APPLIANCE EFFICIENCY DETERMINATIONS AND PROCEDURES. 

(a) DEFINITION OF ENERGY CONSERVATION STANDARD.—Section 321(6) of the Energy Policy and Conservation Act (42 U.S.C. 6291(6)) is amended to read as follows: 

‘‘(6) ENERGY CONSERVATION STANDARD.— 

‘‘(A) IN GENERAL.—The term ‘energy conservation standard’ means 1 or 

more performance standards that— 

‘‘(i) for covered products (excluding clothes washers, dishwashers, 

showerheads, faucets, water closets, and urinals), prescribe a minimum 

level of energy efficiency or a maximum quantity of energy use, determined in accordance with test procedures prescribed under section 323; 

‘‘(ii) for showerheads, faucets, water closets, and urinals, prescribe a 

minimum level of water efficiency or a maximum quantity of water use, 

determined in accordance with test procedures prescribed under section 

323; and 

‘‘(iii) for clothes washers and dishwashers— 

‘‘(I) prescribe a minimum level of energy efficiency or a maximum 

quantity of energy use, determined in accordance with test procedures prescribed under section 323; and 

‘‘(II) may include a minimum level of water efficiency or a maximum quantity of water use, determined in accordance with those 

test procedures. 

‘‘(B) INCLUSIONS.—The term ‘energy conservation standard’ includes— 

‘‘(i) 1 or more design requirements, if the requirements were established— 

‘‘(I) on or before the date of enactment of this subclause; 

‘‘(II) as part of a direct final rule under section 325(p)(4); or 

‘‘(III) as part of a final rule published on or after January 1, 

2012, and 

‘‘(ii) any other requirements that the Secretary may prescribe under 

section 325(r). 

‘‘(C) EXCLUSION.—The term ‘energy conservation standard’ does not include a performance standard for a component of a finished covered product, unless regulation of the component is specifically authorized or established pursuant to this title.’’. 

(b) ADOPTING CONSENSUS TEST PROCEDURES AND TEST PROCEDURES IN USE ELSEWHERE.—Section 323(b) of the Energy Policy and Conservation Act (42 U.S.C. 

6293(b)), as amended by sections 211 and 212 of this Act, is further amended by 

adding the following new paragraph after paragraph (22): 

‘‘(23) CONSENSUS AND ALTERNATE TEST PROCEDURES.— 

‘‘(A) RECEIPT OF JOINT RECOMMENDATION OR ALTERNATE TESTING PROCEDURE.—On receipt of— 

‘‘(i) a statement that is submitted jointly by interested persons that 

are fairly representative of relevant points of view (including representatives of manufacturers of covered products, States, and efficiency advocates), as determined by the Secretary, and contains recommendations with respect to the testing procedure for a covered product; or 

‘‘(ii) a submission of a testing procedure currently in use for a covered 

product by a State, nation, or group of nations— 

‘‘(I) if the Secretary determines that the recommended testing 

procedure contained in the statement or submission is in accordance with subsection (b)(3), the Secretary may issue a final rule 

that establishes an energy or water conservation testing procedure 

that is published simultaneously with a notice of proposed rulemaking that proposes a new or amended energy or water conservation testing procedure that is identical to the testing procedure established in the final rule to establish the recommended testing 

procedure (referred to in this paragraph as a ‘direct final rule’); or 

‘‘(II) if the Secretary determines that a direct final rule cannot 

be issued based on the statement or submission, the Secretary 

shall publish a notice of the determination, together with an explanation of the reasons for the determination. 

‘‘(B) PUBLIC COMMENT.—The Secretary shall solicit public comment for a 

period of at least 110 days with respect to each direct final rule issued by 

the Secretary under subparagraph (A)(ii)(I). 

‘‘(C) WITHDRAWAL OF DIRECT FINAL RULES.— 

‘‘(i) IN GENERAL.—Not later than 120 days after the date on which 

a direct final rule issued under subparagraph (A)(ii)(I) is published in 


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the Federal Register, the Secretary shall withdraw the direct final rule 

if— 

‘‘(I) the Secretary receives 1 or more adverse public comments relating to the direct final rule under subparagraph (B)or any alternative joint recommendation; and 

‘‘(II) based on the rulemaking record relating to the direct final 

rule, the Secretary determines that such adverse public comments 

or alternative joint recommendation may provide a reasonable 

basis for withdrawing the direct final rule under paragraph (3) or 

any other applicable law. 

‘‘(ii) ACTION ON WITHDRAWAL.—On withdrawal of a direct final rule 

under clause (i), the Secretary shall— 

‘‘(I) proceed with the notice of proposed rulemaking published simultaneously with the direct final rule as described in subparagraph (A)(ii)(I); and 

‘‘(II) publish in the Federal Register the reasons why the direct 

final rule was withdrawn. 

‘‘(iii) TREATMENT OF WITHDRAWN DIRECT FINAL RULES.—A direct final 

rule that is withdrawn under clause (i) shall not be considered to be 

a final rule for purposes of subsection (b). 

‘‘(D) EFFECT OF PARAGRAPH.—Nothing in this paragraph authorizes the 

Secretary to issue a direct final rule based solely on receipt of more than 

1 statement containing recommended test procedures relating to the direct 

final rule.’’. 

(c) UPDATING TELEVISION TEST METHODS.—Section 323(b) of the Energy Policy 

and Conservation Act (42 U.S.C. 6293(b)), as amended by sections 211 and 212 of 

this Act, and subsection (b) of this section, is further amended by adding at the end 

the following new paragraph: 

‘‘(24) TELEVISIONS.—(A) On the date of enactment of this paragraph, Appendix H to Subpart B of Part 430 of the United States Code of Federal Regulations, ‘Uniform Test Method for Measuring the Energy Consumption of Television Sets’, is repealed. 

‘‘(B) No later than 12 months after the date of enactment of this paragraph 

the Secretary shall publish in the Federal Register a final rule prescribing a 

new test method for televisions.’’. 

(d) CRITERIA FOR PRESCRIBING NEW OR AMENDED STANDARDS.—(1) Section 

325(o)(2)(B)(i) of the Energy Policy and Conservation Act (42 U.S.C. 6295(o)(2)(B)(i)) 

is amended as follows: 

(A) By striking ‘‘and’’ at the end of subclause (VI). 

(B) By redesignating subclause (VII) as subclause (XI). 

(C) By inserting the following new subclauses after subclause (VI): 

‘‘(VII) the estimated value of the carbon dioxide and other emission reductions 

that will be achieved by virtue of the higher energy efficiency of the covered 

products resulting from the imposition of the standard; 

‘‘(VIII) the estimated impact of standards for a particular product on average 

consumer energy prices; 

‘‘(IX) the increased energy efficiency that may be attributable to the installation of Smart Grid technologies or capabilities in the covered products, if applicable in the determination of the Secretary; 

‘‘(X) the availability in the United States or in other nations of examples or 

prototypes of covered products that achieve significantly higher efficiency standards for energy or for water; and’’. 

(2) Section 325(o)(2)(B)(iii) of such Act is amended as follows: 

(A) By striking ‘‘three’’ and inserting ‘‘5’’. 

(B) By inserting after the first sentence the following ‘‘For products with an 

average expected useful life of less than 5 years, such rebuttable presumption 

shall be determined utilizing 75 percent of the product’s average expected useful 

life as a multiplier instead of 5.’’. 

(C) By striking the last sentence and inserting the following: ‘‘Such a presumption may be rebutted only if the Secretary finds, based on clear, convincing, and reliable evidence, that— 

‘‘(I) such standard level would cause serious and unavoidable hardship to the 

average consumer of the product, or to manufacturers supplying a significant 

portion of the market for the product, that substantially outweighs the standard 

level’s benefits; 

‘‘(II) the standard and implementing regulations cannot be designed to avoid 

or mitigate the hardship identified under subclause (I), through the adoption of 

regional standards consistent with paragraph (6) of this subsection, or other 

reasonable means consistent with this part; 


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‘‘(III) the same or substantially similar hardship would not occur under a 

standard adopted in the absence of the presumption, but that otherwise meets 

the requirements of this section; and 

‘‘(IV) the hardship cannot be avoided or mitigated pursuant the procedures 

specified in section 504 of the Department of Energy Organization Act (42 

U.S.C. 7194). 

A determination by the Secretary that the criteria triggering such presumption are 

not met, or that the criterion for rebutting the presumption are met shall not be 

taken into consideration in the Secretary’s determination of whether a standard is 

economically justified.’’. 

(e) OBTAINING APPLIANCE INFORMATION FROM MANUFACTURERS.—Section 326(d) 

of the Energy Policy and Conservation Act (42 U.S.C. 6295(d)) is amended to read 

as follows: 

‘‘(d) INFORMATION REQUIREMENTS.—(1) For purposes of carrying out this part, the 

Secretary shall publish proposed regulations not later than one year after the date 

of enactment of the American Clean Energy and Security Act of 2009, and after receiving public comment, final regulations not later than 18 months from such date 

of enactment under this part or other provision of law administered by the Secretary, which shall require each manufacturer of a covered product to submit information or reports to the Secretary on an annual basis in a form adopted by the Secretary. Such reports shall include information or data with respect to— 

‘‘(A) the manufacturers’ compliance with all requirements applicable pursuant 

to this part; 

‘‘(B) the economic impact of any proposed energy conservation standard; 

‘‘(C) the manufacturers’ annual shipments of each class or category of covered 

products, organized, to the maximum extent practicable, by— 

‘‘(i) energy efficiency, energy use, and, if applicable, water use; 

‘‘(ii) the presence or absence of such efficiency related or energy consuming operational characteristics or components as the Secretary determines are relevant for the purposes of carrying out this part; and 

‘‘(iii) the State or regional location of sale, for covered products for which 

the Secretary may adopt regional standards; and 

‘‘(D) such other categories of information as the Secretary deems relevant to 

carry out this part, including such other information as may be necessary to establish and revise test procedures, labeling rules, and energy conservation 

standards and to insure compliance with the requirements of this part. 

‘‘(2) In adopting regulations under this subsection, the Secretary shall consider existing public sources of information, including nationally recognized certification 

programs of trade associations. 

‘‘(3) The Secretary shall exercise authority under this section in a manner designed to minimize unnecessary burdens on manufacturers of covered products. 

‘‘(4) To the extent that they do not conflict with the duties of the Secretary in carrying out this part, the provisions of section 11(d) of the Energy Supply and Environmental Coordination Act of 1974 (15 U.S.C. 796(d)) shall apply with respect to 

information obtained under this subsection to the same extent and in the same 

manner as they apply with respect to other energy information obtained under such 

section.’’. 

(f) STATE WAIVER.—Section 327(c) of the Energy Policy and Conservation Act (42 

U.S.C. 6297(c)), as amended by section 161(a)(19) of this Act, is further amended 

by adding at the end the following: 

‘‘(12) is a regulation concerning standards for hot food holding cabinets, drinking water dispensers and portable electric spas adopted by the California Energy Commission on or before January 1, 2013.’’. 

(g) WAIVER OF FEDERAL PREEMPTION.—Paragraph (1) of section 327(d) of the Energy Policy and Conservation Act (42 U.S.C. 6297(d)) is amended as follows: 

(1) In subparagraph (A) by striking ‘‘State regulation’’ each place it appears 

and inserting ‘‘State statute or regulation’’. 

(2) In subparagraph (B) by adding at the end the following new sentence: ‘‘In 

making such a finding, the Secretary may not reject a petition for failure of the 

petitioning State or river basin commission to produce confidential information 

maintained by any manufacturer or distributor, or group or association of manufacturers or distributors, and which the petitioning party does not have the 

legal right to obtain.’’. 

(3) In clause (ii) of subparagraph (C) by striking ‘‘costs’’ each place it appears 

and inserting ‘‘estimated costs’’. 

(4) In subparagraph (C) by striking ‘‘within the context of the State’s energy 

plan and forecast, and,’’. 


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(h) INCLUSION OF CARBON OUTPUT ON APPLIANCE ‘‘ENERGYGUIDE’’ LABELS.—(1) 

Section 324(a)(2) of the Energy Policy and Conservation Act (42 U.S.C. 6294(a)(2)) 

is amended by adding the following at the end: 

‘‘(I)(i) Not later than 90 days after the date of enactment of this subparagraph, 

the Commission shall initiate a rulemaking to implement the additional labeling requirements specified in subsection (c)(1)(C) of this section with an effective date for 

the revised labeling requirement not later than 12 months from issuance of the final 

rule. 

‘‘(ii) Not later than 24 months after the date of enactment of this subparagraph, 

the Commission shall complete the rulemaking initiated under clause (i). 

‘‘(iii) Not later than 90 days after issuance of the final rule as provided in this 

subparagraph, the Secretary shall issue calculation methods required to effectuate 

the labeling requirements specified in subsection (c)(1)(C) of this section.’’. 

(2) Section 324(c)(1) of the Energy Policy and Conservation Act (42 U.S.C. 

6294(c)(1)) is amended— 

(A) by striking ‘‘and’’ at the end of subparagraph (A); 

(B) by striking the period at the end of subparagraph (B) and inserting a 

semicolon; and 

(C) by adding at the end the following new subparagraphs: 

‘‘(C) for products or groups of products providing a comparable function (including the group of products comprising the heating function of heat pumps 

and furnaces) among covered products listed in paragraphs (3), (4), (5), (8), (9), 

(10), and (11) of section 322(a) of this part, and others designated by the Secretary, the estimated total annual atmospheric carbon dioxide emissions (or 

their equivalent in other greenhouse gases) associated with, or caused by, the 

product, calculated utilizing— 

‘‘(i) national average energy use for the product including energy consumed at the point of end use based on test procedures developed under 

section 323 of this part; 

‘‘(ii) national average energy consumed or lost in the production, generation, transportation, storage, and distribution of energy to the point of end 

use; and 

‘‘(iii) any direct emissions of greenhouse gases from the product during 

normal use; 

‘‘(D) in determining the national average energy consumption and total 

annual atmospheric carbon dioxide emissions, the Secretary shall utilize 

Federal Government sources, including the Energy Information Administration Annual Energy Review, the Environmental Protection Agency eGRID 

data base, Environmental Protection Agency AP–42 Emission Factors as 

amended, and other sources determined to be appropriate by the Secretary; 

and 

‘‘(E) information presenting, for each product (or group of products providing the comparable function) identified in section (c)(1)(C) of this section, 

the estimated annual carbon dioxide emissions calculated within the range 

of emissions calculated for all models of the product or group according to 

its function, including those models consuming fuels and those models not 

consuming fuels.’’. 

(i) PERMITTING STATES TO SEEK INJUNCTIVE ENFORCEMENT.—(1) Section 334 of 

the Energy Policy and Conservation Act (42 U.S.C. 6304) is amended to read as follows: 

‘‘SEC. 334. JURISDICTION AND VENUE. 

‘‘(a) JURISDICTION.—The United States district courts shall have jurisdiction to restrain— 

‘‘(1) any violation of section 332; and 

‘‘(2) any person from distributing in commerce any covered product which 

does not comply with an applicable rule under section 324 or 325. 

‘‘(b) AUTHORITY.—Any action referred to in subsection (a) shall be brought by the 

Commission or by the attorney general of a State in the name of the State, except 

that— 

‘‘(1) any such action to restrain any violation of section 332(a)(3) which relates 

to requirements prescribed by the Secretary or any violation of section 332(a)(4) 

which relates to request of the Secretary under section 326(b)(2) shall be 

brought by the Secretary; and 

‘‘(2) any violation of section 332(a)(5) or 332(a)(7) shall be brought by the Secretary or by the attorney general of a State in the name of the State. 

‘‘(c) VENUE AND SERVICE OF PROCESS.—Any such action may be brought in the 

United States district court for a district wherein any act, omission, or transaction 

constituting the violation occurred, or in such court of the district wherein the deVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00107 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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fendant is found or transacts business. In any action under this section, process may 

be served on a defendant in any other district in which the defendant resides or may 

be found.’’. 

(2) The item relating to section 334 in the table of contents for such Act is amended to read as follows: 

‘‘Sec. 334. Jurisdiction and venue.’’. 

(j) TREATMENT OF APPLIANCES WITHIN BUILDING CODES.—(1) Section 327(f)(3) of 

the Energy Policy and Conservation Act (42 U.S.C. 6297(f)(3)) is amended by striking subparagraphs (B) through (G) and inserting the following: 

‘‘(B) The code meets at least one of the following requirements: 

‘‘(i) The code does not require that the covered product have an energy 

efficiency exceeding— 

‘‘(I) the applicable energy conservation standard established in or 

prescribed under section 325; 

‘‘(II) the level required by a regulation of that State for which the 

Secretary has issued a rule granting a waiver under subsection (d) of 

this section; or 

‘‘(III) the required level established in the International Energy Conservation Code or in a standard of the American Society of Heating, Refrigerating and Air-Conditioning Engineers, or by the Secretary pursuant to section 304 of the Energy Conservation and Production Act. 

‘‘(ii) If the code uses one or more baseline building designs against which 

all submitted building designs are to be evaluated and such baseline building designs contain a covered product subject to an energy conservation 

standard established in or prescribed under section 325, the baseline building designs are based on an efficiency level for such covered product which 

meets but does not exceed one of the levels specified in clause (i). 

‘‘(iii) If the code sets forth one or more optional combinations of items 

which meet the energy consumption or conservation objective, in at least 

one combination that the State has found to be reasonably achievable using 

commercially available technologies the efficiency of the covered product 

meets but does not exceed one of the levels specified in clause (i). 

‘‘(C) The credit to the energy consumption or conservation objective allowed 

by the code for installing covered products having energy efficiencies exceeding 

one of the levels specified in subparagraph (B)(i) is on a one-for-one equivalent 

energy use or equivalent energy cost basis, taking into account the typical lifetime of the product. 

‘‘(D) The energy consumption or conservation objective is specified in terms 

of an estimated total consumption of energy (which may be calculated from energy loss- or gain-based codes) utilizing an equivalent amount of energy (which 

may be specified in units of energy or its equivalent cost) and equivalent lifetimes. 

‘‘(E) The estimated energy use of any covered product permitted or required 

in the code, or used in calculating the objective, is determined using the applicable test procedures prescribed under section 323, except that the State may permit the estimated energy use calculation to be adjusted to reflect the conditions 

of the areas where the code is being applied if such adjustment is based on the 

use of the applicable test procedures prescribed under section 323 or other technically accurate documented procedure.’’. 

(2) Section 327(f)(4)(B) of the Energy Policy and Conservation Act (42 U.S.C. 

6297(f)(4)(B)) is amended to read as follows: 

‘‘(B) If a building code requires the installation of covered products with efficiencies exceeding the levels and requirements specified in paragraph (3)(B), such 

requirement of the building code shall not be applicable unless the Secretary has 

granted a waiver for such requirement under subsection (d) of this section.’’. 

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

(a) IN GENERAL.—Not later than 1 year after the date of enactment of this Act, 

the Secretary of Energy, in consultation with the Administrator, shall establish a 

program to be known as the ‘‘Best-in-Class Appliances Deployment Program’’ to— 

(1) provide bonus payments to retailers or distributors under subsection (c) 

for sales of best-in-class high-efficiency household appliance models, high-efficiency installed building equipment, and high-efficiency consumer electronics, 

with the goal of reducing life-cycle costs for consumers, encouraging innovation, 

and maximizing energy savings and public benefit; 

(2) provide bounties under subsection (d) to retailers for the replacement, retirement, and recycling of old, inefficient, and environmentally harmful products; and 

(3) provide premium awards under subsection (e) to manufacturers for developing and producing new Superefficient Best-in-Class Products. 


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(b) DESIGNATION OF BEST-IN-CLASS PRODUCT MODELS.— (1) IN GENERAL.—The Secretary of Energy shall designate product models of 

appliances, equipment, or electronics as Best-in-Class Product models. The Secretary shall publicly announce the Best-in-Class Product models designated 

under this subsection. The Secretary shall define product classes broadly and, 

except as provided in paragraph (2), shall designate as Best-in-Class Product 

models no more than the most efficient 10 percent of the commercially available 

product models in a class that demonstrate, as a group, a distinctly greater energy efficiency than the average energy efficiency of that class of appliances, 

equipment, or electronics. In designating models, the Secretary shall— 

(A) identify commercially available models in the relevant class of products; 

(B) identify the subgroup of those models that share the distinctly higher 

energy-efficiency characteristics that warrant designation as best-in-class; 

and 

(C) add other models in that class to the list of Best-in-Class Product 

models as they demonstrate their ability to meet the higher-efficiency characteristics on which the designation was made. 

(2) PERCENTAGE EXCEPTION.—If there are fewer than 10 product models in a 

class of products, the Secretary may designate one or more of such models as 

Best-in-Class Products. 

(3) REVIEW OF BEST-IN-CLASS STANDARDS.—The Secretary shall review annually the product-specific criteria for designating, and the product models that 

qualify as, Best-in-Class Products and, after notice and a 30-day comment period, make upwards adjustments in the efficiency criteria as necessary to maintain an appropriate ratio of such product models to the total number of product 

models in the product class. 

(c) BONUSES FOR SALES OF BEST-IN-CLASS PRODUCTS.— 

(1) IN GENERAL.—The Secretary of Energy shall make bonus payments to retailers or, as provided in paragraph (5)(B), distributors for the sale of Best-inClass Products. 

(2) BONUS PROGRAM.—The Secretary shall— 

(A) publicly announce the availability and amount of the bonus to be paid 

for each sale of a Best-in-Class Product of a model designated under subsection (b); and 

(B) make bonus payments in at least that amount for each Best-in-Class 

Product of that model sold during the 3-year period beginning on the date 

the model is designated under subsection (b). 

(3) UPGRADE OF BEST-IN-CLASS PRODUCT ELIGIBILITY.—In conducting a review 

under subsection (b)(3), the Secretary shall— 

(A) consider designating as a Best-in-Class Product model a Superefficient Best-in-Class Product model that has been designated pursuant to 

subsection (e); 

(B) announce any change in the bonus payment as necessary to increase 

the market share of Best-in-Class Product models; 

(C) list models that will be eligible for bonuses in the new amount; and 

(D) continue paying bonus payments at the original level, for the sale of 

any models that previously qualified as Best-in-Class Products but do not 

qualify at the new level, for the remainder of the 3-year period announced 

with the original designation. 

(4) SIZE OF INDIVIDUAL BONUS PAYMENTS.—(A) The size of each bonus payment under this subsection shall be the product of— 

(i) an amount determined by the Secretary; and 

(ii) the difference in energy consumption between the Best-in-Class 

Product and the average product in the product class. 

(B) The Secretary shall determine the amount under subparagraph (A)(i) for 

each product type, in consultation with State and utility efficiency program administrators as well as the Administrator, based on estimates of the amount of 

bonus payment that would provide significant incentive to increase the market 

share of Best-in-Class Products. 

(5) ELIGIBLE BONUS RECIPIENT.—(A) The Secretary shall ensure that not more 

than 1 bonus payment is provided under this subsection for each Best-in-Class 

Product. 

(B) The Secretary may make distributors eligible to receive bonus payments 

under this subsection for sales that are not to the final end-user, to the extent 

that the Secretary determines that for a particular product category distributors 

are well situated to increase sales of Best-in-Class Products. 

(d) BOUNTIES FOR REPLACEMENT, RETIREMENT, AND RECYCLING OF EXISTING LOWEFFICIENCY PRODUCTS.— 


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(1) IN GENERAL.—The Secretary of Energy shall make bounty payments to retailers for the replacement, retirement, and recycling of older operating low-efficiency products that might otherwise continue in operation. 

(2) BOUNTIES.—Bounties shall be payable upon documentation that the sale 

of a Best-in-Class Product was accompanied by the replacement, retirement, 

and recycling of— 

(A) an inefficient but still-functioning product; or 

(B) a nonfunctioning product containing a refrigerant, 

by the consumer to whom the Best-in-Class Product was sold. 

(3) AMOUNT.— (A) FUNCTIONING PRODUCTS.—The bounty payment payable under this 

subsection for a product described in paragraph (2)(A) shall be based on the 

difference between the estimated energy use of the product replaced and 

the energy use of an average new product in the product class, over the estimated remaining lifetime of the product that was replaced. 

(B) NONFUNCTIONING PRODUCTS CONTAINING REFRIGERANTS.—The bounty 

payment payable under this subsection for a product described in paragraph (2)(B) shall be in the amount that the Secretary of Energy, in consultation with the Administrator, determines is sufficient to promote the recycling of such products, up to the amount of bounty for a comparable product described in paragraph (2)(A). 

(4) RETIREMENT.—The Secretary shall ensure that no product for which a 

bounty is paid under this subsection is returned to active service, but that it 

is instead destroyed, and recycled to the extent feasible. 

(5) RECYCLING APPLIANCES CONTAINING REFRIGERANTS.—Exclusively for the 

purpose of implementing the bounty payment program for products containing 

a refrigerant under this section, the Administrator shall establish standards for 

environmentally responsible methods of recycling and disposal of refrigerantcontaining appliances that, at a minimum, meet the requirements set by the 

Responsible Appliance Disposal (RAD) Program for refrigerant disposal. The 

Secretary shall ensure that such standards are met before a bounty payment 

is made under this subsection for a product containing a refrigerant. Nothing 

in this section shall be interpreted to alter the requirements of section 608 of 

the Clean Air Act or to relieve any person from complying with those requirements. 

(e) PREMIUM AWARDS FOR DEVELOPMENT AND PRODUCTION OF SUPEREFFICIENT

BEST-IN-CLASS PRODUCTS.— 

(1) IN GENERAL.—(A) The Secretary of Energy shall provide premium awards 

to manufacturers for the development and production of Superefficient Best-inClass Products. The Secretary shall set and periodically revise standards for eligibility of products for designation as a Superefficient Best-in-Class Product. 

(B) The Secretary may establish a standard for a Superefficient Best-in-Class 

Product even if no product meeting that standard exists, if the Secretary has 

reasonable grounds to conclude that a mass-producible product could be made 

to meet that standard. 

(C) The Secretary may also establish a Superefficient Best-in-Class Product 

standard that is met by one or more existing Best-in-Class Product models, if 

those product models have distinct energy efficiency attributes and performance 

characteristics that make them significantly better than other product models 

qualifying as best-in-class. The Secretary may not designate as Superefficient 

Best-in-Class Products under this subparagraph models that represent more 

than 10 percent of the currently qualifying Best-in-Class Product models. 

(2) PREMIUM AWARDS.—(A) The premium award payment provided to a manufacturer under this subsection shall be in addition to any bonus payments made 

under subsection (c). 

(B) The amount of the premium award paid per unit of Superefficient Bestin-Class Products sold to retailers or distributors shall be the product of— 

(i) an amount determined by the Secretary; and 

(ii) the difference in energy consumption between the Superefficient Bestin-Class Product and the average product in the product class. 

(C) The Secretary shall determine the amount under subparagraph (B)(i) for 

each product type, in consultation with State and utility efficiency program administrators as well as the Administrator, based on consideration of the present 

value to the Nation of the energy (and water or other resources or inputs) saved 

over the useful life of the product. The Secretary may also take into consideration the methods used to increase sales of qualifying products in determining 

such amount. 

(D) The Secretary may adjust the value described in subparagraph (C) upward or downward as appropriate, including based on the effect of the premium 


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awards on the sales of products in different classes that may be affected by the 

program under this subsection. 

(E) Premium award payments shall be applied to sales of any Superefficient 

Best-in-Class Product for the first 3 years after designation as a Superefficient 

Best-in-Class Product. 

(3) COORDINATION OF INCENTIVES.—No product for which Federal tax credit 

is received under section 45M of the Internal Revenue Code of 1986 shall be 

eligible to receive premium award payments pursuant to this subsection. 

(f) REPORTING.—The Secretary of Energy shall require, as a condition of receiving 

a bonus, bounty, or premium award under this section, that a report containing the 

following documentation be provided: 

(1) For retailers and distributors, the number of units sold within each product type, and model-specific wholesale purchase prices and retail sale prices, on 

a monthly basis. 

(2) For manufacturers, model-specific energy consumption data. 

(3) For manufacturers, on an immediate basis, information concerning any 

product design or function changes that affect the energy consumption of the 

unit. 

(4) The methods used to increase the sales of qualifying products. 

(g) MONITORING AND VERIFICATION PROTOCOLS.—The Secretary of Energy shall establish monitoring and verification protocols for energy consumption tests for each 

product model and for sales of energy-efficient models. 

(h) DISCLOSURE.—The Secretary of Energy may require that retailers and distributors disclose publicly and to consumers their participation in the program 

under this section. 

(i) COST-EFFECTIVENESS REQUIREMENT.— 

(1) REQUIREMENT.—The Secretary of Energy shall make cost-effectiveness a 

top priority in designing the program under, and administering, this section, except that the cost-effectiveness of providing premium awards to manufacturers 

under subsection (e), in aggregate, may be lower by this measure than that of 

the bonuses and bounties to retailers and distributors under subsections (c) and 

(d). 

(2) DEFINITIONS.—In this subsection: 

(A) COST-EFFECTIVENESS.—The term ‘‘cost-effectiveness’’ means a measure of aggregate savings in the cost of energy over the lifetime of a product 

in relation to the cost to the Secretary of the bonuses, bounties, and premium awards provided under this section for a product. 

(B) SAVINGS.—The term ‘‘savings’’ means the cumulative megawatt-hours 

of electricity or million British thermal units of other fuels saved by a product during the projected useful life of the product, in comparison to projected energy consumption of the average product in the same class, taking 

into consideration the impact of any documented measures to replace, retire, and recycle low-efficiency products at the time of purchase of highlyefficient substitutes. 

(j) DEFINITIONS.—In this section— 

(1) the term ‘‘distributor’’ mean an individual, organization, or company that 

sells products in multiple lots and not directly to end-users; 

(2) the term ‘‘retailer’’ means an individual, organization, or company that 

sells products directly to end-users; and 

(3) the term ‘‘Superefficient Best-in-Class Product’’ means a product that— 

(A) can be mass produced; and 

(B) achieves the highest level of efficiency that the Secretary of Energy 

finds can, given the current state of technology, be produced and sold commercially to mass-market consumers. 

(k) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

$300,000,000 for each of the fiscal years 2010 through 2014 to the Secretary of Energy for purposes of this section, of which not more than 10 percent for any fiscal 

year may be expended on program administration. 

SEC. 215. WATERSENSE. 

(a) IN GENERAL.—There is established within the Environmental Protection Agency a WaterSense program to identify and promote water efficient products, buildings 

and landscapes, and services in order— 

(1) to reduce water use; 

(2) to reduce the strain on water, wastewater, and stormwater infrastructure; 

(3) to conserve energy used to pump, heat, transport, and treat water; and 

(4) to preserve water resources for future generations, 


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through voluntary labeling of, or other forms of communications about, products, 

buildings and landscapes, and services that meet the highest water efficiency and 

performance standards. 

(b) DUTIES.—The Administrator shall— 

(1) promote WaterSense labeled products, buildings and landscapes, and services in the market place as the preferred technologies and services for— 

(A) reducing water use; and 

(B) ensuring product and service performance; 

(2) work to enhance public awareness of the WaterSense label through public 

outreach, education, and other means; 

(3) establish and maintain performance standards so that products, buildings 

and landscapes, and services labeled with the WaterSense label perform as well 

or better than their less efficient counterparts; 

(4) publicize the need for proper installation and maintenance of WaterSense 

products by a licensed, and where certification guidelines exist, WaterSense-certified professional to ensure optimal performance; 

(5) preserve the integrity of the WaterSense label; 

(6) regularly review and, when appropriate, update WaterSense criteria for 

categories of products, buildings and landscapes, and services, at least once 

every four years; 

(7) to the extent practical, regularly estimate and make available to the public 

the production and relative market shares of WaterSense labeled products, 

buildings and landscapes, and services, at least annually; 

(8) to the extent practical, regularly estimate and make available to the public 

the water and energy savings attributable to the use of WaterSense labeled 

products, buildings and landscapes, and services, at least annually; 

(9) solicit comments from interested parties and the public prior to establishing or revising a WaterSense category, specification, installation criterion, or 

other criterion (or prior to effective dates for any such category, specification, 

installation criterion, or other criterion); 

(10) provide reasonable notice to interested parties and the public of any 

changes (including effective dates), on the adoption of a new or revised category, 

specification, installation criterion, or other criterion, along with— 

(A) an explanation of changes; and 

(B) as appropriate, responses to comments submitted by interested parties; 

(11) provide appropriate lead time (as determined by the Administrator) prior 

to the applicable effective date for a new or significant revision to a category, 

specification, installation criterion, or other criterion, taking into account the 

timing requirements of the manufacturing, marketing, training, and distribution process for the specific product, building and landscape, or service category 

addressed; and 

(12) identify and, where appropriate, implement other voluntary approaches 

in commercial, institutional, residential, municipal, and industrial sectors to encourage reuse and recycling technologies, improve water efficiency, or lower 

water use while meeting, where applicable, the performance standards established under paragraph (3). 

(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

$7,500,000 for fiscal year 2010, $10,000,000 for fiscal year 2011, $20,000,000 for fiscal year 2012, and $50,000,000 for fiscal year 2013 and each year thereafter, adjusted for inflation, to carry out this section. 

SEC. 216. FEDERAL PROCUREMENT OF WATER EFFICIENT PRODUCTS. 

(a) DEFINITIONS.—In this section: 

(1) AGENCY.—The term ‘‘agency’’ has the meaning given that term in section 

7902(a) of title 5, United States Code. 

(2) WATERSENSE PRODUCT OR SERVICE.—The term ‘‘WaterSense product or 

service’’ means a product or service that is rated for water efficiency under the 

WaterSense program. 

(3) WATERSENSE PROGRAM.—The term ‘‘WaterSense program’’ means the program established by section 215 of this Act. 

(4) FEMP DESIGNATED PRODUCT.—The term ‘‘FEMP designated product’’ 

means a product that is designated under the Federal Energy Management Program of the Department of Energy as being among the highest 25 percent of 

equivalent products for efficiency. 

(5) PRODUCT AND SERVICE.—The terms ‘‘product’’ and ‘‘service’’ do not include 

any water consuming product or service designed or procured for combat or 

combat-related missions. The terms also exclude products or services already 


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covered by the Federal procurement regulations established under section 553 

of the National Energy Conservation Policy Act (42 U.S.C. 8259b). 

(b) PROCUREMENT OF WATER EFFICIENT PRODUCTS.— 

(1) REQUIREMENT.—To meet the requirements of an agency for a water consuming product or service, the head of the agency shall, except as provided in 

paragraph (2), procure— 

(A) a WaterSense product or service; or 

(B) a FEMP designated product. 

A WaterSense plumbing product should preferably, when possible, be installed 

by a licensed and, when WaterSense certification guidelines exist, WaterSensecertified plumber or mechanical contractor, and a WaterSense irrigation system 

should preferably, when possible, be installed, maintained, and audited by a 

WaterSense-certified irrigation professional to ensure optimal performance. 

(2) EXCEPTIONS.—The head of an agency is not required to procure a 

WaterSense product or service or FEMP designated product under paragraph 

(1) if the head of the agency finds in writing that— 

(A) a WaterSense product or service or FEMP designated product is not 

cost-effective over the life of the product, taking energy and water cost savings into account; or 

(B) no WaterSense product or service or FEMP designated product is reasonably available that meets the functional requirements of the agency. 

(3) PROCUREMENT PLANNING.—The head of an agency shall incorporate into 

the specifications for all procurements involving water consuming products and 

systems, including guide specifications, project specifications, and construction, 

renovation, and services contracts that include provision of water consuming 

products and systems, and into the factors for the evaluation of offers received 

for the procurement, criteria used for rating WaterSense products and services 

and FEMP designated products. The head of an agency shall consider, to the 

maximum extent practicable, additional measures for reducing agency water 

consumption, including water reuse technologies, leak detection and repair, and 

use of waterless products that perform similar functions to existing water-consuming products. 

(c) REGULATIONS.—Not later than 180 days after the date of enactment of this 

Act, the Secretary of Energy, working in coordination with the Administrator, shall 

issue guidelines to carry out this section. 

SEC. 217. WATER EFFICIENT PRODUCT REBATE PROGRAMS. 

(a) DEFINITIONS.—In this section: 

(1) ELIGIBLE STATE.—The term ‘‘eligible State’’ means a State that meets the 

requirements of subsection (b). 

(2) RESIDENTIAL WATER EFFICIENT PRODUCT OR SERVICE.—The term ‘‘residential water efficient product or service’’ means a product or service for a residence or its landscape that is rated for water efficiency and performance— 

(A) by the WaterSense program, where a WaterSense specification does 

not exist; or 

(B) by a State program and approved by the Administrator. 

Categories of water efficient products and services may include faucets, irrigation technologies and services, point-of-use water treatment devices, reuse and 

recycling technologies, toilets, and showerheads. 

(3) STATE PROGRAM.—The term ‘‘State program’’ means a State program for 

administering rebates or vouchers for consumer purchase of water efficient 

products and services as described in subsection (b)(1). 

(4) WATERSENSE PROGRAM.—The term ‘‘WaterSense program’’ means the program established by section 215 of this Act. 

(b) ELIGIBLE STATES.—A State shall be eligible to receive an allocation under subsection (c) if the State— 

(1) establishes (or has established) a State program to provide rebates or 

vouchers to residential consumers for the purchase of residential water efficient 

products or services to replace used products of the same type; 

(2) submits an application for the allocation at such time, in such form, and 

containing such information as the Administrator may require; and 

(3) provides assurances satisfactory to the Administrator that the State will 

use the allocation to supplement, but not supplant, funds made available to 

carry out the State program. 

(c) AMOUNT OF ALLOCATIONS.— 

(1) IN GENERAL.—Subject to paragraph (2), for each fiscal year, the Administrator shall allocate to each eligible State to carry out subsection (d) an amount 

equal to the product obtained by multiplying the amount made available under 

subsection (g) for the fiscal year by the ratio that the population of the State 


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in the most recent calendar year for which data are available bears to the total 

population of all eligible States in that calendar year. 

(2) MINIMUM ALLOCATIONS.—For each fiscal year, the amounts allocated 

under this subsection shall be adjusted proportionately so that no eligible State 

is allocated a sum that is less than an amount determined by the Administrator. 

(d) USE OF ALLOCATED FUNDS.—Funds allocated to a State under subsection (c) 

may be used to pay up to 50 percent of the cost of establishing and carrying out 

a State program. 

(e) FIXTURE RECYCLING.—States are encouraged to promote or implement fixture 

recycling programs to manage the disposal of older fixtures replaced due to the rebate program under this section. 

(f) ISSUANCE OF REBATES.—Rebates or vouchers may be provided to residential 

consumers that meet the requirements of the State program. The State may issue 

all rebates or vouchers directly to residential consumers or, with approval of the Administrator, delegate some or all rebate and voucher administration to other organizations including, but not limited to, local governments, municipal water authorities, and water utilities. The amount of a rebate or voucher shall be determined by 

the State, taking into consideration— 

(1) the amount of the allocation to the State under subsection (c); 

(2) the amount of any Federal or State tax incentive available for the purchase of the residential water efficient product or service; 

(3) the amount necessary to change consumer behavior to purchase water efficient products and services; and 

(4) the consumer expenditures for onsite preparation, assembly, and original 

installation of the product. 

(g) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

to the Administrator to carry out this section $50,000,000 for each of the fiscal years 

2010 and 2011, $75,000,000 for fiscal year 2012, $100,000,000 for fiscal year 2013, 

and $150,000,000 for fiscal year 2014 and each year thereafter, adjusted for inflation. 

SEC. 218. CERTIFIED STOVES PROGRAM. 

(a) DEFINITIONS.—In this section: 

(1) AGENCY.—The term ‘‘Agency’’ means the Environmental Protection Agency. 

(2) WOOD STOVE OR PELLET STOVE.—The term ‘‘wood stove or pellet stove’’ 

means a wood stove, pellet stove, or fireplace insert that uses wood or pellets 

for fuel. 

(3) CERTIFIED STOVE.—The term ‘‘certified stove’’ means a wood stove or pellet 

stove that meets the standards of performance for new residential wood heaters 

under subpart AAA of part 60 of subchapter C of chapter I of title 40, Code of 

Federal Regulations (or successor regulations), as certified by the Administrator. Pellet stoves and fireplace inserts using pellets for fuel that are exempt 

from testing by the Administrator but meet the same standards of performance 

as wood stoves are considered certified for the purposes of this section. 

(4) ELIGIBLE ENTITY.—The term ‘‘eligible entity’’ means— 

(A) a State, a local government, or a federally recognized Indian tribe; 

(B) Alaskan Native villages or regional or village corporations (as defined 

in, or established under, the Alaskan Native Claims Settlement Act (43 

U.S.C. 1601 et seq.)); and 

(C) a nonprofit organization or institution that— 

(i) represents or provides pollution reduction or educational services 

relating to wood smoke minimization to persons, organizations, or communities; or 

(ii) has, as its principal purpose, the promotion of air quality or energy efficiency. 

(b) ESTABLISHMENT.—The Administrator shall establish and carry out a program 

to assist in the replacement of wood stoves or pellet stoves that do not meet the 

standards of performance referred to in subsection (a)(4) by— 

(1) requiring that each wood stove or pellet stove sold in the United States 

on and after the date of enactment of this Act meet the standards of performance referred to in subsection (a)(4); 

(2) requiring that no wood stove or pellet stove replaced under this program 

is sold or returned to active service, but that it is instead destroyed and recycled 

to the maximum extent feasible; 

(3) providing funds to an eligible entity to replace a wood stove or pellet stove 

that does not meet the standards of performance in subsection (a)(4) with a certified stove, including funds to pay for— 


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(A) installation of a replacement certified stove; and 

(B) necessary replacement of or repairs to ventilation, flues, chimneys, or 

other relevant items necessary for safe installation of a replacement certified stove; 

(4) in addition to any funds that may be appropriated for the program under 

this subsection, using existing Federal, State, and local programs and incentives, to the greatest extent practicable; 

(5) prioritizing the replacement of wood stoves or pellet stoves manufactured 

before July 1, 1990; and 

(6) carrying out such other activities as the Administrator determines appropriate to facilitate the replacement of wood stoves or pellet stoves that do not 

meet the standards of performance referred to in subsection (a)(3). 

(c) REGULATIONS.—The Administrator may promulgate such regulations as are 

necessary to carry out the program established under subsection (b). 

(d) FUNDING.— 

(1) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to carry out the program under this section $20,000,000 for the period 

of fiscal years 2010 through 2014. 

(2) DESIGNATED USE.—Of amounts appropriated pursuant to this subsection— 

(A) 25 percent shall be designated for use to carry out the program under 

this section on lands held in trust for the benefit of a federally recognized 

Indian tribe; 

(B) 3 percent shall be designated for use to carry out the program under 

this section in Alaskan Native villages or regional or village corporations 

(as defined in, or established under, the Alaskan Native Claims Settlement 

Act (43 U.S.C. 1601 et seq.)); and 

(C) 72 percent shall be designated for use to carry out the program under 

this section nationwide. 

(3) REGULATORY PROGRAMS.— 

(A) IN GENERAL.—No grant or loan provided under this section shall be 

used to fund the costs of emissions reductions that are mandated under 

Federal, State, or local law. 

(B) MANDATED.—For purposes of subparagraph (A), voluntary or elective 

emission reduction measures shall not be considered ‘‘mandated’’, regardless of whether the reductions are included in the implementation plan of 

a State. 

(e) EPA AUTHORITY TO ACCEPT WOOD STOVE OR PELLET STOVE REPLACEMENT

SUPPLEMENTAL ENVIRONMENTAL PROJECTS.— 

(1) IN GENERAL.—The Administrator may accept (notwithstanding sections 

3302 and 1301 of title 31, United States Code) wood stove or pellet stove replacement Supplemental Environmental Projects if such projects, as part of a 

settlement of any alleged violation of environmental law— 

(A) protect human health or the environment; 

(B) are related to the underlying alleged violation; 

(C) do not constitute activities that the defendant would otherwise be legally required to perform; and 

(D) do not provide funds for the staff of the Agency or for contractors to 

carry out the Agency’s internal operations. 

(2) CERTIFICATION.—In any settlement agreement regarding an alleged violation of environmental law in which a defendant agrees to perform a wood stove 

or pellet stove replacement Supplemental Environmental Project, the Administrator shall require the defendant to include in the settlement documents a certification under penalty of law that the defendant would have agreed to perform 

a comparably valued, alternative project other than a wood stove or pellet stove 

replacement Supplemental Environmental Project if the Administrator were 

precluded by law from accepting a wood stove or pellet stove replacement Supplemental Environmental Project. A failure by the Administrator to include this 

language in such a settlement agreement shall not create a cause of action 

against the United States under the Clean Air Act or any other law or create 

a basis for overturning a settlement agreement entered into by the United 

States. 

SEC. 219. ENERGY STAR STANDARDS. 

(a) ENERGY STAR.—Section 324A(c) of the Energy Policy and Conservation Act is 

amended— 

(1) in paragraph (6)(B), by striking ‘‘and’’ after the semicolon at the end; 

(2) in paragraph (7), by striking the period at the end and inserting a semicolon; and 

(3) by adding at the end the following: 


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‘‘(8) in establishing and revising an Energy Star product category, specification, or criterion, require inclusion of developmental products planned for sale 

within 2 years in the testing or evaluation of products proposed for purposes 

of such establishment or revision; 

‘‘(9) not later than 18 months after the date of enactment of this paragraph, 

establish and implement a rating system for products identified as Energy Star 

products pursuant to this section to provide consumers with the most helpful 

information on the relative energy efficiency of those products, unless the Administrator and the Secretary communicate to Congress that establishing such 

a system would diminish the value of the Energy Star brand to consumers; 

‘‘(10)(A) review the Energy Star product criteria for the 10 products in each 

product category with the greatest energy consumption at least once every 3 

years; and 

‘‘(B) based on the review, update and publish the Energy Star product criteria 

for each such category, as necessary; and 

‘‘(11) require periodic verification of compliance with the Energy Star product 

criteria by products identified as Energy Star products pursuant to this section, 

including— 

‘‘(A) purchase and testing of products from the market; or 

‘‘(B) other appropriate testing and compliance approaches.’’. 

(b) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to carry out the amendments made by this section $5,000,000 for fiscal year 2010 

and for each fiscal year thereafter. 

Subtitle C—Transportation Efficiency 

SEC. 221. EMISSIONS STANDARDS. 

Title VIII of the Clean Air Act, as added by section 331 of this Act, is amended 

by inserting after part A the following new part: 

‘‘PART B—MOBILE SOURCES 

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

‘‘(a) NEW MOTOR VEHICLES AND NEW MOTOR VEHICLE ENGINES.—(1) Pursuant to 

section 202(a)(1), by December 31, 2010, the Administrator shall promulgate standards applicable to emissions of greenhouse gases from new heavy-duty motor vehicles or new heavy-duty motor vehicle engines, excluding such motor vehicles covered 

by the Tier II standards (as established by the Administrator as of the date of the 

enactment of this section). The Administrator may revise these standards from time 

to time. 

‘‘(2) Regulations issued under section 202(a)(1) applicable to emissions of greenhouse gases from new heavy-duty motor vehicles or new heavy-duty motor vehicle 

engines, excluding such motor vehicles covered by the Tier II standards (as established by the Administrator as of the date of the enactment of this section), shall 

contain standards that reflect the greatest degree of emissions reduction achievable 

through the application of technology which the Administrator determines will be 

available for the model year to which such standards apply, giving appropriate consideration to cost, energy, and safety factors associated with the application of such 

technology. Any such regulations shall take effect after such period as the Administrator finds necessary to permit the development and application of the requisite 

technology, and, at a minimum, shall apply for a period no less than 3 model years 

beginning no earlier than the model year commencing 4 years after such regulations 

are promulgated. 

‘‘(3) Regulations issued under section 202(a)(1) applicable to emissions of greenhouse gases from new heavy-duty motor vehicles or new heavy-duty motor vehicle 

engines, excluding such motor vehicles covered by the Tier II standards (as established by the Administrator as of the date of the enactment of this section), shall 

supersede and satisfy any and all of the rulemaking and compliance requirements 

of section 32902(k) of title 49, United States Code. 

‘‘(4) Other than as specifically set forth in paragraph (3) of this subsection, nothing in this section shall affect or otherwise increase or diminish the authority of the 

Secretary of Transportation to adopt regulations to improve the overall fuel efficiency of the commercial goods movement system. 

‘‘(b) NONROAD VEHICLES AND ENGINES.—(1) Pursuant to section 213(a)(4) and (5), 

the Administrator shall identify those classes or categories of new nonroad vehicles 

or engines, or combinations of such classes or categories, that, in the judgment of 

the Administrator, both contribute significantly to the total emissions of greenhouse 


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gases from nonroad engines and vehicles, and provide the greatest potential for significant and cost-effective reductions in emissions of greenhouse gases. The Administrator shall promulgate standards applicable to emissions of greenhouse gases 

from these new nonroad engines or vehicles by December 31, 2012. The Administrator shall also promulgate standards applicable to emissions of greenhouse gases 

for such other classes and categories of new nonroad vehicles and engines as the 

Administrator determines appropriate and in the timeframe the Administrator determines appropriate. The Administrator shall base such determination, among 

other factors, on the relative contribution of greenhouse gas emissions, and the costs 

for achieving reductions, from such classes or categories of new nonroad engines and 

vehicles. The Administrator may revise these standards from time to time. 

‘‘(2) Standards under section 213(a)(4) and (5) applicable to emissions of greenhouse gases from those classes or categories of new nonroad engines or vehicles 

identified in the first sentence of paragraph (1) of this subsection, shall achieve the 

greatest degree of emissions reduction achievable based on the application of technology which the Administrator determines will be available at the time such standards take effect, taking into consideration cost, energy, and safety factors associated 

with the application of such technology. Any such regulations shall take effect after 

such period as the Administrator finds necessary to permit the development and application of the requisite technology. 

‘‘(3) For purposes of this section and standards under section 213(a)(4) or (5) applicable to emissions of greenhouse gases, the term ‘nonroad engines and vehicles’ 

shall include non-internal combustion engines and the vehicles these engines power 

(such as electric engines and electric vehicles), for those non-internal combustion engines and vehicles which would be in the same category and have the same uses 

as nonroad engines and vehicles that are powered by internal combustion engines. 

‘‘(c) AIRCRAFT AND AIRCRAFT ENGINES.— 

‘‘(1) Pursuant to section 231(a), the Administrator shall promulgate standards 

applicable to emissions of greenhouse gases from new aircraft and new engines 

used in aircraft by December 31, 2012. Notwithstanding any requirement in section 231(a), the Administrator, in consultation with the Administrator of the 

Federal Aviation Administration, shall also promulgate standards applicable to 

emissions of greenhouse gases from other classes and categories of aircraft and 

aircraft engines for such classes and categories as the Administrator determines 

appropriate and in the timeframe the Administrator determines appropriate. 

The Administrator may revise these standards from time to time. 

‘‘(2) Standards under section 231(a) applicable to emissions of greenhouse 

gases from new aircraft and new engines used in aircraft, and any later revisions or additional standards, shall achieve the greatest degree of emissions reduction achievable based on the application of technology which the Administrator determines will be available at the time such standards take effect, taking into consideration cost, energy, and safety factors associated with the application of such technology. Any such standards shall take effect after such period 

as the Administrator finds necessary to permit the development and application 

of the requisite technology. 

‘‘(d) AVERAGING, BANKING, AND TRADING OF EMISSIONS CREDITS.—In establishing 

standards applicable to emissions of greenhouse gases pursuant to this section and 

sections 202(a), 213(a)(4) and (5), and 231(a), the Administrator may establish provisions for averaging, banking, and trading of greenhouse gas emissions credits within 

or across classes or categories of motor vehicles and motor vehicle engines, nonroad 

vehicles and engines (including marine vessels), and aircraft and aircraft engines, 

to the extent the Administrator determines appropriate and considering the factors 

appropriate in setting standards under those sections. Such provisions may include 

reasonable and appropriate provisions concerning generation, banking, trading, duration, and use of credits. 

‘‘(e) REPORTS.—The Administrator shall, from time to time, submit a report to 

Congress that projects the amount of greenhouse gas emissions from the transportation sector, including transportation fuels, for the years 2030 and 2050, based on 

the standards adopted under this section. 

‘‘(f) GREENHOUSE GASES.—Notwithstanding the provisions of section 711, 

hydrofluorocarbons shall be considered a greenhouse gas for purposes of this section.’’. 

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

Title VIII of the Clean Air Act, as added by section 331 of this Act, is further 

amended by inserting after part C the following new part: 


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‘‘PART D—PLANNING REQUIREMENTS 

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

‘‘(a) IN GENERAL.—Each State shall— 

‘‘(1) not later than 3 years after the date of enactment of this section, submit 

to the Administrator goals for transportation-related greenhouse gas emissions 

reductions, which goals shall be reasonably commensurate with the targets for 

overall greenhouse gas emissions reduction established by this Act; and 

‘‘(2) as part of each transportation plan or transportation improvement program developed under title 23 or title 49, United States Code, ensure that a 

plan to achieve such goals, or an updated version of such a plan, is submitted 

to the Administrator and to the Secretary of Transportation (in this section referred to as the ‘Secretary’) by each metropolitan planning organization in the 

State for an area with a population exceeding 200,000. 

‘‘(b) MODELS AND METHODOLOGIES.— 

‘‘(1) IN GENERAL.—The Administrator shall promulgate regulations to establish standards for use in developing goals, plans, and strategies under this section and for monitoring progress toward such goals. Such standards shall include— 

‘‘(A) data collection techniques for assessing State and regional transportation-related greenhouse gas emissions; 

‘‘(B) methodologies for determining transportation-related greenhouse gas 

emissions baselines; 

‘‘(C) models and methodologies for scenario analysis; and 

‘‘(D) models and methodologies for estimating transportation-related 

greenhouse gas emissions reductions from the strategies considered under 

this section. 

Such regulations may approve or improve existing models and methodologies 

‘‘(2) TIMING.—The Administrator shall— 

‘‘(A) publish proposed regulations under paragraph (1) not later than 1 

year after the date of enactment of this section; and 

‘‘(B) promulgate final regulations under paragraph (1) not later than 2 

years after such date of enactment. 

‘‘(3) ASSESSMENT.—At least every 6 years after promulgating final regulations 

under paragraph (1), the Administrator, in coordination with the Secretary, 

shall assess current and projected progress in reducing transportation-related 

greenhouse gas emissions. The assessment shall examine the contributions to 

emissions reductions attributable to improvements in vehicle efficiency, greenhouse gas performance of transportation fuels, and increased efficiency in utilizing transportation systems. 

‘‘(c) GREENHOUSE GAS REDUCTION GOALS.— 

‘‘(1) CONSULTATION.—Each State shall develop the goals referred to in subsection (a)(1)— 

‘‘(A) in concurrence with State agencies responsible for air quality and 

transportation; 

‘‘(B) in consultation with each metropolitan planning organization for an 

area in the State with a population exceeding 200,000 and applicable local 

air quality and transportation agencies; and 

‘‘(C) with public involvement, including public comment periods and meetings. 

‘‘(2) PERIOD.—The goals referred to in subsection (a)(1) shall be for 4-, 10-, 

and 20-year periods. 

‘‘(3) TARGETS; DESIGNATED YEAR.—The goals referred to in subsection (a)(1) 

shall establish targets to reduce transportation-related greenhouse gas emissions in the covered area. The targets shall be designed to ensure that the levels of such emissions stabilize and decrease after a designated year. The State 

shall consider designating 2010 as such designated year. 

‘‘(4) COVERED AREA.—The goals referred to in subsection (a)(1)— 

‘‘(A) shall be established on a statewide basis; 

‘‘(B) shall be established for each metropolitan planning organization in 

the State for an area with a population exceeding 200,000; and 

‘‘(C) may be established on a voluntary basis, in accordance with the provisions of this section, for any metropolitan planning organization not described in subparagraph (B). 

‘‘(5) REVISED GOALS.—Every 4 years, each State shall update and revise, as 

appropriate, the goals referred to in subsection (a)(1). 

‘‘(d) PLANNING.—A plan submitted under subsection (a)(2) shall— 


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‘‘(1) be based upon the models and methodologies established by the Administrator under subsection (b); 

‘‘(2) use transportation and land use scenario analysis to address transportation-related greenhouse gas emissions and economic development impacts; 

and 

‘‘(3) be developed— 

‘‘(A) with public involvement, including public comment periods and meetings that provide opportunities for comment from a variety of stakeholders 

based on age, race, income, and disability; 

‘‘(B) with regional coordination, including with respect to— 

‘‘(i) metropolitan planning organizations; 

‘‘(ii) the localities comprising the metropolitan planning organization; 

‘‘(iii) the State in which the metropolitan planning organization is located; and 

‘‘(iv) air quality, environmental health, and transportation agencies 

for the State and region involved; and 

‘‘(C) in consultation with the State and local housing, public health, economic development, land use, environment, and public transportation agencies. 

‘‘(e) STRATEGIES.—In developing goals under subsection (a)(1) and a plan under 

subsection (a)(2), the State or metropolitan planning organization, as applicable, 

shall consider transportation and land use planning strategies to reduce transportation-related greenhouse gas emissions, including the following: 

‘‘(1) Efforts to increase or improve public transportation, including— 

‘‘(A) new public transportation systems, including new commuter rail systems; 

‘‘(B) expansion of existing public transportation systems; 

‘‘(C) employer-based subsidies; 

‘‘(D) cleaner locomotive technologies; 

‘‘(E) quality of service improvements, including improved frequency of 

service; and 

‘‘(F) use of transit buses that are powered by alternative fuels. 

‘‘(2) Updates to zoning and other land use regulations and plans to support 

development that— 

‘‘(A) coordinates transportation and land use planning; 

‘‘(B) focuses future growth close to existing and planned job centers and 

public facilities; 

‘‘(C) uses existing infrastructure; 

‘‘(D) promotes walking, bicycling, and public transportation use; and 

‘‘(E) mixes land uses such as housing, retail, and schools. 

‘‘(3) Implementation of a policy (referred to as a ‘complete streets policy’) 

that— 

‘‘(A) ensures adequate accommodation of all users of transportation systems, including pedestrians, bicyclists, public transportation users, motorists, children, the elderly, and individuals with disabilities; and 

‘‘(B) adequately addresses the safety and convenience of all users of the 

transportation system. 

‘‘(4) Construction of bicycle and pedestrian infrastructure facilities, including 

facilities that improve the connections with networks that provide access to 

human services, employment, schools, and retail. 

‘‘(5) Projects to promote telecommuting, flexible work schedules, or satellite 

work centers. 

‘‘(6) Pricing measures, including tolling, congestion pricing, and pay-as-youdrive insurance. 

‘‘(7) Intermodal freight system strategies, including enhanced rail services, 

short sea shipping, and other strategies. 

‘‘(8) Parking policies. 

‘‘(9) Intercity rail service, including high speed rail. 

‘‘(10) Travel demand management projects. 

‘‘(11) Restriction of the use of certain roads, or lanes, by vehicles other than 

passenger buses and high-occupancy vehicles. 

‘‘(12) Reduction of vehicle idling, including idling associated with freight management, construction, transportation, and commuter operations. 

‘‘(13) Policies to encourage the use of retrofit technologies and early replacement of vehicles, engines and equipment to reduce transportation-related greenhouse gas emissions from existing mobile sources. 

‘‘(14) Other projects that the Administrator finds reduce transportation-related greenhouse gas emissions. 


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‘‘(f) PUBLIC AVAILABILITY.—The Administrator shall publish, including by posting 

on the Environmental Protection Agency’s website— 

‘‘(1) the goals and plans submitted under subsection (a); and 

‘‘(2) for each plan submitted under subsection (a)(2), an analysis of the anticipated effects of the plan on greenhouse gas emissions and oil consumption. 

‘‘(g) CERTIFICATION.—The Administrator, in consultation with the Secretary, shall 

certify a State or metropolitan planning organization greenhouse gas reduction plan 

submitted under subsection (a)(2) if the plan’s implementation is likely to meet the 

corresponding greenhouse gas reduction goal referred to in subsection (a)(1). If the 

Administrator, in consultation with the Secretary, determines that a submitted plan 

cannot be certified, the State or metropolitan planning organization shall revise and 

resubmit the plan within 1 year. 

‘‘(h) ENFORCEMENT.—If the Administrator finds that a State has failed to submit 

goals under subsection (a)(1), has failed to ensure the submission of a plan under 

subsection (a)(2), or has failed to submit a revised plan under subsection (g), for any 

area in the State (irrespective of whether the area is a nonattainment area), the 

Administrator shall impose a prohibition in accordance with section 179(b)(1) applicable to the area within 2 years of such a finding. The Administrator may not impose a prohibition under the preceding sentence, and no action may be brought by 

the Administrator or any other entity alleging a violation of this section, based on 

the content or adequacy of a goal or plan submitted under subsection (a)(1) or (a)(2) 

or failure to achieve the goal submitted under subsection (a)(1). 

‘‘(i) COMPETITIVE GRANTS.— 

‘‘(1) GRANTS.—The Administrator, in consultation with the Secretary, may 

award grants to States or metropolitan planning organizations— 

‘‘(A) to support activities related to improving data collection, modeling, 

and monitoring systems to assess transportation-related greenhouse gas 

emissions and the effects of plans, policies, and strategies referenced in this 

section; 

‘‘(B) for the development of goals and plans to be submitted under sections (a)(1) or (a)(2); and 

‘‘(C) to implement plans certified under subsection (g) or elements thereof, 

provided that each project thus funded includes a measurement and evaluation component that meets the regulations promulgated under subsection 

(b). 

‘‘(2) PRIORITY.—In making grants under paragraph (1)(C), the Administrator 

shall give priority to applicants based upon— 

‘‘(A) the amount of total greenhouse gas emissions to be reduced as a result of implementation of a certified plan, within the covered area, as determined by methods established under subsection (b); 

‘‘(B) the amount of per capita greenhouse gas emissions to be reduced as 

a result of implementation of a certified plan, within the covered area, as 

determined by methods established under subsection (b); 

‘‘(C) the cost effectiveness, in terms of dollars per tons of greenhouse gas 

reductions, to be achieved as a result of the implementation of a certified 

plan; 

‘‘(D) the potential for both short- and long-term reductions; and 

‘‘(E) such other factors as the Administrator determines appropriate. 

‘‘(3) AUTHORIZATION OF APPROPRIATIONS.—To carry out this subsection, there 

are authorized to be appropriated such sums as may be necessary. 

‘‘(j) DEFINITIONS.—In this section: 

‘‘(1) The term ‘metropolitan planning organization’ means a metropolitan 

planning organization, as such term is used in section 176. 

‘‘(2) The term ‘scenario analysis’ means an analysis that is conducted by identifying different trends and making projections based on those trends to develop 

a range of scenarios and estimates of how each scenario could improve access 

to goods and services, including access to employment, education, and health 

care (especially for elderly and economically disadvantaged communities), and 

could affect rates of— 

‘‘(A) vehicle miles traveled; 

‘‘(B) vehicle hours traveled; 

‘‘(C) use of mobile source fuel by type, including electricity; and 

‘‘(D) transportation-related greenhouse gas emissions. 

‘‘(k) LAND USE AUTHORITY.—Nothing in this section may be construed to— 

‘‘(1) infringe upon the existing authority of State or local governments to plan 

or control land use; or 

‘‘(2) provide or transfer authority over land use to any other entity.’’. 


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SEC. 223. SMARTWAY TRANSPORTATION EFFICIENCY PROGRAM. 

Part B of title VIII of the Clean Air Act, as added by section 221 of this Act is 

amended by adding after section 821 the following section: 

‘‘SEC. 822. SMARTWAY TRANSPORTATION EFFICIENCY PROGRAM. 

‘‘(a) IN GENERAL.—There is established within the Environmental Protection 

Agency a SmartWay Transport Program to quantify, demonstrate, and promote the 

benefits of technologies, products, fuels, and operational strategies that reduce petroleum consumption, air pollution, and greenhouse gas emissions from the mobile 

source sector. 

‘‘(b) GENERAL DUTIES.—Under the program established under this section, the Administrator shall carry out each of the following: 

‘‘(1) Development of measurement protocols to evaluate the energy consumption and greenhouse gas impacts from technologies and strategies in the mobile 

source sector, including those for passenger transport and goods movement. 

‘‘(2) Development of qualifying thresholds for certifying, verifying, or designating energy-efficient, low-greenhouse gas SmartWay technologies and strategies for each mode of passenger transportation and goods movement. 

‘‘(3) Development of partnership and recognition programs to promote best 

practices and drive demand for energy-efficient, low-greenhouse gas transportation performance. 

‘‘(4) Promotion of the availability of, and encouragement of the adoption of, 

SmartWay certified or verified technologies and strategies, and publication of 

the availability of financial incentives, such as assistance from loan programs 

and other Federal and State incentives. 

‘‘(c) SMARTWAY TRANSPORT FREIGHT PARTNERSHIP.—The Administrator shall establish a SmartWay Transport Partnership program with shippers and carriers of 

goods to promote energy-efficient, low-greenhouse gas transportation. In carrying 

out such partnership, the Administrator shall undertake each of the following: 

‘‘(1) Certification of the energy and greenhouse gas performance of participating freight carriers, including those operating rail, trucking, marine, and 

other goods movement operations. 

‘‘(2) Publication of a comprehensive energy and greenhouse gas performance 

index of freight modes (including rail, trucking, marine, and other modes of 

transporting goods) and individual freight companies so that shippers can 

choose to deliver their goods more efficiently. 

‘‘(3) Development of tools for— 

‘‘(A) carriers to calculate their energy and greenhouse gas performance; 

and 

‘‘(B) shippers to calculate the energy and greenhouse gas impacts of moving their products and to evaluate the relative impacts from transporting 

their goods by different modes and corporate carriers. 

‘‘(4) Provision of recognition opportunities for participating shipper and carrier companies demonstrating advanced practices and achieving superior levels 

of greenhouse gas performance. 

‘‘(d) IMPROVING FREIGHT GREENHOUSE GAS PERFORMANCE DATABASES.—The Administrator shall, in coordination with other appropriate agencies, define and collect 

data on the physical and operational characteristics of the Nation’s truck population, with special emphasis on data related to energy efficiency and greenhouse 

gas performance to inform the performance index published under subsection (c)(2) 

of this section, and other means of goods transport as necessary, at least every 5 

years. 

‘‘(e) ESTABLISHMENT OF FINANCING PROGRAM.—The Administrator shall establish 

a SmartWay Financing Program to competitively award funding to eligible entities 

identified by the Administrator in accordance with the program requirements in 

subsection (g). 

‘‘(f) PURPOSE.—Under the SmartWay Financing Program, eligible entities shall— 

‘‘(1) use funds awarded by the Administrator to provide flexible loan and lease 

terms that increase approval rates or lower the costs of loans and leases in accordance with guidance developed by the Administrator; and 

‘‘(2) make such loans and leases available to public and private entities for 

the purpose of adopting low-greenhouse gas technologies or strategies for the 

mobile source sector that are designated by the Administrator. 

‘‘(g) PROGRAM REQUIREMENTS.—The Administrator shall determine program design elements and requirements, including— 

‘‘(1) the type of financial mechanism with which to award funding, in the form 

of grants or contracts; 


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‘‘(2) the designation of eligible entities to receive funding, including State, 

tribal, and local governments, regional organizations comprised of governmental 

units, nonprofit organizations, or for-profit companies; 

‘‘(3) criteria for evaluating applications from eligible entities, including anticipated— 

‘‘(A) cost-effectiveness of loan or lease program on a metric-ton-of-greenhouse gas-saved-per-dollar basis; 

‘‘(B) ability to promote the loan or lease program and associated technologies and strategies to the target audience; and 

‘‘(4) reporting requirements for entities that receive awards, including— 

‘‘(A) actual cost-effectiveness and greenhouse gas savings from the loan 

or lease program based on a methodology designated by the Administrator; 

‘‘(B) the total number of applications and number of approved applications; and 

‘‘(C) terms granted to loan and lease recipients compared to prevailing 

market practices. 

‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—Such sums as necessary are authorized 

to be appropriated to the Administrator to carry out this section.’’. 

SEC. 224. STATE VEHICLE FLEETS. 

Section 507(o) of the Energy Policy Act of 1992 (42 U.S.C. 13257) is amended by 

adding the following new paragraph at the end thereof: 

‘‘(3) The Secretary shall revise the rules under this subsection with respect to the 

types of alternative fueled vehicles required for compliance with this subsection to 

ensure those rules are consistent with any guidance issued pursuant to section 303 

of this Act.’’. 

Subtitle D—Industrial Energy Efficiency 

Programs 

SEC. 241. INDUSTRIAL PLANT ENERGY EFFICIENCY STANDARDS. 

The Secretary of Energy shall continue to support the development of the American National Standards Institute (ANSI) voluntary industrial plant energy efficiency certification program, pending International Standards Organization (ISO) 

consensus standard 50001, and other related ANSI/ISO standards. In addition, the 

Department shall undertake complementary activities through the Department of 

Energy’s Industry Technologies Program that support the voluntary implementation 

of such standards by manufacturing firms. There are authorized to be appropriated 

to the Secretary such sums as are necessary to carry out these activities. The Secretary shall report to Congress on the status of standards development and plans 

for further standards development pursuant to this section by not later than 18 

months after the date of enactment of this Act, and shall prepare a second such report 18 months thereafter. 

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

(a) ELECTRIC AND THERMAL WASTE ENERGY RECOVERY AWARDS.—The Secretary 

of Energy shall establish a program to make monetary awards to the owners and 

operators of new and existing electric energy generation facilities or thermal energy 

production facilities using fossil or nuclear fuel, to encourage them to use innovative 

means of recovering any thermal energy that is a potentially useful byproduct of 

electric power generation or other processes to— 

(1) generate additional electric energy; or 

(2) make sales of thermal energy not used for electric generation, in the form 

of steam, hot water, chilled water, or desiccant regeneration, or for other commercially valid purposes. 

(b) AMOUNT OF AWARDS.— 

(1) ELIGIBILITY.—Awards shall be made under subsection (a) only for the use 

of innovative means that achieve net energy efficiency at the facility concerned 

significantly greater than the current standard technology in use at similar facilities. 

(2) AMOUNT.—The amount of an award made under subsection (a) shall equal 

an amount up to the value of 25 percent of the energy projected to be recovered 

or generated during the first 5 years of operation of the facility using the innovative energy recovery method, or such lesser amount that the Secretary determines to be the minimum amount that can cost-effectively stimulate such innovation. 

(3) LIMITATION.—No person may receive an award under this section if a 

grant under the waste energy incentive grant program under section 373 of the 


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Energy Policy and Conservation Act (42 U.S.C. 6343) is made for the same energy savings resulting from the same innovative method. 

(c) REGULATORY STATUS.—The Secretary of Energy shall— 

(1) assist State regulatory commissions to identify and make changes in State 

regulatory programs for electric utilities to provide appropriate regulatory status for thermal energy byproduct businesses of regulated electric utilities to encourage those utilities to enter businesses making the sales referred to in subsection (a)(2); and 

(2) encourage self-regulated utilities to enter businesses making the sales referred to in subsection (a)(2). 

(d) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

to the Secretary of Energy such sums as are necessary for the purposes of this section. 

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

Section 373(e) of the Energy Policy and Conservation Act (42 U.S.C. 6343(e)) is 

amended— 

(1) by striking ‘‘that qualifies for’’ and inserting ‘‘who elects to claim’’; and 

(2) by inserting ‘‘from that project’’ after ‘‘for waste heat recovery’’. 

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

(a) FINDINGS.—Congress finds that— 

(1) electric motor systems account for about half of the electricity used in the 

United States; 

(2) electric motor energy use is determined by both the efficiency of the motor 

and the system in which the motor operates; 

(3) Federal Government research on motor end use and efficiency opportunities is more than a decade old; and 

(4) the Census Bureau has discontinued collection of data on motor and generator importation, manufacture, shipment, and sales. 

(b) DEFINITIONS.—In this section: 

(1) DEPARTMENT.—The term ‘‘Department’’ means the Department of Energy. 

(2) INTERESTED PARTIES.—The term ‘‘interested parties’’ includes— 

(A) trade associations; 

(B) motor manufacturers; 

(C) motor end users; 

(D) electric utilities; and 

(E) individuals and entities that conduct energy efficiency programs. 

(3) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Energy, in consultation with interested parties. 

(c) ASSESSMENT.—The Secretary shall conduct an assessment of electric motors 

and the electric motor market in the United States that shall— 

(1) include important subsectors of the industrial and commercial electric 

motor market (as determined by the Secretary), including— 

(A) the stock of motors and motor-driven equipment; 

(B) efficiency categories of the motor population; and 

(C) motor systems that use drives, servos, and other control technologies; 

(2) characterize and estimate the opportunities for improvement in the energy 

efficiency of motor systems by market segment, including opportunities for— 

(A) expanded use of drives, servos, and other control technologies; 

(B) expanded use of process control, pumps, compressors, fans or blowers, 

and material handling components; and 

(C) substitution of existing motor designs with existing and future advanced motor designs, including electronically commutated permanent magnet, interior permanent magnet, and switched reluctance motors; and 

(3) develop an updated profile of motor system purchase and maintenance 

practices, including surveying the number of companies that have motor purchase and repair specifications, by company size, number of employees, and 

sales. 

(d) RECOMMENDATIONS; UPDATE.—Based on the assessment conducted under subsection (c), the Secretary shall— 

(1) develop— 

(A) recommendations to update the detailed motor profile on a periodic 

basis; 

(B) methods to estimate the energy savings and market penetration that 

is attributable to the Save Energy Now Program of the Department; and 

(C) recommendations for the Director of the Census Bureau on market 

surveys that should be undertaken in support of the motor system activities 

of the Department; and 

(2) prepare an update to the Motor Master+ program of the Department. 


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(e) PROGRAM.—Based on the assessment, recommendations, and update required 

under subsections (c) and (d), the Secretary shall establish a proactive, national program targeted at motor end-users and delivered in cooperation with interested parties to increase awareness of— 

(1) the energy and cost-saving opportunities in commercial and industrial facilities using higher efficiency electric motors; 

(2) improvements in motor system procurement and management procedures 

in the selection of higher efficiency electric motors and motor-system components, including drives, controls, and driven equipment; and 

(3) criteria for making decisions for new, replacement, or repair motor and 

motor system components. 

SEC. 245. MOTOR EFFICIENCY REBATE PROGRAM. 

(a) IN GENERAL.—Part C of title III of the Energy Policy and Conservation Act 

(42 U.S.C. 6311 et seq.) is amended by adding at the end the following: 

‘‘SEC. 347. MOTOR EFFICIENCY REBATE PROGRAM. 

‘‘(a) ESTABLISHMENT.—Not later than January 1, 2010, in accordance with subsection (b), the Secretary shall establish a program to provide rebates for expenditures made by entities— 

‘‘(1) for the purchase and installation of a new electric motor that has a nominal full load efficiency that is not less than the nominal full load efficiency as 

defined in— 

‘‘(A) table 12–12 of NEMA Standards Publication MG 1–2006 for random 

wound motors rated 600 volts or lower; or 

‘‘(B) table 12–13 of NEMA Standards Publication MG 1–2006 for form 

wound motors rated 5000 volts or lower; and 

‘‘(2) to replace an installed motor of the entity the specifications of which are 

established by the Secretary by a date that is not later than 90 days after the 

date of enactment of this section. 

‘‘(b) REQUIREMENTS.— 

‘‘(1) APPLICATION.—To be eligible to receive a rebate under this section, an entity shall submit to the Secretary an application in such form, at such time, and 

containing such information as the Secretary may require, including— 

‘‘(A) demonstrated evidence that the entity purchased an electric motor 

described in subsection (a)(1) to replace an installed motor described in subsection (a)(2); 

‘‘(B) demonstrated evidence that the entity— 

‘‘(i) removed the installed motor of the entity from service; and 

‘‘(ii) properly disposed the installed motor of the entity; and 

‘‘(C) the physical nameplate of the installed motor of the entity. 

‘‘(2) AUTHORIZED AMOUNT OF REBATE.—The Secretary may provide to an entity that meets each requirement under paragraph (1) a rebate the amount of 

which shall be equal to the product obtained by multiplying— 

‘‘(A) the nameplate horsepower of the electric motor purchased by the entity in accordance with subsection (a)(1); and 

‘‘(B) $25.00. 

‘‘(3) PAYMENTS TO DISTRIBUTORS OF QUALIFYING ELECTRIC MOTORS.—To assist 

in the payment for expenses relating to processing and motor core disposal 

costs, the Secretary shall provide to the distributor of an electric motor described in subsection (a)(1), the purchaser of which received a rebate under this 

section, an amount equal to the product obtained by multiplying— 

‘‘(A) the nameplate horsepower of the electric motor; and 

‘‘(B) $5.00. 

‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

to carry out this section, to remain available until expended— 

‘‘(1) $80,000,000 for fiscal year 2011; 

‘‘(2) $75,000,000 for fiscal year 2012; 

‘‘(3) $70,000,000 for fiscal year 2013; 

‘‘(4) $65,000,000 for fiscal year 2014; and 

‘‘(5) $60,000,000 for fiscal year 2015.’’. 

(b) TABLE OF CONTENTS.—The table of contents of the Energy Policy and Conservation Act (42 U.S.C. prec. 6201) is amended by adding at the end of the items 

relating to part C of title III the following: 

‘‘Sec. 347. Motor efficiency rebate program.’’. 


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Subtitle E—Improvements in Energy Savings 

Performance Contracting 

SEC. 251. ENERGY SAVINGS PERFORMANCE CONTRACTS. 

(a) COMPETITION REQUIREMENTS FOR TASK OR DELIVERY ORDERS UNDER ENERGY

SAVINGS PERFORMANCE CONTRACTS.— 

(1) COMPETITION REQUIREMENTS.—Subsection (a) of section 801 of the National Energy Conservation Policy Act (42 U.S.C. 8287(a)) is amended by adding 

at the end the following paragraph: 

‘‘(3)(A) The head of a Federal agency may issue a task or delivery order under 

an energy savings performance contract by— 

‘‘(i) notifying all contractors that have received an award under such contract 

that the agency proposes to discuss energy savings performance services for 

some or all of its facilities, soliciting an expression of interest in performing site 

surveys or investigations and feasibility designs and studies and the submission 

of qualifications from such contractors, and including in such notice summary 

information concerning energy use for any facilities that the agency has specific 

interest in including in such contract; 

‘‘(ii) reviewing all expressions of interest and qualifications submitted pursuant to the notice under clause (i); 

‘‘(iii) selecting two or more contractors (from among those reviewed under 

clause (ii)) to conduct discussions concerning the contractors’ respective qualifications to implement potential energy conservation measures, including requesting references demonstrating experience on similar efforts and the resulting energy savings of such similar efforts; 

‘‘(iv) selecting and authorizing— 

‘‘(I) more than one contractor (from among those selected under clause 

(iii)) to conduct site surveys, investigations, feasibility designs and studies 

or similar assessments for the energy savings performance contract services 

(or for discrete portions of such services), for the purpose of allowing each 

such contractor to submit a firm, fixed-price proposal to implement specific 

energy conservation measures; or 

‘‘(II) one contractor (from among those selected under clause (iii)) to conduct a site survey, investigation, a feasibility design and study or similar 

for the purpose of allowing the contractor to submit a firm, fixed-price proposal to implement specific energy conservation measures; 

‘‘(v) negotiating a task or delivery order for energy savings performance contracting services with the contractor or contractors selected under clause (iv) 

based on the energy conservation measures identified; and 

‘‘(vi) issuing a task or delivery order for energy savings performance contracting services to such contractor or contractors. 

‘‘(B) The issuance of a task or delivery order for energy savings performance contracting services pursuant to subparagraph (A) is deemed to satisfy the task and 

delivery order competition requirements in section 2304c(d) of title 10, United 

States Code, and section 303J(d) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253j(d)). 

‘‘(C) The Secretary may issue guidance as necessary to agencies issuing task or 

delivery orders pursuant to subparagraph (A).’’. 

(2) EFFECTIVE DATE.—The amendment made by paragraph (1) is inapplicable 

to task or delivery orders issued before the date of enactment of this section. 

(b) INCLUSION OF THERMAL RENEWABLE ENERGY.—Section 203 of the Energy Policy Act of 2005 (42 U.S.C. 15852) is amended— 

(1) in subsection (a), by striking ‘‘electric’’; and 

(2) in subsection (b)(2), by inserting ‘‘or thermal’’ after ‘‘means electric’’. 

(c) CREDIT FOR RENEWABLE ENERGY PRODUCED AND USED ON SITE.—Subsection 

(c) of section 203 of the Energy Policy Act of 2005 (42 U.S.C. 15852) is amended 

to read as follows: 

‘‘(c) CALCULATION.—Renewable energy produced at a Federal facility, on Federal 

lands, or on Indian lands (as defined in title XXVI of the Energy Policy Act of 1992 

(25 U.S.C. 3501 et seq.)) shall be calculated separately from renewable energy consumed at a Federal facility, and each may be used to comply with the consumption 

requirement under subsection (a).’’. 

(d) FINANCING FLEXIBILITY.—Section 801(a)(2)(E) of the National Energy Conservation Policy Act (42 U.S.C. 8287(a)(2)(E)) is amended by striking ‘‘In’’ and inserting ‘‘Notwithstanding any other provision of law, in’’. 


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Subtitle F—Public Institutions 

SEC. 261. PUBLIC INSTITUTIONS. 

Section 399A of the Energy Policy and Conservation Act (42 U.S.C. 6371h–1) is 

amended— 

(1) in subsection (a)(5), by striking ‘‘or a designee’’ and inserting ‘‘a not-forprofit hospital or not-for-profit inpatient health care facility, or a designated 

agent’’; 

(2) in subsection (c)(1), by striking subparagraph (C); 

(3) in subsection (f)(3)(A), by striking ‘‘$1,000,000’’ and inserting ‘‘$2,500,000’’; 

and 

(4) in subsection (i)(1), by striking ‘‘$250,000,000 for each of fiscal years 2009 through 2013’’ and inserting ‘‘$250,000,000 for each of fiscal years 2010 through 

2015’’. 

SEC. 262. COMMUNITY ENERGY EFFICIENCY FLEXIBILITY. 

Section 545(b)(3) of the Energy Independence and Security Act of 2007 (42 U.S.C. 

17155(b)(3)) is amended— 

(1) by striking ‘‘Indian tribe may use’’ and all that follows through ‘‘for administrative expenses’’ and inserting ‘‘Indian tribe may use for administrative expenses’’; 

(2) by striking subparagraphs (B) and (C); 

(3) by redesignating the remaining clauses (i) and (ii) as subparagraphs (A) 

and (B), respectively and adjusting the margin of those subparagraphs accordingly; and 

(4) by striking the semicolon at the end and inserting a period. 

SEC. 263. SMALL COMMUNITY JOINT PARTICIPATION. 

(a) Section 541(3)(A) of the Energy Independence and Security Act of 2007 is 

amended in clause (i) by striking ‘‘and’’ at the end of subclause (II), in clause (ii) 

by striking the period at the end of subclause (II) and inserting ‘‘; or’’, and by inserting the following new clause (iii): 

‘‘(iii) a group of adjacent, contiguous, or geographically proximate units 

of local government that reach agreement to act jointly for purposes of this 

section and that represent a combined population of not less than 35,000.’’. 

(b) Section 541(3)(B) of the Energy Independence and Security Act of 2007 is 

amended in clause (i) by striking ‘‘or’’, in clause (ii) by striking the period at the 

end and inserting ‘‘; or’’, and by inserting the following new clause (iii): 

‘‘(iii) a group of adjacent, contiguous, or geographically proximate units 

of local government that reach agreement to act jointly for purposes of this 

section and that represent a combined population of not less than 50,000.’’. 

SEC. 264. LOW INCOME COMMUNITY ENERGY EFFICIENCY PROGRAM. 

(a) IN GENERAL.—The Secretary of Energy is authorized to make grants to private, nonprofit, mission-driven community development organizations including 

community development corporations and community development financial institutions to provide financing to businesses and projects that improve energy efficiency; 

identify and develop alternative, renewable, and distributed energy supplies; provide 

technical assistance and promote job and business opportunities for low-income residents; and increase energy conservation in low income rural and urban communities. 

(b) GRANTS.—The purpose of such grants is to increase the flow of capital and 

benefits to low income communities, minority-owned and woman-owned businesses 

and entrepreneurs and other projects and activities located in low income communities in order to reduce environmental degradation, foster energy conservation and 

efficiency and create job and business opportunities for local residents. The Secretary may make grants on a competitive basis for— 

(1) investments that develop alternative, renewable, and distributed energy 

supplies; 

(2) capitalizing loan funds that lend to energy efficiency projects and energy 

conservation programs; 

(3) technical assistance to plan, develop, and manage an energy efficiency financing program; and 

(4) technical and financial assistance to assist small-scale businesses and private entities develop new renewable and distributed sources of power or combined heat and power generation. 

(c) AUTHORIZATION OF APPROPRIATIONS.—For the purposes of this section there is 

authorized to be appropriated $50,000,000 for each of the fiscal years 2010 through 

2015. 


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Subtitle G—Miscellaneous 

SEC. 271. ENERGY EFFICIENT INFORMATION AND COMMUNICATIONS TECHNOLOGIES. 

Section 543 of the National Energy Conservation Policy Act (42 U.S.C. 8253) is 

amended to read as follows: 

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

‘‘(a) IN GENERAL.—Not later than 1 year after the date of enactment of the American Clean Energy and Security Act of 2009, each Federal agency shall collaborate 

with the Director of the Office of Management and Budget (referred to in this section as the ‘Director’) to create an implementation strategy, including best practices 

and measurement and verification techniques, for the purchase and use of energy 

efficient information and communications technologies and practices. Wherever possible, existing standards, specifications, performance metrics, and best management 

practices that have been or are being developed in open collaboration and with 

broad stakeholder input and review should be incorporated. In addition, agency 

strategies shall be flexible, cost-effective, and based on the specific operating requirements and statutory mission of each agency. 

‘‘(b) ENERGY EFFICIENT INFORMATION AND COMMUNICATIONS TECHNOLOGIES.—In 

developing an implementation strategy, each agency shall— 

‘‘(1) consider information and communications technologies and infrastructure, including, but not limited to, advanced metering infrastructure, information and communications technology services and products, efficient data center 

strategies, applications modernization and rationalization, building systems energy efficiency, and telework; and 

‘‘(2) ensure that agencies are eligible to realize the savings and rewards 

brought about through increased efficiencies. 

‘‘(c) PERFORMANCE GOALS.—Not later than 6 months after the date of enactment 

of the American Clean Energy and Security Act of 2009, the Director shall establish 

performance goals for evaluating the efforts of the agencies in improving the maintenance, purchase and use of energy efficiency of information and communications 

technology systems. These performance goals should measure information technology costs over a specific time horizon (3 to 5 years), providing a complete picture 

of all costs, including energy. 

‘‘(d) REPORT.—Not later than 18 months after the date of enactment of the American Clean Energy and Security Act of 2009, and annually thereafter, the Director 

shall submit a report to Congress on— 

‘‘(1) the progress of each agency in reducing energy use through its implementation strategy; and 

‘‘(2) new and emerging technologies that would help achieve increased energy 

efficiency.’’. 

SEC. 272. NATIONAL ENERGY EFFICIENCY GOALS. 

(a) GOALS.—The energy efficiency goals of the United States are— 

(1) to achieve an improvement in the overall energy productivity of the United 

States (measured in gross domestic product per unit of energy input) of at least 

2.5 percent per year by the year 2012; and 

(2) to maintain that annual rate of improvement each year through 2030. 

(b) STRATEGIC PLAN.— (1) IN GENERAL.—Not later than 1 year after the date of enactment of this 

Act, the Secretary of Energy (referred to in this section as the ‘‘Secretary’’), in 

cooperation with the Administrator and the heads of other appropriate Federal 

agencies, shall develop a strategic plan to achieve the national goals for improvement in energy productivity established under subsection (a). 

(2) PUBLIC INPUT AND COMMENT.—The Secretary shall develop the plan in a 

manner that provides appropriate opportunities for public input and comment. 

(c) PLAN CONTENTS.—The strategic plan shall— 

(1) identify future regulatory, funding, and policy priorities that would assist 

the United States in meeting the national goals; 

(2) include energy savings estimates for each sector; and 

(3) include data collection methodologies and compilations used to establish 

baseline and energy savings data. 

(d) PLAN UPDATES.— (1) IN GENERAL.—The Secretary shall— 

(A) update the strategic plan biennially; and 

(B) include the updated strategic plan in the national energy policy plan 

required by section 801 of the Department of Energy Organization Act (42 

U.S.C. 7321). 

(2) CONTENTS.—In updating the plan, the Secretary shall— 


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(A) report on progress made toward implementing efficiency policies to 

achieve the national goals established under subsection (a); and 

(B) verify, to the maximum extent practicable, energy savings resulting 

from the policies. 

(e) REPORT TO CONGRESS AND THE PUBLIC.—The Secretary shall submit to Congress, and make available to the public, the initial strategic plan developed under 

subsection (b) and each updated plan. 

SEC. 273. AFFILIATED ISLAND ENERGY INDEPENDENCE TEAM. 

(a) DEFINITIONS.—In this section: 

(1) AFFILIATED ISLAND.—The term ‘‘affiliated island’’ means— 

(A) the Commonwealth of Puerto Rico; 

(B) Guam; 

(C) American Samoa; 

(D) the Commonwealth of the Northern Mariana Islands; 

(E) the Federated States of Micronesia; 

(F) the Republic of the Marshall Islands; 

(G) the Republic of Palau; and 

(H) the United States Virgin Islands. 

(2) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Energy (acting 

through the Assistant Secretary of Energy Efficiency and Renewable Energy), 

in consultation with the Secretary of the Interior and the Secretary of State. 

(3) TEAM.—The term ‘‘team’’ means the team established by the Secretary 

under subsection (b). 

(b) ESTABLISHMENT.—As soon as practicable after the date of enactment of this 

Act, the Secretary shall assemble a team of technical, policy, and financial experts 

to address the energy needs of each affiliated island— 

(1) to reduce the reliance and expenditure of each affiliated island on imported fossil fuels; 

(2) to increase the use by each affiliated island of indigenous, nonfossil fuel 

energy sources; 

(3) to improve the performance of the energy infrastructure of the affiliated 

island through projects— 

(A) to improve the energy efficiency of power generation, transmission, 

and distribution; and 

(B) to increase consumer energy efficiency; 

(4) to improve the performance of the energy infrastructure of each affiliated 

island through enhanced planning, education, and training; 

(5) to adopt research-based and public-private partnership-based approaches 

as appropriate; 

(6) to stimulate economic development and job creation; and 

(7) to enhance the engagement by the Federal Government in international 

efforts to address island energy needs. 

(c) DUTIES OF TEAM.— 

(1) ENERGY ACTION PLANS.— 

(A) IN GENERAL.—In accordance with subparagraph (B), the team shall 

provide technical, programmatic, and financial assistance to each utility of 

each affiliated island, and the government of each affiliated island, as appropriate, to develop and implement an energy Action Plan for each affiliated island to reduce the reliance of each affiliated island on imported fossil 

fuels through increased efficiency and use of indigenous clean-energy resources. 

(B) REQUIREMENTS.—Each Action Plan described in subparagraph (A) for 

each affiliated island shall require and provide for— 

(i) the conduct of 1 or more studies to assess opportunities to reduce 

fossil fuel use through— 

(I) the improvement of the energy efficiency of the affiliated island; and 

(II) the increased use by the affiliated island of indigenous cleanenergy resources; 

(ii) the identification and implementation of the most cost-effective 

strategies and projects to reduce the dependence of the affiliated island 

on fossil fuels; 

(iii) the promotion of education and training activities to improve the 

capacity of the local utilities of the affiliated island, and the government of the affiliated island, as appropriate, to plan for, maintain, and 

operate the energy infrastructure of the affiliated island through the 

use of local or regional institutions, as appropriate; 


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(iv) the coordination of the activities described in clause (iii) to leverage the expertise and resources of international entities, the Department of Energy, the Department of the Interior, and the regional utilities of the affiliated island; 

(v) the identification, and development, as appropriate, of researchbased and private-public, partnership approaches to implement the Action Plan; and 

(vi) any other component that the Secretary determines to be necessary to reduce successfully the use by each affiliated island of fossil 

fuels. 

(2) REPORTS TO SECRETARY.—Not later than 1 year after the date on which 

the Secretary establishes the team and biennially thereafter, the team shall 

submit to the Secretary a report that contains a description of the progress of 

each affiliated island in— 

(A) implementing the Action Plan of the affiliated island developed under 

paragraph (1)(A); and 

(B) reducing the reliance of the affiliated island on fossil fuels. 

(d) USE OF REGIONAL UTILITY ORGANIZATIONS.—To provide expertise to affiliated 

islands to assist the affiliated islands in meeting the purposes of this section, the 

Secretary shall consider— 

(1) including regional utility organizations in the establishment of the team; 

and 

(2) providing assistance through regional utility organizations. 

(e) ANNUAL REPORTS TO CONGRESS.—Not later than 30 days after the date on 

which the Secretary receives a report submitted by the team under subsection (c)(2), 

the Secretary shall submit to the appropriate committees of Congress a report that 

contains a summary of the report of the team. 

(f) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

such sums as are necessary to carry out this section. 

SEC. 274. PRODUCT CARBON DISCLOSURE PROGRAM. 

(a) EPA STUDY.—The Administrator shall conduct a study to determine the feasibility of establishing a national program for measuring, reporting, publicly disclosing, and labeling products or materials sold in the United States for their carbon 

content, and shall, not later than 18 months after the date of enactment of this Act, 

transmit a report to Congress which shall include the following: 

(1) A determination of whether a national product carbon disclosure program 

and labeling program would be effective in achieving the intended goals of 

achieving greenhouse gas reductions and an examination of existing programs 

globally and their strengths and weaknesses. 

(2) Criteria for identifying and prioritizing sectors and products and processes 

that should be covered in such program or programs. 

(3) An identification of products, processes, or sectors whose inclusion could 

have a substantial carbon impact (prioritizing industrial products such as iron 

and steel, aluminum, cement, chemicals, and paper products, and also including 

food, beverage, hygiene, cleaning, household cleaners, construction, metals, 

clothing, semiconductor, and consumer electronics). 

(4) Suggested methodology and protocols for measuring the carbon content of 

the products across the entire carbon lifecycle of such products for use in a carbon disclosure program and labeling program. 

(5) A review of existing greenhouse gas product accounting standards, methodologies, and practices including the Greenhouse Gas Protocol, ISO 14040/44, 

ISO 14067, and Publically Available Specification 2050, and including a review 

of the strengths and weaknesses of each. 

(6) A survey of secondary databases including the Manufacturing Energy Consumption Survey and evaluate the quality of data for use in a product carbon 

disclosure program and product carbon labeling program and an identification 

of gaps in the data relative to the potential purposes of a national product carbon disclosure program and product carbon labeling program and development 

of recommendations for addressing these data gaps. 

(7) An assessment of the utility of comparing products and the appropriateness of product carbon standards. 

(8) An evaluation of the information needed on a label for clear and accurate 

communication, including what pieces of quantitative and qualitative information needs to be disclosed. 

(9) An evaluation of the appropriate boundaries of the carbon lifecycle analysis for different sectors and products. 

(10) An analysis of whether default values should be developed for products 

whose producer does not participate in the program or does not have data to 


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support a disclosure or label and determine best ways to develop such default 

values. 

(11) A recommendation of certification and verification options necessary to 

assure the quality of the information and avoid greenwashing or the use of insubstantial or meaningless environmental claims to promote a product. 

(12) An assessment of options for educating consumers about product carbon 

content and the product carbon disclosure program and product carbon labeling 

program. 

(13) An analysis of the costs and timelines associated with establishing a national product carbon disclosure program and product carbon labeling program, 

including options for a phased approach. Costs should include those for businesses associated with the measurement of carbon footprints and those associated with creating a product carbon label and managing and operating a product carbon labeling program, and options for minimizing these costs. 

(14) An evaluation of incentives (such as financial incentives, brand reputation, and brand loyalty) to determine whether reductions in emissions can be 

accelerated through encouraging more efficient manufacturing or by encouraging preferences for lower-emissions products to substitute for higher-emissions products whose level of performance is no better. 

(b) DEVELOPMENT OF NATIONAL CARBON DISCLOSURE PROGRAM.—Upon conclusion 

of the study, and not more than 36 months after the date of enactment of this Act, 

the Administrator shall establish a national product carbon disclosure program, participation in which shall be voluntary, and which may involve a product carbon label 

with broad applicability to the wholesale and consumer markets to enable and encourage knowledge about carbon content by producers and consumers and to inform 

efforts to reduce energy consumption (carbon dioxide equivalent emissions) nationwide. In developing such a program, the Administrator shall— 

(1) consider the results of the study conducted under subsection (a); 

(2) consider existing and planned programs and proposals and measurement 

standards (including the Publicly Available Specification 2050, standards to be 

developed by the World Resource Institute/World Business Council for Sustainable Development, the International Standards Organization, and the bill AB19 

pending in the California legislature); 

(3) consider the compatibility of a national product carbon disclosure program 

with existing programs; 

(4) utilize incentives and other means to spur the adoption of product carbon 

disclosure and product carbon labeling; 

(5) develop protocols and parameters for a product carbon disclosure program, 

including a methodology and formula for assessing, verifying, and potentially labeling a product’s greenhouse gas content, and for data quality requirements to 

allow for product comparison; 

(6) create a means to— 

(A) document best practices; 

(B) ensure clarity and consistency; 

(C) work with suppliers, manufacturers, and retailers to encourage participation; 

(D) ensure that protocols are consistent and comparable across like products; and 

(E) evaluate the effectiveness of the program; 

(7) make publicly available information on product carbon content to ensure 

transparency; 

(8) provide for public outreach, including a consumer education program to increase awareness; 

(9) develop training and education programs to help businesses learn how to 

measure and communicate their carbon footprint and easy tools and templates 

for businesses to use to reduce cost and time to measure their products’ carbon 

lifecycle; 

(10) consult with the Secretary of Energy, the Secretary of Commerce, the 

Federal Trade Commission, and other Federal agencies, as necessary; 

(11) gather input from stakeholders through consultations, public workshops 

or hearings with representatives of consumer product manufacturers, consumer 

groups, and environmental groups; 

(12) utilize systems for verification and product certification that will ensure 

that claims manufacturers make about their products are valid; 

(13) create a process for reviewing the accuracy of product carbon label information and protecting the product carbon label in the case of a change in the 

product’s energy source, supply chain, ingredients, or other factors, and specify 

the frequency to which data should be updated; and 


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(14) develop a standardized, easily understandable carbon label, if appropriate, and create a process for responding to inaccuracies and misuses of such 

a label. 

(c) REPORT TO CONGRESS.—Not later than 5 years after the program is established 

pursuant to subsection (b), the Administrator shall report to Congress on the effectiveness and impact of the program, the level of voluntary participation, and any 

recommendations for additional measures. 

(d) DEFINITIONS.—As used in this section— 

(1) the term ‘‘carbon content’’ means the amount of greenhouse gas emissions 

and their warming impact on the atmosphere expressed in carbon dioxide equivalent associated with a product’s value chain; 

(2) the term ‘‘carbon footprint’’ means the level of greenhouse gas emissions 

produced by a particular activity, service, or entity; and 

(3) the term ‘‘carbon lifecycle’’ means the greenhouse gas emissions that are 

released as part of the processes of creating, producing, processing or manufacturing, modifying, transporting, distributing, storing, using, recycling, or disposing of goods and services. 

(e) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to be appropriated 

to the Administrator $5,000,000 for the study required by subsection (a) and 

$25,000,000 for each of fiscal years 2010 through 2025 for the program required 

under subsection (b). 

TITLE III—REDUCING GLOBAL WARMING 

POLLUTION 

SEC. 301. SHORT TITLE. 

This title, and sections 112, 116, 221, 222, 223, and 401 of this Act, may be cited 

as the ‘‘Safe Climate Act’’. 

Subtitle A—Reducing Global Warming Pollution 

SEC. 311. REDUCING GLOBAL WARMING POLLUTION. 

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

the following new title: 

‘‘TITLE VII—GLOBAL WARMING POLLUTION 

REDUCTION PROGRAM 

‘‘PART A—GLOBAL WARMING POLLUTION REDUCTION 

GOALS AND TARGETS 

‘‘SEC. 701. FINDINGS AND PURPOSE. 

‘‘(a) FINDINGS.—The Congress finds as follows: 

‘‘(1) Global warming poses a significant threat to the national security, economy, public health and welfare, and environment of the United States, as well 

as of other nations. 

‘‘(2) Reviews of scientific studies, including by the Intergovernmental Panel 

on Climate Change and the National Academy of Sciences, demonstrate that 

global warming is the result of the combined anthropogenic greenhouse gas 

emissions from numerous sources of all types and sizes. Each increment of 

emission, when combined with other emissions, causes or contributes materially 

to the acceleration and extent of global warming and its adverse effects for the 

lifetime of such gas in the atmosphere. Accordingly, controlling emissions in 

small as well as large amounts is essential to prevent, slow the pace of, reduce 

the threats from, and mitigate global warming and its adverse effects. 

‘‘(3) Because they induce global warming, greenhouse gas emissions cause or 

contribute to injuries to persons in the United States, including— 

‘‘(A) adverse health effects such as disease and loss of life; 

‘‘(B) displacement of human populations; 

‘‘(C) damage to property and other interests related to ocean levels, acidification, and ice changes; 

‘‘(D) severe weather and seasonal changes; 


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‘‘(E) disruption, costs, and losses to business, trade, employment, farms, 

subsistence, aesthetic enjoyment of the environment, recreation, culture, 

and tourism; 

‘‘(F) damage to plants, forests, lands, and waters; 

‘‘(G) harm to wildlife and habitat; 

‘‘(H) scarcity of water and the decreased abundance of other natural resources; 

‘‘(I) worsening of tropospheric air pollution; 

‘‘(J) substantial threats of similar damage; and 

‘‘(K) other harm. 

‘‘(4) That many of these effects and risks of future effects of global warming 

are widely shared does not minimize the adverse effects individual persons have 

suffered, will suffer, and are at risk of suffering because of global warming. 

‘‘(5) That some of the adverse and potentially catastrophic effects of global 

warming are at risk of occurring and not a certainty does not negate the harm 

persons suffer from actions that increase the likelihood, extent, and severity of 

such future impacts. 

‘‘(6) Nations of the world look to the United States for leadership in addressing the threat of and harm from global warming. Full implementation of the 

Safe Climate Act is critical to engage other nations in an international effort 

to mitigate the threat of and harm from global warming. 

‘‘(7) Global warming and its adverse effects are occurring and are likely to 

continue and increase in magnitude, and to do so at a greater and more harmful 

rate, unless the Safe Climate Act is fully implemented and enforced in an expeditious manner. 

‘‘(b) PURPOSE.—It is the general purpose of the Safe Climate Act to help prevent, 

reduce the pace of, mitigate, and remedy global warming and its adverse effects. To 

fulfill such purpose, it is necessary to— 

‘‘(1) require the timely fulfillment of all governmental acts and duties, both 

substantive and procedural, and the prompt compliance of covered entities with 

the requirements of the Safe Climate Act; 

‘‘(2) establish and maintain an effective, transparent, and fair market for 

emission allowances and preserve the integrity of the cap on emissions and of 

offset credits; 

‘‘(3) advance the production and deployment of clean energy and energy efficiency technologies; and 

‘‘(4) ensure effective enforcement of the Safe Climate Act by citizens, States, 

Indian tribes, and all levels of government because each violation of the Safe 

Climate Act is likely to result in an additional increment of greenhouse gas 

emission and will slow the pace of implementation of the Safe Climate Act and 

delay the achievement of the goals set forth in section 702, and cause or contribute to global warming and its adverse effects. 

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

‘‘The goals of the Safe Climate Act are to reduce steadily the quantity of United 

States greenhouse gas emissions such that— 

‘‘(1) in 2012, the quantity of United States greenhouse gas emissions does not 

exceed 97 percent of the quantity of United States greenhouse gas emissions in 

2005; 

‘‘(2) in 2020, the quantity of United States greenhouse gas emissions does not 

exceed 80 percent of the quantity of United States greenhouse gas emissions in 

2005; 

‘‘(3) in 2030, the quantity of United States greenhouse gas emissions does not 

exceed 58 percent of the quantity of United States greenhouse gas emissions in 

2005; and 

‘‘(4) in 2050, the quantity of United States greenhouse gas emissions does not 

exceed 17 percent of the quantity of United States greenhouse gas emissions in 

2005. 

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

‘‘(a) IN GENERAL.—The regulations issued under section 721 shall cap and reduce 

annually the greenhouse gas emissions of capped sources each calendar year beginning in 2012 such that— 

‘‘(1) in 2012, the quantity of greenhouse gas emissions from capped sources 

does not exceed 97 percent of the quantity of greenhouse gas emissions from 

such sources in 2005; 

‘‘(2) in 2020, the quantity of greenhouse gas emissions from capped sources 

does not exceed 83 percent of the quantity of greenhouse gas emissions from 

such sources in 2005; 


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‘‘(3) in 2030, the quantity of greenhouse gas emissions from capped sources 

does not exceed 58 percent of the quantity of greenhouse gas emissions from 

such sources in 2005; and 

‘‘(4) in 2050, the quantity of greenhouse gas emissions from capped sources 

does not exceed 17 percent of the quantity of greenhouse gas emissions from 

such sources in 2005. 

‘‘(b) DEFINITION.—For purposes of this section, the term ‘greenhouse gas emissions 

from such sources in 2005’ means emissions to which section 722 would have applied if the requirements of this title for the specified year had been in effect for 

2005. 

‘‘SEC. 704. SUPPLEMENTAL POLLUTION REDUCTIONS. 

‘‘For the purposes of decreasing the likelihood of catastrophic climate change, preserving tropical forests, building capacity to generate offset credits, and facilitating 

international action on global warming, the Administrator shall set aside the percentage specified in section 781 of the quantity of emission allowances established 

under section 721(a) for each year, to be used to achieve a reduction of greenhouse 

gas emissions from deforestation in developing countries in accordance with part E. 

In 2020, activities supported under part E shall provide greenhouse gas reductions 

in an amount equal to an additional 10 percentage points of reductions from United 

States greenhouse gas emissions in 2005. The Administrator shall distribute these 

allowances with respect to activities in countries that enter into and implement 

agreements or arrangements relating to reduced deforestation as described in section 754(a)(2). 

‘‘SEC. 705. REVIEW AND PROGRAM RECOMMENDATIONS. 

‘‘(a) IN GENERAL.—The Administrator shall, in consultation with appropriate Federal agencies, submit to Congress a report not later than July 1, 2013, and every 

4 years thereafter, that includes— 

‘‘(1) an analysis of key findings based on the latest scientific information and 

data relevant to global climate change; 

‘‘(2) an analysis of capabilities to monitor and verify greenhouse gas reductions on a worldwide basis, including for the United States, as required under 

the Safe Climate Act; and 

‘‘(3) an analysis of the status of worldwide greenhouse gas reduction efforts, 

including implementation of the Safe Climate Act and other policies, both domestic and international, for reducing greenhouse gas emissions, preventing 

dangerous atmospheric concentrations of greenhouse gases, preventing significant irreversible consequences of climate change, and reducing vulnerability to 

the impacts of climate change. 

‘‘(b) EXCEPTION.—Paragraph (3) of subsection (a) shall not apply to the first report 

submitted under such subsection. 

‘‘(c) LATEST SCIENTIFIC INFORMATION.—The analysis required under subsection 

(a)(1) shall— 

‘‘(1) address existing scientific information and reports, considering, to the 

greatest extent possible, the most recent assessment report of the Intergovernmental Panel on Climate Change, reports by the United States Global Change 

Research Program, the Natural Resources Climate Change Adaptation Panel established under section 475 of the American Clean Energy and Security Act of 

2009, and Federal agencies, and the European Union’s global temperature data 

assessment; and 

‘‘(2) review trends and projections for— 

‘‘(A) global and country-specific annual emissions of greenhouse gases, 

and cumulative greenhouse gas emissions produced between 1850 and the 

present, including— 

‘‘(i) global cumulative emissions of anthropogenic greenhouse gases; 

‘‘(ii) global annual emissions of anthropogenic greenhouse gases; and 

‘‘(iii) by country, annual total, annual per capita, and cumulative anthropogenic emissions of greenhouse gases for the top 50 emitting nations; 

‘‘(B) significant changes, both globally and by region, in annual net nonanthropogenic 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; 


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‘‘(3) assess the current and potential impacts of global climate change on— 

‘‘(A) human populations, including impacts on public health, economic 

livelihoods, subsistence, human infrastructure, and displacement or permanent relocation due to flooding, severe weather, extended drought, erosion, 

or other ecosystem changes; 

‘‘(B) freshwater systems, including water resources for human consumption and agriculture and natural and managed ecosystems, flood and 

drought risks, and relative humidity; 

‘‘(C) the carbon cycle, including impacts related to the thawing of permafrost, the frequency and intensity of wildfire, and terrestrial and ocean carbon sinks; 

‘‘(D) ecosystems and animal and plant populations, including impacts on 

species abundance, phenology, and distribution; 

‘‘(E) oceans and ocean ecosystems, including effects on sea level, ocean 

acidity, ocean temperatures, coral reefs, ocean circulation, fisheries, and 

other indicators of ocean ecosystem health; 

‘‘(F) the cryosphere, including effects on ice sheet mass balance, mountain 

glacier mass balance, and sea-ice extent and volume; 

‘‘(G) changes in the intensity, frequency, or distribution of severe weather 

events, including precipitation, tropical cyclones, tornadoes, and severe heat 

waves; 

‘‘(H) agriculture and forest systems; and 

‘‘(I) any other indicators the Administrator deems appropriate; 

‘‘(4) summarize any significant socio-economic impacts of climate change in 

the United States, including the territories of the United States, drawing on 

work by Federal agencies and the academic literature, including impacts on— 

‘‘(A) public health; 

‘‘(B) economic livelihoods and subsistence; 

‘‘(C) displacement or permanent relocation due to flooding, severe weather, extended drought, or other ecosystem changes; 

‘‘(D) human infrastructure, including coastal infrastructure vulnerability 

to extreme events and sea level rise, river floodplain infrastructure, and 

sewer and water management systems; 

‘‘(E) agriculture and forests, including effects on potential growing season, 

distribution, and yield; 

‘‘(F) water resources for human consumption, agriculture and natural and 

managed ecosystems, flood and drought risks, and relative humidity; 

‘‘(G) energy supply and use; and 

‘‘(H) transportation; 

‘‘(5) in assessing risks and impacts, use a risk management framework, including both qualitative and quantitative measures, to assess the observed and 

projected impacts of current and future climate change, accounting for— 

‘‘(A) both monetized and non-monetized losses; 

‘‘(B) potential nonlinear, abrupt, or essentially irreversible changes in the 

climate system; 

‘‘(C) potential nonlinear increases in the cost of impacts; 

‘‘(D) potential low-probability, high impact events; and 

‘‘(E) whether impacts are transitory or essentially permanent; and 

‘‘(6) based on the findings of the Administrator under this section, as well as 

assessments produced by the Intergovernmental Panel on Climate Change, the 

United States Global Change Research program, and other relevant scientific 

entities— 

‘‘(A) describe increased risks to natural systems and society that would 

result from an increase in global average temperature 3.6 degrees Fahrenheit (2 degrees Celsius) above the pre-industrial average or an increase 

in atmospheric greenhouse gas concentrations above 450 parts per million 

carbon dioxide equivalent; and 

‘‘(B) identify and assess— 

‘‘(i) significant residual risks not avoided by the thresholds described 

in subparagraph (A); 

‘‘(ii) alternative thresholds or targets that may more effectively limit 

the risks identified pursuant to clause (i); and 

‘‘(iii) thresholds above those described in subparagraph (A) which significantly increase the risk of certain impacts or render them essentially permanent. 

‘‘(d) STATUS OF MONITORING AND VERIFICATION CAPABILITIES TO EVALUATE

GREENHOUSE GAS REDUCTION EFFORTS.—The analysis required under subsection 

(a)(2) shall evaluate the capabilities of the monitoring, reporting, and verification 

systems used to quantify progress in achieving reductions in greenhouse gas emisVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00134 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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sions both globally and in the United States (as described in section 702), including— 

‘‘(1) quantification of emissions and emission reductions by entities participating in the cap and trade program under this title; 

‘‘(2) quantification of emissions and emission reductions by entities participating in the offset program under this title; 

‘‘(3) quantification of emission and emissions reductions by entities regulated 

by performance standards; 

‘‘(4) quantification of aggregate net emissions and emissions reductions by the 

United States; and 

‘‘(5) quantification of global changes in net emissions and in sources and sinks 

of greenhouse gases. 

‘‘(e) STATUS OF GREENHOUSE GAS REDUCTION EFFORTS.—The analysis required 

under subsection (a)(3) shall address— 

‘‘(1) whether the programs under Safe Climate Act and other Federal statutes 

are resulting in sufficient United States greenhouse gas emissions reductions to 

meet the emissions reduction goals described in section 702, taking into account 

the use of offsets; and 

‘‘(2) whether United States actions, taking into account international actions, 

commitments, and trends, and considering the range of plausible emissions scenarios, are sufficient to avoid— 

‘‘(A) atmospheric greenhouse gas concentrations above 450 parts per million carbon dioxide equivalent; 

‘‘(B) global average surface temperature 3.6 degrees Fahrenheit (2 degrees Celsius) above the pre-industrial average, or such other temperature 

thresholds as the Administrator deems appropriate; and 

‘‘(C) other temperature or greenhouse gas thresholds identified pursuant 

to subsection (c)(6)(B). 

‘‘(f) RECOMMENDATIONS.— 

‘‘(1) LATEST SCIENTIFIC INFORMATION.—Based on the analysis described in 

subsection (a)(1), each report under subsection (a) shall identify actions that 

could be taken to— 

‘‘(A) improve the characterization of changes in the earth-climate system 

and impacts of global climate change; 

‘‘(B) better inform decision making and actions related to global climate 

change; 

‘‘(C) mitigate risks to natural and social systems; and 

‘‘(D) design policies to better account for climate risks. 

‘‘(2) MONITORING, REPORTING AND VERIFICATION.—Based on the analysis described in subsection (a)(2), each report under subsection (a) shall identify key 

gaps in measurement, reporting, and verification capabilities and make recommendations to improve the accuracy and reliability of those capabilities. 

‘‘(3) STATUS OF GREENHOUSE GAS REDUCTION EFFORTS.—Based on the analysis 

described in subsection (a)(3), taking into account international actions, commitments, and trends, and considering the range of plausible emissions scenarios, 

each report under subsection (a) shall identify— 

‘‘(A) the quantity of additional reductions required to meet the emissions 

reduction goals in section 702; 

‘‘(B) the quantity of additional reductions in global greenhouse gas emissions needed to avoid the concentration and temperature thresholds identified in subsection (e); and 

‘‘(C) possible strategies and approaches for achieving additional reductions. 

‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to carry out this section such sums as may be necessary. 

‘‘SEC. 706. NATIONAL ACADEMY REVIEW. 

‘‘(a) IN GENERAL.—Not later than 1 year after the date of enactment of this title, 

the Administrator shall offer to enter into a contract with the National Academy 

of Sciences (in this section referred to as the ‘Academy’) under which the Academy 

shall, not later than July 1, 2014, and every 4 years thereafter, submit to Congress 

and the Administrator a report that includes— 

‘‘(1) a review of the most recent report and recommendations issued under 

section 705; and 

‘‘(2) an analysis of technologies to achieve reductions in greenhouse gas emissions. 

‘‘(b) FAILURE TO ISSUE A REPORT.—In the event that the Administrator has not 

issued all or part of the most recent report required under section 705, the Academy 

shall conduct its own review and analysis of the required information. 


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‘‘(c) TECHNOLOGICAL INFORMATION.—The analysis required under subsection (a)(2) 

shall— 

‘‘(1) review existing technological information and reports, including the most 

recent reports by the Department of Energy, the United States Global Change 

Research Program, the Intergovernmental Panel on Climate Change, and the 

International Energy Agency and any other relevant information on technologies or practices that reduce or limit greenhouse gas emissions; 

‘‘(2) include the participation of technical experts from relevant private industry sectors; 

‘‘(3) review the current and future projected deployment of technologies and 

practices in the United States that reduce or limit greenhouse gas emissions, 

including— 

‘‘(A) technologies for capture and sequestration of greenhouse gases; 

‘‘(B) technologies to improve energy efficiency; 

‘‘(C) low- or zero-greenhouse gas emitting energy technologies; 

‘‘(D) low- or zero-greenhouse gas emitting fuels; 

‘‘(E) biological sequestration practices and technologies; and 

‘‘(F) any other technologies the Academy deems relevant; and 

‘‘(4) review and compare the emissions reduction potential, commercial viability, market penetration, investment trends, and deployment of the technologies 

described in paragraph (3), including— 

‘‘(A) the need for additional research and development, including publicly 

funded research and development; 

‘‘(B) the extent of commercial deployment, including, where appropriate, 

a comparison to the cost and level of deployment of conventional fossil fuelfired energy technologies and devices; and 

‘‘(C) an evaluation of any substantial technological, legal, or market-based 

barriers to commercial deployment. 

‘‘(d) RECOMMENDATIONS.— 

‘‘(1) LATEST SCIENTIFIC INFORMATION.—Based on the review described in subsection (a)(1), the Academy shall identify actions that could be taken to— 

‘‘(A) improve the characterization of changes in the earth-climate system 

and impacts of global climate change; 

‘‘(B) better inform decision making and actions related to global climate 

change; 

‘‘(C) mitigate risks to natural and social systems; 

‘‘(D) design policies to better account for climate risks; and 

‘‘(E) improve the accuracy and reliability of capabilities to monitor, report, and verify greenhouse gas emissions reduction efforts. 

‘‘(2) TECHNOLOGICAL INFORMATION.—Based on the analysis described in subsection (a)(2), the Academy shall identify— 

‘‘(A) additional emissions reductions that may be possible as a result of 

technologies described in the analysis; 

‘‘(B) barriers to the deployment of such technologies; and 

‘‘(C) actions that could be taken to speed deployment of such technologies. 

‘‘(3) STATUS OF GREENHOUSE GAS REDUCTION EFFORTS.—Based on the review 

described in subsection (a)(1), the Academy shall identify— 

‘‘(A) the quantity of additional reductions required to meet the emissions 

reduction goals described in section 702; and 

‘‘(B) the quantity of additional reductions in global greenhouse gas emissions needed to avoid the concentration and temperature thresholds described in section 705(c)(6)(A) or identified pursuant to section 705(c)(6)(B). 

‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

to carry out this section such sums as may be necessary. 

‘‘SEC. 707. PRESIDENTIAL RESPONSE AND RECOMMENDATIONS. 

‘‘Not later than July 1, 2015, and every 4 years thereafter— 

‘‘(1) the President shall direct relevant Federal agencies to use existing statutory authority to take appropriate actions identified in the reports submitted 

under sections 705 and 706 and to address any shortfalls identified in such reports; and 

‘‘(2) in the event that the National Academy of Sciences has concluded, in the 

most recent report submitted under section 706, that the United States will not 

achieve the necessary domestic greenhouse gas emissions reductions, or that 

global actions will not maintain safe global average surface temperature and atmospheric greenhouse gas concentration thresholds, the President shall submit 

to Congress a plan identifying domestic and international actions that will 

achieve necessary additional greenhouse gas reductions, including any recommendations for legislative action. 


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‘‘PART B—DESIGNATION AND REGISTRATION OF 

GREENHOUSE GASES 

‘‘SEC. 711. DESIGNATION OF GREENHOUSE GASES. 

‘‘(a) GREENHOUSE GASES.—For purposes of this title, the following are greenhouse 

gases: 

‘‘(1) Carbon dioxide. 

‘‘(2) Methane. 

‘‘(3) Nitrous oxide. 

‘‘(4) Sulfur hexafluoride. 

‘‘(5) Hydrofluorocarbons from a chemical manufacturing process at an industrial stationary source. 

‘‘(6) Any perfluorocarbon. 

‘‘(7) Nitrogen trifluoride. 

‘‘(8) Any other anthropogenic gas designated as a greenhouse gas by the Administrator under this section. 

‘‘(b) DETERMINATION ON ADMINISTRATOR’S INITIATIVE.—The Administrator shall, 

by rule— 

‘‘(1) determine whether 1 metric ton of another anthropogenic gas makes the 

same or greater contribution to global warming over 100 years as 1 metric ton 

of carbon dioxide; 

‘‘(2) determine the carbon dioxide equivalent value for each gas with respect 

to which the Administrator makes an affirmative determination under paragraph (1); 

‘‘(3) for each gas with respect to which the Administrator makes an affirmative determination under paragraph (1) and that is used as a substitute for a 

class I or class II substance under title VI, determine the extent to which to 

regulate that gas under section 619 and specify appropriate compliance obligations under section 619; 

‘‘(4) designate as a greenhouse gas for purposes of this title each gas for which 

the Administrator makes an affirmative determination under paragraph (1), to 

the extent that it is not regulated under section 619; and 

‘‘(5) specify the appropriate compliance obligations under this title for each 

gas designated as a greenhouse gas under paragraph (4). 

‘‘(c) PETITIONS TO DESIGNATE A GREENHOUSE GAS.— 

‘‘(1) IN GENERAL.—Any person may petition the Administrator to designate as 

a greenhouse gas any anthropogenic gas 1 metric ton of which makes the same 

or greater contribution to global warming over 100 years as 1 metric ton of carbon dioxide. 

‘‘(2) CONTENTS OF PETITION.—The petitioner shall provide sufficient data, as 

specified by rule by the Administrator, to demonstrate that the gas is likely to 

be a greenhouse gas and is likely to be produced, imported, used, or emitted 

in the United States. To the extent practicable, the petitioner shall also identify 

producers, importers, distributors, users, and emitters of the gas in the United 

States. 

‘‘(3) REVIEW AND ACTION BY THE ADMINISTRATOR.—Not later than 90 days 

after receipt of a petition under paragraph (2), the Administrator shall determine whether the petition is complete and notify the petitioner and the public 

of the decision. 

‘‘(4) ADDITIONAL INFORMATION.—The Administrator may require producers, 

importers, distributors, users, or emitters of the gas to provide information on 

the contribution of the gas to global warming over 100 years compared to carbon dioxide. 

‘‘(5) TREATMENT OF PETITION.—For any substance used as a substitute for a 

class I or class II substance under title VI, the Administrator may elect to treat 

a petition under this subsection as a petition to list the substance as a class 

II, group II substance under section 619, and may require the petition to be 

amended to address listing criteria promulgated under that section. 

‘‘(6) DETERMINATION.—Not later than 2 years after receipt of a complete petition, the Administrator shall, after notice and an opportunity for comment— 

‘‘(A) issue and publish in the Federal Register— 

‘‘(i) a determination that 1 metric ton of the gas does not make a contribution to global warming over 100 years that is equal to or greater 

than that made by 1 metric ton of carbon dioxide; and 

‘‘(ii) an explanation of the decision; or 

‘‘(B) determine that 1 metric ton of the gas makes a contribution to global 

warming over 100 years that is equal to or greater than that made by 1 


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metric ton of carbon dioxide, and take the actions described in subsection 

(b) with respect to such gas. 

‘‘(7) GROUNDS FOR DENIAL.—The Administrator may not deny a petition under 

this subsection solely on the basis of inadequate Environmental Protection 

Agency resources or time for review. 

‘‘(d) SCIENCE ADVISORY BOARD CONSULTATION.— 

‘‘(1) CONSULTATION.—The Administrator shall— 

‘‘(A) give notice to the Science Advisory Board prior to making a determination under subsection (b)(1), (c)(6), or (e)(2)(B); 

‘‘(B) consider the written recommendations of the Science Advisory Board 

under paragraph (2) regarding the determination; and 

‘‘(C) consult with the Science Advisory Board regarding such determination, including consultation subsequent to receipt of such written recommendations. 

‘‘(2) FORMULATION OF RECOMMENDATIONS.—Upon receipt of notice under paragraph (1)(A) regarding a pending determination under subsection (b)(1), (c)(6), 

or (e)(2)(B), the Science Advisory Board shall— 

‘‘(A) formulate recommendations regarding such determination, subject to 

a peer review process; and 

‘‘(B) submit such recommendations in writing to the Administrator. 

‘‘(e) MANUFACTURING AND EMISSION NOTICES.— 

‘‘(1) NOTICE REQUIREMENT.— 

‘‘(A) IN GENERAL.—Effective 24 months after the date of enactment of this 

title, no person may manufacture or introduce into interstate commerce a 

fluorinated gas, or emit a significant quantity, as determined by the Administrator, of any fluorinated gas that is generated as a byproduct during the 

production or use of another fluorinated gas, unless— 

‘‘(i) the gas is designated as a greenhouse gas under this section or 

is an ozone-depleting substance listed as a class I or class II substance 

under title VI; 

‘‘(ii) the Administrator has determined that 1 metric ton of such gas 

does not make a contribution to global warming that is equal to or 

greater than that made by 1 metric ton of carbon dioxide; or 

‘‘(iii) the person manufacturing or importing the gas for distribution 

into interstate commerce, or emitting the gas, has submitted to the Administrator, at least 90 days before the start of such manufacture, introduction into commerce, or emission, a notice of such person’s manufacture, introduction into commerce, or emission of such gas, and the 

Administrator has not determined that notice or a substantially similar 

notice is incomplete. 

‘‘(B) ALTERNATIVE COMPLIANCE.—For a gas that is a substitute for a class 

I or class II substance under title VI and either has been listed as acceptable for use under section 612 or is currently subject to evaluation under 

section 612, the Administrator may accept the notice and information provided pursuant to that section as fulfilling the obligation under clause (iii) 

of subparagraph (A). 

‘‘(2) REVIEW AND ACTION BY THE ADMINISTRATOR.— 

‘‘(A) COMPLETENESS.—Not later than 90 days after receipt of notice under 

paragraph (1)(A)(iii) or (B), the Administrator shall determine whether the 

notice is complete. 

‘‘(B) DETERMINATION.— If the Administrator determines that the notice 

is complete, the Administrator shall, after notice and an opportunity for 

comment, not later than 12 months after receipt of the notice— 

‘‘(i) issue and publish in the Federal Register a determination that 

1 metric ton of the gas does not make a contribution to global warming 

over 100 years that is equal to or greater than that made by 1 metric 

ton of carbon dioxide and an explanation of the decision; or 

‘‘(ii) determine that 1 metric ton of the gas makes a contribution to 

global warming over 100 years that is equal to or greater than that 

made by 1 metric ton of carbon dioxide, and take the actions described 

in subsection (b) with respect to such gas. 

‘‘(f) REGULATIONS.—Not later than one year after the date of enactment of this 

title, the Administrator shall promulgate regulations to carry out this section. Such 

regulations shall include— 

‘‘(1) requirements for the contents of a petition submitted under subsection 

(c); 

‘‘(2) requirements for the contents of a notice required under subsection (e); 

and 


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‘‘(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 


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1 of the first calendar year starting at least 9 months after the date on which 

the revised determination was published. 

‘‘(3) The Administrator may decrease the frequency of review and revision 

under paragraph (1) if the Administrator determines that such decrease is appropriate in order to synchronize such review and revision with any similar review process carried out pursuant to the United Nations Framework Convention on Climate Change, done at New York on May 9, 1992, or to an agreement 

negotiated under that convention, except that in no event shall the Administrator carry out such review and revision any less frequently than every 10 

years. 

‘‘(d) METHODOLOGY.—In setting carbon dioxide equivalent values, for purposes of 

this section or section 711, the Administrator shall take into account publications 

by the Intergovernmental Panel on Climate Change or a successor organization 

under the auspices of the United Nations Environmental Programme and the World 

Meteorological Organization. 

‘‘SEC. 713. GREENHOUSE GAS REGISTRY. 

‘‘(a) DEFINITIONS.—For purposes of this section: 

‘‘(1) CLIMATE REGISTRY.—The term ‘Climate Registry’ means the greenhouse 

gas emissions registry jointly established and managed by more than 40 States 

and Indian tribes in 2007 to collect high-quality greenhouse gas emission data 

from facilities, corporations, and other organizations to support various greenhouse gas emission reporting and reduction policies for the member States and 

Indian tribes. 

‘‘(2) REPORTING ENTITY.—The term ‘reporting entity’ means— 

‘‘(A) a covered entity; 

‘‘(B) an entity that— 

‘‘(i) would be a covered entity if it had emitted, produced, imported, 

manufactured, or delivered in 2008 or any subsequent year more than 

the applicable threshold level in the definition of covered entity in paragraph (13) of section 700; and 

‘‘(ii) has emitted, produced, imported, manufactured, or delivered in 

2008 or any subsequent year more than the applicable threshold level 

in the definition of covered entity in paragraph (13) of section 700, provided that the figure of 25,000 tons of carbon dioxide equivalent is read 

instead as 10,000 tons of carbon dioxide equivalent and the figure of 

460,000,000 cubic feet is read instead as 184,000,000 cubic feet; 

‘‘(C) any other entity that emits a greenhouse gas, or produces, imports, 

manufactures, or delivers material whose use results or may result in 

greenhouse gas emissions if the Administrator determines that reporting 

under this section by such entity will help achieve the purposes of this title 

or title VIII; 

‘‘(D) any vehicle fleet with emissions of more than 25,000 tons of carbon 

dioxide equivalent on an annual basis, if the Administrator determines that 

the inclusion of such fleet will help achieve the purposes of this title or title 

VIII; or 

‘‘(E) any entity that delivers electricity to an energy-intensive facility in 

an industrial sector that meets the energy or greenhouse gas intensity criteria in section 764(b)(2)(A)(i). 

‘‘(b) REGULATIONS.— 

‘‘(1) IN GENERAL.—Not later than 6 months after the date of enactment of this 

title, the Administrator shall issue regulations establishing a Federal greenhouse gas registry. Such regulations shall— 

‘‘(A) require reporting entities to submit to the Administrator data on— 

‘‘(i) greenhouse gas emissions in the United States; 

‘‘(ii) the production and manufacture in the United States, importation into the United States, and, at the discretion of the Administrator, 

exportation from the United States, of fuels and industrial gases the 

uses of which result or may result in greenhouse gas emissions; 

‘‘(iii) deliveries in the United States of natural gas, and any other gas 

meeting the specifications for commingling with natural gas for purposes of delivery, the combustion of which result or may result in 

greenhouse gas emissions; and 

‘‘(iv) the capture and sequestration of greenhouse gases; 

‘‘(B) require covered entities and, where appropriate, other reporting entities to submit to the Administrator data sufficient to ensure compliance 

with or implementation of the requirements of this title; 

‘‘(C) require reporting of electricity delivered to industrial sources in energy-intensive industries; 


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‘‘(D) ensure the completeness, consistency, transparency, accuracy, precision, and reliability of such data; 

‘‘(E) take into account the best practices from the most recent Federal, 

State, tribal, and international protocols for the measurement, accounting, 

reporting, and verification of greenhouse gas emissions, including protocols 

from the Climate Registry and other mandatory State or multistate authorized programs; 

‘‘(F) take into account the latest scientific research; 

‘‘(G) require that, for covered entities with respect to greenhouse gases to 

which section 722 applies, and, to the extent determined to be appropriate 

by the Administrator, for covered entities with respect to other greenhouse 

gases and for other reporting entities, submitted data are based on— 

‘‘(i) continuous monitoring systems for fuel flow or emissions, such as 

continuous emission monitoring systems; 

‘‘(ii) alternative systems that are demonstrated as providing data 

with the same precision, reliability, accessibility, and timeliness, or, to 

the extent the Administrator determines is appropriate for reporting 

small amounts of emissions, the same precision, reliability, and accessibility and similar timeliness, as data provided by continuous monitoring systems for fuel flow or emissions; or 

‘‘(iii) alternative methodologies that are demonstrated to provide data 

with precision, reliability, accessibility, and timeliness, or, to the extent 

the Administrator determines is appropriate for reporting small 

amounts of emissions, precision, reliability, and accessibility, as similar 

as is technically feasible to that of data generally provided by continuous monitoring systems for fuel flow or emissions, if the Administrator 

determines that, with respect to a reporting entity, there is no continuous monitoring system or alternative system described in clause (i) or 

(ii) that is technically feasible; 

‘‘(H) require that the Administrator, in determining the extent to which 

the requirement to use systems or methodologies in accordance with subparagraph (G) is appropriate for reporting entities other than covered entities or for greenhouse gases to which section 722 does not apply, consider 

the cost of using such systems and methodologies, and of using other systems and methodologies that are available and suitable, for quantifying the 

emissions involved in light of the purposes of this title, including the goal 

of collecting consistent entity-wide data; 

‘‘(I) include methods for minimizing double reporting and avoiding irreconcilable double reporting of greenhouse gas emissions; 

‘‘(J) establish measurement protocols for carbon capture and sequestration systems, taking into consideration the regulations promulgated under 

section 813; 

‘‘(K) require that reporting entities provide the data required under this 

paragraph in reports submitted electronically to the Administrator, in such 

form and containing such information as may be required by the Administrator; 

‘‘(L) include requirements for keeping records supporting or related to, 

and protocols for auditing, submitted data; 

‘‘(M) establish consistent policies for calculating carbon content and 

greenhouse gas emissions for each type of fossil fuel with respect to which 

reporting is required; 

‘‘(N) subsequent to implementation of policies developed under subparagraph (M), provide for immediate dissemination, to States, Indian tribes, 

and on the Internet, of all data reported under this section as soon as practicable after electronic audit by the Administrator and any resulting correction of data, except that data shall not be disseminated under this subparagraph if— 

‘‘(i) its nondissemination is vital to the national security of the 

United States, as determined by the President; or 

‘‘(ii) it is confidential business information that cannot be derived 

from information that is otherwise publicly available and that would 

cause significant calculable competitive harm if published, except 

that— 

‘‘(I) data relating to greenhouse gas emissions, including any upstream or verification data from reporting entities, shall not be 

considered to be confidential business information; and 

‘‘(II) data that is confidential business information shall be provided to a State or Indian tribe within whose jurisdiction the reporting entity is located, if the Administrator determines that such 


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State or Indian tribe has in effect protections for confidential business information that are equivalent to protections applicable to 

the Federal Government; 

‘‘(O) prescribe methods by which the Administrator shall, in cases in 

which satisfactory data are not submitted to the Administrator for any period of time, estimate emission, production, importation, manufacture, or 

delivery levels— 

‘‘(i) for covered entities with respect to greenhouse gas emissions, production, importation, manufacture, or delivery regulated under this 

title to ensure that emissions, production, importation, manufacture, or 

deliveries are not underreported, and to create a strong incentive for 

meeting data monitoring and reporting requirements— 

‘‘(I) with a conservative estimate of the highest emission, production, importation, manufacture, or delivery levels that may have occurred during the period for which data are missing; or 

‘‘(II) to the extent the Administrator considers appropriate, with 

an estimate of such levels assuming the unit is emitting, producing, importing, manufacturing, or delivering at a maximum potential level during the period, in order to ensure that such levels 

are not underreported and to create a strong incentive for meeting 

data monitoring and reporting requirements; and 

‘‘(ii) for covered entities with respect to greenhouse gas emissions to 

which section 722 does not apply and for other reporting entities, with 

a reasonable estimate of the emission, production, importation, manufacture, or delivery levels that may have occurred during the period for 

which data are missing; 

‘‘(P) require the designation of a designated representative for each reporting entity; 

‘‘(Q) require an appropriate certification, by the designated representative 

for the reporting entity, of accurate and complete accounting of greenhouse 

gas emissions, as determined by the Administrator; and 

‘‘(R) include requirements for other data necessary for accurate and complete accounting of greenhouse gas emissions, as determined by the Administrator, including data for quality assurance of monitoring systems, monitors and other measurement devices, and other data needed to verify reported emissions, production, importation, manufacture, or delivery. 

‘‘(2) TIMING.— 

‘‘(A) CALENDAR YEARS 2007 THROUGH 2010.—For a base period of calendar 

years 2007 through 2010, each reporting entity shall submit annual data 

required under this section to the Administrator not later than March 31, 

2011. The Administrator may waive or modify reporting requirements for 

calendar years 2007 through 2010 for categories of reporting entities to the 

extent that the Administrator determines that the reporting entities did not 

keep data or records necessary to meet reporting requirements. The Administrator may, in addition to or in lieu of such requirements, collect information on energy consumption and production. 

‘‘(B) SUBSEQUENT CALENDAR YEARS.—For calendar year 2011 and each 

subsequent calendar year, each reporting entity shall submit quarterly data 

required under this section to the Administrator not later than 60 days 

after the end of the applicable quarter, except when the data is already 

being reported to the Administrator on an earlier timeframe for another 

program. 

‘‘(3) WAIVER OF REPORTING REQUIREMENTS.—The Administrator may waive reporting requirements under this section for specific entities to the extent that 

the Administrator determines that sufficient and equally or more reliable 

verified and timely data are available to the Administrator and the public on 

the Internet under other mandatory statutory requirements. 

‘‘(4) ALTERNATIVE THRESHOLD.—The Administrator may, by rule, establish applicability thresholds for reporting under this section using alternative metrics 

and levels, provided that such metrics and levels are easier to administer and 

cover the same size and type of sources as the threshold defined in this section. 

‘‘(c) INTERRELATIONSHIP WITH OTHER SYSTEMS.—In developing the regulations 

issued under subsection (b), the Administrator shall take into account the work 

done by the Climate Registry and other mandatory State or multistate programs. 

Such regulations shall include an explanation of any major differences in approach 

between the system established under the regulations and such registries and programs. 


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‘‘PART C—PROGRAM RULES 

‘‘SEC. 721. EMISSION ALLOWANCES. 

‘‘(a) IN GENERAL.—The Administrator shall establish a separate quantity of emission allowances for each calendar year starting in 2012, in the amounts prescribed 

under subsection (e). 

‘‘(b) IDENTIFICATION NUMBERS.—The Administrator shall assign to each emission 

allowance established under subsection (a) a unique identification number that includes the vintage year for that emission allowance. 

‘‘(c) LEGAL STATUS OF EMISSION ALLOWANCES.— 

‘‘(1) IN GENERAL.—An allowance established by the Administrator under this 

title does not constitute a property right. 

‘‘(2) TERMINATION OR LIMITATION.—Nothing in this Act or any other provision 

of law shall be construed to limit or alter the authority of the United States, 

including the Administrator acting pursuant to statutory authority, to terminate or limit allowances or offset credits. 

‘‘(3) OTHER PROVISIONS UNAFFECTED.—Except as otherwise specified in this 

Act, nothing in this Act relating to allowances or offset credits established or 

issued under this title shall affect the application of any other provision of law 

to a covered entity, or the responsibility for a covered entity to comply with any 

such provision of law. 

‘‘(d) SAVINGS PROVISION.—Nothing in this part shall be construed as requiring a 

change of any kind in any State law regulating electric utility rates and charges, 

or as affecting any State law regarding such State regulation, or as limiting State 

regulation (including any prudency review) under such a State law. Nothing in this 

part shall be construed as modifying the Federal Power Act or as affecting the authority of the Federal Energy Regulatory Commission under that Act. Nothing in 

this part shall be construed to interfere with or impair any program for competitive 

bidding for power supply in a State in which such program is established. 

‘‘(e) ALLOWANCES FOR EACH CALENDAR YEAR.— 

‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the number of emission allowances established by the Administrator under subsection (a) for each 

calendar year shall be as provided in the following table: 

‘‘Calendar year Emission allowances (in millions) 

2012 4,627 

2013 4,544 

2014 5,099 

2015 5,003 

2016 5,482 

2017 5,375 

2018 5,269 

2019 5,162 

2020 5,056 

2021 4,903 

2022 4,751 

2023 4,599 

2024 4,446 

2025 4,294 

2026 4,142 

2027 3,990 

2028 3,837 

2029 3,685 


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‘‘Calendar year Emission allowances (in millions) 

2030 3,533 

2031 3,408 

2032 3,283 

2033 3,158 

2034 3,033 

2035 2,908 

2036 2,784 

2037 2,659 

2038 2,534 

2039 2,409 

2040 2,284 

2041 2,159 

2042 2,034 

2043 1,910 

2044 1,785 

2045 1,660 

2046 1,535 

2047 1,410 

2048 1,285 

2049 1,160 

2050 and each year thereafter 1,035 

‘‘(2) REVISION.— 

‘‘(A) IN GENERAL.—The Administrator may adjust, in accordance with 

subparagraph (B), the number of emission allowances established pursuant 

to paragraph (1) if, after notice and an opportunity for public comment, the 

Administrator determines that— 

‘‘(i) United States greenhouse gas emissions in 2005 were other than 

7,206 million metric tons carbon dioxide equivalent; 

‘‘(ii) if the requirements of this title for 2012 had been in effect in 

2005, section 722 would have required emission allowances to be held 

for other than 66.2 percent of United States greenhouse gas emissions 

in 2005; 

‘‘(iii) if the requirements of this title for 2014 had been in effect in 

2005, section 722 would have required emission allowances to be held 

for other than 75.7 percent of United States greenhouse gas emissions 

in 2005; or 

‘‘(iv) if the requirements of this title for 2016 had been in effect in 

2005, section 722 would have required emission allowances to be held 

for other than 84.5 percent United States greenhouse gas emissions in 

2005. 

‘‘(B) ADJUSTMENT FORMULA.— 

‘‘(i) IN GENERAL.—If the Administrator adjusts under this paragraph 

the number of emission allowances established pursuant to paragraph 

(1), the number of emission allowances the Administrator establishes 

for any given calendar year shall equal the product of— 

‘‘(I) United States greenhouse gas emissions in 2005, expressed 

in tons of carbon dioxide equivalent; 

‘‘(II) the percent of United States greenhouse gas emissions in 

2005, expressed in tons of carbon dioxide equivalent, that would 

have been subject to section 722 if the requirements of this title for 

the given calendar year had been in effect in 2005; and 


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‘‘(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 coalbased 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 


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of greenhouse gases or their precursors and that such emissions have not 

been adequately addressed under other requirements of this Act, the Administrator may, after notice and comment rulemaking, promulgate a regulation reducing compensatory allowances commensurately if doing so will 

not result in leakage. 

‘‘(g) FLUORINATED GASES ASSESSMENT.—No later than March 31, 2014, the Administrator shall conduct an assessment of the regulation of non-HFC fluorinated 

gases under this title to determine whether the most appropriate point of regulation 

is at the gas manufacturer or importer level, or at the source of emissions downstream. If the Administrator determines, based on consideration of environmental 

effectiveness, cost effectiveness, administrative feasibility, extent of coverage of 

emissions, and competitiveness considerations, that emissions of non-HFC 

fluorinated gases can best be regulated by designating downstream emission sources 

as covered entities with compliance obligations under section 722, the Administrator 

shall, after notice and comment rulemaking, change the definition of covered entity 

with respect to fluorinated gases (other than HFCs) accordingly and establish such 

requirements as are necessary to ensure compliance for such entities with the requirements of this title. 

‘‘(h) REGULATIONS.—Not later than 24 months after the date of enactment of this 

title, the Administrator shall promulgate regulations to carry out the provisions of 

this title. 

‘‘SEC. 722. PROHIBITION OF EXCESS EMISSIONS. 

‘‘(a) PROHIBITION.—Except as provided in subsection (c), effective January 1, 2012, 

each covered entity is prohibited from emitting greenhouse gases, and having attributable greenhouse gas emissions, in combination, in excess of its allowable emissions level. A covered entity’s allowable emissions level for each calendar year is the 

number of emission allowances (or credits or other allowances as provided in subsection (d)) it holds as of 12:01 a.m. on April 1 (or a later date established by the 

Administrator under subsection (j)) of the following calendar year. 

‘‘(b) METHODS OF DEMONSTRATING COMPLIANCE.—Except as otherwise provided in 

this section, the owner or operator of a covered entity shall not be considered to be 

in compliance with the prohibition in subsection (a) unless, as of 12:01 a.m. on April 

1 (or a later date established by the Administrator under subsection (j)) of each calendar year starting in 2013, the owner or operator holds a quantity of emission allowances (or credits or other allowances as provided in subsection (d)) at least as 

great as the quantity calculated as follows: 

‘‘(1) ELECTRICITY SOURCES.—For a covered entity described in section 

700(13)(A), 1 emission allowance for each ton of carbon dioxide equivalent of 

greenhouse gas that such covered entity emitted in the previous calendar year, 

excluding emissions resulting from the combustion of— 

‘‘(A) petroleum-based or coal-based liquid fuel; 

‘‘(B) natural gas liquid; 

‘‘(C) renewable biomass or gas derived from renewable biomass; or 

‘‘(D) petroleum coke or gas derived from petroleum coke. 

‘‘(2) FUEL PRODUCERS AND IMPORTERS.—For a covered entity described in section 700(13)(B), 1 emission allowance for each ton of carbon dioxide equivalent 

of greenhouse gas that would be emitted from the combustion of any petroleumbased or coal-based liquid fuel, petroleum coke, or natural gas liquid, produced 

or imported by such covered entity during the previous calendar year for sale 

or distribution in interstate commerce, assuming no capture and sequestration 

of any greenhouse gas emissions. 

‘‘(3) INDUSTRIAL GAS PRODUCERS AND IMPORTERS.—For a covered entity described in section 700(13)(C), 1 emission allowance for each ton of carbon dioxide equivalent of fossil fuel-based carbon dioxide, nitrous oxide, or any other 

fluorinated gas that is a greenhouse gas (except for nitrogen trifluoride), or any 

combination thereof, produced or imported by such covered entity during the 

previous calendar year for sale or distribution in interstate commerce or released as fugitive emissions in the production of fluorinated gas. 

‘‘(4) NITROGEN TRIFLUORIDE SOURCES.—For a covered entity described in section 700(13)(D), 1 emission allowance for each ton of carbon dioxide equivalent 

of nitrogen trifluoride that such covered entity emitted in the previous calendar 

year. 

‘‘(5) GEOLOGICAL SEQUESTRATION SITES.—For a covered entity described in 

section 700(13)(E), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas that such covered entity emitted in the previous calendar 

year. 

‘‘(6) INDUSTRIAL STATIONARY SOURCES.—For a covered entity described in section 700(13)(F), (G), or (H), 1 emission allowance for each ton of carbon dioxide 


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equivalent of greenhouse gas that such covered entity emitted in the previous 

calendar year, excluding emissions resulting from— 

‘‘(A) the combustion of petroleum-based or coal-based liquid fuel; 

‘‘(B) the combustion of natural gas liquid; 

‘‘(C) the combustion of renewable biomass or gas derived from renewable 

biomass; 

‘‘(D) the combustion of petroleum coke or gas derived from petroleum 

coke; or 

‘‘(E) the use of any fluorinated gas that is a greenhouse gas purchased 

for use at that covered entity, except for nitrogen trifluoride. 

‘‘(7) INDUSTRIAL FOSSIL FUEL-FIRED COMBUSTION DEVICES.—For a covered entity described in section 700(13)(I), 1 emission allowance for each ton of carbon 

dioxide equivalent of greenhouse gas that the devices emitted in the previous 

calendar year, excluding emissions resulting from the combustion of— 

‘‘(A) petroleum-based or coal-based liquid fuel; 

‘‘(B) natural gas liquid; 

‘‘(C) renewable biomass or gas derived from renewable biomass; or 

‘‘(D) petroleum coke or gas derived from petroleum coke. 

‘‘(8) NATURAL GAS LOCAL DISTRIBUTION COMPANIES.—For a covered entity described in section 700(13)(J), 1 emission allowance for each ton of carbon dioxide 

equivalent of greenhouse gas that would be emitted from the combustion of the 

natural gas, and any other gas meeting the specifications for commingling with 

natural gas for purposes of delivery, that such entity delivered during the previous calendar year to customers that are not covered entities, assuming no capture and sequestration of that greenhouse gas. 

‘‘(9) ALGAE-BASED FUELS.—Where carbon dioxide (or another greenhouse gas) 

is used as an input in the production of algae-based fuels, the Administrator 

shall ensure that allowances are required to be held either for the carbon dioxide used to grow the algae or for the carbon dioxide emitted from combustion 

of the fuel produced from such algae, but not for both. 

‘‘(10) FUGITIVE EMISSIONS.—The greenhouse gas emissions to which paragraphs (1), (4), (6), and (7) apply shall not include fugitive emissions of greenhouse gas, except to the extent the Administrator determines that data on the 

carbon dioxide equivalent value of greenhouse gas in the fugitive emissions can 

be provided with sufficient precision, reliability, accessibility, and timeliness to 

ensure the integrity of emission allowances, the allowance tracking system, and 

the cap on emissions. 

‘‘(11) EXPORT EXEMPTION.—This section shall not apply to any petroleumbased or coal-based liquid fuel, petroleum coke, natural gas liquid, fossil fuelbased carbon dioxide, nitrous oxide, or fluorinated gas that is exported for sale 

or use. 

‘‘(12) NATURAL GAS LIQUIDS.—Notwithstanding subsection (a), if the owner or 

operator of a covered entity described in section 700(13)(B) that produces natural gas liquids does not take ownership of the liquids, and is not responsible 

for the distribution or use of the liquids in commerce, the owner of the liquids 

shall be responsible for compliance with this section, section 723, and other relevant sections of this title with respect to such liquids. In the regulations promulgated under section 721, the Administrator shall include such provisions 

with respect to such liquids as the Administrator determines are appropriate 

to determine and ensure compliance, and to penalize noncompliance. In such a 

case, the owner of the covered entity shall provide to the Administrator, in a 

manner to be determined by the Administrator, information regarding the 

quantity and ownership of liquids produced at the covered entity. 

‘‘(13) APPLICATION OF MULTIPLE PARAGRAPHS.—For a covered entity to which 

more than 1 of paragraphs (1) through (8) apply, all applicable paragraphs shall 

apply, except that not more than 1 emission allowance shall be required for the 

same emission. 

‘‘(c) PHASE-IN OF PROHIBITION.— 

‘‘(1) INDUSTRIAL STATIONARY SOURCES.—The prohibition under subsection (a) 

shall first apply to a covered entity described in section 700(13)(D), (F), (G), (H), 

or (I), with respect to emissions occurring during calendar year 2014. 

‘‘(2) NATURAL GAS LOCAL DISTRIBUTION COMPANIES.—The prohibition under 

subsection (a) shall first apply to a covered entity described in section 700(13)(J) 

with respect to deliveries occurring during calendar year 2016. 

‘‘(d) ADDITIONAL METHODS.—In addition to using the method of compliance described in subsection (b), a covered entity may do the following: 

‘‘(1) OFFSET CREDITS.— 

‘‘(A) IN GENERAL.—Covered entities collectively may, in accordance with 

this paragraph, use offset credits to demonstrate compliance for up to a 


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maximum of 2 billion tons of greenhouse gas emissions annually. The ability to demonstrate compliance with offset credits shall be divided pro rata 

among covered entities by allowing each covered entity to satisfy a percentage of the number of allowances required to be held under subsection (b) 

to demonstrate compliance by holding 1 domestic offset credit or 1.25 international offset credits in lieu of an emission allowance, except as provided 

in subparagraph (D). 

‘‘(B) APPLICABLE PERCENTAGE.—The percentage referred to in subparagraph (A) for a given calendar year shall be determined by dividing 2 billion 

by the sum of 2 billion plus the number of emission allowances established 

under section 721(a) for the previous year, and multiplying that number by 

100. Not more than one half of the applicable percentage under this paragraph may be used by holding domestic offset credits, and not more than 

one half of the applicable percentage under this paragraph may be used by 

holding international offset credits, except as provided in subparagraph (C). 

‘‘(C) MODIFIED PERCENTAGES.—If the Administrator determines that domestic offset credits available for use in demonstrating compliance in any 

calendar year at domestic offset prices generally equal to or less than allowance prices, are likely to offset less than 0.9 billion tons of greenhouse gas 

emissions (measured in tons of carbon dioxide equivalents), the Administrator shall increase the percent of emissions that can be offset through the 

use of international offset credits (and decrease the percent of emissions 

that can be allowed through the use of domestic offset credits by the same 

amount) to reflect the amount that 1.0 billion exceeds the number of domestic offset credits the Administrator determines is available for that year, up 

to a maximum of 0.5 billion tons of greenhouse gas emissions. 

‘‘(D) INTERNATIONAL OFFSET CREDITS.—Notwithstanding subparagraph 

(A), to demonstrate compliance prior to calendar year 2018, a covered entity 

may use 1 international offset credit in lieu of an emission allowance up 

to the amount permitted under this paragraph. 

‘‘(E) PRESIDENT’S RECOMMENDATION.—The President may make a recommendation to Congress as to whether the number 2 billion specified in 

subparagraphs (A) and (B) should be increased or decreased. 

‘‘(2) INTERNATIONAL EMISSION ALLOWANCES.—To demonstrate compliance, a 

covered entity may hold an international emission allowance in lieu of an emission allowance, except as modified under section 728(d). 

‘‘(3) COMPENSATORY ALLOWANCES.—To demonstrate compliance, a covered entity may hold a compensatory allowance obtained under section 721(f) in lieu 

of an emission allowance. 

‘‘(e) RETIREMENT OF ALLOWANCES AND CREDITS.—As soon as practicable after a 

deadline established for covered entities to demonstrate compliance with this title, 

the Administrator shall retire the quantity of allowances or credits required to be 

held under this title. 

‘‘(f) ALTERNATIVE METRICS.—For categories of covered entities described in subparagraph (B), (C), (D), (G), (H), or (I) of section 700(13), the Administrator may, 

by rule, establish an applicability threshold for inclusion under those subparagraphs 

using an alternative metric and level, provided that such metric and level are easier 

to administer and cover the same size and type of sources as the threshold defined 

in such subparagraphs. 

‘‘(g) THRESHOLD REVIEW.—For each category of covered entities described in subparagraph (B), (C), (D), (G), (H), or (I) of section 700(13), the Administrator shall, 

in 2020 and once every 8 years thereafter, review the carbon dioxide equivalent 

emission thresholds that are used to define covered entities. After consideration of— 

‘‘(1) emissions from covered entities in each such category, and from other entities of the same type that emit less than the threshold amount for the category (including emission sources that commence operation after the date of enactment of this title that are not covered entities); and 

‘‘(2) whether greater greenhouse gas emission reductions can be cost-effectively achieved by lowering the applicable threshold, 

the Administrator may by rule lower such threshold to not less than 10,000 tons 

of carbon dioxide equivalent emissions. In determining the cost effectiveness of potential reductions from lowering the threshold for covered entities, the Administrator shall consider alternative regulatory greenhouse gas programs, including setting standards under other titles of this Act. 

‘‘(h) DESIGNATED REPRESENTATIVES.—The regulations promulgated under section 

721(h) shall require that each covered entity, and each entity holding allowances or 

credits or receiving allowances or credits from the Administrator under this title, 

select a designated representative. 

‘‘(i) EDUCATION AND OUTREACH.— 


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‘‘(1) IN GENERAL.—The Administrator shall establish and carry out a program 

of education and outreach to assist covered entities, especially entities having 

little experience with environmental regulatory requirements similar or comparable to those under this title, in preparing to meet the compliance obligations of this title. Such program shall include education with respect to using 

markets to effectively achieve such compliance. 

‘‘(2) FAILURE TO RECEIVE INFORMATION.—A failure to receive information or 

assistance under this subsection may not be used as a defense against an allegation of any violation of this title. 

‘‘(j) ADJUSTMENT OF DEADLINE.—The Administrator may, by rule, establish a 

deadline for demonstrating compliance, for a calendar year, later than the date provided in subsection (a), as necessary to ensure the availability of emissions data, but 

in no event shall the deadline be later than June 1. 

‘‘(k) NOTICE REQUIREMENT FOR COVERED ENTITIES RECEIVING NATURAL GAS FROM

NATURAL GAS LOCAL DISTRIBUTION COMPANIES.—The owner or operator of a covered 

entity that takes delivery of natural gas from a natural gas local distribution company shall, not later than September 1 of each calendar year, notify such natural 

gas local distribution company in writing that such entity will qualify as a covered 

entity under this title for that calendar year. 

‘‘(l) COMPLIANCE OBLIGATION.—For purposes of this title, the year of a compliance 

obligation is the year in which compliance is determined, not the year in which the 

greenhouse gas emissions occur or the covered entity has attributable greenhouse 

gas emissions. 

‘‘SEC. 723. PENALTY FOR NONCOMPLIANCE. 

‘‘(a) ENFORCEMENT.—A violation of any prohibition of, requirement of, or regulation promulgated pursuant to this title shall be a violation of this Act. It shall be 

a violation of this Act for a covered entity to emit greenhouse gases, and have attributable greenhouse gas emissions, in combination, in excess of its allowable emissions level as provided in section 722(a). Each ton of carbon dioxide equivalent for 

which a covered entity fails to demonstrate compliance under section 722(b) shall 

be a separate violation. 

‘‘(b) EXCESS EMISSIONS PENALTY.— ‘‘(1) IN GENERAL.—The owner or operator of any covered entity that fails for 

any year to comply, on the deadline described in section 722(a) or (j), shall be 

liable for payment to the Administrator of an excess emissions penalty in the 

amount described in paragraph (2). 

‘‘(2) AMOUNT.—The amount of an excess emissions penalty required to be paid 

under paragraph (1) shall be equal to the product obtained by multiplying— 

‘‘(A) the tons of carbon dioxide equivalent of greenhouse gas emissions or 

attributable greenhouse gas emissions for which the owner or operator of 

a covered entity failed to comply under section 722(b) on the deadline; by 

‘‘(B) twice the fair market value of emission allowances established for 

emissions occurring in the calendar year for which the emission allowances 

were due. 

‘‘(3) TIMING.—An excess emissions penalty required under this subsection 

shall be immediately due and payable to the Administrator, without demand, 

in accordance with regulations promulgated by the Administrator, which shall 

be issued not later than 2 years after the date of enactment of this title. 

‘‘(4) NO EFFECT ON LIABILITY.—An excess emissions penalty due and payable 

by the owners or operators of a covered entity under this subsection shall not 

diminish the liability of the owners or operators for any fine, penalty, or assessment against the owners or operators for the same violation under any other 

provision of this Act or any other law. 

‘‘(c) EXCESS EMISSIONS ALLOWANCES.—The owner or operator of a covered entity 

that fails for any year to comply on the deadline described in section 722(a) or (j) 

shall be liable to offset the covered entity’s excess combination of greenhouse gases 

emitted and attributable greenhouse gas emissions by an equal quantity of emission 

allowances during the following calendar year, or such longer period as the Administrator may prescribe. During the year in which the covered entity failed to comply, 

or any year thereafter, the Administrator may deduct the emission allowances required under this subsection to offset the covered entity’s excess actual or attributable emissions. 

‘‘SEC. 724. TRADING. 

‘‘(a) PERMITTED TRANSACTIONS.—Except as otherwise provided in this title, the 

lawful holder of an emission allowance, compensatory allowance, or offset credit 

may, without restriction, sell, exchange, transfer, hold for compliance in accordance 

with section 722, or request that the Administrator retire the emission allowance, 

compensatory allowance, or offset credit. 


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‘‘(b) NO RESTRICTION ON TRANSACTIONS.—The privilege of purchasing, holding, 

selling, exchanging, transferring, and requesting retirement of emission allowances, 

compensatory allowances, or offset credits shall not be restricted to the owners and 

operators of covered entities, except as otherwise provided in this title. 

‘‘(c) EFFECTIVENESS OF ALLOWANCE TRANSFERS.—No transfer of an allowance or 

offset credit shall be effective for purposes of this title until a certification of the 

transfer, signed by the designated representative of the transferor, is received and 

recorded by the Administrator in accordance with regulations promulgated under 

section 721(h). 

‘‘(d) ALLOWANCE TRACKING SYSTEM.—The regulations promulgated under section 

721(h) shall include a system for issuing, recording, holding, and tracking allowances and offset credits that shall specify all necessary procedures and requirements 

for an orderly and competitive functioning of the allowance and offset credit markets. Such regulations shall provide for appropriate publication of the information 

in the system on the Internet. 

‘‘SEC. 725. BANKING AND BORROWING. 

‘‘(a) BANKING.—An emission allowance may be used to comply with section 722 

or section 723 for emissions in— 

‘‘(1) the vintage year for the allowance; or 

‘‘(2) any calendar year subsequent to the vintage year for the allowance. 

‘‘(b) EXPIRATION.— ‘‘(1) REGULATIONS.—The Administrator may establish by regulation criteria 

and procedures for determining whether, and for implementing a determination 

that, the expiration of an allowance or credit established or issued by the Administrator under this title, or expiration of the ability to use an international 

emission allowance to comply with section 722, is necessary to ensure the authenticity and integrity of allowances or credits or the allowance tracking system. 

‘‘(2) GENERAL RULE.—An allowance or credit established or issued by the Administrator under this title shall not expire unless— 

‘‘(A) it is retired by the Administrator as required under this title; or 

‘‘(B) it is determined to expire or to have expired by a specific date by 

the Administrator in accordance with regulations promulgated under paragraph (1). 

‘‘(3) INTERNATIONAL EMISSION ALLOWANCES.—The ability to use an international emission allowance to comply with section 722 shall not expire unless— 

‘‘(A) the allowance is retired by the Administrator as required by this 

title; or 

‘‘(B) the ability to use such allowance to meet such compliance obligation 

requirements is determined to expire or to have expired by a specific date 

by the Administrator in accordance with regulations promulgated under 

paragraph (1). 

‘‘(c) BORROWING FUTURE VINTAGE YEAR ALLOWANCES.— 

‘‘(1) BORROWING WITHOUT INTEREST.—In addition to the uses described in subsection (a), an emission allowance may be used to comply with section 722(a) 

or section 723 for emissions, production, importation, manufacture, or deliveries 

in the calendar year immediately preceding the vintage year for the allowance. 

‘‘(2) BORROWING WITH INTEREST.— 

‘‘(A) IN GENERAL.—A covered entity may demonstrate compliance under 

subsection (b) in a specific calendar year for up to 15 percent of its emissions by holding emission allowances with a vintage year 1 to 5 years later 

than that calendar year. 

‘‘(B) LIMITATIONS.—An emission allowance borrowed pursuant to this 

paragraph shall be an emission allowance that is established by the Administrator for a specific future calendar year under section 721(a) and that is 

held by the borrower. 

‘‘(C) PREPAYMENT OF INTEREST.—For each emission allowance that an 

owner or operator of a covered entity borrows pursuant to this paragraph, 

such owner or operator shall, at the time it borrows the allowance, hold for 

retirement by the Administrator a quantity of emission allowances that is 

equal to the product obtained by multiplying— 

‘‘(i) 0.08; by 

‘‘(ii) the number of years between the calendar year in which the allowance is being used to satisfy a compliance obligation and the vintage 

year of the allowance. 

‘‘SEC. 726. STRATEGIC RESERVE. 

‘‘(a) STRATEGIC RESERVE AUCTIONS.— 


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‘‘(1) IN GENERAL.—Once each quarter of each calendar year for which allowances are established under section 721(a), the Administrator shall auction strategic reserve allowances. 

‘‘(2) RESTRICTION TO COVERED ENTITIES.—In each auction conducted under 

paragraph (1), only covered entities that the Administrator expects will be required to comply with section 722 in the following calendar year shall be eligible 

to make purchases. 

‘‘(b) POOL OF EMISSION ALLOWANCES FOR STRATEGIC RESERVE AUCTIONS.— ‘‘(1) FILLING THE STRATEGIC RESERVE INITIALLY.— ‘‘(A) IN GENERAL.—The Administrator shall, not later than 2 years after 

the date of enactment of this title, establish a strategic reserve account, and 

shall place in that account an amount of emission allowances established 

under section 721(a) for each calendar year from 2012 through 2050 in the 

amounts specified in subparagraph (B) of this paragraph. 

‘‘(B) AMOUNT.—The amount referred to in subparagraph (A) shall be— 

‘‘(i) for each of calendar years 2012 through 2019, 1 percent of the 

quantity of emission allowances established for that year pursuant to 

section 721(e)(1); 

‘‘(ii) for each of calendar years 2020 through 2029, 2 percent of the 

quantity of emission allowances established for that year pursuant to 

section 721(e)(1); and 

‘‘(iii) for each of calendar years 2030 through 2050, 3 percent of the 

quantity of emission allowances established for that year pursuant to 

section 721(e)(1). 

‘‘(C) EFFECT ON OTHER PROVISIONS.—Any provision in this title (except for 

subparagraph (B) of this paragraph) that refers to a quantity or percentage 

of the emission allowances established for a calendar year under section 

721(a) shall be considered to refer to the amount of emission allowances as 

determined pursuant to section 721(e), less any emission allowances established for that year that are placed in the strategic reserve account under 

this paragraph. 

‘‘(2) SUPPLEMENTING THE STRATEGIC RESERVE.—The Administrator shall 

also— 

‘‘(A) at the end of each calendar year, transfer to the strategic reserve account each emission allowance that was offered for sale but not sold at any 

auction conducted under section 791; and 

‘‘(B) transfer emission allowances established under subsection (g) from 

auction proceeds, and deposit them into the strategic reserve, to the extent 

necessary to maintain the reserve at its original size. 

‘‘(c) MINIMUM STRATEGIC RESERVE AUCTION PRICE.— 

‘‘(1) IN GENERAL.—At each strategic reserve auction, the Administrator shall 

offer emission allowances for sale beginning at a minimum price per emission 

allowance, which shall be known as the ‘minimum strategic reserve auction 

price’. 

‘‘(2) INITIAL MINIMUM STRATEGIC RESERVE AUCTION PRICES.—The minimum 

strategic reserve auction price shall be $28 (in constant 2009 dollars) for the 

strategic reserve auctions held in 2012. For the strategic reserve auctions held 

in 2013 and 2014, the minimum strategic reserve auction price shall be the 

strategic reserve auction price for the previous year increased by 5 percent plus 

the rate of inflation (as measured by the Consumer Price Index for All Urban 

Consumers). 

‘‘(3) MINIMUM STRATEGIC RESERVE AUCTION PRICE IN SUBSEQUENT YEARS.—For 

each strategic reserve auction held in 2015 and each year thereafter, the minimum strategic reserve auction price shall be 60 percent above a rolling 36- 

month average of the daily closing price for that year’s emission allowance vintage as reported on registered carbon trading facilities, calculated using constant dollars. 

‘‘(d) QUANTITY OF EMISSION ALLOWANCES RELEASED FROM THE STRATEGIC RESERVE.— 

‘‘(1) INITIAL LIMITS.—For each of calendar years 2012 through 2016, the annual limit on the number of emission allowances from the strategic reserve account that may be auctioned is an amount equal to 5 percent of the emission 

allowances established for that calendar year under section 721(a). This limit 

does not apply to international offset credits sold on consignment pursuant to 

subsection (h). 

‘‘(2) LIMITS IN SUBSEQUENT YEARS.—For calendar year 2017 and each year 

thereafter, the annual limit on the number of emission allowances from the 

strategic reserve account that may be auctioned is an amount equal to 10 percent of the emission allowances established for that calendar year under section 


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721(a). This limit does not apply to international offset credits sold on consignment pursuant to subsection (h). 

‘‘(3) ALLOCATION OF LIMITATION.—One-fourth of each year’s annual strategic 

reserve auction limit under this subsection shall be made available for auction 

in each quarter. Any allowances from the strategic reserve account that are 

made available for sale in a quarterly auction and not sold shall be rolled over 

and added to the quantity available for sale in the following quarter, except 

that allowances not sold at auction in the fourth quarter of a year shall not be 

rolled over to the following calendar year’s auctions, but shall be returned to 

the strategic reserve account. 

‘‘(e) PURCHASE LIMIT.— 

‘‘(1) IN GENERAL.—Except as provided in paragraph (2) or (3), the annual 

number of emission allowances that a covered entity may purchase at the strategic reserve auctions in each calendar year shall not exceed 20 percent of the 

covered entity’s emissions during the most recent year for which allowances or 

credits were retired under section 722. 

‘‘(2) 2012 LIMIT.—For calendar year 2012, the maximum aggregate number of 

emission allowances that a covered entity may purchase from that year’s strategic reserve auctions shall be 20 percent of the covered entity’s greenhouse gas 

emissions that the covered entity reported to the registry established under section 713 for 2011 and that would be subject to section 722(a) if occurring in 

later calendar years. 

‘‘(3) NEW ENTRANTS.—The Administrator shall, by regulation, establish a separate purchase limit applicable to entities that expect to become a covered entity in the year of the auction, permitting them to purchase emission allowances 

at the strategic reserve auctions in their first calendar year of operation in an 

amount of at least 20 percent of their expected combined emissions and attributable greenhouse gas emissions for that year. 

‘‘(f) DELEGATION OR CONTRACT.—Pursuant to regulations under this section, the 

Administrator may, by delegation or contract, provide for the conduct of strategic 

reserve auctions under the Administrator’s supervision by other departments or 

agencies of the Federal Government or by nongovernmental agencies, groups, or organizations. 

‘‘(g) USE OF AUCTION PROCEEDS.— 

‘‘(1) DEPOSIT IN STRATEGIC RESERVE FUND.—The proceeds from strategic reserve auctions shall be placed in the Strategic Reserve Fund established under 

section 793(1), and shall be available without further appropriation or fiscal 

year limitation for the purposes described in this subsection. 

‘‘(2) INTERNATIONAL OFFSET CREDITS FOR REDUCED DEFORESTATION.—The Administrator shall use the proceeds from each strategic reserve auction to purchase international offset credits issued for reduced deforestation activities pursuant to section 743(e). The Administrator shall retire those international offset 

credits and establish a number of emission allowances equal to 80 percent of 

the number of international offset credits so retired. Emission allowances established under this paragraph shall be in addition to those established under section 721(a). 

‘‘(3) EMISSION ALLOWANCES.—The Administrator shall deposit emission allowances established under paragraph (2) in the strategic reserve, except that, with 

respect to any such emission allowances in excess of the amount necessary to 

fill the strategic reserve to its original size, the Administrator shall— 

‘‘(A) except as provided in subparagraph (B), assign a vintage year to the 

emission allowance, which shall be no earlier than the year in which the 

allowance is established under paragraph (2) and shall treat such allowances as ones that are not designated for distribution or auction for purposes of section 782(q) and (r); and 

‘‘(B) to the extent any such allowances cannot be assigned a vintage year 

because of the limitation in paragraph (4), retire the allowances. 

‘‘(4) LIMITATION.—In no case may the Administrator assign under paragraph 

(3)(A) more emission allowances to a vintage year than the number of emission 

allowances from that vintage year that were placed in the strategic reserve account under subsection (b)(1). 

‘‘(h) AVAILABILITY OF INTERNATIONAL OFFSET CREDITS FOR AUCTION.— 

‘‘(1) IN GENERAL.—The regulations promulgated under section 721(h) shall 

allow any entity holding international offset credits from reduced deforestation 

issued under section 743(e) to request that the Administrator include such offset credits in an upcoming strategic reserve auction. The regulations shall provide that— 


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‘‘(A) such international offset credits will be used to fill bid orders only 

after the supply of strategic reserve allowances available for sale at that 

auction has been depleted; 

‘‘(B) international offset credits may be sold at a strategic reserve auction 

under this subsection only if the Administrator determines that it is highly 

likely that covered entities will, to cover emissions occurring in the year the 

auction is held, use offset credits to demonstrate compliance under section 

722 for emissions equal to or greater than 80 percent of 2 billion tons of 

carbon dioxide equivalent; 

‘‘(C) upon sale of such international offset credits, the Administrator shall 

retire those international offset credits, and establish and provide to the 

purchasers a number of emission allowances equal to 80 percent of the 

number of international offset credits so retired, which allowances shall be 

in addition to those established under section 721(a); and 

‘‘(D) for international offset credits sold pursuant to this subsection, the 

proceeds for the entity that offered the international offset credits for sale 

shall be the lesser of— 

‘‘(i) the average daily closing price for international offset credits sold 

on registered exchanges (or if such price is unavailable, the average 

price as determined by the Administrator) during the six months prior 

to the strategic reserve auction at which they were auctioned, with the 

remaining funds collected upon the sale of the international offset credits deposited in the Treasury; and 

‘‘(ii) the amount received for the international offset credits at the 

auction. 

‘‘(2) PROCEEDS.—For international offset credits sold pursuant to this subsection, notwithstanding section 3302 of title 31, United States Code, or any 

other provision of law, within 90 days of receipt, the United States shall transfer the proceeds from the auction, as defined in paragraph (1)(D), to the entity 

that offered the international offset credits for sale. No funds transferred from 

a purchaser to a seller of international offset credits under this paragraph shall 

be held by any officer or employee of the United States or treated for any purpose as public monies. 

‘‘(3) PRICING.—When the Administrator acts under this subsection as the 

agent of an entity in possession of international offset credits, the Administrator 

is not obligated to obtain the highest price possible for the international offset 

credits, and instead shall auction such international offset credits in the same 

manner and pursuant to the same rules (except as modified in paragraph (1)) 

as set forth for auctioning strategic reserve allowances. Entities requesting that 

such international offset credits be offered for sale at a strategic reserve auction 

may not set a minimum reserve price for their international offset credits that 

is different than the minimum strategic reserve auction price set pursuant to 

subsection (c). 

‘‘(i) INITIAL REGULATIONS.—Not later than 24 months after the date of enactment 

of this title, the Administrator shall promulgate regulations, in consultation with 

other appropriate agencies, governing the auction of allowances under this section. 

Such regulations shall include the following requirements: 

‘‘(1) FREQUENCY; FIRST AUCTION.—Auctions shall be held four times per year 

at regular intervals, with the first auction to be held no later than March 31, 

2012. 

‘‘(2) AUCTION FORMAT.—Auctions shall follow a single-round, sealed-bid, uniform price format. 

‘‘(3) PARTICIPATION; FINANCIAL ASSURANCE.—Auctions shall be open to any 

covered entity eligible to purchase emission allowances at the auction under 

subsection (a)(2), except that the Administrator may establish financial assurance requirements to ensure that auction participants can and will perform on 

their bids. 

‘‘(4) DISCLOSURE OF BENEFICIAL OWNERSHIP.—Each bidder in an auction shall 

be required to disclose the person or entity sponsoring or benefitting from the 

bidder’s participation in the auction if such person or entity is, in whole or in 

part, other than the bidder. 

‘‘(5) PURCHASE LIMITS.—No person may, directly or in concert with another 

participant, purchase more than 20 percent of the allowances offered for sale 

at any quarterly auction. 

‘‘(6) PUBLICATION OF INFORMATION.—After the auction, the Administrator 

shall, in a timely fashion, publish the identities of winning bidders, the quantity 

of allowances obtained by each winning bidder, and the auction clearing price. 

‘‘(7) OTHER REQUIREMENTS.—The Administrator may include in the regulations such other requirements or provisions as the Administrator, in consultaVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00153 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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tion with other agencies as appropriate, considers appropriate to promote effective, efficient, transparent, and fair administration of auctions under this section. 

‘‘(j) REVISION OF REGULATIONS.—The Administrator may, at any time, in consultation with other agencies as appropriate, revise the initial regulations promulgated 

under subsection (i). Such revised regulations need not meet the requirements identified in subsection (i) if the Administrator determines that an alternative auction 

design would be more effective, taking into account factors including costs of administration, transparency, fairness, and risks of collusion or manipulation. In determining whether and how to revise the initial regulations under this subsection, the 

Administrator shall not consider maximization of revenues to the Federal Government. 

‘‘SEC. 727. PERMITS. 

‘‘(a) PERMIT PROGRAM.—For stationary sources subject to title V of this Act, that 

are covered entities, the provisions of this title shall be implemented by permits 

issued to such covered entities (and enforced) in accordance with the provisions of 

title V, as modified by this title. Any such permit issued by the Administrator, or 

by a State with an approved permit program, shall require the owner or operator 

of a covered entity to hold emission allowances or offset credits at least equal to the 

total annual amount of carbon dioxide equivalents for its combined emissions and 

attributable greenhouse gas emissions to which section 722 applies. No such permit 

shall be issued that is inconsistent with the requirements of this title, and title V 

as applicable. Nothing in this section regarding compliance plans or in title V shall 

be construed as affecting allowances or offset credits. Submission of a statement by 

the owner or operator, or the designated representative of the owners and operators, 

of a covered entity that the owners and operators will hold emission allowances or 

offset credits for the entity’s combined emissions and attributable greenhouse gas 

emissions to which section 722 applies shall be deemed to meet the proposed and 

approved planning requirements of title V. Recordation by the Administrator of 

transfers of emission allowances shall amend automatically all applicable proposed 

or approved permit applications, compliance plans, and permits. 

‘‘(b) MULTIPLE OWNERS.—No permit shall be issued under this section and no allowances or offset credits shall be disbursed under this title to a covered entity or 

any other person until the designated representative of the owners or operators has 

filed a certificate of representation with regard to matters under this title, including 

the holding and distribution of emission allowances and the proceeds of transactions 

involving emission allowances. Where there are multiple holders of a legal or equitable title to, or a leasehold interest in, such a covered entity or other entity or 

where a utility or industrial customer purchases power under a long-term power 

purchase contract from an independent power production facility that is a covered 

entity, the certificate shall state— 

‘‘(1) that emission allowances and the proceeds of transactions involving emission allowances will be deemed to be held or distributed in proportion to each 

holder’s legal, equitable, leasehold, or contractual reservation or entitlement; or 

‘‘(2) if such multiple holders have expressly provided for a different distribution of emission allowances by contract, that emission allowances and the proceeds of transactions involving emission allowances will be deemed to be held 

or distributed in accordance with the contract. 

A passive lessor, or a person who has an equitable interest through such lessor, 

whose rental payments are not based, either directly or indirectly, upon the revenues or income from the covered entity or other entity shall not be deemed to be 

a holder of a legal, equitable, leasehold, or contractual interest for the purpose of 

holding or distributing emission allowances as provided in this subsection, during 

either the term of such leasehold or thereafter, unless expressly provided for in the 

leasehold agreement. Except as otherwise provided in this subsection, where all 

legal or equitable title to or interest in a covered entity, or other entity, is held by 

a single person, the certificate shall state that all emission allowances received by 

the entity are deemed to be held for that person. 

‘‘(c) PROHIBITION.—It shall be unlawful for any person to operate any stationary 

source subject to the requirements of this section except in compliance with the 

terms and requirements of a permit issued by the Administrator or a State with 

an approved permit program in accordance with this section. For purposes of this 

subsection, compliance, as provided in section 504(f), with a permit issued under 

title V which complies with this title for covered entities shall be deemed compliance 

with this subsection as well as section 502(a). 

‘‘(d) RELIABILITY.—Nothing in this section or title V shall be construed as requiring termination of operations of a stationary source that is a covered entity for failure to have an approved permit, or compliance plan, that is consistent with the reVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00154 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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quirements in the second and fifth sentences of subsection (a) concerning the holding of emission allowances, compensatory allowances, international emission allowances, or offset allowances, except that any such covered entity may be subject to 

the applicable enforcement provision of section 113. 

‘‘(e) REGULATIONS.—The Administrator shall promulgate regulations to implement 

this section. To provide for permits required under this section, each State in which 

one or more stationary sources and that are covered entities are located shall submit, in accordance with this section and title V, revised permit programs for approval. 

‘‘SEC. 728. INTERNATIONAL EMISSION ALLOWANCES. 

‘‘(a) QUALIFYING PROGRAMS.—The Administrator, in consultation with the Secretary of State, may by rule designate an international climate change program as 

a qualifying international program if— 

‘‘(1) the program is run by a national or supranational foreign government, 

and imposes a mandatory absolute tonnage limit on greenhouse gas emissions 

from 1 or more foreign countries, or from 1 or more economic sectors in such 

a country or countries; and 

‘‘(2) the program is at least as stringent as the program established by this 

title, including provisions to ensure at least comparable monitoring, compliance, 

enforcement, quality of offsets, and restrictions on the use of offsets. 

‘‘(b) DISQUALIFIED ALLOWANCES.—An international emission allowance may not be 

held under section 722(d)(2) if it is in the nature of an offset instrument or allowance awarded based on the achievement of greenhouse gas emission reductions or 

avoidance, or greenhouse gas sequestration, that are not subject to the mandatory 

absolute tonnage limits referred to in subsection (a)(1). 

‘‘(c) RETIREMENT.— 

‘‘(1) ENTITY CERTIFICATION.—The owner or operator of an entity that holds an 

international emission allowance under section 722(d)(2) shall certify to the Administrator that such international emission allowance has not previously been 

used to comply with any foreign, international, or domestic greenhouse gas regulatory program. 

‘‘(2) RETIREMENT.— 

‘‘(A) FOREIGN AND INTERNATIONAL REGULATORY ENTITIES.—The Administrator, in consultation with the Secretary of State, shall seek, by whatever 

means appropriate, including agreements and technical cooperation on allowance tracking, to ensure that any relevant foreign, international, and domestic regulatory entities— 

‘‘(i) are notified of the use, for purposes of compliance with this title, 

of any international emission allowance; and 

‘‘(ii) provide for the disqualification of such international emission allowance for any subsequent use under the relevant foreign, international, or domestic greenhouse gas regulatory program, regardless of 

whether such use is a sale, exchange, or submission to satisfy a compliance obligation. 

‘‘(B) DISQUALIFICATION FROM FURTHER USE.—The Administrator shall ensure that, once an international emission allowance has been disqualified 

or otherwise used for purposes of compliance with this title, such allowance 

shall be disqualified from any further use under this title. 

‘‘(d) USE LIMITATIONS.—The Administrator may, by rule, modify the percentage 

applicable to international emission allowances under section 722(d)(2), consistent 

with the purposes of the Safe Climate Act. 

‘‘PART D—OFFSETS 

‘‘SEC. 731. OFFSETS INTEGRITY ADVISORY BOARD. 

‘‘(a) ESTABLISHMENT.—Not later than 30 days after the date of enactment of this 

title, the Administrator shall establish an independent Offsets Integrity Advisory 

Board. The Advisory Board shall make recommendations to the Administrator for 

use in promulgating and revising regulations under this part and part E, and for 

ensuring the overall environmental integrity of the programs established pursuant 

to those regulations. 

‘‘(b) MEMBERSHIP.—The Advisory Board shall be comprised of at least nine members. Each member shall be qualified by education, training, and experience to 

evaluate scientific and technical information on matters referred to the Board under 

this section. The Administrator shall appoint Advisory Board members, including a 

chair and vice-chair of the Advisory Board. Terms shall be 3 years in length, except 

for initial terms, which may be up to 5 years in length to allow staggering. Members 


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may be reappointed only once for an additional 3-year term, and such second term 

may follow directly after a first term. 

‘‘(c) ACTIVITIES.—The Advisory Board established pursuant to subsection (a) 

shall— 

‘‘(1) provide recommendations, not later than 90 days after the Advisory 

Board’s establishment and periodically thereafter, to the Administrator regarding offset project types that should be considered for eligibility under section 

733, taking into consideration relevant scientific and other issues, including— 

‘‘(A) the availability of a representative data set for use in developing the 

activity baseline; 

‘‘(B) the potential for accurate quantification of greenhouse gas reduction, 

avoidance, or sequestration for an offset project type; 

‘‘(C) the potential level of scientific and measurement uncertainty associated with an offset project type; and 

‘‘(D) any beneficial or adverse environmental, public health, welfare, social, economic, or energy effects associated with an offset project type; 

‘‘(2) make available to the Administrator its advice and comments on offset 

methodologies that should be considered under regulations promulgated pursuant to section 734(a) and (b), including methodologies to address the issues of 

additionality, activity baselines, measurement, leakage, uncertainty, permanence, and environmental integrity; 

‘‘(3) make available to the Administrator, and other relevant Federal agencies, 

its advice and comments regarding scientific, technical, and methodological 

issues specific to the issuance of international offset credits under section 743; 

‘‘(4) make available to the Administrator, and other relevant Federal agencies, 

its advice and comments regarding scientific, technical, and methodological 

issues associated with the implementation of part E; 

‘‘(5) make available to the Administrator its advice and comments on areas 

in which further knowledge is required to appraise the adequacy of existing, revised, or proposed methodologies for use under this part and part E, and describe the research efforts necessary to provide the required information; and 

‘‘(6) make available to the Administrator its advice and comments on other 

ways to improve or safeguard the environmental integrity of programs established under this part and part E. 

‘‘(d) SCIENTIFIC REVIEW OF OFFSET AND DEFORESTATION REDUCTION PROGRAMS.— 

Not later than January 1, 2017, and at five-year intervals thereafter, the Advisory 

Board shall submit to the Administrator and make available to the public an analysis of relevant scientific and technical information related to this part and part E. 

The Advisory Board shall review approved and potential methodologies, scientific 

studies, offset project monitoring, offset project verification reports, and audits related to this part and part E, and evaluate the net emissions effects of implemented 

offset projects. The Advisory Board shall recommend changes to offset methodologies, protocols, or project types, or to the overall offset program under this part, to 

ensure that offset credits issued by the Administrator do not compromise the integrity of the annual emission reductions established under section 703, and to avoid 

or minimize adverse effects to human health or the environment. 

‘‘SEC. 732. ESTABLISHMENT OF OFFSETS PROGRAM. 

‘‘(a) REGULATIONS.—Not later than 2 years after the date of enactment of this 

title, the Administrator, in consultation with appropriate Federal agencies and taking into consideration the recommendations of the Advisory Board, shall promulgate 

regulations establishing a program for the issuance of offset credits in accordance 

with the requirements of this part. The Administrator shall periodically revise these 

regulations as necessary to meet the requirements of this part. 

‘‘(b) REQUIREMENTS.—The regulations described in subsection (a) shall— 

‘‘(1) authorize the issuance of offset credits with respect to qualifying offset 

projects that result in reductions or avoidance of greenhouse gas emissions, or 

sequestration of greenhouse gases; 

‘‘(2) ensure that such offset credits represent verifiable and additional greenhouse gas emission reductions or avoidance, or increases in sequestration; 

‘‘(3) ensure that offset credits issued for sequestration offset projects are only 

issued for greenhouse gas reductions that are permanent; 

‘‘(4) provide for the implementation of the requirements of this part; and 

‘‘(5) include as reductions in greenhouse gases reductions achieved through 

the destruction of methane and its conversion to carbon dioxide. 

‘‘(c) COORDINATION TO MINIMIZE NEGATIVE EFFECTS.—In promulgating and implementing regulations under this part, the Administrator shall act (including by rejecting projects, if necessary) to avoid or minimize, to the maximum extent pracVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00156 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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ticable, adverse effects on human health or the environment resulting from the implementation of offset projects under this part. 

‘‘(d) OFFSET REGISTRY.—The Administrator shall establish within the allowance 

tracking system established under section 724(d) an Offset Registry for qualifying 

offset projects and offset credits issued with respect thereto under this part. 

‘‘(e) LEGAL STATUS OF OFFSET CREDIT.—An offset credit does not constitute a 

property right. 

‘‘(f) FEES.—The Administrator shall assess fees payable by offset project developers in an amount necessary to cover the administrative costs to the Environmental Protection Agency of carrying out the activities under this part. Amounts 

collected for such fees shall be available to the Administrator for carrying out the 

activities under this part to the extent provided in advance in appropriations Acts. 

‘‘SEC. 733. ELIGIBLE PROJECT TYPES. 

‘‘(a) LIST OF ELIGIBLE PROJECT TYPES.— 

‘‘(1) IN GENERAL.—As part of the regulations promulgated under section 

732(a), the Administrator shall establish, and may periodically revise, a list of 

types of projects eligible to generate offset credits, including international offset 

credits, under this part. 

‘‘(2) ADVISORY BOARD RECOMMENDATIONS.—In determining the eligibility of 

project types, the Administrator shall take into consideration the recommendations of the Advisory Board. If a list established under this section differs from 

the recommendations of the Advisory Board, the regulations promulgated under 

section 732(a) shall include a justification for the discrepancy. 

‘‘(3) INITIAL DETERMINATION.—The Administrator shall establish the initial 

eligibility list under paragraph (1) not later than one year after the date of enactment of this title. The Administrator shall add additional project types to the 

list not later than 2 years after the date of enactment of this title. In determining the initial list, the Administrator shall give priority to consideration of 

offset project types that are recommended by the Advisory Board and for which 

there are well developed methodologies that the Administrator determines 

would meet the criteria of section 734, with such modifications as the Administrator deems appropriate. In issuing methodologies pursuant to section 734, the 

Administrator shall give priority to methodologies for offset types included on 

the initial eligibility list. 

‘‘(b) MODIFICATION OF LIST.—The Administrator— 

‘‘(1) may at any time, by rule, add a project type to the list established under 

subsection (a) if the Administrator, in consultation with appropriate Federal 

agencies and taking into consideration the recommendations of the Advisory 

Board, determines that the project type can generate additional reductions or 

avoidance of greenhouse gas emissions, or sequestration of greenhouse gases, 

subject to the requirements of this part; 

‘‘(2) may at any time, by rule, determine that a project type on the list does 

not meet the requirements of this part, and remove a project type from the list 

established under subsection (a), in consultation with appropriate Federal agencies and taking into consideration any recommendations of the Advisory Board; 

and 

‘‘(3) shall consider adding to or removing from the list established under subsection (a), at a minimum, project types proposed to the Administrator— 

‘‘(A) by petition pursuant to subsection (c); or 

‘‘(B) by the Advisory Board. 

‘‘(c) PETITION PROCESS.—Any person may petition the Administrator to modify the 

list established under subsection (a) by adding or removing a project type pursuant 

to subsection (b). Any such petition shall include a showing by the petitioner that 

there is adequate data to establish that the project type does or does not meet the 

requirements of this part. Not later than 12 months after receipt of such a petition, 

the Administrator shall either grant or deny the petition and publish a written explanation of the reasons for the Administrator’s decision. The Administrator may 

not deny a petition under this subsection on the basis of inadequate Environmental 

Protection Agency resources or time for review. 

‘‘SEC. 734. REQUIREMENTS FOR OFFSET PROJECTS. 

‘‘(a) METHODOLOGIES.—As part of the regulations promulgated under section 

732(a), the Administrator shall establish, for each type of offset project listed as eligible under section 733, the following: 

‘‘(1) ADDITIONALITY.—A standardized methodology for determining the 

additionality of greenhouse gas emission reductions or avoidance, or greenhouse 

gas sequestration, achieved by an offset project of that type. Such methodology 

shall ensure, at a minimum, that any greenhouse gas emission reduction or 


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avoidance, or any greenhouse gas sequestration, is considered additional only to 

the extent that it results from activities that— 

‘‘(A) are not required by or undertaken to comply with any law, including 

any regulation or consent order; 

‘‘(B) were not commenced prior to January 1, 2009, except in the case of— 

‘‘(i) offset project activities that commenced after January 1, 2001, 

and were registered as of the date of enactment of this title under an 

offset program with respect to which the Administrator has made an 

affirmative determination under section 740(a)(2); or 

‘‘(ii) activities that are readily reversible, with respect to which the 

Administrator may set an alternative earlier date under this subparagraph that is not earlier than January 1, 2001, where the Administrator determines that setting such an alternative date may produce an 

environmental benefit by removing an incentive to cease and then reinitiate activities that began prior to January 1, 2009; 

‘‘(C) are not receiving support under part E of this title or title IV, subtitle D of the American Clean Energy and Security Act of 2009; and 

‘‘(D) exceed the activity baseline established under paragraph (2). 

‘‘(2) ACTIVITY BASELINES.—A standardized methodology for establishing activity baselines for offset projects of that type. The Administrator shall set activity 

baselines to reflect a conservative estimate of business-as-usual performance or 

practices for the relevant type of activity such that the baseline provides an 

adequate margin of safety to ensure the environmental integrity of offsets calculated in reference to such baseline. 

‘‘(3) QUANTIFICATION METHODS.—A standardized methodology for determining 

the extent to which greenhouse gas emission reductions or avoidance, or greenhouse gas sequestration, achieved by an offset project of that type exceed a relevant activity baseline, including protocols for monitoring and accounting for 

uncertainty. 

‘‘(4) LEAKAGE.—A standardized methodology for accounting for and mitigating 

potential leakage, if any, from an offset project of that type, taking uncertainty 

into account. 

‘‘(b) ACCOUNTING FOR REVERSALS.— 

‘‘(1) IN GENERAL.—For each type of sequestration project listed under section 

733, the Administrator shall establish requirements to account for and address 

reversals, including— 

‘‘(A) a requirement to report any reversal with respect to an offset project 

for which offset credits have been issued under this part; 

‘‘(B) provisions to require emission allowances to be held in amounts to 

fully compensate for greenhouse gas emissions attributable to reversals, 

and to assign responsibility for holding such emission allowances; and 

‘‘(C) any other provisions the Administrator determines necessary to account for and address reversals. 

‘‘(2) MECHANISMS.—The Administrator shall prescribe mechanisms to ensure 

that any sequestration with respect to which an offset credit is issued under 

this part results in a permanent net increase in sequestration, and that full account is taken of any actual or potential reversal of such sequestration, with 

an adequate margin of safety. The Administrator shall prescribe at least one 

of the following mechanisms to meet the requirements of this paragraph: 

‘‘(A) An offsets reserve, pursuant to paragraph (3). 

‘‘(B) Insurance that provides for purchase and provision to the Administrator for retirement of an amount of offset credits or emission allowances 

equal in number to the tons of carbon dioxide equivalents of greenhouse gas 

emissions released due to reversal. 

‘‘(C) Another mechanism that the Administrator determines satisfies the 

requirements of this part. 

‘‘(3) OFFSETS RESERVE.— 

‘‘(A) IN GENERAL.—An offsets reserve referred to in paragraph (2)(A) is a 

program under which, before issuance of offset credits under this part, the 

Administrator shall subtract and reserve from the quantity to be issued a 

quantity of offset credits based on the risk of reversal. The Administrator 

shall— 

‘‘(i) hold these reserved offset credits in the offsets reserve; and 

‘‘(ii) register the holding of the reserved offset credits in the Offset 

Registry established under section 732(d). 

‘‘(B) PROJECT REVERSAL.— 

‘‘(i) IN GENERAL.—If a reversal has occurred with respect an offset 

project for which offset credits are reserved under this paragraph, the 

Administrator shall remove offset credits from the offsets reserve and 


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cancel them to fully account for the tons of carbon dioxide equivalent 

that are no longer sequestered. 

‘‘(ii) INTENTIONAL REVERSALS.—If the Administrator determines that 

a reversal was intentional, the offset project developer for the relevant 

offset project shall place into the offsets reserve a quantity of offset 

credits, or combination of offset credits and emission allowances, equal 

in number to the number of reserve offset credits that were canceled 

due to the reversal pursuant to clause (i). 

‘‘(iii) UNINTENTIONAL REVERSALS.—If the Administrator determines 

that a reversal was unintentional, the offset project developer for the 

relevant offset project shall place into the offsets reserve a quantity of 

offset credits, or combination of offset credits and emission allowances, 

equal in number to half the number of offset credits that were reserved 

for that offset project, or half the number of reserve offset credits that 

were canceled due to the reversal pursuant to clause (i), whichever is 

less. 

‘‘(C) USE OF RESERVED OFFSET CREDITS.—Offset credits placed into the offsets reserve under this paragraph may not be used to comply with section 

722. 

‘‘(c) CREDITING PERIODS.— 

‘‘(1) IN GENERAL.—For each offset project type, the Administrator shall specify 

a crediting period, and establish provisions for petitions for new crediting periods, in accordance with this subsection. 

‘‘(2) DURATION.—The crediting period shall be no less than 5 and no greater 

than 10 years for any project type other than those involving sequestration. 

‘‘(3) ELIGIBILITY.—An offset project shall be eligible to generate offset credits 

under this part only during the project’s crediting period. During such crediting 

period, the project shall remain eligible to generate offset credits, subject to the 

methodologies and project type eligibility list that applied as of the date of 

project approval under section 735, except as provided in paragraph (4) of this 

subsection. 

‘‘(4) PETITION FOR NEW CREDITING PERIOD.—An offset project developer may 

petition for a new crediting period to commence after termination of a crediting 

period, subject to the methodologies and project type eligibility list in effect at 

the time when such petition is submitted. A petition may not be submitted 

under this paragraph more than 18 months before the end of the pending crediting period. The Administrator may limit the number of new crediting periods 

available for projects of particular project types. 

‘‘(d) ENVIRONMENTAL INTEGRITY.—In establishing the requirements under this section, the Administrator shall apply conservative assumptions or methods to maximize the certainty that the environmental integrity of the cap established under section 703 is not compromised. 

‘‘(e) PRE-EXISTING METHODOLOGIES.—In promulgating requirements under this 

section, the Administrator shall give due consideration to methodologies for offset 

projects existing as of the date of enactment of this title. 

‘‘(f) ADDED PROJECT TYPES.—The Administrator shall establish methodologies described in subsection (a), and, as applicable, requirements and mechanisms for reversals as described in subsection (b), for any project type that is added to the list 

pursuant to section 733. 

‘‘SEC. 735. APPROVAL OF OFFSET PROJECTS. 

‘‘(a) APPROVAL PETITION.—An offset project developer shall submit an offset 

project approval petition providing such information as the Administrator requires 

to determine whether the offset project is eligible for issuance of offset credits under 

rules promulgated pursuant to this part. 

‘‘(b) TIMING.—An approval petition shall be submitted to the Administrator under 

subsection (a) no later than the time at which an offset project’s first verification 

report is submitted under section 736. 

‘‘(c) APPROVAL PETITION REQUIREMENTS.—As part of the regulations promulgated 

under section 732, the Administrator shall include provisions for, and shall specify, 

the required components of an offset project approval petition required under subsection (a), which shall include— 

‘‘(1) designation of an offset project developer; and 

‘‘(2) any other information that the Administrator considers to be necessary 

to achieve the purposes of this part. 

‘‘(d) APPROVAL AND NOTIFICATION.—Not later than 90 days after receiving a complete approval petition under subsection (a), the Administrator shall approve or 

deny the petition in writing and, if the petition is denied, provide the reasons for 

denial. After an offset project is approved, the offset project developer shall not be 


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required to resubmit an approval petition during the offset project’s crediting period, 

except as provided in section 734(c)(4). 

‘‘(e) APPEAL.—The Administrator shall establish procedures for appeal and review 

of determinations made under subsection (d). 

‘‘(f) VOLUNTARY PREAPPROVAL REVIEW.—The Administrator may establish a voluntary preapproval review procedure, to allow an offset project developer to request 

the Administrator to conduct a preliminary eligibility review for an offset project. 

Findings of such reviews shall not be binding upon the Administrator. The voluntary preapproval review procedure— 

‘‘(1) shall require the offset project developer to submit such basic project information as the Administrator requires to provide a meaningful review; and 

‘‘(2) shall require a response from the Administrator not later than 6 weeks 

after receiving a request for review under this subsection. 

‘‘SEC. 736. VERIFICATION OF OFFSET PROJECTS. 

‘‘(a) IN GENERAL.—As part of the regulations promulgated under section 732(a), 

the Administrator shall establish requirements, including protocols, for verification 

of the quantity of greenhouse gas emission reductions or avoidance, or sequestration 

of greenhouse gases, resulting from an offset project. The regulations shall require 

that an offset project developer shall submit a report, prepared by a third-party 

verifier accredited under subsection (d), providing such information as the Administrator requires to determine the quantity of greenhouse gas emission reductions or 

avoidance, or sequestration of greenhouse gas, resulting from the offset project. 

‘‘(b) SCHEDULE.—The Administrator shall prescribe a schedule for the submission 

of verification reports under subsection (a). 

‘‘(c) VERIFICATION REPORT REQUIREMENTS.—The Administrator shall specify the 

required components of a verification report required under subsection (a), which 

shall include— 

‘‘(1) the name and contact information for a designated representative for the 

offset project developer; 

‘‘(2) the quantity of greenhouse gas reduced, avoided, or sequestered; 

‘‘(3) the methodologies applicable to the project pursuant to section 734; 

‘‘(4) a certification that the project meets the applicable requirements; 

‘‘(5) a certification establishing that the conflict of interest requirements in 

the regulations promulgated under subsection (d)(1) have been complied with; 

and 

‘‘(6) any other information that the Administrator considers to be necessary 

to achieve the purposes of this part. 

‘‘(d) VERIFIER ACCREDITATION.— ‘‘(1) IN GENERAL.—As part of the regulations promulgated under section 

732(a), the Administrator shall establish a process and requirements for periodic accreditation of third-party verifiers to ensure that such verifiers are professionally qualified and have no conflicts of interest. 

‘‘(2) STANDARDS.— 

‘‘(A) AMERICAN NATIONAL STANDARDS INSTITUTE ACCREDITATION.—The Administrator may accredit, or accept for purposes of accreditation under this 

subsection, verifiers accredited under the American National Standards Institute (ANSI) accreditation program in accordance with ISO 14065. The 

Administrator shall accredit, or accept for accreditation, verifiers under this 

subparagraph only if the Administrator finds that the American National 

Standards Institute accreditation program provides sufficient assurance 

that the requirements of this part will be met. 

‘‘(B) EPA ACCREDITATION.—As part of the regulations promulgated under 

section 732(a), the Administrator may establish accreditation standards for 

verifiers under this subsection, and may establish related training and testing programs and requirements. 

‘‘(3) PUBLIC ACCESSIBILITY.—Each verifier meeting the requirements for accreditation in accordance with this subsection shall be listed in a publicly accessible database, which shall be maintained and updated by the Administrator. 

‘‘SEC. 737. ISSUANCE OF OFFSET CREDITS. 

‘‘(a) DETERMINATION AND NOTIFICATION.—Not later than 90 days after receiving 

a complete verification report under section 736, the Administrator shall— 

‘‘(1) make the report publicly available; 

‘‘(2) make a determination of the quantity of greenhouse gas emissions reduced or avoided, or greenhouse gases sequestered, resulting from an offset 

project approved under section 735; and 

‘‘(3) notify the offset project developer in writing of such determination. 

‘‘(b) ISSUANCE OF OFFSET CREDITS.—The Administrator shall issue one offset credit to an offset project developer for each ton of carbon dioxide equivalent that the 


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Administrator has determined has been reduced, avoided, or sequestered during the 

period covered by a verification report submitted in accordance with section 736, 

only if— 

‘‘(1) the Administrator has approved the offset project pursuant to section 735; 

and 

‘‘(2) the relevant emissions reduction, avoidance, or sequestration has— 

‘‘(A) already occurred, during the offset project’s crediting period; and 

‘‘(B) occurred after January 1, 2009. 

‘‘(c) APPEAL.—The Administrator shall establish procedures for appeal and review 

of determinations made under subsection (a). 

‘‘(d) TIMING.—Offset credits meeting the criteria established in subsection (b) shall 

be issued not later than 2 weeks following the verification determination made by 

the Administrator under subsection (a). 

‘‘(e) REGISTRATION.—The Administrator shall assign a unique serial number to 

and register each offset credit to be issued in the Offset Registry established under 

section 732(d). 

‘‘SEC. 738. AUDITS. 

‘‘(a) IN GENERAL.—The Administrator shall, on an ongoing basis, conduct random 

audits of offset projects, offset credits, and practices of third-party verifiers. In each 

year, the Administrator shall conduct audits, at minimum, for a representative sample of project types and geographic areas. 

‘‘(b) DELEGATION.—The Administrator may delegate to a State or tribal government the responsibility for conducting audits under this section if the Administrator 

finds that the program proposed by the State or tribal government provides assurances equivalent to those provided by the auditing program of the Administrator, 

and that the integrity of the offset program under this part will be maintained. 

Nothing in this subsection shall prevent the Administrator from conducting any 

audit the Administrator considers necessary and appropriate. 

‘‘SEC. 739. PROGRAM REVIEW AND REVISION. 

‘‘At least once every 5 years, the Administrator shall review and, based on new 

or updated information and taking into consideration the recommendations of the 

Advisory Board, update and revise— 

‘‘(1) the list of eligible project types established under section 733; 

‘‘(2) the methodologies established, including specific activity baselines, under 

section 734(a); 

‘‘(3) the reversal requirements and mechanisms established or prescribed 

under section 734(b); 

‘‘(4) measures to improve the accountability of the offsets program; and 

‘‘(5) any other requirements established under this part to ensure the environmental integrity and effective operation of this part. 

‘‘SEC. 740. EARLY OFFSET SUPPLY. 

‘‘(a) PROJECTS REGISTERED UNDER OTHER GOVERNMENT-RECOGNIZED PROGRAMS.— 

Except as provided in subsection (b) or (c), the Administrator shall issue one offset 

credit for each ton of carbon dioxide equivalent emissions reduced, avoided, or sequestered— 

‘‘(1) under an offset project that was started after January 1, 2001; 

‘‘(2) for which a credit was issued under any regulatory or voluntary greenhouse gas emission offset program that the Administrator determines— 

‘‘(A) was established under State or tribal law or regulation prior to January 1, 2009, or has been approved by the Administrator pursuant to subsection (e); 

‘‘(B) has developed offset project type standards, methodologies, and protocols through a public consultation process or a peer review process; 

‘‘(C) has made available to the public standards, methodologies, and protocols that require that credited emission reductions, avoidance, or sequestration are permanent, additional, verifiable, and enforceable; 

‘‘(D) requires that all emission reductions, avoidance, or sequestration be 

verified by a State regulatory agency or an accredited third-party independent verification body; 

‘‘(E) requires that all credits issued are registered in a publicly accessible 

registry, with individual serial numbers assigned for each ton of carbon dioxide equivalent emission reductions, avoidance, or sequestration; and 

‘‘(F) ensures that no credits are issued for activities for which the entity 

administering the program, or a program administrator or representative, 

has funded, solicited, or served as a fund administrator for the development 

of, the project or activity that caused the emission reduction, avoidance, or 

sequestration; and 


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‘‘(3) for which the credit described in paragraph (2) is transferred to the Administrator. 

‘‘(b) INELIGIBLE CREDITS.—Subsection (a) shall not apply to offset credits that 

have expired or have been retired, canceled, or used for compliance under a program 

established under State or tribal law or regulation. 

‘‘(c) LIMITATION.—Notwithstanding subsection (a)(1), offset credits shall be issued 

under this section— 

‘‘(1) only for reductions or avoidance of greenhouse gas emissions, or sequestration of greenhouse gases, that occur after January 1, 2009; and 

‘‘(2) only until the date that is 3 years after the date of enactment of this title, 

or the date that regulations promulgated under section 732(a) take effect, 

whichever occurs sooner. 

‘‘(d) RETIREMENT OF CREDITS.—The Administrator shall seek to ensure that offset 

credits described in subsection (a)(2) are retired for purposes of use under a program 

described in subsection (b). 

‘‘(e) OTHER PROGRAMS.—(1) Offset programs that either— 

‘‘(A) were not established under State or tribal law; or 

‘‘(B) were not established prior to January 1, 2009, 

but that otherwise meet all of the criteria of subsection (a)(2) may apply to the 

Administrator to be approved under this subsection as an eligible program for 

early offset credits under this section. 

‘‘(2) The Administrator shall approve any such program that the Administrator 

determines has criteria and methodologies of at least equal stringency to the criteria 

and methodologies of the programs established under State or tribal law that the 

Administrator determines meet the criteria of subsection (a)(2). The Administrator 

may approve types of offsets under any such program that are subject to criteria 

and methodologies of at least equal stringency to the criteria and methodologies for 

such types of offsets applied under the programs established under State or tribal 

law that the Administrator determines meet the criteria of subsection (a)(2). The 

Administrator shall make a determination on any application received under this 

subsection by no later than 180 days from the date of receipt of the application. 

‘‘SEC. 741. ENVIRONMENTAL CONSIDERATIONS. 

‘‘If the Administrator lists forestry projects as eligible offset project types under 

section 733, the Administrator, in consultation with appropriate Federal agencies, 

shall promulgate regulations for the selection and use of species in forestry and 

other relevant land management-related offset projects— 

‘‘(1) to ensure that native species are given primary consideration in such 

projects; 

‘‘(2) to enhance biological diversity in such projects; 

‘‘(3) to prohibit the use of federally designated or State-designated noxious 

weeds; 

‘‘(4) to prohibit the use of a species listed by a regional or State invasive plant 

authority within the applicable region or State; and 

‘‘(5) in accordance with widely accepted, environmentally sustainable forestry 

practices. 

‘‘SEC. 742. TRADING. 

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

‘‘SEC. 743. INTERNATIONAL OFFSET CREDITS. 

‘‘(a) IN GENERAL.—The Administrator, in consultation with the Secretary of State 

and the Administrator of the United States Agency for International Development, 

may issue, in accordance with this section, international offset credits based on activities that reduce or avoid greenhouse gas emissions, or increase sequestration of 

greenhouse gases, in a developing country. Such credits may be issued for projects 

pursuant to the requirements of this part or as provided in subsection (c), (d), or 

(e). 

‘‘(b) ISSUANCE.— 

‘‘(1) REGULATIONS.—Not later than 2 years after the date of enactment of this 

title, the Administrator, in consultation with the Secretary of State, the Administrator of the United States Agency for International Development, and any 

other appropriate Federal agency, and taking into consideration the recommendations of the Advisory Board, shall promulgate regulations for implementing this section. Except as otherwise provided in this section, the issuance 

of international offset credits under this section shall be subject to the requirements of this part. 

‘‘(2) REQUIREMENTS FOR INTERNATIONAL OFFSET CREDITS.—The Administrator 

may issue international offset credits only if— 


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‘‘(A) the United States is a party to a bilateral or multilateral agreement 

or arrangement that includes the country in which the project or measure 

achieving the relevant greenhouse gas emission reduction or avoidance, or 

greenhouse gas sequestration, has occurred; 

‘‘(B) such country is a developing country; and 

‘‘(C) such agreement or arrangement— 

‘‘(i) ensures that all of the requirements of this part apply to the 

issuance of international offset credits under this section; and 

‘‘(ii) provides for the appropriate distribution of international offset 

credits issued. 

‘‘(c) SECTOR-BASED CREDITS.— ‘‘(1) IN GENERAL.—In order to minimize the potential for leakage and to encourage countries to take nationally appropriate mitigation actions to reduce or 

avoid greenhouse gas emissions, or sequester greenhouse gases, the Administrator, in consultation with the Secretary of State and the Administrator of the 

United States Agency for International Development, shall— 

‘‘(A) identify sectors of specific countries with respect to which the 

issuance of international offset credits on a sectoral basis is appropriate; 

and 

‘‘(B) issue international offset credits for such sectors only on a sectoral 

basis. 

‘‘(2) IDENTIFICATION OF SECTORS.— 

‘‘(A) GENERAL RULE.—For purposes of paragraph (1)(A), a sectoral basis 

shall be appropriate for activities— 

‘‘(i) in countries that have comparatively high greenhouse gas emissions, or comparatively greater levels of economic development; and 

‘‘(ii) that, if located in the United States, would be within a sector 

subject to the compliance obligation under section 722. 

‘‘(B) FACTORS.—In determining the sectors and countries for which international offset credits should be awarded only on a sectoral basis, the Administrator, in consultation with the Secretary of State and the Administrator of the United States Agency for International Development, shall 

consider the following factors: 

‘‘(i) The country’s gross domestic product. 

‘‘(ii) The country’s total greenhouse gas emissions. 

‘‘(iii) Whether the comparable sector of the United States economy is 

covered by the compliance obligation under section 722. 

‘‘(iv) The heterogeneity or homogeneity of sources within the relevant 

sector. 

‘‘(v) Whether the relevant sector provides products or services that 

are sold in internationally competitive markets. 

‘‘(vi) The risk of leakage if international offset credits were issued on 

a project-level basis, instead of on a sectoral basis, for activities within 

the relevant sector. 

‘‘(vii) The capability of accurately measuring, monitoring, reporting, 

and verifying the performance of sources across the relevant sector. 

‘‘(viii) Such other factors as the Administrator, in consultation with 

the Secretary of State and the Administrator of the United States 

Agency for International Development, determines are appropriate to— 

‘‘(I) ensure the integrity of the United States greenhouse gas 

emissions cap established under section 703; and 

‘‘(II) encourage countries to take nationally appropriate mitigation actions to reduce or avoid greenhouse gas emissions, or sequester greenhouse gases. 

‘‘(3) SECTORAL BASIS.— 

‘‘(A) DEFINITION.—In this subsection, the term ‘sectoral basis’ means the 

issuance of international offset credits only for the quantity of sector-wide 

reductions or avoidance of greenhouse gas emissions, or sector-wide increases in sequestration of greenhouse gases, achieved across the relevant 

sector of the economy relative to a baseline level of performance established 

in an agreement or arrangement described in subsection (b)(2)(A) for the 

sector. 

‘‘(B) BASELINE.—The baseline for a sector shall be established at levels 

of greenhouse gas emissions lower than would occur under a business-asusual scenario taking into account relevant domestic or international policies or incentives to reduce greenhouse gas emissions, among other factors, 

and additionality and performance shall be determined on the basis of such 

baseline. 

‘‘(d) CREDITS ISSUED BY AN INTERNATIONAL BODY.— 


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‘‘(1) IN GENERAL.—The Administrator, in consultation with the Secretary of 

State, may issue international offset credits in exchange for instruments in the 

nature of offset credits that are issued by an international body established pursuant to the United Nations Framework Convention on Climate Change, to a 

protocol to such Convention, or to a treaty that succeeds such Convention. The 

Administrator may issue international offset credits under this subsection only 

if, in addition to the requirements of subsection (b), the Administrator has determined that the international body that issued the instruments has implemented substantive and procedural requirements for the relevant project type 

that provide equal or greater assurance of the integrity of such instruments as 

is provided by the requirements of this part. 

‘‘(2) RETIREMENT.—The Administrator, in consultation with the Secretary of 

State, shall seek, by whatever means appropriate, including agreements, arrangements, or technical cooperation with the international issuing body described in paragraph (1), to ensure that such body— 

‘‘(A) is notified of the Administrator’s issuance, under this subsection, of 

an international offset credit in exchange for an instrument issued by such 

international body; and 

‘‘(B) provides, to the extent feasible, for the disqualification of the instrument issued by such international body for subsequent use under any relevant foreign or international greenhouse gas regulatory program, regardless of whether such use is a sale, exchange, or submission to satisfy a compliance obligation. 

‘‘(e) OFFSETS FROM REDUCED DEFORESTATION.— 

‘‘(1) REQUIREMENTS.—The Administrator, in accordance with the regulations 

promulgated under subsection (b)(1) and an agreement or arrangement described in subsection (b)(2)(A), shall issue international offset credits for greenhouse gas emission reductions achieved through activities to reduce deforestation only if, in addition to the requirements of subsection (b)— 

‘‘(A) the activity occurs in— 

‘‘(i) a country listed by the Administrator pursuant to paragraph (2); 

‘‘(ii) a state or province listed by the Administrator pursuant to paragraph (5); or 

‘‘(iii) a country listed by the Administrator pursuant to paragraph (6); 

‘‘(B) except as provided in paragraph (5) or (6), the quantity of the international offset credits is determined by comparing the national emissions 

from deforestation relative to a national deforestation baseline for that 

country established, in accordance with an agreement or arrangement described in subsection (b)(2)(A), pursuant to paragraph (4); 

‘‘(C) the reduction in emissions from deforestation has occurred before the 

issuance of the international offset credit and, taking into consideration relevant international standards, has been demonstrated using ground-based 

inventories, remote sensing technology, and other methodologies to ensure 

that all relevant carbon stocks are accounted; 

‘‘(D) the Administrator has made appropriate adjustments, such as discounting for any additional uncertainty, to account for circumstances specific to the country, including its technical capacity described in paragraph 

(2)(A); 

‘‘(E) the activity is designed, carried out, and managed— 

‘‘(i) in accordance with widely accepted, environmentally sustainable 

forest management practices; 

‘‘(ii) to promote or restore native forest species and ecosystems where 

practicable, and to avoid the introduction of invasive nonnative species; 

‘‘(iii) in a manner that gives due regard to the rights and interests 

of local communities, indigenous peoples, forest-dependent communities, and vulnerable social groups; 

‘‘(iv) with consultations with, and full participation of, local communities, indigenous peoples, and forest-dependent communities, in affected areas, as partners and primary stakeholders, prior to and during 

the design, planning, implementation, and monitoring and evaluation 

of activities; and 

‘‘(v) with equitable sharing of profits and benefits derived from offset 

credits with local communities, indigenous peoples, and forest-dependent communities; and 

‘‘(F) the reduction otherwise satisfies and is consistent with any relevant 

requirements established by an agreement reached under the auspices of 

the United Nations Framework Convention on Climate Change. 

‘‘(2) ELIGIBLE COUNTRIES.—The Administrator, in consultation with the Secretary of State and the Administrator of the United States Agency for InterVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00164 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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national Development, and in accordance with an agreement or arrangement 

described in subsection (b)(2)(A), shall establish, and periodically review and update, a list of the developing countries that have the capacity to participate in 

deforestation reduction activities at a national level, including— 

‘‘(A) the technical capacity to monitor, measure, report, and verify forest 

carbon fluxes for all significant sources of greenhouse gas emissions from 

deforestation with an acceptable level of uncertainty, as determined taking 

into account relevant internationally accepted methodologies, such as those 

established by the Intergovernmental Panel on Climate Change; 

‘‘(B) the institutional capacity to reduce emissions from deforestation, including strong forest governance and mechanisms to equitably distribute 

deforestation resources for local actions; and 

‘‘(C) a land use or forest sector strategic plan that— 

‘‘(i) assesses national and local drivers of deforestation and forest 

degradation and identifies reforms to national policies needed to address them; 

‘‘(ii) estimates the country’s emissions from deforestation and forest 

degradation; 

‘‘(iii) identifies improvements in data collection, monitoring, and institutional capacity necessary to implement a national deforestation reduction program; and 

‘‘(iv) establishes a timeline for implementing the program and 

transitioning to low-emissions development. 

‘‘(3) PROTECTION OF INTERESTS.—With respect to an agreement or arrangement described in subsection (b)(2)(A) with a country that addresses international offset credits under this subsection, the Administrator, in consultation 

with the Secretary of State and the Administrator of the United States Agency 

for International Development, shall seek to ensure the establishment and enforcement by such country of legal regimes, processes, standards, and safeguards that— 

‘‘(A) give due regard to the rights and interests of local communities, indigenous peoples, forest-dependent communities, and vulnerable social 

groups; 

‘‘(B) promote consultations with, and full participation of, forest-dependent communities and indigenous peoples in affected areas, as partners and 

primary stakeholders, prior to and during the design, planning, implementation, and monitoring and evaluation of activities; and 

‘‘(C) encourage equitable sharing of profits and benefits derived from 

international offset credits with local communities, indigenous peoples, and 

forest-dependent communities. 

‘‘(4) NATIONAL DEFORESTATION BASELINE.—A national deforestation baseline 

established under this subsection shall— 

‘‘(A) be national in scope; 

‘‘(B) be consistent with nationally appropriate mitigation commitments or 

actions with respect to deforestation, taking into consideration the average 

annual historical deforestation rates of the country during a period of at 

least 5 years, the applicable drivers of deforestation, and other factors to 

ensure additionality; 

‘‘(C) establish a trajectory that would result in zero net deforestation by 

not later than 20 years after the national deforestation baseline has been 

established; 

‘‘(D) be adjusted over time to take account of changing national circumstances; 

‘‘(E) be designed to account for all significant sources of greenhouse gas 

emissions from deforestation in the country; and 

‘‘(F) be consistent with the national deforestation baseline, if any, established for such country under section 754(d)(1). 

‘‘(5) STATE-LEVEL OR PROVINCE-LEVEL ACTIVITIES.— 

‘‘(A) ELIGIBLE STATES OR PROVINCES.—The Administrator, in consultation 

with the Secretary of State and the Administrator of the United States 

Agency for International Development, shall establish, and periodically review and update, a list of states or provinces in developing countries 

where— 

‘‘(i) the developing country is not included on the list of countries established pursuant to paragraph (6)(A); 

‘‘(ii) the state or province by itself is a major emitter of greenhouse 

gases from tropical deforestation on a scale commensurate to the emissions of other countries; and 


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‘‘(iii) the state or province meets the eligibility criteria in paragraphs 

(2) and (3) for the geographic area under its jurisdiction. 

‘‘(B) ACTIVITIES.—The Administrator may issue international offset credits for greenhouse gas emission reductions achieved through activities to reduce deforestation at a state or provincial level that meet the requirements 

of this section. Such credits shall be determined by comparing the emissions from deforestation within that state or province relative to the state 

or province deforestation baseline for that state or province established, in 

accordance with an agreement or arrangement described in subsection 

(b)(2)(A), pursuant to subparagraph (C) of this paragraph. 

‘‘(C) STATE-LEVEL OR PROVINCE-LEVEL DEFORESTATION BASELINE.—A 

state-level or province-level deforestation baseline shall— 

‘‘(i) be consistent with any existing nationally appropriate mitigation 

commitments or actions for the country in which the activity is occurring, taking into consideration the average annual historical deforestation rates of the state or province during a period of at least 5 years, 

relevant drivers of deforestation, and other factors to ensure 

additionality; 

‘‘(ii) establish a trajectory that would result in zero net deforestation 

by not later than 20 years after the state-level or province-level deforestation baseline has been established; and 

‘‘(iii) be designed to account for all significant sources of greenhouse 

gas emissions from deforestation in the state or province and adjusted 

to fully account for emissions leakage outside the state or province. 

‘‘(D) PHASE OUT.—Beginning 5 years after the first calendar year for 

which a covered entity must demonstrate compliance with section 722(a), 

the Administrator shall issue no further international offset credits for eligible state-level or province-level activities to reduce deforestation pursuant 

to this paragraph. 

‘‘(6) PROJECTS AND PROGRAMS TO REDUCE DEFORESTATION.— 

‘‘(A) ELIGIBLE COUNTRIES.—The Administrator, in consultation with the 

Secretary of State and the Administrator of the United States Agency for 

International Development, shall establish, and periodically review and update, a list of developing countries that— 

‘‘(i) the Administrator determines, based on recent, credible, and reliable emissions data, account for less than 1 percent of global greenhouse gas emissions and less than 3 percent of global forest-sector and 

land use change greenhouse gas emissions; and 

‘‘(ii) have, or in the determination of the Administrator are making 

a good faith effort to develop, a land use or forest sector strategic plan 

that meets the criteria described in paragraph (2)(C). 

‘‘(B) ACTIVITIES.—The Administrator may issue international offset credits for greenhouse gas emission reductions achieved through project or program level activities to reduce deforestation in countries listed under subparagraph (A) that meet the requirements of this section. The quantity of 

international offset credits shall be determined by comparing the projectlevel or program-level emissions from deforestation to a deforestation baseline for such project or program established pursuant to subparagraph (C). 

‘‘(C) PROJECT-LEVEL OR PROGRAM-LEVEL BASELINE.—A project-level or program-level deforestation baseline shall— 

‘‘(i) be consistent with any existing nationally appropriate mitigation 

commitments or actions for the country in which the project or program 

is occurring, taking into consideration the average annual historical deforestation rates in the project or program boundary during a period of 

at least 5 years, applicable drivers of deforestation, and other factors 

to ensure additionality; 

‘‘(ii) be designed to account for all significant sources of greenhouse 

gas emissions from deforestation in the project or program boundary; 

and 

‘‘(iii) be adjusted to fully account for emissions leakage outside the 

project or program boundary. 

‘‘(D) PHASE OUT.—(i) Beginning 5 years after the first calendar year for 

which a covered entity must demonstrate compliance with section 722(a), 

the Administrator shall issue no further international offset credits for 

project-level or program-level activities as described in this paragraph, except as provided in clause (ii). 

‘‘(ii) The Administrator may extend the phase out deadline for the 

issuance of international offset credits under this section by up to 8 years 

with respect to eligible activities taking place in a least developed nation, 


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which is a foreign country that the United Nations has identified as among 

the least developed of developing countries at the time that the Administrator determines to provide an extension, provided that the Administrator, 

in consultation with the Secretary of State and the Administrator of the 

United States Agency for International Development, determines the nation— 

‘‘(I) lacks sufficient capacity to adopt and implement effective programs to achieve reductions in deforestation measured against national 

baselines; 

‘‘(II) is receiving support under part E to develop such capacity; and 

‘‘(III) has developed and is working to implement a credible national 

strategy or plan to reduce deforestation. 

‘‘(7) DEFORESTATION.—In implementing this subsection, the Administrator, 

taking into consideration the recommendations of the Advisory Board, may include forest degradation, or soil carbon losses associated with forested wetlands 

or peatlands, within the meaning of deforestation. 

‘‘(f) MODIFICATION OF REQUIREMENTS.—In promulgating regulations under subsection (b)(1) with respect to the issuance of international offset credits under subsection (c), (d), or (e), the Administrator, in consultation with the Secretary of State 

and the Administrator of the United States Agency for International Development, 

may modify or omit a requirement of this part (excluding the requirements of this 

section) if the Administrator determines that the application of that requirement to 

such subsection is not feasible. In modifying or omitting such a requirement on the 

basis of infeasibility, the Administrator, in consultation with the Secretary of State 

and the Administrator of the United States Agency for International Development, 

shall ensure, with an adequate margin of safety, the integrity of international offset 

credits issued under this section and of the greenhouse gas emissions cap established pursuant to section 703. 

‘‘(g) AVOIDING DOUBLE COUNTING.—The Administrator, in consultation with the 

Secretary of State, shall seek, by whatever means appropriate, including agreements, arrangements, or technical cooperation, to ensure that activities on the basis 

of which international offset credits are issued under this section are not used for 

compliance with an obligation to reduce or avoid greenhouse gas emissions, or increase greenhouse gas sequestration, under a foreign or international regulatory 

system. In addition, no international offset credits shall be issued for emission reductions from activities with respect to which emission allowances were allocated 

under section 781 for distribution under part E. 

‘‘(h) LIMITATION.—The Administrator shall not issue international offset credits 

generated by projects based on the destruction of hydrofluorocarbons. 

‘‘PART E—SUPPLEMENTAL EMISSIONS REDUCTIONS 

FROM REDUCED DEFORESTATION 

‘‘SEC. 751. DEFINITIONS. 

‘‘In this part: 

‘‘(1) LEAKAGE PREVENTION ACTIVITIES.—The term ‘leakage prevention activities’ means activities in developing countries that are directed at preserving existing forest carbon stocks, including forested wetlands and peatlands, that 

might, absent such activities, be lost through leakage. 

‘‘(2) NATIONAL DEFORESTATION REDUCTION ACTIVITIES.—The term ‘national deforestation reduction activities’ means activities in developing countries that reduce a quantity of greenhouse gas emissions from deforestation that is calculated by measuring actual emissions against a national deforestation baseline 

established pursuant to section 754(d)(1) and (2). 

‘‘(3) SUBNATIONAL DEFORESTATION REDUCTION ACTIVITIES.—The term ‘subnational deforestation reduction activities’ means activities in developing countries that reduce a quantity of greenhouse gas emissions from deforestation that 

are calculated by measuring actual emissions using an appropriate baseline established by the Administrator that is less than national in scope. 

‘‘(4) SUPPLEMENTAL EMISSIONS REDUCTIONS.—The term ‘supplemental emissions reductions’ means greenhouse gas emissions reductions achieved from reduced or avoided deforestation under this part. 

‘‘(5) USAID.—The term ‘USAID’ means the United States Agency for International Development. 

‘‘SEC. 752. FINDINGS. 

‘‘Congress finds that— 


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‘‘(1) as part of a global effort to mitigate climate change, it is in the national 

interest of the United States to assist developing countries to reduce and ultimately halt emissions from deforestation; 

‘‘(2) deforestation is one of the largest sources of greenhouse gas emissions in 

developing countries, amounting to roughly 20 percent of overall emissions globally; 

‘‘(3) recent scientific analysis shows that it will be substantially more difficult 

to limit the increase in global temperatures to less than 2 degrees centigrade 

above preindustrial levels without reducing and ultimately halting net emissions from deforestation; 

‘‘(4) reducing emissions from deforestation is highly cost-effective, compared 

to many other sources of emissions reductions; 

‘‘(5) in addition to contributing significantly to worldwide efforts to address 

global warming, this assistance will generate significant environmental and social cobenefits, including protection of biodiversity, ecosystem services, and forest-related livelihoods; and 

‘‘(6) Under the Bali Action Plan, developed country parties to the United Nations Framework Convention on Climate Change, including the United States, 

committed to ‘enhanced action on the provision of financial resources and investment to support action on mitigation and adaptation and technology cooperation,’ including, inter alia, consideration of ‘improved access to adequate, 

predictable, and sustainable financial resources and financial and technical support, and the provision of new and additional resources, including official and 

concessional funding for developing country parties’ . 

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

‘‘(a) REGULATIONS.—Not later than 2 years after the date of enactment of this 

title, the Administrator, in consultation with the Administrator of USAID and any 

other appropriate agencies, shall promulgate regulations establishing a program to 

use emission allowances set aside for this purpose under section 781 to achieve the 

reduction of greenhouse gas emissions from deforestation in developing countries in 

accordance with the requirements of this part. 

‘‘(b) OBJECTIVES.—The objectives of the program established under this section 

shall be to— 

‘‘(1) achieve supplemental emissions reductions of at least 720,000,000 tons of 

carbon dioxide equivalent in 2020, a cumulative amount of at least 

6,000,000,000 tons of carbon dioxide equivalent by December 31, 2025, and additional supplemental emissions reductions in subsequent years; 

‘‘(2) build capacity to reduce deforestation in developing countries experiencing deforestation, including preparing developing countries to participate in 

international markets for international offset credits for reduced emissions from 

deforestation; and 

‘‘(3) preserve existing forest carbon stocks in countries where such forest carbon may be vulnerable to international leakage, particularly in developing countries with largely intact native forests. 

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

‘‘(a) ELIGIBLE COUNTRIES.—The Administrator may support activities under this 

part only with respect to a developing country that— 

‘‘(1) the Administrator, in consultation with the Administrator of USAID, determines is experiencing deforestation or forest degradation or has standing forest carbon stocks that may be at risk of deforestation or degradation; and 

‘‘(2) has entered into a bilateral or multilateral agreement or arrangement 

with the United States establishing the conditions of its participation in the 

program established under this part, which shall include an agreement to meet 

the standards established under subsection (d) for the activities to which those 

standards apply. 

‘‘(b) ACTIVITIES.—(1) Subject to the requirements of this part, the Administrator, 

in consultation with the Administrator of USAID, may support activities to achieve 

the objectives identified in section 753(b), including— 

‘‘(A) national deforestation reduction activities; 

‘‘(B) subnational deforestation reduction activities, including pilot activities that reduce greenhouse gas emissions but are subject to significant uncertainty; 

‘‘(C) activities to measure, monitor, and verify deforestation, avoided deforestation, and deforestation rates; 

‘‘(D) leakage prevention activities; 

‘‘(E) development of measurement, monitoring, and verification capacities 

to enable a country to quantify supplemental emissions reductions and to 

generate for sale offset credits from reduced or avoided deforestation; 


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‘‘(F) development of governance structures to reduce deforestation and illegal logging; 

‘‘(G) enforcement of requirements for reduced deforestation or forest conservation; 

‘‘(H) efforts to combat illegal logging and increase enforcement cooperation; 

‘‘(I) providing incentives for policy reforms to achieve the objectives identified in section 753(b); and 

‘‘(J) monitoring and evaluation of the results of the activities conducted 

under this section. 

‘‘(2) ACTIVITIES SELECTED BY USAID.— ‘‘(A) The Administrator of USAID, in consultation with the Administrator, 

may select for support and implementation pursuant to subsection (c) any 

of the activities described in paragraph (1), consistent with this part and 

the regulations promulgated under subsection (d), and subject to the requirement to achieve the objectives listed in section 753(b)(1). 

‘‘(B) With respect to the activities listed in subparagraphs (D) through (J) 

of paragraph (1), the Administrator of USAID, in consultation with the Administrator, shall have primary but not exclusive responsibility for selecting 

the activities to be supported and implemented. 

‘‘(3) INTERAGENCY COORDINATION.—The Administrator and the Administrator 

of USAID shall jointly develop and biennially update a strategic plan for meeting the objectives listed in section 753(b) and shall execute a memorandum of 

understanding delineating the agencies’ respective roles in implementing this 

part. 

‘‘(c) MECHANISMS.— 

‘‘(1) IN GENERAL.—The Administrator may support activities to achieve the 

objectives identified in section 753(b) by— 

‘‘(A) developing and implementing programs and projects that achieve 

such objectives; and 

‘‘(B) distributing emission allowances to a country that is eligible under 

subsection (a), to any private or public group (including international organizations), or to an international fund established by an international 

agreement to which the United States is a party, to carry out activities to 

achieve such objectives. 

‘‘(2) USAID ACTIVITIES.—With respect to activities selected and implemented 

by the Administrator of USAID pursuant to (b)(2), the Administrator shall distribute emission allowances as provided in subparagraph (1) based upon the direction of the Administrator of USAID, subject to the availability of allowances 

for such activities. 

‘‘(3) IMPLEMENTATION THROUGH INTERNATIONAL ORGANIZATIONS.—If support is 

distributed through an international organization, the agency responsible for selecting activities in accordance with subparagraph (b)(1) or (2), in consultation 

with the Secretary of State, shall ensure the establishment and implementation 

of adequate mechanisms to apply and enforce the eligibility requirements and 

other requirements of this section. 

‘‘(4) ROLE OF THE SECRETARY OF STATE.—The Administrator may not distribute emission allowances to the government of another country or to an international organization or international fund unless the Secretary of State has 

concurred with such distribution. 

‘‘(d) STANDARDS.—The Administrator, in consultation with the Administrator of 

USAID, shall promulgate standards to ensure that supplemental emissions reductions achieved through supported activities are additional, measurable, verifiable, 

permanent, monitored, and account for leakage and uncertainty. In addition, such 

standards shall— 

‘‘(1) require the establishment of a national deforestation baseline for each 

country with national deforestation reduction activities that is used to account 

for reductions achieved from such activities; 

‘‘(2) provide that a national deforestation baseline established under paragraph (1) shall— 

‘‘(A) be national in scope; 

‘‘(B) be consistent with nationally appropriate mitigation commitments or 

actions with respect to deforestation, taking into consideration the average 

annual historical deforestation rates of the country during a period of at 

least 5 years and other factors to ensure additionality; 

‘‘(C) establish a trajectory that would result in zero net deforestation by 

not later than 20 years from the date the baseline is established; 

‘‘(D) be adjusted over time to take account of changing national circumstances; 


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‘‘(E) be designed to account for all significant sources of greenhouse gas 

emissions from deforestation in the country; and 

‘‘(F) be consistent with the national deforestation baseline, if any, established for such country under section 743(e)(4); 

‘‘(3) with respect to support provided pursuant to subsection (b)(1)(A) or (B), 

require supplemental emissions reductions to be achieved and verified prior to 

compensation through the distribution of emission allowances under this part; 

‘‘(4) with respect to accounting for subnational deforestation reduction activities that lack the standardized or precise measurement and monitoring techniques needed for a full accounting of changes in emissions or baselines, or are 

subject to other sources of uncertainty, apply a conservative discount factor to 

reflect the uncertainty regarding the levels of reductions achieved; 

‘‘(5) ensure that activities under this part shall be designed, carried out, and 

managed— 

‘‘(A) in accordance with widely accepted, environmentally sustainable forestry practices; 

‘‘(B) to promote native species and conservation or restoration of native 

forests, if practicable, and to avoid the introduction of invasive nonnative 

species; 

‘‘(C) in a manner that gives due regard to the rights and interests of local 

communities, indigenous peoples, forest-dependent communities, and vulnerable social groups; 

‘‘(D) with consultations with, and full participation of, local communities, 

indigenous peoples, and forest-dependent communities in affected areas, as 

partners and primary stakeholders, prior to and during the design, planning, implementation, and monitoring and evaluation of activities; and 

‘‘(E) with equitable sharing of profits and benefits derived from the activities with local communities, indigenous peoples, and forest-dependent communities; and 

‘‘(6) with respect to support for all activities under this part, seek to ensure 

the establishment and enforcement by the recipient country of legal regimes, 

standards, processes, and safeguards that— 

‘‘(A) give due regard to the rights and interests of local communities, indigenous peoples, forest-dependent communities, and vulnerable social 

groups; 

‘‘(B) promote consultations with local communities and indigenous peoples 

and forest-dependent communities in affected areas, as partners and primary stakeholders, prior to and during the design, planning, implementation, monitoring, and evaluation of activities under this part; and 

‘‘(C) encourage equitable sharing of profits and benefits from incentives 

for emissions reductions or leakage prevention with local communities, indigenous peoples, and forest-dependent communities. 

‘‘(e) EXPANSION OF SCOPE.—The Administrator, in consultation with the Administrator of USAID, may decide, taking into account any advice from the Advisory 

Board, to expand, where appropriate, the scope of activities under this part to include— 

‘‘(1) reduced emissions from forest degradation; or 

‘‘(2) reduced soil carbon-derived emissions associated with deforestation and 

degradation of forested wetlands and peatlands. 

‘‘(f) ACCOUNTING.—The Administrator shall establish a publicly accessible registry 

of the supplemental emissions reductions achieved through support provided under 

this part each year, after appropriately discounting for uncertainty and other relevant factors as required by the standards established under subsection (d). 

‘‘(g) TRANSITION TO NATIONAL REDUCTIONS.—Beginning 5 years after the date that 

a country entered into the agreement or arrangement required under subsection 

(a)(2), the Administrator shall provide no further compensation through emission allowances to that country under this part for any subnational deforestation reduction 

activities, except that the Administrator may extend this period by an additional 5 

years if the Administrator, in consultation with the Administrator of USAID, determines that— 

‘‘(1) the country is making substantial progress towards adopting and implementing a program to achieve reductions in deforestation measured against a 

national baseline; 

‘‘(2) the greenhouse gas emissions reductions achieved are not resulting in significant leakage; and 

‘‘(3) the greenhouse gas emissions reductions achieved are being appropriately 

discounted to account for any leakage that is occurring. 

The limitation under this subsection shall not apply to support for activities to further the objectives listed in section 753(b)(2) or (3). 


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‘‘(h) COORDINATION WITH U.S. FOREIGN ASSISTANCE.—Subject to the direction of 

the President, the Administrator and the Administrator of USAID shall, to the extent practicable and consistent with the objectives of this program, seek to align activities under this section with broader development, poverty alleviation, or natural 

resource management objectives and initiatives in the recipient country. 

‘‘(i) SUPPORT AS SUPPLEMENT.—The provision of support for activities under this 

part shall be used to supplement, and not to supplant, any other Federal, State, or 

local support available to carry out such qualifying activities under this part. 

‘‘SEC. 755. REPORTS AND REVIEWS. 

‘‘(a) REPORTS.—Not later than January 1, 2014, and annually thereafter, the Administrator and the Administrator of USAID shall submit to the Committee on Energy and Commerce and the Committee on Foreign Affairs of the House of Representatives, and the Committee on Environment and Public Works and the Committee on Foreign Relations of the Senate, and make available to the public, a report on the support provided under this part during the prior fiscal year. The report 

shall include— 

‘‘(1) a statement of the quantity of supplemental emissions reductions for 

which compensation in the form of emission allowances was provided under this 

part during the prior fiscal year, as registered by the Administrator under section 754(f); and 

‘‘(2) a description of the national and subnational deforestation reduction activities, capacity-building activities, and leakage prevention activities supported 

under this part, including a statement of the quantity of emission allowances 

distributed to each recipient for each activity during the prior fiscal year, and 

a description of what was accomplished through each of the activities. 

‘‘(b) REVIEWS.—Not later than 4 years after the date of enactment of this title and 

every 5 years thereafter, the Administrator and the Administrator of USAID and 

taking into consideration any evaluation by or recommendations from the Advisory 

Board established under section 731, shall conduct a review of the activities undertaken pursuant to this part and make any appropriate changes in the program established under this part based on the findings of the review. The review shall include the effects of the activities on— 

‘‘(1) total documented carbon stocks of each country that directly or indirectly 

received support under this part compared with such country’s national deforestation baseline established under section 754(d)(1); 

‘‘(2) the number of countries with the capacity to generate for sale instruments in the nature of offset credits from forest-related activities, and the 

amount of such activities; 

‘‘(3) forest governance in each country that directly or indirectly received support under this part; 

‘‘(4) indigenous peoples and forest-dependent communities residing in areas 

affected by such activities; 

‘‘(5) biodiversity and ecosystem services within forested areas associated with 

the activities; 

‘‘(6) international leakage; and 

‘‘(7) any program or mechanism established under the United Nations Framework Convention on Climate Change related to greenhouse gas emissions from 

deforestation. 

‘‘SEC. 756. LEGAL EFFECT OF PART. 

‘‘(1) IN GENERAL.—Nothing in this part supersedes, limits, or otherwise affects 

any restriction imposed by Federal law (including regulations) on any interaction between an entity located in the United States and an entity located in 

a foreign country. 

‘‘(2) ROLE OF THE SECRETARY OF STATE.—Nothing in this part shall be construed as affecting the role of the Secretary of State or the responsibilities of 

the Secretary under section 622 (c) of the Foreign Assistance Act of 1961.’’. 

SEC. 312. DEFINITIONS. 

Title VII of the Clean Air Act, as added by section 311 of this Act, is amended 

by inserting before part A the following new section: 

‘‘SEC. 700. DEFINITIONS. 

‘‘In this title: 

‘‘(1) ADDITIONAL.—The term ‘additional’, when used with respect to reductions 

or avoidance of greenhouse gas emissions, or to sequestration of greenhouse 

gases, means reductions, avoidance, or sequestration that result in a lower level 

of net greenhouse gas emissions or atmospheric concentrations than would 

occur in the absence of an offset project. 


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‘‘(2) ADDITIONALITY.—The term ‘additionality’ means the extent to which reductions or avoidance of greenhouse gas emissions, or sequestration of greenhouse gases, are additional. 

‘‘(3) ADVISORY BOARD.—The term ‘Advisory Board’ means the Offsets Integrity 

Advisory Board established under section 731. 

‘‘(4) AFFILIATED.—The term ‘affiliated’— 

‘‘(A) when used in relation to an entity means owned or controlled by, or 

under common ownership or control with, another entity, as determined by 

the Administrator; and 

‘‘(B) when used in relation to a natural gas local distribution company, 

means owned or controlled by, or under common ownership or control with, 

another natural gas local distribution company, as determined by the Administrator. 

‘‘(5) ALLOWANCE.—The term ‘allowance’ means a limited authorization to 

emit, or have attributable greenhouse gas emissions in an amount of, 1 ton of 

carbon dioxide equivalent of a greenhouse gas in accordance with this title; it 

includes an emission allowance, a compensatory allowance, or an international 

emission allowance. 

‘‘(6) ATTRIBUTABLE GREENHOUSE GAS EMISSIONS.—The term ‘attributable 

greenhouse gas emissions’ means— 

‘‘(A) for a covered entity that is a fuel producer or importer described in 

paragraph (13)(B), greenhouse gases that would be emitted from the combustion of any petroleum-based or coal-based liquid fuel, petroleum coke, or 

natural gas liquid, produced or imported by that covered entity for sale or 

distribution in interstate commerce, assuming no capture and sequestration 

of any greenhouse gas emissions; 

‘‘(B) for a covered entity that is an industrial gas producer or importer 

described in paragraph (13)(C), the tons of carbon dioxide equivalent of fossil fuel-based carbon dioxide, nitrous oxide, any fluorinated gas, other than 

nitrogen trifluoride, that is a greenhouse gas, or any combination thereof— 

‘‘(i) produced or imported by such covered entity during the previous 

calendar year for sale or distribution in interstate commerce; or 

‘‘(ii) released as fugitive emissions in the production of fluorinated 

gas; and 

‘‘(C) for a natural gas local distribution company described in paragraph 

(13)(J), greenhouse gases that would be emitted from the combustion of the 

natural gas, and any other gas meeting the specifications for commingling 

with natural gas for purposes of delivery, that such entity delivered during 

the previous calendar year to customers that are not covered entities, assuming no capture and sequestration of that greenhouse gas. 

‘‘(7) BIOLOGICAL SEQUESTRATION; BIOLOGICALLY SEQUESTERED.—The terms ‘biological sequestration’ and ‘biologically sequestered’ mean the removal of greenhouse gases from the atmosphere by terrestrial biological means, such as by 

growing plants, and the storage of those greenhouse gases in plants or soils. 

‘‘(8) CAPPED EMISSIONS.—The term ‘capped emissions’ means greenhouse gas 

emissions to which section 722 applies, including emissions from the combustion 

of natural gas, petroleum-based or coal-based liquid fuel, petroleum coke, or 

natural gas liquid to which section 722(b)(2) or (8) applies. 

‘‘(9) CAPPED SOURCE.—The term ‘capped source’ means a source that directly 

emits capped emissions. 

‘‘(10) CARBON DIOXIDE EQUIVALENT.—The term ‘carbon dioxide equivalent’ 

means the unit of measure, expressed in metric tons, of greenhouse gases as 

provided under section 711 or 712. 

‘‘(11) CARBON STOCK.—The term ‘carbon stock’ means the quantity of carbon 

contained in a biological reservoir or system which has the capacity to accumulate or release carbon. 

‘‘(12) COMPENSATORY ALLOWANCE.—The term ‘compensatory allowance’ means 

an allowance issued under section 721(f). 

‘‘(13) COVERED ENTITY.—The term ‘covered entity’ means each of the following: 

‘‘(A) Any electricity source. 

‘‘(B) Any stationary source that produces, and any entity that (or any 

group of two or more affiliated entities that, in the aggregate) imports, for 

sale or distribution in interstate commerce in 2008 or any subsequent year, 

petroleum-based or coal-based liquid fuel, petroleum coke, or natural gas 

liquid, the combustion of which would emit more than 25,000 tons of carbon 

dioxide equivalent, as determined by the Administrator. 

‘‘(C) Any stationary source that produces, and any entity that (or any 

group of two or more affiliated entities that, in the aggregate) imports, for 


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sale or distribution in interstate commerce, in bulk, or in products designated by the Administrator, in 2008 or any subsequent year more than 

25,000 tons of carbon dioxide equivalent of— 

‘‘(i) fossil fuel-based carbon dioxide; 

‘‘(ii) nitrous oxide; 

‘‘(iii) perfluorocarbons; 

‘‘(iv) sulfur hexafluoride; 

‘‘(v) any other fluorinated gas, except for nitrogen trifluoride, that is 

a greenhouse gas, as designated by the Administrator under section 

711(b) or (c); or 

‘‘(vi) any combination of greenhouse gases described in clauses (i) 

through (vi). 

‘‘(D) Any stationary source that has emitted 25,000 or more tons of carbon dioxide equivalent of nitrogen trifluoride in 2008 or any subsequent 

year. 

‘‘(E) Any geologic sequestration site. 

‘‘(F) Any stationary source in the following industrial sectors: 

‘‘(i) Adipic acid production. 

‘‘(ii) Primary aluminum production. 

‘‘(iii) Ammonia manufacturing. 

‘‘(iv) Cement production, excluding grinding-only operations. 

‘‘(v) Hydrochlorofluorocarbon production. 

‘‘(vi) Lime manufacturing. 

‘‘(vii) Nitric acid production. 

‘‘(viii) Petroleum refining. 

‘‘(ix) Phosphoric acid production. 

‘‘(x) Silicon carbide production. 

‘‘(xi) Soda ash production. 

‘‘(xii) Titanium dioxide production. 

‘‘(xiii) Coal-based liquid or gaseous fuel production. 

‘‘(G) Any stationary source in the chemical or petrochemical sector that, 

in 2008 or any subsequent year— 

‘‘(i) produces acrylonitrile, carbon black, ethylene, ethylene dichloride, 

ethylene oxide, or methanol; or 

‘‘(ii) produces a chemical or petrochemical product if producing that 

product results in annual combustion plus process emissions of 25,000 

or more tons of carbon dioxide equivalent. 

‘‘(H) Any stationary source that— 

‘‘(i) is in one of the following industrial sectors: ethanol production; 

ferroalloy production; fluorinated gas production; food processing; glass 

production; hydrogen production; iron and steel production; lead production; pulp and paper manufacturing; and zinc production; and 

‘‘(ii) has emitted 25,000 or more tons of carbon dioxide equivalent in 

2008 or any subsequent year. 

‘‘(I) Any fossil fuel-fired combustion device (such as a boiler) or grouping 

of such devices that— 

‘‘(i) is all or part of an industrial source not specified in subparagraph 

(D), (F), (G), or (H); and 

‘‘(ii) has emitted 25,000 or more tons of carbon dioxide equivalent in 

2008 or any subsequent year. 

‘‘(J) Any natural gas local distribution company that (or any group of 2 

or more affiliated natural gas local distribution companies that, in the aggregate) in 2008 or any subsequent year, delivers 460,000,000 cubic feet or 

more of natural gas to customers that are not covered entities. 

‘‘(14) CREDITING PERIOD.—The term ‘crediting period’ means the period with 

respect to which an offset project is eligible to earn offset credits under part D, 

as determined under section 734(c). 

‘‘(15) DESIGNATED REPRESENTATIVE.—The term ‘designated representative’ 

means, with respect to a covered entity, a reporting entity, an offset project developer, or any other entity receiving or holding allowances or offset credits 

under this title, an individual authorized, through a certificate of representation 

submitted to the Administrator by the owners and operators or similar entity 

official, to represent the owners and operators or similar entity official in all 

matters pertaining to this title (including the holding, transfer, or disposition 

of allowances or offset credits), and to make all submissions to the Administrator under this title. 

‘‘(16) DEVELOPING COUNTRY.—The term ‘developing country’ means a country 

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lines of the Development Assistance Committee of the Organization for Economic Cooperation and Development. 

‘‘(17) DOMESTIC OFFSET CREDIT.—The term ‘domestic offset credit’ means an 

offset credit issued under part D, other than an international offset credit. 

‘‘(18) ELECTRICITY SOURCE.—The term ‘electricity source’ means a stationary 

source that includes one or more utility units. 

‘‘(19) EMISSION.—The term ‘emission’ means the release of a greenhouse gas 

into the ambient air. Such term does not include gases that are captured and 

sequestered, except to the extent that they are later released into the atmosphere, in which case compliance must be demonstrated pursuant to section 

722(b)(5). 

‘‘(20) EMISSION ALLOWANCE.—The term ‘emission allowance’ means an allowance established under section 721(a) or section 726(g)(2) or (h)(1)(C). 

‘‘(21) FAIR MARKET VALUE.—The term ‘fair market value’ means the average 

daily closing price on registered exchanges or, if such a price is unavailable, the 

average price as determined by the Administrator, during a specified time period, of an emission allowance. 

‘‘(22) FEDERAL LAND.—The term ‘Federal land’ means land that is owned by 

the United States, other than land held in trust for an Indian or Indian tribe. 

‘‘(23) FOSSIL FUEL.—The term ‘fossil fuel’ means natural gas, petroleum, or 

coal, or any form of solid, liquid, or gaseous fuel derived from such material, 

including consumer products that are derived from such materials and are combusted. 

‘‘(24) FOSSIL FUEL-FIRED.—The term ‘fossil fuel-fired’ means powered by combustion of fossil fuel, alone or in combination with any other fuel, regardless of 

the percentage of fossil fuel consumed. 

‘‘(25) FUGITIVE EMISSIONS.—The term ‘fugitive emissions’ means emissions 

from leaks, valves, joints, or other small openings in pipes, ducts, or other 

equipment, or from vents. 

‘‘(26) GEOLOGIC SEQUESTRATION; GEOLOGICALLY SEQUESTERED.—The terms 

‘geologic sequestration’ and ‘geologically sequestered’ mean the sequestration of 

greenhouse gases in subsurface geologic formations for purposes of permanent 

storage. 

‘‘(27) GEOLOGIC SEQUESTRATION SITE.—The term ‘geologic sequestration site’ 

means a site where carbon dioxide is geologically sequestered. 

‘‘(28) GREENHOUSE GAS.—The term ‘greenhouse gas’ means any gas described 

in section 711(a) or designated under section 711(b), (c), or (e), except to the extent that it is regulated under title VI. 

‘‘(29) HIGH CONSERVATION PRIORITY LAND.—The term ‘high conservation priority land’ means land that is not Federal land and is— 

‘‘(A) globally or State ranked as critically imperiled or imperiled under a 

State Natural Heritage Program; or 

‘‘(B) old-growth or late-successional forest, as identified by the office of 

the State Forester or relevant State agency with regulatory jurisdiction 

over forestry activities. 

‘‘(30) HOLD.—The term ‘hold’ means, with respect to an allowance or offset 

credit, to have in the appropriate account in the allowance tracking system, or 

submit to the Administrator for recording in such account. 

‘‘(31) INDUSTRIAL SOURCE.—The term ‘industrial source’ means any stationary 

source that— 

‘‘(A) is not an electricity source; and 

‘‘(B) is in— 

‘‘(i) the manufacturing sector (as defined in North American Industrial Classification System codes 31, 32, and 33); or 

‘‘(ii) the natural gas processing or natural gas pipeline transportation 

sector (as defined in North American Industrial Classification System 

codes 211112 or 486210). 

‘‘(32) INTERNATIONAL EMISSION ALLOWANCE.—The term ‘international emission 

allowance’ means a tradable authorization to emit 1 ton of carbon dioxide equivalent of greenhouse gas that is issued by a national or supranational foreign 

government pursuant to a qualifying international program designated by the 

Administrator pursuant to section 728(a). 

‘‘(33) INTERNATIONAL OFFSET CREDIT.—The term ‘international offset credit’ 

means an offset credit issued by the Administrator under section 743. 

‘‘(34) LEAKAGE.—The term ‘leakage’ means a significant increase in greenhouse gas emissions, or significant decrease in sequestration, which is caused 

by an offset project and occurs outside the boundaries of the offset project. 

‘‘(35) MINERAL SEQUESTRATION.—The term ‘mineral sequestration’ means sequestration of carbon dioxide from the atmosphere by capturing carbon dioxide 


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into a permanent mineral, such as the aqueous precipitation of carbonate minerals that results in the storage of carbon dioxide in a mineral form. 

‘‘(36) NATURAL GAS LIQUID.—The term ‘natural gas liquid’ means ethane, butane, isobutane, natural gasoline, and propane which is ready for commercial 

sale or use. 

‘‘(37) NATURAL GAS LOCAL DISTRIBUTION COMPANY.—The term ‘natural gas 

local distribution company’ has the meaning given the term ‘local distribution 

company’ in section 2(17) of the Natural Gas Policy Act of 1978 (15 U.S.C. 

3301(17)). 

‘‘(38) OFFSET CREDIT.—The term ‘offset credit’ means a credit issued under 

part D. 

‘‘(39) OFFSET PROJECT.—The term ‘offset project’ means a project or activity 

that reduces or avoids greenhouse gas emissions, or sequesters greenhouse 

gases, and for which offset credits are issued under part D. 

‘‘(40) OFFSET PROJECT DEVELOPER.—The term ‘offset project developer’ means 

the individual or entity designated as the offset project developer in an offset 

project approval petition under section 735(c)(1). 

‘‘(41) PETROLEUM.—The term ‘petroleum’ includes crude oil, tar sands, oil 

shale, and heavy oils. 

‘‘(42) RENEWABLE BIOMASS.—The term ‘renewable biomass’ means any of the 

following: 

‘‘(A) Plant material, including waste material, harvested or collected from 

actively managed agricultural land that was in cultivation, cleared, or fallow and nonforested on January 1, 2009. 

‘‘(B) Plant material, including waste material, harvested or collected from 

pastureland that was nonforested on January 1, 2009. 

‘‘(C) Nonhazardous vegetative matter derived from waste, including separated yard waste, landscape right-of-way trimmings, construction and demolition debris or food waste (but not municipal solid waste, recyclable waste 

paper, painted, treated or pressurized wood, or wood contaminated with 

plastic or metals). 

‘‘(D) Animal waste or animal byproducts, including products of animal 

waste digesters. 

‘‘(E) Algae. 

‘‘(F) Trees, brush, slash, residues, or any other vegetative matter removed 

from within 600 feet of any building, campground, or route designated for 

evacuation by a public official with responsibility for emergency preparedness, or from within 300 feet of a paved road, electric transmission line, 

utility tower, or water supply line. 

‘‘(G) Residues from or byproducts of milled logs. 

‘‘(H) Any of the following removed from forested land that is not Federal 

and is not high conservation priority land: 

‘‘(i) Trees, brush, slash, residues, interplanted energy crops, or any 

other vegetative matter removed from an actively managed tree plantation established— 

‘‘(I) prior to January 1, 2009; or 

‘‘(II) on land that, as of January 1, 2009, was cultivated or fallow 

and non-forested. 

‘‘(ii) Trees, logging residue, thinnings, cull trees, pulpwood, and brush 

removed from naturally-regenerated forests or other non-plantation forests, including for the purposes of hazardous fuel reduction or preventative treatment for reducing or containing insect or disease infestation. 

‘‘(iii) Logging residue, thinnings, cull trees, pulpwood, brush and species that are non-native and noxious, from stands that were planted 

and managed after January 1, 2009, to restore or maintain native forest types. 

‘‘(iv) Dead or severely damaged trees removed within 5 years of fire, 

blowdown, or other natural disaster, and badly infested trees. 

‘‘(I) Materials, pre-commercial thinnings, or removed invasive species 

from National Forest System land and public lands (as defined in section 

103 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 

1702)), including those that are byproducts of preventive treatments (such 

as trees, wood, brush, thinnings, chips, and slash), that are removed as part 

of a federally recognized timber sale, or that are removed to reduce hazardous fuels, to reduce or contain disease or insect infestation, or to restore 

ecosystem health, and that are— 

‘‘(i) not from components of the National Wilderness Preservation 

System, Wilderness Study Areas, Inventoried Roadless Areas, old 

growth or mature forest stands, components of the National Landscape 


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Conservation System, National Monuments, National Conservation 

Areas, Designated Primitive Areas; or Wild and Scenic Rivers corridors; 

‘‘(ii) harvested in environmentally sustainable quantities, as determined by the appropriate Federal land manager; and 

‘‘(iii) are harvested in accordance with Federal and State law, and applicable land management plans. 

‘‘(43) RETIRE.—The term ‘retire’, with respect to an allowance or offset credit 

established or issued under this title, means to disqualify such allowance or offset credit for any subsequent use under this title, regardless of whether the use 

is a sale, exchange, or submission of the allowance or offset credit to satisfy a 

compliance obligation. 

‘‘(44) REVERSAL.—The term ‘reversal’ means an intentional or unintentional 

loss of sequestered greenhouse gases to the atmosphere. 

‘‘(45) SEQUESTERED AND SEQUESTRATION.—The terms ‘sequestered’ and ‘sequestration’ mean the separation, isolation, or removal of greenhouse gases 

from the atmosphere, as determined by the Administrator. The terms include 

biological, geologic, and mineral sequestration, but do not include ocean fertilization techniques. 

‘‘(46) STATIONARY SOURCE.—The term ‘stationary source’ means any integrated operation comprising any plant, building, structure, or stationary equipment, including support buildings and equipment, that is located within one or 

more contiguous or adjacent properties, is under common control of the same 

person or persons, and emits or may emit a greenhouse gas. 

‘‘(47) STRATEGIC RESERVE ALLOWANCE.—The term ‘strategic reserve allowance’ 

means an emission allowance reserved for, transferred to, or deposited in the 

strategic reserve, or established, under section 726. 

‘‘(48) UNCAPPED EMISSIONS.—The term ‘uncapped emissions’ means emissions 

of greenhouse gases emitted after December 31, 2011, that are not capped emissions. 

‘‘(49) UNITED STATES GREENHOUSE GAS EMISSIONS.—The term ‘United States 

greenhouse gas emissions’ means the total quantity of annual greenhouse gas 

emissions from the United States, as calculated by the Administrator and reported to the United Nations Framework Convention on Climate Change Secretariat. 

‘‘(50) UTILITY UNIT.—The term ‘utility unit’ means a combustion device that, 

on January 1, 2009, or any date thereafter, is fossil fuel-fired and serves a generator that produces electricity for sale, unless such combustion device, during 

the 12-month period starting the later of January 1, 2009, or the commencement of commercial operation and each calendar year starting after such later 

date— 

‘‘(A) is part of an integrated cycle system that cogenerates steam and 

electricity during normal operation and that supplies one-third or less of its 

potential electric output capacity and 25 MW or less of electrical output for 

sale; or 

‘‘(B) combusts materials of which more than 95 percent is municipal solid 

waste on a heat input basis. 

‘‘(51) VINTAGE YEAR.—The term ‘vintage year’ means the calendar year for 

which an emission allowance is established under section 721(a) or which is assigned to an emission allowance under section 726(g)(3)(A), except that the vintage year for a strategic reserve allowance shall be the year in which such allowance is purchased at auction.’’. 

Subtitle B—Disposition of Allowances 

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

PROGRAM. 

Title VII of the Clean Air Act, as added by section 311 of this Act, is amended 

by adding at the end the following part: 

‘‘PART H—DISPOSITION OF ALLOWANCES 

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

‘‘(a) IN GENERAL.—The Administrator shall allocate for each vintage year the following percentage of the emission allowances established under section 721(a), for 

distribution in accordance with part E: 

‘‘(1) For vintage years 2012 through 2025, 5 percent. 

‘‘(2) For vintage years 2026 through 2030, 3 percent. 


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‘‘(3) For vintage years 2031 through 2050, 2 percent. 

‘‘(b) ADJUSTMENT.—The Administrator shall modify the percentages set forth in 

subsection (a) as necessary to ensure the achievement of the annual supplemental 

emission reduction objective for 2020, and the cumulative reduction objective 

through 2025, set forth in section 753(b)(1). 

‘‘(c) CARRYOVER.—If the Administrator has not distributed all of the allowances 

allocated pursuant to this section for a given vintage year by the end of that year, 

the Administrator shall— 

‘‘(1) auction the remaining emission allowances under section 791 not later 

than March 31 of the year following that vintage year; and 

‘‘(2) increase the allocation for the vintage year after the vintage year for 

which emission allowances were undistributed by the amount of undistributed 

emission allowances. 

‘‘SEC. 782. ALLOCATION OF EMISSION ALLOWANCES. 

‘‘(a) ELECTRICITY CONSUMERS.—The Administrator shall allocate emission allowances for the benefit of electricity consumers, to be distributed in accordance with 

section 783 in the following amounts: 

‘‘(1) For vintage years 2012 and 2013, 43.75 percent of the emission allowances established for each year under section 721(a). 

‘‘(2) For vintage years 2014 and 2015, 38.89 percent of the emission allowances established for each year under section 721(a). 

‘‘(3) For vintage years 2016 through 2025, 35.00 percent of the emission allowances established for each year under section 721(a). 

‘‘(4) For vintage year 2026, 28 percent of the emission allowances established 

for each year under section 721(a). 

‘‘(5) For vintage year 2027, 21 percent of the emission allowances established 

for each year under section 721(a). 

‘‘(6) For vintage year 2028, 14 percent of the emission allowances established 

for each year under section 721(a). 

‘‘(7) For vintage year 2029, 7 percent of the emission allowances established 

for each year under section 721(a). 

‘‘(b) NATURAL GAS CONSUMERS.—The Administrator shall allocate emission allowances for the benefit of natural gas consumers to be distributed in accordance with 

section 784 in the following amounts: 

‘‘(1) For vintage years 2016 through 2025, 9 percent of the emission allowances established for each year under section 721(a). 

‘‘(2) For vintage year 2026, 7.2 percent of the emission allowances established 

for each year under section 721(a). 

‘‘(3) For vintage year 2027, 5.4 percent of the emission allowances established 

for each year under section 721(a). 

‘‘(4) For vintage year 2028, 3.6 percent of the emission allowances established 

for each year under section 721(a). 

‘‘(5) For vintage year 2029, 1.8 percent of the emission allowances established 

for each year under section 721(a). 

‘‘(c) HOME HEATING OIL AND PROPANE CONSUMERS.—The Administrator shall allocate emission allowances for the benefit of home heating oil and propane consumers 

to be distributed in accordance with section 785 in the following amounts: 

‘‘(1) For vintage years 2012 and 2013, 1.875 percent of the emission allowances established for each year under section 721(a). 

‘‘(2) For vintage years 2014 and 2015, 1.67 percent of the emission allowances 

established for each year under section 721(a). 

‘‘(3) For vintage years 2016 through 2025, 1.5 percent of the emission allowances established for each year under section 721(a). 

‘‘(4) For vintage year 2026, 1.2 percent of the emission allowances established 

for each year under section 721(a). 

‘‘(5) For vintage year 2027, 0.9 percent of the emission allowances established 

for each year under section 721(a). 

‘‘(6) For vintage year 2028, 0.6 percent of the emission allowances established 

for each year under section 721(a). 

‘‘(7) For vintage year 2029, 0.3 percent of the emission allowances established 

for each year under section 721(a). 

‘‘(d) LOW INCOME CONSUMERS.—For each vintage year starting in 2012, the Administrator shall auction pursuant to section 791 15 percent of the emission allowances established for each year under section 721(a), with the proceeds used for the 

benefit of low income consumers to fund the program set forth in subtitle C of title 

IV of American Clean Energy and Security Act of 2009. 


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‘‘(e) TRADE-VULNERABLE INDUSTRIES.—The Administrator shall allocate emission 

allowances to energy-intensive, trade-exposed entities, to be distributed in accordance with section 765, in the following amounts: 

‘‘(1) For vintage years 2012 and 2013, up to 2.0 percent of the emission allowances established for each year under section 721(a). 

‘‘(2) For vintage year 2014, up to 15 percent of the emission allowances established for that year under section 721(a). 

‘‘(3) For vintage year 2015, up to the product of the amount specified in paragraph (2), multiplied by the quantity of emission allowances established for 

2015 under section 721(a) divided by the quantity of emission allowances established for 2014 under section 721(a). 

‘‘(4) For vintage year 2016, up to the product of the amount specified in paragraph (3), multiplied by the quantity of emission allowances established for 

2015 under section 721(a) divided by the quantity of emission allowances established for 2014 under section 721(a). 

‘‘(5) For vintage years 2017 through 2025, up to the product of the amount 

specified in paragraph (4), multiplied by the quantity of emission allowances established for that year under section 721(a) divided by the quantity of emission 

allowances established for 2016 under section 721(a). 

‘‘(6) For vintage years 2026 through 2050, up to the product of the amount 

specified in paragraph (4)— 

‘‘(A) multiplied by the quantity of emission allowances established for the 

applicable year during 2026 through 2050 under section 721(a) divided by 

the quantity of emission allowances established for 2016 under section 

721(a); and 

‘‘(B) multiplied by a factor, not exceeding 100 percent, that shall equal 

90 percent for 2026 and decline 10 percent for each year thereafter until 

reaching zero, 

except that, if the President sets one or more factors for a year under section 

767(c)(3)(A), the highest factor set (not exceeding 100 percent) shall be used for 

that year instead of the factor specified in subparagraph (B). 

‘‘(f) DEPLOYMENT OF CARBON CAPTURE AND SEQUESTRATION TECHNOLOGY.— 

‘‘(1) ANNUAL ALLOCATION.—The Administrator shall allocate emission allowances for the deployment of carbon capture and sequestration technology to be 

distributed in accordance with section 786 in the following amounts: 

‘‘(A) For vintage years 2014 through 2017, 1.75 percent of the emission 

allowances established for each year under section 721(a). 

‘‘(B) For vintage years 2018 and 2019, 4.75 percent of the emission allowances established for each year under section 721(a). 

‘‘(C) For vintage years 2020 through 2050, 5 percent of the emission allowances established for each year under section 721(a). 

‘‘(2) CARRYOVER.—If the Administrator has not distributed all of the allowances allocated pursuant to this subsection for a given vintage year by the end 

of that year, the Administrator shall— 

‘‘(A) auction those emission allowances under section 791 not later than 

March 31 of the year following that vintage year; and 

‘‘(B) increase the allocation under this subsection for the vintage year 

after the vintage year for which emission allowances were undisbursed by 

the amount of undisbursed emission allowances, but only to the extent that 

allowances for that later year are to be auctioned. 

‘‘(g) INVESTMENT IN ENERGY EFFICIENCY AND RENEWABLE ENERGY.—The Administrator shall allocate emission allowances to invest in energy efficiency and renewable energy as follows: 

‘‘(1) To be distributed in accordance with section 132 of the American Clean 

Energy and Security Act of 2009 in the following amounts: 

‘‘(A) For vintage years 2012 through 2015, 9.5 percent of the emission allowances established for each year under section 721(a). 

‘‘(B) For vintage years 2016 through 2017, 6.5 percent of the emission allowances established for each year under section 721(a). 

‘‘(C) For vintage years 2018 through 2021, 5.5 percent of the emission allowances established for each year under section 721(a). 

‘‘(D) For vintage years 2022 through 2025, 1.0 percent of the emission allowances established for each year under section 721(a). 

‘‘(E) For vintage years 2026 through 2050, 4.5 percent of the emission allowances established for each year under section 721(a). 

‘‘(F) At the same time the vintage year 2022 through 2025 allowances are 

distributed, 3.55 percent of emission allowances established under section 

721(a) for the vintage year four years greater shall also be distributed 

(which shall be in addition to the emission allowances in subparagraph (E)). 


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‘‘(2) To be distributed in accordance with section 201 of the American Clean 

Energy and Security Act of 2009, for each vintage year from 2012 through 2050, 

0.5 percent of emission allowances established under section 721(a). 

‘‘(h) CLEAN ENERGY INNOVATION CENTERS.—For each vintage year from 2012 

through 2050, the Administrator shall allocate for Clean Energy Innovation Centers, 

1.5 percent of emission allowances established under section 721(a), to be distributed in accordance with section 171 of the American Clean Energy and Security Act 

of 2009. 

‘‘(i) INVESTMENT IN CLEAN VEHICLE TECHNOLOGY.—The Administrator shall allocate emission allowances to invest in the development and deployment of clean vehicles, to be distributed in accordance with section 124 of the American Clean Energy 

and Security Act of 2009 in the following amounts: 

‘‘(1) For vintage years 2012 through 2017, 3 percent of the emission allowances established for each year under section 721(a). 

‘‘(2) For vintage years 2018 through 2025, 1 percent of the emission allowances established for each year under section 721(a). 

‘‘(j) DOMESTIC FUEL PRODUCTION.—For vintage years 2014 through 2026, the Administrator shall allocate 2.0 percent of the emission allowances established under 

section 721(a) to domestic refiners, to be distributed in accordance with section 787. 

‘‘(k) INVESTMENT IN WORKERS.—The Administrator shall auction pursuant to section 791 emission allowances for workers in the following amounts and shall report 

to the Secretary of Labor the amount of proceeds from the sale of these allowances: 

‘‘(1) For vintage years 2012 through 2021, 0.5 percent of the emission allowances established for each year under section 721(a). 

‘‘(2) For vintage years 2022 through 2050, 1.0 percent of the emission allowances established for each year under section 721(a). 

‘‘(l) DOMESTIC ADAPTATION.—The Administrator shall allocate emission allowances 

for domestic adaptation as follows: 

‘‘(1) To be distributed in accordance with section 453 of the American Clean 

Energy and Security Act of 2009 in the following amounts: 

‘‘(A) For vintage years 2012 through 2021, 0.9 percent of the emission allowances established for each year under section 721(a). 

‘‘(B) For vintage years 2022 through 2026, 1.9 percent of the emission allowances established for each year under section 721(a). 

‘‘(C) For vintage years 2027 through 2050, 3.9 percent of the emission allowances established for each year under section 721(a). 

‘‘(2) For vintage year 2012 and thereafter, the Administrator shall auction, 

pursuant to section 791, 0.1 percent of the emission allowances established for 

each year under section 721(a), and shall deposit the proceeds in the Climate 

Change Health Protection and Promotion Fund established by section 467 of the 

American Clean Energy and Security Act of 2009. 

‘‘(m) WILDLIFE AND NATURAL RESOURCE ADAPTATION.—The Administrator shall 

allocate emission allowances for wildlife and natural resource adaptation as follows: 

‘‘(1) To be distributed to State agencies in accordance with section 480(c)(1) 

of the American Clean Energy and Security Act of 2009 in the following 

amounts: 

‘‘(A) For vintage years 2012 through 2021, 0.385 percent of the emission 

allowances established for each year under section 721(a). 

‘‘(B) For vintage years 2022 through 2026, 0.77 percent of the emission 

allowances established for each year under section 721(a). 

‘‘(C) For vintage years 2027 through 2050, 1.54 percent of the emission 

allowances established for each year under section 721(a). 

‘‘(2) To be auctioned pursuant to section 791, with the proceeds to be deposited in the Natural Resources Climate Change Adaptation Fund established 

pursuant to section 480(a), in the following amounts: 

‘‘(A) For vintage years 2012 through 2021, 0.615 percent of the emission 

allowances established for each year under section 721(a). 

‘‘(B) For vintage years 2022 through 2026, 1.23 percent of the emission 

allowances established for each year under section 721(a). 

‘‘(C) For vintage years 2027 through 2050, 2.46 percent of the emission 

allowances established for each year under section 721(a). 

‘‘(n) INTERNATIONAL ADAPTATION.—The Administrator shall allocate emission allowances for international adaptation to be distributed in accordance with part 2 of 

subtitle E of title IV of the American Clean Energy and Security Act of 2009 in the 

following amounts: 

‘‘(1) For vintage years 2012 through 2021, 1.0 percent of the emission allowances established for each year under section 721(a). 

‘‘(2) For vintage years 2022 through 2026, 2.0 percent of the emission allowances established for each year under section 721(a). 


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‘‘(3) For vintage years 2027 through 2050, 4.0 percent of the emission allowances established for each year under section 721(a). 

‘‘(o) INTERNATIONAL CLEAN TECHNOLOGY DEPLOYMENT.—The Administrator shall 

allocate emission allowances for international clean technology deployment for distribution in accordance with subtitle D of title IV of the American Clean Energy and 

Security Act of 2009 in the following amounts: 

‘‘(1) For vintage years 2012 through 2021, 1.0 percent of the emission allowances established for each year under section 721(a). 

‘‘(2) For vintage years 2022 through 2026, 2.0 percent of the emission allowances established for each year under section 721(a). 

‘‘(3) For vintage years 2027 through 2050, 4.0 percent of the emission allowances established for each year under section 721(a). 

‘‘(p) RELEASE OF FUTURE ALLOWANCES.—The Administrator shall make future 

year allowances available by auctioning allowances, pursuant to section 791, in the 

following amounts: 

‘‘(1) In each of calendar years 2014 through 2019, a string of 0.70 billion allowances with vintage years 12 to 17 years after the year of the auction, with 

an equal number of allowances from each vintage year in the string. 

‘‘(2) In each of calendar years 2020 through 2025, a string of 0.50 billion allowances with vintage years 12 to 17 years after the year of the auction, with 

an equal number of allowances from each vintage year in the string. 

‘‘(3) In each of calendar years 2026 through 2030, a string of 0.3 billion allowances with vintage years 12 to 17 years after the year of the auction, with an 

equal number of allowances from each vintage year in the string. 

‘‘(q) DEFICIT REDUCTION.— 

‘‘(1) For each of vintage years 2012 through 2025, any allowances not designated for distribution or auction pursuant to section 781, subsections (a) 

through (o) of this section, or section 790 shall be auctioned by the Administrator pursuant to section 791 and the proceeds shall be deposited into the 

Treasury. 

‘‘(2) Unless otherwise specified, any allowances allocated pursuant to subsections (a) through (o) and not distributed by March 31 of the calendar year 

following the allowance’s vintage year, shall be auctioned by the Administrator 

and the proceeds shall be deposited into the Treasury. 

‘‘(3) For auctions conducted through calendar year 2020 pursuant to subsection (p), the auction proceeds shall be deposited into the Treasury. 

‘‘(r) CLIMATE CHANGE CONSUMER REFUND.— 

‘‘(1) For each of vintage years 2026 through 2050, the Administrator shall 

auction the following allowances established under section 721(a) and deposit 

the proceeds into the Climate Change Consumer Refund Account: 

‘‘(A) Any allowances not designated for distribution or auction pursuant 

to section 781, subsections (a) through (p) of this section, or section 790. 

‘‘(B) Unless otherwise specified, any allowances allocated pursuant to subsections (a) through (o) and not distributed by March 31 of the calendar 

year following the allowance’s vintage year. 

‘‘(2) For auctions conducted pursuant to subsection (p) in calendar years 2021 

and thereafter, the Administrator shall place the proceeds from the sales of the 

these allowances into the Climate Change Consumer Refund Account. Funds 

deposited into the Climate Change Consumer Refund Account shall be used as 

specified in section 789 and shall be available for expenditure, without further 

appropriation or fiscal year limitation. 

‘‘SEC. 783. ELECTRICITY CONSUMERS. 

‘‘(a) DEFINITIONS.—For purposes of this section: 

‘‘(1) ELECTRICITY LOCAL DISTRIBUTION COMPANY.—The term ‘electricity local 

distribution company’ means an electric utility— 

‘‘(A) that has a legal, regulatory, or contractual obligation to deliver electricity directly to retail consumers in the United States, regardless of 

whether that entity or another entity sells the electricity as a commodity 

to those retail consumers; and 

‘‘(B) the retail rates of which, except in the case of a registered electric 

cooperative, are regulated by a State regulatory authority, regulatory commission, municipality, public utility, or by an Indian tribe pursuant to tribal law. 

‘‘(2) LONG-TERM CONTRACT GENERATOR.—The term ‘long-term contract generator’ means a qualifying small power production facility or a qualifying cogeneration facility (within the meaning of section 3(17)(C) or 3(18)(B) of the Federal 

Power Act), or a new independent power production facility (within the meaning 


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of section 416(a)(2) of this Act, except that subparagraph (C) of such definition 

shall not apply for purposes of this paragraph), that is— 

‘‘(A) a covered entity; 

‘‘(B) as of the commencement of operation, a facility consisting of one or 

more utility units with total installed net output capacity (in MWe) of no 

more than 130 percent of the facility’s total planned net output capacity (in 

MWe); 

‘‘(C) as of the date of enactment of this title, a facility with a power sales 

agreement executed before January 1, 2007, that governs the facility’s electricity sales and provides for sales at a price (whether a fixed price or a 

price formula) for electricity that does not allow for recovery of the costs 

of compliance with the limitation on greenhouse gas emissions under this 

title; and 

‘‘(D) not a merchant coal generator. 

‘‘(3) MERCHANT COAL GENERATOR.—The term ‘merchant coal generator’ means 

an electric generation facility that— 

‘‘(A) is a covered entity; 

‘‘(B) derives at least 85 percent of its heat input from coal, petroleum 

coke, or any combination of these 2 fuels; 

‘‘(C) is not owned by a Federal, State, or regional agency or power authority; and 

‘‘(D) generates electricity for sale to others, provided that such sales are 

not subject to— 

‘‘(i) retail rate regulation by a State public utility commission; or 

‘‘(ii) self-regulation of rates by a local government, State agency, or 

electric cooperative. 

‘‘(4) STATE REGULATORY AUTHORITY.—The term ‘State regulatory authority’ 

has the meaning given that term in section 3(17) of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602(17)). 

‘‘(b) ELECTRICITY LOCAL DISTRIBUTION COMPANIES.— 

‘‘(1) ALLOCATION.—Not later than June 30 of 2011 and each calendar year 

thereafter through 2028, the Administrator shall distribute to electricity local 

distribution companies for the benefit of retail ratepayers the quantity of emission allowances allocated for the electricity sector for the following vintage year 

pursuant to section 782(a), provided that the Administrator shall first subtract 

from such quantity and distribute or reserve for distribution the quantity of 

emission allowances for the relevant vintage year that are required for distribution under subsections (c) and (d) of this section. 

‘‘(2) DISTRIBUTION OF ALLOWANCES BASED ON EMISSIONS.— 

‘‘(A) IN GENERAL.—For each vintage year, 50 percent of the emission allowances available for distribution under paragraph (1) shall be distributed 

by the Administrator among individual electricity local distribution companies ratably based on the annual average carbon dioxide emissions attributable to generation of electricity delivered at retail by each such company 

during the base period determined under subparagraph (B). 

‘‘(B) BASE PERIOD.— 

‘‘(i) VINTAGE YEARS 2012 AND 2013.—For vintage years 2012 and 2013, 

an electricity local distribution company’s base period shall be— 

‘‘(I) calendar years 2006 through 2008; or 

‘‘(II) any 3 consecutive calendar years between 1999 and 2008, 

inclusive, that such company selects, provided that the company 

timely informs the Administrator of such selection. 

‘‘(ii) VINTAGE YEARS 2014 AND THEREAFTER.—For vintage years 2014 

and thereafter, the base period shall be— 

‘‘(I) the base period selected under clause (i); or 

‘‘(II) any 3 consecutive calendar years between 2009 through 

2012, inclusive, or, for local distribution companies with new units 

that are not fully operational before 2012, solely calendar year 

2012, provided that such company selects a period from among 

these options and timely informs the Administrator of such selection. 

‘‘(C) DETERMINATION OF EMISSIONS.—As part of the regulations promulgated pursuant to subsection (e), the Administrator, after consultation with 

the Energy Information Administration, shall determine the average 

amount of carbon dioxide emissions attributable to generation of electricity 

delivered at retail by each electricity local distribution company for each of 

the years 1999 through 2009 or the most recent calendar year for which appropriate data are available, taking into account entities’ electricity generation, electricity purchases, and electricity sales. Not later than March 31, 


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2013, the Administrator, after consultation with the Energy Information 

Administration, shall update such determination to include emissions for 

any additional calendar years through 2012. Such determinations shall be 

as precise as practicable, taking into account the nature of data currently 

available and the nature of markets and regulation in effect in various regions of the country. The following requirements shall apply to such determinations: 

‘‘(i) The Administrator shall determine the amount of fossil fuel-based 

electricity delivered at retail by each electricity local distribution company, and shall use appropriate emission factors to calculate carbon dioxide emissions associated with the generation of such electricity. 

‘‘(ii) Where it is not practical to determine the precise fuel mix for 

the electricity delivered at retail by an individual electricity local distribution company, the Administrator may use the best available data, 

including average data on a regional basis with reference to Regional 

Transmission Organizations or regional entities (as that term is defined 

in section 215(a)(7) of the Federal Power Act (16 U.S.C. 824o(a)(7)), to 

estimate fuel mix and emissions. Different methodologies may be applied in different regions if appropriate to obtain the most accurate estimate. 

‘‘(3) DISTRIBUTION OF ALLOWANCES BASED ON DELIVERIES.— 

‘‘(A) INITIAL ALLOCATION FORMULA.—Except as provided in subparagraph 

(B), for each vintage year, the Administrator shall distribute 50 percent of 

the emission allowances allocated under paragraph (1) of this subsection 

among individual electricity local distribution companies ratably based on 

each electricity local distribution company’s annual average retail electricity 

deliveries for 2006 through 2008, unless the owner or operator of the company selects 3 other consecutive years between 1999 and 2008, inclusive, 

and timely notifies the Administrator of its selection. 

‘‘(B) UPDATING.—Prior to distributing 2015 vintage emission allowances 

under this subparagraph and at 3-year intervals thereafter, the Administrator shall update the distribution formula under this subparagraph to reflect changes in each electricity local distribution company’s service territory since the most recent formula was established. For each successive 3- 

year period, the Administrator shall distribute allowances ratably among 

individual electricity local distribution companies based on the product of— 

‘‘(i) each electricity local distribution company’s average annual deliveries per customer during calendar years 2006 through 2008, or during 

the 3 alternative consecutive years selected by such company under 

subparagraph (A); and 

‘‘(ii) the number of customers of such electricity local distribution 

company in the most recent year in which the formula is updated 

under this clause. 

‘‘(4) USE OF ALLOWANCES.— 

‘‘(A) RATEPAYER BENEFIT.—Emission allowances distributed to an electricity local distribution company under this subsection shall be used exclusively for the benefit of retail ratepayers of such electricity local distribution 

company and may not be used to support electricity sales or deliveries to 

entities or persons other than such ratepayers. 

‘‘(B) RATEPAYER CLASSES.—In using emission allowances distributed 

under this section for the benefit of ratepayers, an electricity local distribution company shall ensure that ratepayer benefits are distributed— 

‘‘(i) among ratepayer classes ratably based on electricity deliveries to 

each class; and 

‘‘(ii) equitably among individual ratepayers within each ratepayer 

class, including entities that receive emission allowances pursuant to 

part F. 

‘‘(C) LIMITATION.—An electricity local distribution company shall not use 

the value of emission allowances distributed under this subsection to provide to any ratepayer a rebate that is based solely on the quantity of electricity delivered to such ratepayer. To the extent an electricity local distribution company uses the value of emission allowances distributed under 

this subsection to provide rebates, it shall, to the maximum extent practicable, provide such rebates with regard to the fixed portion of ratepayers’ 

bills or as a fixed credit or rebate on electricity bills. 

‘‘(D) GUIDELINES.—As part of the regulations promulgated under subsection (e), the Administrator shall prescribe specific guidelines for the implementation of the requirements of this paragraph. 

‘‘(5) REGULATORY PROCEEDINGS.— 


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‘‘(A) REQUIREMENT.—No electricity local distribution company shall be eligible to receive emission allowances under this subsection unless the State 

regulatory authority with authority over such company, or the entity with 

authority to regulate retail electricity rates of an electricity local distribution company not regulated by a State regulatory authority, has— 

‘‘(i) promulgated a regulation or completed a rate proceeding (or the 

equivalent, in the case of a ratemaking entity other than a State regulatory authority) that provides for the full implementation of the requirements of paragraph (4) of this subsection; and 

‘‘(ii) made available to the Administrator and the public a report describing, in adequate detail, the manner in which the requirements of 

paragraph (4) will be implemented. 

‘‘(B) UPDATING.—The Administrator shall require, as a condition of continued receipt of emission allowances under this subsection by an electricity 

local distribution company, that a new regulation be promulgated or rate 

proceeding be completed, and a new report be made available to the Administrator and the public, pursuant to subparagraph (A), not less frequently 

than every 5 years. 

‘‘(6) PLANS AND REPORTING.— ‘‘(A) REGULATIONS.—As part of the regulations promulgated under subsection (e), the Administrator shall prescribe requirements governing plans 

and reports to be submitted in accordance with this paragraph. 

‘‘(B) PLANS.—Not later than April 30 of 2011 and every 5 years thereafter 

through 2026, each electricity local distribution company shall submit to 

the Administrator a plan, approved by the State regulatory authority or 

other entity charged with regulating the retail rates of such company, describing such company’s plans for the disposition of the value of emission 

allowances to be received pursuant to this subsection, in accordance with 

the requirements of this subsection. 

‘‘(C) REPORTS.—Not later than June 30 of 2013 and each calendar year 

thereafter through 2031, each electricity local distribution company shall 

submit a report to the Administrator, and to the relevant State regulatory 

authority or other entity charged with regulating the retail electricity rates 

of such company, describing the disposition of the value of any emission allowances received by such company in the prior calendar year pursuant to 

this subsection, including— 

‘‘(i) a description of sales, transfer, exchange, or use by the company 

for compliance with obligations under this title, of any such emission 

allowances; 

‘‘(ii) the monetary value received by the company, whether in money 

or in some other form, from the sale, transfer, or exchange of emission 

allowances received by the company under this subsection; 

‘‘(iii) the manner in which the company’s disposition of emission allowances received under this subsection complies with the requirements of this subsection, including each of the requirements of paragraph (4); and 

‘‘(iv) such other information as the Administrator may require pursuant to subparagraph (A). 

‘‘(D) PUBLICATION.—The Administrator shall make available to the public 

all plans and reports submitted under this subsection, including by publishing such plans and reports on the Internet. 

‘‘(7) AUDITS.—Each year, the Administrator shall audit a representative sample of electricity local distribution companies to ensure that emission allowances 

distributed under this subsection have been used exclusively for the benefit of 

retail ratepayers and that such companies are complying with the requirements 

of this subsection. In selecting companies for audit, the Administrator shall take 

into account any credible evidence of noncompliance with such requirements. 

The Administrator shall make available to the public a report describing the results of each such audit, including by publishing such report on the Internet. 

‘‘(8) ENFORCEMENT.—A violation of any requirement of this subsection shall 

be a violation of this Act. Each emission allowance the value of which is used 

in violation of the requirements of this subsection shall be a separate violation. 

‘‘(c) MERCHANT COAL GENERATORS.— 

‘‘(1) QUALIFYING EMISSIONS.—The qualifying emissions for a merchant coal 

generator for a given calendar year shall be the product of the number of megawatt hours of electricity generated by such generator in such calendar year and 

the average carbon dioxide emissions per megawatt hour generated by such 

generator during calendar years 2006 through 2008, provided that the number 

of megawatt hours in a given calendar year for purposes of such calculation 


hsrobinson on PROD1PC76 with HEARING
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shall be reduced in proportion to the portion of such generator’s carbon dioxide 

emissions that are either— 

‘‘(A) captured and sequestered in such calendar year; or 

‘‘(B) attributable to the combustion or gasification of renewable biomass, 

such that the generator is not required to hold emission allowances for such 

emissions. 

‘‘(2) PHASE-DOWN SCHEDULE.—The Administrator shall identify an annual 

phase-down factor, applicable to distributions to merchant coal generators for 

each of vintage years 2012 through 2029, that corresponds to the overall decline 

in the amount of emission allowances to be allocated to the electricity sector in 

such years pursuant to section 782(a). Such factor shall— 

‘‘(A) for vintage year 2012, be equal to 1.0; 

‘‘(B) for each of vintage years 2013 through 2029, correspond to the 

quotient of— 

‘‘(i) the quantity of emission allowances allocated to the electricity 

sector under section 782(a) for such vintage year; divided by 

‘‘(ii) the quantity of emission allowances allocated to the electricity 

sector under section 782(a) for vintage year 2012. 

‘‘(3) DISTRIBUTION OF EMISSION ALLOWANCES.—Not later than March 1 of 2013 

and each calendar year through 2030, the Administrator shall distribute emission allowances of the preceding vintage year to the owner or operator of each 

merchant coal generator equal to the product of— 

‘‘(A) 0.5; 

‘‘(B) the qualifying emissions for such merchant coal generator for the 

preceding year, as determined under paragraph (1); and 

‘‘(C) the phase-down factor for the preceding calendar year, as identified 

under paragraph (2). 

‘‘(4) ADJUSTMENT.— 

‘‘(A) STUDY.—Not later than July 1, 2014, the Administrator, in consultation with the Federal Energy Regulatory Commission, shall complete a 

study to determine whether the allocation formula under paragraph (3) is 

resulting in, or is likely to result in, windfall profits to merchant coal generators or substantially disparate treatment of merchant coal generators 

operating in different markets or regions. 

‘‘(B) REGULATION.—If the Administrator, in consultation with the Federal 

Energy Regulatory Commission, makes an affirmative finding of windfall 

profits or disparate treatment under subparagraph (A), the Administrator 

shall, not later than 18 months after the completion of the study described 

in subparagraph (A), promulgate regulations providing for the adjustment 

of the allocation formula under paragraph (3) to mitigate, to the extent 

practicable, such windfall profits, if any, and such disparate treatment, if 

any. 

‘‘(5) LIMITATION ON ALLOWANCES.—Notwithstanding paragraph (3) or (4), for 

any vintage year the Administrator shall distribute under this subsection no 

more than 10 percent of the total quantity of emission allowances available for 

such vintage year for distribution to the electricity sector under section 782(a). 

If the quantity of emission allowances that would otherwise be distributed pursuant to paragraph (3) or (4) for any vintage year would exceed such limit, the 

Administrator shall distribute 10 percent of the total emission allowances available for distribution under section 782(a) for such vintage year ratably among 

merchant coal generators based on the applicable formula under paragraph (3) 

or (4). 

‘‘(d) GENERATORS WITH LONG-TERM POWER PURCHASE AGREEMENTS.— 

‘‘(1) RESERVED ALLOWANCES.—Notwithstanding subsections (b) and (c) of this 

section, the Administrator shall withhold from distribution to electricity local 

distribution companies a number of emission allowances equal to 105 percent 

of the emission allowances the Administrator anticipates will be distributed to 

long-term contract generators under this subsection. If not required to distribute all of these reserved allowances under this subsection, the Administrator 

shall distribute any remaining emission allowances to the electricity local distribution companies in accordance with subsection (b). 

‘‘(2) DISTRIBUTION.—Not later than March 1 of 2013 and each calendar year 

through 2030, the Administrator shall distribute to the owner or operator of 

each long-term contract generator the number of emission allowances of the preceding vintage year that are equal to the number of tons of carbon dioxide emitted as a result of a qualifying long-term power purchase agreement referred to 

in subsection (a)(2)(C). 


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‘‘(3) DURATION.—A long-term contract generator shall cease to be eligible to 

receive allocations under this subsection upon the earliest of the following 

dates: 

‘‘(A) The date when the facility no longer qualifies as a qualifying small 

power production facility or a qualifying cogeneration facility (within the 

meaning of section 3(17)(C) or 3(18)(B) of the Federal Power Act), or a new 

independent power production facility (within the meaning of section 

416(a)(2) of this Act, except that subparagraph (C) of such definition shall 

not apply for purposes of this clause). 

‘‘(B) The date when the facility no longer meets the total installed net 

output capacity criterion required to be met as of the commencement of operation in subsection (a)(2)(B). 

‘‘(C) The date when the power purchase agreement referred to in subsection (a)(2)(C)— 

‘‘(i) expires; 

‘‘(ii) is terminated; or 

‘‘(iii) is amended in any way that changes the location of the facility, 

the price (whether a fixed price or price formula) for electricity sold 

under such agreement, the quantity of electricity sold under the agreement, or the expiration or termination date of the agreement. 

‘‘(4) ELIGIBILITY.—To be eligible to receive allowance distributions under this 

subsection, the owner or operator of a long-term contract generator shall submit 

each of the following in writing to the Administrator within 180 days after the 

date of enactment of this title, and not later than September 30 of each vintage 

year for which such generator wishes to receive emission allowances: 

‘‘(A) A certificate of representation described in section 700(15). 

‘‘(B) An identification of each owner and each operator of the facility. 

‘‘(C) An identification of the units at the facility and the location of the 

facility. 

‘‘(D) A written certification by the designated representative that the facility meets all the requirements of the definition of a long-term contract 

generator. 

‘‘(E) The expiration date of the power purchase agreement referred to in 

subsection (a)(2)(C). 

‘‘(F) A copy of the power purchase agreement referred to in subsection 

(a)(2)(C). 

‘‘(5) NOTIFICATION.—Not later than 30 days after a facility loses, in accordance with paragraph (3), its eligibility for emission allowances distributed pursuant to this subsection, the designated representative of such facility shall notify the Administrator in writing when, and on what basis, the facility lost its 

eligibility to receive emission allowances. 

‘‘(e) REGULATIONS.—Not later than 2 years after the date of enactment of this 

title, the Administrator, in consultation with the Federal Energy Regulatory Commission, shall promulgate regulations to implement the requirements of this section. 

‘‘SEC. 784. NATURAL GAS CONSUMERS. 

‘‘(a) DEFINITIONS.—For purposes of this section: 

‘‘(1) NATURAL GAS LOCAL DISTRIBUTION COMPANY.—The term ‘natural gas local 

distribution company’ means a natural gas local distribution company that is 

a covered entity. 

‘‘(2) COST-EFFECTIVE.—The term ‘cost-effective’, with respect to an energy efficiency program, means that the program meets the Total Resource Cost Test, 

which requires that the net present value of economic benefits over the life of 

the program, including avoided supply and delivery costs and deferred or avoided investments, is greater than the net present value of the economic costs over 

the life of the program, including program costs and incremental costs borne by 

the energy consumer. 

‘‘(b) ALLOCATION.—Not later than June 30 of 2015 and each calendar year thereafter through 2028, the Administrator shall distribute to natural gas local distribution companies for the benefit of retail ratepayers the quantity of emission allowances allocated for the following vintage year pursuant to section 782(b). Such allowances shall be distributed among local natural gas distribution companies based 

on the following formula: 

‘‘(1) INITIAL FORMULA.—Except as provided in paragraph (2), for each vintage 

year, the Administrator shall distribute emission allowances among natural gas 

local distribution companies ratably based on each such company’s annual average retail natural gas deliveries for 2006 through 2008, unless the owner or operator of the company selects 3 other consecutive years between 1999 and 2008, 

inclusive, and timely notifies the Administrator of its selection. 


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‘‘(2) UPDATING.—Prior to distributing 2019 vintage emission allowances and 

at 3-year intervals thereafter, the Administrator shall update the distribution 

formula under this subsection to reflect changes in each natural gas local distribution company’s service territory since the most recent formula was established. For each successive 3-year period, the Administrator shall distribute allowances ratably among natural gas local distribution companies based on the 

product of— 

‘‘(A) each natural gas local distribution company’s average annual natural 

gas deliveries per customer during calendar years 2006 through 2008, or 

during the 3 alternative consecutive years selected by such company under 

paragraph (1); and 

‘‘(B) the number of customers of such natural gas local distribution company in the most recent year in which the formula is updated under this 

paragraph. 

‘‘(c) USE OF ALLOWANCES.— ‘‘(1) RATEPAYER BENEFIT.—Emission allowances distributed to a natural gas 

local distribution company under this section shall be used exclusively for the 

benefit of retail ratepayers of such natural gas local distribution company and 

may not be used to support natural gas sales or deliveries to entities or persons 

other than such ratepayers. 

‘‘(2) RATEPAYER CLASSES.—In using emission allowances distributed under 

this section for the benefit of ratepayers, a natural gas local distribution company shall ensure that ratepayer benefits are distributed— 

‘‘(A) among ratepayer classes ratably based on natural gas deliveries to 

each class; and 

‘‘(B) equitably among individual ratepayers within each ratepayer class. 

‘‘(3) LIMITATION.—A natural gas local distribution company shall not use the 

value of emission allowances distributed under this section to provide to any 

ratepayer a rebate that is based solely on the quantity of natural gas delivered 

to such ratepayer. To the extent a natural gas local distribution company uses 

the value of emission allowances distributed under this section to provide rebates, it shall, to the maximum extent practicable, provide such rebates with 

regard to the fixed portion of ratepayers’ bills or as a fixed creditor rebate on 

natural gas bills. 

‘‘(4) ENERGY EFFICIENCY PROGRAMS.—The value of no less than one third of 

the emission allowances distributed to natural gas local distribution companies 

pursuant to this section in any calendar year shall be used for cost-effective energy efficiency programs for natural gas consumers. Such programs must be authorized and overseen by the State regulatory authority, or by the entity with 

regulatory authority over retail natural gas rates in the case of a natural gas 

local distribution company that is not regulated by a State regulatory authority. 

‘‘(5) GUIDELINES.—As part of the regulations promulgated under subsection 

(h), the Administrator shall prescribe specific guidelines for the implementation 

of the requirements of this subsection. 

‘‘(d) REGULATORY PROCEEDINGS.— 

‘‘(1) REQUIREMENT.—No natural gas local distribution company shall be eligible to receive emission allowances under this section unless the State regulatory 

authority with authority over such company, or the entity with authority to regulate retail rates of a natural gas local distribution company not regulated by 

a State regulatory authority, has— 

‘‘(A) promulgated a regulation or completed a rate proceeding (or the 

equivalent, in the case of a ratemaking entity other than a State regulatory 

authority) that provides for the full implementation of the requirements of 

subsection (c); and 

‘‘(B) made available to the Administrator and the public a report describing, in adequate detail, the manner in which the requirements of subsection 

(c) will be implemented. 

‘‘(2) UPDATING.—The Administrator shall require, as a condition of continued 

receipt of emission allowances under this section, that a new regulation be promulgated or rate proceeding be completed, and a new report be made available 

to the Administrator and the public, pursuant to paragraph (1), not less frequently than every 5 years. 

‘‘(e) PLANS AND REPORTING.— 

‘‘(1) REGULATIONS.—As part of the regulations promulgated under subsection 

(h), the Administrator shall prescribe requirements governing plans and reports 

to be submitted in accordance with this subsection. 

‘‘(2) PLANS.—Not later than April 30 of 2015 and every 5 years thereafter 

through 2025, each natural gas local distribution company shall submit to the 

Administrator a plan, approved by the State regulatory authority or other entity 


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charged with regulating the retail rates of such company, describing such company’s plans for the disposition of the value of emission allowances to be received pursuant to this section, in accordance with the requirements of this section. 

‘‘(3) REPORTS.—Not later than June 30 of 2017 and each calendar year thereafter through 2031, each natural gas local distribution company shall submit a 

report to the Administrator, approved by the relevant State regulatory authority or other entity charged with regulating the retail natural gas rates of such 

company, describing the disposition of the value of any emission allowances received by such company in the prior calendar year pursuant to this subsection, 

including— 

‘‘(A) a description of sales, transfer, exchange, or use by the company for 

compliance with obligations under this title, of any such emission allowances; 

‘‘(B) the monetary value received by the company, whether in money or 

in some other form, from the sale, transfer, or exchange of emission allowances received by the company under this section; 

‘‘(C) the manner in which the company’s disposition of emission allowances received under this subsection complies with the requirements of this 

section, including each of the requirements of subsection (c); 

‘‘(D) the cost-effectiveness of, and energy savings achieved by, energy efficiency programs supported through such emission allowances; and 

‘‘(E) such other information as the Administrator may require pursuant 

to paragraph (1). 

‘‘(4) PUBLICATION.—The Administrator shall make available to the public all 

plans and reports submitted by natural gas local distribution companies under 

this subsection, including by publishing such plans and reports on the Internet. 

‘‘(f) AUDITS.—Each year, the Administrator shall audit a representative sample of 

natural gas local distribution companies to ensure that emission allowances distributed under this section have been used exclusively for the benefit of retail ratepayers and that such companies are complying with the requirements of this section. In selecting companies for audit, the Administrator shall take into account any 

credible evidence of noncompliance with such requirements. The Administrator shall 

make available to the public a report describing the results of each such audit, including by publishing such report on the Internet. 

‘‘(g) ENFORCEMENT.—A violation of any requirement of this section shall be a violation of this Act. Each emission allowance the value of which is used in violation 

of the requirements of this section shall be a separate violation. 

‘‘(h) REGULATIONS.—Not later than January 1, 2014, the Administrator, in consultation with the Federal Energy Regulatory Commission, shall promulgate regulations to implement the requirements of this section. 

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

‘‘(a) DEFINITIONS.—For purposes of this section: 

‘‘(1) CARBON CONTENT.—The term ‘carbon content’ means the amount of carbon dioxide that would be emitted as a result of the combustion of a fuel. 

‘‘(2) COST-EFFECTIVE.—The term ‘cost-effective’ has the meaning given that 

term in section 784(a)(2). 

‘‘(b) ALLOCATION.—Not later than September 30 of each of calendar years 2012 

through 2029, the Administrator shall distribute among the States, in accordance 

with this section, the quantity of emission allowances allocated pursuant to section 

782(c). 

‘‘(c) DISTRIBUTION AMONG STATES.—The Administrator shall distribute emission 

allowances among the States under this section each year ratably based on the ratio 

of— 

‘‘(1) the carbon content of home heating oil and propane sold to consumers 

within each State in the preceding year for residential or commercial uses; to 

‘‘(2) the carbon content of home heating oil and propane sold to consumers 

within the United States in the preceding year for residential or commercial 

uses. 

‘‘(d) USE OF ALLOWANCES.— 

‘‘(1) IN GENERAL.—States shall use emission allowances distributed under this 

section exclusively for the benefit of consumers of home heating oil or propane 

for residential or commercial purposes. Such proceeds shall be used exclusively 

for— 

‘‘(A) cost-effective energy efficiency programs for consumers that use 

home heating oil or propane for residential or commercial purposes; or 

‘‘(B) rebates or other direct financial assistance programs for consumers 

of home heating oil or propane used for residential or commercial purposes. 


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‘‘(2) ADMINISTRATION AND DELIVERY MECHANISMS.—In administering programs 

supported by this section, States shall— 

‘‘(A) use no less than 50 percent of the value of emission allowances received under this section for cost-effective energy efficiency programs to reduce consumers’ overall fuel costs; 

‘‘(B) to the extent practicable, deliver consumer support under this section 

through existing energy efficiency and consumer energy assistance programs or delivery mechanisms, including, where appropriate, programs or 

mechanisms administered by parties other than the State; and 

‘‘(C) seek to coordinate the administration and delivery of energy efficiency and consumer energy assistance programs supported under this section, with one another and with existing programs for various fuel types, 

so as to deliver comprehensive, fuel-blind, coordinated programs to consumers. 

‘‘(e) REPORTING.—Each State receiving emission allowances under this section 

shall submit to the Administrator, within 12 months of each receipt of such allowances, a report, in accordance with such requirements as the Administrator may 

prescribe, that— 

‘‘(1) describes the State’s use of emission allowances distributed under this 

section, including a description of the energy efficiency and consumer assistance 

programs supported with such allowances; 

‘‘(2) demonstrates the cost-effectiveness of, and the energy savings achieved 

by, energy efficiency programs supported under this section; and 

‘‘(3) includes a report prepared by an independent third party, in accordance 

with such regulations as the Administrator may promulgate, evaluating the performance of the energy efficiency and consumer assistance programs supported 

under this section. 

‘‘(f) ENFORCEMENT.—If the Administrator determines that a State is not in compliance with this section, the Administrator may withhold a portion of the emission 

allowances, the quantity of which is equal to up to twice the quantity of the allowances that the State failed to use in accordance with the requirements of this section, that such State would otherwise be eligible to receive under this section in 

later years. Allowances withheld pursuant to this subsection shall be distributed 

among the remaining States ratably in accordance with the formula in subsection 

(c). 

‘‘SEC. 787. ALLOCATIONS TO REFINERIES. 

‘‘(a) PURPOSE.—To provide emission allowance rebates to petroleum refiners in the 

United States in a manner that promotes energy efficiency and a reduction in greenhouse gas emissions at such facilities. 

‘‘(b) DEFINITIONS.—In this section: 

‘‘(1) EMISSIONS.—The term ‘emissions’ means the greenhouse gas emissions in 

the calendar year preceding the calendar year in which emission allowances are 

being distributed. The term includes direct emissions from fuel combustion, 

process emissions, and indirect emissions from the generation of electricity used 

to produce the output of the petroleum refinery or sector. 

‘‘(2) INTENSITY.—The term ‘intensity’ means tons of carbon dioxide equivalent 

emissions per unit of output in a given year. 

‘‘(3) INTENSITY FACTOR.—The term ‘intensity factor’ means the intensity of the 

petroleum refining sector divided by the intensity for an individual petroleum 

refinery. 

‘‘(4) OUTPUT.—The term ‘output’ means the average annual number of gallons 

of refined fuel produced in the three calendar years preceding the calendar year 

in which emission allowances are being distributed. 

‘‘(5) PETROLEUM REFINERY.—The term ‘petroleum refinery’ means a facility 

classified under 324110 of the North American Industrial Classification System 

of 2002. 

‘‘(6) PRODUCTION FACTOR.—The term ‘production factor’ means the output of 

an individual petroleum refinery divided by the output of the petroleum refining 

sector. 

‘‘(c) IN GENERAL.—For each vintage year between 2014 and 2026, the Administrator shall distribute allowances pursuant to this section to owners and operators 

of petroleum refineries in the United States. 

‘‘(d) DISTRIBUTION SCHEDULE.—The Administrator shall distribute emission allowances of each vintage year no later than October 31 of the preceding calendar year. 

‘‘(e) CALCULATION OF EMISSION ALLOWANCE REBATES.— 

‘‘(1) For each petroleum refinery, the Administrator shall calculate an individual allocation factor for each vintage year, based upon the product of the inVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00188 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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tensity factor for such refinery multiplied by the production factor for such refinery. 

‘‘(2) The Administrator shall also calculate a total allocation factor for each 

vintage year, based upon the sum of all of the individual allocation factors. 

‘‘(3) The Administrator shall calculate the number of emission allowances to 

be provided to each petroleum refinery in each vintage year by dividing the individual allocation factor for such refinery by the total allocation factor, then 

multiplying the result by the number of emission allowances allocated to the 

program under this section for that vintage year. 

‘‘(f) DATA SOURCES.— ‘‘(1) The Administrator shall use data from the greenhouse gas registry, established under section 713, where it is available. 

‘‘(2) The Administrator shall determine, by rule, the methodology by which to 

calculate indirect emissions for a refinery. The Administrator shall also determine, by rule, the methodology by which to take into account the value of allowances provided at no cost to local distribution companies that is passed through 

to a refinery. Each person selling electricity to the owner or operator of a petroleum refinery shall provide the owner or operator and the Administrator, on an 

annual basis, such data as the Administrator determines is necessary to implement this section. 

‘‘SEC. 788. øSECTION RESERVED¿. 

‘‘SEC. 789. CLIMATE CHANGE CONSUMER REFUNDS. 

‘‘(a) REFUND.—In each year after deposits are made to the Climate Change Consumer Refund Account, the Secretary of the Treasury shall provide tax refunds on 

a per capita basis to each household in the United States that shall collectively 

equal the amount deposited into the Climate Change Consumer Refund Account. 

‘‘(b) LIMITATIONS.—The Secretary of the Treasury shall establish procedures to ensure that individuals who are not— 

‘‘(1) citizens or nationals of the United States; or 

‘‘(2) immigrants lawfully residing in the United States, 

are excluded for the purpose of calculating and distributing refunds under this section. 

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

‘‘(a) IN GENERAL.—Not later than one year after the date of enactment of this 

title, the Administrator shall issue regulations allowing any person in the United 

States to exchange greenhouse gas emission allowances issued before December 31, 

2011, by the State of California or for the Regional Greenhouse Gas Initiative, or 

the Western Climate Initiative (in this section referred to as ‘State allowances’) for 

emission allowances established by the Administrator under section 721(a). 

‘‘(b) REGULATIONS.—Regulations issued under subsection (a) shall— 

‘‘(1) provide that a person exchanging State allowances under this section receive emission allowances established under section 721(a) in the amount that 

is sufficient to compensate for the cost of obtaining and holding such State allowances; 

‘‘(2) establish a deadline by which persons must exchange the State allowances; and 

‘‘(3) provide that the Federal emission allowances disbursed pursuant to this 

section shall be deducted from the allowances to be auctioned pursuant to section 782(b). 

‘‘(c) COST OF OBTAINING STATE ALLOWANCE.—For purposes of this section, the cost 

of obtaining a State allowance shall be the average auction price, for emission allowances issued in the year in which the State allowance was issued, under the program under which the State allowance was issued. 

‘‘SEC. 791. AUCTION PROCEDURES. 

‘‘(a) IN GENERAL.—To the extent that auctions of emission allowances by the Administrator are authorized by this part, such auctions shall be carried out pursuant 

to this section and the regulations established hereunder. 

‘‘(b) INITIAL REGULATIONS.—Not later than 12 months after the date of enactment 

of this title, the Administrator, in consultation with other agencies, as appropriate, 

shall promulgate regulations governing the auction of allowances under this section. 

Such regulations shall include the following requirements: 

‘‘(1) FREQUENCY; FIRST AUCTION.—Auctions shall be held four times per year 

at regular intervals, with the first auction to be held no later than March 31, 

2011. 

‘‘(2) AUCTION SCHEDULE; CURRENT AND FUTURE VINTAGES.—The Administrator 

shall, at each quarterly auction under this section, offer for sale both a portion 

of the allowances with the same vintage year as the year in which the auction 


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is being conducted and a portion of the allowances with vintage years from future years. The preceding sentence shall not apply to auctions held before 2012, 

during which period, by necessity, the Administrator shall auction only allowances with a vintage year that is later than the year in which the auction is 

held. Beginning with the first auction and at each quarterly auction held thereafter, the Administrator may offer for sale allowances with vintage years of up 

to four years after the year in which the auction is being conducted, except as 

provided in section 782(p). 

‘‘(3) AUCTION FORMAT.—Auctions shall follow a single-round, sealed-bid, uniform price format. 

‘‘(4) PARTICIPATION; FINANCIAL ASSURANCE.—Auctions shall be open to any 

person, except that the Administrator may establish financial assurance requirements to ensure that auction participants can and will perform on their 

bids. 

‘‘(5) DISCLOSURE OF BENEFICIAL OWNERSHIP.—Each bidder in the auction shall 

be required to disclose the person or entity sponsoring or benefitting from the 

bidder’s participation in the auction if such person or entity is, in whole or in 

part, other than the bidder. 

‘‘(6) PURCHASE LIMITS.—No person may, directly or in concert with another 

participant, purchase more than 5 percent of the allowances offered for sale at 

any quarterly auction. 

‘‘(7) PUBLICATION OF INFORMATION.—After the auction, the Administrator 

shall, in a timely fashion, publish the identities of winning bidders, the quantity 

of allowances obtained by each winning bidder, and the auction clearing price. 

‘‘(8) OTHER REQUIREMENTS.—The Administrator may include in the regulations such other requirements or provisions as the Administrator, in consultation with other agencies, as appropriate, considers appropriate to promote effective, efficient, transparent, and fair administration of auctions under this section. 

‘‘(c) REVISION OF REGULATIONS.—The Administrator may, in consultation with 

other agencies, as appropriate, at any time, revise the initial regulations promulgated under subsection (b). Such revised regulations need not meet the requirements identified in subsection (b) if the Administrator determines that an alternative auction design would be more effective, taking into account factors including 

costs of administration, transparency, fairness, and risks of collusion or manipulation. In determining whether and how to revise the initial regulations under this 

subsection, the Administrator shall not consider maximization of revenues to the 

Federal Government. 

‘‘(d) RESERVE AUCTION PRICE.—The minimum reserve auction price shall be $10 

(in constant 2009 dollars) for auctions occurring in 2012. The minimum reserve 

price for auctions occurring in years after 2012 shall be the minimum reserve auction price for the previous year increased by 5 percent plus the rate of inflation (as 

measured by the Consumer Price Index for all urban consumers). 

‘‘(e) DELEGATION OR CONTRACT.—Pursuant to regulations under this section, the 

Administrator may by delegation or contract provide for the conduct of auctions 

under the Administrator’s supervision by other departments or agencies of the Federal Government or by nongovernmental agencies, groups, or organizations. 

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

‘‘(a) CONSIGNMENT.—Any entity holding emission allowances or compensatory allowances may request that the Administrator auction, pursuant to section 791, the 

allowances on consignment. 

‘‘(b) PRICING.—When the Administrator acts under this section as the agent of an 

entity in possession of emission allowances, the Administrator is not obligated to obtain the highest price possible for the emission allowances, and instead shall auction 

consignment allowances in the same manner and pursuant to the same rules as auctions of other allowances under section 791. The Administrator may permit the entity offering the allowance for sale to condition the sale of its allowances pursuant 

to this section on a minimum reserve price that is different than the reserve auction 

price set pursuant to section 791(d). 

‘‘(c) PROCEEDS.—For emission allowances and compensatory allowances auctioned 

pursuant to this section, notwithstanding section 3302 of title 31, United States 

Code, or any other provision of law, within 90 days of receipt, the United States 

shall transfer the proceeds from the auction to the entity which held the allowances 

auctioned. No funds transferred from a purchaser to a seller of emission allowances 

or compensatory allowances under this subsection shall be held by any officer or employee of the United States or treated for any purpose as public monies. 

‘‘(d) REGULATIONS.—The Administrator shall issue regulations within 24 months 

after the date of enactment of this title to implement this section. 


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‘‘SEC. 793. ESTABLISHMENT OF FUNDS. 

‘‘There is established in the Treasury of the United States the following funds: 

‘‘(1) The Strategic Reserve Fund. 

‘‘(2) The Climate Change Consumer Refund Fund. 

‘‘SEC. 794. OVERSIGHT OF ALLOCATIONS. 

‘‘(a) IN GENERAL.—Not later than January 1, 2014, and every 2 years thereafter, 

the Comptroller General of the United States shall carry out a review of programs 

administered by the Federal Government that distribute emission allowances or 

funds from any Federal auction of allowances. 

‘‘(b) CONTENTS.—Each such report shall include a comprehensive evaluation of the 

administration and effectiveness of each program, including— 

‘‘(1) the efficiency, transparency, and soundness of the administration of each 

program; 

‘‘(2) the performance of activities receiving assistance under each program; 

‘‘(3) the cost-effectiveness of each program in achieving the stated purposes 

of the program; and 

‘‘(4) recommendations, if any, for regulatory or administrative changes to each 

program to improve its effectiveness. 

‘‘(c) FOCUS.—In evaluating program performance, each review under this section 

review shall address the effectiveness of such programs in— 

‘‘(1) creating and preserving jobs; 

‘‘(2) ensuring a manageable transition for working families and workers; 

‘‘(3) reducing the emissions, or enhancing sequestration, of greenhouse gases; 

‘‘(4) developing clean technologies; and 

‘‘(5) building resilience to the impacts of climate change.’’. 

Subtitle C—Additional Greenhouse Gas Standards 

SEC. 331. GREENHOUSE GAS STANDARDS. 

The Clean Air Act (42 U.S.C. 7401 and following), as amended by subtitles A and 

B of this title, is further amended by adding the following new title after title VII: 

‘‘TITLE VIII—ADDITIONAL GREENHOUSE GAS 

STANDARDS 

‘‘SEC. 801. DEFINITIONS. 

‘‘For purposes of this title, terms that are defined in title VII, except for the term 

‘stationary source’, shall have the meaning given those terms in title VII. 

‘‘PART A—STATIONARY SOURCE STANDARDS 

‘‘SEC. 811. STANDARDS OF PERFORMANCE. 

‘‘(a) UNCAPPED STATIONARY SOURCES.— 

‘‘(1) INVENTORY OF SOURCE CATEGORIES.—(A) Within 12 months after the date 

of enactment of this title, the Administrator shall publish under section 

111(b)(1)(A) an inventory of categories of stationary sources that consist of those 

categories that contain sources that individually had uncapped greenhouse gas 

emissions greater than 10,000 tons of carbon dioxide equivalent and that, in the 

aggregate, were responsible for emitting at least 20 percent annually of the uncapped greenhouse gas emissions. 

‘‘(B) The Administrator shall include in the inventory under this paragraph 

each source category that is responsible for at least 10 percent of the uncapped 

methane emissions in 2005. Notwithstanding any other provision, the inventory 

required by this section shall not include sources of enteric fermentation. The 

list under this paragraph shall include industrial sources, the emissions from 

which, when added to the capped emissions from industrial sources, constitute 

at least 95 percent of the greenhouse gas emissions of the industrial sector. 

‘‘(C) For purposes of this subsection, emissions shall be calculated using tons 

of carbon dioxide equivalents. In promulgating the inventory required by this 

paragraph and the schedule required under by paragraph (2)(C), the Administrator shall use the most current emissions data available at the time of promulgation, except as provided in subparagraph (B). 

‘‘(D) Notwithstanding any other provisions, the Administrator may list under 

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section without making a finding that the source category causes or contributes 

significantly to, air pollution with may be reasonably anticipated to endanger 

public health or welfare. 

‘‘(2) STANDARDS AND SCHEDULE.—(A) For each category identified as provided 

in paragraph (1), the Administrator shall promulgate standards of performance 

under section 111 for the uncapped emissions of greenhouse gases from stationary sources in that category and shall promulgate corresponding regulations 

under section 111(d). 

‘‘(B) The Administrator shall promulgate standards as required by this subsection for stationary sources in categories identified as provided in paragraph 

(1) as expeditiously as practicable, assuring that— 

‘‘(i) standards for identified source categories that, combined, emitted 80 

percent or more of the greenhouse gas emissions of the identified source 

categories shall be promulgated not later than 3 years after the date of enactment of this title and shall include standards for natural gas extraction; 

and 

‘‘(ii) for all other identified source categories— 

‘‘(I) standards for not less than an additional 25 percent of the identified categories shall be promulgated not later than 5 years after the 

date of enactment of this title; 

‘‘(II) standards for not less than an additional 25 percent of the identified categories shall be promulgated not later than 7 years after the 

date of enactment of this title; and 

‘‘(III) standards for all the identified categories shall be promulgated 

not later than 10 years after the date of enactment of this title. 

‘‘(C) Not later than 24 months after the date of enactment of this title and 

after notice and opportunity for comment, the Administrator shall publish a 

schedule establishing a date for the promulgation of standards for each category 

of sources identified pursuant to paragraph (1). The date for each category shall 

be consistent with the requirements of subparagraph (B). The determination of 

priorities for the promulgation of standards pursuant to this paragraph is not 

a rulemaking and shall not be subject to judicial review, except that failure to 

promulgate any standard pursuant to the schedule established by this paragraph shall be subject to review under section 304(a)(2). 

‘‘(D) Notwithstanding section 307, no action of the Administrator listing a 

source category under paragraph (1) shall be a final agency action subject to 

judicial review, except that any such action may be reviewed under section 307 

when the Administrator issues performance standards for such category. 

‘‘(b) CAPPED SOURCES.—No standard of performance shall be established under 

section 111 for capped greenhouse gas emissions from a capped source unless the 

Administrator determines that such standards are appropriate because of effects 

that do not include climate change effects. In promulgating a standard of performance under section 111 for the emission from capped sources of any air pollutant 

that is not a greenhouse gas, the Administrator shall treat the emission of any 

greenhouse gas by those entities as a nonair quality public health and environmental impact within the meaning of section 111(a)(1). 

‘‘(c) PERFORMANCE STANDARDS.—For purposes of setting a performance standard 

for source categories identified pursuant to subsection (a)— 

‘‘(1) The Administrator shall take into account the goal of reducing total 

United States greenhouse gas emissions as set forth in section 702. 

‘‘(2) The Administrator may promulgate a design, equipment, work practice, 

or operational standard, or any combination thereof, under section 111 in lieu 

of a standard of performance under that section without regard to any determination of feasibility that would otherwise be required under section 111(h). 

‘‘(3) Notwithstanding any other provision, in setting the level of each standard 

required by this section, the Administrator shall take into account projections 

of allowance prices, such that the marginal cost of compliance (expressed as dollars per ton of carbon dioxide equivalent reduced) imposed by the standard 

would not, in the judgement of the Administrator, be expected to exceed the Administrator’s projected allowance prices over the time period spanning from the 

date of initial compliance to the date that the next revisions of the standard 

would come into effect pursuant to the schedule under section 111(b)(1)(B). 

‘‘(d) DEFINITIONS.—In this section, the terms ‘uncapped greenhouse gas emissions’ 

and ‘uncapped methane emissions’ mean those greenhouse gas or methane emissions, respectively, to which section 722 would not have applied if the requirements 

of this title had been in effect for the same year as the emissions data upon which 

the list is based. 

‘‘(e) STUDY OF THE EFFECTS OF PERFORMANCE STANDARDS.— 


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‘‘(1) STUDY.—The Administrator shall conduct a study of the impacts of performance standards required under this section, which shall evaluate the effect 

of such standards on the— 

‘‘(A) costs of achieving compliance with the economy-wide reduction goals 

specified in section 702 and the reduction targets specified in section 703; 

‘‘(B) available supply of offset credits; and 

‘‘(C) ability to achieve the economy-wide reduction goals specified in section 702 and any other benefits of such standards. 

‘‘(2) REPORT.—The Administrator shall submit to the House Energy and Commerce Committee a report that describes the results of the study not later than 

18 months after the publication of the standards required under subsection 

(a)(2)(B)(i). 

‘‘PART C—EXEMPTIONS FROM OTHER PROGRAMS 

‘‘SEC. 831. CRITERIA POLLUTANTS. 

‘‘As of the date of the enactment of the Safe Climate Act, no greenhouse gas may 

be added to the list under section 108(a) on the basis of its effect on global climate 

change. 

‘‘SEC. 832. INTERNATIONAL AIR POLLUTION. 

‘‘Section 115 shall not apply to an air pollutant with respect to that pollutant’s 

contribution to global warming. 

‘‘SEC. 833. HAZARDOUS AIR POLLUTANTS. 

‘‘No greenhouse gas may be added to the list of hazardous air pollutants under 

section 112 unless such greenhouse gas meets the listing criteria of section 112(b) 

independent of its effects on global climate change. 

‘‘SEC. 834. NEW SOURCE REVIEW. 

‘‘The provisions of part C of title I shall not apply to a major emitting facility that 

is initially permitted or modified after January 1, 2009, on the basis of its emissions 

of any greenhouse gas. 

‘‘SEC. 835. TITLE V PERMITS. 

‘‘Notwithstanding any provision of title III or V, no stationary source shall be required to apply for, or operate pursuant to, a permit under title V, solely because 

the source emits any greenhouse gases that are regulated solely because of their effect on global climate change.’’. 

SEC. 332. HFC REGULATION. 

(a) IN GENERAL.—Title VI of the Clean Air Act (42 U.S.C. 7671 et seq.) (relating 

to stratospheric ozone protection) is amended by adding at the end the following: 

‘‘SEC. 619. HYDROFLUOROCARBONS (HFCS). 

‘‘(a) TREATMENT AS CLASS II, GROUP II SUBSTANCES.—Except as otherwise provided in this section, hydrofluorocarbons shall be treated as class II substances for 

purposes of applying the provisions of this title. The Administrator shall establish 

two groups of class II substances. Class II, group I substances shall include all 

hydrochlorofluorocarbons (HCFCs) listed pursuant to section 602(b). Class II, group 

II substances shall include each of the following: 

‘‘(1) Hydrofluorocarbon-23 (HFC–23). 

‘‘(2) Hydrofluorocarbon-32 (HFC–32). 

‘‘(3) Hydrofluorocarbon-41 (HFC–41). 

‘‘(4) Hydrofluorocarbon-125 (HFC–125). 

‘‘(5) Hydrofluorocarbon-134 (HFC–134). 

‘‘(6) Hydrofluorocarbon-134a (HFC–134a). 

‘‘(7) Hydrofluorocarbon-143 (HFC–143). 

‘‘(8) Hydrofluorocarbon-143a (HFC–143a). 

‘‘(9) Hydrofluorocarbon-152 (HFC–152). 

‘‘(10) Hydrofluorocarbon-152a (HFC–152a). 

‘‘(11) Hydrofluorocarbon-227ea (HFC–227ea). 

‘‘(12) Hydrofluorocarbon-236cb (HFC–236cb). 

‘‘(13) Hydrofluorocarbon-236ea (HFC–236ea). 

‘‘(14) Hydrofluorocarbon-236fa (HFC–236fa). 

‘‘(15) Hydrofluorocarbon-245ca (HFC–245ca). 

‘‘(16) Hydrofluorocarbon-245fa (HFC–245fa). 

‘‘(17) Hydrofluorocarbon-365mfc (HFC–365mfc). 

‘‘(18) Hydrofluorocarbon-43-10mee (HFC–43–10mee). 

‘‘(19) Hydrofluoroolefin-1234yf (HFO–1234yf). 


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‘‘(20) Hydrofluoroolefin-1234ze (HFO–1234ze). 

Not later than 6 months after the date of enactment of this title, the Administrator 

shall publish an initial list of class II, group II substances, which shall include the 

substances listed in this subsection. The Administrator may add to the list of class 

II, group II substances any other substance used as a substitute for a class I or II 

substance if the Administrator determines that 1 metric ton of the substance makes 

the same or greater contribution to global warming over 100 years as 1 metric ton 

of carbon dioxide. Within 24 months after the date of enactment of this section, the 

Administrator shall amend the regulations under this title (including the regulations referred to in sections 603, 608, 609, 610, 611, 612, and 613) to apply to class 

II, group II substances. 

‘‘(b) CONSUMPTION AND PRODUCTION OF CLASS II, GROUP II SUBSTANCES.— ‘‘(1) IN GENERAL.— ‘‘(A) CONSUMPTION PHASE DOWN.—In the case of class II, group II substances, in lieu of applying section 605 and the regulations thereunder, the 

Administrator shall promulgate regulations phasing down the consumption 

of class II, group II substances in the United States, and the importation 

of products containing any class II, group II substance, in accordance with 

this subsection within 18 months after the date of enactment of this section. 

Effective January 1, 2012, it shall be unlawful for any person to produce 

any class II, group II substance, import any class II, group II substance, 

or import any product containing any class II, group II substance without 

holding one consumption allowance or one destruction offset credit for each 

carbon dioxide equivalent ton of the class II, group II substance. Any person 

who exports a class II, group II substance for which a consumption allowance was retired may receive a refund of that allowance from the Administrator following the export. 

‘‘(B) PRODUCTION.—If the United States becomes a party or otherwise adheres to a multilateral agreement, including any amendment to the Montreal Protocol on Substances That Deplete the Ozone Layer, that restricts 

the production of class II, group II substances, the Administrator shall promulgate regulations establishing a baseline for the production of class II, 

group II substances in the United States and phasing down the production 

of class II, group II substances in the United States, in accordance with 

such multilateral agreement and subject to the same exceptions and other 

provisions as are applicable to the phase down of consumption of class II, 

group II substances under this section (except that the Administrator shall 

not require a person who obtains production allowances from the Administrator to make payment for such allowances if the person is making payment for a corresponding quantity of consumption allowances of the same 

vintage year). Upon the effective date of such regulations, it shall be unlawful for any person to produce any class II, group II substance without holding one consumption allowance and one production allowance, or one destruction offset credit, for each carbon dioxide equivalent ton of the class 

II, group II substance. 

‘‘(C) INTEGRITY OF CAP.—To maintain the integrity of the class II, group 

II cap, the Administrator may, through rulemaking, limit the percentage of 

each person’s compliance obligation that may be met through the use of destruction offset credits or banked allowances. 

‘‘(D) COUNTING OF VIOLATIONS.—Each emission allowance or destruction 

offset credit not held as required by this section shall be a separate violation of this section. 

‘‘(2) SCHEDULE.—Pursuant to the regulations promulgated pursuant to paragraph (1), the number of class II, group II consumption allowances established 

by the Administrator for each calendar year beginning in 2012 shall be the following percentage of the baseline, as established by the Administrator pursuant 

to paragraph (3): 

‘‘Calendar year Percent of baseline 

2012 90 

2013 87.5 

2014 85 

2015 82.5 

2016 80 


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‘‘Calendar year Percent of baseline 

2017 77.5 

2018 75 

2019 71 

2020 67 

2021 63 

2022 59 

2023 54 

2024 50 

2025 46 

2026 42 

2027 38 

2028 34 

2029 30 

2030 25 

2031 21 

2032 17 

after 2032 15 

‘‘(3) BASELINE.—(A) Within 12 months after the date of enactment of this section, the Administrator shall promulgate regulations to establish the baseline 

for purposes of paragraph (2). The baseline shall be the sum, expressed in tons 

of carbon dioxide equivalents, of— 

‘‘(i) the annual average consumption of all class II substances in calendar 

years 2004, 2005, and 2006; plus 

‘‘(ii) the annual average quantity of all class II substances contained in 

imported products in calendar years 2004, 2005, and 2006. 

‘‘(B) Notwithstanding subparagraph (A), if the Administrator determines that 

the baseline is higher than 370 million metric tons of carbon dioxide equivalents, then the Administrator shall establish the baseline at 370 million metric 

tons of carbon dioxide equivalents. 

‘‘(C) Notwithstanding subparagraph (A), if the Administrator determines that 

the baseline is lower than 280 million metric tons of carbon dioxide equivalents, 

then the Administrator shall establish the baseline at 280 million metric tons 

of carbon dioxide equivalents. 

‘‘(4) DISTRIBUTION OF ALLOWANCES.— 

‘‘(A) IN GENERAL.—Pursuant to the regulations promulgated under paragraph (1), for each calendar year beginning in 2012, the Administrator shall 

sell consumption allowances in accordance with this paragraph. 

‘‘(B) ESTABLISHMENT OF POOLS.—The Administrator shall establish two 

allowance pools. Eighty percent of the consumption allowances available for 

a calendar year shall be placed in the producer-importer pool, and 20 percent of the consumption allowances available for a calendar year shall be 

placed in the secondary pool. 

‘‘(C) PRODUCER-IMPORTER POOL.— 

‘‘(i) AUCTION.—(I) For each calendar year, the Administrator shall 

offer for sale at auction the following percentage of the consumption allowances in the producer-importer pool: 

‘‘Calendar year Percent available for auction 

2012 10 

2013 20 

2014 30 


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‘‘Calendar year Percent available for auction 

2015 40 

2016 50 

2017 60 

2018 70 

2019 80 

2020 and thereafter 90 

‘‘(II) Any person who produced or imported any class II substance 

during calendar year 2004, 2005, or 2006 may participate in the auction. No other persons may participate in the auction unless permitted 

to do so pursuant to subclause (III). 

‘‘(III) Not later than three years after the date of the initial auction 

and from time to time thereafter, the Administrator shall determine 

through rulemaking whether any persons who did not produce or import a class II substance during calendar year 2004, 2005, or 2006 will 

be permitted to participate in future auctions. The Administrator shall 

base this determination on the duration, consistency, and scale of such 

person’s purchases of consumption allowances in the secondary pool 

under subparagraph (D), as well as economic or technical hardship and 

other factors deemed relevant by the Administrator. 

‘‘(IV) The Administrator shall set a minimum bid per consumption allowance of the following: 

‘‘(aa) For vintage year 2012, $1.00. 

‘‘(bb) For vintage year 2013, $1.20. 

‘‘(cc) For vintage year 2014, $1.40. 

‘‘(dd) For vintage year 2015, $1.60. 

‘‘(ee) For vintage year 2016, $1.80. 

‘‘(ff) For vintage year 2017, $2.00. 

‘‘(gg) For vintage year 2018 and thereafter, $2.00 adjusted for inflation after vintage year 2017 based upon the producer price index 

as published by the Department of Commerce. 

‘‘(ii) NON-AUCTION SALE.—(I) For each calendar year, as soon as practicable after auction, the Administrator shall offer for sale the remaining consumption allowances in the producer-importer pool at the following prices: 

‘‘(aa) A fee of $1.00 per vintage year 2012 allowance. 

‘‘(bb) A fee of $1.20 per vintage year 2013 allowance. 

‘‘(cc) A fee of $1.40 per vintage year 2014 allowance. 

‘‘(dd) For each vintage year 2015 allowance, a fee equal to the 

average of $1.10 and the auction clearing price for vintage year 

2014 allowances. 

‘‘(ee) For each vintage year 2016 allowance, a fee equal to the av- erage of $1.30 and the auction clearing price for vintage year 2015 

allowances. 

‘‘(ff) For each vintage year 2017 allowance, a fee equal to the average of $1.40 and the auction clearing price for vintage year 2016 

allowances. 

‘‘(gg) For each allowance of vintage year 2018 and subsequent 

vintage years, a fee equal to the auction clearing price for that vintage year. 

‘‘(II) The Administrator shall offer to sell the remaining consumption 

allowances in the producer-importer pool to producers of class II, group 

II substances and importers of class II, group II substances in proportion to their relative allocation share. 

‘‘(III) Such allocation share for such sale shall be determined by the 

Administrator using such producer’s or importer’s annual average data 

on class II substances from calendar years 2004, 2005, and 2006, on a 

carbon dioxide equivalent basis, and— 

‘‘(aa) shall be based on a producer’s production, plus importation, 

plus acquisitions and purchases from persons who produced class 

II substances in the United States during calendar years 2004, 

2005, or 2006, less exportation, less transfers and sales to persons 


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who produced class II substances in the United States during calendar years 2004, 2005, or 2006; and 

‘‘(bb) for an importer of class II substances that did not produce 

in the United States any class II substance during calendar years 

2004, 2005, and 2006, shall be based on the importer’s importation 

less exportation. 

For purposes of item (aa), the Administrator shall account for 100 percent of class II, group II substances and 60 percent of class II, group 

I substances. For purposes of item (bb), the Administrator shall account 

for 100 percent of class II, group II substances and 100 percent of class 

II, group I substances. 

‘‘(IV) Any consumption allowances made available for nonauction sale 

to a specific producer or importer of class II, group II substances but 

not purchased by the specific producer or importer shall be made available for sale to any producer or importer of class II substances during 

calendar years 2004, 2005, or 2006. If demand for such consumption allowances exceeds supply of such consumption allowances, the Administrator shall develop and utilize criteria for the sale of such consumption 

allowances that may include pro rata shares, historic production and 

importation, economic or technical hardship, or other factors deemed 

relevant by the Administrator. If the supply of such consumption allowances exceeds demand, the Administrator may offer such consumption 

allowances for sale in the secondary pool as set forth in subparagraph 

(D). 

‘‘(D) SECONDARY POOL.—(i) For each calendar year, as soon as practicable 

after the auction required in subparagraph (C), the Administrator shall 

offer for sale the consumption allowances in the secondary pool at the prices 

listed in subparagraph (C)(ii). 

‘‘(ii) The Administrator shall accept applications for purchase of secondary pool consumption allowances from— 

‘‘(I) importers of products containing class II, group II substances; 

‘‘(II) persons who purchased any class II, group II substance directly 

from a producer or importer of class II, group II substances for use in 

a product containing a class II, group II substance, a manufacturing 

process, or a reclamation process; 

‘‘(III) persons who did not produce or import a class II substance during calendar year 2004, 2005, or 2006, but who the Administrator determines have subsequently taken significant steps to produce or import a substantial quantity of any class II, group II substance; and 

‘‘(IV) persons who produced or imported any class II substance during 

calendar year 2004, 2005, or 2006. 

‘‘(iii) If the supply of consumption allowances in the secondary pool equals 

or exceeds the demand for consumption allowances in the secondary pool 

as presented in the applications for purchase, the Administrator shall sell 

the consumption allowances in the secondary pool to the applicants in the 

amounts requested in the applications for purchase. Any consumption allowances in the secondary pool not purchased in a calendar year may be 

rolled over and added to the quantity available in the secondary pool in the 

following year. 

‘‘(iv) If the demand for consumption allowances in the secondary pool as 

presented in the applications for purchase exceeds the supply of consumption allowances in the secondary pool, the Administrator shall sell the consumption allowances as follows: 

‘‘(I) The Administrator shall first sell the consumption allowances in 

the secondary pool to any importers of products containing class II, 

group II substances in the amounts requested in their applications for 

purchase. If the demand for such consumption allowances exceeds supply of such consumption allowances, the Administrator shall develop 

and utilize criteria for the sale of such consumption allowances among 

importers of products containing class II, group II substances that may 

include pro rata shares, historic importation, economic or technical 

hardship, or other factors deemed relevant by the Administrator. 

‘‘(II) The Administrator shall next sell any remaining consumption allowances to persons identified in subclauses (II) and (III) of clause (ii) 

in the amounts requested in their applications for purchase. If the demand for such consumption allowances exceeds remaining supply of 

such consumption allowances, the Administrator shall develop and utilize criteria for the sale of such consumption allowances among subclauses (II) and (III) applicants that may include pro rata shares, hisVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00197 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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toric 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 nonauction sale under this subparagraph shall be required to disclose the 

person or entity sponsoring or benefitting from the purchases if such 

person or entity is, in whole or in part, other than the purchaser or the 

purchaser’s employer. 

‘‘(E) DISCRETION TO WITHHOLD ALLOWANCES.—Nothing in this paragraph 

prevents the Administrator from exercising discretion to withhold and retire consumption allowances that would otherwise be available for auction 

or nonauction sale. Not later than 18 months after the date of enactment 

of this section, the Administrator shall promulgate regulations establishing 

criteria for withholding and retiring consumption allowances. 

‘‘(5) BANKING.—A consumption allowance or destruction offset credit may be 

used to meet the compliance obligation requirements of paragraph (1) in— 

‘‘(A) the vintage year for the allowance or destruction offset credit; or 

‘‘(B) any calendar year subsequent to the vintage year for the allowance 

or destruction offset credit. 

‘‘(6) AUCTIONS.— 

‘‘(A) INITIAL REGULATIONS.—Not later than 18 months after the date of 

enactment of this section, the Administrator shall promulgate regulations 

governing the auction of allowances under this section. Such regulations 

shall include the following requirements: 

‘‘(i) FREQUENCY; FIRST AUCTION.—Auctions shall be held one time per 

year at regular intervals, with the first auction to be held no later than 

October 31, 2011. 

‘‘(ii) AUCTION FORMAT.—Auctions shall follow a single-round, sealedbid, uniform price format. 

‘‘(iii) FINANCIAL ASSURANCE.—The Administrator may establish financial assurance requirements to ensure that auction participants can 

and will perform on their bids. 

‘‘(iv) DISCLOSURE OF BENEFICIAL OWNERSHIP.—Each bidder in the 

auction shall be required to disclose the person or entity sponsoring or 

benefitting from the bidder’s participation in the auction if such person 

or entity is, in whole or in part, other than the bidder or the bidder’s 

employer. 

‘‘(v) PUBLICATION OF INFORMATION.—After the auction, the Administrator shall, in a timely fashion, publish the number of bidders, number 

of winning bidders, the quantity of allowances sold, and the auction 

clearing price. 

‘‘(vi) BIDDING LIMITS IN 2012.—In the vintage year 2012 auction, no 

auction participant may, directly or in concert with another participant, 

bid for or purchase more allowances offered for sale at the auction than 

the greater of— 

‘‘(I) the number of allowances which, when added to the number 

of allowances available for purchase by the participant in the producer-importer pool non-auction sale, would equal the participant’s 

annual average consumption of class II, group II substances in calendar years 2004, 2005, and 2006; or 

‘‘(II) the number of allowances equal to the product of— 

‘‘(aa) 1.20 multiplied by the participant’s allocation share of 

the producer-importer pool non-auction sale as determined 

under paragraph (4)(C)(ii); and 

‘‘(bb) the number of vintage year 2012 allowances offered at 

auction. 

‘‘(vii) BIDDING LIMITS IN 2013.—In the vintage year 2013 auction, no 

auction participant may, directly or in concert with another participant, 

bid for or purchase more allowances offered for sale at the auction than 

the product of— 


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‘‘(I) 1.15 multiplied by the ratio of the total number of vintage 

year 2012 allowances purchased by the participant from the auction and from the producer-importer pool non-auction sale to the 

total number of vintage year 2012 allowances in the producer-importer pool; and 

‘‘(II) the number of vintage year 2013 allowances offered at auction. 

‘‘(viii) BIDDING LIMITS IN SUBSEQUENT YEARS.—In the auctions for 

vintage year 2014 and subsequent vintage years, no auction participant 

may, directly or in concert with another participant, bid for or purchase 

more allowances offered for sale at the auction than the product of— 

‘‘(I) 1.15 multiplied by the ratio of the highest number of allowances held by the participant in any of the three prior vintage 

years to meet its compliance obligation under paragraph (1) to the 

total number of allowances in the producer-importer pool for such 

vintage year; and 

‘‘(II) the number of allowances offered at auction for that vintage 

year. 

‘‘(ix) OTHER REQUIREMENTS.—The Administrator may include in the 

regulations such other requirements or provisions as the Administrator 

considers necessary to promote effective, efficient, transparent, and fair 

administration of auctions under this section. 

‘‘(B) REVISION OF REGULATIONS.—The Administrator may, at any time, revise the initial regulations promulgated under subparagraph (A) based on 

the Administrator’s experience in administering allowance auctions. Such 

revised regulations need not meet the requirements identified in subparagraph (A) if the Administrator determines that an alternative auction design would be more effective, taking into account factors including costs of 

administration, transparency, fairness, and risks of collusion or manipulation. In determining whether and how to revise the initial regulations 

under this paragraph, the Administrator shall not consider maximization of 

revenues to the Federal Government. 

‘‘(C) DELEGATION OR CONTRACT.—Pursuant to regulations under this section, the Administrator may, by delegation or contract, provide for the conduct of auctions under the Administrator’s supervision by other departments or agencies of the Federal Government or by nongovernmental agencies, groups, or organizations. 

‘‘(7) PAYMENTS FOR ALLOWANCES.— 

‘‘(A) INITIAL REGULATIONS.—Not later than 18 months after the date of 

enactment of this section, the Administrator shall promulgate regulations 

governing the payment for allowances purchased in auction and non-auction sales under this section. Such regulations shall include the requirement that, in the event that full payment for purchased allowances is not 

made on the date of purchase, equal payments shall be made one time per 

calendar quarter with all payments for allowances of a vintage year made 

by the end of that vintage year. 

‘‘(B) REVISION OF REGULATIONS.— The Administrator may, at any time, 

revise the initial regulations promulgated under subparagraph (A) based on 

the Administrator’s experience in administering collection of payments. 

Such revised regulations need not meet the requirements identified in subparagraph (A) if the Administrator determines that an alternative payment 

structure or frequency would be more effective, taking into account factors 

including cost of administration, transparency, and fairness. In determining 

whether and how to revise the initial regulations under this paragraph, the 

Administrator shall not consider maximization of revenues to the Federal 

Government. 

‘‘(C) PENALTIES FOR NON-PAYMENT.—Failure to pay for purchased allowances in accordance with the regulations promulgated pursuant to this 

paragraph shall be a violation of the requirements of subsection (b). Section 

113(c)(3) shall apply in the case of any person who knowingly fails to pay 

for purchased allowances in accordance with the regulations promulgated 

pursuant to this paragraph. 

‘‘(8) IMPORTED PRODUCTS.—If the United States becomes a party or otherwise 

adheres to a multilateral agreement, including any amendment to the Montreal 

Protocol on Substances That Deplete the Ozone Layer, which restricts the production and consumption of class II, group II substances— 

‘‘(A) as of the date on which such agreement or amendment enters into 

force, it shall no longer be unlawful for any person to import from a party 

to such agreement or amendment any product containing any class II, 


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group II substance whose production and consumption are regulated by 

such agreement or amendment without holding one consumption allowance 

or one destruction offset credit for each carbon dioxide equivalent ton of the 

class II, group II substance; 

‘‘(B) the Administrator shall promulgate regulations within 12 months of 

the date the United States becomes a party or otherwise adheres to such 

agreement or amendment, or the date on which such agreement or amendment enters into force, whichever is later, to establish a new baseline for 

purposes of paragraph (2), which new baseline shall be the original baseline 

less the carbon dioxide equivalent of the annual average quantity of any 

class II substances regulated by such agreement or amendment contained 

in products imported from parties to such agreement or amendment in calendar years 2004, 2005, and 2006; 

‘‘(C) as of the date on which such agreement or amendment enters into 

force, no person importing any product containing any class II, group II 

substance may, directly or in concert with another person, purchase any 

consumption allowances for sale by the Administrator for the importation 

of products from a party to such agreement or amendment that contain any 

class II, group II substance restricted by such agreement or amendment; 

and 

‘‘(D) the Administrator may adjust the two allowance pools established in 

paragraph (4) such that up to 90 percent of the consumption allowances 

available for a calendar year are placed in the producer-importer pool with 

the remaining consumption allowances placed in the secondary pool. 

‘‘(9) OFFSETS.— 

‘‘(A) CHLOROFLUOROCARBON DESTRUCTION.—Within 18 months after the 

date of enactment of this section, the Administrator shall promulgate regulations to provide for the issuance of offset credits for the destruction, in 

the calendar year 2012 or later, of chlorofluorocarbons in the United States. 

The Administrator shall establish and distribute to the destroying entity a 

quantity of destruction offset credits equal to 0.8 times the number of tons 

of carbon dioxide equivalents of reduction achieved through the destruction. 

No destruction offset credits shall be established for the destruction of a 

class II, group II substance. 

‘‘(B) DEFINITION.—For purposes of this paragraph, the term ‘destruction’ 

means the conversion of a substance by thermal, chemical, or other means 

to another substance with little or no carbon dioxide equivalent value and 

no ozone depletion potential. 

‘‘(C) REGULATIONS.—The regulations promulgated under this paragraph 

shall include standards and protocols for project eligibility, certification of 

destroyers, monitoring, tracking, destruction efficiency, quantification of 

project and baseline emissions and carbon dioxide equivalent value, and 

verification. The Administrator shall ensure that destruction offset credits 

represent real and verifiable destruction of chlorofluorocarbons or other 

class I or class II, group I, substances authorized under subparagraph (D). 

‘‘(D) OTHER SUBSTANCES.—The Administrator may promulgate regulations to add to the list of class I and class II, group I, substances that may 

be destroyed for destruction offset credits, taking into account a candidate 

substance’s carbon dioxide equivalent value, ozone depletion potential, prevalence in banks in the United States, and emission rates, as well as the 

need for additional cost containment under the class II, group II cap and 

the integrity of the class II, group II cap. The Administrator shall not add 

a class I or class II, group I substance to the list if the consumption of the 

substance has not been completely phased-out internationally (except for essential use exemptions or other similar exemptions) pursuant to the Montreal Protocol. 

‘‘(E) EXTENSION OF OFFSETS.—(i) At any time after the Administrator promulgates regulations pursuant to subparagraph (A), the Administrator may 

add the types of destruction projects authorized to receive destruction offset 

credits under this paragraph to the list of types of projects eligible for offset 

credits under section 733. Nothing in this paragraph shall affect the 

issuance of offset credits under section 740. 

‘‘(ii) The Administrator shall not make the addition under clause (i) unless the Administrator finds that insufficient destruction is occurring or is 

projected to occur under this paragraph and that the addition would increase destruction. 

‘‘(iii) In no event shall more than one destruction offset credit be issued 

under title VII and this section for the destruction of the same quantity of 

a substance. 


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‘‘(10) LEGAL STATUS OF ALLOWANCES AND CREDITS.—None of the following constitutes a property right: 

‘‘(A) A production or consumption allowance. 

‘‘(B) A destruction offset credit. 

‘‘(c) DEADLINES FOR COMPLIANCE.—Notwithstanding the deadlines specified for 

class II substances in sections 608, 609, 610, 612, and 613 that occur prior to January 1, 2009, the deadline for promulgating regulations under those sections for class 

II, group II substances shall be January 1, 2012. 

‘‘(d) EXCEPTIONS FOR ESSENTIAL USES.—Notwithstanding any phase down of production and consumption required by this section, to the extent consistent with any 

applicable multilateral agreement to which the United States is a party or otherwise 

adheres, the Administrator may provide the following exceptions for essential uses: 

‘‘(1) MEDICAL DEVICES.—The Administrator, after notice and opportunity for 

public comment, and in consultation with the Commissioner of the Food and 

Drug Administration, may provide an exception for the production and consumption of class II, group II substances solely for use in medical devices. 

‘‘(2) AVIATION SAFETY.—The Administrator, after notice and opportunity for 

public comment, may authorize the production and consumption of limited 

quantities of class II, group II substances solely for the purposes of aviation 

safety if the Administrator of the Federal Aviation Administration, in consultation with the Administrator, determines that no safe and effective substitute 

has been developed and that such authorization is necessary for aviation safety 

purposes. 

‘‘(e) DEVELOPING COUNTRIES.—Notwithstanding any phase down of production required by this section, the Administrator, after notice and opportunity for public 

comment, may authorize the production of limited quantities of class II, group II 

substances in excess of the amounts otherwise allowable under this section solely 

for export to, and use in, developing countries. Any production authorized under this 

subsection shall be solely for purposes of satisfying the basic domestic needs of such 

countries as provided in applicable international agreements, if any, to which the 

United States is a party or otherwise adheres. 

‘‘(f) NATIONAL SECURITY; FIRE SUPPRESSION, ETC.—The provisions of subsection (f) 

and paragraphs (1) and (2) of subsection (g) of section 604 shall apply to any consumption and production phase down of class II, group II substances in the same 

manner and to the same extent, consistent with any applicable international agreement to which the United States is a party or otherwise adheres, as such provisions 

apply to the substances specified in such subsection. 

‘‘(g) ACCELERATED SCHEDULE.—In lieu of section 606, the provisions of paragraphs 

(1), (2), and (3) of this subsection shall apply in the case of class II, group II substances. 

‘‘(1) IN GENERAL.—The Administrator shall promulgate initial regulations not 

later than 18 months after the date of enactment of this section, and revised 

regulations any time thereafter, which establish a schedule for phasing down 

the consumption (and, if the condition in subsection (b)(1)(B) is met, the production) of class II, group II substances that is more stringent than the schedule 

set forth in this section if, based on the availability of substitutes, the Administrator determines that such more stringent schedule is practicable, taking into 

account technological achievability, safety, and other factors the Administrator 

deems relevant, or if the Montreal Protocol, or any applicable international 

agreement to which the United States is a party or otherwise adheres, is modified or established to include a schedule or other requirements to control or reduce production, consumption, or use of any class II, group II substance more 

rapidly than the applicable schedule under this section. 

‘‘(2) PETITION.—Any person may submit a petition to promulgate regulations 

under this subsection in the same manner and subject to the same procedures 

as are provided in section 606(b). 

‘‘(3) INCONSISTENCY.—If the Administrator determines that the provisions of 

this section regarding banking, allowance rollover, or destruction offset credits 

create a significant potential for inconsistency with the requirements of any applicable international agreement to which the United States is a party or otherwise adheres, the Administrator may promulgate regulations restricting the 

availability of banking, allowance rollover, or destruction offset credits to the 

extent necessary to avoid such inconsistency. 

‘‘(h) EXCHANGE.—Section 607 shall not apply in the case of class II, group II substances. Production and consumption allowances for class II, group II substances 

may be freely exchanged or sold but may not be converted into allowances for class 

II, group I substances. 

‘‘(i) LABELING.—(1) In applying section 611 to products containing or manufactured with class II, group II substances, in lieu of the words ‘destroying ozone in 


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the upper atmosphere’ on labels required under section 611 there shall be substituted the words ‘contributing to global warming’. 

‘‘(2) The Administrator may, through rulemaking, exempt from the requirements 

of section 611 products containing or manufactured with class II, group II substances determined to have little or no carbon dioxide equivalent value compared 

to other substances used in similar products. 

‘‘(j) NONESSENTIAL PRODUCTS.—For the purposes of section 610, class II, group II 

substances shall be regulated under section 610(b), except that in applying section 

610(b) the word ‘hydrofluorocarbon’ shall be substituted for the word 

‘chlorofluorocarbon’ and the term ‘class II, group II’ shall be substituted for the term 

‘class I’. Class II, group II substances shall not be subject to the provisions of section 

610(d). 

‘‘(k) INTERNATIONAL TRANSFERS.—In the case of class II, group II substances, in 

lieu of sections 616(a) and 616(b), this subsection shall apply. To the extent consistent with any applicable international agreement to which the United States is 

a party or otherwise adheres, including any amendment to the Montreal Protocol, 

the United States may engage in transfers with other parties to such agreement or 

amendment under the following conditions: 

‘‘(1) The United States may transfer production allowances to another party 

to such agreement or amendment if, at the time of the transfer, the Administrator establishes revised production limits for the United States accounting for 

the transfer in accordance with regulations promulgated pursuant to this subsection. 

‘‘(2) The United States may acquire production allowances from another party 

to such agreement or amendment if, at the time of the transfer, the Administrator finds that the other party has revised its domestic production limits in 

the same manner as provided with respect to transfers by the United States in 

the regulations promulgated pursuant to this subsection. 

‘‘(l) RELATIONSHIP TO OTHER LAWS.— 

‘‘(1) STATE LAWS.—For purposes of section 116, the requirements of this section for class II, group II substances shall be treated as requirements for the 

control and abatement of air pollution. 

‘‘(2) MULTILATERAL AGREEMENTS.—Section 614 shall apply to the provisions of 

this section concerning class II, group II substances, except that for the words 

‘Montreal Protocol’ there shall be substituted the words ‘Montreal Protocol, or 

any applicable multilateral agreement to which the United States is a party or 

otherwise adheres that restricts the production or consumption of class II, group 

II substances,’ and for the words ‘Article 4 of the Montreal Protocol’ there shall 

be substituted ‘any provision of such multilateral agreement regarding trade 

with non-parties’. 

‘‘(3) FEDERAL FACILITIES.—For purposes of section 118, the requirements of 

this section for class II, group II substances and corresponding State, interstate, 

and local requirements, administrative authority, and process and sanctions 

shall be treated as requirements for the control and abatement of air pollution 

within the meaning of section 118. 

‘‘(m) CARBON DIOXIDE EQUIVALENT VALUE.—(1) In lieu of section 602(e), the provisions of this subsection shall apply in the case of class II, group II substances. Simultaneously with establishing the list of class II, group II substances, and simultaneously with any addition to that list, the Administrator shall publish the carbon 

dioxide equivalent value of each listed class II, group II substance, based on a determination of the number of metric tons of carbon dioxide that makes the same contribution to global warming over 100 years as 1 metric ton of each class II, group 

II substance. 

‘‘(2) Not later than February 1, 2017, and not less than every 5 years thereafter, 

the Administrator shall— 

‘‘(A) review, and if appropriate, revise the carbon dioxide equivalent values established for class II, group II substances based on a determination of the number of metric tons of carbon dioxide that makes the same contributions to global 

warming over 100 years as 1 metric ton of each class II, group II substance; 

and 

‘‘(B) publish in the Federal Register the results of that review and any revisions. 

‘‘(3) A revised determination published in the Federal Register under paragraph 

(2)(B) shall take effect for production of class II, group II substances, consumption 

of class II, group II substances, and importation of products containing class II, 

group II substances starting on January 1 of the first calendar year starting at least 

9 months after the date on which the revised determination was published. 

‘‘(4) The Administrator may decrease the frequency of review and revision under 

paragraph (2) if the Administrator determines that such decrease is appropriate in 


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order to synchronize such review and revisions with any similar review process carried out pursuant to the United Nations Framework Convention on Climate Change, 

an agreement negotiated under that convention, The Vienna Convention for the Protection of the Ozone Layer, or an agreement negotiated under that convention, except that in no event shall the Administrator carry out such review and revision 

any less frequently than every 10 years. 

‘‘(n) REPORTING REQUIREMENTS.—In lieu of subsections (b) and (c) of section 603, 

paragraphs (1) and (2) of this subsection shall apply in the case of class II, group 

II substances: 

‘‘(1) IN GENERAL.—On a quarterly basis, or such other basis (not less than annually) as determined by the Administrator, each person who produced, imported, or exported a class II, group II substance, or who imported a product 

containing a class II, group II substance, shall file a report with the Administrator setting forth the carbon dioxide equivalent amount of the substance that 

such person produced, imported, or exported, as well as the amount that was 

contained in products imported by that person, during the preceding reporting 

period. Each such report shall be signed and attested by a responsible officer. 

If all other reporting is complete, no such report shall be required from a person 

after April 1 of the calendar year after such person permanently ceases production, importation, and exportation of the substance, as well as importation of 

products containing the substance, and so notifies the Administrator in writing. 

If the United States becomes a party or otherwise adheres to a multilateral 

agreement, including any amendment to the Montreal Protocol on Substances 

That Deplete the Ozone Layer, that restricts the production and consumption 

of class II, group II substances, then, if all other reporting is complete, no such 

report shall be required from a person with respect to importation from parties 

to such agreement or amendment of products containing any class II, group II 

substance restricted by such agreement or amendment, after April 1 of the calendar year following the year during which such agreement or amendment enters into force. 

‘‘(2) BASELINE REPORTS FOR CLASS II, GROUP II SUBSTANCES.— 

‘‘(A) IN GENERAL.—Unless such information has been previously reported 

to the Administrator, on the date on which the first report under paragraph 

(1) of this subsection is required to be filed, each person who produced, imported, or exported a class II, group II substance, or who imported a product containing a class II substance, (other than a substance added to the 

list of class II, group II substances after the publication of the initial list 

of such substances under this section), shall file a report with the Administrator setting forth the amount of such substance that such person produced, imported, exported, or that was contained in products imported by 

that person, during each of calendar years 2004, 2005, and 2006. 

‘‘(B) PRODUCERS.—In reporting under subparagraph (A), each person who 

produced in the United States a class II substance during calendar years 

2004, 2005, or 2006 shall— 

‘‘(i) report all acquisitions or purchases of class II substances during 

each of calendar years 2004, 2005, and 2006 from all other persons who 

produced in the United States a class II substance during calendar 

years 2004, 2005, or 2006, and supply evidence of such acquisitions and 

purchases as deemed necessary by the Administrator; and 

‘‘(ii) report all transfers or sales of class II substances during each 

of calendar years 2004, 2005, and 2006 to all other persons who produced in the United States a class II substance during calendar years 

2004, 2005, or 2006, and supply evidence of such transfers and sales 

as deemed necessary by the Administrator. 

‘‘(C) ADDED SUBSTANCES.—In the case of a substance added to the list of 

class II, group II substances after publication of the initial list of such substances under this section, each person who produced, imported, exported, 

or imported products containing such substance in calendar year 2004, 

2005, or 2006 shall file a report with the Administrator within 180 days 

after the date on which such substance is added to the list, setting forth 

the amount of the substance that such person produced, imported, and exported, as well as the amount that was contained in products imported by 

that person, in calendar years 2004, 2005, and 2006. 

‘‘(o) STRATOSPHERIC OZONE AND CLIMATE PROTECTION FUND.— 

‘‘(1) IN GENERAL.—There is established in the Treasury of the United States 

a Stratospheric Ozone and Climate Protection Fund. 

‘‘(2) DEPOSITS.—The Administrator shall deposit all proceeds from the auction 

and non-auction sale of allowances under this section into the Stratospheric 

Ozone and Climate Protection Fund. 


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‘‘(3) USE.—Amounts deposited into the Stratospheric Ozone and Climate Protection Fund shall be available, subject to appropriations, exclusively for the following purposes: 

‘‘(A) RECOVERY, RECYCLING, AND RECLAMATION.—The Administrator may 

utilize funds to establish a program to incentivize the recovery, recycling, 

and reclamation of any Class II substances in order to reduce emissions of 

such substances. 

‘‘(B) MULTILATERAL FUND.—If the United States becomes a party or otherwise adheres to a multilateral agreement, including any amendment to the 

Montreal Protocol on Substances That Deplete the Ozone Layer, which restricts the production and consumption of class II, group II substances, the 

Administrator may utilize funds to meet any related contribution obligation 

of the United States to the Multilateral Fund for the Implementation of the 

Montreal Protocol or similar multilateral fund established under such multilateral agreement. 

‘‘(C) BEST-IN-CLASS APPLIANCES DEPLOYMENT PROGRAM.—The Secretary of 

Energy is authorized to utilize funds to carry out the purposes of section 

214 of the American Clean Energy and Security Act of 2009. 

‘‘(D) LOW GLOBAL WARMING PRODUCT TRANSITION ASSISTANCE PROGRAM.— ‘‘(i) IN GENERAL.—The Administrator, in consultation with the Secretary of Energy, may utilize funds in fiscal years 2012 through 2022 

to establish a program to provide financial assistance to manufacturers 

of products containing class II, group II substances to facilitate the 

transition to products that contain or utilize alternative substances 

with no or low carbon dioxide equivalent value and no ozone depletion 

potential. 

‘‘(ii) DEFINITION.—In this subparagraph, the term ‘products’ means 

refrigerators, freezers, dehumidifiers, air conditioners, foam insulation, 

technical aerosols, fire protection systems, and semiconductors. 

‘‘(iii) FINANCIAL ASSISTANCE.—The Administrator may provide financial assistance to manufacturers pursuant to clause (i) for— 

‘‘(I) the design and configuration of new products that use alternative substances with no or low carbon dioxide equivalent value 

and no ozone depletion potential; and 

‘‘(II) the redesign and retooling of facilities for the manufacture 

of products in the United States that use alternative substances 

with no or low carbon dioxide equivalent value and no ozone depletion potential. 

‘‘(iv) REPORTS.—For any fiscal year during which the Administrator 

provides financial assistance pursuant to this subparagraph, the Administrator shall submit a report to the Congress within 3 months of 

the end of such fiscal year detailing the amounts, recipients, specific 

purposes, and results of the financial assistance provided.’’. 

(b) TABLE OF CONTENTS.—The table of contents of title VI of the Clean Air Act 

(42 U.S.C. 7671 et seq.) is amended by adding the following new item at the end 

thereof: 

‘‘Sec. 619. Hydrofluorocarbons (HFCs).’’. 

(c) FIRE SUPPRESSION AGENTS.—Section 605(a) of the Clean Air Act (42 U.S.C. 

7671(a)) is amended— 

(1) by striking ‘‘or’’ at the end of paragraph (2); 

(2) by striking the period at the end of paragraph (3) and inserting ‘‘; or’’; and 

(3) by adding the following new paragraph after paragraph (3): 

‘‘(4) is listed as acceptable for use as a fire suppression agent for nonresidential applications in accordance with section 612(c).’’. 

(d) MOTOR VEHICLE AIR CONDITIONERS.— 

(1) Section 609(e) of the Clean Air Act (42 U.S.C. 7671h(e)) is amended by 

inserting ‘‘, group I’’ after each reference to ‘‘class II’’ in the text and heading. 

(2) Section 609 of the Clean Air Act (42 U.S.C. 7671h) is amended by adding 

the following new subsection after subsection (e): 

‘‘(f) CLASS II, GROUP II SUBSTANCES.— 

‘‘(1) REPAIR.—The Administrator may promulgate regulations establishing requirements for repair of motor vehicle air conditioners prior to adding a class 

II, group II substance. 

‘‘(2) SMALL CONTAINERS.—(A) The Administrator may promulgate regulations 

establishing servicing practices and procedures for recovery of class II, group II 

substances from containers which contain less than 20 pounds of such class II, 

group II substances. 

‘‘(B) Not later than 18 months after enactment of this subsection, the Administrator shall either promulgate regulations requiring that containers which 


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contain less than 20 pounds of a class II, group II substance be equipped with 

a device or technology that limits refrigerant emissions and leaks from the container and limits refrigerant emissions and leaks during the transfer of refrigerant from the container to the motor vehicle air conditioner or issue a determination that such requirements are not necessary or appropriate. 

‘‘(C) Not later than 18 months after enactment of this subsection, the Administrator shall promulgate regulations establishing requirements for consumer 

education materials on best practices associated with the use of containers 

which contain less than 20 pounds of a class II, group II substance and prohibiting the sale or distribution, or offer for sale or distribution, of any class II, 

group II substance in any container which contains less than 20 pounds of such 

class II, group II substance, unless consumer education materials consistent 

with such requirements are displayed and available at point-of-sale locations, 

provided to the consumer, or included in or on the packaging of the container 

which contain less than 20 pounds of a class II, group II substance. 

‘‘(D) The Administrator may, through rulemaking, extend the requirements 

established under this paragraph to containers which contain 30 pounds or less 

of a class II, group II substance if the Administrator determines that such action would produce significant environmental benefits. 

‘‘(3) RESTRICTION OF SALES.—Effective January 1, 2014, no person may sell or 

distribute or offer to sell or distribute or otherwise introduce into interstate 

commerce any motor vehicle air conditioner refrigerant in any size container 

unless the substance has been found acceptable for use in a motor vehicle air 

conditioner under section 612.’’. 

(e) SAFE ALTERNATIVES POLICY.—Section 612(e) of the Clean Air Act (42 U.S.C. 

7671k(e)) is amended by inserting ‘‘or class II’’ after each reference to ‘‘class I’’. 

SEC. 333. BLACK CARBON. 

(a) DEFINITION.—As used in this section, the term ‘‘black carbon’’ means primary 

light absorbing aerosols, as defined by the Administrator, based on the best available science. 

(b) BLACK CARBON ABATEMENT REPORT.—Not later than one year after the date 

of enactment of this section, the Administrator shall, in consultation with other appropriate Federal agencies, submit to Congress a report regarding black carbon 

emissions. The report shall include the following: 

(1) A summary of the current information and research that identifies— 

(A) an inventory of the major sources of black carbon emissions in the 

United States and throughout the world, including— 

(i) an estimate of the quantity of current and projected future emissions; and 

(ii) the net climate forcing of the emissions from such sources, including consideration of co-emissions of other pollutants; 

(B) effective and cost-effective control technologies, operations, and strategies for additional domestic and international black carbon emissions reductions, such as diesel retrofit technologies on existing on-road, non-road, and 

stationary engines and programs to address residential cookstoves, and forest and agriculture-based burning; 

(C) potential metrics and approaches for quantifying the climatic effects 

of black carbon emissions, including its radiative forcing and warming effects, that may be used to compare the climate benefits of different mitigation strategies, including an assessment of the uncertainty in such metrics 

and approaches; and 

(D) the public health and environmental benefits associated with additional controls for black carbon emissions. 

(2) Recommendations regarding— 

(A) development of additional emissions monitoring techniques and capabilities, modeling, and other black carbon-related areas of study; 

(B) areas of focus for additional study of technologies, operations, and 

strategies with the greatest potential to reduce emissions of black carbon 

and associated public health, economic, and environmental impacts associated with these emissions; and 

(C) actions, in addition to those identified by the Administrator under 

section 851 of the Clean Air Act (as added by subsection (c)), the Federal 

Government may take to encourage or require reductions in black carbon 

emissions. 

(c) BLACK CARBON MITIGATION.—Title VIII of the Clean Air Act, as added by section 331 of this Act, and amended by section 222 of this Act, is further amended 

by adding after part D the following new part: 


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‘‘PART E—BLACK CARBON 

‘‘SEC. 851. BLACK CARBON. 

‘‘(a) DOMESTIC BLACK CARBON MITIGATION.—Not later than 18 months after the 

date of enactment of this section, the Administrator, taking into consideration the 

public health and environmental impacts of black carbon emissions, including the 

effects on global and regional warming, the Arctic, and other snow and ice-covered 

surfaces, shall propose regulations under the existing authorities of this Act to reduce emissions of black carbon or propose a finding that existing regulations promulgated pursuant to this Act adequately regulate black carbon emissions. Not later 

than two years after the date of enactment of this section, the Administrator shall 

promulgate final regulations under the existing authorities of this Act or finalize the 

proposed finding. 

‘‘(b) INTERNATIONAL BLACK CARBON MITIGATION.— 

‘‘(1) REPORT.—Not later than one year after the date of enactment of this section, the Administrator, in coordination with the Secretary of State and other 

appropriate Federal agencies, shall transmit a report to Congress on the 

amount, type, and direction of all present United States financial, technical, and 

related assistance to foreign countries to reduce, mitigate, and otherwise abate 

black carbon emissions. 

‘‘(2) OTHER OPPORTUNITIES.—The report required under paragraph (1) shall 

also identify opportunities and recommendations, including action under existing authorities, to achieve significant black carbon emission reductions in foreign countries through technical assistance or other approaches to— 

‘‘(A) promote sustainable solutions to bring clean, efficient, safe, and affordable stoves, fuels, or both stoves and fuels to residents of developing 

countries that are reliant on solid fuels such as wood, dung, charcoal, coal, 

or crop residues for home cooking and heating, so as to help reduce the public health, environmental, and economic impacts of black carbon emissions 

from these sources by— 

‘‘(i) identifying key regions for large-scale demonstration efforts, and 

key partners in each such region; and 

‘‘(ii) developing for each such region a large-scale implementation 

strategy with a goal of collectively reaching 20,000,000 homes over 5 

years with interventions that will— 

‘‘(I) increase stove efficiency by over 50 percent (or such other 

goal as determined by the Administrator); 

‘‘(II) reduce emissions of black carbon by over 60 percent (or such 

other goal as determined by the Administrator); and 

‘‘(III) reduce the incidence of severe pneumonia in children under 

5 years old by over 30 percent (or such other goal as determined 

by the Administrator); 

‘‘(B) make technological improvements to diesel engines and provide 

greater access to fuels that emit less or no black carbon; 

‘‘(C) reduce unnecessary agricultural or other biomass burning where feasible alternatives exist; 

‘‘(D) reduce unnecessary fossil fuel burning that produces black carbon 

where feasible alternatives exist; 

‘‘(E) reduce other sources of black carbon emissions; and 

‘‘(F) improve capacity to achieve greater compliance with existing laws to 

address black carbon emissions.’’. 

(d) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated 

such sums as are necessary to carry out this section. 

SEC. 334. STATES. 

Section 116 of the Clean Air Act (42 U.S.C. 7416) is amended by adding the following at the end thereof: ‘‘For the purposes of this section, the phrases ‘standard 

or limitation respecting emissions of air pollutants’ and ‘requirements respecting 

control or abatement of air pollution’ shall include any provision to: cap greenhouse 

gas emissions, require surrender to the State or a political subdivision thereof of 

emission allowances or offset credits established or issued under this Act, and require the use of such allowances or credits as a means of demonstrating compliance 

with requirements established by a State or political subdivision thereof.’’. 

SEC. 335. STATE PROGRAMS. 

Title VIII of the Clean Air Act, as added by section 331 of this Act and amended 

by several sections of this Act, is further amended by adding after part E (as added 

by section 333(c) of this Act) the following new part: 


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‘‘PART F—MISCELLANEOUS 

‘‘SEC. 861. STATE PROGRAMS. 

‘‘Notwithstanding section 116, no State or political subdivision thereof shall implement or enforce a cap and trade program that covers any capped emissions emitted 

during the years 2012 through 2017. For purposes of this section, the term ‘cap and 

trade program’ means a system of greenhouse gas regulation under which a State 

or political subdivision issues a limited number of tradable instruments in the nature of emission allowances and requires that sources within its jurisdiction surrender such tradeable instruments for each unit of greenhouse gases emitted during 

a compliance period. For purposes of this section, a ‘cap-and-trade program’ does not 

include a target or limit on greenhouse gas emissions adopted by a State or political 

subdivision that is implemented other than through the issuance and surrender of 

a limited number of tradable instruments in the nature of emission allowances, nor 

does it include any other standard, limit, regulation, or program to reduce greenhouse gas emissions that is not implemented through the issuance and surrender 

of a limited number of tradeable instruments in the nature of emission allowances. 

For purposes of this section, the term ‘cap and trade program’ does not include, 

among other things, fleet-wide motor vehicle emission requirements that allow 

greater emissions with increased vehicle production, or requirements that fuels, or 

other products, meet an average pollution emission rate or lifecycle greenhouse gas 

standard. 

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

‘‘The Administrator is authorized to make grants to air pollution control agencies 

pursuant to section 105 for purposes of assisting in the implementation of programs 

to address global warming established under the Safe Climate Act.’’. 

SEC. 336. ENFORCEMENT. 

(a) REMAND.—Section 307(b) of the Clean Air Act (42 U.S.C. 7607(b)) is amended 

by adding the following new paragraph at the end thereof: 

‘‘(3) If the court determines that any action of the Administrator is arbitrary, 

capricious, or otherwise unlawful, the court may remand such action, without 

vacatur, if vacatur would impair or delay protection of the environment or public health or otherwise undermine the timely achievement of the purposes of 

this Act.’’. 

(b) PETITION FOR RECONSIDERATION.—Section 307(d)(7)(B) of the Clean Air Act (42 

U.S.C. 7607(d)(7)(B)) is amended as follows: 

(1) By inserting after the second sentence ‘‘If a petition for reconsideration is 

filed, the Administrator shall take final action on such petition, including promulgation of final action either revising or determining not to revise the action 

for which reconsideration is sought, within 150 days after the petition is received by the Administrator or the petition shall be deemed denied for the purpose of judicial review.’’. 

(2) By amending the third sentence to read as follows: ‘‘Such person may seek 

judicial review of such denial, or of any other final action, by the Administrator, 

in response to a petition for reconsideration, in the United States court of appeals for the appropriate circuit (as provided in subsection (b)).’’. 

SEC. 337. CONFORMING AMENDMENTS. 

(a) FEDERAL ENFORCEMENT.—Section 113 of the Clean Air Act (42 U.S.C. 7413) 

is amended as follows: 

(1) In subsection (a)(3), by striking ‘‘or title VI,’’ and inserting ‘‘title VI, title 

VII, or title VIII’’. 

(2) In subsection (b), by striking ‘‘or a major stationary source’’ and inserting 

‘‘a major stationary source, or a covered EGU under title VIII’’ in the material 

preceding paragraph (1). 

(3) In paragraph (2) of subsection (b), by striking ‘‘or title VI’’ and inserting 

‘‘title VI, title VII, or title VIII’’. 

(4) In subsection (c)— 

(A) in the first sentence of paragraph (1), by striking ‘‘or title VI (relating 

to stratospheric ozone control),’’ and inserting ‘‘title VI, title VII, or title 

VIII,’’; and 

(B) in the first sentence of paragraph (3), by striking ‘‘or VI’’ and inserting ‘‘VI, VII, or VIII’’. 

(5) In subsection (d)(1)(B), by striking ‘‘or VI’’ and inserting ‘‘VI, VII, or VIII’’. 

(6) In subsection (f), in the first sentence, by striking ‘‘or VI’’ and inserting 

‘‘VI, VII, or VIII’’. 


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(b) RETENTION OF STATE AUTHORITY.—Section 116 of the Clean Air Act (42 U.S.C. 

7416) is amended as follows: 

(1) By striking ‘‘and 233’’ and inserting ‘‘233’’. 

(2) By striking ‘‘of moving sources)’’ and inserting ‘‘of moving sources), and 

861 (preempting certain State greenhouse gas programs for a limited time)’’. 

(c) INSPECTIONS, MONITORING, AND ENTRY.—Section 114(a) of the Clean Air Act 

(42 U.S.C. 7414(a)) is amended by striking ‘‘section 112,’’ and all that follows 

through ‘‘(ii)’’ and inserting the following: ‘‘section 112, or any regulation of greenhouse gas emissions under title VII or VIII, (ii)’’. 

(d) ENFORCEMENT.—Subsection (f) of section 304 of the Clean Air Act (42 U.S.C. 

7604(f)) is amended as follows: 

(1) By striking ‘‘; or’’ at the end of paragraph (3) thereof and inserting a comma. (2) By striking the period at the end of paragraph (4) thereof and inserting 

‘‘, or’’. 

(3) By adding the following after paragraph (4) thereof: 

‘‘(5) any requirement of title VII or VIII.’’. 

(e) ADMINISTRATIVE PROCEEDINGS AND JUDICIAL REVIEW.—Section 307 of the 

Clean Air Act (42 U.S.C. 7607) is amended as follows: 

(1) In subsection (a), by striking ‘‘, or section 306’’ and inserting ‘‘section 306, 

or title VII or VIII’’. 

(2) In subsection (b)(1)— 

(A) by striking ‘‘,,’’ and inserting ‘‘,’’ in each place such punctuation appears; and 

(B) by striking ‘‘section 120,’’ in the first sentence and inserting ‘‘section 

120, any final action under title VII or VIII,’’. 

(3) In subsection (d)(1) by amending subparagraph (S) to read as follows: 

‘‘(S) the promulgation or revision of any regulation under title VII or 

VIII,’’. 

SEC. 338. DAVIS-BACON COMPLIANCE. 

(a) IN GENERAL.—Notwithstanding any other provision of law and in a manner 

consistent with other provisions in this Act, to receive emission allowances or funding under this Act the recipient shall provide reasonable assurances that all laborers and mechanics employed by contractors and subcontractors on projects funded 

directly by or assisted in whole or in part by and through the Federal Government 

pursuant to this Act, or by any entity established in accordance with this Act, including the Carbon Storage Research Corporation, will be paid wages at rates not 

less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of 

title 40, United States Code (commonly known as the ‘‘Davis-Bacon Act’’). With respect to the labor standards specified in this section, the Secretary of Labor shall 

have the authority and functions set forth in Reorganization Plan Numbered 14 of 

1950 (64 Stat. 1267; 5 U.S.C. App.) and section 3145 of title 40, United States Code. 

(b) EXEMPTION.—Neither subsection (a) nor the requirements of subchapter IV of 

chapter 31 of title 40, United States Code, shall apply to retrofitting of any residential building (as defined in section 202(a)(5)), or to retrofitting of a nonresidential 

building (as defined in section 202(a)(1)) if the net interior space of such nonresidential building is less than 6,500 square feet, or if such nonresidential building is designed for residential use for less than 4 families. 

Subtitle D—Carbon Market Assurance 

SEC. 341. CARBON MARKET ASSURANCE. 

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

the end the following: 

‘‘PART IV—CARBON MARKET ASSURANCE 

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

‘‘(a) DEFINITIONS.—In this section: 

‘‘(1) CONTRACT OF SALE.—The term ‘contract of sale’ includes sales, agreements of sale, and agreements to sell. 

‘‘(2) COVERED ENTITY.—The term ‘covered entity’ shall have the meaning 

given in section 700 of the Clean Air Act. 

‘‘(3) FUTURE DELIVERY.—The term ‘future delivery’ does not include any sale 

of any cash commodity for deferred shipment or delivery. 


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‘‘(4) OFFSET CREATION CONTRACT.—The term ‘offset creation contract’ mean a 

written agreement for the origination and development of an offset project, and 

the related issuance of offset credits, pursuant to title VII of the Clean Air Act. 

‘‘(5) REGULATED ALLOWANCE.—The term ‘regulated allowance’ means any 

emission allowance, compensatory allowance, offset credit, or Federal renewable 

electricity credit established or issued under the American Clean Energy and 

Security Act of 2009. 

‘‘(6) REGULATED ALLOWANCE DERIVATIVE.—The term ‘regulated allowance derivative’ means an instrument that is, or includes, an instrument— 

‘‘(A) which— 

‘‘(i) is of the character of, or is commonly known to the trade as, a 

‘put option’, ‘call option’, ‘privilege’, ‘indemnity’, ‘advance guaranty’, ‘decline guaranty’, or ‘swap agreement’; or 

‘‘(ii) is a contract of sale for future delivery other than an offset creation contract; and 

‘‘(B) the value of which, in whole or in part, is expressly linked to the 

price of a regulated allowance or another regulated allowance derivative. 

‘‘(7) REGULATED INSTRUMENT.—The term ‘regulated instrument’ means a regulated allowance or a regulated allowance derivative. 

‘‘(b) REGULATED ALLOWANCE MARKET.— ‘‘(1) AUTHORITY.—The Commission shall promulgate regulations for the establishment, operation, and oversight of markets for regulated allowances not later 

than 18 months after the date of the enactment of this section, and from time 

to time thereafter as may be appropriate. 

‘‘(2) REGULATIONS.—The regulations promulgated pursuant to paragraph (1) 

shall— 

‘‘(A) provide for effective and comprehensive market oversight; 

‘‘(B) prohibit fraud, market manipulation (including an entity’s fraudulent 

or manipulative conduct with respect to regulated allowance derivatives 

that benefits the entity in regulated allowance markets), and excess speculation, and provide measures to limit unreasonable fluctuation in the prices 

of regulated allowances; 

‘‘(C) facilitate compliance with title VII of the Clean Air Act by covered 

entities; 

‘‘(D) ensure market transparency and recordkeeping deemed necessary 

and appropriate by the Commission to provide for efficient price discovery; 

prevention of fraud, market manipulation, and excess speculation; and compliance with title VII of the Clean Air Act and section 610 of the Public 

Utility Regulatory Policies Act of 1978; 

‘‘(E) as necessary, ensure that position limitations for individual market 

participants are established with respect to each class of regulated allowances; 

‘‘(F) as necessary, ensure that margin requirements are established for 

each class of regulated allowances; 

‘‘(G) provide for the formation and operation of a fair, orderly and liquid 

national market system that allows for the best execution in the trading of 

regulated allowances; 

‘‘(H) limit or eliminate counterparty risks, market power concentration 

risks, and other risks associated with over-the-counter trading; and 

‘‘(I) establish standards for qualification as, and operation of, trading facilities for regulated allowances; 

‘‘(J) establish standards for qualification as, and operation of, clearing organizations for trading facilities for regulated allowances; and 

‘‘(K) include such other requirements as necessary to preserve market integrity and facilitate compliance with title VII of the Clean Air Act and section 610 of the Public Utility Regulatory Policies Act of 1978 and the regulations promulgated under such title and such section. 

‘‘(3) ENFORCEMENT.— 

‘‘(A) IN GENERAL.—If the Commission determines, after notice and an opportunity for a hearing on the record, that any entity has violated any rule 

or order issued by the Commission under this subsection, the Commission 

may issue an order— 

‘‘(i) prohibiting the entity from trading on a trading facility for regulated allowances registered with the Commission, and requiring all 

such facilities to refuse the entity all privileges for such period as may 

be specified in the order; 

‘‘(ii) if the entity is registered with the Commission in any capacity, 

suspending for a period of not more than 6 months, or revoking, the 

registration of the entity; 


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‘‘(iii) assessing the entity a civil penalty of not more than $1,000,000 

per day per violation for as long as the violation continues (and in determining the amount of a civil penalty, the Commission shall take into 

account the nature and seriousness of the violation and the efforts to 

remedy the violation); and 

‘‘(iv) requiring disgorgement of unjust profits, restitution to entities 

harmed by the violation as determined by the Commission, or both. 

‘‘(B) AUTHORITY TO SUSPEND OR REVOKE REGISTRATION.—The Commission 

may suspend for a period of not more than 6 months, or revoke, the registration of a trading facility for regulated allowances or of a clearing organization registered by the Commission if, after notice and opportunity for 

a hearing on the record, the Commission finds that— 

‘‘(i) the entity violated any rule or order issued by the Commission 

under this subsection; or 

‘‘(ii) a director, officer, employee, or agent of the entity has violated 

any rule or order issued by the Commission under this subsection. 

‘‘(C) CEASE AND DESIST PROCEEDINGS.— ‘‘(i) IN GENERAL.—If the Commission determines that any entity may 

be violating, may have violated, or may be about to violate any provision of this part, or any regulation promulgated by, or any restriction, 

condition, or order made or imposed by, the Commission under this Act, 

and if the Commission finds that the alleged violation or threatened 

violation, or the continuation of the violation, is likely to result in significant harm to covered entities or market participants, or significant 

harm to the public interest, the Commission may issue a temporary 

order requiring the entity— 

‘‘(I) to cease and desist from the violation or threatened violation; 

‘‘(II) to take such action as is necessary to prevent the violation 

or threatened violation; and 

‘‘(III) to prevent, as the Commission determines to be appropriate— 

‘‘(aa) significant harm to covered entities or market participants; 

‘‘(bb) significant harm to the public interest; and 

‘‘(cc) frustration of the ability of the Commission to conduct 

the proceedings or to redress the violation at the conclusion of 

the proceedings. 

‘‘(ii) TIMING OF ENTRY.—An order issued under clause (i) shall be entered only after notice and opportunity for a hearing, unless the Commission determines that notice and hearing before entry would be impracticable or contrary to the public interest. 

‘‘(iii) EFFECTIVE DATE.—A temporary order issued under clause (i) 

shall— 

‘‘(I) become effective upon service upon the entity; and 

‘‘(II) unless set aside, limited, or suspended by the Commission 

or a court of competent jurisdiction, remain effective and enforceable pending the completion of the proceedings. 

‘‘(D) PROCEEDINGS REGARDING DISSIPATION OR CONVERSION OF ASSETS.— 

‘‘(i) IN GENERAL.—In a proceeding involving an alleged violation of a 

regulation or order promulgated or issued by the Commission, if the 

Commission determines that the alleged violation or related circumstances are likely to result in significant dissipation or conversion 

of assets, the Commission may issue a temporary order requiring the 

respondent to take such action as is necessary to prevent the dissipation or conversion of assets. 

‘‘(ii) TIMING OF ENTRY.—An order issued under clause (i) shall be entered only after notice and opportunity for a hearing, unless the Commission determines that notice and hearing before entry would be impracticable or contrary to the public interest. 

‘‘(iii) EFFECTIVE DATE.—A temporary order issued under clause (i) 

shall— 

‘‘(I) become effective upon service upon the respondent; and 

‘‘(II) unless set aside, limited, or suspended by the Commission 

or a court of competent jurisdiction, remain effective and enforceable pending the completion of the proceedings. 

‘‘(E) REVIEW OF TEMPORARY ORDERS.— 

‘‘(i) APPLICATION FOR REVIEW.—At any time after a respondent has 

been served with a temporary cease-and-desist order pursuant to subparagraph (C) or order regarding the dissipation or conversion of assets 


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pursuant to subparagraph (D), the respondent may apply to the Commission to have the order set aside, limited, or suspended. 

‘‘(ii) NO PRIOR HEARING.—If a respondent has been served with a temporary order entered without a prior hearing of the Commission— 

‘‘(I) the respondent may, not later than 10 days after the date on 

which the order was served, request a hearing on the application; 

and 

‘‘(II) the Commission shall hold a hearing and render a decision 

on the application at the earliest practicable time. 

‘‘(iii) JUDICIAL REVIEW.— ‘‘(I) IN GENERAL.—An entity shall not be required to submit a request for rehearing of a temporary order before seeking judicial review in accordance with this subparagraph. 

‘‘(II) TIMING OF REVIEW.—Not later than 10 days after the date 

on which a respondent is served with a temporary cease-and-desist 

order entered with a prior hearing of the Commission, or 10 days 

after the date on which the Commission renders a decision on an 

application and hearing under clause (i) with respect to any temporary order entered without such a prior hearing— 

‘‘(aa) the respondent may obtain a review of the order in a 

United States circuit court having jurisdiction over the circuit 

in which the respondent resides or has a principal place of 

business, or in the United States Court of Appeals for the District of Columbia Circuit, for an order setting aside, limiting, 

or suspending the effectiveness or enforcement of the order; 

and 

‘‘(bb) the court shall have jurisdiction to enter such an order. 

‘‘(III) NO PRIOR HEARING.—A respondent served with a temporary 

order entered without a prior hearing of the Commission may not 

apply to the applicable court described in subclause (II) except 

after a hearing and decision by the Commission on the application 

of the respondent under clauses (i) and (ii). 

‘‘(iv) PROCEDURES.—Section 222 and Part III shall apply to— 

‘‘(I) an application for review of an order under clause (i); and 

‘‘(II) an order subject to review under clause (iii). 

‘‘(v) NO AUTOMATIC STAY OF TEMPORARY ORDER.—The commencement 

of proceedings under clause (iii) shall not, unless specifically ordered by 

the court, operate as a stay of the order of the Commission. 

‘‘(F) ACTIONS TO COLLECT CIVIL PENALTIES.—If any person fails to pay a 

civil penalty assessed under this subsection after an order assessing the 

penalty has become final and unappealable, the Commission shall bring an 

action to recover the amount of the penalty in any appropriate United 

States district court. In any such action, the validity or appropriateness of 

the final assessment order or judgment shall not be subject to review. 

‘‘(4) TRANSACTION FEES.— 

‘‘(A) IN GENERAL.—The Commission shall, in accordance with this paragraph, establish and collect transaction fees designed to recover the costs 

to the Federal Government of the supervision and regulation of regulated 

allowance markets and market participants, including related costs for enforcement activities, policy and rulemaking activities, administration, legal 

services, and international regulatory activities. 

‘‘(B) INITIAL FEE RATE.—Each trading facility on or through which regulated allowances are transacted shall pay to the Commission a fee at a rate 

of not more than $15 per $1,000,000 of the aggregate dollar amount of sales 

of regulated allowances transacted through the facility. 

‘‘(C) ANNUAL ADJUSTMENT OF FEE RATE.—The Commission shall, on an 

annual basis— 

‘‘(i) assess the rate at which fees are to be collected as necessary to 

meet the cost recovery requirement in subparagraph (A); and 

‘‘(ii) consistent with subparagraph (B), adjust the rate as necessary 

in order to meet the requirement. 

‘‘(D) REPORT ON ADEQUACY OF FEES IN RECOVERING COSTS.—The Commission, shall, on an annual basis, report to the Committee on Energy and 

Commerce of the House of Representatives and the Committee on Energy 

and Natural Resources of the Senate on the adequacy of the transaction 

fees in providing funding for the Commission to regulate the regulated allowance markets. 

‘‘(5) JUDICIAL REVIEW.—Judicial review of actions taken by the Commission 

under this subsection shall be pursuant to part III. 


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‘‘(6) INFORMATION-SHARING.—Within 6 months after a Federal agency with jurisdiction over regulated allowance derivatives is delegated authority pursuant 

to subsection (c)(1), the agency shall enter into a memorandum of understanding with the Commission relating to information sharing, which shall include provisions ensuring that information requests to markets within the respective jurisdiction of the agency are properly coordinated to facilitate, among 

other things, effective information-sharing while minimizing duplicative information requests, and provisions regarding the treatment of proprietary information. 

‘‘(7) ADDITIONAL EMPLOYEES REPORT AND APPOINTMENT.—Within 18 months 

after the date of the enactment of this section, the Commission shall submit to 

the President, the Committee on Energy and Commerce of the House of Representatives, and the Committee on Energy and Natural Resources of the Senate, a report that contains recommendations as to how many additional employees would be necessary to provide robust oversight and enforcement of the regulations promulgated under this subsection. As soon as practicable after the completion of the report, subject to appropriations, the Commission shall appoint 

the recommended number of additional employees for such purposes. 

‘‘(c) DELEGATION OF AUTHORITY BY THE PRESIDENT.— ‘‘(1) DELEGATION.—The President, taking into consideration the recommendations of the interagency working group established in subsection (d), shall delegate to members of the working group and the heads of other appropriate Federal agencies the authority to promulgate regulations for the establishment, operation, and oversight of all markets for regulated allowance derivatives. 

‘‘(2) REGULATIONS.—The regulations promulgated pursuant to paragraph (1) 

shall— 

‘‘(A) provide for effective and comprehensive market oversight; 

‘‘(B) prohibit fraud, market manipulation, and excess speculation, and 

provide measures to limit unreasonable fluctuation in the prices of regulated allowance derivatives; 

‘‘(C) facilitate compliance with title VII of the Clean Air Act by covered 

entities; 

‘‘(D) ensure market transparency and recordkeeping necessary to provide 

for efficient price discovery; prevention of fraud, market manipulation, and 

excess speculation; and compliance with title VII of the Clean Air Act and 

section 610 of the Public Utility Regulatory Policies Act of 1978; 

‘‘(E) ensure that position limitations for individual market participants 

are established with respect to each regulated allowance derivative and aggregate position limitations for individual market participants are established with respect to all regulated allowance derivative markets; 

‘‘(F) ensure that margin requirements are established for each regulated 

allowance derivative; 

‘‘(G) provide for the formation and operation of a market system that allows for best execution in the trading of regulated allowance derivatives; 

‘‘(H) to the extent the regulations deviate from the rule set forth in paragraph (4)(B), limit or eliminate counterparty risks, market power concentration risks, and other risks associated with over-the-counter trading, and 

promulgate reporting and market transparency rules for large traders; 

‘‘(I) ensure that market participants do not evade position limits or otherwise undermine the integrity and effectiveness of the regulations promulgated under subparagraph (C) through participation in markets not subject 

to the position limits and regulations; 

‘‘(J) establish standards, as necessary, for qualification as, and operation 

of, trading facilities for regulated allowance derivatives; 

‘‘(K) establish standards, as necessary, for qualification as, and operation 

of, clearing organizations for trading facilities for regulated allowance derivatives; 

‘‘(L) provide boards of trade designated as contract markets under the 

Commodity Exchange Act, and market participants, with an adequate transition period for compliance with any new regulatory requirements established under this paragraph; 

‘‘(M) determine whether and to what extent offset creation contracts, to 

the extent incorporating regulated allowance derivatives, should be governed by the same regulations that apply to other regulated allowance derivatives; and 

‘‘(N) include such other requirements as necessary to preserve market integrity and facilitate compliance with title VII of the Clean Air Act and section 610 of the Public Utility Regulatory Policies Act of 1978 and the regulations promulgated under such title and such section. 


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‘‘(3) DEADLINE.—The agencies authorized to promulgate regulations for the establishment, operation, and oversight of markets for regulated allowance derivatives pursuant to paragraph (1) shall promulgate such regulations not later 

than 18 months after the date of the enactment of this section, and from time 

to time thereafter as may be appropriate. 

‘‘(4) DEFAULT RULES.— ‘‘(A) An individual market participant, directly or in concert with another 

participant, shall not control more than 10 percent of the open interest in 

any regulated allowance derivative. 

‘‘(B) All contracts for the purchase or sale of any regulated allowance derivative shall be executed on or through a board of trade designated as a 

contract market under the Commodity Exchange Act. 

‘‘(C) To the extent that regulations promulgated under this subsection 

provide different rules with respect to the matters described in subparagraph (A) or (B), the regulations shall supersede subparagraph (A) or (B), 

as the case may be. 

‘‘(d) WORKING GROUP.— ‘‘(1) ESTABLISHMENT.—Not later than 30 days after the date of the enactment 

of this section, the President shall establish an interagency working group on 

carbon market oversight, which shall include the Administrator of the Environmental Protection Agency and representatives of other relevant agencies, to 

make recommendations to the President regarding proposed regulations for the 

establishment, operation, and oversight of markets for regulated allowance derivatives. 

‘‘(2) REPORT.—Not later than 180 days after the date of the enactment of this 

section, and biennially thereafter, the interagency working group shall submit 

a written report to the President and Congress that includes its recommendations to the President regarding proposed regulations for the establishment, operation, and oversight of markets for regulated allowance derivatives and any 

recommendations to Congress for statutory changes needed to ensure the establishment, operation, and oversight of transparent, fair, stable, and efficient markets for regulated allowance derivatives. 

‘‘(e) ENFORCEMENT OF REGULATIONS.—Each Federal agency that promulgates 

under subsection (c) a regulation of conduct with respect to a regulated allowance 

derivative shall have the same authority to enforce compliance with the regulation 

as the Commodity Futures Trading Commission has to enforce compliance with any 

regulation of similar conduct with respect to a contract, agreement, or transaction 

over which the Commodity Futures Trading Commission has jurisdiction, except 

that any enforcement by the Federal Energy Regulatory Commission shall be pursuant to section 222 and Part III. 

‘‘(f) PROHIBITION ON PRICE OR MARKET MANIPULATION, FRAUD, AND FALSE OR MISLEADING STATEMENTS OR REPORTS.—(1) It shall be a felony punishable by a fine of 

not more than $25,000,000 (or $5,000,000 in the case of a person who is an individual) or imprisonment for not more than 20 years, or both, together with the costs 

of prosecution for any person, directly or indirectly— 

‘‘(A) in connection with a transaction involving a regulated instrument, to 

knowingly— 

‘‘(i) use any manipulative or deceptive device or contrivance in violation 

of regulations promulgated pursuant to this section; 

‘‘(ii) corner or attempt to corner the regulated instrument; or 

‘‘(iii) cheat or defraud, or attempt to cheat or defraud, any other person; 

‘‘(B) to knowingly deliver or cause to be delivered a false, misleading, or inaccurate report concerning information or conditions that affect or tend to affect 

the price of a regulated instrument; 

‘‘(C) to knowingly make, or cause to be made, in an application, report, or document required to be filed under any regulation promulgated pursuant to this 

section, a statement which is false or misleading with respect to a material fact, 

or to omit any material fact required to be stated therein or necessary to make 

the statements therein not misleading; or 

‘‘(D) to knowingly falsify, conceal, or cover up by any trick, scheme, or artifice 

a material fact, make any false, fictitious, or fraudulent statements or representations, or make or use any false writing or document that contains a false, fictitious, or fraudulent statement or entry, to an entity on or through which 

transactions in regulated instruments occur, or are settled or cleared, acting in 

furtherance of its official duties under this section or regulations promulgated 

under this section. 

‘‘(2) If a person is found guilty of a felony established in paragraph (1), the person 

may be prohibited from holding or trading regulated instruments for a period of not 

more than 5 years pursuant to the regulations promulgated under this section, exVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00213 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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cept that, if the person is a covered entity, the person shall be allowed to hold sufficient regulated allowances to meet its compliance obligations. 

‘‘(g) RELATION TO STATE LAW.—Nothing in this section shall preclude, diminish or 

qualify any authority of a State or political subdivision thereof to adopt or enforce 

any unfair competition, antitrust, consumer protection, securities, commodities or 

any other law or regulation, except that no such State law or regulation may relieve 

any person of any requirement otherwise applicable under this section. 

‘‘(h) MARKET REPORTS.— ‘‘(1) COLLECTION AND ANALYSIS OF INFORMATION.—The Commission, in conjunction with the Federal agency with jurisdiction over regulated allowance derivatives pursuant to subsection (c)(1), shall, on a continuous basis, collect and 

analyze the following information on the functioning of the markets for regulated instruments established under this part: 

‘‘(A) The status of, and trends in, the markets, including prices, trading 

volumes, transaction types, and trading channels and mechanisms. 

‘‘(B) Spikes, collapses, and volatility in prices of regulated instruments, 

and the causes therefor. 

‘‘(C) The relationship between the market for regulated allowances and 

allowance derivatives, and the spot and futures markets for energy commodities, including electricity. 

‘‘(D) Evidence of fraud or manipulation in any such market, the effects 

on any such market of any such fraud or manipulation (or threat of fraud 

or manipulation) that the Commission, in conjunction with the Federal 

agency, has identified, and the effectiveness of corrective measures undertaken by the Commission, in conjunction with the Federal agency, to address the fraud, manipulation, or threat. 

‘‘(E) The economic effects of the markets, including to macro- and microeconomic effects of unexpected significant increases and decreases in the 

price of regulated instruments. 

‘‘(F) Any changes in the roles, activities, or strategies of various market 

participants. 

‘‘(G) Regional, industrial, and consumer responses to the markets, and energy investment responses to the markets. 

‘‘(H) Any other issue related to the markets that the Commission, in conjunction with the entities, deems appropriate. 

‘‘(2) ANNUAL REPORTS TO THE CONGRESS.— Not later than 1 month after the 

end of each calendar year, the Commission, in conjunction with the Federal 

agency, shall submit to the President, the Committee on Energy and Commerce 

of the House of Representatives, and the Committee on Energy and Natural Resources of the Senate, and make available to the public, a report on the matters 

described in paragraph (1) with respect to the year, including recommendations 

for any administrative or statutory measures the Commission, in conjunction 

with the Federal agency, considers necessary to address any threats to the 

transparency, fairness, or integrity of the markets in regulated instruments. 

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

‘‘(a) SECTIONS 301, 304, AND 306.—Sections 301, 304, and 306 shall not apply to 

this part. 

‘‘(b) SECTIONS 307, 309, AND 314.—Sections 307, 309, and 314 shall only apply to 

section 401(c) to the extent that the Commission is delegated authority to promulgate regulations for the establishment, operation, and oversight of markets for regulated allowance derivatives (as defined in section 401). If the Commission is not delegated authority to promulgate regulations for the establishment, operation, and 

oversight of markets for regulated allowance derivatives, sections 307, 309, and 314 

shall not apply to section 401(f) in the case of regulated allowance derivatives. 

‘‘(c) SECTION 315.—In applying section 315(a) to this part, the words ‘‘person or 

entity’’ shall be substituted for the words ‘‘licensee or public utility’’. In applying section 315(b) to this part, the words ‘‘an entity’’ shall be substituted for the words ‘‘a 

licensee or public utility’’ and the words ‘‘such entity’’ shall be substituted for the 

words ‘‘such licensee or public utility.’’ 

‘‘(d) SECTION 316.—Section 316(a) shall not apply to section 401(f).’’. 

Subtitle E—Additional Market Assurance 

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

COMMODITIES. 

(a) ENERGY COMMODITY DEFINED.—Section 1a of the Commodity Exchange Act (7 

U.S.C. 1a) is amended— 


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(1) in paragraph (14), by inserting ‘‘, an energy commodity,’’ after ‘‘excluded 

commodity’’; 

(2) by redesignating paragraphs (13) through (21) and paragraphs (22) 

through (34) as paragraphs (14) through (22) and paragraphs (24) through (36), 

respectively; 

(3) by inserting after paragraph (12) the following: 

‘‘(13) ENERGY COMMODITY.—The term ‘energy commodity’ means— 

‘‘(A) coal; 

‘‘(B) crude oil, gasoline, diesel fuel, jet fuel, heating oil, and propane; 

‘‘(C) electricity (excluding financial transmission rights which are subject 

to regulation and oversight by the Federal Energy Regulatory Commission); 

‘‘(D) natural gas; and 

‘‘(E) any other substance (other than an excluded commodity, a metal, or 

an agricultural commodity) that is used as a source of energy, as the Commission, in its discretion, deems appropriate.’’; and 

(4) by inserting after paragraph (22) (as so redesignated by paragraph (2) of 

this subsection) the following: 

‘‘(23) INCLUDED ENERGY TRANSACTION.—The term ‘included energy transaction’ means a contract, agreement, or transaction in an energy commodity for 

future delivery that provides for a delivery point of the energy commodity in 

the United States or a territory or possession of the United States, or that is 

offered or transacted on or through a computer terminal located in the United 

States.’’. 

(b) EXTENSION OF REGULATORY AUTHORITY TO SWAPS INVOLVING ENERGY TRANSACTIONS.—Section 2(g) of such Act (7 U.S.C. 2(g)) is amended by inserting ‘‘or an 

energy commodity’’ after ‘‘agricultural commodity’’. 

(c) ELIMINATION OF EXEMPTION FOR OVER-THE-COUNTER SWAPS INVOLVING ENERGY COMMODITIES.—Section 2(h)(1) of such Act (7 U.S.C. 2(h)(1)) is amended by inserting ‘‘(other than an energy commodity)’’ after ‘‘exempt commodity’’. 

(d) EXTENSION OF REGULATORY AUTHORITY TO INCLUDED ENERGY TRANSACTIONS

ON FOREIGN BOARDS OF TRADE.—Section 4 of such Act (7 U.S.C. 6) is amended— 

(1) in subsection (a), by inserting ‘‘, and which is not an included energy 

transaction’’ after ‘‘territories or possessions’’ the 2nd place it appears; and 

(2) in subsection (b), by adding at the end the following: ‘‘The preceding sentence shall not apply with respect to included energy transactions.’’. 

(e) LIMITATION OF GENERAL EXEMPTIVE AUTHORITY OF THE CFTC WITH RESPECT

TO INCLUDED ENERGY TRANSACTIONS.— 

(1) IN GENERAL.—Section 4(c) of such Act (7 U.S.C. 6(c)) is amended by adding 

at the end the following: 

‘‘(6) The Commission may not exempt any included energy transaction from the 

requirements of subsection (a), unless the Commission provides 60 days advance notice to the Congress and the Position Limit Energy Advisory Group and solicits public comment about the exemption request and any proposed Commission action.’’. 

(2) NULLIFICATION OF NO-ACTION LETTER EXEMPTIONS TO CERTAIN REQUIREMENTS APPLICABLE TO INCLUDED ENERGY TRANSACTIONS.—Beginning 180 days 

after the date of the enactment of this Act, any exemption provided by the Commodity Futures Trading Commission that has allowed included energy transactions (as defined in section 1a(13) of the Commodity Exchange Act) to be conducted without regard to the requirements of section 4(a) of such Act shall be 

null and void. 

(f) REQUIREMENT TO ESTABLISH UNIFORM SPECULATIVE POSITION LIMITS FOR ENERGY TRANSACTIONS.— 

(1) IN GENERAL.—Section 4a(a) of such Act (7 U.S.C. 6a(a)) is amended— 

(A) by inserting ‘‘(1)’’ after ‘‘(a)’’; 

(B) by inserting after the 2nd sentence the following: ‘‘With respect to energy transactions, the Commission shall fix limits on the aggregate number 

of positions which may be held by any person for each month across all 

markets subject to the jurisdiction of the Commission.’’; 

(C) in the 4th sentence by inserting ‘‘, consistent with the 3rd sentence,’’ 

after ‘‘Commission’’; and 

(D) by adding after and below the end the following: 

‘‘(2)(A) Not later than 60 days after the date of the enactment of this paragraph, 

the Commission shall convene a Position Limit Energy Advisory Group consisting 

of representatives from— 

‘‘(i) 7 predominantly commercial short hedgers of the actual energy commodity 

for future delivery; 

‘‘(ii) 7 predominantly commercial long hedgers of the actual energy commodity 

for future delivery; 


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‘‘(iii) 4 non-commercial participants in markets for energy commodities for future delivery; and 

‘‘(iv) each designated contract market or derivatives transaction execution facility upon which a contract in the energy commodity for future delivery is traded, and each electronic trading facility that has a significant price discovery contract in the energy commodity. 

‘‘(B) Not later than 60 days after the date on which the advisory group is convened under subparagraph (A), and annually thereafter, the advisory group shall 

submit to the Commission advisory recommendations regarding the position limits 

to be established in paragraph (1). 

‘‘(C) The Commission shall have exclusive authority to grant exemptions for bona 

fide hedging transactions and positions from position limits imposed under this Act 

on energy transactions.’’. 

(2) CONFORMING AMENDMENTS.— 

(A) SIGNIFICANT PRICE DISCOVERY CONTRACTS.—Section 2(h)(7) of such Act 

(7 U.S.C. 2(h)(7)) is amended— 

(i) in subparagraph (A)— 

(I) by inserting ‘‘of this paragraph and section 4a(a)’’ after ‘‘(B) 

through (D)’’; and 

(II) by inserting ‘‘of this paragraph’’ before the period; and 

(ii) in subparagraph (C)(ii)(IV)— 

(I) in the heading, by striking ‘‘LIMITATIONS OR’’; and 

(II) by striking ‘‘position limitations or’’. 

(B) CONTRACTS TRADED ON OR THROUGH DESIGNATED CONTRACT MARKETS.—Section 5(d)(5) of such Act (7 U.S.C. 7(d)(5)) is amended— 

(i) in the heading by striking ‘‘LIMITATIONS OR’’; and 

(ii) by striking ‘‘position limitations or’’. 

(C) CONTRACTS TRADED ON OR THROUGH DERIVATIVES TRANSACTION EXECUTION FACILITIES.—Section 5a(d)(4) of such Act (7 U.S.C. 7a(d)(4)) is 

amended— 

(i) in the heading by striking ‘‘LIMITATIONS OR’’; and 

(ii) by striking ‘‘position limits or’’. 

(g) ELIMINATION OF THE SWAPS LOOPHOLE.—Section 4a(c) of such Act (7 U.S.C. 

6a(c)) is amended— 

(1) by inserting ‘‘(1)’’ after ‘‘(c)’’; and 

(2) by adding after and below the end the following: 

‘‘(2) For the purposes of contracts of sale for future delivery and options on such 

contracts or commodities, the Commission shall define what constitutes a bona fide 

hedging transaction or position as a transaction or position that— 

‘‘(A)(i) represents a substitute for transactions made or to be made or positions taken or to be taken at a later time in a physical marketing channel; 

‘‘(ii) is economically appropriate to the reduction of risks in the conduct and 

management of a commercial enterprise; and 

‘‘(iii) arises from the potential change in the value of— 

‘‘(I) assets that a person owns, produces, manufactures, processes, or merchandises or anticipates owning, producing, manufacturing, processing, or 

merchandising; 

‘‘(II) liabilities that a person owns or anticipates incurring; or 

‘‘(III) services that a person provides, purchases, or anticipates providing 

or purchasing; or 

‘‘(B) reduces risks attendant to a position resulting from a transaction that— 

‘‘(i) was executed pursuant to subsection (d), (g), (h)(1), or (h)(2) of section 

2, or an exemption issued by the Commission by rule, regulation or order; 

and 

‘‘(ii) was executed opposite a counterparty for which the transaction 

would qualify as a bona fide hedging transaction pursuant to paragraph 

(2)(A) of this subsection.’’. 

(h) DETAILED REPORTING AND DISAGGREGATION OF MARKET DATA.—Section 4 of 

such Act (7 U.S.C. 6) is amended by adding at the end the following: 

‘‘(e) DETAILED REPORTING AND DISAGGREGATION OF MARKET DATA.— 

‘‘(1) INDEX TRADERS AND SWAP DEALERS REPORTING.—The Commission shall 

issue a proposed rule defining and classifying index traders and swap dealers 

(as those terms are defined by the Commission) for purposes of data reporting 

requirements and setting routine detailed reporting requirements for any positions of such entities in contracts traded on designated contract markets, overthe-counter markets, derivatives transaction execution facilities, foreign boards 

of trade subject to section 4(f), and electronic trading facilities with respect to 

significant price discovery contracts not later than 120 days after the date of 


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the enactment of this subsection, and issue a final rule within 180 days after 

such date of enactment. 

‘‘(2) DISAGGREGATION OF INDEX FUNDS AND OTHER DATA IN MARKETS.—Subject 

to section 8 and beginning within 60 days of the issuance of the final rule required by paragraph (1), the Commission shall disaggregate and make public 

weekly— 

‘‘(A) the number of positions and total notional value of index funds and 

other passive, long-only and short-only positions (as defined by the Commission) in all markets to the extent such information is available; and 

‘‘(B) data on speculative positions relative to bona fide physical hedgers 

in those markets to the extent such information is available. 

‘‘(3) DISCLOSURE OF IDENTITY OF HOLDERS OF POSITIONS IN INDEXES IN EXCESS

OF POSITION LIMITS.—The Commission shall include in its weekly Commitment 

of Trader reports the identity of each person who holds a position in an index 

in excess of a limit imposed under section 4i.’’. 

(i) AUTHORITY TO SET LIMITS TO PREVENT EXCESSIVE SPECULATION IN INDEXES.— 

(1) IN GENERAL.—Section 4a of such Act (7 U.S.C. 6a) is amended by adding 

at the end the following: 

‘‘(f) The provisions of this section shall apply to the amounts of trading which may 

be done or positions which may be held by any person under contracts of sale of 

an index for future delivery on or subject to the rules of any contract market, derivatives transaction execution facility, or over-the-counter market, or on an electronic trading facility with respect to a significant price discovery contract, in the 

same manner in which this section applies to contracts of sale of a commodity for 

future delivery.’’. 

(2) REGULATIONS.—The Commodity Futures Trading Commission shall issue 

regulations under section 4a(f) of the Commodity Exchange Act within 180 days 

after the date of the enactment of this Act. 

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

Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended by adding at 

the end the following:. 

‘‘(j) This Act shall not be interpreted to affect the jurisdiction of the Federal Energy Regulatory Commission with respect to the authority of the Federal Energy 

Regulatory Commission under the Federal Power Act (16 U.S.C. 791a et seq.), the 

Natural Gas Act (15 U.S.C. 717 et seq.), or other law to obtain information, carry 

out enforcement actions, or otherwise carry out the responsibilities of the Federal 

Energy Regulatory Commission.’’. 

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

(a) ELEVATION OF OFFICE.— 

(1) INCLUSION OF CFTC IN DEFINITION OF ESTABLISHMENT.— 

(A) Section 12(1) of the Inspector General Act of 1978 (5 U.S.C. App.) is 

amended by striking ‘‘or the Federal Cochairpersons of the Commissions established under section 15301 of title 40, United States Code;’’ and inserting ‘‘the Federal Cochairpersons of the Commissions established under section 15301 of title 40, United States Code; or the Chairman of the Commodity Futures Trading Commission;’’. 

(B) Section 12(2) of the Inspector General Act of 1978 (5 U.S.C. App.) is 

amended by striking ‘‘or the Commissions established under section 15301 

of title 40, United States Code,’’ and inserting ‘‘the Commissions established 

under section 15301 of title 40, United States Code, or the Commodity Futures Trading Commission,’’. 

(2) EXCLUSION OF CFTC FROM DEFINITION OF DESIGNATED FEDERAL ENTITY.— 

Section 8G(a)(2) of the Inspector General Act of 1978 (5 U.S.C. App.) is amended by striking ‘‘the Commodity Futures Trading Commission,’’. 

(b) EFFECTIVE DATE; TRANSITION RULE.— 

(1) EFFECTIVE DATE.—The amendments made by this section shall take effect 

30 days after the date of the enactment of this Act. 

(2) TRANSITION RULE.—An individual serving as Inspector General of the 

Commodity Futures Trading Commission on the effective date of this section 

pursuant to an appointment made under section 8G of the Inspector General 

Act of 1978 (5 U.S.C. App.)— 

(A) may continue so serving until the President makes an appointment 

under section 3(a) of such Act consistent with the amendments made by 

this section; and 

(B) shall, while serving under subparagraph (A), remain subject to the 

provisions of section 8G of such Act which apply with respect to the Commodity Futures Trading Commission. 


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

(a) IN GENERAL.— (1) APPLICATION TO EXCLUDED DERIVATIVE TRANSACTIONS.— (A) Section 2(d)(1) of the Commodity Exchange Act (7 U.S.C. 2(d)(1)) is 

amended— 

(i) by striking ‘‘and’’ at the end of subparagraph (A); 

(ii) by striking the period at the end of subparagraph (B) and inserting ‘‘; and’’; and 

(iii) by adding at the end the following: 

‘‘(C) except as provided in section 4(f), the agreement, contract, or transaction is settled and cleared through a derivatives clearing organization 

registered with the Commission.’’. 

(B) Section 2(d)(2) of such Act (7 U.S.C. 2(d)(2)) is amended— 

(i) by striking ‘‘and’’ at the end of subparagraph (B); 

(ii) by striking the period at the end of subparagraph (C) and inserting ‘‘; and’’; and 

(iii) by adding at the end the following: 

‘‘(D) except as provided in section 4(f), the agreement, contract, or transaction is settled and cleared through a derivatives clearing organization 

registered with the Commission.’’. 

(2) APPLICATION TO CERTAIN SWAP TRANSACTIONS.—Section 2(g) of such Act (7 

U.S.C. 2(g)) is amended— 

(A) by striking ‘‘and’’ at the end of paragraph (2); 

(B) by striking the period at the end of paragraph (3) and inserting ‘‘; 

and’’; and 

(C) by adding at the end the following: 

‘‘(4) except as provided in section 4(f), settled and cleared through a derivatives clearing organization registered with the Commission.’’. 

(3) APPLICATION TO CERTAIN TRANSACTIONS IN EXEMPT COMMODITIES.— 

(A) Section 2(h)(1) of such Act ( 7 U.S.C. 2(h)(1)) is amended— 

(i) by striking ‘‘and’’ at the end of subparagraph (A); 

(ii) by striking the period at the end of subparagraph (B) and inserting ‘‘; and’’; and 

(iii) by adding at the end the following: 

‘‘(C) except as provided in section 4(f), is settled and cleared through a 

derivatives clearing organization registered with the Commission.’’. 

(B) Section 2(h)(3) of such Act (7 U.S.C. 2(h)(3)) is amended— 

(i) by striking ‘‘and’’ at the end of subparagraph (A); 

(ii) by striking the period at the end of subparagraph (B) and inserting ‘‘; and’’; and 

(iii) by adding at the end the following: 

‘‘(C) except as provided in section 4(f), settled and cleared through a derivatives clearing organization registered with the Commission.’’. 

(4) GENERAL EXEMPTIVE AUTHORITY.—Section 4(c)(1) of such Act (7 U.S.C. 

6(c)(1)) is amended by inserting ‘‘the agreement, contract, or transaction, except 

as provided in section 4(h), will be settled and cleared through a derivatives 

clearing organization registered with the Commission and’’ before ‘‘the Commission determines’’. 

(5) CONFORMING AMENDMENT RELATING TO SIGNIFICANT PRICE DISCOVERY CONTRACTS.—Section 2(h)(7)(D) of such Act (7 U.S.C. 2(h)(7)(D)) is amended by 

striking the designation and heading for the subparagraph and all that follows 

through ‘‘As part of’’ and inserting the following: 

‘‘(D) REVIEW OF IMPLEMENTATION.—As part of’’. 

(b) ALTERNATIVES TO CLEARING THROUGH DESIGNATED CLEARING ORGANIZATIONS.—Section 4 of such Act (7 U.S.C. 6), as amended by section 351(h) of this Act, 

is amended by adding at the end the following: 

‘‘(f) ALTERNATIVES TO CLEARING THROUGH DESIGNATED CLEARING ORGANIZATIONS.— 

‘‘(1) SETTLEMENT AND CLEARING THROUGH CERTAIN OTHER REGULATED ENTITIES.—An agreement, contract, or transaction, or class thereof, relating to an 

excluded commodity, that would otherwise be required to be settled and cleared 

by section 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), or 2(h)(3)(C) of this Act, or 

subsection (c)(1) of this section may be settled and cleared through an entity 

listed in subsections (a) or (b) of section 409 of the Federal Deposit Insurance 

Corporation Improvement Act of 1991. 

‘‘(2) WAIVER OF CLEARING REQUIREMENT.— 

‘‘(A) The Commission, in its discretion, may exempt an agreement, contract, or transaction, or class thereof, that would otherwise be required by 


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section 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), or 2(h)(3)(C) of this Act, or 

subsection (c)(1) of this section to be settled and cleared through a derivatives clearing organization registered with the Commission from such requirement. 

‘‘(B) In granting exemptions pursuant to subparagraph (A), the Commission shall consult with the Securities and Exchange Commission and the 

Board of Governors of the Federal Reserve System regarding exemptions 

that relate to excluded commodities or entities for which the Securities Exchange Commission or the Board of Governors of the Federal Reserve System serve as the primary regulator. 

‘‘(C) Before granting an exemption pursuant to subparagraph (A), the 

Commission shall find that the agreement, contract, or transaction, or class 

thereof— 

‘‘(i) is highly customized as to its material terms and conditions; 

‘‘(ii) is transacted infrequently; 

‘‘(iii) does not serve a significant price-discovery function in the marketplace; and 

‘‘(iv) is being entered into by parties who can demonstrate the financial integrity of the agreement, contract, or transaction and their own 

financial integrity, as such terms and standards are determined by the 

Commission. The standards may include, with respect to any federally 

regulated financial entity for which net capital requirements are imposed, a net capital requirement associated with any agreement, contract, or transaction subject to an exemption from the clearing requirement that is higher than the net capital requirement that would be associated with such a transaction were it cleared 

‘‘(D) Any agreement, contract, or transaction, or class thereof, which is exempted pursuant to subparagraph (A) shall be reported to the Commission 

in a manner designated by the Commission, or to such other entity the 

Commission deems appropriate. 

‘‘(E) The Commission, the Securities and Exchange Commission and the 

Board of Governors of the Federal Reserve System shall enter into a memorandum of understanding by which the information reported to the Commission pursuant to subparagraph (D) with regard to excluded commodities 

or entities for which the Securities Exchange Commission or the Board of 

Governors of the Federal Reserve System serve as the primary regulator 

may be provided to the other agencies. 

‘‘(g) SPOT AND FORWARD EXCLUSION.—The settlement and clearing requirements 

of section 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 2(h)(3)(C), or 4(c)(1) shall not 

apply to an agreement, contract, or transaction of any cash commodity for immediate or deferred shipment or delivery, as defined by the Commission.’’. 

(c) ADDITIONAL REQUIREMENTS APPLICABLE TO APPLICANTS FOR REGISTRATION AS

A DERIVATIVE CLEARING ORGANIZATION.—Section 5b(c)(2) of such Act (7 U.S.C. 7a1(c)(2)) is amended by adding at the end the following: 

‘‘(O) DISCLOSURE OF GENERAL INFORMATION.—The applicant shall disclose 

publicly and to the Commission information concerning— 

‘‘(i) the terms and conditions of contracts, agreements, and transactions cleared and settled by the applicant; 

‘‘(ii) the conventions, mechanisms, and practices applicable to the 

contracts, agreements, and transactions; 

‘‘(iii) the margin-setting methodology and the size and composition of 

the financial resource package of the applicant; and 

‘‘(iv) other information relevant to participation in the settlement and 

clearing activities of the applicant. 

‘‘(P) DAILY PUBLICATION OF TRADING INFORMATION.—The applicant shall 

make public daily information on settlement prices, volume, and open interest for contracts settled or cleared pursuant to the requirements of section 

2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 2(h)(3)(C) or 4(c)(1) of this Act by 

the applicant if the Commission determines that the contracts perform a 

significant price discovery function for transactions in the cash market for 

the commodity underlying the contracts. 

‘‘(Q) FITNESS STANDARDS.—The applicant shall establish and enforce appropriate fitness standards for directors, members of any disciplinary committee, and members of the applicant, and any other persons with direct 

access to the settlement or clearing activities of the applicant, including any 

parties affiliated with any of the persons described in this subparagraph.’’. 

(d) AMENDMENTS.— 

(1) Section 409 of the Federal Deposit Insurance Corporation Improvement 

Act of 1991 (12 U.S.C. 4422) is amended by adding at the end the following: 


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‘‘(c) CLEARING REQUIREMENT.—A multilateral clearing organization described in 

subsections (a) or (b) of this section shall comply with requirements similar to the 

requirements of sections 5b and 5c of the Commodity Exchange Act.’’. 

(2) Section 407 of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 

27e) is amended by inserting ‘‘and the settlement and clearing requirements of 

sections 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 2(h)(3)(C), and 4(c)(1) of such 

Act’’ after ‘‘the clearing of covered swap agreements’’. 

(e) EFFECTIVE DATE.—The amendments made by this section shall take effect 150 

days after the date of the enactment of this Act. 

(f) TRANSITION RULE.—Any agreement, contract, or transaction entered into before 

the date of the enactment of this Act or within 150 days after such date of enactment, in reliance on subsection (d), (g), (h)(1), or (h)(3) of section 2 of the Commodity 

Exchange Act or any other exemption issued by the Commission Futures Trading 

Commission by rule, regulation, or order shall, within 90 days after such date of 

enactment, unless settled and cleared through an entity registered with the Commission as a derivatives clearing organization or another clearing entity pursuant 

to section 4(f) of such Act, be reported to the Commission in a manner designated 

by the Commission, or to such other entity as the Commission deems appropriate. 

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

(a) IN GENERAL.—Section 4c of the Commodity Exchange Act (7 U.S.C. 6c) is 

amended by adding at the end the following: 

‘‘(h) LIMITATION ON ELIGIBILITY TO PURCHASE A CREDIT DEFAULT SWAP.—It shall 

be unlawful for any person to enter into a credit default swap unless the person— 

‘‘(1) owns a credit instrument which is insured by the credit default swap; 

‘‘(2) would experience financial loss if an event that is the subject of the credit 

default swap occurs with respect to the credit instrument; and 

‘‘(3) meets such minimum capital adequacy standards as may be established 

by the Commission, in consultation with the Board of Governors of the Federal 

Reserve System, or such more stringent minimum capital adequacy standards 

as may be established by or under the law of any State in which the swap is 

originated or entered into, or in which possession of the contract involved takes 

place.’’. 

(b) ELIMINATION OF PREEMPTION OF STATE BUCKETING LAWS REGARDING NAKED

CREDIT DEFAULT SWAPS.—Section 12(e)(2)(B) of such Act (7 U.S.C. 16(e)(2)(B)) is 

amended by inserting ‘‘(other than a credit default swap in which the purchaser of 

the swap would not experience financial loss if an event that is the subject of the 

swap occurred)’’ before ‘‘that is excluded’’. 

(c) DEFINITION OF CREDIT DEFAULT SWAP.—Section 1a of such Act (7 U.S.C. 1a), 

as amended by section 351(a) of this Act, is amended by adding at the end the following: 

‘‘(37) CREDIT DEFAULT SWAP.—The term ‘credit default swap’ means a contract 

which insures a party to the contract against the risk that an entity may experience a loss of value as a result of an event specified in the contract, such as 

a default or credit downgrade. A credit default swap that is traded on or cleared 

by a registered entity shall be excluded from the definition of a security as defined in this Act and in section 2(a)(1) of the Securities Act of 1933 or section 

3(a)(10) of the Securities Exchange Act of 1934, except it shall be deemed a security solely for purpose of enforcing prohibitions against insider trading in sections 10 and 16 of the Securities Exchange Act of 1934.’’. 

(d) EFFECTIVE DATE.—The amendments made by this section shall be effective for 

credit default swaps (as defined in section 1a(37) of the Commodity Exchange Act) 

entered into after 60 days after the date of the enactment of this section. 

SEC. 356. TRANSACTION FEES. 

(a) IN GENERAL.—Section 12 of the Commodity Exchange Act (7 U.S.C. 16) is 

amended by redesignating subsections (e), (f), and (g) as subsections (f), (g), and (h), 

respectively, and inserting after subsection (d) the following: 

‘‘(e) CLEARING FEES.— 

‘‘(1) IN GENERAL.—The Commission shall, in accordance with this subsection, 

charge and collect from each registered clearing organization, and each such organization shall pay to the Commission, transaction fees at a rate calculated to 

recover the costs to the Federal Government of the supervision and regulation 

of futures markets, except those directly related to enforcement. 

‘‘(2) FEES ASSESSED PER SIDE OF CLEARED CONTRACTS.— 

‘‘(A) IN GENERAL.—The Commission shall determine the fee rate referred 

to in paragraph (1), and shall apply the fee rate per side of any transaction 

cleared. 

‘‘(B) AUTHORITY TO DELEGATE.— The Commission may determine the procedures by which the fee rate is to be applied on the transactions subject 


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to the fee, or delegate the authority to make the determination to any appropriate derivatives clearing organization. 

‘‘(3) EXEMPTIONS.—The Commission may not impose a fee under paragraph 

(1) on— 

‘‘(A) a class of contracts or transactions if the Commission finds that it 

is in the public interest to exempt the class from the fee; or 

‘‘(B) a contract or transaction cleared by a registered derivatives clearing 

organization that is— 

‘‘(i) subject to fees under section 31 of the Securities Exchange Act 

of 1934; or 

‘‘(ii) a security as defined in the Securities Act of 1933 or the Securities Exchange Act of 1934. 

‘‘(4) DATES FOR PAYMENT OF FEES.—The fees imposed under paragraph (1) 

shall be paid on or before— 

‘‘(A) March 15 of each year, with respect to transactions occurring on or 

after the preceding September 1 and on or before the preceding December 

31; and 

‘‘(B) September 15 of each year, with respect to transactions occurring on 

or after the preceding January 1 and on or before the preceding August 31. 

‘‘(5) ANNUAL ADJUSTMENT OF FEE RATES.— 

‘‘(A) IN GENERAL.—Not later than April 30 of each fiscal year , the Commission shall, by order, adjust each fee rate determined under paragraph 

(2) for the fiscal year to a uniform adjusted rate that, when applied to the 

estimated aggregate number of cleared sides of transactions for the fiscal 

year, is reasonably likely to produce aggregate fee receipts under this subsection for the fiscal year equal to the target offsetting receipt amount for 

the fiscal year. 

‘‘(B) DEFINITIONS.—In subparagraph (A): 

‘‘(i) ESTIMATED AGGREGATE NUMBER OF CLEARED SIDES OF TRANSACTIONS.—The term ‘estimated aggregate number of cleared sides of 

transactions’ means, with respect to a fiscal year, the aggregate number of cleared sides of transactions to be cleared by registered derivatives clearing organizations during the fiscal year, as estimated by the 

Commission, after consultation with the Office of Management and 

Budget, using the methodology required for making projections pursuant to section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985. 

‘‘(ii) TARGET OFFSETTING RECEIPT AMOUNT.—The term ‘target offsetting receipt amount’ means, with respect to a fiscal year, the total level 

of Commission budget authority for all non-enforcement activities of 

the Commission, as contained in the regular appropriations Acts for the 

fiscal year. 

‘‘(C) NO JUDICIAL REVIEW.—An adjusted fee rate prescribed under subparagraph (A) shall not be subject to judicial review. 

‘‘(6) PUBLICATION.—Not later than April 30 of each fiscal year, the Commission shall cause to be published in the Federal Register notices of the fee rates 

applicable under this subsection for the succeeding fiscal year, and any estimate 

or projection on which the fee rates are based. 

‘‘(7) INAPPLICABILITY OF CERTAIN PROCEDURAL RULES.—Section 553 of title 5, 

United States Code, shall not apply with respect to any exercise of authority 

under this subsection. 

‘‘(8) ESTABLISHMENT OF FUTURES AND OPTIONS TRANSACTION FEE ACCOUNT; DEPOSIT OF FEES.—There is established in the Treasury of the United States an 

account which shall be known as the ‘Futures and Options Transaction Fee Account’. All fees collected under this subsection for a fiscal year shall be deposited in the account. Amounts in the account are authorized to be appropriated 

to fund the expenditures of the Commission.’’. 

(b) EFFECTIVE DATE.—The amendments made by subsection (a) shall apply to fiscal years beginning 30 or more days after the date of the enactment of this Act. 

(c) TRANSITION RULE.—If this section becomes law after March 31 and before September 1 of a fiscal year, then paragraphs (5)(A) and (6) of section 12(e) of the Commodity Exchange Act shall be applied, in the case of the 1st fiscal year beginning 

after the date of the enactment of this Act, by substituting ‘‘August 31’’ for ‘‘April 

30’’. 

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

Nothing in this subtitle shall be interpreted to affect or diminish the jurisdiction 

or authority of the Federal Trade Commission with respect to its authorities under 

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ence and Security Act of 2007 (Public Law 110–140) to obtain information, to carry 

out enforcement activities or otherwise carry out the responsibilities of the Federal 

Trade Commission. 

SEC. 358. REGULATION OF CARBON DERIVATIVES MARKETS. 

(a) DEFAULT RULE.—Section 2 of the Commodity Exchange Act (7 U.S.C. 2), as 

amended by section 352 of this Act, is amended by adding at the end the following: 

‘‘(k) The Commission shall have jurisdiction over the establishment, operations, 

and oversight of markets for regulated allowance derivatives (as defined in section 

401 of the Federal Power Act (16 U.S.C. 791a and following)), and shall provide for 

the establishment, operation, and oversight of the markets in accordance with the 

same regulations that apply under this Act to included energy transactions.’’. 

(b) PRESIDENTIAL DETERMINATIONS.—To the extent that the President delegates 

the authority to promulgate regulations for the establishment, operation, and oversight of all markets for regulated allowance derivatives to a Federal agency other 

than the Commodity Futures Trading Commission pursuant to section 401 of the 

Federal Power Act, such determination shall supersede subsection (a). To the extent 

that the President determines that regulations promulgated pursuant to section 

401(c)(2) of the Federal Power Act would provide for more stringent and effective 

market oversight, such regulations shall supersede subsection (a). Nothing in this 

section shall be construed to affect the operation of the default rules established in 

section 401(c)(4) of the Federal Power Act. 

SEC. 359. CEASE-AND-DESIST AUTHORITY. 

(a) NATURAL GAS ACT.—Section 20 of the Natural Gas Act (15 U.S.C. 717s) is 

amended by adding the following at the end: 

‘‘(e) CEASE-AND-DESIST PROCEEDINGS; TEMPORARY ORDERS; AUTHORITY OF THE

COMMISSION.— ‘‘(1) IN GENERAL.—If the Commission finds, after notice and opportunity for 

hearing, that any entity may be violating, may have violated, or may be about 

to violate any provision of this Act, or any rule, regulation, restriction, condition, or order made or imposed by the Commission under the authority of this 

Act, the Commission may publish its findings and issue an order requiring such 

entity, and any other entity that is, was, or would be a cause of the violation, 

due to an act or omission the entity knew or should have known would contribute to such violation, to cease and desist from committing or causing such 

violation and any future violation of the same provision, rule, or regulation. 

Such order may, in addition to requiring an entity to cease and desist from committing or causing a violation, require such entity to comply, to provide an accounting and disgorgement, or to take steps to effect compliance, with such provision, rule, or regulation, upon such terms and conditions and within such time 

as the Commission may specify in such order. Any such order may, as the Commission deems appropriate, require future compliance or steps to effect future 

compliance, either permanently or for such period of time as the Commission 

may specify. 

‘‘(2) TIMING OF ENTRY.—An order issued under this subsection shall be entered only after notice and opportunity for a hearing, unless the Commission 

determines that notice and hearing prior to entry would be impracticable or 

contrary to the public interest. 

‘‘(f) HEARING.—The notice instituting proceedings pursuant to subsection (e) shall 

fix a hearing date not earlier than 30 days nor later than 60 days after service of 

the notice unless an earlier or a later date is set by the Commission with the consent of any respondent so served. 

‘‘(g) TEMPORARY ORDER.—Whenever the Commission determines that-— 

‘‘(1) a respondent may take actions to dissipate or convert assets prior to the 

completion of the proceedings referred to in subsection (e), and such assets 

would be necessary to comply with or otherwise satisfy a final enforcement 

order of the Commission pursuant to alleged violations or threatened violations 

specified in the notice instituting proceedings; or 

‘‘(2) a respondent is engaged in actual or threatened violations of this Act or 

a Commission rule, regulation, restriction or order referred to in subsection (e), 

the Commission may issue a temporary order requiring the respondent to take such 

action to prevent dissipation or conversion of assets, significant harm to energy consumers, or substantial harm to the public interest, frustration of the Commission’s 

ability to conduct the proceedings, or frustration of the Commission’s ability to redress said violation at the conclusion of the proceedings, as the Commission deems 

appropriate pending completion of such proceedings. 

‘‘(h) REVIEW OF TEMPORARY ORDERS.— 

‘‘(1) COMMISSION REVIEW.—At any time after the respondent has been served 

with a temporary cease-and-desist order pursuant to subsection (g), the reVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00222 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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spondent may apply to the Commission to have the order set aside, limited, or 

suspended. If the respondent has been served with a temporary cease-and-desist 

order entered without a prior Commission hearing, the respondent may, within 

10 days after the date on which the order was served, request a hearing on such 

application and the Commission shall hold a hearing and render a decision on 

such application at the earliest possible time. 

‘‘(2) JUDICIAL REVIEW.—Within— 

‘‘(A) 10 days after the date the respondent was served with a temporary 

cease-and-desist order entered with a prior Commission hearing; or 

‘‘(B) 10 days after the Commission renders a decision on an application 

and hearing under paragraph (1), 

with respect to any temporary cease-and-desist order entered without a prior 

Commission hearing, the respondent may apply to the United States district 

court for the district in which the respondent resides or has its principal place 

of business, or for the District of Columbia, for an order setting aside, limiting, 

or suspending the effectiveness or enforcement of the order, and the court shall 

have jurisdiction to enter such an order. A respondent served with a temporary 

cease-and-desist order entered without a prior Commission hearing may not 

apply to the court except after hearing and decision by the Commission on the 

respondent’s application under paragraph (1) of this subsection. 

‘‘(3) NO AUTOMATIC STAY OF TEMPORARY ORDER.—The commencement of proceedings under paragraph (2) of this subsection shall not, unless specifically ordered by the court, operate as a stay of the Commission’s order. 

‘‘(4) EXCLUSIVE REVIEW.—Sections 19(d) and 24 shall not apply to a temporary 

order entered pursuant to this section. 

‘‘(i) IMPLEMENTATION.—The Commission is authorized to adopt rules, regulations, 

and orders as it deems appropriate to implement this section.’’. 

(c) NATURAL GAS POLICY ACT OF 1978.—Section 504 of the Natural Gas Policy Act 

of 1978 (15 U.S.C. 3414) is amended by adding the following at the end: 

‘‘(d) CEASE-AND-DESIST PROCEEDINGS; TEMPORARY ORDERS; AUTHORITY OF THE

COMMISSION.— 

‘‘(1) IN GENERAL.—If the Commission finds, after notice and opportunity for 

hearing, that any entity may be violating, may have violated, or may be about 

to violate any provision of this Act, or any rule, regulation, restriction, condition, or order made or imposed by the Commission under the authority of this 

Act, the Commission may publish its findings and issue an order requiring such 

entity, and any other entity that is, was, or would be a cause of the violation, 

due to an act or omission the entity knew or should have known would contribute to such violation, to cease and desist from committing or causing such 

violation and any future violation of the same provision, rule, or regulation. 

Such order may, in addition to requiring an entity to cease and desist from committing or causing a violation, require such entity to comply, to provide an accounting and disgorgement, or to take steps to effect compliance, with such provision, rule, or regulation, upon such terms and conditions and within such time 

as the Commission may specify in such order. Any such order may, as the Commission deems appropriate, require future compliance or steps to effect future 

compliance, either permanently or for such period of time as the Commission 

may specify. 

‘‘(2) TIMING OF ENTRY.—An order issued under this subsection shall be entered only after notice and opportunity for a hearing, unless the Commission 

determines that notice and hearing prior to entry would be impracticable or 

contrary to the public interest. 

‘‘(3) HEARING.—The notice instituting proceedings pursuant to paragraph (1) 

shall fix a hearing date not earlier than 30 days nor later than 60 days after 

service of the notice unless an earlier or a later date is set by the Commission 

with the consent of any respondent so served. 

‘‘(4) TEMPORARY ORDER.—Whenever the Commission determines that— 

‘‘(A) a respondent may take actions to dissipate or convert assets prior 

to the completion of the proceedings referred to in paragraph (1) and such 

assets would be necessary to comply with or otherwise satisfy a final enforcement order of the Commission pursuant to alleged violations or threatened violations specified in the notice instituting proceedings; or 

‘‘(B) a respondent is engaged in actual or threatened violations of this Act 

or a Commission rule, regulation, restriction or order referred to in paragraph (1), 

the Commission may issue a temporary order requiring the respondent to take 

such action to prevent dissipation or conversion of assets, significant harm to 

energy consumers, or substantial harm to the public interest, frustration of the 

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sion’s ability to redress said violation at the conclusion of the proceedings, as 

the Commission deems appropriate pending completion of such proceedings. 

‘‘(5) REVIEW OF TEMPORARY ORDERS.— 

‘‘(A) COMMISSION REVIEW.—At any time after the respondent has been 

served with a temporary cease-and-desist order pursuant to paragraph (4), 

the respondent may apply to the Commission to have the order set aside, 

limited, or suspended. If the respondent has been served with a temporary 

cease-and-desist order entered without a prior Commission hearing, the respondent may, within 10 days after the date on which the order was served, 

request a hearing on such application and the Commission shall hold a 

hearing and render a decision on such application at the earliest possible 

time. 

‘‘(B) JUDICIAL REVIEW.—Within— 

‘‘(i) 10 days after the date the respondent was served with a temporary cease-and-desist order entered with a prior Commission hearing; 

or 

‘‘(ii) 10 days after the Commission renders a decision on an application and hearing under subparagraph (A), with respect to any temporary cease-and-desist order entered without a prior Commission 

hearing, the respondent may apply to the United States district court 

for the district in which the respondent resides or has its principal 

place of business, or for the District of Columbia, for an order setting 

aside, limiting, or suspending the effectiveness or enforcement of the 

order, and the court shall have jurisdiction to enter such an order. A 

respondent served with a temporary cease-and-desist order entered 

without a prior Commission hearing may not apply to the court except 

after hearing and decision by the Commission on the respondent’s application under paragraph (1) of this subsection. 

‘‘(C) NO AUTOMATIC STAY OF TEMPORARY ORDER.—The commencement of 

proceedings under subparagraph (B) of this paragraph shall not, unless specifically ordered by the court, operate as a stay of the Commission’s order. 

‘‘(6) IMPLEMENTATION.—The Commission is authorized to adopt rules, regulations, and orders as it deems appropriate to implement this subsection.’’. 

TITLE IV—TRANSITIONING TO A CLEAN 

ENERGY ECONOMY 

Subtitle A—Ensuring Real Reductions in 

Industrial Emissions 

SEC. 401. ENSURING REAL REDUCTIONS IN INDUSTRIAL EMISSIONS. 

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

new part: 

‘‘PART F—ENSURING REAL REDUCTIONS IN 

INDUSTRIAL EMISSIONS 

‘‘SEC. 761. PURPOSES. 

‘‘(a) PURPOSE OF PART.—The purposes of this part are— 

‘‘(1) to promote a strong global effort to significantly reduce greenhouse gas 

emissions, and, through this global effort, stabilize greenhouse gas concentrations in the atmosphere at a level that will prevent dangerous anthropogenic 

interference with the climate system; and 

‘‘(2) to prevent an increase in greenhouse gas emissions in countries other 

than the United States as a result of direct and indirect compliance costs incurred under this title. 

‘‘(b) PURPOSES OF SUBPART 1.—The purposes of subpart 1 are additionally— 

‘‘(1) to rebate the owners and operators of entities in domestic eligible industrial sectors for their greenhouse gas emission costs incurred under this title, 

but not for costs associated with other related or unrelated market dynamics; 

‘‘(2) to design such rebates in a way that will prevent carbon leakage while 

also rewarding innovation and facility-level investments in energy efficiency 

performance improvements; and 


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‘‘(3) to eliminate or reduce distribution of emission allowances under this part 

when such distribution is no longer necessary to prevent carbon leakage from 

eligible industrial sectors. 

‘‘SEC. 762. INTERNATIONAL NEGOTIATIONS. 

‘‘(a) FINDING.—Congress finds that the purposes of this part, as set forth in section 761, can be most effectively addressed and achieved through agreements negotiated between the United States and foreign countries. 

‘‘(b) STATEMENT OF POLICY.—It is the policy of the United States to work 

proactively under the United Nations Framework Convention on Climate Change, 

and in other appropriate forums, to establish binding agreements, including sectoral 

agreements, committing all major greenhouse gas-emitting nations to contribute equitably to the reduction of global greenhouse gas emissions. 

‘‘(c) NOTIFICATION OF FOREIGN COUNTRIES.—Not later than January 1, 2020, the 

President shall notify foreign countries that an International Reserve Allowance 

Program, as described in subpart 2, may apply to primary products produced in a 

foreign country by a sector for which the President has made a determination described in section 767(c). 

‘‘SEC. 763. DEFINITIONS. 

‘‘In this part: 

‘‘(1) CARBON LEAKAGE.—The term ‘carbon leakage’ means any substantial increase (as determined by the Administrator) in greenhouse gas emissions by industrial entities located in other countries if such increase is caused by an incremental cost of production increase in the United States resulting from the 

implementation of this title. 

‘‘(2) ELIGIBLE INDUSTRIAL SECTOR.—The term ‘eligible industrial sector’ means 

an industrial sector determined by the Administrator under section 764(b) to be 

eligible to receive emission allowance rebates under subpart 1. 

‘‘(3) INDUSTRIAL SECTOR.—The term ‘industrial sector’ means any sector that 

is in the manufacturing sector (as defined in NAICS codes 31, 32, and 33). 

‘‘(4) NAICS.—The term ‘NAICS’ means the North American Industrial Classification System of 2002. 

‘‘(5) OUTPUT.—The term ‘output’ means the total tonnage or other standard 

unit of production (as determined by the Administrator) produced by an entity 

in an industrial sector. The output of the cement sector is hydraulic cement, 

and not clinker. 

‘‘(6) PRIMARY PRODUCT.—The term ‘primary product’ means a product manufactured by an eligible industrial sector that is— 

‘‘(A) iron, steel, steel mill products (including pipe and tube), aluminum, 

cement, glass (including flat, container, and specialty glass and fiberglass), 

pulp, paper, chemicals, or industrial ceramics; or 

‘‘(B) any other manufactured product that is sold in bulk for purposes of 

further manufacture or inclusion in a finished product. 

‘‘Subpart 1—Emission Allowance Rebate Program 

‘‘SEC. 764. ELIGIBLE INDUSTRIAL SECTORS. 

‘‘(a) LIST.— 

‘‘(1) INITIAL LIST.—Not later than June 30, 2011, the Administrator shall publish in the Federal Register a list of eligible industrial sectors pursuant to subsection (b). Such list shall include the amount of the emission allowance rebate 

per unit of production that shall be provided to entities in each eligible industrial sector in the following two calendar years pursuant to section 765. 

‘‘(2) SUBSEQUENT LISTS.—Not later than February 1, 2013, and every four 

years thereafter, the Administrator shall publish in the Federal Register an updated version of the list published under paragraph (1). 

‘‘(b) ELIGIBLE INDUSTRIAL SECTORS.— 

‘‘(1) IN GENERAL.—Not later than June 30, 2011, the Administrator shall promulgate a rule designating, based on the criteria under paragraph (2), the industrial sectors eligible for emission allowance rebates under this subpart. 

‘‘(2) PRESUMPTIVELY ELIGIBLE INDUSTRIAL SECTORS.— 

‘‘(A) ELIGIBILITY CRITERIA.—An owner or operator of an entity shall be eligible to receive emission allowance rebates under this subpart if such entity 

is in an industrial sector that is included in a six-digit classification of the 

NAICS that meets the criteria in both clauses (i) and (ii), or the criteria 

in clause (iii). 

‘‘(i) ENERGY OR GREENHOUSE GAS INTENSITY.—As determined by the 

Administrator, the industrial sector had— 


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‘‘(I) an energy intensity of at least 5 percent, calculated by dividing the cost of purchased electricity and fuel costs of the sector by 

the value of the shipments of the sector, based on data described 

in subparagraph (E); or 

‘‘(II) a greenhouse gas intensity of at least 5 percent, calculated 

by dividing— 

‘‘(aa) the number 20 multiplied by the number of tons of carbon dioxide equivalent greenhouse gas emissions (including direct emissions from fuel combustion, process emissions, and indirect emissions from the generation of electricity used to 

produce the output of the sector) of the sector based on data 

described in subparagraph (E); by 

‘‘(bb) the value of the shipments of the sector, based on data 

described in subparagraph (E). 

‘‘(ii) TRADE INTENSITY.—As determined by the Administrator, the industrial sector had a trade intensity of at least 15 percent, calculated 

by dividing the value of the total imports and exports of such sector by 

the value of the shipments plus the value of imports of such sector, 

based on data described in subparagraph (E). 

‘‘(iii) VERY HIGH ENERGY OR GREENHOUSE GAS INTENSITY.—As determined by the Administrator, the industrial sector had an energy or 

greenhouse gas intensity, as calculated under clause (i)(I) or (II), of at 

least 20 percent. 

‘‘(B) IRON AND STEEL SECTOR.—For purposes of this subpart, in carrying 

out this section and section 765, the Administrator shall consider as in different industrial sectors— 

‘‘(i) entities using integrated iron and steelmaking technologies (including coke ovens, blast furnaces, and other iron-making technologies); 

and 

‘‘(ii) entities using electric arc furnace technologies. 

‘‘(C) METAL AND PHOSPHATE PRODUCTION CLASSIFIED UNDER MORE THAN

ONE NAICS CODE.—For purposes of this subpart, in carrying out this section 

and section 765, the Administrator shall— 

‘‘(i) aggregate data for the beneficiation or other processing of iron 

and copper ores and phosphate with subsequent steps in the process of 

metal and phosphate manufacturing regardless of the NAICS code 

under which such activity is classified; and 

‘‘(ii) aggregate data for the manufacturing of steel with the manufacturing of steel pipe and tube made from purchased steel in a nonintegrated process. 

‘‘(D) EXCLUSION.—The petroleum refining sector shall not be an eligible 

industrial sector. 

‘‘(E) DATA SOURCES.— 

‘‘(i) ELECTRICITY AND FUEL COSTS, VALUE OF SHIPMENTS.—The Administrator shall determine electricity and fuel costs and the value of shipments under this subsection from data from the United States Census 

of Mineral Industries and the United States Census Annual Survey of 

Manufacturers. The Administrator shall take the average of data from 

as many of the years of 2004, 2005, and 2006 for which such data are 

available. If such data are unavailable, the Administrator shall make 

a determination based upon 2002 or 2006 data from the most detailed 

industrial classification level of Energy Information Agency’s Manufacturing Energy Consumption Survey (using 2006 data if it is available) 

and the 2002 or 2007 Economic Census of the United States (using 

2007 data if it is available). If data from the Manufacturing Energy 

Consumption Survey are unavailable for any sector at the six-digit classification level in the NAICS, then the Administrator may extrapolate 

the information necessary to determine the eligibility of a sector under 

this paragraph from available Manufacturing Energy Consumption 

Survey data pertaining to a broader industrial category classified in the 

NAICS. Fuel cost data shall not include the cost of fuel used as feedstock by an industrial sector. 

‘‘(ii) IMPORTS AND EXPORTS.—The Administrator shall base the value 

of imports and exports under this subsection on United States International Trade Commission data. The Administrator shall take the average of data from as many of the years of 2004, 2005, and 2006 for 

which such data are available. 


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‘‘(iii) PERCENTAGES.—The Administrator shall round the energy intensity, greenhouse gas intensity, and trade intensity percentages 

under subparagraph (A) to the nearest whole number. 

‘‘(iv) GREENHOUSE GAS EMISSION CALCULATIONS.—When calculating 

the tons of carbon dioxide equivalent greenhouse gas emissions for each 

sector under subparagraph (A)(i)(II)(aa), the Administrator— 

‘‘(I) shall use the best available data from as many of the years 

2004, 2005, and 2006 for which such data is available; and 

‘‘(II) may, to the extent necessary with respect to a sector, use 

economic and engineering models and the best available information on technology performance levels for such sector. 

‘‘(3) ADMINISTRATIVE DETERMINATION OF ADDITIONAL ELIGIBLE INDUSTRIAL

SECTORS.— 

‘‘(A) INDIVIDUAL SHOWING PETITION.— 

‘‘(i) PETITION.—The owner or operator of an entity in an industrial 

sector may petition the Administrator to designate as eligible industrial 

sectors under this subpart an entity or a group of entities that— 

‘‘(I) represent a subsector of a six-digit section of the NAICS 

code; and 

‘‘(II) meet the eligibility criteria in both clauses (i) and (ii) of 

paragraph (2)(A), or the eligibility criteria in clause (iii) of paragraph (2)(A). 

‘‘(ii) DATA.—In making a determination under this subparagraph, the 

Administrator shall consider data submitted by the petitioner that is 

specific to the entity, data solicited by the Administrator from other entities in the subsector, if such other entities exist, and data specified 

in paragraph (2)(E). 

‘‘(iii) BASIS OF SUBSECTOR DETERMINATION.—The Administrator shall 

determine an entity or group of entities to be a subsector of a six-digit 

section of the NAICS code based only upon the products manufactured 

and not the industrial process by which the products are manufactured, 

except that the Administrator may determine an entity or group of entities that manufacture a product from a virgin material to be a separate subsector from another entity or group of entities that manufacture the same product from recycled material. 

‘‘(iv) FINAL ACTION.—The Administrator shall take final action on 

such petition no later than 6 months after the petition is received by 

the Administrator. 

‘‘(B) UPDATED TRADE INTENSITY DATA.—The Administrator shall designate 

as eligible to receive emission allowance rebates under this subpart an industrial sector that— 

‘‘(i) met the energy or greenhouse gas intensity criteria in paragraph 

(2)(A)(i) as of the date of promulgation of the rule under paragraph (1); 

and 

‘‘(ii) meets the trade intensity criteria in paragraph (2)(A)(ii), using 

data from any year after 2006. 

‘‘(C) USE OF MOST RECENT DATA.—In determining whether to designate a 

sector or subsector as an eligible industrial sector under this paragraph, the 

Administrator shall use the most recent data available from the sources described in paragraph (2)(E), rather than the data from the years specified 

in paragraph (2)(E), to determine the trade intensity of such sector or subsector, but only for determining such trade intensity. 

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

‘‘(a) DISTRIBUTION SCHEDULE.— 

‘‘(1) IN GENERAL.—For each vintage year, the Administrator shall distribute 

allowances pursuant to this section no later than October 31 of the preceding 

calendar year. The Administrator shall make such annual distributions to the 

owners and operators of each entity in an eligible industrial sector in the 

amount of emission allowances calculated under subsection (b), except that— 

‘‘(A) for vintage years 2012 and 2013, the distribution for a covered entity 

shall be the entity’s indirect carbon factor as calculated under subsection 

(b)(3); and 

‘‘(B) for vintage year 2026 and thereafter, the distribution shall be the 

amount calculated under subsection (b) multiplied by, except as modified by 

the President pursuant to section 767(c)(3)(A) for a sector— 

‘‘(i) 90 percent for vintage year 2026; 

‘‘(ii) 80 percent for vintage year 2027; 

‘‘(iii) 70 percent for vintage year 2028; 


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‘‘(iv) 60 percent for vintage year 2029; 

‘‘(v) 50 percent for vintage year 2030; 

‘‘(vi) 40 percent for vintage year 2031; 

‘‘(vii) 30 percent for vintage year 2032; 

‘‘(viii) 20 percent for vintage year 2033; 

‘‘(ix) 10 percent for vintage year 2034; and 

‘‘(x) 0 percent for vintage year 2035 and thereafter. 

‘‘(2) RESUMPTION OF REDUCTION.—If the President has modified the percentage stated in paragraph (1)(B) under section 767(c)(3)(A), and the President 

subsequently makes a determination under section 767(b) for an eligible industrial sector that more than 70 percent of global output for that sector is produced or manufactured in countries that have met at least one of the criteria 

in that subsection, then the reduction schedule set forth in paragraph (1)(B) of 

this subsection shall begin in the next vintage year, with the percentage reduction based on the amount of the distribution of emission allowances under this 

section in the previous year. 

‘‘(3) NEWLY ELIGIBLE SECTORS.—In addition to receiving a distribution of 

emission allowances under this section in the first distribution occurring after 

an industrial sector is designated as eligible under section 764(b)(3), the owner 

or operator of an entity in that eligible industrial sector may receive a prorated 

share of any emission allowances made available for distribution under this section that were not distributed for the year in which the petition for eligibility 

was granted under section 764(b)(3)(A). 

‘‘(b) CALCULATION OF DIRECT AND INDIRECT CARBON FACTORS.— 

‘‘(1) IN GENERAL.— 

‘‘(A) COVERED ENTITIES.—Except as provided in subsection (a), for covered 

entities that are in eligible industrial sectors, the amount of emission allowance rebates shall be based on the sum of the covered entity’s direct and 

indirect carbon factors. 

‘‘(B) OTHER ELIGIBLE ENTITIES.—For entities that are in eligible industrial 

sectors but are not covered entities, the amount of emission allowance rebates shall be based on the entity’s indirect carbon factor. 

‘‘(C) NEW ENTITIES.—Not later than 2 years after the date of enactment 

of this title, the Administrator shall issue regulations governing the distribution of emission allowance rebates for the first and second years of operation of a new entity in an eligible industrial sector. These regulations 

shall provide for— 

‘‘(i) the distribution of emission allowance rebates to such entities 

based on comparable entities in the same sector; and 

‘‘(ii) an adjustment in the third and fourth years of operation to reconcile the total amount of emission allowance rebates received during 

the first and second years of operation to the amount the entity would 

have received during the first and second years of operation had the 

appropriate data been available. 

‘‘(2) DIRECT CARBON FACTOR.—The direct carbon factor for a covered entity for 

a vintage year is the product of— 

‘‘(A) the average output of the covered entity for the two years preceding 

the year of the distribution; and 

‘‘(B) the most recent calculation of the average direct greenhouse gas 

emissions (expressed in tons of carbon dioxide equivalent) per unit of output 

for all covered entities in the sector, as determined by the Administrator 

under paragraph (4). 

‘‘(3) INDIRECT CARBON FACTOR.— 

‘‘(A) IN GENERAL.—The indirect carbon factor for an entity for a vintage 

year is the product obtained by multiplying the average output of the entity 

for the two years preceding the years of the distribution by both the electricity emissions intensity factor determined pursuant to subparagraph (B) 

and the electricity efficiency factor determined pursuant to subparagraph 

(C) for the year concerned. 

‘‘(B) ELECTRICITY EMISSIONS INTENSITY FACTOR.—Each person selling electricity to the owner or operator of an entity in any sector designated as an 

eligible industrial sector under section 764(b) shall provide the owner or operator of the entity and the Administrator, on an annual basis, the electricity emissions intensity factor for the entity. The electricity emissions intensity factor for the entity, expressed in tons of carbon dioxide equivalents 

per kilowatt hour, is determined by dividing— 

‘‘(i) the annual sum of the hourly product of— 

‘‘(I) the electricity purchased by the entity from that person in 

each hour (expressed in kilowatt hours), multiplied by 


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‘‘(II) the marginal or weighted average tons of carbon dioxide 

equivalent per kilowatt hour that the person selling the electricity 

charges to the entity, taking into account the entity’s retail rate arrangements, by 

‘‘(ii) the total kilowatt hours of electricity purchased by the entity 

from that person during that year. 

‘‘(C) ELECTRICITY EFFICIENCY FACTOR.—The electricity efficiency factor is 

the average amount of electricity (in kilowatt hours) used per unit of output 

for all entities in the relevant sector, as determined by the Administrator 

based on the best available data, including data provided under paragraph 

(6). 

‘‘(D) INDIRECT CARBON FACTOR REDUCTION.—If an electricity provider received a free allocation of emission allowances pursuant to section 782(a), 

the Administrator shall adjust the indirect carbon factor to avoid rebates 

to the eligible entity for costs that the Administrator determines were not 

incurred by the industrial entity because the allowances were freely allocated to the eligible entity’s electricity provider and used for the benefit of 

industrial consumers. 

‘‘(4) GREENHOUSE GAS INTENSITY CALCULATIONS.—The Administrator shall calculate the average direct greenhouse gas emissions (expressed in tons of carbon 

dioxide equivalent) per unit of output for all covered entities in each eligible industrial sector every four years using an average of the two most recent years 

of the best available data. 

‘‘(5) ENSURING EFFICIENCY IMPROVEMENTS.—When making greenhouse gas 

calculations, the Administrator shall— 

‘‘(A) limit the average direct greenhouse gas emissions per unit of output, 

calculated under paragraph (4), for any eligible industrial sector to an 

amount that is not greater than it was in any previous calculation under 

this subsection; and 

‘‘(B) limit the electricity emissions intensity factor, calculated under paragraph (3)(B) and resulting from a change in electricity supply, for any entity to an amount that is not greater than it was during any previous year. 

‘‘(6) DATA SOURCES.—For the purposes of this subsection— 

‘‘(A) the Administrator shall use data from the greenhouse gas registry, 

established under section 713, where it is available; and 

‘‘(B) each owner or operator of an entity in an eligible industrial sector 

and each department, agency, and instrumentality of the United States 

shall provide the Administrator with such information as the Administrator 

finds necessary to determine the direct carbon factor and the indirect carbon factor for each entity subject to this section. 

‘‘(c) TOTAL MAXIMUM DISTRIBUTION.—Notwithstanding subsections (a) and (b), the 

Administrator shall not distribute more allowances for any vintage year pursuant 

to this section than are allocated for use under this part pursuant to section 782 

for that vintage year. For any vintage year for which the total emission allowance 

rebates calculated pursuant to this section exceed the number of allowances allocated pursuant to section 782, the Administrator shall reduce each entity’s distribution on a pro rata basis so that the total distribution under this section equals the 

number of allowances allocated under section 782. 

‘‘Subpart 2—International Reserve Allowance Program 

‘‘SEC. 766. INTERNATIONAL RESERVE ALLOWANCE PROGRAM. 

‘‘(a) ESTABLISHMENT.— 

‘‘(1) IN GENERAL.—If the President takes an action described in section 

767(c)(3)(B) with respect to a sector then, not later than 24 months after that 

determination, the Administrator shall issue regulations— 

‘‘(A) determining an appropriate price for and offering for sale to United 

States importers international reserve allowances; 

‘‘(B) requiring the submission of appropriate amounts of such allowances 

in conjunction with the importation into the United States of a primary 

product produced or manufactured by that sector; 

‘‘(C) exempting from the requirements of subparagraph (B) primary products produced in— 

‘‘(i) foreign countries that the United Nations has identified as among 

the least developed of developing countries; or 

‘‘(ii) foreign countries that the President has determined to be responsible for less than 0.5 percent of total global greenhouse gas emissions; 

and 


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‘‘(D) prohibiting the introduction into interstate commerce of a primary 

product without submitting the required number of international reserve 

allowances in accordance with such regulations, unless the product was produced by a covered entity under this title, or by an entity that is or could 

be regulated under this title. 

‘‘(2) PURPOSE OF PROGRAM.—The Administrator shall establish the program 

under paragraph (1) in a manner that addresses, consistent with international 

agreements to which the United States is a party, the competitive imbalance 

in the costs of producing or manufacturing primary products in industrial sectors resulting from the difference between— 

‘‘(A) the direct and indirect costs of complying with this title; and 

‘‘(B) the direct and indirect costs, if any, of complying in other countries 

with greenhouse gas regulatory programs, requirements, export tariffs, or 

other measures adopted or imposed to reduce greenhouse gas emissions. 

‘‘(3) EMISSION ALLOWANCE REBATES.—The Administrator shall take into account the value of emission allowance rebates distributed under subpart 1 when 

making calculations under paragraph (2). 

‘‘(4) LIMITATION.—The International Reserve Allowance Program may not 

begin before January 1, 2025. 

‘‘(b) COVERED ENTITIES.—International reserve allowances may not be held by covered entities to comply with section 722. 

‘‘Subpart 3—Presidential Determination 

‘‘SEC. 767. PRESIDENTIAL REPORTS AND DETERMINATIONS. 

‘‘(a) REPORT.—Not later than January 1, 2018, the President shall submit a report 

to Congress on the effectiveness of the distribution of emission allowance rebates 

under subpart 1 in mitigating carbon leakage in industrial sectors. Such report shall 

also include— 

‘‘(1) recommendations on how to better achieve the purposes of this part, including an assessment of the feasibility and usefulness of an International Reserve Allowance Program; and 

‘‘(2) an assessment of the amount and duration of assistance, including distribution of free allowances, being provided to eligible industrial sectors in other 

developed countries to mitigate costs of compliance with domestic greenhouse 

gas reduction programs in such countries. 

‘‘(b) PRESIDENTIAL DETERMINATION.—Not later than June 30, 2022, and every four 

years thereafter, the President, in consultation with the Administrator and other 

appropriate agencies, shall determine, for each eligible industrial sector, whether 

more than 70 percent of global output for that sector is produced or manufactured 

in countries that have met at least one of the following criteria: 

‘‘(1) The country is a party to an international agreement to which the United 

States is a party that includes a nationally enforceable greenhouse gas emissions reduction commitment for that country that is at least as stringent as that 

of the United States. 

‘‘(2) The country is a party to a multilateral or bilateral emission reduction 

agreement for that sector to which the United States is a party. 

‘‘(3) The country has an annual energy or greenhouse gas intensity, as described in section 764(b)(2)(A)(i), for the sector that is equal to or less than the 

energy or greenhouse gas intensity for such sector in the United States in the 

most recent calendar year for which data are available. 

‘‘(4) The country has implemented policies, including sectoral caps, export tariffs, production fees, electricity generation regulations, or greenhouse gas emissions fees, that individually or collectively impose an incremental increase on 

the cost of production associated with greenhouse gas emissions from the sector 

that is at least 60 percent of the cost of complying with this title in the United 

States for such sector, averaged over a two-year period. 

‘‘(c) EFFECT OF PRESIDENTIAL DETERMINATION.—If the President makes a determination under subsection (b) with respect to an eligible industrial sector that 70 

percent or less of the global output for the sector is produced or manufactured in 

countries that have met one or more of the criteria in subsection (b), then the President shall, not later than June 30, 2022, and every four years thereafter— 

‘‘(1) assess the extent to which the emission allowance rebates provided pursuant to subpart 1 have mitigated or addressed, or could mitigate or address, 

carbon leakage in that sector; 

‘‘(2) assess the extent to which an International Reserve Allowance Program 

has mitigated or addressed, or could mitigate or address, carbon leakage in that 

sector and the feasibility of establishing such a program; and 


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‘‘(3) with respect to that sector— 

‘‘(A) modify the percentage by which direct and indirect carbon factors 

will be multiplied under section 765(a)(1)(B); 

‘‘(B) implement an International Reserve Allowance Program under section 766 for the products of the sector; or 

‘‘(C) take the actions in both subparagraph (A) and (B). 

‘‘(d) REPORT TO CONGRESS.—Not later than June 30, 2022, and every four years 

thereafter, the President shall transmit to the Congress a report providing notice 

of any determination made under subsection (b), explaining the reasons for such determination, and identifying the actions taken by the President under subsection (c). 

‘‘(e) LIMITATION.—The President may only implement an International Reserve Allowance Program for sectors producing primary products. 

‘‘(f) IRON AND STEEL SECTOR.—For the purposes of this subpart, the Administrator 

shall consider to be in the same industrial sector— 

‘‘(1) entities using integrated iron and steelmaking technologies (including 

coke ovens, blast furnaces, and other iron-making technologies); and 

‘‘(2) entities using electric arc furnace technologies.’’. 

Subtitle B—Green Jobs and Worker Transition 

PART 1—GREEN JOBS 

SEC. 421. CLEAN ENERGY CURRICULUM DEVELOPMENT GRANTS. 

(a) AUTHORIZATION.—The Secretary of Education is authorized to award grants, 

on a competitive basis, to eligible partnerships to develop programs of study (containing the information described in section 122(c)(1)(A) of the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2342), that are focused on 

emerging careers and jobs in renewable energy, energy efficiency, and climate 

change mitigation. The Secretary of Education shall consult with the Secretary of 

Labor and the Secretary of Energy prior to the issuance of a solicitation for grant 

applications. 

(b) ELIGIBLE PARTNERSHIPS.—For purposes of this section, an eligible partnership 

shall include— 

(1) at least 1 local educational agency eligible for funding under section 131 

of the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 

2351) or an area career and technical education school or education service 

agency described in such section; 

(2) at least 1 postsecondary institution eligible for funding under section 132 

of such Act (20 U.S.C. 2352); and 

(3) representatives of the community including business, labor organizations, 

and industry that have experience in clean energy. 

(c) APPLICATION.—An eligible partnership seeking a grant under this section shall 

submit an application to the Secretary at such time and in such manner as the Secretary may require. Applications shall include— 

(1) a description of the eligible partners and partnership, the roles and responsibilities of each partner, and a demonstration of each partner’s capacity 

to support the program; 

(2) a description of the career area or areas within the field of clean energy 

to be developed, the reason for the choice, and evidence of the labor market 

need to prepare students in that area; 

(3) a description of the new or existing program of study and both secondary 

and postsecondary components; 

(4) a description of the students to be served by the new program of study; 

(5) a description of how the program of study funded by the grant will be 

replicable and disseminated to schools outside of the partnership, including 

urban and rural areas; 

(6) a description of applied learning that will be incorporated into the program of study and how it will incorporate or reinforce academic learning; 

(7) a description of how the program of study will be delivered; 

(8) a description of how the program will provide accessibility to students, especially economically disadvantaged, low performing, and urban and rural students; 

(9) a description of how the program will address placement of students in 

nontraditional fields as described in section 3(20) of the Carl D. Perkins Career 

and Technical Education Act of 2006 (20 U.S.C. 2302(20)); and 

(10) a description of how the applicant proposes to consult or has consulted 

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gram, or joint apprenticeship and training program that provides education and 

training in the field of study for which the applicant proposes to develop a curriculum. 

(d) PRIORITY.—The Secretary shall give priority to applications that— 

(1) use online learning or other innovative means to deliver the program of 

study to students, educators, and instructors outside of the partnership; and 

(2) focus on low performing students and special populations as defined in 

section 3(29) of the Carl D. Perkins Career and Technical Education Act of 2006 

(20 U.S.C. 2302(29)). 

(e) PEER REVIEW.—The Secretary shall convene a peer review process to review 

applications for grants under this section and to make recommendations regarding 

the selection of grantees. Members of the peer review committee shall include— 

(1) educators who have experience implementing curricula with comparable 

purposes; and 

(2) business and industry experts in clean energy-related fields. 

(f) USES OF FUNDS.—Grants awarded under this section shall be used for the development, implementation, and dissemination of programs of study (as described 

in section 122(c)(1)(A) of the Carl D. Perkins Career and Technical Education Act 

(20 U.S.C. 342(c)(1)(A))) in career areas related to clean energy, renewable energy, 

energy efficiency, and climate change mitigation. 

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

Section 171(e)(8) of the Workforce Investment Act of 1998 (29 U.S.C. 2916(e)(8)) 

is amended by striking ‘‘$125,000,000’’ and inserting ‘‘$150,000,000’’. 

PART 2—CLIMATE CHANGE WORKER ADJUSTMENT 

ASSISTANCE 

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

(a) PETITIONS.— 

(1) FILING.—A petition for certification of eligibility to apply for adjustment 

assistance for a group of workers under this part may be filed by any of the 

following: 

(A) The group of workers. 

(B) The certified or recognized union or other duly authorized representative of such workers. 

(C) Employers of such workers, one-stop operators or one-stop partners 

(as defined in section 101 of the Workforce Investment Act of 1998 (29 

U.S.C. 2801)), including State employment security agencies, or the State 

dislocated worker unit established under title I of such Act, on behalf of 

such workers. 

The petition shall be filed simultaneously with the Secretary of Labor and with 

the Governor of the State in which such workers’ employment site is located. 

(2) ACTION BY GOVERNORS.—Upon receipt of a petition filed under paragraph 

(1), the Governor shall— 

(A) ensure that rapid response activities and appropriate core and intensive services (as described in section 134 of the Workforce Investment Act 

of 1998 (29 U.S.C. 2864)) authorized under other Federal laws are made 

available to the workers covered by the petition to the extent authorized 

under such laws; and 

(B) assist the Secretary in the review of the petition by verifying such information and providing such other assistance as the Secretary may request. 

(3) ACTION BY THE SECRETARY.—Upon receipt of the petition, the Secretary 

shall promptly publish notice in the Federal Register and on the website of the 

Department of Labor that the Secretary has received the petition and initiated 

an investigation. 

(4) HEARINGS.—If the petitioner, or any other person found by the Secretary 

to have a substantial interest in the proceedings, submits not later than 10 days 

after the date of the Secretary’s publication under paragraph (3) a request for 

a hearing, the Secretary shall provide for a public hearing and afford such interested persons an opportunity to be present, to produce evidence, and to be 

heard. 

(b) ELIGIBILITY.— 

(1) IN GENERAL.—A group of workers shall be certified by the Secretary as eligible to apply for adjustment assistance under this part pursuant to a petition 

filed under subsection (a) if— 

(A) the group of workers is employed in— 


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(i) energy producing and transforming industries; 

(ii) industries dependent upon energy industries; 

(iii) energy-intensive manufacturing industries; 

(iv) consumer goods manufacturing; or 

(v) other industries whose employment the Secretary determines has 

been adversely affected by any requirement of title VII of the Clean Air 

Act; 

(B) the Secretary determines that a significant number or proportion of 

the workers in such workers’ employment site have become totally or partially separated, or are threatened to become totally or partially separated 

from employment; and 

(C) the sales, production, or delivery of goods or services have decreased 

as a result of any requirement of title VII of the Clean Air Act, including— 

(i) the shift from reliance upon fossil fuels to other sources of energy, 

including renewable energy, that results in the closing of a facility or 

layoff of employees at a facility that mines, produces, processes, or utilizes fossil fuels to generate electricity; 

(ii) a substantial increase in the cost of energy required for a manufacturing facility to produce items whose prices are competitive in the 

marketplace, to the extent the cost is not offset by allowance allocation 

to the facility pursuant to title VII of the Clean Air Act; or 

(iii) other documented occurrences that the Secretary determines are 

indicators of an adverse impact on an industry described in subparagraph (A) as a result of any requirement of title VII of the Clean Air 

Act. 

(2) WORKERS IN PUBLIC AGENCIES.—A group of workers in a public agency 

shall be certified by the Secretary as eligible to apply for climate change adjustment assistance pursuant to a petition filed if the Secretary determines that a 

significant number or proportion of the workers in the public agency have become totally or partially separated from employment, or are threatened to become totally or partially separated as a result of any requirement of title VII 

of the Clean Air Act. 

(3) ADVERSELY AFFECTED SERVICE WORKERS.—A group of workers shall be certified as eligible to apply for climate change adjustment assistance pursuant to 

a petition filed if the Secretary determines that— 

(A) a significant number or proportion of the service workers at an employment site where a group of workers has been certified by the Secretary 

as eligible to apply for adjustment assistance under this part pursuant to 

paragraph (1) have become totally or partially separated from employment, 

or are threatened to become totally or partially separated; and 

(B) a loss of business in the firm providing service workers to an employment site is directly attributable to one or more of the documented occurrences listed in paragraph (1)(C). 

(c) AUTHORITY TO INVESTIGATE AND COLLECT INFORMATION.— 

(1) IN GENERAL.—The Secretary shall, in determining whether to certify a 

group of workers under subsection (d), obtain information the Secretary determines to be necessary to make the certification, through questionnaires and in 

such other manner as the Secretary determines appropriate from— 

(A) the workers’ employer; 

(B) officials of certified or recognized unions or other duly authorized representatives of the group of workers; or 

(C) one-stop operators or one-stop partners (as defined in section 101 of 

the Workforce Investment Act of 1998 (29 U.S.C. 2801)); or 

(2) VERIFICATION OF INFORMATION.—The Secretary shall require an employer, 

union, or one-stop operator or partner to certify all information obtained under 

paragraph (1) from the employer, union, or one-stop operator or partner (as the 

case may be) on which the Secretary relies in making a determination under 

subsection (d), unless the Secretary has a reasonable basis for determining that 

such information is accurate and complete without being certified. 

(3) PROTECTION OF CONFIDENTIAL INFORMATION.—The Secretary may not release information obtained under paragraph (1) that the Secretary considers to 

be confidential business information unless the employer submitting the confidential business information had notice, at the time of submission, that the 

information would be released by the Secretary, or the employer subsequently 

consents to the release of the information. Nothing in this paragraph shall be 

construed to prohibit the Secretary from providing such confidential business 

information to a court in camera or to another party under a protective order 

issued by a court. 

(d) DETERMINATION BY THE SECRETARY OF LABOR.— 


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(1) IN GENERAL.—As soon as possible after the date on which a petition is 

filed under subsection (a), but in any event not later than 40 days after that 

date, the Secretary, in consultation with the Secretary of Energy and the Administrator, as necessary, shall determine whether the petitioning group meets 

the requirements of subsection (b) and shall issue a certification of eligibility 

to apply for assistance under this part covering workers in any group which 

meets such requirements. Each certification shall specify the date on which the 

total or partial separation began or threatened to begin. Upon reaching a determination on a petition, the Secretary shall promptly publish a summary of the 

determination in the Federal Register and on the website of the Department of 

Labor, together with the Secretary’s reasons for making such determination. 

(2) ONE YEAR LIMITATION.—A certification under this section shall not apply 

to any worker whose last total or partial separation from the employment site 

before the worker’s application under section 426(a) occurred more than 1 year 

before the date of the petition on which such certification was granted. 

(3) REVOCATION OF CERTIFICATION.—Whenever the Secretary determines, with 

respect to any certification of eligibility of the workers of an employment site, 

that total or partial separations from such site are no longer a result of the factors specified in subsection (b)(1), the Secretary shall terminate such certification and promptly have notice of such termination published in the Federal 

Register and on the website of the Department of Labor, together with the Secretary’s reasons for making such determination. Such termination shall apply 

only with respect to total or partial separations occurring after the termination 

date specified by the Secretary. 

(e) INDUSTRY NOTIFICATION OF ASSISTANCE.—Upon receiving a notification of a determination under subsection (d) with respect to a domestic industry the Secretary 

of Labor shall notify the representatives of the domestic industry affected by the determination, employers publicly identified by name during the course of the proceeding relating to the determination, and any certified or recognized union or, to 

the extent practicable, other duly authorized representative of workers employed by 

such representatives of the domestic industry, of— 

(1) the adjustment allowances, training, and other benefits available under 

this part; 

(2) the manner in which to file a petition and apply for such benefits; and 

(3) the availability of assistance in filing such petitions; 

(4) notify the Governor of each State in which one or more employers in such 

industry are located of the Secretary’s determination and the identity of the employers; and 

(5) upon request, provide any assistance that is necessary to file a petition 

under subsection (a). 

(f) BENEFIT INFORMATION TO WORKERS, PROVIDERS OF TRAINING.— 

(1) IN GENERAL.—The Secretary shall provide full information to workers 

about the adjustment allowances, training, and other benefits available under 

this part and about the petition and application procedures, and the appropriate 

filing dates, for such allowances, training and services. The Secretary shall provide whatever assistance is necessary to enable groups of workers to prepare 

petitions or applications for program benefits. The Secretary shall make every 

effort to insure that cooperating State agencies fully comply with the agreements entered into under section 426(a) and shall periodically review such compliance. The Secretary shall inform the State Board for Vocational Education 

or equivalent agency, the one-stop operators or one-stop partners (as defined in 

section 101 of the Workforce Investment Act of 1998 (29 U.S.C. 2801), and other 

public or private agencies, institutions, and employers, as appropriate, of each 

certification issued under subsection (d) and of projections, if available, of the 

needs for training under as a result of such certification. 

(2) NOTICE BY MAIL.—The Secretary shall provide written notice through the 

mail of the benefits available under this part to each worker whom the Secretary has reason to believe is covered by a certification made under subsection 

(d)— 

(A) at the time such certification is made, if the worker was partially or 

totally separated from the adversely affected employment before such certification, or— 

(B) at the time of the total or partial separation of the worker from the 

adversely affected employment, if subparagraph (A) does not apply. 

(3) NEWSPAPERS; WEBSITE.—The Secretary shall publish notice of the benefits 

available under this part to workers covered by each certification made under 

subsection (d) in newspapers of general circulation in the areas in which such 

workers reside and shall make such information available on the website of the 

Department of Labor. 


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SEC. 426. PROGRAM BENEFITS. 

(a) CLIMATE CHANGE ADJUSTMENT ALLOWANCE.— 

(1) ELIGIBILITY.—Payment of a climate change adjustment allowance shall be 

made to an adversely affected worker covered by a certification under section 

425(b) who files an application for such allowance for any week of unemployment which begins on or after the date of such certification, if the following conditions are met: 

(A) Such worker’s total or partial separation before the worker’s application under this part occurred— 

(i) on or after the date, as specified in the certification under which 

the worker is covered, on which total or partial separation began or 

threatened to begin in the adversely affected employment; 

(ii) before the expiration of the 2-year period beginning on the date 

on which the determination under section 425(d) was made; and 

(iii) before the termination date, if any, determined pursuant to section 425(d)(3). 

(B) Such worker had, in the 52-week period ending with the week in 

which such total or partial separation occurred, at least 26 weeks of fulltime employment or 1,040 hours of part time employment in adversely affected employment, or, if data with respect to weeks of employment are not 

available, equivalent amounts of employment computed under regulations 

prescribed by the Secretary. For the purposes of this paragraph, any week 

in which such worker— 

(i) is on employer-authorized leave for purposes of vacation, sickness, 

injury, maternity, or inactive duty or active duty military service for 

training; 

(ii) does not work because of a disability that is compensable under 

a workmen’s compensation law or plan of a State or the United States; 

(iii) had his employment interrupted in order to serve as a full-time 

representative of a labor organization in such firm; or 

(iv) is on call-up for purposes of active duty in a reserve status in the 

Armed Forces of the United States, provided such active duty is ‘‘Federal service’’ as defined in section 8521(a)(1) of title 5, United States 

Code, 

shall be treated as a week of employment. 

(C) Such worker is enrolled in a training program approved by the Secretary under subsection (b)(2). 

(2) INELIGIBILITY FOR CERTAIN OTHER BENEFITS.—An adversely affected worker receiving a payment under this section shall be ineligible to receive any other 

form of unemployment insurance for the period in which such worker is receiving a climate change adjustment allowance under this section. 

(3) REVOCATION.—If— 

(A) the Secretary determines that— 

(i) the adversely affected worker— 

(I) has failed to begin participation in the training program the 

enrollment in which meets the requirement of paragraph (1)(C); or 

(II) has ceased to participate in such training program before 

completing such training program; and 

(ii) there is no justifiable cause for such failure or cessation; or 

(B) the certification made with respect to such worker under section 

425(d) is revoked under paragraph (3) of such section, 

no adjustment allowance may be paid to the adversely affected worker under 

this part for the week in which such failure, cessation, or revocation occurred, 

or any succeeding week, until the adversely affected worker begins or resumes 

participation in a training program approved by the Secretary under section 

(b)(2). 

(4) WAIVERS OF TRAINING REQUIREMENTS.—The Secretary may issue a written 

statement to an adversely affected worker waiving the requirement to be enrolled in training described in subsection (b)(2) if the Secretary determines that 

it is not feasible or appropriate for the worker, because of 1 or more of the following reasons: 

(A) RECALL.—The worker has been notified that the worker will be recalled by the employer from which the separation occurred. 

(B) MARKETABLE SKILLS.— 

(i) IN GENERAL.—The worker possesses marketable skills for suitable 

employment (as determined pursuant to an assessment of the worker, 

which may include the profiling system under section 303(j) of the Social Security Act (42 U.S.C. 503(j)), carried out in accordance with 


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guidelines issued by the Secretary) and there is a reasonable expectation of employment at equivalent wages in the foreseeable future. 

(ii) MARKETABLE SKILLS DEFINED.—For purposes of clause (i), the 

term ‘‘marketable skills’’ may include the possession of a postgraduate 

degree from an institution of higher education (as defined in section 

102 of the Higher Education Act of 1965 (20 U.S.C. 1002)) or an equivalent institution, or the possession of an equivalent postgraduate certification in a specialized field. 

(C) RETIREMENT.—The worker is within 2 years of meeting all requirements for entitlement to either— 

(i) old-age insurance benefits under title II of the Social Security Act 

(42 U.S.C. 401 et seq.) (except for application therefor); or 

(ii) a private pension sponsored by an employer or labor organization. 

(D) HEALTH.—The worker is unable to participate in training due to the 

health of the worker, except that a waiver under this subparagraph shall 

not be construed to exempt a worker from requirements relating to the 

availability for work, active search for work, or refusal to accept work under 

Federal or State unemployment compensation laws. 

(E) ENROLLMENT UNAVAILABLE.—The first available enrollment date for 

the training of the worker is within 60 days after the date of the determination made under this paragraph, or, if later, there are extenuating circumstances for the delay in enrollment, as determined pursuant to guidelines issued by the Secretary. 

(F) TRAINING NOT AVAILABLE.—Training described in subsection (b)(2) is 

not reasonably available to the worker from either governmental agencies 

or private sources (which may include area career and technical education 

schools, as defined in section 3 of the Carl D. Perkins Career and Technical 

Education Act of 2006 (20 U.S.C. 2302), and employers), no training that 

is suitable for the worker is available at a reasonable cost, or no training 

funds are available. 

(5) WEEKLY AMOUNTS.—The climate change adjustment allowance payable to 

an adversely affected worker for a week of unemployment shall be an amount 

equal to 70 percent of the average weekly wage of such worker, but in no case 

shall such amount exceed the average weekly wage for all workers in the State 

where the adversely affected worker resides. 

(6) MAXIMUM DURATION OF BENEFITS.—An eligible worker may receive a climate change adjustment allowance under this subsection for a period of not 

longer than 156 weeks. 

(b) EMPLOYMENT SERVICES AND TRAINING.— 

(1) INFORMATION AND EMPLOYMENT SERVICES.—The Secretary shall make 

available, directly or through agreements with the States under section 427(a) 

to adversely affected workers covered by a certification under section 425(a) the 

following information and employment services: 

(A) Comprehensive and specialized assessment of skill levels and service 

needs, including through— 

(i) diagnostic testing and use of other assessment tools; and 

(ii) in-depth interviewing and evaluation to identify employment barriers and appropriate employment goals. 

(B) Development of an individual employment plan to identify employment goals and objectives, and appropriate training to achieve those goals 

and objectives. 

(C) Information on training available in local and regional areas, information on individual counseling to determine which training is suitable training, and information on how to apply for such training. 

(D) Information on training programs and other services provided by a 

State pursuant to title I of the Workforce Investment Act of 1998 and available in local and regional areas, information on individual counseling to determine which training is suitable training, and information on how to 

apply for such training. 

(E) Information on how to apply for financial aid, including referring 

workers to educational opportunity centers described in section 402F of the 

Higher Education Act of 1965 (20 U.S.C. 1070a–16), where applicable, and 

notifying workers that the workers may request financial aid administrators at institutions of higher education (as defined in section 102 of such 

Act (20 U.S.C. 1002)) to use the administrators’ discretion under section 

479A of such Act (20 U.S.C. 1087tt) to use current year income data, rather 

than preceding year income data, for determining the amount of need of the 

workers for Federal financial assistance under title IV of such Act (20 

U.S.C. 1070 et seq.). 


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(F) Short-term prevocational services, including development of learning 

skills, communications skills, interviewing skills, punctuality, personal 

maintenance skills, and professional conduct to prepare individuals for employment or training. 

(G) Individual career counseling, including job search and placement 

counseling, during the period in which the individual is receiving a climate 

change adjustment allowance or training under this part, and after receiving such training for purposes of job placement. 

(H) Provision of employment statistics information, including the provision of accurate information relating to local, regional, and national labor 

market areas, including— 

(i) job vacancy listings in such labor market areas; 

(ii) information on jobs skills necessary to obtain jobs identified in job 

vacancy listings described in subparagraph (A); 

(iii) information relating to local occupations that are in demand and 

earnings potential of such occupations; and 

(iv) skills requirements for local occupations described in subparagraph (C). 

(I) Information relating to the availability of supportive services, including services relating to child care, transportation, dependent care, housing 

assistance, and need-related payments that are necessary to enable an individual to participate in training. 

(2) TRAINING.— 

(A) APPROVAL OF AND PAYMENT FOR TRAINING.—If the Secretary determines, with respect to an adversely affected worker that— 

(i) there is no suitable employment (which may include technical and 

professional employment) available for an adversely affected worker; 

(ii) the worker would benefit from appropriate training; 

(iii) there is a reasonable expectation of employment following completion of such training; 

(iv) training approved by the Secretary is reasonably available to the 

worker from either governmental agencies or private sources (including 

area career and technical education schools, as defined in section 3 of 

the Carl D. Perkins Career and Technical Education Act of 2006, and 

employers); 

(v) the worker is qualified to undertake and complete such training; 

and 

(vi) such training is suitable for the worker and available at a reasonable cost, 

the Secretary shall approve such training for the worker. Upon such approval, the worker shall be entitled to have payment of the costs of such 

training (subject to the limitations imposed by this section) paid on the 

worker’s behalf by the Secretary directly or through a voucher system. 

(B) DISTRIBUTION.—The Secretary shall establish procedures for the distribution of the funds to States to carry out the training programs approved 

under this paragraph, and shall make an initial distribution of the funds 

made available as soon as practicable after the beginning of each fiscal 

year. 

(C) ADDITIONAL RULES REGARDING APPROVAL OF AND PAYMENT FOR TRAINING.— 

(i) For purposes of applying subparagraph (A)(iii), a reasonable expectation of employment does not require that employment opportunities 

for a worker be available, or offered, immediately upon the completion 

of training approved under such subparagraph. 

(ii) If the costs of training an adversely affected worker are paid by 

the Secretary under subparagraph (A), no other payment for such costs 

may be made under any other provision of Federal law. No payment 

may be made under subparagraph (A) of the costs of training an adversely affected worker or an adversely affected incumbent worker if 

such costs— 

(I) have already been paid under any other provision of Federal 

law; or 

(II) are reimbursable under any other provision of Federal law 

and a portion of such costs have already been paid under such 

other provision of Federal law. 

The provisions of this clause shall not apply to, or take into account, 

any funds provided under any other provision of Federal law which are 

used for any purpose other than the direct payment of the costs incurred in training a particular adversely affected worker, even if such 


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use has the effect of indirectly paying or reducing any portion of the 

costs involved in training the adversely affected worker. 

(D) TRAINING PROGRAMS.—The training programs that may be approved 

under subparagraph (A) include— 

(i) employer-based training, including— 

(I) on-the-job training if approved by the Secretary under subsection (c); and 

(II) joint labor-management apprenticeship programs; 

(ii) any training program provided by a State pursuant to title I of 

the Workforce Investment Act of 1998; 

(iii) any training program approved by a private industry council established under section 102 of such Act; 

(iv) any programs in career and technical education described in section 3(5) of the Carl D. Perkins Career and Technical Education Act of 

2006; 

(v) any program of remedial education; 

(vi) any program of prerequisite education or coursework required to 

enroll in training that may be approved under this paragraph; 

(vii) any training program for which all, or any portion, of the costs 

of training the worker are paid— 

(I) under any Federal or State program other than this part; or 

(II) from any source other than this part; 

(viii) any training program or coursework at an accredited institution 

of higher education (described in section 102 of the Higher Education 

Act of 1965 (20 U.S.C. 1002)), including a training program or 

coursework for the purpose of— 

(I) obtaining a degree or certification; or 

(II) completing a degree or certification that the worker had previously begun at an accredited institution of higher education; and 

(ix) any other training program approved by the Secretary. 

(3) SUPPLEMENTAL ASSISTANCE.—The Secretary may, as appropriate, authorize 

supplemental assistance that is necessary to defray reasonable transportation and 

subsistence expenses for separate maintenance in a case in which training for a 

worker is provided in a facility that is not within commuting distance of the regular 

place of residence of the worker. 

(c) ON-THE-JOB TRAINING REQUIREMENTS.— 

(1) IN GENERAL.—The Secretary may approve on-the-job training for any adversely affected worker if— 

(A) the Secretary determines that on-the-job training— 

(i) can reasonably be expected to lead to suitable employment with 

the employer offering the on-the-job training; 

(ii) is compatible with the skills of the worker; 

(iii) includes a curriculum through which the worker will gain the 

knowledge or skills to become proficient in the job for which the worker 

is being trained; and 

(iv) can be measured by benchmarks that indicate that the worker 

is gaining such knowledge or skills; and 

(B) the State determines that the on-the-job training program meets the 

requirements of clauses (iii) and (iv) of subparagraph (A). 

(2) MONTHLY PAYMENTS.—The Secretary shall pay the costs of on-the-job 

training approved under paragraph (1) in monthly installments. 

(3) CONTRACTS FOR ON-THE-JOB TRAINING.— 

(A) IN GENERAL.—The Secretary shall ensure, in entering into a contract 

with an employer to provide on-the-job training to a worker under this subsection, that the skill requirements of the job for which the worker is being 

trained, the academic and occupational skill level of the worker, and the 

work experience of the worker are taken into consideration. 

(B) TERM OF CONTRACT.—Training under any such contract shall be limited to the period of time required for the worker receiving on-the-job training to become proficient in the job for which the worker is being trained, 

but may not exceed 156 weeks in any case. 

(4) EXCLUSION OF CERTAIN EMPLOYERS.—The Secretary shall not enter into a 

contract for on-the-job training with an employer that exhibits a pattern of failing to provide workers receiving on-the-job training from the employer with— 

(A) continued, long-term employment as regular employees; and 

(B) wages, benefits, and working conditions that are equivalent to the 

wages, benefits, and working conditions provided to regular employees who 

have worked a similar period of time and are doing the same type of work 

as workers receiving on-the-job training from the employer. 


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(d) ADMINISTRATIVE AND EMPLOYMENT SERVICES FUNDING.— (1) ADMINISTRATIVE FUNDING.—In addition to any funds made available to a 

State to carry out this section for a fiscal year, the State shall receive for the 

fiscal year a payment in an amount that is equal to 15 percent of the amount 

of such funds and shall— 

(A) use not more than 2⁄3 of such payment for the administration of the 

climate change adjustment assistance for workers program under this part, 

including for— 

(i) processing waivers of training requirements under subsection 

(a)(4); and 

(ii) collecting, validating, and reporting data required under this part; 

and 

(B) use not less than 1⁄3 of such payment for information and employment 

services under subsection (b)(1). 

(2) EMPLOYMENT SERVICES FUNDING.— (A) IN GENERAL.—In addition to any funds made available to a State to 

carry out subsection (b)(2) and the payment under paragraph (1) for a fiscal 

year, the Secretary shall provide to the State for the fiscal year a reasonable payment for the purpose of providing employment and services under 

subsection (b)(1). 

(B) VOLUNTARY RETURN OF FUNDS.—A State that receives a payment 

under subparagraph (A) may decline or otherwise return such payment to 

the Secretary. 

(e) JOB SEARCH ALLOWANCES.—The Secretary of Labor may provide adversely affected workers a one-time job search allowance in accordance with regulations prescribed by the Secretary. Any job search allowance provided shall be available only 

under the following circumstances and conditions: 

(1) The worker is no longer eligible for the climate change adjustment allowance under subsection (a) and has completed the training program required by 

subsection (a)(1)(E). 

(2) The Secretary determines that the worker cannot reasonably be expected 

to secure suitable employment in the commuting area in which the worker resides. 

(3) An allowance granted shall provide reimbursement to the worker of all 

necessary job search expenses as prescribed by the Secretary in regulations. 

Such reimbursement under this subsection may not exceed $1,500 for any worker. 

(f) RELOCATION ALLOWANCE AUTHORIZED.— 

(1) IN GENERAL.—Any adversely affected worker covered by a certification 

issued under section 425 may file an application for a relocation allowance with 

the Secretary, and the Secretary may grant the relocation allowance, subject to 

the terms and conditions of this subsection. 

(2) CONDITIONS FOR GRANTING ALLOWANCE.—A relocation allowance may be 

granted if all of the following terms and conditions are met: 

(A) ASSIST AN ADVERSELY AFFECTED WORKER.—The relocation allowance 

will assist an adversely affected worker in relocating within the United 

States. 

(B) LOCAL EMPLOYMENT NOT AVAILABLE.—The Secretary determines that 

the worker cannot reasonably be expected to secure suitable employment in 

the commuting area in which the worker resides. 

(C) TOTAL SEPARATION.—The worker is totally separated from employment at the time relocation commences. 

(D) SUITABLE EMPLOYMENT OBTAINED.—The worker— 

(i) has obtained suitable employment affording a reasonable expectation of long-term duration in the area in which the worker wishes to 

relocate; or 

(ii) has obtained a bona fide offer of such employment. 

(E) APPLICATION.—The worker filed an application with the Secretary at 

such time and in such manner as the Secretary shall specify by regulation. 

(3) AMOUNT OF ALLOWANCE.—The relocation allowance granted to a worker 

under paragraph (1) includes— 

(A) all reasonable and necessary expenses (including, subsistence and 

transportation expenses at levels not exceeding amounts prescribed by the 

Secretary in regulations) incurred in transporting the worker, the worker’s 

family, and household effects; and 

(B) a lump sum equivalent to 3 times the worker’s average weekly wage, 

up to a maximum payment of $1,500. 

(4) LIMITATIONS.—A relocation allowance may not be granted to a worker unless— 


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(A) the relocation occurs within 182 days after the filing of the application for relocation assistance; or 

(B) the relocation occurs within 182 days after the conclusion of training, 

if the worker entered a training program approved by the Secretary under 

subsection (b)(2). 

(g) HEALTH INSURANCE CONTINUATION.—Not later than 1 year after the date of 

enactment of this part, the Secretary of Labor shall prescribe regulations to provide, 

for the period in which an adversely affected worker is participating in a training 

program described in subsection (b)(2), 80 percent of the monthly premium of any 

health insurance coverage that an adversely affected worker was receiving from 

such worker’s employer prior to the separation from employment described in section 425(b), to be paid to any health care insurance plan designated by the adversely 

affected worker receiving an allowance under this section. 

SEC. 427. GENERAL PROVISIONS. 

(a) AGREEMENTS WITH STATES.— 

(1) IN GENERAL.—The Secretary is authorized on behalf of the United States 

to enter into an agreement with any State, or with any State agency (referred 

to in this section as ‘‘cooperating States’’ and ‘‘cooperating States agencies’’ respectively). Under such an agreement, the cooperating State agency— 

(A) as agent of the United States, shall receive applications for, and shall 

provide, payments on the basis provided in this part; 

(B) in accordance with paragraph (6), shall make available to adversely 

affected workers covered by a certification under section 425(d) the employment services described in section 426(b)(1); 

(C) shall make any certifications required under section 425(d); 

(D) shall otherwise cooperate with the Secretary and with other State and 

Federal agencies in providing payments and services under this part. 

Each agreement under this section shall provide the terms and conditions upon 

which the agreement may be amended, suspended, or terminated. 

(2) FORM AND MANNER OF DATA.—Each agreement under this section shall— 

(A) provide the Secretary with the authority to collect any data the Secretary determines necessary to meet the requirements of this part; and 

(B) specify the form and manner in which any such data requested by the 

Secretary shall be reported. 

(3) RELATIONSHIP TO UNEMPLOYMENT INSURANCE.—Each agreement under 

this section shall provide that an adversely affected worker receiving a climate 

change adjustment allowance under this part shall not be eligible for unemployment insurance otherwise payable to such worker under the laws of the State. 

(4) REVIEW.—A determination by a cooperating State agency with respect to 

entitlement to program benefits under an agreement is subject to review in the 

same manner and to the same extent as determinations under the applicable 

State law and only in that manner and to that extent. 

(5) COORDINATION.—Any agreement entered into under this section shall provide for the coordination of the administration of the provisions for employment 

services, training, and supplemental assistance under section 426 and under 

title I of the Workforce Investment Act of 1998 upon such terms and conditions 

as are established by the Secretary in consultation with the States and set forth 

in such agreement. Any agency of the State jointly administering such provisions under such agreement shall be considered to be a cooperating State agency for purposes of this part. 

(6) RESPONSIBILITIES OF COOPERATING AGENCIES.—Each cooperating State 

agency shall, in carrying out paragraph (1)(B)— 

(A) advise each worker who applies for unemployment insurance of the 

benefits under this part and the procedures and deadlines for applying for 

such benefits; 

(B) facilitate the early filing of petitions under section 425(a) for any 

workers that the agency considers are likely to be eligible for benefits under 

this part; 

(C) advise each adversely affected worker to apply for training under section 426(b) before, or at the same time, the worker applies for climate 

change adjustment allowances under section 426(a); 

(D) perform outreach to, intake of, and orientation for adversely affected 

workers and adversely affected incumbent workers covered by a certification under section 426(a) with respect to assistance and benefits available 

under this part; 

(E) make employment services described in section 426(b)(1) available to 

adversely affected workers and adversely affected incumbent workers covered by a certification under section 425(d) and, if funds provided to carry 


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out this part are insufficient to make such services available, make arrangements to make such services available through other Federal programs; and 

(F) provide the benefits and reemployment services under this part in a 

manner that is necessary for the proper and efficient administration of this 

part, including the use of state agency personnel employed in accordance 

with a merit system of personnel administration standards, including— 

(i) making determinations of eligibility for, and payment of, climate 

change readjustment allowances and health care benefit replacement 

amounts; 

(ii) developing recommendations regarding payments as a bridge to 

retirement and lump sum payments to pension plans in accordance 

with this subsection; and 

(iii) the provision of reemployment services to eligible workers, including referral to training services. 

(7) In order to promote the coordination of workforce investment activities in 

each State with activities carried out under this part, any agreement entered 

into under this section shall provide that the State shall submit to the Secretary, in such form as the Secretary may require, the description and information described in paragraphs (8) and (14) of section 112(b) of the Workforce Investment Act of 1998 (29 U.S.C. 2822(b)) and a description of the State’s rapid 

response activities under section 221(a)(2)(A). 

(8) CONTROL MEASURES.— 

(A) IN GENERAL.—The Secretary shall require each cooperating State and 

cooperating State agency to implement effective control measures and to effectively oversee the operation and administration of the climate change adjustment assistance program under this part, including by means of monitoring the operation of control measures to improve the accuracy and timeliness of the data being collected and reported. 

(B) DEFINITION.—For purposes of subparagraph (A), the term ‘‘control 

measures’’ means measures that— 

(i) are internal to a system used by a State to collect data; and 

(ii) are designed to ensure the accuracy and verifiability of such data. 

(9) DATA REPORTING.— 

(A) IN GENERAL.—Any agreement entered into under this section shall require the cooperating State or cooperating State agency to report to the Secretary on a quarterly basis comprehensive performance accountability data, 

to consist of— 

(i) the core indicators of performance described in subparagraph 

(B)(i); 

(ii) the additional indicators of performance described in subparagraph (B)(ii), if any; and 

(iii) a description of efforts made to improve outcomes for workers 

under the climate change adjustment assistance program. 

(B) CORE INDICATORS DESCRIBED.— 

(i) IN GENERAL.—The core indicators of performance described in this 

subparagraph are— 

(I) the percentage of workers receiving benefits under this part 

who are employed during the second calendar quarter following the 

calendar quarter in which the workers cease receiving such benefits; 

(II) the percentage of such workers who are employed in each of 

the third and fourth calendar quarters following the calendar quarter in which the workers cease receiving such benefits; and 

(III) the earnings of such workers in each of the third and fourth 

calendar quarters following the calendar quarter in which the 

workers cease receiving such benefits. 

(ii) ADDITIONAL INDICATORS.—The Secretary and a cooperating State 

or cooperating State agency may agree upon additional indicators of 

performance for the climate change adjustment assistance program 

under this part, as appropriate. 

(C) STANDARDS WITH RESPECT TO RELIABILITY OF DATA.—In preparing the 

quarterly report required by subparagraph (A), each cooperating State or 

cooperating State agency shall establish procedures that are consistent with 

guidelines to be issued by the Secretary to ensure that the data reported 

are valid and reliable. 

(10) VERIFICATION OF ELIGIBILITY FOR PROGRAM BENEFITS.— 

(A) IN GENERAL.—An agreement under this section shall provide that the 

State shall periodically redetermine that a worker receiving benefits under 


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this part who is not a citizen or national of the United States remains in 

a satisfactory immigration status. Once satisfactory immigration status has 

been initially verified through the immigration status verification system 

described in section 1137(d) of the Social Security Act (42 U.S.C. 1320b7(d)) for purposes of establishing a worker’s eligibility for unemployment 

compensation, the State shall reverify the worker’s immigration status if 

the documentation provided during initial verification will expire during the 

period in which that worker is potentially eligible to receive benefits under 

this part. The State shall conduct such redetermination in a timely manner, 

utilizing the immigration status verification system described in section 

1137(d) of the Social Security Act (42 U.S.C. 1320b-7(d)). 

(B) PROCEDURES.—The Secretary shall establish procedures to ensure the 

uniform application by the States of the requirements of this paragraph. 

(b) ADMINISTRATION ABSENT STATE AGREEMENT.— (1) In any State where there is no agreement in force between a State or its 

agency under subsection (a), the Secretary shall promulgate regulations for the 

performance of all necessary functions under section 426, including provision for 

a fair hearing for any worker whose application for payments is denied. 

(2) A final determination under paragraph (1) with respect to entitlement to 

program benefits under section 426 is subject to review by the courts in the 

same manner and to the same extent as is provided by section 205(g) of the Social Security Act (42 U.S.C. 405(g)). 

(c) PROHIBITION ON CONTRACTING WITH PRIVATE ENTITIES.—Neither the Secretary 

nor a State may contract with any private for-profit or nonprofit entity for the administration of the climate change adjustment assistance program under this part. 

(d) PAYMENT TO THE STATES.— 

(1) IN GENERAL.—The Secretary shall from time to time certify to the Secretary of the Treasury for payment to each cooperating State the sums necessary to enable such State as agent of the United States to make payments 

provided for by this part. 

(2) RESTRICTION.—All money paid a State under this subsection shall be used 

solely for the purposes for which it is paid; and money so paid which is not used 

for such purposes shall be returned, at the time specified in the agreement 

under this section, to the Secretary of the Treasury. 

(3) BONDS.—Any agreement under this section may require any officer or employee of the State certifying payments or disbursing funds under the agreement or otherwise participating in the performance of the agreement, to give 

a surety bond to the United States in such amount as the Secretary may deem 

necessary, and may provide for the payment of the cost of such bond from funds 

for carrying out the purposes of this part. 

(e) LABOR STANDARDS.— 

(1) PROHIBITION ON DISPLACEMENT.—An individual in an apprenticeship program or on-the-job training program under this part shall not displace (including a partial displacement, such as a reduction in the hours of non-overtime 

work, wages, or employment benefits) any employed employee. 

(2) PROHIBITION ON IMPAIRMENT OF CONTRACTS.—An apprenticeship program 

or on-the-job raining program under this Act shall not impair an existing contract for services or collective bargaining agreement, and no such activity that 

would be inconsistent with the terms of a collective bargaining agreement shall 

be undertaken without the written concurrence of the labor organization and 

employer concerned. 

(3) ADDITIONAL STANDARDS.—The Secretary, or a State acting under an agreement described in subsection (a) may pay the costs of on-the-job training, notwithstanding any other provision of this section, only if— 

(A) in the case of training which would be inconsistent with the terms 

of a collective bargaining agreement, the written concurrence of the labor 

organization concerned has been obtained; 

(B) the job for which such adversely affected worker is being trained is 

not being created in a promotional line that will infringe in any way upon 

the promotional opportunities of currently employed individuals; 

(C) such training is not for the same occupation from which the worker 

was separated and with respect to which such worker’s group was certified 

pursuant to section 425(d); 

(D) the employer is provided reimbursement of not more than 50 percent 

of the wage rate of the participant, for the cost of providing the training 

and additional supervision related to the training; and 

(E) the employer has not received payment under with respect to any 

other on-the-job training provided by such employer which failed to meet 

the requirements of subparagraphs (A) through (D). 


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(f) DEFINITIONS.—As used in this part the following definitions apply: 

(1) The term ‘‘adversely affected employment’’ means employment at an employment site, if workers at such site are eligible to apply for adjustment assistance under this part. 

(2) The term ‘‘adversely affected worker’’ means an individual who has been 

totally or partially separated from employment and is eligible to apply for adjustment assistance under this part. 

(3) The term ‘‘average weekly wage’’ means 1⁄13 of the total wages paid to an 

individual in the quarter in which the individual’s total wages were highest 

among the first 4 of the last 5 completed calendar quarters immediately before 

the quarter in which occurs the week with respect to which the computation is 

made. Such week shall be the week in which total separation occurred, or, in 

cases where partial separation is claimed, an appropriate week, as defined in 

regulations prescribed by the Secretary. 

(4) The term ‘‘average weekly hours’’ means the average hours worked by the 

individual (excluding overtime) in the employment from which he has been or 

claims to have been separated in the 52 weeks (excluding weeks during which 

the individual was sick or on vacation) preceding the week specified in the last 

sentence of paragraph (4). 

(5) The term ‘‘benefit period’’ means, with respect to an individual— 

(A) the benefit year and any ensuing period, as determined under applicable State law, during which the individual is eligible for regular compensation, additional compensation, or extended compensation; or 

(B) the equivalent to such a benefit year or ensuing period provided for 

under the applicable Federal unemployment insurance law. 

(6) The term ‘‘consumer goods manufacturing’’ means the electrical equipment, appliance, and component manufacturing industry and transportation 

equipment manufacturing. 

(7) The term ‘‘employment site’’ means a single facility or site of employment. 

(8) The term ‘‘energy-intensive manufacturing industries’’ means all industrial sectors, entities, or groups of entities that meet the energy or greenhouse 

gas intensity criteria in section 765(b)(2)(A)(i) of the Clean Air Act based on the 

most recent data available. 

(9) The term ‘‘energy producing and transforming industries’’ means the coal 

mining industry, oil and gas extraction, electricity power generation, transmission and distribution, and natural gas distribution. 

(10) The term ‘‘industries dependent on energy industries’’ means rail transportation and pipeline transportation. 

(11) The term ‘‘on-the-job training’’ means training provided by an employer 

to an individual who is employed by the employer. 

(12) The terms ‘‘partial separation’’ and ‘‘partially separated’’ refer, with respect to an individual who has not been totally separated, that such individual 

has had— 

(A) his or her hours of work reduced to 80 percent or less of his average 

weekly hours in adversely affected employment; and 

(B) his or her wages reduced to 80 percent or less of his average weekly 

wage in such adversely affected employment. 

(13) The term ‘‘public agency’’ means a department or agency of a State or 

political subdivision of a State or of the Federal government. 

(14) The term ‘‘Secretary’’ means the Secretary of Labor. 

(15) The term ‘‘service workers’’ means workers supplying support or auxiliary services to an employment site. 

(16) The term ‘‘State’’ includes the District of Columbia and the Commonwealth of Puerto Rico: and the term ‘‘United States’’ when used in the geographical sense includes such Commonwealth. 

(17) The term ‘‘State agency’’ means the agency of the State which administers the State law. 

(18) The term ‘‘State law’’ means the unemployment insurance law of the 

State approved by the Secretary of Labor under section 3304 of the Internal 

Revenue Code of 1954. 

(19) The terms ‘‘total separation’’ and ‘‘totally separated’’ refer to the layoff 

or severance of an individual from employment with an employer in which adversely affected employment exists. 

(20) The term ‘‘unemployment insurance’’ means the unemployment compensation payable to an individual under any State law or Federal unemployment compensation law, including chapter 85 of title 5, United States Code, and 

the Railroad Unemployment Insurance Act. The terms ‘‘regular compensation’’, 

‘‘additional compensation’’, and ‘‘extended compensation’’ have the same respective meanings that are given them in section 205(2), (3), and (4) of the FederalVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00243 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 

note.) 

(21) The term ‘‘week’’ means a week as defined in the applicable State law. 

(22) The term ‘‘week of unemployment’’ means a week of total, part-total, or 

partial unemployment as determined under the applicable State law or Federal 

unemployment insurance law. 

(g) SPECIAL RULE WITH RESPECT TO MILITARY SERVICE.— (1) IN GENERAL.—Notwithstanding any other provision of this part, the Secretary may waive any requirement of this part that the Secretary determines 

is necessary to ensure that an adversely affected worker who is a member of 

a reserve component of the Armed Forces and serves a period of duty described 

in paragraph (2) is eligible to receive a climate change adjustment allowance, 

training, and other benefits under this part in the same manner and to the 

same extent as if the worker had not served the period of duty. 

(2) PERIOD OF DUTY DESCRIBED.—An adversely affected worker serves a period 

of duty described in this paragraph if, before completing training under this 

part, the worker— 

(A) serves on active duty for a period of more than 30 days under a call 

or order to active duty of more than 30 days; or 

(B) in the case of a member of the Army National Guard of the United 

States or Air National Guard of the United States, performs full-time National Guard duty under section 502(f) of title 32, United States Code, for 

30 consecutive days or more when authorized by the President or the Secretary of Defense for the purpose of responding to a national emergency declared by the President and supported by Federal funds. 

(h) FRAUD AND RECOVERY OF OVERPAYMENTS.— 

(1) RECOVERY OF PAYMENTS TO WHICH AN INDIVIDUAL WAS NOT ENTITLED.—If 

the Secretary or a court of competent jurisdiction determines that any person 

has received any payment under this part to which the individual was not entitled, such individual shall be liable to repay such amount to the Secretary, as 

the case may be, except that the Secretary shall waive such repayment if such 

agency or the Secretary determines that— 

(A) the payment was made without fault on the part of such individual; 

and 

(B) requiring such repayment would cause a financial hardship for the individual (or the individual’s household, if applicable) when taking into consideration the income and resources reasonably available to the individual 

(or household) and other ordinary living expenses of the individual (or 

household). 

(2) MEANS OF RECOVERY.—Unless an overpayment is otherwise recovered, or 

waived under paragraph (1), the Secretary shall recover the overpayment by deductions from any sums payable to such person under this part, under any Federal unemployment compensation law or other Federal law administered by the 

Secretary which provides for the payment of assistance or an allowance with respect to unemployment. Any amount recovered under this section shall be returned to the Treasury of the United States. 

(3) PENALTIES FOR FRAUD.—Any person who— 

(A) makes a false statement of a material fact knowing it to be false, or 

knowingly fails to disclose a material fact, for the purpose of obtaining or 

increasing for that person or for any other person any payment authorized 

to be furnished under this part; or 

(B) makes a false statement of a material fact knowing it to be false, or 

knowingly fails to disclose a material fact, when providing information to 

the Secretary during an investigation of a petition under section 425(c), 

shall be imprisoned for not more than one year, or fined under title 18, United 

States Code, or both, and be ineligible for any further payments under this part. 

(i) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this part. 

(j) STUDY ON OLDER WORKERS.—The Secretary shall conduct a study examine the 

circumstances of older adversely affected workers and the ability of such workers 

to access their retirement benefits. The Secretary shall transmit a report to Congress not later than 2 years after the date of enactment of this part on the findings 

of the study and the Secretary’s recommendations on how to ensure that adversely 

affected workers within 2 years of retirement are able to access their retirement 

benefits. 

ø(k) SPENDING LIMIT.—For each fiscal year, the total amount of funds disbursed 

for the purposes described in section 426 shall not exceed the amount deposited in 

that fiscal year into the Climate Change Worker Assistance Fund established under 

section ø782(j)¿ of the Clean Air Act. The annual spending limit for any succeeding 


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year shall be increased by the difference, if any, between the amount of the prior 

year’s disbursements and the spending limitation for that year. The Secretary shall 

promulgate rules to ensure that this spending limit is not exceeded. Such rules shall 

provide that workers who receive any of the benefits described in section 426 receive 

full benefits, and shall include the establishment of a waiting list for workers in the 

event that the requests for assistance exceed the spending limit.¿ 

Subtitle C—Consumer Assistance 

SEC. 431. ENERGY TAX CREDIT. 

Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code 

of 1986 is amended by inserting after section 36A the following new section: 

‘‘SEC. 36B. ENERGY TAX CREDIT. 

‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eligible individual, there shall be 

allowed as a credit against the tax imposed by this subtitle for the taxable year an 

amount equal to— 

‘‘(1) for an eligible individual with applicable income of less than $6,000, the 

phase in rate times the applicable income; 

‘‘(2) for an eligible individual with applicable income that is greater than or 

equal to $6,000 and is less than or equal to the phase down amount, the maximum energy tax credit; and 

‘‘(3) for an individual with applicable income that exceeds the phase down 

amount, an amount equal to— 

‘‘(A) the maximum energy tax credit minus; or 

‘‘(B) the difference between the individual’s applicable income and the 

phase down amount multiplied by .2. 

‘‘(b) COORDINATION WITH ENERGY REFUND RECEIVED THROUGH STATE HUMAN

SERVICE AGENCIES.—The amount described in subsection (a) shall be reduced by 1⁄12

for each month in which the individual or his or her spouse received a refund under 

section 432 of the American Clean Energy and Security Act of 2009. 

‘‘(1) The Secretary of the Treasury shall promulgate regulations that instruct 

States on how to inform adult individuals who receive a refund under section 

432 of the American Clean Energy and Security Act of 2009 of the number of 

months he or she received a refund and how such information shall be provided 

to the Internal Revenue Service. 

‘‘(2) The Secretary of the Treasury shall establish a telephone and online system that allows an individual to inquire about the number of months she or he 

received such a refund. 

‘‘(3) In the case of an individual that does not report the number of months 

a refund was provided under section 432 of the American Clean Energy and Security Act of 2009 or recorded an incorrect number of months, the Secretary of 

the Treasury shall adjust the energy tax credit based on the information received from States, provided that the Secretary of the Treasury has made a determination that the information meets a sufficient standard for accuracy. 

‘‘(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this section: 

‘‘(1) ELIGIBLE INDIVIDUAL.— 

‘‘(A) IN GENERAL.—The term ‘eligible individual’ means any individual 

other than— 

‘‘(i) any nonresident alien individual; 

‘‘(ii) any individual with respect to whom a deduction under section 

151 is allowable to another taxpayer for a taxable year beginning in the 

calendar year in which the individual’s taxable year begins; and 

‘‘(iii) an estate or trust. 

‘‘(B) IDENTIFICATION NUMBER REQUIREMENT.—Such term shall not include 

any individual who— 

‘‘(i) in the case of a return that is not a joint return, does not include 

the social security number of the individual; and 

‘‘(ii) in the case of joint return, does not include the social security 

number of at least one of the taxpayers on such return. 

For purposes of the preceding sentence, the social security number shall not 

include a TIN issued by the Internal Revenue Service. 

‘‘(2) APPLICABLE INCOME.—Applicable income means the larger of— 

‘‘(A) earned income as defined in section 32(c)(2), except that such term 

shall not include net earnings from self-employment which are not taken 

into account in computing taxable income; and 

‘‘(B) adjusted gross income. 


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‘‘(3) PHASE IN RATE.—The Secretary of the Treasury shall compute the phase 

in rates each year for the energy credit for joint returns and for returns that 

are not filed jointly with respect to each relevant number of qualifying individuals such that the phase in rate equals the maximum energy tax credit divided 

by $6,000. 

‘‘(4) MAXIMUM ENERGY TAX CREDIT.— ‘‘(A) IN GENERAL.— ‘‘(i) The maximum energy tax credit shall vary based on the number 

of individuals in the tax filing unit. 

‘‘(ii) The maximum energy tax credit for a filing unit of a particular 

size shall be equal to the average annual reduction in purchasing 

power for low-income households of that household size, as calculated 

by the Environmental Protection Agency, that results from the regulation of greenhouse gas emissions under title VII of the Clean Air Act. 

‘‘(iii) The Environmental Protection Agency, in consultation with 

other appropriate Federal agencies, shall calculate the maximum energy tax credit by August 31 of each year for the following calendar 

year using the most recent, reliable data available. 

‘‘(B) ENERGY TAX CREDIT CALCULATION.— ‘‘(i) DISTRIBUTION.—For each calendar year, the Environmental Protection Agency shall determine pursuant to subparagraph (B)(iii) the 

aggregate reduction in purchasing power among all United States 

households that results from the regulation of greenhouse gas emissions under title VII of the Clean Air Act and distribute that aggregate 

reduction in purchasing power among all United States households 

based on— 

‘‘(I) households’ share of total consumption by all households; 

‘‘(II) the carbon intensity and covered-emissions intensity of 

households’ consumption; and 

‘‘(III) the share of households’ carbon and covered-emissions consumption that is not financed by Federal benefits subject to a cost 

of living adjustment that offsets increased carbon costs. 

‘‘(ii) MAXIMUM ENERGY TAX CREDIT.—The maximum energy tax credit 

shall be equal to the arithmetic mean value of the amount allocated 

under clause (i) to households of a specified household size in the lowest income quintile. Tax filing units that include 5 or more individuals 

shall be eligible for the arithmetic mean value of the amount allocated 

under clause (i) to households that includes 5 or more individuals. 

‘‘(iii) AGGREGATE REDUCTION IN PURCHASING POWER.—For purposes of 

this section, the aggregate reduction in purchasing power shall be 

based on the projected total market value of the emissions allowances 

used to demonstrate compliance with title VII of the Clean Air Act in 

that year, adjusted to reflect costs that were not incurred by households as a result of allowances freely allocated pursuant to section 782 

of the Clean Air Act, as estimated by the Environmental Protection 

Agency, and calculated in a way generally recognized as suitable by experts in evaluating such purchasing power impacts. 

‘‘(iv) INCOME QUINTILES.—Income quintiles shall be determined by 

ranking households according to income adjusted for household size, 

and shall be constructed so that each quintile contains an equal number of people. 

‘‘(5) PHASE DOWN AMOUNT.— 

‘‘(A) In the case of an eligible individual who has no qualifying individuals, the phase down amount shall be— 

‘‘(i) $20,000 in the case of an individual who does not file a joint return; and 

‘‘(ii) $25,000 in the case of a joint return. 

‘‘(B) In the case of an eligible individual who files a joint return and has 

at least one qualifying individual— 

‘‘(i) If the eligible individual has one qualifying individual, the lowest 

income level that exceeds the phaseout amount as defined in section 

32(b)(2) at which a married couple with one qualifying child is ineligible for the earned income credit for the taxable year. 

‘‘(ii) If the eligible individual has two qualifying individuals, the lowest income level that exceeds the phaseout amount as defined in section 

32(b)(2) at which a married couple with two qualifying children is ineligible for the earned income credit for the taxable year. 

‘‘(iii) If the eligible individual claims three or more qualifying individuals, the lowest income level that exceeds the phaseout amount as deVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00246 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

hsrobinson on PROD1PC76 with HEARING
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fined in section 32(b)(2) at which a married couple with three or more 

qualifying children is ineligible for the earned income credit for the taxable year. 

‘‘(C) In the case of an eligible individual who does not file a joint return 

and has at least one individual qualifying individual— 

‘‘(i) If the eligible individual has one qualifying individual, the lowest 

income level that exceeds the phaseout amount as defined in section 

32(b)(2) at which a single individual with one qualifying child is ineligible for the earned income credit for the taxable year. 

‘‘(ii) If the eligible individual has two qualifying individuals, the lowest income level that exceeds the phaseout amount as defined in section 

32(b)(2) at which a single individual with two qualifying children is ineligible for the earned income credit for the taxable year. 

‘‘(iii) If the eligible individual has three or more qualifying individuals, the lowest income level that exceeds the phaseout amount as defined in section 32(b)(2) at which a single individual with three or more 

qualifying children is ineligible for the earned income credit for the taxable year. 

‘‘(6) QUALIFYING INDIVIDUAL.—A qualifying individual is an individual whom 

the eligible individual claims as a dependent under section 151, or as a qualifying child for the earned income credit under section 32(c)(3) or the child tax 

credit under section 24, or both. The term qualifying individual does not include— 

‘‘(A) someone claimed as a dependent under section 151 if that dependent 

is claimed as a qualifying child for the earned income tax credit or the child 

tax credit on a tax form by someone other than the eligible individual; and 

‘‘(B) the eligible individual and, if a joint return, his or her spouse. 

‘‘(7) NUMBER OF PEOPLE IN THE TAX FILING UNIT.—The number of people in 

the tax filing unit shall equal the sum of the number of qualifying individuals 

plus— 

‘‘(A) in the case of a joint return, 2; and 

‘‘(B) in the case of a return that is not filed jointly, 1. 

‘‘(d) TREATMENT OF POSSESSIONS.— 

‘‘(1) PAYMENTS TO POSSESSIONS.— 

‘‘(A) MIRROR CODE POSSESSION.—The Secretary of the Treasury shall pay 

to each possession of the United States with a mirror code tax system 

amounts equal to the loss to that possession by reason of the amendments 

made by this section. Such amounts shall be determined by the Secretary 

of the Treasury based on information provided by the Government of the 

respective possession. 

‘‘(B) OTHER POSSESSIONS.—The Secretary of the Treasury shall pay to 

each possession of the United States which does not have a mirror code tax 

system amounts estimated by the Secretary of the Treasury as being equal 

to the aggregate benefits that would have been provided to residents of 

such possession by reason of the amendments made by this section if a mirror code tax system had been in effect in such possession. The preceding 

sentence shall not apply for a given taxable year with respect to any possession of the United States unless such possession has a plan, which has been 

approved by the Secretary of the Treasury, under which such possession 

will promptly distribute such payments to residents of such possession. 

‘‘(2) COORDINATION WITH CREDIT ALLOWED AGAINST UNITED STATES INCOME

TAXES.—No credit shall be allowed against United States income taxes for any 

taxable year under this section to any person— 

‘‘(A) to whom a credit is allowed against taxes imposed by the possession 

by reason of the amendments made by this section for such taxable year; 

or 

‘‘(B) who is eligible for a payment under a plan described in paragraph 

(1)(B) with respect to such taxable year. 

‘‘(e) AMOUNT OF CREDIT TO BE DETERMINED UNDER TABLES.—The amount of the 

credit allowed by this section shall be determined under tables prescribed by the 

Secretary. 

‘‘(f) INFLATION ADJUSTMENTS.— In the case of any taxable year beginning after 

2009, dollar amounts in subsection (c)(4)(A) shall be increased by an amount equal 

to such dollar amount, multiplied by the cost-of-living adjustment determined under 

section 1(f)(3) of the Internal Revenue Code of 1986. 

‘‘(g) TREATMENT IN OTHER PROGRAMS.—The energy tax credit provided under this 

section shall not be considered income or resources for any purpose under any Federal, State, or local laws, including, but not limited to, laws relating to an income 

tax or public assistance program (including, but not limited to, health care, cash aid, 


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child care, nutrition programs, and housing assistance), and no participating State 

or political subdivision thereof shall decrease any assistance otherwise provided an 

individual or individuals because of the receipt of an energy tax credit under this 

Act.’’. 

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

(a) ENERGY REFUND PROGRAM.— 

(1) The Administrator of the Environmental Protection Agency, or the agency 

designated by the Administrator shall formulate and administer the ‘‘Energy 

Refund Program’’. 

(2) At the request of the State agency, eligible low-income households within 

the State shall receive a monthly cash energy refund equal to the estimated loss 

in purchasing power resulting from this Act. 

(b) ELIGIBILITY.— 

(1) ELIGIBLE HOUSEHOLDS.—Participation in the Energy Refund Program 

shall be limited to a household that— 

(A) the State agency determines to be participating in (i) the Supplemental Nutrition Assistance Program authorized by the Food and Nutrition 

Act of 2008 (7 U.S.C. 2011 et seq.); (ii) the Food Distribution Program on 

Indian Reservations authorized by section 4(b) of such Act (7 U.S.C. 

2013(b)); or (iii) the program for nutrition assistance in Puerto Rico or 

American Samoa under section 19 of the such Act (7 U.S.C. 2028); 

(B) has gross income that does not exceed 150 percent of the poverty line; 

or 

(C) consists of a single individual or a married couple and (i) receives the 

subsidy described in section 1860D–14 of the Social Security Act (42 U.S.C. 

1395w–114); or (ii)(I) participates in the program under section XVIII of the 

Social Security Act; and (II) meets the income requirements described in 

section 1860D–14(a)(1) or (a)(2) of such Act (42 U.S.C. 1395w–114(a)(1) or 

(a)(2)). 

(2) STREAMLINED ELIGIBILITY FOR CERTAIN BENEFICIARIES.—The Administrator, in consultation with the Secretary of Health and Human Services, the 

Commissioner of Social Security, the Railroad Retirement Board, the Secretary 

of Veterans Affairs, and the State agencies shall develop procedures to ensure 

that low-income beneficiaries of the benefit programs they administer receive 

the energy refund for which they are eligible. 

(3) LIMITATION.—Notwithstanding any provision of law, the Administrator 

shall establish procedures to ensure that individuals that qualify for the refund 

under paragraph (1)(B) and that do not participate in the Supplemental Nutrition Assistance Program are United States citizens, United States nationals, or 

individuals lawfully residing in the United States. 

(4) NATIONAL STANDARDS.—The Administrator shall establish uniform national standards of eligibility in accordance with the provisions of this section. 

No State agency shall impose any other standard or requirement as a condition 

of eligibility or refund receipt under the program. Assistance in the Energy Refund Program shall be furnished promptly to all eligible households who make 

application for such participation. 

(c) MONTHLY ENERGY REFUND AMOUNT.— 

(1) MONTHLY ENERGY REFUND.—The monthly refund under this subsection for 

households of 1, 2, 3, 4, and 5 or more members shall be equal to the maximum 

energy tax credit amount calculated under section 36B(c)(4) of the Internal Revenue Code of 1986 for each household size, divided by 12 and rounded to the 

nearest whole dollar amount. 

(2) MONTHLY ELIGIBILITY.—A household shall not be eligible for the refund 

under this section for months that the household has not established eligibility 

under subsection (b). 

(d) DELIVERY MECHANISM.— 

(1) Subject to standards and an implementation schedule set by the Administrator, the energy refund shall be provided in monthly installments via— 

(A) direct deposit into the eligible household’s designated bank account; 

(B) the State’s electronic benefit transfer system; or 

(C) another Federal or State mechanism, if such a mechanism is approved by the Administrator. 

(2) Such standards shall include— 

(A)(i) defining the required level of recipient protection regarding privacy; 

(ii) guidance on how recipients are offered choices, when relevant, about 

the delivery mechanism; 

(iii) guidance on ease of use and access to the refund, including the prohibition of fees charged to recipients for withdrawals or other services; and 


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(iv) cost-effective protections against improper accessing of the energy refund; 

(B) operating standards that provide for interoperability between States 

and law enforcement monitoring; and 

(C) other standards, as determined by the Administrator or the Administrator’s designee. 

(e) INFORMATION ABOUT REFUND PROVIDED TO HOUSEHOLDS AND INTERNAL REVENUE SERVICE.— 

(1) By January 31 of each year, for each adult that was a member of a household that received an energy refund under this section in the State during the 

prior calendar year, each State shall issue a form that conforms to standards 

established by the Secretary of the Treasury under section 36B(b) of the Internal Revenue Code of 1986, containing— 

(A) the name, address, and social security number of the adult household 

member; and 

(B) the number of months the individual was a member of a household 

that received an energy refund under this section. 

(2) States shall provide this information to the Internal Revenue Service in 

accordance to standards and regulations set forth by the Secretary of the Treasury. 

(f) ADMINISTRATION.— 

(1) IN GENERAL.—The State agency of each participating State shall assume 

responsibility for the certification of applicant households and for the issuance 

of refunds and the control and accountability thereof. 

(2) PROCEDURES.—Under standards established by the Administrator, the 

State agency shall establish procedures governing the administration of the Energy Refund Program that the State agency determines best serve households 

in the State, including households with special needs, such as households with 

elderly or disabled members, households in rural areas, homeless individuals, 

and households residing on reservations as defined in the Indian Child Welfare 

Act of 1978 and the Indian Financing Act of 1974. In carrying out this paragraph, a State agency— 

(A) shall provide timely, accurate, and fair service to applicants for, and 

participants in, the Energy Refund Program; 

(B) shall permit an applicant household to apply to participate in the program at the time that the household first contacts the State agency, and 

shall consider an application that contains the name, address, and signature of the applicant to be sufficient to constitute an application for participation; 

(C) shall screen any applicant household for the Supplemental Nutrition 

Assistance Program, the State’s medical assistance program under section 

XIX of the Social Security Act, State Childrens Health Insurance Program 

under section XXI of the Social Security Act, and a State program that provides basic assistance under a State program funded under title IV of the 

Social Security Act or with qualified State expenditures as defined in section 409(a)(7) of the Social Security Act for eligibility for the Energy Refund 

Program and, if eligible, shall enroll such applicant household in the Energy Refund Program; 

(D) shall complete certification of and provide a refund to any eligible 

household not later than thirty days following its filing of an application; 

(E) shall use appropriate bilingual personnel and materials in the administration of the program in those portions of the State in which a substantial number of members of low-income households speak a language other 

than English; and 

(F) shall utilize State agency personnel who are employed in accordance 

with the current standards for a Merit System of Personnel Administration 

or any standards later prescribed by the Office of Personnel Management 

pursuant to section 208 of the Intergovernmental Personnel Act of 1970 (42 

U.S.C. 4728) modifying or superseding such standards relating to the establishment and maintenance of personnel standards on a merit basis to make 

all tentative and final determinations of eligibility and ineligibility. 

(3) REGULATIONS.— 

(A) Except as provided in subparagraph (B) the Administrator shall issue 

such regulations consistent with this section as the Administrator deems 

necessary or appropriate for the effective and efficient administration of the 

Energy Refund Program and shall promulgate all such regulations in accordance with the procedures set forth in section 553 of title 5, United 

States Code. 


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(B) Without regard to section 553 of title 5 of such Code, the Administrator may, during the period beginning with the effective date of this section and ending two years after such date, by rule promulgate as final any 

procedures that are substantially the same as the procedures governing the 

Supplemental Nutrition Assistance Program at 7 C.F.R. 273.2, 

273.12.273.15. 

(g) TREATMENT.—The value of the refund provided under this Act shall not be considered income or resources for any purpose under any Federal, State, or local laws, 

including, but not limited to, laws relating to an income tax, or public assistance 

programs (including, but not limited to, health care, cash aid, child care, nutrition 

programs, and housing assistance) and no participating State or political subdivision 

thereof shall decrease any assistance otherwise provided an individual or individuals because of the receipt of a refund under this Act. 

(h) PROGRAM INTEGRITY.—For purposes of ensuring program integrity and complying with the requirements of the Improper Payment Information Act of 2002, the 

Administrator shall— 

(1) to the maximum extent possible rely on and coordinate with the quality 

control sample and review procedures of section 16(c)(2), (3), (4), and (5) of the 

Supplemental Nutrition Assistance Program; and 

(2) develop procedures to monitor the compliance with and accuracy of State 

agencies in providing forms to household members and the Internal Revenue 

Service under subsection (f). 

(i) DEFINITIONS.— 

(1) ADMINISTRATOR.—The term ‘‘Administrator’’ means the Administrator of 

the Environmental Protection Agency or the head of another agency designated 

by the Administrator. 

(2) ELECTRONIC BENEFIT TRANSFER SYSTEM.—The term ‘‘electronic benefit 

transfer system’’ means a system by which household benefits or refunds defined under subsection (d) are issued from and stored in a central databank via 

electronic benefit transfer cards. 

(3) GROSS INCOME.—The term ‘‘gross income’’ means the gross income of a 

household that is determined in accordance with standards and procedures established under section 5 of the Food and Nutrition Act of 2008 (7 U.S.C. 2014) 

and its implementing regulations. 

(4) HOUSEHOLD.—The term ‘‘household’’ means— 

(A)(i) except as provided in subparagraph (C), an individual or a group 

of individuals who are a household under section 3(n) of the Food and Nutrition Act of 2008 (7 U.S.C. 2012(n)); and 

(ii) a single individual or married couple that receive benefits under section 1860D–14 of the Social Security Act (42 U.S.C. 1395w–114). 

(B) The Administrator shall establish rules for providing the energy refund in an equitable and administratively simple manner to households 

where the group of individuals who live together includes a combination of 

members described in clauses (i) and (ii) of subparagraph (A), or includes 

additional members not described in clause (i) or clause (ii) of subparagraph 

(A). 

(C) The Administrator shall establish rules regarding the eligibility and 

delivery of the energy refund to groups of individuals described in section 

3(n)(4) or (5) of the Food and Nutrition Act of 2008 (7 U.S.C. 2012(n)). 

(5) POVERTY LINE.—The term ‘‘poverty line’’ has the meaning given the term 

in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 

9902(2)), including any revision required by that section. 

(6) STATE.—The term ‘‘State’’ means the 50 States, the District of Columbia, 

the Commonwealth of Puerto Rico, American Samoa, the United States Virgin 

Islands, Guam, and the Commonwealth of the Northern Mariana Islands. 

(7) STATE AGENCY.—The term ‘‘State agency’’ means an agency of State government, including the local offices thereof, that has responsibility for administration of the 1 or more federally aided public assistance programs within the 

State, and in those States where such assistance programs are operated on a 

decentralized basis, the term shall include the counterpart local agencies administering such programs. 

(8) OTHER TERMS.—Other terms not defined in this Act shall have the same 

meaning applied in the Supplemental Nutrition Assistance Program unless the 

Administrator finds for good cause that application of a particular definition 

would be detrimental to the purposes of the Energy Refund Program. 


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Subtitle D—Exporting Clean Technology 

SEC. 441. FINDINGS AND PURPOSES. 

(a) FINDINGS.—Congress finds the following: 

(1) Protecting Americans from the impacts of climate change requires global 

reductions in greenhouse gas emissions. 

(2) Although developing countries are historically least responsible for the cumulative greenhouse gas emissions that are causing climate change and continue to have very low per capita greenhouse gas emissions, their overall greenhouse gas emissions are increasing as they seek to grow their economies and 

reduce energy poverty for their populations. 

(3) Many developing countries lack the financial and technical resources to 

adopt clean energy technologies and absent assistance their greenhouse gas 

emissions will continue to increase. 

(4) Investments in clean energy technology cooperation can substantially reduce global greenhouse gas emissions while providing developing countries with 

incentives to adopt policies that will address competitiveness concerns related 

to regulation of United States greenhouse gas emissions. 

(5) Investments in clean technology in developing countries will increase demand for clean energy products, open up new markets for United States companies, spur innovation, and lower costs. 

(6) Under Article 4 of the United Nations Framework Convention on Climate 

Change, developed country parties, including the United States, committed to 

‘‘take all practicable steps to promote, facilitate, and finance, as appropriate, the 

transfer of, or access to, environmentally sound technologies and know-how to 

other parties, particularly developing country parties, to enable them to implement the provisions of the Convention’’. 

(7) Under the Bali Action Plan, developed country parties to the United Nations Framework Convention on Climate Change, including the United States, 

committed to ‘‘enhanced action on the provision of financial resources and investment to support action on mitigation and adaptation and technology cooperation,’’ including, inter alia, consideration of ‘‘improved access to adequate, 

predictable, and sustainable financial resources and financial and technical support, and the provision of new and additional resources, including official and 

concessional funding for developing country parties’’. 

(b) PURPOSES.—The purposes of this subtitle are— 

(1) to provide United States assistance and leverage private resources to encourage widespread implementation, in developing countries, of activities that 

reduce, sequester, or avoid greenhouse gas emissions; and 

(2) to provide such assistance in a manner that— 

(A) encourages such countries to adopt policies and measures, including 

sector-based and cross-sector policies and measures, that substantially reduce, sequester, or avoid greenhouse gas emissions; and 

(B) promotes the successful negotiation of a global agreement to reduce 

greenhouse gas emissions under the United Nations Framework Convention 

on Climate Change. 

SEC. 442. DEFINITIONS. 

In this subtitle: 

(1) ALLOWANCE.—The term ‘‘allowance’’ means an emission allowance established under section 721 of the Clean Air Act. 

(2) APPROPRIATE CONGRESSIONAL COMMITTEES.—The term ‘‘appropriate congressional committees’’ means— 

(A) the Committees on Energy and Commerce, Foreign Affairs, and Financial Services of the House of Representatives; and 

(B) the Committees on Environment and Public Works, Energy and Natural Resources, and Foreign Relations of the Senate. 

(3) CONVENTION.—The term ‘‘Convention’’ means the United Nations Framework Convention on Climate Change, done at New York on May 9, 1992, and 

entered into force on March 21, 1994. 

(4) DEVELOPING COUNTRY.—The term ‘‘developing country’’ means a country 

eligible to receive official development assistance according to the income guidelines of the Development Assistance Committee of the Organization for Economic Cooperation and Development. 

(5) ELIGIBLE COUNTRY.—The term ‘‘eligible country’’ means a developing country that is determined by the interagency group under section 444 to be eligible 

to receive assistance from the International Clean Technology Account. 


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(6) INTERAGENCY GROUP.—The term ‘‘interagency group’’ means the group established by the President under section 443 to administer distributions from 

the International Clean Technology Account. 

(7) INTERNATIONAL CLEAN TECHNOLOGY ACCOUNT.—The term ‘‘International 

Clean Technology Account’’ means the account to which the Administrator allocates allowances under section 782(o) of the Clean Air Act. 

(8) LEAST DEVELOPED COUNTRY.—The term ‘‘least developed country’’ means 

a foreign country the United Nations has identified as among the least developed of developing countries. 

(9) QUALIFYING ACTIVITY.—The term ‘‘qualifying activity’’ means an activity 

that meets the criteria in section 445. 

(10) QUALIFYING ENTITY.—The term ‘‘qualifying entity’’ means a national, regional, or local government in, or a nongovernmental organization or private entity located or operating in, an eligible country. 

SEC. 443. GOVERNANCE. 

(a) OVERSIGHT.—The Secretary of State, or such other Federal agency head as the 

President may designate, in consultation with the interagency group established 

under subsection (b), shall oversee distributions of allowances from the International Clean Technology Account. 

(b) INTERAGENCY GROUP.—The President shall establish an interagency group to 

administer the International Clean Technology Account. The Members of the interagency group shall include— 

(1) the Secretary of State; 

(2) the Administrator of the Environmental Protection Agency; 

(3) the Secretary of Energy; 

(4) the Secretary of the Treasury; 

(5) the Administrator of the United States Agency for International Development; and 

(6) any other head of a Federal agency or executive branch appointee that the 

President may designate. 

(c) CHAIRPERSON.—The Secretary of State shall serve as the chairperson of the 

interagency group. 

(d) SUPPLEMENT NOT SUPPLANT.—Allowances distributed from the International 

Clean Technology Account shall be used to supplement, and not to supplant, any 

other Federal, State, or local resources available to carry out activities that are 

qualifying activities under this subtitle. 

SEC. 444. DETERMINATION OF ELIGIBLE COUNTRIES. 

(a) IN GENERAL.—The interagency group shall determine a country to be an eligible country for the purposes of this subtitle if a country meets the following criteria: 

(1) The country is a developing country that— 

(A) has entered into an international agreement to which the United 

States is a party, under which such country agrees to take actions to 

produce measurable, reportable, and verifiable greenhouse gas emissions 

mitigation; or 

(B) is determined by the interagency group to have in force national policies and measures that are capable of producing measurable, reportable, 

and verifiable greenhouse gas emissions mitigation. 

(2) The country has developed a nationally appropriate mitigation strategy 

that seeks to achieve substantial reductions, sequestration, or avoidance of 

greenhouse gas emissions, relative to business-as-usual levels. 

(3) Subject to subsection (b)(1), such other criteria as the President determines will serve the purposes of this subtitle or other United States national 

security, foreign policy, environmental, or economic objectives. 

(b) EXCEPTIONS.— 

(1) Subsection (a)(3) applies only to bilateral assistance under section 446(c). 

(2) The eligibility criteria in this section do not apply in the case of least developed countries receiving assistance under section 445(7) for the purpose of 

building capacity to meet such eligibility criteria. 

SEC. 445. QUALIFYING ACTIVITIES. 

Assistance under this subtitle may be provided only to qualifying entities for clean 

technology activities (including building relevant technical and institutional capacity) that contribute to substantial, measurable, reportable, and verifiable reductions, 

sequestration, or avoidance of greenhouse gas emissions including— 

(1) deployment of technologies to capture and sequester carbon dioxide emissions from electric generating units or large industrial sources (except that assistance under this subtitle for such deployment shall be limited to the cost of 


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retrofitting existing facilities with such technologies or the incremental cost of 

purchasing and installing such technologies at new facilities); 

(2) deployment of renewable electricity generation from wind, solar, 

sustainably-produced biomass, geothermal, marine, or hydrokinetic sources; 

(3) substantial increases in the efficiency of electricity transmission, distribution, and consumption; 

(4) deployment of low- or zero emissions technologies that are facing financial 

or other barriers to their widespread deployment which could be addressed 

through support under this subtitle in order to reduce, sequester, or avoid emission; 

(5) reduction in transportation sector emissions through increased transportation system and vehicle efficiency or use of transportation fuels that have 

lifecycle greenhouse gas emissions that are substantially lower than those attributable to fossil fuel-based alternatives; 

(6) reduction in black carbon emissions; or 

(7) capacity building activities, including— 

(A) developing and implementing methodologies and programs for measuring and quantifying greenhouse gas emissions and verifying emissions 

mitigation; 

(B) assessing, developing, and implementing technology and policy options for greenhouse gas emissions mitigation and avoidance of future emissions, including sector and cross-sector mitigation strategies; and 

(C) providing other forms of technical assistance to facilitate the qualification for, and receipt of, assistance under this Act. 

SEC. 446. ASSISTANCE. 

(a) IN GENERAL.—The Secretary of State, or such other Federal agency head as 

the President may designate, is authorized to provide assistance, through the distribution of allowances, from the International Clean Technology Account for qualifying activities that take place in eligible countries. 

(b) DISTRIBUTION OF ALLOWANCES.— 

(1) IN GENERAL.—The Secretary of State, or such other Federal agency head 

as the President may designate, after consultation with the interagency group, 

shall distribute allowances from the International Clean Technology Account— 

(A) in the form of bilateral assistance in accordance with paragraph (4); 

(B) to multilateral funds or institutions pursuant to the Convention or an 

agreement negotiated under the Convention; or 

(C) through some combination of the mechanisms identified in subparagraphs (A) and (B). 

(2) GLOBAL ENVIRONMENT FACILITY.—For any allowances provided to the 

Global Environment Facility pursuant to paragraph (1)(B), the President shall 

designate the Secretary of the Treasury to distribute those allowances to the 

Global Environment Facility. 

(3) DISTRIBUTION THROUGH INTERNATIONAL FUND OR INSTITUTION.—If allowances are distributed to a multilateral fund or institution, as authorized in 

paragraph (1), the Secretary of State, or such other Federal agency head as the 

President may designate, shall seek to ensure the establishment and implementation of adequate mechanisms to— 

(A) apply and enforce the criteria for determination of eligible countries 

and qualifying activities under sections 444 and 445, respectively; and 

(B) require public reporting describing the process and methodology for 

selecting the ultimate recipients of assistance and a description of each activity that received assistance, including the amount of obligations and expenditures for assistance. 

(4) BILATERAL ASSISTANCE.— 

(A) IN GENERAL.—Bilateral assistance under paragraph (1) shall be carried out by the Administrator of the United States Agency for International 

Development, in consultation with the interagency group. 

(B) LIMITATIONS.—Not more than 15 percent of allowances made available to carry out bilateral assistance under this subtitle in any year shall 

be distributed to support activities in any single country. 

(C) SELECTION CRITERIA.—Not later than 2 years after the date of enactment of this subtitle, the Administrator of the United States Agency for 

International Development, after consultation with the interagency group, 

shall develop and publish a set of criteria to be used in evaluating activities 

within eligible countries for bilateral assistance under this subtitle. 

(D) CRITERIA REQUIREMENTS.—The criteria under subparagraph (C) shall 

require that— 

(i) the activity is a qualifying activity; 


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(ii) the activity will be conducted as part of an eligible country’s nationally appropriate mitigation strategy or as part of an eligible country’s actions towards providing a nationally appropriate mitigation 

strategy to reduce, sequester, or avoid emissions being implemented by 

the eligible country; 

(iii) the activity will not have adverse effects on human health, safety, or welfare, the environment, or natural resources; 

(iv) any technologies deployed through bilateral assistance under this 

subtitle will be properly implemented and maintained; 

(v) the activity will not cause any net loss of United States jobs or 

displacement of United States production; 

(vi) costs of the activity will be shared by the host country government, private sector parties, or a multinational development bank, except that this clause does not apply to least developed countries; and 

(vii) the activity meets such other requirements as the interagency 

group determines appropriate to further the purposes of this subtitle. 

(E) CRITERIA PREFERENCES.—The criteria under subparagraph (C) shall 

give preference to activities that— 

(i) promise to achieve large-scale greenhouse gas reductions, sequestration, or avoidance at a national, sectoral or cross-sectoral level; 

(ii) have the potential to catalyze a shift within the host country towards widespread deployment of low- or zero-carbon energy technologies; 

(iii) build technical and institutional capacity and other activities 

that are unlikely to be attractive to private sector funding; or 

(iv) maximize opportunities to leverage other sources of assistance 

and catalyze private-sector investment. 

(c) MONITORING, EVALUATION, AND ENFORCEMENT.—The Secretary of State, or 

such other Federal agency head as the President may designate, in consultation 

with the interagency group, shall establish and implement a system to monitor and 

evaluate the performance of activities receiving assistance under this subtitle. The 

Secretary of State, or such other Federal agency head as the President may designate, shall have the authority to suspend or terminate assistance in whole or in 

part for an activity if it is determined that the activity is not operating in compliance with the approved proposal. 

(d) COORDINATION WITH U.S. FOREIGN ASSISTANCE.—Subject to the direction of 

the President, the Secretary of State shall, to the extent practicable, seek to align 

activities under this section with broader development, poverty alleviation, or natural resource management objectives and initiatives in the recipient country. 

(e) ANNUAL REPORTS.—Not later than March 1, 2012, and annually thereafter, the 

President shall submit to the appropriate congressional committees a report on the 

assistance provided under this subtitle during the prior fiscal year. Such report 

shall include— 

(1) a description of the amount and value of allowances distributed during the 

prior fiscal year; 

(2) a description of each activity that received assistance during the prior fiscal year, and a description of the anticipated and actual outcomes; 

(3) an assessment of any adverse effects to human health, safety, or welfare, 

the environment, or natural resources as a result of activities supported under 

this subtitle; 

(4) an assessment of the success of the assistance provided under this subtitle 

to improving the technical and institutional capacity to implement substantial 

emissions reductions; and 

(5) an estimate of the greenhouse gas emissions reductions, sequestration, or 

avoidance achieved by assistance provided under this subtitle during the prior 

fiscal year. 

Subtitle E—Adapting to Climate Change 

PART 1—DOMESTIC ADAPTATION 

Subpart A—National Climate Change Adaptation Program 

SEC. 451. NATIONAL CLIMATE CHANGE ADAPTATION PROGRAM. 

The President shall establish within the United States Global Change Research 

Program a National Climate Change Adaptation Program for the purpose of increasing the overall effectiveness of Federal climate change adaptation efforts. 


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SEC. 452. CLIMATE SERVICES. 

The Secretary of Commerce, acting through the Administrator of the National 

Oceanic and Atmospheric Administration (NOAA), shall establish within NOAA a 

National Climate Service to develop climate information, data, forecasts, and warnings at national and regional scales, and to distribute information related to climate 

impacts to State, local, and tribal governments and the public to facilitate the development and implementation of strategies to reduce society’s vulnerability to climate 

variability and change. 

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

(a) DISTRIBUTION OF ALLOWANCES.— 

(1) IN GENERAL.—Not later than September 30, 2012, and annually thereafter 

through 2050, the Administrator shall distribute allowances allocated for purposes of this subpart pursuant to section 782 of the Clean Air Act ratably 

among the State governments based on the product of— 

(A) each State’s population; and 

(B) each State’s allocation factor as determined under paragraph (2). 

(2) STATE ALLOCATION FACTORS.— 

(A) IN GENERAL.—Except as provided in subparagraph (B), the allocation 

factor for a State shall be the quotient of— 

(i) the per capita income of all individuals in the United States, divided by 

(ii) the per capita income of all individuals in such State. 

(B) LIMITATION.—If the allocation factor for a State as calculated under 

subparagraph (A) would exceed 1.2, then the allocation factor for such State 

shall be 1.2. If the allocation factor for a State as calculated under subparagraph (A) would be less than 0.8, then the allocation factor for such State 

shall be 0.8. 

(C) PER CAPITA INCOME.—For purposes of this paragraph, per capita income shall be— 

(i) determined at 2-year intervals; and 

(ii) subject to subparagraph (D), equal to the average of the annual 

per capita incomes for the most recent period of 3 consecutive years for 

which satisfactory data are available from the Department of Commerce at the time such determination is made. 

(D) REVENUE DIRECTLY RESULTING FROM A PRESIDENTIALLY DECLARED

MAJOR DISASTER.—For purposes of this paragraph, per capita income from 

one or more of the following sources shall be reduced or excluded if the Secretary of Commerce (in consultation with the Administrator and the secretaries or administrators of the departments or agencies involved) determines that the income accrues to persons as the result of a Major Disaster 

(as declared by the President of the United States) and if the Secretary 

finds that the inclusion of one or more of these income sources, in whole 

or in part, results in a transitory, rather than a sustainable, increase in a 

State’s per capita income level relative to the national average: 

(i) Property and casualty insurance (including homeowners and renters insurance). 

(ii) The National Flood Insurance Program of the Federal Emergency 

Management Agency . 

(iii) The Individual and Family Grants Program of the Federal Emergency Management Agency. 

(iv) The Disaster Housing Program of the Federal Emergency Management Agency. 

(v) The Community Development Block Grant Program of the Department of Housing and Urban Development. 

(vi) The Disaster Unemployment Assistance Program of the Department of Labor. 

(vii) Any other source determined appropriate by the Administrator. 

(b) SALE OF ALLOWANCES.—Each State receiving emission allowances under this 

section shall sell such allowances within 1 year of receipt, either directly or through 

consignment to the Administrator for auction. States shall deposit the proceeds of 

such sales within the State Energy and Environment Development (SEED) Fund established pursuant to section 131 of this Act . Emission allowances distributed 

under this section that are not sold within 1 year of receipt by a State shall be returned to the Administrator, who shall distribute such allowances to the remaining 

States ratably in accordance with the formula in subsection (a). 

(c) USE OF PROCEEDS.—States shall, in accordance with a State climate adaptation plan approved pursuant to subsection (e), use the proceeds of sales of emission 

allowances distributed under this section exclusively for the implementation of 


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projects, programs, or measures to build resilience to the impacts of climate change, 

including— 

(1) extreme weather events such as flooding and tropical cyclones; 

(2) more frequent heavy precipitation events; 

(3) water scarcity and adverse impacts on water quality; 

(4) stronger and longer heat waves; 

(5) more frequent and severe droughts; 

(6) rises in sea level; 

(7) ecosystem disruption; 

(8) increased air pollution; and 

(9) effects on public health. 

(d) PRIORITY IN PROJECTS TO REDUCE FLOOD EVENTS.—When implementing any 

project, program, or measure funded under this section and designed to reduce flood 

events, a State should consider prioritizing projects that seek to— 

(1) mitigate the destructive impacts of climate-related increases in the duration, frequency, or magnitude of rainfall or runoff, including snowmelt runoff, 

as well as hurricanes; 

(2) improve flood protection for densely populated urban areas; and 

(3) mitigate the destructive impact of ocean-related climate change effects, including effects on bays, estuaries, populated barrier islands and other ocean-related features, through a variety of means and measures, including the construction of jetties, levies, and other coastal structures in densely populated 

coastal areas impacted by climate change. 

(e) STATE CLIMATE ADAPTATION PLANS.— 

(1) IN GENERAL.—Not later than 2 years after the date of enactment of this 

Act, the Administrator, or such other Federal agency head or heads as the 

President may designate, shall promulgate regulations establishing requirements for submission and approval of State climate adaptation plans under this 

section. Receipt of emission allowances pursuant to this section shall be contingent on approval of a State climate adaptation plan meeting the requirements 

of such guidelines. 

(2) REQUIREMENTS.—Regulations promulgated under this subsection shall require, at minimum, that— 

(A) State climate adaptation plans assess and prioritize the State’s vulnerability to a broad range of impacts of climate change, based on the best 

available science; 

(B) State climate adaptation plans include an assessment of potential for 

carbon reduction through changes to land management policies (including 

enhancement, or protection, of forest carbon sinks); 

(C) State climate adaptation plans identify and prioritize specific cost-effective projects, programs, and measures to build resilience to predicted impacts of climate change; 

(D) State climate adaptation plans ensure that the State fully considers 

and undertakes, to the maximum extent practicable, initiatives that— 

(i) protect or enhance natural ecosystem functions, including protection, maintenance, or restoration of natural infrastructure such as wetlands, reefs, and barrier islands to buffer communities from floodwaters 

or storms, watershed protection to maintain water quality and groundwater recharge, or floodplain restoration to improve natural flood control capacity; or 

(ii) use non-structural approaches including practices that utilize, enhance, or mimic the natural hydrologic cycle processes of infiltration, 

evapotranspiration, and reuse; 

(E) in order to be eligible to receive emission allowances under this section, a State shall submit a revised State climate adaptation plan for approval not less frequently than every 5 years; and 

(F) State climate adaptation plans be consistent with Federal conservation and environmental laws and, to the maximum extent practicable, avoid 

environmental degradation. 

(3) COORDINATION WITH PRIOR PLANNING EFFORTS.—In promulgating regulations under this subsection, the Administrator, or such other Federal agency 

head or heads as the President may designate, shall— 

(A) draw upon lessons learned and best practices from preexisting State 

climate adaptation planning efforts; 

(B) seek to avoid duplication of such efforts; and 

(C) ensure that the plans developed under this section reflect and are 

fully consistent with State natural resources adaptation plans developed 

under section 479. 


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(f) REPORTING.—Each State receiving emission allowances under this section shall 

submit to the Administrator, or such other Federal agency head or heads as the 

President may designate, within 12 months after each receipt of such allowances 

and once every 2 years thereafter until the proceeds from the sale of emission allowances received under this section are fully expended, a report that— 

(1) provides a full accounting for the State’s use of proceeds of sales of emission allowances distributed under this section, including a description of the 

projects, programs, or measures funded through such proceeds; 

(2) includes a report prepared by an independent third party, in accordance 

with such regulations as are promulgated by the Administrator or such other 

Federal agency head or heads as the President may designate, evaluating the 

performance of the projects, programs, or measures funded under this section; 

and 

(3) identifies any use by the State of proceeds of sales of emission allowances 

distributed under this section for the reduction of flood and storm damage and 

the effects of climate change on water and flood protection infrastructure. 

(g) ENFORCEMENT.—If the Administrator, or such other Federal agency head or 

heads as the President may designate, determines that a State is not in compliance 

with this section, the Administrator may withhold a portion of the allowances, the 

value of which is equal to up to twice the value of the allowances that the State 

failed to use in accordance with the requirements of this section, that such State 

would otherwise be eligible to receive under this section in 1 or more later years. 

Allowances withheld pursuant to this subsection shall be distributed among the remaining States ratably in accordance with the formula in subsection (a). 

(h) SUPPLEMENT, NOT SUPPLANT.—It is the intent of the Congress that emission 

allowances distributed to carry out this subpart should be used to supplement, and 

not replace, existing sources of funding used to build resilience to the impacts of climate change identified in subsection (c). 

Subpart B—Public Health and Climate Change 

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

It is the sense of the Congress that the Federal Government, in cooperation with 

international, State, tribal, and local governments, concerned public and private organizations, and citizens, should use all practicable means and measures— 

(1) to assist the efforts of public health and health care professionals, first responders, States, tribes, municipalities, and local communities to incorporate 

measures to prepare health systems to respond to the impacts of climate 

change; 

(2) to ensure— 

(A) that the Nation’s health professionals have sufficient information to 

prepare for and respond to the adverse health impacts of climate change; 

(B) the utility and value of scientific research in advancing understanding 

of— 

(i) the health impacts of climate change; and 

(ii) strategies to prepare for and respond to the health impacts of climate change; 

(C) the identification of communities vulnerable to the health effects of 

climate change and the development of strategic response plans to be carried out by health professionals for those communities; 

(D) the improvement of health status and health equity through efforts 

to prepare for and respond to climate change; and 

(E) the inclusion of health policy in the development of climate change 

responses; 

(3) to encourage further research, interdisciplinary partnership, and collaboration among stakeholders in order to— 

(A) understand and monitor the health impacts of climate change; and 

(B) improve public health knowledge and response strategies to climate 

change; 

(4) to enhance preparedness activities, and public health infrastructure, relating to climate change and health; 

(5) to encourage each and every American to learn about the impacts of climate change on health; and 

(6) to assist the efforts of developing nations to incorporate measures to prepare health systems to respond to the impacts of climate change. 


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SEC. 462. RELATIONSHIP TO OTHER LAWS. 

Nothing in this subpart in any manner limits the authority provided to or responsibility conferred on any Federal department or agency by any provision of any law 

(including regulations) or authorizes any violation of any provision of any law (including regulations), including any health, energy, environmental, transportation, or 

any other law or regulation. 

SEC. 463. NATIONAL STRATEGIC ACTION PLAN. 

(a) REQUIREMENT.— 

(1) IN GENERAL.—The Secretary of Health and Human Services, within 2 

years after the date of the enactment of this Act, on the basis of the best available science, and in consultation pursuant to paragraph (2), shall publish a strategic action plan to assist health professionals in preparing for and responding 

to the impacts of climate change on public health in the United States and 

other nations, particularly developing nations. 

(2) CONSULTATION.—In developing or making any revision to the national 

strategic action plan, the Secretary shall— 

(A) consult with the Director of the Centers for Disease Control and Prevention, the Administrator of the Environmental Protection Agency, the Director of the National Institutes of Health, the Secretary of Energy, other 

appropriate Federal agencies, Indian tribes, State and local governments, 

public health organizations, scientists, and other interested stakeholders; 

and 

(B) provide opportunity for public input. 

(b) CONTENTS.— 

(1) IN GENERAL.—The Secretary, acting through the Director of the Centers 

for Disease Control and Prevention and other appropriate Federal agencies, 

shall assist health professionals in preparing for and responding effectively and 

efficiently to the health effects of climate change through measures including— 

(A) developing, improving, integrating, and maintaining domestic and 

international disease surveillance systems and monitoring capacity to respond to health-related effects of climate change, including on topics addressing— 

(i) water, food, and vector borne infectious diseases and climate 

change; 

(ii) pulmonary effects, including responses to aeroallergens; 

(iii) cardiovascular effects, including impacts of temperature extremes; 

(iv) air pollution health effects, including heightened sensitivity to air 

pollution; 

(v) hazardous algal blooms; 

(vi) mental and behavioral health impacts of climate change; 

(vii) the health of refugees, displaced persons, and vulnerable communities; 

(viii) the implications for communities vulnerable to health effects of 

climate change, as well as strategies for responding to climate change 

within these communities; and 

(ix) local and community-based health interventions for climate-related health impacts; 

(B) creating tools for predicting and monitoring the public health effects 

of climate change on the international, national, regional, State, and local 

levels, and providing technical support to assist in their implementation; 

(C) developing public health communications strategies and interventions 

for extreme weather events and disaster response situations; 

(D) identifying and prioritizing communities and populations vulnerable 

to the health effects of climate change, and determining actions and communication strategies that should be taken to inform and protect these communities and populations from the health effects of climate change; 

(E) developing health communication, public education, and outreach programs aimed at public health and health care professionals, as well as the 

general public, to promote preparedness and response strategies relating to 

climate change and public health, including the identification of greenhouse 

gas reduction behaviors that are health-promoting; and 

(F) developing academic and regional centers of excellence devoted to— 

(i) researching relationships between climate change and health; 

(ii) expanding and training the public health workforce to strengthen 

the capacity of such workforce to respond to and prepare for the health 

effects of climate change; 


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(iii) creating and supporting academic fellowships focusing on the 

health effects of climate change; and 

(iv) training senior health ministry officials from developing nations 

to strengthen the capacity of such nations to— 

(I) prepare for and respond to the health effects of climate 

change; and 

(II) build an international network of public health professionals 

with the necessary climate change knowledge base; 

(G) using techniques, including health impact assessments, to assess various climate change public health preparedness and response strategies on 

international, national, State, regional, tribal, and local levels, and make 

recommendations as to those strategies that best protect the public health; 

(H)(i) assisting in the development, implementation, and support of State, 

regional, tribal, and local preparedness, communication, and response plans 

(including with respect to the health departments of such entities) to anticipate and reduce the health threats of climate change; and 

(ii) pursuing collaborative efforts to develop, integrate, and implement 

such plans; 

(I) creating a program to advance research as it relates to the effects of 

climate change on public health across Federal agencies, including research 

to— 

(i) identify and assess climate change health effects preparedness and 

response strategies; 

(ii) prioritize critical public health infrastructure projects related to 

potential climate change impacts that affect public health; and 

(iii) coordinate preparedness for climate change health impacts, including the development of modeling and forecasting tools; 

(J) providing technical assistance for the development, implementation, 

and support of preparedness and response plans to anticipate and reduce 

the health threats of climate change in developing nations; and 

(K) carrying out other activities determined appropriate by the Secretary 

to plan for and respond to the impacts of climate change on public health. 

(c) REVISION.—The Secretary shall revise the national strategic action plan not 

later than July 1, 2014, and every 4 years thereafter, to reflect new information collected pursuant to implementation of the national strategic action plan and otherwise, including information on— 

(1) the status of critical environmental health parameters and related human 

health impacts; 

(2) the impacts of climate change on public health; and 

(3) advances in the development of strategies for preparing for and responding to the impacts of climate change on public health. 

(d) IMPLEMENTATION.— 

(1) IMPLEMENTATION THROUGH HHS.—The Secretary shall exercise the Secretary’s authority under this subpart and other provisions of Federal law to 

achieve the goals and measures of the national strategic action plan. 

(2) OTHER PUBLIC HEALTH PROGRAMS AND INITIATIVES.—The Secretary and 

Federal officials of other relevant Federal agencies shall administer public 

health programs and initiatives authorized by provisions of law other than this 

subpart, subject to the requirements of such statutes, in a manner designed to 

achieve the goals of the national strategic action plan. 

(3) CDC.—In furtherance of the national strategic action plan, the Secretary, 

acting through the Director of the Centers for Disease Control and Prevention 

and the head of any other appropriate Federal agency, shall— 

(A) conduct scientific research to assist health professionals in preparing 

for and responding to the impacts of climate change on public health; and 

(B) provide funding for— 

(i) research on the health effects of climate change; and 

(ii) preparedness planning on the international, national, State, regional, and local levels to respond to or reduce the burden of health effects of climate change; and 

(C) carry out other activities determined appropriate by the Director or 

the head of such agency to prepare for and respond to the impacts of climate change on public health. 

SEC. 464. ADVISORY BOARD. 

(a) ESTABLISHMENT.—The Secretary shall establish a permanent science advisory 

board comprised of not less than 10 and not more than 20 members. 

(b) APPOINTMENT OF MEMBERS.—The Secretary shall appoint the members of the 

science advisory board from among individuals— 


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(1) who have expertise in public health and human services, climate change, 

and other relevant disciplines; and 

(2) at least 1⁄2 of whom are recommended by the President of the National 

Academy of Sciences. 

(c) FUNCTIONS.—The science advisory board shall— 

(1) provide scientific and technical advice and recommendations to the Secretary on the domestic and international impacts of climate change on public 

health, populations and regions particularly vulnerable to the effects of climate 

change, and strategies and mechanisms to prepare for and respond to the impacts of climate change on public health; and 

(2) advise the Secretary regarding the best science available for purposes of 

issuing the national strategic action plan. 

SEC. 465. REPORTS. 

(a) NEEDS ASSESSMENT.— 

(1) IN GENERAL.—The Secretary shall seek to enter into, by not later than 6 

months after the date of the enactment of this Act, an agreement with the National Research Council and the Institute of Medicine to complete a report 

that— 

(A) assesses the needs for health professionals to prepare for and respond 

to climate change impacts on public health; and 

(B) recommends programs to meet those needs. 

(2) SUBMISSION.—The agreement under paragraph (1) shall require the completed report to be submitted to the Congress and the Secretary and made publicly available not later than 1 year after the date of the agreement. 

(b) CLIMATE CHANGE HEALTH PROTECTION AND PROMOTION REPORTS.— 

(1) IN GENERAL.—The Secretary, in consultation with the advisory board established under section 464, shall ensure the issuance of reports to aid health 

professionals in preparing for and responding to the adverse health effects of 

climate change that— 

(A) review scientific developments on health impacts of climate change; 

and 

(B) recommend changes to the national strategic action plan. 

(2) SUBMISSION.—The Secretary shall submit the reports required by paragraph (1) to the Congress and make such reports publicly available not later 

than July 1, 2013, and every 4 years thereafter. 

SEC. 466. DEFINITIONS. 

In this subpart: 

(1) HEALTH IMPACT ASSESSMENT.—The term ‘‘health impact assessment’’ 

means a combination of procedures, methods, and tools by which a policy, program, or project may be judged as to its potential effects on the health of a population, and the distribution of those effects within the population. 

(2) NATIONAL STRATEGIC ACTION PLAN.—The term ‘‘national strategic action 

plan’’ means the plan issued and revised under section 463. 

(3) SECRETARY.—Unless otherwise specified, the term ‘‘Secretary’’ means the 

Secretary of Health and Human Services. 

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

(a) ESTABLISHMENT OF FUND.—There is hereby established in the Treasury a separate account that shall be known as the Climate Change Health Protection and 

Promotion Fund. 

(b) AVAILABILITY OF AMOUNTS.—All amounts deposited into the Climate Change 

Health Protection and Promotion Fund shall be available to the Secretary to carry 

out this subpart subject to further appropriation. 

(c) DISTRIBUTION OF FUNDS BY HHS.—In carrying out this subpart, the Secretary 

may make funds deposited in the Climate Change Health Protection and Promotion 

Fund available to— 

(1) other departments, agencies, and offices of the Federal Government; 

(2) foreign, State, tribal, and local governments; and 

(3) such other entities as the Secretary determines appropriate. 

(d) SUPPLEMENT, NOT REPLACE.—It is the intent of Congress that funds made 

available to carry out this subpart should be used to supplement, and not replace, 

existing sources of funding for public health. 

Subpart C—Natural Resource Adaptation 

SEC. 471. PURPOSES. 

The purposes of this subpart are to— 


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(1) establish an integrated Federal program to protect, restore, and conserve 

the Nation’s natural resources in response to the threats of climate change and 

ocean acidification; and 

(2) provide financial support and incentives for programs, strategies, and activities that protect, restore, and conserve the Nation’s natural resources in response to the threats of climate change and ocean acidification. 

SEC. 472. NATURAL RESOURCES CLIMATE CHANGE ADAPTATION POLICY. 

It is the policy of the Federal Government, in cooperation with State and local 

governments, Indian tribes, and other interested stakeholders to use all practicable 

means and measures to protect, restore, and conserve natural resources to enable 

them to become more resilient, adapt to, and withstand the impacts of climate 

change and ocean acidification. 

SEC. 473. DEFINITIONS. 

In this subpart: 

(1) COASTAL STATE.—The term ‘‘coastal State’’ has the meaning given the 

term in section 304 of the Coastal Zone Management Act of 1972 (16 U.S.C. 

1453). 

(2) CORRIDORS.—The term ‘‘corridors’’ means areas that provide connectivity, 

over different time scales (including seasonal or longer), of habitat or potential 

habitat and that facilitate the ability of terrestrial, marine, estuarine, and 

freshwater fish, wildlife, or plants to move within a landscape as needed for migration, gene flow, or dispersal, or in response to the impacts of climate change 

and ocean acidification or other impacts. 

(3) ECOLOGICAL PROCESSES.—The term ‘‘ecological processes’’ means biological, 

chemical, or physical interaction between the biotic and abiotic components of 

an ecosystem and includes— 

(A) nutrient cycling; 

(B) pollination; 

(C) predator-prey relationships; 

(D) soil formation; 

(E) gene flow; 

(F) disease epizootiology; 

(G) larval dispersal and settlement; 

(H) hydrological cycling; 

(I) decomposition; and 

(J) disturbance regimes such as fire and flooding. 

(4) HABITAT.—The term ‘‘habitat’’ means the physical, chemical, and biological 

properties that are used by fish, wildlife, or plants for growth, reproduction, 

survival, food, water, and cover, on a tract of land, in a body of water, or in 

an area or region. 

(5) INDIAN TRIBE.—The term ‘‘Indian tribe’’ has the meaning given the term 

in section 4 of the Indian Self-Determination and Education Assistance Act (25 

U.S.C. 450b). 

(6) NATURAL RESOURCES.—The term ‘‘natural resources’’ means the terrestrial, freshwater, estuarine, and marine fish, wildlife, plants, land, water, habitats, and ecosystems of the United States. 

(7) NATURAL RESOURCES ADAPTATION.—The term ‘‘natural resources adaptation’’ means the protection, restoration, and conservation of natural resources 

to enable them to become more resilient, adapt to, and withstand the impacts 

of climate change and ocean acidification. 

(8) RESILIENCE.—Each of the terms ‘‘resilience’’ and ‘‘resilient’’ means the ability to resist or recover from disturbance and preserve diversity, productivity, 

and sustainability. 

(9) STATE.—The term ‘‘State’’ means— 

(A) a State of the United States; 

(B) the District of Columbia; and 

(C) the Commonwealth of Puerto Rico, Guam, the United States Virgin 

Islands, the Northern Mariana Islands, and American Samoa. 

SEC. 474. COUNCIL ON ENVIRONMENTAL QUALITY. 

The Chair of the Council on Environmental Quality shall— 

(1) advise the President on implementation and development of— 

(A) a Natural Resources Climate Change Adaptation Strategy required 

under section 476; and 

(B) Federal natural resource agency adaptation plans required under section 478; 

(2) serve as the Chair of the Natural Resources Climate Change Adaptation 

Panel established under section 475; and 


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(3) coordinate Federal agency strategies, plans, programs, and activities related to protecting, restoring, and maintaining natural resources to become 

more resilient, adapt to, and withstand the impacts of climate change and ocean 

acidification. 

SEC. 475. NATURAL RESOURCES CLIMATE CHANGE ADAPTATION PANEL. 

(a) ESTABLISHMENT.—Not later than 90 days after the date of the enactment of 

this subpart, the President shall establish a Natural Resources Climate Change Adaptation Panel, consisting of— 

(1) the head, or their designee, of each of— 

(A) the National Oceanic and Atmospheric Administration; 

(B) the Forest Service; 

(C) the National Park Service; 

(D) the United States Fish and Wildlife Service; 

(E) the Bureau of Land Management; 

(F) the United States Geological Survey; 

(G) the Bureau of Reclamation; 

(H) the Bureau of Indian Affairs; 

(I) the Environmental Protection Agency; and 

(J) the Army Corps of Engineers; 

(2) the Chair of the Council on Environmental Quality; and 

(3) the heads of such other Federal agencies or departments with jurisdiction 

over natural resources of the United States, as determined by the President. 

(b) FUNCTIONS.—The Panel shall serve as a forum for interagency consultation on 

and the coordination of the development and implementation of a national Natural 

Resources Climate Change Adaptation Strategy required under section 476. 

(c) CHAIR.—The Chair of the Council on Environmental Quality shall serve as the 

Chair of the Panel. 

SEC. 476. NATURAL RESOURCES CLIMATE CHANGE ADAPTATION STRATEGY. 

(a) IN GENERAL.—Not later than one year after the date of the enactment of this 

subpart, the President, through the Natural Resources Climate Change Adaptation 

Panel established under section 475, shall develop a Natural Resources Climate 

Change Adaptation Strategy to protect, restore, and conserve natural resources to 

enable them to become more resilient, adapt to, and withstand the impacts of climate change and ocean acidification and to identify opportunities to mitigate those 

impacts. 

(b) DEVELOPMENT AND REVISION.—In developing and revising the Strategy, the 

Panel shall— 

(1) base the strategy on the best available science; 

(2) develop the strategy in close cooperation with States and Indian tribes; 

(3) coordinate with other Federal agencies as appropriate; 

(4) consult with local governments, conservation organizations, scientists, and 

other interested stakeholders; 

(5) provide public notice and opportunity for comment; and 

(6) review and revise the Strategy every 5 years to incorporate new information regarding the impacts of climate change and ocean acidification on natural 

resources and advances in the development of strategies for becoming more resilient and adapting to those impacts. 

(c) CONTENTS.—The National Resources Adaptation Strategy shall include— 

(1) an assessment of the vulnerability of natural resources to climate change 

and ocean acidification, including the short-term, medium-term, long-term, cumulative, and synergistic impacts; 

(2) a description of current research, observation, and monitoring activities at 

the Federal, State, tribal, and local level related to the impacts of climate 

change and ocean acidification on natural resources, as well as identification of 

research and data needs and priorities; 

(3) identification of natural resources that are likely to have the greatest need 

for protection, restoration, and conservation because of the adverse effects of climate change and ocean acidification; 

(4) specific protocols for integrating climate change and ocean acidification adaptation strategies and activities into the conservation and management of natural resources by Federal departments and agencies to ensure consistency 

across agency jurisdictions and resources; 

(5) specific actions that Federal departments and agencies shall take to protect, conserve, and restore natural resources to become more resilient, adapt to, 

and withstand the impacts of climate change and ocean acidification, including 

a timeline to implement those actions; 

(6) specific mechanisms for ensuring communication and coordination among 

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cies and State natural resource agencies, United States territories, Indian 

tribes, private landowners, conservation organizations, and other nations that 

share jurisdiction over natural resources with the United States; 

(7) specific actions to develop and implement consistent natural resources inventory and monitoring protocols through interagency coordination and collaboration; and 

(8) a process for guiding the development of detailed agency- and departmentspecific adaptation plans required under section 478 to address the impacts of 

climate change and ocean acidification on the natural resources in the jurisdiction of each agency. 

(d) IMPLEMENTATION.—Consistent with its authorities under other laws and with 

Federal trust responsibilities with respect to Indian lands, each Federal department 

or agency with representation on the National Resources Climate Change Adaptation Panel shall consider the impacts of climate change and ocean acidification and 

integrate the elements of the strategy into agency plans, environmental reviews, 

programs, and activities related to the conservation, restoration, and management 

of natural resources. 

SEC. 477. NATURAL RESOURCES ADAPTATION SCIENCE AND INFORMATION. 

(a) COORDINATION.—Not later than 90 days after the date of the enactment of this 

subpart, the Secretary of Commerce, acting through the Administrator of the National Oceanic and Atmospheric Administration, and the Secretary of the Interior, 

acting through the Director of the United States Geological Survey, shall establish 

a coordinated process for developing and providing science and information needed 

to assess and address the impacts of climate change and ocean acidification on natural resources. The process shall be led by the National Climate Change and Wildlife Science Center established within the United States Geological Survey under 

subsection (d) and the National Climate Service of the National Oceanic and Atmospheric Administration. 

(b) FUNCTIONS.—The Secretaries shall ensure that such process avoids duplication 

and that the National Oceanic and Atmospheric Administration and the United 

States Geological Survey shall— 

(1) provide technical assistance to Federal departments and agencies, State 

and local governments, Indian tribes, and interested private landowners in their 

efforts to assess and address the impacts of climate change and ocean acidification on natural resources; 

(2) conduct and sponsor research and provide Federal departments and agencies, State and local governments, Indian tribes, and interested private landowners with research products, decision and monitoring tools and information, 

to develop strategies for assisting natural resources to become more resilient, 

adapt to, and withstand the impacts of climate change and ocean acidification; 

and 

(3) assist Federal departments and agencies in the development of the adaptation plans required under section 478. 

(c) SURVEY.—Not later than one year after the date of enactment of this subpart 

and every 5 years thereafter, the Secretary of Commerce and the Secretary of the 

Interior shall undertake a climate change and ocean acidification impact survey 

that— 

(1) identifies natural resources considered likely to be adversely affected by 

climate change and ocean acidification; 

(2) includes baseline monitoring and ongoing trend analysis; 

(3) uses a stakeholder process to identify and prioritize needed monitoring 

and research that is of greatest relevance to the ongoing needs of natural resource managers to address the impacts of climate change and ocean acidification; and 

(4) identifies decision tools necessary to develop strategies for assisting natural resources to become more resilient and adapt to and withstand the impacts 

of climate change and ocean acidification. 

(d) NATIONAL CLIMATE CHANGE AND WILDLIFE SCIENCE CENTER.— 

(1) ESTABLISHMENT.—The Secretary of the Interior shall establish the National Climate Change and Wildlife Science Center within the United States 

Geological Survey. 

(2) FUNCTIONS.—The Center shall, in collaboration with Federal and State 

natural resources agencies and departments, Indian tribes, universities, and 

other partner organizations— 

(A) assess and synthesize current physical and biological knowledge and 

prioritize scientific gaps in such knowledge in order to forecast the ecological impacts of climate change on fish and wildlife at the ecosystem, habitat, 

community, population, and species levels; 


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(B) develop and improve tools to identify, evaluate, and, where appropriate, link scientific approaches and models for forecasting the impacts of 

climate change and adaptation on fish, wildlife, plants, and their habitats, 

including monitoring, predictive models, vulnerability analyses, risk assessments, and decision support systems to help managers make informed decisions; 

(C) develop and evaluate tools to adaptively manage and monitor the effects of climate change on fish and wildlife at national, regional, and local 

scales; and 

(D) develop capacities for sharing standardized data and the synthesis of 

such data. 

(e) SCIENCE ADVISORY BOARD.— 

(1) ESTABLISHMENT.—Not later than 180 days after the date of enactment of 

this subpart, the Secretary of Commerce and the Secretary of the Interior shall 

establish and appoint the members of a Science Advisory Board, to be comprised of not fewer than 10 and not more than 20 members— 

(A) who have expertise in fish, wildlife, plant, aquatic, and coastal and 

marine biology, ecology, climate change, ocean acidification, and other relevant scientific disciplines; 

(B) who represent a balanced membership among Federal, State, Indian 

tribes, and local representatives, universities, and conservation organizations; and 

(C) at least 1⁄2 of whom are recommended by the President of the National Academy of Sciences. 

(2) DUTIES.—The Science Advisory Board shall— 

(A) advise the Secretaries on the state-of-the-science regarding the impacts of climate change and ocean acidification on natural resources and 

scientific strategies and mechanisms for protecting, restoring, and conserving natural resources to enable them to become more resilient, adapt 

to, and withstand the impacts of climate change and ocean acidification; 

and 

(B) identify and recommend priorities for ongoing research needs on such 

issues. 

(3) COLLABORATION.—The Science Advisory Board shall collaborate with other 

climate change and ecosystem research entities in other Federal agencies and 

departments. 

(4) AVAILABILITY TO THE PUBLIC.—The advice and recommendations of the 

Science Advisory Board shall be made available to the public. 

SEC. 478. FEDERAL NATURAL RESOURCE AGENCY ADAPTATION PLANS. 

(a) DEVELOPMENT.—Not later than 1 year after the date of the development of a 

Natural Resources Climate Change Adaptation Strategy under section 476, each department or agency that has a representative on the Natural Resources Climate 

Change Adaptation Panel established under section 475 shall— 

(1) complete an adaptation plan for that department or agency, respectively, 

implementing the Natural Resources Climate Change Adaptation Strategy 

under section 476 and consistent with the Natural Resources Climate Change 

Adaptation Policy under section 472, detailing the department’s or agency’s current and projected efforts to address the potential impacts of climate change 

and ocean acidification on natural resources within the department’s or agency’s 

jurisdiction and necessary additional actions, including a timeline for implementation of those actions; 

(2) provide opportunities for review and comment on that adaptation plan by 

the public, including in the case of a plan by the Bureau of Indian Affairs, review by Indian tribes; and 

(3) submit such plan to the President for approval. 

(b) REVIEW BY PRESIDENT AND SUBMISSION TO CONGRESS.— 

(1) REVIEW BY PRESIDENT.—The President shall— 

(A) approve an adaptation plan submitted under subsection (a)(3) if the 

plan meets the requirements of subsection (c) and is consistent with the 

strategy developed under section 476; 

(B) decide whether to approve the plan within 60 days after submission; 

and 

(C) if the President disapproves a plan, direct the department or agency 

to submit a revised plan to the President under subsection (a)(3) within 60 

days after such disapproval. 

(2) SUBMISSION TO CONGRESS.—Not later than 30 days after the date of approval of such adaptation plan by the President, the department or agency shall 

submit the approved plan to the Committee on Natural Resources of the House 


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of Representatives, the Committee on Energy and Natural Resources of the Senate, and the committees of the House of Representatives and the Senate with 

principal jurisdiction over the department or agency. 

(c) REQUIREMENTS.—Each adaptation plan shall— 

(1) establish programs for assessing the current and future impacts of climate 

change and ocean acidification on natural resources within the department’s or 

agency’s, respectively, jurisdiction, including cumulative and synergistic effects, 

and for identifying and monitoring those natural resources that are likely to be 

adversely affected and that have need for conservation; 

(2) identify and prioritize the department’s or agency’s strategies and specific 

conservation actions to address the current and future impacts of climate 

change and ocean acidification on natural resources within the scope of the department’s or agency’s jurisdiction and to develop and implement strategies to 

protect, restore, and conserve such resources to become more resilient, adapt to, 

and better withstand those impacts, including— 

(A) the protection, restoration, and conservation of terrestrial, marine, estuarine, and freshwater habitats and ecosystems; 

(B) the establishment of terrestrial, marine, estuarine, and freshwater 

habitat linkages and corridors; 

(C) the restoration and conservation of ecological processes; 

(D) the protection of a broad diversity of native species of fish, wildlife, 

and plant populations across their range; and 

(E) the protection of fish, wildlife, and plant health, recognizing that climate can alter the distribution and ecology of parasites, pathogens, and 

vectors; 

(3) describe how the department or agency will integrate such strategies and 

conservation activities into plans, programs, activities, and actions of the department or agency, related to the conservation and management of natural resources and establish new plans, programs, activities, and actions as necessary; 

(4) establish methods for assessing the effectiveness of strategies and conservation actions taken to protect, restore, and conserve natural resources to enable them to become more resilient, adapt to, and withstand the impacts of climate change and ocean acidification, and for updating those strategies and actions to respond to new information and changing conditions; 

(5) include a description of current and proposed mechanisms to enhance cooperation and coordination of natural resources adaptation efforts with other 

Federal agencies, State and local governments, Indian tribes, and nongovernmental stakeholders; 

(6) include specific written guidance to resource managers to— 

(A) explain how managers are expected to address the effects of climate 

change and ocean acidification; 

(B) identify how managers are to obtain any site-specific information that 

may be necessary; and 

(C) reflect best practices shared among relevant agencies, while also recognizing the unique missions, objectives, and responsibilities of each agency; and 

(7) identify and assess data and information gaps necessary to develop natural resources adaptation plans and strategies. 

(d) IMPLEMENTATION.— 

(1) IN GENERAL.—Upon approval by the President, each department or agency 

that serves on the Natural Resources Climate Change Adaptation Panel shall 

implement its adaptation plan through existing and new plans, policies, programs, activities, and actions to the extent not inconsistent with existing authority. 

(2) CONSIDERATION OF IMPACTS.— 

(A) IN GENERAL.—To the maximum extent practicable and consistent with 

applicable law, every natural resource management decision made by the 

department or agency shall consider the impacts of climate change and 

ocean acidification on those natural resources. 

(B) GUIDANCE.—The Council on Environmental Quality shall issue guidance for Federal departments and agencies for considering those impacts. 

(e) REVISION AND REVIEW.—Not less than every 5 years, each adaptation plan 

under this section shall be reviewed and revised to incorporate the best available 

science and other information regarding the impacts of climate change and ocean 

acidification on natural resources. 

SEC. 479. STATE NATURAL RESOURCES ADAPTATION PLANS. 

(a) REQUIREMENT.—In order to be eligible for funds under section 480, not later 

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tion Strategy required under section 476 each State shall prepare a State natural 

resources adaptation plan detailing the State’s current and projected efforts to address the potential impacts of climate change and ocean acidification on natural resources and coastal areas within the State’s jurisdiction. 

(b) REVIEW OR APPROVAL.— (1) IN GENERAL.—Each State adaptation plan shall be reviewed and approved 

or disapproved by the Secretary of the Interior and, as applicable, the Secretary 

of Commerce. Such approval shall be granted if the plan meets the requirements of subsection (c) and is consistent with the Natural Resources Climate 

Change Adaptation Strategy required under section 476. 

(2) APPROVAL OR DISAPPROVAL.—Within 180 days after transmittal of such a 

plan, or a revision to such a plan, the Secretary of the Interior and, as applicable, the Secretary of Commerce shall approve or disapprove the plan by written 

notice. 

(3) RESUBMITTAL.—Within 90 days after transmittal of a resubmitted adaptation plan as a result of disapproval under paragraph (3), the Secretary of the 

Interior and, as applicable, the Secretary of Commerce, shall approve or disapprove the plan by written notice. 

(c) CONTENTS.—A State natural resources adaptation plan shall— 

(1) include a strategy for addressing the impacts of climate change and ocean 

acidification on terrestrial, marine, estuarine, and freshwater fish, wildlife, 

plants, habitats, ecosystems, wildlife health, and ecological processes, that— 

(A) describes the impacts of climate change and ocean acidification on the 

diversity and health of the fish, wildlife and plant populations, habitats, 

ecosystems, and associated ecological processes; 

(B) establishes programs for monitoring the impacts of climate change 

and ocean acidification on fish, wildlife, and plant populations, habitats, 

ecosystems, and associated ecological processes; 

(C) describes and prioritizes proposed conservation actions to assist fish, 

wildlife, plant populations, habitats, ecosystems, and associated ecological 

processes in becoming more resilient, adapting to, and better withstanding 

those impacts; 

(D) includes strategies, specific conservation actions, and a time frame for 

implementing conservation actions for fish, wildlife, and plant populations, 

habitats, ecosystems, and associated ecological processes; 

(E) establishes methods for assessing the effectiveness of strategies and 

conservation actions taken to assist fish, wildlife, and plant populations, 

habitats, ecosystems, and associated ecological processes in becoming more 

resilient, adapt to, and better withstand the impacts of climate changes and 

ocean acidification and for updating those strategies and actions to respond 

appropriately to new information or changing conditions; 

(F) is incorporated into a revision of the State wildlife action plan (also 

known as the State comprehensive wildlife strategy)— 

(i) that has been submitted to the United States Fish and Wildlife 

Service; and 

(ii) that has been approved by the Service or on which a decision on 

approval is pending; and 

(G) is developed— 

(i) with the participation of the State fish and wildlife agency, the 

State coastal agency, the State agency responsible for administration of 

Land and Water Conservation Fund grants, the State Forest Legacy 

program coordinator, and other State agencies considered appropriate 

by the Governor of such State; and 

(ii) in coordination with the Secretary of the Interior, and where applicable, the Secretary of Commerce and other States that share jurisdiction over natural resources with the State; and 

(2) include, in the case of a coastal State, a strategy for addressing the impacts of climate change and ocean acidification on the coastal zone that— 

(A) identifies natural resources that are likely to be impacted by climate 

change and ocean acidification and describes those impacts; 

(B) identifies and prioritizes continuing research and data collection needed to address those impacts including— 

(i) acquisition of high resolution coastal elevation and nearshore bathymetry data; 

(ii) historic shoreline position maps, erosion rates, and inventories of 

shoreline features and structures; 

(iii) measures and models of relative rates of sea level rise or lake 

level changes, including effects on flooding, storm surge, inundation, 

and coastal geological processes; 


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(iv) habitat loss, including projected losses of coastal wetlands and 

potentials for inland migration of natural shoreline habitats; 

(v) ocean and coastal species and ecosystem migrations, and changes 

in species population dynamics; 

(vi) changes in storm frequency, intensity, or rainfall patterns; 

(vii) saltwater intrusion into coastal rivers and aquifers; 

(viii) changes in chemical or physical characteristics of marine and 

estuarine systems; 

(ix) increased harmful algal blooms; and 

(x) spread of invasive species; 

(C) identifies and prioritizes adaptation strategies to protect, restore, and 

conserve natural resources to enable them to become more resilient, adapt 

to, and withstand the impacts of climate change and ocean acidification, including— 

(i) protection, maintenance, and restoration of ecologically important 

coastal lands, coastal and ocean ecosystems, and species biodiversity 

and the establishment of habitat buffer zones, migration corridors, and 

climate refugia; and 

(ii) improved planning, siting policies, and hazard mitigation strategies; 

(D) establishes programs for the long-term monitoring of the impacts of 

climate change and ocean acidification on the ocean and coastal zone and 

to assess and adjust, when necessary, such adaptive management strategies; 

(E) establishes performance measures for assessing the effectiveness of 

adaptation strategies intended to improve resilience and the ability of natural resources in the coastal zone to adapt to and withstand the impacts 

of climate change and ocean acidification and of adaptation strategies intended to minimize those impacts on the coastal zone and to update those 

strategies to respond to new information or changing conditions; and 

(F) is developed with the participation of the State coastal agency and 

other appropriate State agencies and in coordination with the Secretary of 

Commerce and other appropriate Federal agencies. 

(d) PUBLIC INPUT.—States shall provide for solicitation and consideration of public 

and independent scientific input in the development of their plans. 

(e) COORDINATION WITH OTHER PLANS.—The State plan shall take into consideration research and information contained in, and coordinate with and integrate the 

goals and measures identified in, as appropriate, other natural resources conservation strategies, including— 

(1) the national fish habitat action plan; 

(2) plans under the North American Wetlands Conservation Act (16 U.S.C. 

4401 et seq.); 

(3) the Federal, State, and local partnership known as ‘‘Partners in Flight’’; 

(4) federally approved coastal zone management plans under the Coastal Zone 

Management Act of 1972 (16 U.S.C. 1451 et seq.); 

(5) federally approved regional fishery management plants and habitat conservation activities under the Magnuson-Stevens Fishery Conservation and 

Management Act (16 U.S.C. 1801 et seq.); 

(6) the national coral reef action plan; 

(7) recovery plans for threatened species and endangered species under section 4(f) of the Endangered Species Act of 1973 (16 U.S.C. 1533(f)); 

(8) habitat conservation plans under section 10 of that Act (16 U.S.C. 1539); 

(9) other Federal, State, and tribal plans for imperiled species; 

(10) State or tribal hazard mitigation plans; 

(11) State or tribal water management plans; and 

(12) other State-based strategies that comprehensively implement adaptation 

activities to remediate the effects of climate change and ocean acidification on 

terrestrial, marine, and freshwater fish, wildlife, plants, and other natural resources. 

(f) UPDATING.—Each State plan shall be updated not less than every 5 years. 

(g) FUNDING.— 

(1) IN GENERAL.—Funds allocated to States under section 480 shall be used 

only for activities that are consistent with a State natural resources adaptation 

plan that has been approved by the Secretaries of Interior and Commerce. 

(2) FUNDING PRIOR TO THE APPROVAL OF A STATE PLAN.—Until the earlier of 

the date that is 3 years after the date of the enactment of this subpart or the 

date on which a State receives approval for the State strategy, a State shall be 

eligible to receive funding under section 480 for adaptation activities that are— 


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(A) consistent with the comprehensive wildlife strategy of the State and, 

where appropriate, other natural resources conservation strategies; and 

(B) in accordance with a workplan developed in coordination with— 

(i) the Secretary of the Interior; and 

(ii) the Secretary of Commerce, for any coastal State subject to the 

condition that coordination with the Secretary of Commerce shall be required only for those portions of the strategy relating to activities affecting the coastal zone. 

(3) PENDING APPROVAL.—During the period for which approval by the applicable Secretary of a State plan is pending, the State may continue receiving funds 

under section 480 pursuant to the workplan described in paragraph (2)(B). 

SEC. 480. NATURAL RESOURCES CLIMATE CHANGE ADAPTATION FUND. 

(a) ALLOCATIONS TO STATES.—100 percent of the emission allowances made available for each year to carry out this subpart shall be provided to States to carry out 

natural resources adaptation activities in accordance with State natural resources 

adaptation plans approved under section 479. Specifically— 

(1) 84.4 percent shall be available to State wildlife agencies in accordance 

with the apportionment formula established under the second subsection (c) of 

section 4 of the Pittman-Robertson Wildlife Restoration Act (16 U.S.C. 669c), as 

added by section 902(e) of H.R. 5548 as introduced in the 106th Congress and 

enacted into law by section 1(a)(2) of Public Law 106–553 (114 Stat. 2762A– 

119); and 

(2) 15.6 percent shall be available to State coastal agencies pursuant to the 

formula established by the Secretary of Commerce under section 306(c) of the 

Coastal Management Act of 1972 (16 U.S.C. 1455(c)). 

(b) ESTABLISHMENT OF FUND.— 

(1) ESTABLISHMENT.—There is hereby established in the Treasury a separate 

account that shall be known as the Natural Resources Climate Change Adaptation Fund. 

(2) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated for section 480(c) such sums as are deposited in the Natural Resources 

Climate Change Fund, and the amounts appropriated for section 480(c) shall be 

no less than the total estimated annual deposits in the Natural Resources Climate Change Adaptation Fund. Such appropriations shall be offset by the 

amounts deposited in such fund pursuant to section 782(m). 

(c) ALLOCATIONS TO FEDERAL AGENCIES.— 

(1) DEPARTMENT OF THE INTERIOR.—Of the amounts made available for each 

fiscal year to carry out this subpart— 

(A) 27.6 percent shall be allocated to the Secretary of the Interior for use 

in funding— 

(i) natural resources adaptation activities carried out— 

(I) under endangered species, migratory species, and other fish 

and wildlife programs administered by the National Park Service, 

the United States Fish and Wildlife Service, the Bureau of Indian 

Affairs, and the Bureau of Land Management; 

(II) on wildlife refuges, National Park Service land, and other 

public land under the jurisdiction of the United States Fish and 

Wildlife Service, the Bureau of Land Management, the Bureau of 

Indian Affairs, or the National Park Service; or 

(III) within Federal water managed by the Bureau of Reclamation and the National Park Service; and 

(ii) for the implementation of the National Fish and Wildlife Habitat 

and Corridors Identification Program pursuant to section 481; 

(B) 8.1 percent shall be allocated to the Secretary of the Interior for natural resources adaptation activities carried out under cooperative grant programs, including— 

(i) the cooperative endangered species conservation fund authorized 

under section 6 of the Endangered Species Act of 1973 (16 U.S.C. 1535); 

(ii) programs under the North American Wetlands Conservation Act 

(16 U.S.C. 4401 et seq.); 

(iii) the Neotropical Migratory Bird Conservation Fund established 

by section 478(a) of the Neotropical Migratory Bird Conservation Act 

(16 U.S.C. 6108(a)); 

(iv) the Coastal Program of the United States Fish and Wildlife Service; 

(v) the National Fish Habitat Action Plan; 

(vi) the Partners for Fish and Wildlife Program; 

(vii) the Landowner Incentive Program; 


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(viii) the Wildlife Without Borders Program of the United States Fish 

and Wildlife Service; and 

(ix) the Migratory Species Program and Park Flight Migratory Bird 

Program of the National Park Service; and 

(C) 4.9 percent shall be allocated to the Secretary of the Interior to provide financial assistance to Indian tribes to carry out natural resources adaptation activities through the Tribal Wildlife Grants Program of the 

United States Fish and Wildlife Service. 

(2) LAND AND WATER CONSERVATION FUND.— (A) DEPOSITS.— (i) IN GENERAL.—Of the amounts made available for each fiscal year 

to carry out this subpart, 19.5 percent shall be deposited into the Land 

and Water Conservation Fund established under section 2 of the Land 

and Water Conservation Fund Act of 1965 (16 U.S.C. 460l–5). 

(ii) USE OF DEPOSITS.— (I) Deposits into the Land and Water Conservation Fund under this paragraph shall be supplemental to authorizations provided under section 3 of the Land and Water Conservation 

Fund Act of 1965 (16 U.S.C. 460l–6), which shall remain available for 

nonadaptation needs. 

(II) There are authorized to be appropriated for activities in this subpart such sums as are deposited in the Land and Water Conservation 

Fund pursuant to section 480(c)(3)(A)(ii), and the amounts appropriated 

for this paragraph shall be no less than the total estimated annual deposits in the Land and Water Conservation Fund. Such appropriations 

shall be offset by the amounts deposited in such Fund pursuant to section 782(m). 

(B) ALLOCATIONS.—Of the amounts deposited under this paragraph into 

the Land and Water Conservation Fund— 

(i) 1⁄6 shall be allocated to the Secretary of the Interior and made 

available on a competitive basis to carry out natural resources adaptation activities through the acquisition of land and interests in land 

under section 6 of the Land and Water Conservation Fund Act of 1965 

(16 U.S.C. 460l–8)— 

(I) to States in accordance with their natural resources adaptation plans, and to Indian tribes; 

(II) notwithstanding section 5 of that Act (16 U.S.C. 460l–7); and 

(III) in addition to any funds provided pursuant to annual appropriations Acts, the Energy Policy Act of 2005 (42 U.S.C. 15801 et 

seq.), or any other authorization for nonadaptation needs; 

(ii) 1⁄3 shall be allocated to the Secretary of the Interior to carry out 

natural resources adaptation activities through the acquisition of lands 

and interests in land under section 7 of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 460l–9); 

(iii) 1⁄6 shall be allocated to the Secretary of Agriculture and made 

available to the States and Indian tribes to carry out natural resources 

adaptation activities through the acquisition of land and interests in 

land under section 7 of the Forest Legacy Program under the Cooperative Forestry Assistance Act of 1978 (16 U.S.C. 2103c); and 

(iv) 1⁄3 shall be allocated to the Secretary of Agriculture to carry out 

natural resources adaptation activities through the acquisition of land 

and interests in land under section 7 of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 460l–9). 

(C) EXPENDITURE OF FUNDS.—In allocating funds under subparagraph 

(B), the Secretary of the Interior and the Secretary of Agriculture shall take 

into consideration factors including— 

(i) the availability of non-Federal contributions from State, local, or 

private sources; 

(ii) opportunities to protect fish and wildlife corridors or otherwise to 

link or consolidate fragmented habitats; 

(iii) opportunities to reduce the risk of catastrophic wildfires, 

drought, extreme flooding, or other climate-related events that are 

harmful to fish and wildlife and people; and 

(iv) the potential for conservation of species or habitat types at serious risk due to climate change, ocean acidification, and other stressors. 

(3) FOREST SERVICE.—Of the amounts made available for each fiscal year to 

carry out this subpart, 8.1 percent shall be allocated to the Secretary of Agriculture for use in funding natural resources adaptation activities carried out on 

national forests and national grasslands under the jurisdiction of the Forest 

Service. 


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(4) DEPARTMENT OF COMMERCE.—Of the amounts made available for each fiscal year to carry out this subpart, 11.5 percent shall be allocated to the Secretary of Commerce for use in funding natural resources adaptation activities 

to protect, maintain, and restore coastal, estuarine, and marine resources, habitats, and ecosystems, including such activities carried out under— 

(A) the coastal and estuarine land conservation program; 

(B) the community-based restoration program; 

(C) the Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et seq.), 

that are specifically designed to strengthen the ability of coastal, estuarine, 

and marine resources, habitats, and ecosystems to adapt to and withstand 

the impacts of climate change and ocean acidification; 

(D) the Open Rivers Initiative; 

(E) the Magnuson-Stevens Fishery Conservation and Management Act 

(16 U.S.C. 1801 et seq.); 

(F) the Marine Mammal Protection Act of 1972 (16 U.S.C. 1361 et seq.); 

(G) the Endangered Species Act of 1973 (16 U.S.C. 1531 et seq.); 

(H) the Marine Protection, Research, and Sanctuaries Act of 1972 (33 

U.S.C. 1401 et seq.); 

(I) the Coral Reef Conservation Act of 2000 (16 U.S.C. 6401 et seq.); and 

(J) the Estuary Restoration Act of 2000 (33 U.S.C. 2901 et seq.). 

(5) ENVIRONMENTAL PROTECTION AGENCY.—Of the amounts made available 

each fiscal year to carry out this section, 12.2 percent shall be allocated to the 

Administrator for use in natural resources adaptation activities restoring and 

protecting— 

(A) large-scale freshwater aquatic ecosystems, such as the Everglades, 

the Great Lakes, Flathead Lake, the Missouri River, the Mississippi River, 

the Colorado River, the Sacramento-San Joaquin Rivers, the Ohio River, 

the Columbia-Snake River System, the Apalachicola, Chattahoochee, and 

Flint River System, the Connecticut River, and the Yellowstone River; 

(B) large-scale estuarine ecosystems, such as Chesapeake Bay, Long Island Sound, Puget Sound, the Mississippi River Delta, the San Francisco 

Bay Delta, Narragansett Bay, and Albemarle-Pamlico Sound; and 

(C) freshwater and estuarine ecosystems, watersheds, and basins identified as priorities by the Administrator, working in cooperation with other 

Federal agencies, States, Indian tribes, local governments, scientists, and 

other conservation partners. 

(6) CORPS OF ENGINEERS.—Of the amounts made available each fiscal year to 

carry out this section, 8.1 percent shall be available to the Secretary of the 

Army for use by the Corps of Engineers to carry out natural resources adaptation activities restoring— 

(A) large-scale freshwater aquatic ecosystems, such as the ecosystems described in paragraph (5)(A); 

(B) large-scale estuarine ecosystems, such as the ecosystems described in 

paragraph (5)(B); 

(C) freshwater and estuarine ecosystems, watersheds, and basins identified as priorities by the Corps of Engineers, working in cooperation with 

other Federal agencies, States, Indian tribes, local governments, scientists, 

and other conservation partners; and 

(D) habitats and ecosystems through the implementation of estuary habitat restoration projects authorized by the Estuary Restoration Act of 2000 

(33 U.S.C. 2901 et seq.), project modifications for improvement of the environment, aquatic restoration and protection projects authorized by section 

206 of the Water Resources Development Act of 1996 (33 U.S.C. 2330), and 

other appropriate programs and activities. 

(d) USE OF FUNDS BY FEDERAL DEPARTMENTS AND AGENCIES.—Funds allocated to 

Federal departments and agencies under this section shall only be used for natural 

resources adaptation activities that are consistent with an adaptation plan developed and approved by the President under section 478. 

(e) STATE COST SHARING.—Notwithstanding any other provision of law, a State 

that receives a grant with amounts allocated under this section shall use funds from 

non-Federal sources to pay 10 percent of the costs of each activity carried out using 

amounts provided under the grant. 

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

(a) ESTABLISHMENT.—Within 6 months of the date of enactment of this subpart, 

the Secretary of the Interior, in cooperation with the States and Indian tribes, shall 

establish a National Fish and Wildlife Habitat and Corridors Information Program 

in accordance with the requirements of this section. 

(b) PURPOSE.—The purpose of this program is to— 


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(1) support States and Indian tribes in the development of a geographic information system database of fish and wildlife habitat and corridors that would 

inform planning and development decisions within each State, enable each 

State to model climate impacts and adaptation, and provide geographically specific enhancements of State wildlife action plans; 

(2) ensure the collaborative development, with the States and Indian tribes, 

of a comprehensive, national geographic information system database of maps, 

models, data, surveys, informational products, and other geospatial information 

regarding fish and wildlife habitat and corridors, that— 

(A) is based on consistent protocols for sampling and mapping across 

landscapes that take into account regional differences; and 

(B) that utilizes— 

(i) existing and planned State- and tribal-based geographic information system databases; and 

(ii) existing databases, analytical tools, metadata activities, and other 

information products available through the National Biological Information Infrastructure maintained by the Secretary and nongovernmental organizations; and 

(3) facilitate the use of such databases by Federal, State, local, and tribal decisionmakers to incorporate qualitative information on fish and wildlife habitat 

and corridors at the earliest possible stage to— 

(A) prioritize and target natural resources adaptation strategies and activities; 

(B) avoid, minimize, and mitigate the impacts on fish and wildlife habitat 

and corridors in siting energy development, water, transmission, transportation, and other land use projects; 

(C) assess the impacts of existing development on habitats and corridors; 

and 

(D) develop management strategies to enhance the ability of fish, wildlife, 

and plant species to migrate or respond to shifting habitats within existing 

habitats and corridors. 

(c) HABITAT AND CORRIDORS INFORMATION SYSTEM.— 

(1) IN GENERAL.—The Secretary, in cooperation with the States and Indian 

tribes, shall develop a Habitat and Corridors Information System. 

(2) CONTENTS.—The System shall— 

(A) include maps, data, and descriptions of fish and wildlife habitat and 

corridors, that— 

(i) have been developed by Federal agencies, State wildlife agencies 

and natural heritage programs, Indian tribes, local governments, nongovernmental organizations, and industry; 

(ii) meet accepted Geospatial Interoperability Framework data and 

metadata protocols and standards; 

(B) include maps and descriptions of projected shifts in habitats and corridors of fish and wildlife species in response to climate change; 

(C) assure data quality and make the data, models, and analyses included 

in the System available at scales useful to decisionmakers— 

(i) to prioritize and target natural resources adaptation strategies 

and activities; 

(ii) to assess the impacts of proposed energy development, water, 

transmission, transportation, and other land use projects and avoid, 

minimize, and mitigate those impacts on habitats and corridors; 

(iii) to assess the impacts of existing development on habitats and 

corridors; and 

(iv) to develop management strategies to enhance the ability of fish, 

wildlife, and plant species to migrate or respond to shifting habitats 

within existing habitats and corridors; 

(D) establish a process for updating maps and other information as landscapes, habitats, corridors, and wildlife populations change or as other information becomes available; 

(E) encourage the development of collaborative plans by Federal and 

State agencies and Indian tribes to monitor and evaluate the efficacy of the 

System to meet the needs of decisionmakers; 

(F) identify gaps in habitat and corridor information, mapping, and research that should be addressed to fully understand and assess current 

data and metadata, and to prioritize research and future data collection activities for use in updating the System and provide support for those activities; 


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(G) include mechanisms to support collaborative research, mapping, and 

planning of habitats and corridors by Federal and State agencies, Indian 

tribes, and other interested stakeholders; 

(H) incorporate biological and geospatial data on species and corridors 

found in energy development and transmission plans, including renewable 

energy initiatives, transportation, and other land use plans; 

(I) be based on the best scientific information available; and 

(J) identify, prioritize, and describe key parcels of non-Federal land located within the boundaries of units of the National Park System, National 

Wildlife Refuge System, National Forest System, or National Grassland 

System that are critical to maintenance of wildlife habitat and migration 

corridors. 

(d) FINANCIAL AND OTHER SUPPORT.—The Secretary may provide support to the 

States and Indian tribes, including financial and technical assistance, for activities 

that support the development and implementation of the System. 

(e) COORDINATION.—The Secretary, in cooperation with the States and Indian 

tribes, shall make recommendations on how the information developed in the System may be incorporated into existing relevant State and Federal plans affecting 

fish and wildlife, including land management plans, the State Comprehensive Wildlife Conservation Strategies, and appropriate tribal conservation plans, to ensure 

that they— 

(1) prevent unnecessary habitat fragmentation and disruption of corridors; 

(2) promote the landscape connectivity necessary to allow wildlife to move as 

necessary to meet biological needs, adjust to shifts in habitat, and adapt to climate change; and 

(3) minimize the impacts of energy, development, water, transportation, and 

transmission projects and other activities expected to impact habitat and corridors. 

(f) DEFINITIONS.—In this section: 

(1) GEOSPATIAL INTEROPERABILITY FRAMEWORK.—The term ‘‘Geospatial Interoperability Framework’’ means the strategy utilized by the National Biological 

Information Infrastructure that is based upon accepted standards, specifications, and protocols adopted through the International Standards Organization, 

the Open Geospatial Consortium, and the Federal Geographic Data Committee, 

to manage, archive, integrate, analyze, and make accessible geospatial and biological data and metadata. 

(2) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of the Interior. 

SEC. 482. ADDITIONAL PROVISIONS REGARDING INDIAN TRIBES. 

(a) FEDERAL TRUST RESPONSIBILITY.—Nothing in this subpart is intended to 

amend, alter, or give priority over the Federal trust responsibility to Indian tribes. 

(b) EXEMPTION FROM FOIA.—If a Federal department or agency receives any information related to sacred sites or cultural activities identified by an Indian tribe 

as confidential, such information shall be exempt from disclosure under section 552 

of title 5, United States Code, popularly known as the Freedom of Information Act 

(5 U.S.C. 552). 

(c) APPLICATION OF OTHER LAW.—The Secretary of the Interior may apply the provisions of Public Law 93–638 where appropriate in the implementation of this subpart. 

PART 2—INTERNATIONAL CLIMATE CHANGE 

ADAPTATION PROGRAM 

SEC. 491. FINDINGS AND PURPOSES. 

(a) FINDINGS.—Congress finds the following: 

(1) Global climate change is a potentially significant national and global security threat multiplier and is likely to exacerbate competition and conflict over 

agricultural, vegetative, marine, and water resources and to result in increased 

displacement of people, poverty, and hunger within developing countries. 

(2) The strategic, social, political, economic, cultural, and environmental consequences of global climate change are likely to have disproportionate adverse 

impacts on developing countries, which have less economic capacity to respond 

to such impacts. 

(3) The countries most vulnerable to climate change, due both to greater exposure to harmful impacts and to lower capacity to adapt, are developing countries with very low industrial greenhouse gas emissions that have contributed 

less to climate change than more affluent countries. 


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(4) To a much greater degree than developed countries, developing countries 

rely on the natural and environmental systems likely to be affected by climate 

change for sustenance, livelihoods, and economic growth and stability. 

(5) Within developing countries there may be varying climate change adaptation and resilience needs among different communities and populations, including impoverished communities, children, women, and indigenous peoples. 

(6) The consequences of global climate change, including increases in poverty 

and destabilization of economies and societies, are likely to pose long-term challenges to the national security, foreign policy, and economic interests of the 

United States. 

(7) It is in the national security, foreign policy, and economic interests of the 

United States to recognize, plan for, and mitigate the international strategic, social, political, cultural, environmental, health, and economic effects of climate 

change and to assist developing countries to increase their resilience to those 

effects. 

(8) Under Article 4 of the United Nations Framework Convention on Climate 

Change, developed country parties, including the United States, committed to 

‘‘assist the developing country parties that are particularly vulnerable to the adverse effects of climate change in meeting costs of adaptation to those adverse 

effects’’. 

(9) Under the Bali Action Plan, developed country parties to the United Nations Framework Convention on Climate Change, including the United States, 

committed to ‘‘enhanced action on the provision of financial resources and investment to support action on mitigation and adaptation and technology cooperation,’’ including, inter alia, consideration of ‘‘improved access to adequate, 

predictable, and sustainable financial resources and financial and technical support, and the provision of new and additional resources, including official and 

concessional funding for developing country parties’’. 

(b) PURPOSES.—The purposes of this part are— 

(1) to provide new and additional assistance from the United States to the 

most vulnerable developing countries, including the most vulnerable communities and populations therein, in order to support the development and implementation of climate change adaptation programs and activities that reduce the 

vulnerability and increase the resilience of communities to climate change impacts, including impacts on water availability, agricultural productivity, flood 

risk, coastal resources, timing of seasons, biodiversity, economic livelihoods, 

health and diseases, and human migration; and 

(2) to provide such assistance in a manner that protects and promotes the national security, foreign policy, environmental, and economic interests of the 

United States to the extent such interests may be advanced by minimizing, 

averting, or increasing resilience to climate change impacts. 

SEC. 492. DEFINITIONS. 

In this part: 

(1) ALLOWANCE.—The term ‘‘allowance’’ means an emission allowance established under section 721 of the Clean Air Act. 

(2) APPROPRIATE CONGRESSIONAL COMMITTEES.—The term ‘‘appropriate congressional committees’’ means— 

(A) the Committees on Energy and Commerce, Financial Services, and 

Foreign Affairs of the House of Representatives; and 

(B) the Committees on Environment and Public Works and Foreign Relations of the Senate. 

(3) DEVELOPING COUNTRY.—The term ‘‘developing country’’ means a country 

eligible to receive official development assistance according to the income guidelines of the Development Assistance Committee of the Organization for Economic Cooperation and Development. 

(4) MOST VULNERABLE DEVELOPING COUNTRIES.—The term ‘‘most vulnerable 

developing countries’’ means, as determined by the Administrator of USAID, developing countries that are at risk of substantial adverse impacts of climate 

change and have limited capacity to respond to such impacts, considering the 

approaches included in any international treaties and agreements. 

(5) MOST VULNERABLE COMMUNITIES AND POPULATIONS.—The term ‘‘most vulnerable communities and populations’’ means communities and populations that 

are at risk of substantial adverse impacts of climate change and have limited 

capacity to respond to such impacts, including impoverished communities, children, women, and indigenous peoples. 

(6) PROGRAM.—The term ‘‘Program’’ means the International Climate Change 

Adaptation Program established under section 493. 


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(7) USAID.—The term ‘‘USAID’’ means the United States Agency for International Development. 

(8) UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE.—The 

term ‘‘United Nations Framework Convention on Climate Change’’ or ‘‘Convention’’ means the United Nations Framework Convention on Climate Change 

done at New York on May 9, 1992, and entered into force on March 21, 1994. 

SEC. 493. INTERNATIONAL CLIMATE CHANGE ADAPTATION PROGRAM. 

(a) ESTABLISHMENT.—The Secretary of State, in consultation with the Administrator of USAID, the Secretary of the Treasury, and the Administrator of the Environmental Protection Agency, shall establish an International Climate Change Adaptation Program in accordance with the requirements of this part. 

(b) ALLOWANCE ACCOUNT.—Allowances allocated pursuant to section 782(n) of the 

Clean Air Act shall be available for distribution to carry out the Program established under subsection (a). 

(c) SUPPLEMENT NOT SUPPLANT.—Assistance provided under this part shall be 

used to supplement, and not to supplant, any other Federal, State, or local resources 

available to carry out activities of the type carried out under the Program. 

SEC. 494. DISTRIBUTION OF ALLOWANCES. 

(a) IN GENERAL.—The Secretary of State, or such other Federal agency head as 

the President may designate, after consultation with the Secretary of the Treasury, 

the Administrator of USAID, and the Administrator of the Environmental Protection Agency, shall direct the distribution of allowances to carry out the Program— 

(1) in the form of bilateral assistance pursuant to the requirements under section 495; 

(2) to multilateral funds or international institutions pursuant to the Convention or an agreement negotiated under the Convention; or 

(3) through a combination of the mechanisms identified under paragraphs (1) 

and (2). 

(b) LIMITATION.— 

(1) CONDITIONAL DISTRIBUTION TO MULTILATERAL FUNDS OR INTERNATIONAL

INSTITUTIONS.—In any fiscal year, the Secretary of State, or such other Federal 

agency head as the President may designate, in consultation with the Administrator of USAID, the Secretary of the Treasury, and the Administrator of the 

Environmental Protection Agency, shall distribute at least 40 percent and up 

to 60 percent of the allowances available to carry out the Program to one or 

more multilateral funds or international institutions that meet the requirements of paragraph (2), if any such fund or institution exists, and shall annually certify in a report to the appropriate congressional committees that any 

multilateral fund or international institution receiving allowances under this 

section meets the requirements of paragraph (2) or that no multilateral fund or 

international institution that meets the requirements of paragraph (2) exists, as 

the case may be. The Secretary of State shall notify the appropriate congressional committees not less than 15 days prior to any transfer of allowances to 

a multilateral fund or international institution pursuant to this section. 

(2) MULTILATERAL FUND OR INTERNATIONAL INSTITUTION ELIGIBILITY.—A multilateral fund or international institution is eligible to receive allowances available to carry out the Program— 

(A) if— 

(i) such fund or institution is established pursuant to— 

(I) the Convention; or 

(II) an agreement negotiated under the Convention; or 

(ii) the allowances are directed to one or more multilateral development banks or international development institutions, pursuant to an 

agreement negotiated under such Convention; and 

(B) if such fund or institution— 

(i) specifies the terms and conditions under which the United States 

is to provide allowances to the fund or institution, and under which the 

fund or institution is to provide assistance to recipient countries; 

(ii) ensures that assistance from the United States to the fund or institution and the principal and income of the fund or institution are 

disbursed only for purposes that are consistent with those described in 

section 491(b)(1); 

(iii) requires a regular meeting of a governing body of the fund or institution that includes representation from countries among the most 

vulnerable developing countries and provides public access; 

(iv) requires that local communities and indigenous peoples in areas 

where any activities or programs are planned are engaged through adeVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00274 Fmt 6659 Sfmt 6621 E:\HR\OC\HR137.XXX HR137

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quate disclosure of information, public participation, and consultation; 

and 

(v) prepares and makes public an annual report that— 

(I) describes the process and methodology for selecting the recipients of assistance from the fund or institution, including assessments of vulnerability; 

(II) describes specific programs and activities supported by the 

fund or institution and the extent to which the assistance is addressing the adaptation needs of the most vulnerable developing 

countries, and the most vulnerable communities and populations 

therein; 

(III) describes the performance goals for assistance authorized 

under the fund or institution and expresses such goals in an objective and quantifiable form, to the extent practicable; 

(IV) describes the performance indicators to be used in measuring or assessing the achievement of the performance goals described in subclause (III); 

(V) provides a basis for recommendations for adjustments to assistance authorized under this part to enhance the impact of such 

assistance; and 

(VI) describes the participation of other nations and international 

organizations in supporting and governing the fund or institution. 

(c) OVERSIGHT.— 

(1) DISTRIBUTION TO MULTILATERAL FUNDS OR INTERNATIONAL INSTITUTIONS.— 

The Secretary of State, or such other Federal agency head as the President may 

designate, in consultation with the Administrator of USAID, shall oversee the 

distribution of allowances available to carry out the Program to a multilateral 

fund or international institution under subsection (b). 

(2) BILATERAL ASSISTANCE.—The Administrator of USAID, in consultation 

with the Secretary of State, shall oversee the distribution of allowances available to carry out the Program for bilateral assistance under section 495. 

SEC. 495. BILATERAL ASSISTANCE. 

(a) ACTIVITIES AND FOREIGN AID.— 

(1) IN GENERAL.—In order to achieve the purposes of this part, the Administrator of USAID may carry out programs and activities and distribute allowances to any private or public group (including international organizations and 

faith-based organizations), association, or other entity engaged in peaceful activities to— 

(A) provide assistance to the most vulnerable developing countries for— 

(i) the development of national or regional climate change adaptation 

plans, including a systematic assessment of socioeconomic 

vulnerabilities in order to identify the most vulnerable communities 

and populations; 

(ii) associated national policies; and 

(iii) planning, financing, and execution of adaptation programs and 

activities; 

(B) support investments, capacity-building activities, and other assistance, to reduce vulnerability and promote community-level resilience related to climate change and its impacts in the most vulnerable developing 

countries, including impacts on water availability, agricultural productivity, 

flood risk, coastal resources, timing of seasons, biodiversity, economic livelihoods, health, human migration, or other social, economic, political, cultural, or environmental matters; 

(C) support climate change adaptation research in or for the most vulnerable developing countries; 

(D) reduce vulnerability and provide increased resilience to climate 

change for local communities and livelihoods in the most vulnerable developing countries by encouraging— 

(i) the protection and rehabilitation of natural systems; 

(ii) the enhancement and diversification of agricultural, fishery, and 

other livelihoods; and 

(iii) the reduction of disaster risks; 

(E) support the deployment of technologies to help the most vulnerable 

developing countries respond to the destabilizing impacts of climate change 

and encourage the identification and adoption of appropriate renewable and 

efficient energy technologies that are beneficial in increasing communitylevel resilience to the impacts of global climate change in those countries; 

and 


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(F) encourage the engagement of local communities through disclosure of 

information, consultation, and the communities’ informed participation relating to the development of plans, programs, and activities to increase 

community-level resilience to climate change impacts. 

(2) LIMITATIONS.—Not more than 10 percent of the allowances made available 

to carry out bilateral assistance under this part in any year shall be distributed 

to support activities in any single country. 

(3) PRIORITIZING ASSISTANCE.—In providing assistance under this section, the 

Administrator of USAID shall give priority to countries, including the most vulnerable communities and populations therein, that are most vulnerable to the 

adverse impacts of climate change, determined by the likelihood and severity 

of such impacts and the country’s capacity to adapt to such impacts. 

(b) COMMUNITY ENGAGEMENT.— (1) IN GENERAL.—The Administrator of USAID shall ensure that local communities, including the most vulnerable communities and populations therein, in 

areas where any programs or activities are carried out pursuant to this section 

are engaged in, through disclosure of information, public participation, and consultation, the design, implementation, monitoring, and evaluation of such programs and activities. 

(2) CONSULTATION AND DISCLOSURE.—For each country receiving assistance 

under this section, the Administrator of USAID shall establish a process for 

consultation with, and disclosure of information to, local, national, and international stakeholders regarding any programs and activities carried out pursuant to this section. 

(c) COORDINATION.— 

(1) ALIGNMENT OF ACTIVITIES.—Subject to the direction of the President and 

the Secretary of State, the Administrator of USAID shall, to the extent practicable, seek to align activities under this section with broader development, 

poverty alleviation, or natural resource management objectives and initiatives 

in the recipient country. 

(2) COORDINATION OF ACTIVITIES.—The Administrator of USAID shall ensure 

that there is coordination among the activities under this section, subtitle D of 

this title, and part E of title VII of the Clean Air Act, in order to maximize the 

effectiveness of United States assistance to developing countries. 

(d) REPORTING.— 

(1) INITIAL REPORT.—Not later than 180 days after the date of enactment of 

this part, the Administrator of USAID, in consultation with the Secretary of 

State, shall submit to the President and the appropriate congressional committees an initial report that— 

(A) based on the most recent information available from reliable public 

sources or knowledge obtained by USAID on a reliable basis, as determined 

by the Administrator of USAID, identifies the developing countries, including the most vulnerable communities and populations therein, that are 

most vulnerable to climate change impacts and in which assistance may 

have the greatest and most sustainable benefit in reducing vulnerability to 

climate change; and 

(B) describes the process and methodology for selecting the recipients of 

assistance under subsection (a)(1). 

(2) ANNUAL REPORTS.—Not later than 18 months after the date on which the 

initial report is submitted pursuant to paragraph (1), and annually thereafter, 

the Administrator of USAID, in consultation with the Secretary of State, shall 

submit to the President and the appropriate congressional committees a report 

that— 

(A) describes the extent to which global climate change, through its potential negative impacts on sensitive populations and natural resources in 

the most vulnerable developing countries, may threaten, cause, or exacerbate political, economic, environmental, cultural, or social instability or 

international conflict in those regions; 

(B) describes the ramifications of any potentially destabilizing impacts climate change may have on the national security, foreign policy, and economic interests of the United States, including— 

(i) the creation of environmental migrants and internally displaced 

peoples; 

(ii) international or internal armed conflicts over water, food, land, 

or other resources; 

(iii) loss of agricultural and other livelihoods, cultural stability, and 

other causes of increased poverty and economic destabilization; 

(iv) decline in availability of resources needed for survival, including 

water; 


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(v) increased impact of natural disasters (including droughts, flooding, and other severe weather events); 

(vi) increased prevalence or virulence of climate-related diseases; and 

(vii) intensified urban migration; 

(C) describes how allowances available under this section were distributed during the previous fiscal year to enhance the national security, foreign policy, and economic interests of the United States and assist in avoiding the economically, politically, environmentally, culturally, and socially 

destabilizing impacts of climate change in most vulnerable developing countries; 

(D) identifies and recommends the developing countries, including the 

most vulnerable communities and populations therein, that are most vulnerable to climate change impacts and in which assistance may have the 

greatest and most sustainable benefit in reducing vulnerability to climate 

change, including in the form of deploying technologies, investments, capacity-building activities, and other types of assistance for adaptation to climate change impacts and approaches to reduce greenhouse gases in ways 

that may also provide community-level resilience to climate change impacts; 

and 

(E) describes cooperation undertaken with other nations and international organizations to carry out this part. 

(e) MONITORING AND EVALUATION.— 

(1) IN GENERAL.—The Administrator of USAID shall establish and implement 

a system to monitor and evaluate the effectiveness and efficiency of assistance 

provided under this section in order to maximize the long-term sustainable development impact of such assistance, including the extent to which such assistance is meeting the purposes of this part and addressing the adaptation needs 

of developing countries. 

(2) REQUIREMENTS.—In carrying out paragraph (1), the Administrator of 

USAID shall— 

(A) in consultation with national governments in recipient countries, establish performance goals for assistance authorized under this section and 

express such goals in an objective and quantifiable form, to the extent practicable; 

(B) establish performance indicators to be used in measuring or assessing 

the achievement of the performance goals described in subparagraph (A), 

including an evaluation of— 

(i) the extent to which assistance under this section provided for disclosure of information to, consultation with, and informed participation 

by local communities; 

(ii) the extent to which local communities participated in the design, 

implementation, and evaluation of programs and activities implemented pursuant to this section; and 

(iii) the impacts of such participation on the goals and objectives of 

the programs and activities implemented under this section; 

(C) provide a basis for recommendations for adjustments to assistance authorized under this section to enhance the impact of such assistance; and 

(D) include, in the annual report to the appropriate congressional committees and other relevant agencies required under subsection (d)(2), findings resulting from the monitoring and evaluation of programs and activities under this section. 

PURPOSE AND SUMMARY

H.R. 2454, the ‘‘American Clean Energy and Security Act of 

2009’’ (ACES) was introduced by Rep. Henry A. Waxman and Rep. 

Edward J. Markey on May 15, 2009. The purpose of the legislation 

is to create clean energy jobs, achieve energy independence, reduce 

global warming pollution and transition to a clean energy economy. 

Key provisions in the bill: 

• Require electric utilities to meet 20 percent of their electricity 

demand through renewable energy sources and energy efficiency by 

2020. 

• Invest in new clean energy technologies and energy efficiency, 

including energy efficiency and renewable energy, carbon capture 


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1 International Energy Agency, World Energy Outlook 2008: Executive Summary, at 5 (2008). 2 Bureau of Labor Statistics, Employment Situation Summary (May 8, 2009) (online at http:// 

www.bls.gov/news.release/empsit.nr0.htm). 3Foreclosures in U.S. Rose 81 percent, Topping 2.3 Million Last Year, Bloomberg News (Jan. 

15, 2009) (online at http://www.bloomberg.com/apps/news?pid=20601110&sid=asgBXeQ.u5Lg). 4 House Committee on Energy and Commerce, Hearing on the U.S. Climate Action Partnership 

(Jan. 15, 2009). 

and sequestration, electric and other advanced technology vehicles, 

and basic scientific research and development. 

• Mandate new energy-saving standards for buildings and appliances, as well as promote efficiency in the industrial sectors. 

• Reduce carbon emissions from major U.S. sources by 17 percent by 2020 and over 80 percent by 2050 compared to 2005 levels. 

Complementary measures in the legislation, such as investments in 

preventing tropical deforestation, will achieve significant additional 

reductions in carbon emissions. 

• Protect consumers from energy price increases. 

BACKGROUND AND NEED FOR LEGISLATION

This may prove to be a watershed moment in the history of energy production and consumption. Between now and 2030, an estimated $1.5 trillion will be invested in energy infrastructure in the 

United States and more than $26 trillion will be invested worldwide.1 How these investments are made will have dramatic and 

consequential effects on the national security and economic future 

of the United States. How these investments are made may also 

determine the fate of our planet’s climate. 

ECONOMY 

The U.S. economy is not doing well. In April 2009, the national 

unemployment rate rose to 8.9 percent, with a loss of 5.7 million 

jobs since the recession began.2 Foreclosure filings in 2008 rose 81 

percent to 2.3 million.3 Congress has taken steps to help the economy recover, but more aid is needed. 

Investments in clean energy offer an important opportunity to 

spur economic growth. However, uncertainty about federal policies 

regarding energy and global warming pollution is impeding investors and CEOs in making investments in the energy sector. The 

Committee received testimony from numerous CEOs on this topic. 

Jim Rogers, Chairman, President and Chief Executive Officer of 

Duke Energy testified 

And let me quickly say, for our company, we plan to invest $25 billion in infrastructure over the next 5 years. It 

is critical we know the rules of the road of climate change 

as soon as possible to make sure that we are making the 

right investments. Regulatory uncertainty is postponing 

investments and renewables in other green technologies. 

It’s postponing the creation of jobs from apprentices to engineers to Ph.Ds. Our one fear—and I will leave this with 

you—is that many in Congress will look for reasons to 

postpone action on climate legislation this year.4

Jeffrey Immelt, Chairman and Chief Executive Officer of General 

Electric, similarly testified that 


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5 House Committee on Energy and Commerce, Hearing on the U.S. Climate Action Partnership, 111th Cong. (Jan. 15, 2009). 6 House Committee on Energy and Commerce, Hearing on the U.S. Climate Action Partnership, 111th Cong. (Jan. 15, 2009). 7 House Committee on Energy and Commerce, Hearing on the U.S. Climate Action Partnership, 111th Cong. (Jan. 15, 2009). 

Certainty in the investment world is critical to success. 

And what we lack today is certainty in terms of what is 

going to happen and when it is going to happen . . . 

[T]oday, we have almost the worst of all worlds. We have 

17 States that are developing their own programs. We 

have RPS in some areas, not in others. The fact is that the 

last 40-plus coal plants haven’t been permitted. You know, 

so we have an energy policy, it is just that nobody knows 

what it is. And it shows up in terms of those consequences. 

So, look, I am not—I say this with great respect to my colleagues—I didn’t come to this as an environmentalist. I 

come to it as an industrialist. I am a capitalist, pure, plain 

and simple. And I just think the system we have today is 

untenable over the long term, insofar as, you know, the 

science is so compelling on global warming.5

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

If climate change legislation is passed . . . the first thing 

it will do is it will unleash additional investment by us in 

various technologies designed to prepare for the cap-andtrade system that is coming. So, you know, this may be 

counterintuitive, but I think quite the contrary, in the 

near term it will actually unleash investment and create 

jobs. And we and many of the companies that sit here, we 

have very substantial capital. I think my company and 

Jeff’s are the two smallest at this panel. We sit with $1.5 

billion in investment capital ready to invest, but we need 

to know in what direction.6

Steve Kline, vice president of corporate environmental and federal 

affairs for PG&E Corporation stated 

We also see an incredible lost opportunity if we don’t act 

now . . . there are these amazing, developing new technology centers across the United States, and we see those 

jobs going overseas and that technology superiority going 

overseas. And so, in terms of our service territory, where 

Silicon Valley is putting a lot of time and energy into these 

technologies, we are going to lose that if we don’t act now.7

By establishing an energy policy that provides certainty with respect to both support for clean energy and regulatory obligations 

for global warming pollution, we can free up investments that have 

been on hold. By unleashing billions of dollars of private and public 

investment in new power generation, retrofits of existing capacity, 

energy efficiency, and offsets for global warming pollution, clean 

energy legislation can be an engine for both economic growth and 

job creation. 

Recent experience and economic analyses indicate the scope of 

the economic opportunities that these investments could create. 

Over the last few years, renewable electricity projects and compaVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00279 Fmt 6659 Sfmt 6602 E:\HR\OC\HR137.XXX HR137

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8 American Wind Energy Association, Wind Energy Grows by Record 8,300 MW in 2008 (Jan. 

27, 2009) (online at http://www.awea.org/newsroom/releases/ 

windlenergylgrowth2008l27Jan09.html). 9 American Wind Energy Association, U.S. Wind Energy Industry Praises Congress and President for Adopting Stimulus Bill (Feb. 17, 2009) (online at http://www.awea.org/newsroom/releases/awealstatementlonlstimuluslbilll17Feb09.html). 10 Up on the Roof, New Jobs in Solar, New York Times (Dec. 13, 2008) (online at http:// 

www.nytimes.com/2008/12/14/jobs/14starts.html?lr=3&8dpc). 11Solar Energy Industries Association, Solar Industry Recommends Steps to Implement Economic Stimulus, Continue to Grow Solar Industry (May 6, 2009) (online at http://www.seia.org/ 

cs/newsldetail?pressrelease.id=407). 12 BBC Research and Consulting, Employment and Other Economic Benefits from 

AdvancedCoal Electric Generation with Carbon Capture and Storage, (Feb. 2009). 13 National Venture Capital Association, Venture Capital Industry Joins President Obama in 

Support of Investing In Clean Energy Economy (Mar. 24, 2009) (online at http://www.nvca.org/ 

index.php?option=comldocman&task=docldownload&gid=414&Itemid=93l). 14 Clean Energy Funding Trumps Fossil Fuels, New York Times (June 3, 2009) (online at 

http://greeninc.blogs.nytimes.com/2009/06/03/clean-energy-funding-trumps-fossil-fuels/ 

?ref=global). 

nies have created tens of thousands of high-paying jobs. The wind 

industry in particular has been an engine of job growth. Last year, 

there were about 35,000 new wind jobs.8 Many of these jobs involve 

the construction of wind turbines and turbine components, and 

these new manufacturing jobs are located here in the United 

States.9

The solar industry is also producing clean energy jobs. More than 

3,000 companies employ between 25,000 and 35,000 workers.10 As 

demand for solar power increases, there are more jobs for solar 

panel installers, manufacturers, distributors, and material suppliers. The Solar Energy Industries Association predicts that the 

United States solar sector will be employing more than 110,000 

American workers by 2016.11

Applying new technologies to traditional fuels can also drive job 

creation. It has been estimated that construction of the first 20 

gigawatts of coal plants with carbon capture and storage will generate 1.4 million job-years of construction work and 47,500 jobs for 

operations and maintenance. Construction of 65 gigawatts of plants 

using CCS could create 4.5 million job-years of construction work 

and 152,500 jobs running those plants.12 Promotion of clean power 

construction and deployment of energy efficiency measures also 

does not risk making investments in jobs that will later be shifted 

to other countries, as these activities must be done domestically. 

Clean energy solutions, developed by American workers, present 

an unprecedented opportunity for innovation-driven economic revival. The clean technology sector is booming despite the economic 

downturn. Venture capital investments in the clean energy sector 

rose to more than $4 billion in 2008, a 54 percent increase from 

2007 levels.13 Globally, about 56% of investment dollars in new power capacity went to renewable sources, about $140 billion in 

2008. Again, investment grew even as the global economic crisis 

drove markets down; investments in clean energy rose 5% in 2008 

from 2007 levels.14

The renewable energy and energy efficiency technology sectors 

have already become a major engine of job creation, and numerous 

studies confirm that adoption of public policies to support these 

sectors will yield substantial job growth. Research commissioned by 

the American Solar Energy Society found that in 2007 the energy 

efficiency and renewable energy industries had revenues of $1 trillion and created more than 9 million jobs. Aggressive investment 

in energy efficiency would result in the creation of 37 million new 


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15 American Solar Energy Society, Green Collar Jobs in the U.S. and Colorado: Economic Drivers for the 21st Century (Jan. 2009) (online at http://www.ases.org/images/stories/ASES/pdfs/ 

COlJobslRptlJan2009lsummary.pdf). 16 Union of Concerned Scientists, Cashing in on Clean Energy (July 2007) (online at http:// 

ucsusa.org/assets/documents/cleanlenergy/cashing-in-national.pdf). 17 Center for American Progress and Political Economy Research Institute, Green Recovery: A 

Program to Create Good Jobs and Start Building a Low-Carbon Economy (Sept. 2008) (online 

at http://www.americanprogress.org/issues/2008/09/pdf/greenlrecovery.pdf). 18World Watch Institute, Another Sunny Year for Solar Power, (May 8, 2008) (online at http:// 

www.worldwatch.org/node/5449). 19 China Seen Surging to Top Wind Turbine Maker in 09, Reuters (Jan. 8 2009). 20 Center for American Progress, We Must Seize the Energy Opportunity or Slip Further Behind (Apr. 2009) (online at http://www.americanprogress.org/issues/2009/04/pdf/ 

chinalenergy.pdf). 

jobs and nearly $4.3 trillion in revenues by 2030.15 Investments in 

renewable energy create, on average, three to five times as many 

jobs as similar investments in fossil-fuel energy systems. A Union 

of Concerned Scientists analysis found that if utilities generated an 

average of 20 percent of their electricity from renewable sources, 

185,000 new jobs would be created by 2020.16 The Center for American Progress and the University of Massachusetts—Amherst’s Political Economy Research Institute have found that $100 billion targeted investment in five energy efficiency and renewable energy 

production strategies could generate 2 million new jobs, roughly 

800,000 of which would be in the construction sector.17 Such an approach would outperform an economic stimulus approach focused 

on increasing household spending, such as through rebate checks, 

which would create only 300,000 more jobs. 

The long-term health of the economy also depends upon the leadership of the United States in the technology sector. The United 

States risks losing its leadership in clean energy technology. Federal funding for energy research and development has fallen to $3– 

4 billion a year, which is one-third of the funding levels in the late 

1970s, in constant dollars. In the 1990s, the United States was the 

world leader in solar energy technology, but the leading manufacturers are now China, Japan and Europe.18 Similarly, China is expected to take the lead in the production of wind turbines in 

2009.19

Other nations are taking aggressive steps to lead on clean energy technology. China’s proposed stimulus plan will invest $221 billion 

over two years in clean energy and other environmentally friendly 

technologies. As a percentage of GDP, this is six times the level of 

investments made in the American Recovery and Reinvestment 

Act.20 The United States must take aggressive steps if we want to 

maintain leadership on the development and production of clean 

energy technologies and seize the economic opportunities presented 

by the global shift to cleaner forms of energy. 

ENERGY 

The United States is facing a deepening energy crisis. The most 

critical aspect of that crisis is our growing dependence on foreign 

oil, coupled with the volatility of oil and gasoline prices. But in a 

range of other key areas, including natural gas and electricity generation and transmission, the United States is facing challenges 

arising from growing demand, limits on supply, and rising global 

prices. At the same time, we find ourselves on the cusp of an unprecedented wave of investment in infrastructure and technology, 

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21 Energy Information Administration, Table 3.3a, Petroleum Trade: Overview (May 2009) (online at http://www.eia.doe.gov/emeu/mer/pdf/pages/sec3l7.pdf). 22 Energy Information Administration, Daily Cushing, OK WTI Spot Price FOB (online at 

http://tonto.eia.doe.gov/dnav/pet/hist/rwtcd.htm). 23 Energy Information Administration, Daily Cushing, OK WTI Spot Price FOB (online at 

http://tonto.eia.doe.gov/dnav/pet/hist/rwtcd.htm). 24 Energy Information Administration, Weekly U.S. Regular All Formulations Retail Gasoline 

Prices (online at http://tonto.eia.doe.gov/dnav/pet/hist/mglrtlusw.htm). 25 Energy Information Administration, International Energy Outlook: Highlights (May 27, 

2009) (online at http://www.eia.doe.gov/oiaf/ieo/pdf/highlights.pdf). 26 Energy Information Administration, International Energy Outlook: Highlights (May 27, 

2009) (online at http://www.eia.doe.gov/oiaf/ieo/pdf/highlights.pdf). 27 Energy Information Administration, Annual Energy Outlook 2009, at 139 (Mar. 2009) online 

at http://www.eia.doe.gov/oiaf/aeo/pdf/0383(2009).pdf). 28 U.S. Census Bureau, FT 900: U.S. International Trade in Goods and Services, Exhibit 17 

(Imports of Energy-Related Petroleum Products, Including Crude Oil) (July 2008) (online at 

http://www.census.gov/foreign-trade/Press-Release/currentlpresslrelease/exh17.pdf); U.S. 

Census Bureau, FT 900: U.S. International Trade in Goods and Services, Exhibit 17 (Imports 

of Energy-Related Petroleum Products, Including Crude Oil) (July 2003) (online at http:// 

www.census.gov/foreign-trade/Press-Release/2003pr/07/exh17.pdf). 

swer the challenge. Between now and 2030, more than $26 trillion 

will be invested in energy infrastructure worldwide, and an estimated $1.5 trillion will be invested in the United States power sector alone. This places us at a critical decision point in the development of the United States and global energy economies. 

DEPENDENCE ON OIL

The single greatest energy security challenge facing the United 

States in the 21st century is our growing dependence on foreign oil. 

The United States imported more than 4 billion barrels of oil in 

2008, or 57 percent of its total oil consumption. This represents an 

increase in imports compared to 2000, when the U.S. imported 53 

percent of the oil it consumed and 1990, when imports stood at 42 

percent.21 Our dependence on oil makes us vulnerable to price 

spikes and market manipulation. Because oil accounts for nearly a 

third of domestic global warming pollution, oil dependence is also 

a cause of significant environmental harm. 

Oil and gasoline prices have been extremely volatile over the past several years. The price of oil rose from $18 per barrel in January 2002 to $147 per barrel in July 2008, an increase of more 

than 700 percent.22 Prices doubled in just 12 months between July 

2007 and July 2008 before declining in the face of an expanding 

global financial crisis.23 Similarly, gasoline prices soared from under $1.50 per gallon in January 2001 to more than $4.11 in July 

2008.24 By June 2009, oil prices had more than doubled from their December lows and were back around $70 per barrel, while average 

gasoline prices had climbed back to more than $2.50 per gallon. 

The EIA projects oil prices will climb from $61 per barrel in 2009 

to $110 per barrel in 2015.25

By 2030, global demand for oil is expected to grow to 107 million 

barrels per day (mbd) compared to current levels of 84 mbd,26

largely due to demand increases in the developing world. And, despite significant petroleum savings that will result from the fuel 

economy standard increases and biofuel mandates included in the 

Energy Independence and Security Act of 2007 (EISA), demand for 

oil in the United States is expected to continue to grow, from 20.8 

mbd today to 21.6 mbd in 2030.27

Oil dependence imposes a significant cost on the United States economy. Oil imports cost the United States a staggering $342 billion in 2008.28 Dr. David L. Greene of the Oak Ridge National LabVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00282 Fmt 6659 Sfmt 6602 E:\HR\OC\HR137.XXX HR137

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29Oak Ridge National Laboratory, Costs of Oil Dependence Update 2008: Summary (Aug. 8, 

2008). 30 U.S. Mineral Management Service, Report to Congress: Comprehensive Inventory of U.S. 

OCS Oil and Natural Gas Resources (Feb. 2006) (online at http://www.mms.gov/revaldiv/ 

PDFs/FinalInvRptToCongress050106.pdf). Figures are adjusted to account for the estimated 

1.26 billion barrels of oil and 79.96 trillion cubic feet of gas in the Gulf of Mexico that were 

made accessible following this inventory by the Gulf of Mexico Energy Security Act of 2006. 31 U.S. Mineral Management Service, Report to Congress: Comprehensive Inventory of U.S. 

OCS Oil and Natural Gas Resources (Feb. 2006) (online at http://www.mms.gov/revaldiv/ 

PDFs/FinalInvRptToCongress050106.pdf). 32 Energy Information Administration, Analysis of Crude Oil Production in the Arctic National 

Wildlife Refuge (May 2008) (online at http://www.eia.doe.gov/oiaf/servicerpt/anwr/index.html). 33 Energy Information Administration, Analysis of Crude Oil Production in the Arctic National 

Wildlife Refuge, at 11 (May 2008) (online at http://www.eia.doe.gov/oiaf/servicerpt/anwr/ 

index.html). 34 Conventional oil is crude oil and natural gas liquids produced from underground reservoirs 

by means of conventional wells. Non-conventional oil includes oil shales, oil sands, and extraheavy crude. 35 Energy Information Administration, Long-term Global Oil Scenarios: Looking Beyond 2030 

(Presentation to the EIA 2008 Energy Conference, Apr. 7, 2008). EIA uses 20.6 trillion barrels 

as its base case. 

oratory estimates that the full cost of dependence on foreign oil to 

the United States economy is much higher—$750 billion in 2008, 

including a loss of potential GDP of $352 billion (about 2 percent 

of total GDP).29

This growing dependence on foreign oil has dire implications for 

United States national security and economic stability. Dependence 

on imported oil makes the United States increasingly vulnerable to 

foreign governments’ manipulation of supply and prices. Although 

Canada and Mexico supply a substantial proportion of United 

States imports, OPEC countries control virtually all of the world’s 

marginal production capacity and therefore have the ability to set 

the global price for this commodity. 

While many are calling for increased domestic production as the 

solution, the facts make clear that we cannot drill our way out of 

this problem. More drilling will have minimal impact on prices consumers pay for oil or gasoline and will not substantially reduce 

U.S. dependence on foreign oil. While nearly 83 percent of technically recoverable offshore oil reserves in the United States are located in areas already available for leasing and drilling prior to the 

October 1, 2008 expiration of the Congressional moratoria,30 the 

Department of Energy’s Energy Information Administration (EIA) 

estimates that, even if drilling were permitted in the OCS of the 

entire continental United States, this would increase cumulative 

U.S. oil production by only 1.6 percent by 2030 and would have an 

‘‘insignificant’’ impact on prices.31 EIA estimates that if the Arctic 

National Wildlife Refuge were opened for drilling, production would 

likely peak in 2027 at just 0.78 million barrels per day—reducing 

world oil prices by 75 cents per barrel in EIA’s average price and 

resource case.32 In addition, EIA notes that ‘‘the Organization of 

Petroleum Exporting Countries (OPEC) could neutralize any potential price impact of ANWR oil production by reducing its oil exports 

by an equal amount.’’ 33

Finally, regardless of U.S. oil production trends there are serious 

questions about whether increasing global demand can be met. Estimates of the total petroleum resource currently in the ground— 

both conventional and unconventional 34—vary from 14 to 24 trillion barrels.35 However, ‘‘proven reserves,’’ those that have already 

been discovered and are expected to be economically producible are 

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36Simmons & Company International, The 21st Century Energy Crisis Has Arrived (Presentation to the CFA Society of Atlanta, Apr. 16, 2008). 37 International Energy Agency, World Energy Outlook 2006 at 90 (2006). 

rels worldwide. At the same time, generating new oil supply is 

proving increasingly difficult. New oil fields are generally in expensive and hard-to-reach places like deep water areas in the Gulf of 

Mexico.36 Even with advances in technology, the average size of 

discoveries per exploratory well is around 10 million barrels, which 

is half the output of wells dug between 1965 and 1979.37

The shrinking margin between stagnant supply and soaring demand provides yet another reason that the United States and the 

world need to begin to look beyond oil to meet our growing energy 

needs. 

SOLUTIONS TO THE OIL DEPENDENCE

Addressing our dependence on oil is primarily a transportation 

challenge. The U.S. transportation sector produces roughly a third 

of total U.S. greenhouse gas emissions, accounts for approximately 

69 percent of total U.S. oil consumption, and is 95 percent dependent upon petroleum. Reducing both oil consumption and global 

warming pollution in the transportation sector will require the 

United States to address three interrelated issues—the efficiency of 

our vehicles, the fuels that power them, and how much we drive 

them. 

VEHICLES AND FUEL—INCREASE FUEL ECONOMY AND TRANSITION TO

ELECTRIC DRIVE

Implementing higher fuel economy standards is one of the most 

important means to increase energy independence of the United 

States. The Energy Independence and Security Act of 2007 (EISA) 

mandated that fuel economy standards increase by at least 40 percent, to 35 mpg, by 2020. On May 19, 2009, President Obama announced his Administration’s intent to harmonize fuel economy 

standards set by the U.S. Department of Transportation, tailpipe 

standards set by the Environmental Protection Agency and California’s clean car regulations, such that the automotive fleet would 

achieve the equivalent of 35.5 miles per gallon by 2016. 

EISA also authorized a number of research, development, demonstration, and deployment programs for plug-in hybrid, advanced 

vehicle battery, and other advanced vehicle technologies. Section 

136 of EISA authorized $25 billion in loans to support retooling of 

U.S. auto manufacturing facilities to produce more fuel efficient vehicles—a program that was fully funded under H.R. 2638, the continuing resolution enacted September 30, 2008. 

The development of plug-in hybrid electric vehicles (PHEVs) and 

all-electric vehicles holds great potential to enhance America’s energy independence and reduce greenhouse gas emissions. Electric 

motors are three to four times more efficient at turning their fuel 

into useful work than either gasoline or diesel engines. They also 

consume no energy while idling and utilize regenerative braking to 

recharge the vehicle’s battery. Every major automaker has announced plans to produce all-electric vehicles or PHEVs for the 

U.S. market, to be made available as soon as 2010. 


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38Pacific Northwest National Laboratory, Impacts Assessment of Plug-In Hybrid Vehicles on 

Electric Utilities and Regional U.S. Power Grids, Part 1: Technical Analysis, (2006) (online at 

http://energytech.pnl.gov/publications/pdf/PHEVlFeasibilitylAnalysislPart1.pdf). 39 Electric Cars—How Much Does It Cost per Charge?, Scientific American (March 13, 2009) 

(online at http://www.scientificamerican.com/article.cfm?id=electric-cars-cost-per-charge). 40 Id. 41Pacific Northwest National Laboratory, Impacts Assessment of Plug-in Hybrid Vehicles on 

Electric Utilities and Regional U.S. Power Grids Part I: Technical Analysis, at 13 (2007). 42Federal Highway Administration, Our Nation’s Highways—2000 (2000) (online at http:// 

www.fhwa.dot.gov/ohim/onh00/bar4.htm). 43Federal Highway Administration, Our Nation’s Highways—2000, at 24 (2000) (online at 

http://www.fhwa.dot.gov/ohim/onh00/bar4.htm). 44 U.S. Department of Transportation, Transportation Vision 2030 at 5 (Jan. 2008) (online at 

http://www.rita.dot.gov/publications/transportationlvisionl2030/pdf/entire.pdf). 

The electric grid is an important and readily available piece of 

infrastructure that could power the transport sector in the United 

States. The electricity infrastructure is currently designed to meet 

the highest expected demand for power, which only occurs for a few 

hundred hours a year. During the night more than 50 percent of 

generating capacity lies idle. By utilizing this idle generating capacity, the Department of Energy’s Pacific Northwest National 

Laboratory found that up to 84 percent of U.S. cars, pickup trucks, 

and sport utility vehicles can be transitioned to electricity without 

building a single new power plant.38 An 84 percent level of electric 

vehicle penetration is estimated to eliminate the consumption of 

6.5 million barrels of oil equivalent per day, more than all the oil 

currently imported from OPEC countries.39 With the national average cost of electricity of 8.5 cents per kilowatt hour, an electric vehicle runs on an equivalent of around 75 cents per gallon.40

PHEVs slash greenhouse gas emissions, even with our current 

electricity fuel mix. Even given the current U.S. electricity generation profile, almost half of which is comprised of carbon-intensive 

coal combustion, the nationwide deployment of battery-powered 

electric vehicles would still reduce greenhouse gas emissions by as 

much as 27 percent as compared to equivalent gasoline-powered vehicles.41 Greenhouse gas benefits will improve in the future as renewable and other low- or no-carbon electricity generation increases. 

The American Recovery and Reinvestment Act included substantial funding to advance the development of batteries for electric vehicles. 

REDUCE VEHICLE MILES TRAVELED WHILE IMPROVING QUALITY OF

LIFE

To meet our energy security and global warming pollution reduction goals, we must provide options for individuals who wish to get 

from place to place without driving. Americans drive much more 

than individuals in other advanced industrial countries—5,700 

miles a year compared with 2,368 in Japan and 3,961 in Germany 

as of 1997.42 The number of vehicle miles traveled (VMT) nearly 

quadrupled between 1960 and 2000 43 and is projected to increase 

another 60 percent by 2030.44 If left unchecked, this projected VMT 

growth will substantially reduce the oil consumption and global 

warming pollution benefits of increased fuel economy and cleaner 

fuels. 

A broad array of policies can help communities to ‘‘grow smarter,’’ while reducing VMT. Increasing public transit and creating 

more pedestrian and bicycle-friendly infrastructure can encourage 


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45The Brookings Institution, Investing in a Better Future: A Review of the Fiscal and Competitive Advantages of Smarter Growth Development Patterns (March 2004) (online at http:// 

www.brookings.edu//media/Files/rc/reports/2004/03metropolitanpolicylmuro/ 

200403lsmartgrowth.pdf). 46 Energy Information Administration, Annual Energy Review 2007, at 224–26 (2008). 47 Energy Information Administration, Electric Power Annual with data for 2007, Table 2.4 

(Planned Nameplate Capacity Additions from New Generators, by Energy Source, 2008 through 

2012) (2009) (online at http://www.eia.doe.gov/cneaf/electricity/epa/epat2p4.html). 48 Energy Information Administration, Annual Coal Report (2007) (online at www.eia.doe.gov/ 

neic/infosheets/coalreserves.html and www.eia.doe.gov/cneaf/coal/page/acr/acrlsum.html). 49 U.S. Environmental Protection Agency, Draft U.S. Greenhouse Gas Inventory Report (2009) 

(online at www.epa.gov/climatechange/emissions/downloads09/07ES.pdf). 50World Coal Institute, Coal Facts 2008 (online at http://www.worldcoal.org/pages/content/ 

index.asp?PageID=188). 51 Energy Information Administration, International Energy Outlook (2008) (online at 

www.eia.doe.gov/oiaf/ieo/emissions.html). 

people to travel without using a car. Planning roads and pathways 

to create shorter, direct links to destinations can limit car distances. Communities that implement such improvements reduce 

global warming pollution, balance local budgets by avoiding infrastructure costs, and reduce family gasoline bills.45

Although most of these policies are implemented at the local, 

State, or regional level, federal policy can play a substantial role 

in supporting them. 

THE ELECTRICITY CHALLENGE

The overall fuel mix for power generation in the United States 

has remained relatively stable over the past decade. In 2007, coal 

remained the leading fuel source, accounting for 49 percent of generation, followed by natural gas with 21 percent, and nuclear with 

19 percent. Hydroelectric power accounted for 6 percent, and nonhydro renewables provided 3 percent.46 New capacity is shifting 

from reliance on coal to natural gas and wind energy. In 2008, natural gas accounted for 48 percent of all new generating capacity, 

wind accounted for 42 percent, and coal accounted for less than 6 

percent—with solar, biomass, and geothermal making up most of 

the balance.47

COAL

Coal is a key fuel for the electric power sector, both for the 

United States and the rest of the world. The United States has the 

largest coal reserves in the world (28% of global reserves) and produces more than a billion short tons of coal annually.48 More than 

90% of U.S. coal consumption is used for electricity generation, and 

coal powers nearly 50% of all U.S. electricity generation.49 China 

and India, two of the largest, fastest growing economies in the 

world, both have large coal reserves and rely on coal for the majority of their electricity generation (78% for China and 69% for 

India).50

Greenhouse gas emissions from coal use present a serious challenge in addressing global climate change. Because of coal’s high 

carbon content, coal-fired power plants emit roughly twice as much 

carbon dioxide (CO2) per unit of electricity as natural gas-fired 

plants. Existing coal-fired plants account for almost a third of U.S. 

CO2 emissions. Globally, CO2 emissions from coal have grown from 

39% in 1990 to 41% in 2005, and are projected to reach 44% by 

2030 absent an international agreement to limit emissions.51


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52 National Energy Technology Laboratory, Tracking New Coal-Fired Power Plants (Jan. 5, 

2009) (online at www.netl.doe.gov/coal/refshelf/ncp.pdf). 53 Energy Information Administration, Annual Energy Outlook Early Release Overview (2009) 

(online at www.eia.doe.gov/oiaf/aeo/overview.html). 54 Energy Information Administration, Annual Energy Outlook Early Release Overview (2009) 

(online at www.eia.doe.gov/oiaf/aeo/overview.html). 55See, e.g., Intergovernmental Panel on Climate Change, Special Report on Carbon Capture 

and Storage (IPCC CCS Report)(2005) (online at http://arch.rivm.nl/env/int/ipcc/ 

pageslmedia/SRCCS-final/IPCCSpecialReportonCarbondioxideCaptureandStorage.htm). 

Regulatory uncertainty concerning both State and federal approaches to controlling greenhouse gas emissions has already had 

an impact on the construction of new coal-fired electric generating 

capacity. Multiple coal-based projects have been canceled or delayed over the past two years, and uncertainty over climate policy 

has played a role.52 With respect to future capacity expansion, the 

Energy Information Administration (EIA), in its preliminary 2009 

Annual Energy Outlook, projects that a total of 46,000 megawatts 

of coal-fired generating capacity will be added in the United States 

from 2007 to 2030.53 This represents less than half of the projected 

expansion (103,000 megawatts) forecast in the 2008 reference case. 

EIA states: 

Beyond the well-known uncertainties with respect to future 

demand growth and fuel, labor, and new plant costs, [energy 

companies] also must consider the potential impact of concerns 

surrounding energy-related GHG [greenhouse gas] emissions. 

Even without the enactment of Federal laws and policies limiting U.S. GHG emissions, regulators and the investment community are beginning to push energy companies to shift their 

investments towards less GHG-intensive technologies.54

A central element in discussions concerning federal climate 

change policy is how to reconcile the continued use of coal with the 

objective of achieving significant reductions in greenhouse gas 

emissions. While multiple strategies exist to reduce coal-related 

greenhouse gas emissions, a consensus has emerged that carbon 

capture and storage (CCS) technologies, involving physical capture 

of CO2 at power plants and other major point sources and compression and injection of CO2 into deep geological reservoirs, provide a 

likely path forward. 

CARBON CAPTURE AND SEQUESTRATION

There are three principal technology options for capturing CO2

emissions at coal-based power plants: (1) pre-combustion capture 

using integrated gasification combined cycle (‘‘IGCC’’) technology; 

(2) pre-combustion capture using oxy-fuel combustion; and (3) postcombustion capture using solvents or membranes.55

In an IGCC plant, coal is processed in a reactor with steam and 

oxygen before combustion to produce a mixture consisting mainly 

of carbon monoxide and hydrogen known as ‘‘synthesis gas’’ or 

‘‘syngas.’’ The carbon monoxide is then mixed with steam to 

produce CO2 and more hydrogen. The hydrogen becomes a carbonfree fuel to power the plant, while the CO2 can be compressed for 

transport and ultimate storage. There are four IGCC plants in operation worldwide, including two in the United States. 

Oxy-fuel combustion eliminates nitrogen from exhaust gases by 

burning the fuel in pure oxygen or a mixture of pure oxygen and 

CO2-rich recycled flue gas. The main emissions from this process 


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56See, e.g., National Energy Technology Laboratory, Carbon Sequestration Atlas of the United 

States and Canada (2007) (online at www.netl.doe.gov/technologies/carbonlseq/refshelf/atlas/). 57 U.S. Department of Energy, Carbon Sequestration: Technology Roadmap and Program Plan 

2005, at 4 (2005) available at http://fossil.energy.gov/programs/sequestration/publications/ 

programplans/2005/sequestrationlroadmapl2005.pdf. 58 IPCC CCS Report; Massachusetts Institute of Technology, The Future of Coal: Options for 

a Carbon-Constrained Economy (2007) (online at http://web.mit.edu/coal/) (MIT Future of Coal 

Report). 

are CO2 and water. Once compressed, dried, and purified, the CO2

is ready for transport and storage. Although the key elements of 

oxy-fuel combustion technology are currently in commercial use, it 

has not yet been deployed for CO2 capture on a commercial scale. 

Post-combustion capture systems use a solvent or a membrane to 

separate CO2 from the power plant’s flue gases. Post-combustion 

capture technologies are already commercially available and are 

used to capture CO2 from coal- and gas-fired plants in the food and 

beverage and chemical-production industries. They would have to 

be significantly scaled up from current applications to be used in 

large commercial power plants. 

After CO2 is captured, it is compressed into a dense fluid (supercritical) state for transport via pipeline to an injection site. Three 

types of geologic formations are well-suited to long-term storage of 

injected CO2: depleted oil and gas fields, saline formations, and 

deep coal seams. Surveys indicate that both global and U.S. storage 

capacity is potentially vast.56 The Department of Energy projects 

that U.S. domestic geologic formations ‘‘have at least enough capacity to store several centuries’ worth of point source emissions’’ from 

the United States.57 There appears to be a good correlation between emissions sources and geological basins suitable for longterm storage, and preliminary assessments suggest that risks to 

human health and the environment from large-scale injection of 

CO2 are limited.58 Underground injection of naturally produced 

CO2 has been used since the early 1970s as part of enhanced oil 

recovery projects, and there are several major commercial projects 

around the world that inject captured CO2 for underground storage. A variety of new projects are now under development. 

Although most of the technologies on which CCS is based are already demonstrated, they have not yet been integrated or implemented at the scale needed to mitigate power plant emissions. Applying CCS to a single 500 megawatt coal-fired plant, for example, 

could involve capture and injection of 2–3 million metric tons of 

CO2 annually. 

In addition to technical concerns, there are economic obstacles to 

widespread deployment of CCS. For example, carbon capture technologies typically require significant amounts of power to operate; 

the energy penalty imposed and consequent requirement for ‘‘makeup’’ power carry a cost. The overall capital and operating costs to 

capture and sequester carbon are also substantial, though such 

costs are expected to decrease over time as technologies mature. 

Such costs, in the absence of appropriate regulatory drivers, will 

impede commercial-scale deployment of CCS technologies. While 

current cost estimates for CCS are highly uncertain, they provide 

some sense of the point at which CCS will become a feasible mitigation strategy for coal-fired plants and other industrial emitters. 

A 2008 McKinsey study estimated between $38–57 per ton of CO2

abated for its reference plants, though it put the cost for early demVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00288 Fmt 6659 Sfmt 6602 E:\HR\OC\HR137.XXX HR137

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59McKinsey & Company, Carbon Capture & Storage: Assessing the Economics (Sept. 2008) 

(online at www.mckinsey.com/clientservice/ccsi/pdf/CCSlAssessingl thelEconomics.pdf). 60See, e.g., MIT Future of Coal Report; and McKinsey & Company, Reducing U.S. Greenhouse 

Gas Emissions: How Much at What Cost? (Dec. 2007) (online at www.mckinsey.com/ 

clientservice/ccsi/pdf/USlghglfinallreport.pdf). 61 Environmental Protection Agency, Federal Requirements Under the Underground Injection 

Control Program for Carbon Dioxide Geologic Sequestration Wells (Jul. 25, 2008) (online at 

www.epa.gov/fedrgstr/EPA-WATER/2008/July/Day-25/w16626.htm). 62 Energy Information Administration, International Energy Outlook 2008, at 44 (Table 6) 

(June 2008) (online at http://www.eia.doe.gov/oiaf/ieo/pdf/natlgas.pdf). 63Letter from the Nuclear Energy Institute to Rep. Edward J. Markey (Oct. 21, 2008). 

onstration projects at $77–115 per ton.59 Other studies estimate 

that CO2 allowance prices would have to range anywhere from 

$30–60 per ton in order to make CCS economically viable.60 Because State utility regulation would likely prevent recovery of this 

cost differential between controlled and uncontrolled plants, utilities are unlikely to invest in CCS in the absence of a regulatory 

requirement to do so. 

Large-scale underground injection and storage of CO2 also presents a series of legal and regulatory questions. EPA has issued a 

proposed rulemaking addressing the subsurface aspects of sequestration under the Safe Drinking Water Act’s Underground Injection 

Control program, but as yet there is no comprehensive regulatory 

regime for commercial-scale injection either at the federal or State 

level.61 Some of these questions—such as those related to subsurface property rights—will likely be answered at the State level. 

Congress has taken some steps to promote development of CCSrelated technologies. The Energy Independence and Security Act of 

2007 authorized a research, development, and demonstration program for CCS technologies and directed the Department of the Interior to gather detailed data on potential geologic storage capacity. 

The American Recovery and Reinvestment Act of 2009 provided 

funds of $3.4 billion to the Department of Energy for use in fossil 

energy projects, portions of which will likely be used to support 

CCS demonstration projects. 

NATURAL GAS

The United States accounts for more than 22 percent of global 

consumption of natural gas, but has only 3.4 percent of global reserves. Domestic production satisfies 80 percent of U.S. demand— 

and more than 80 percent of U.S. imports come from Canada.62

Natural gas has become the fuel of choice for new power plants 

in the United States. Natural gas accounted for nearly half of new 

generating capacity built in the United States in 2008. In addition, 

natural gas is a critical feedstock and fuel for U.S. manufacturing, 

accounting for 29 percent of U.S. natural gas use. Natural gas 

prices have been highly volatile in recent years, with large swings 

driven by high demand in some years, and more recently, downward pressure on prices due to reduced demand and increased domestic production. 

NUCLEAR POWER

Electric utilities have recently filed 17 applications with the Nuclear Regulatory Commission for 26 new reactor operating licenses. 

In recent years, the projected cost of a new 1,000 megawatt reactor 

has increased from approximately $2 billion to $6–8 billion.63 In 


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64 Nuclear Power: 17 Apply for DOE Loan Guarantees, Far Exceeding Available Cash, Greenwire (Oct. 2, 2008). 65 Energy Information Administration, Annual Energy Review 2007: Table 8.2b Electricity Net 

Generation: Electric Power Sector, Selected Years, 1949–2007 (June 23, 2008). 66Lawrence Berkeley National Laboratory, Renewables Portfolio Standards in the United 

States: A Status Report with Data Through 2007 (Apr. 2008) (online at http://eetd.lbl.gov/ea/ 

EMS/reports/lbnll154e-revised.pdf). 67World Wind Energy Association, World Wind Energy Report 2008 (Feb. 2009) (online at 

http://www.wwindea.org/home/images/stories/worldwindenergyreport2008ls.pdf). 68 U.S. Department of Energy, 20 percent Wind Energy By 2030: Increasing Wind Energy’s 

Contribution to the U.S. Electricity Supply (July 2008) (online at http://www1.eere.energy.gov/ 

windandhydro/pdfs/41869.pdf). 

light of these costs and risks, it is unclear whether private financing would be available for new nuclear facilities without the assurance of federal government loan guarantees. 

The existing Department of Energy Title XVII loan guarantee 

program has authority to provide up to $51 billion in loan guarantees, $18.5 billion of which is specifically set aside for nuclear 

power. The Department has received applications for federal loan 

guarantees from 21 proposed nuclear power plants, totaling $122 

billion in requested assistance.64

Nuclear power faces a challenge in remaining competitive in electricity markets where low cost generation has priority dispatch to 

the grid. While the operating costs of nuclear power are comparatively low, it continues to be an expensive investment for electricity 

ratepayers due to large up-front capital costs. 

RENEWABLE ENERGY

Renewable electricity currently generates 8.4 percent of the country’s electricity, with non-hydroelectric renewables responsible for 

just 2.5 percent.65 Reaching 20 percent of total generation by 2020 

is an ambitious, but achievable, target for renewable electricity. 

The Committee believes that adoption of a national renewable 

electricity standard (RES) should be a centerpiece of our national 

energy strategy. State-level RES requirements have been a key 

driver of renewable energy growth in the U.S. Seventy-one percent 

of the population now lives in one of the 28 states with these mandatory policies in place. More than half of the non-hydroelectric renewable electricity capacity added in the U.S. over the last decade 

has occurred in States with RES programs, with little or no impact 

on consumer electricity rates.66 During the 110th Congress, the 

House twice passed a national RES of 15 percent by 2020—with 

the option to meet up to 4 percent with efficiency—but the measure 

failed to pass the Senate. 

The renewable resources outlined below are among the most likely to contribute significantly to the U.S. and global electricity supply over the next two to three decades. 

WIND

More than 27,000 megawatts of new wind capacity was installed 

worldwide in 2008, nearly a quarter of which was installed in the 

United States.67 Department of Energy research suggests generating 20 percent of electricity from wind in the United States is an 

ambitious yet feasible scenario if certain challenges are overcome.68

With policy support, the United States is projected to have more 

than 60,000 megawatts of wind installed by 2012 and by 2016 it 


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69Solarbuzz, Marketbuzz 2008: Annual World Solar Photovoltaic industry Report (2008). 70 Earth Policy Institute, Solar Cell Production Jumps 50 Percent in 2007 (Dec. 27, 2007) (online at http://www.earth-policy.org/Indicators/Solar/2007.htm). 71 National Renewable Energy Laboratory, Quantifying the Benefits of Extending the Solar 

ITC (Feb. 2008). 

could reach 112,000 megawatts, surpassing nuclear capacity in the 

United States. 

As wind technology continues to improve, prices are falling and 

capacity factors are increasing. The cost of wind energy over the 

past 20 years has dropped from 40 cents per kWh to 4 to 6 cents 

per kWh at good sites. While most new wind turbines in the United 

States produce 1.5 to 2 megawatts of power, superconducting materials may enable the construction of 10 megawatt turbines in the 

near future. Increases in the capacity factor of the turbines or the 

percentage of time in which they are producing at their full capacity—have grown 11 percent over the past two years and will continue to increase as the technology improves. 

SOLAR

With more energy in the form of solar radiation striking the 

Earth’s surface in an hour than humanity uses in an entire year, 

the available solar energy resource is enormous. Capturing this energy and converting it into electricity is primarily done through 

photovoltaic cells that convert sunlight into direct electrical current 

and concentrating solar power, which concentrates the sun’s energy 

using huge mirrors or lenses and then uses this heat to run a conventional turbine. 

Solar photovoltaics (PV) have experienced explosive growth over 

the last several years. World capacity grew 62 percent in 2007 

alone 69 and solar PV installations in the United States grew by 

more than 80 percent in 2007.70 Over the next two decades, solar 

PV will become a major source of power—both here in the United 

States and globally. Solar PV is projected to grow from a $20 billion industry in 2007 to a $74 billion industry within a decade. A 

study from the National Renewable Energy Laboratory found that 

installed capacity in the United States could climb to 10,000 

megawatts by 2015, 26,000 megawatts by 2020, and ultimately 

more than 100,000 megawatts by 2030 with the passage of the critical 8-year extension of the investment tax credits included in the 

financial rescue package enacted in October, 2008.71

Concentrating solar power (CSP) systems deliver large-scale, centralized electricity generation from solar energy. CSP systems are 

generally utility-scale projects with many acres of mirrors and 

lenses that can produce dozens to hundreds of megawatts of electrical power. The National Renewable Energy Laboratory has identified the potential for nearly 7,000,000 megawatts of solar thermal 

power generation in the southwestern United States, roughly seven 

times current U.S. electric generating capacity. More than 4,000 

megawatts of solar thermal projects are currently in development 

nationwide, and Environment America has projected 80,000 

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72Solar Energy Industries Association, U.S. Solar Industry: 2007 Year in Review (2007) (online at http://seia.org/galleries/pdf/YearlinlReviewl2007lsm.pdf). 73 Environment America Research and Policy Center, On the Rise: Solar Thermal Power and 

the Fight Against Global Warming (Spring 2008) (online at http:// 

www.environmentcalifornia.org/uploads/EX/qu/EXqur2dJBZQbJESwUtulZA/On-The-Rise.pdf). 74 California Energy Commission, Comparative Cost of California Central Station Electricity 

Generation Technologies: Final Staff Report (June 2003) (online at http://www.energy.ca.gov/reports/2003-06-06l100-03-001F.PDF). 75 U.S. Geological Survey, Fact Sheet: Assessment of Moderate- and High-Temperature Geothermal Resources of the United States (2008) (online at http://pubs.usgs.gov/fs/2008/3082/pdf/ 

fs2008-3082.pdf). 76Massachusetts Institute of Technology, The Future of Geothermal Energy: Impact of Enhanced Geothermal Systems on the United States in the 21st Century, at 1–3 (2006) (online at 

http://www1.eere.energy.gov/geothermal/pdfs/futurelgeolenergy.pdf). 77 American Solar Energy Society, Tackling Climate Change in the U.S., at 153 (Jan. 2007) 

(online at http://ases.org/images/stories/file/ASES/climatelchange.pdf). 78 Energy Information Administration, Biomass for Electricity Generation (online at http:// 

www.eia.doe.gov/oiaf/analysispaper/biomass/). 

port.72 The cost of energy from solar thermal power plants is estimated to be approximately 14 to 16 cents/kWh.73

GEOTHERMAL

The United States has about 35 percent of the world’s installed 

capacity of geothermal energy, with about 2,500 megawatts connected to the grid across six States. While several new facilities are 

in construction around the country, the amount of electricity produced from geothermal energy has essentially been flat for the past 

two decades. New facilities are estimated to be able to produce base 

load electricity for 5 to 7 cents/kWh.74

The United States has massive, untapped geothermal energy resources. Scientists with the U.S. Geological Survey (USGS) recently 

found that the electric generation potential from currently identified geothermal systems distributed over 13 U.S. states is more 

than 9,000 megawatts. Their estimated power production potential 

from yet to be discovered geothermal resources is more than 30,000 

megawatts. An additional 500,000 megawatts may be available by 

harnessing geothermal reservoirs characterized by high temperature, but low permeability, rock formations.75

An MIT study estimated that recovering a small fraction of the 

available resources using conventional geothermal as well as enhanced (or engineered) geothermal systems, could feasibly yield 

100,000 megawatts of electrical power in the United States by 

2050.76 And a study sponsored by the Western Governors Association found 5,600 megawatts of new geothermal capacity could be 

added through 2015 and 13,000 megawatts within the next 20 

years in their 13-State region.77

BIOMASS

Biomass currently supplies more electricity in the United States 

than wind, solar, and geothermal power combined, and the potential for additional generation from this energy source is vast. Biomass available for electricity generation includes residues from forests, primary mills, and agriculture, as well as dedicated energy 

crops and urban wood wastes. Biomass can be used as the sole fuel 

source for power plants, or it can be used in conventional power 

plants to substitute for a portion of the traditional fuel, typically 

coal, in a process called co-firing. While most co-firing plants use 

biomass for between 1 and 8 percent of heat input,78 biomass can 

effectively substitute for up to 20 percent of the coal used in the 


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79Federal Energy Management Program, Biomass Cofiring in Coal-fired Boilers (May 2004) 

(online at http://www1.eere.energy.gov/femp/pdfs/ftalbiomasslcofiring.pdf). 80 Energy Information Administration, Impacts of a 15–Percent Renewable Portfolio Standard 

(Table 2: Summary Results), at 9 (June 2007) (online at http://www.eia.doe.gov/oiaf/servicerpt/ 

prps/pdf/sroiaf(2007)03.pdf). 81Oak Ridge National Laboratory, Biomass Feedstock Availability in the United States: 1999 

State Level Analysis (Jan. 2000) (online at http://bioenergy.ornl.gov/resourcedata/index.html). 82 Energy Information Administration, Regional Generation Impacts of a 15-Percent Renewable 

Portfolio Standard (June 2007) (online at http://www.eia.doe.gov/oiaf/servicerpt/prps/pdf/regionallgeneration.pdf). 83 Energy Information Administration, Annual Energy Review 2007 (2008); U.S. Department 

of Commerce, Gross Domestic Product Data (in constant 2000 dollars) from Bureau of Economic 

Analysis, (May, 2009). 84 Ehrhardt-Martinez, Karen, and Laitner, John A. ‘‘Skip’’, The Size of the U.S. Energy Efficiency Market: Generating a More Complete Picture, ACEEE Report Number E083 (May 2008). 

boiler.79 Certain biomass can have important greenhouse gas benefits, and co-firing with biomass also lowers fuel costs, avoids 

landfilling, and reduces emissions of sulfur oxide and nitrogen 

oxide. 

An EIA analysis of the impacts of a 15 percent national renewable electricity requirement found that electricity production from 

biomass could grow by a factor of eight between 2005 and 2030.80

Most of this generation would come in the southeastern United 

States, where nearly a third of the country’s biomass feedstock potential exists.81 The EIA found that the Southeast region could 

meet nearly its entire 15 percent renewable requirement through 

2020 with indigenous biomass resources.82

TRANSMISSION PLANNING

Lack of adequate transmission capacity is a barrier to the widescale deployment of renewable electricity. Transmission lines must 

be constructed to move renewable electricity from rural areas and 

offshore, where it is most abundant and most reliably generated, 

to population centers where it can be used. Federal leadership will 

be critical in helping to ensure that efficient transmission is built. 

BOOSTING EFFICIENCY

The largest and least expensive way to expand energy resources 

and reduce global warming pollution is by improving energy efficiency. Numerous studies have confirmed the basic notion that the 

best and cheapest power plant is the one we never have to build— 

because greater efficiency reduces demand for power. These efficiency investments would yield positive economic returns over their 

lifecycles because savings on the cost of energy would exceed the 

cost of the initial investment. 

Historically, energy efficiency has been an important positive factor in the U.S. energy situation. The amount of energy consumed 

per dollar of gross domestic product (GDP) fell to about 58 per cent 

in 2006 of the amount of energy required per dollar of GDP in 

1980.83 A recent study by the American Council for an Energy-Efficient Economy (ACEEE) found that approximately three-quarters 

of the incremental energy demand projected in the 1970s was met 

by greater energy efficiency rather than actual energy supply increases.84

Efficiency measures can reduce demand for electricity by nearly 

25 percent over the next 20 years. A 2004 survey by the American 

Council for an Energy Efficiency Economy (ACEEE) of 11 different 

studies showed that the median achievable potential for electricity 


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85Steven Nadel et al., The Technical, Economic and Achievable Potential for Energy-Efficiency 

in the U.S.—A Meta-Analysis of Recent Studies, Proceedings of the 2004 ACEEE Summer Study 

on Energy Efficiency in Buildings (2004). 86Steven Nadel et al., The Technical, Economic and Achievable Potential for Energy-Efficiency 

in the U.S.—A Meta-Analysis of Recent Studies, Proceedings of the 2004 ACEEE Summer Study 

on Energy Efficiency in Buildings (2004). 87Steven Nadel et al., The Technical, Economic and Achievable Potential for Energy-Efficiency 

in the U.S.—A Meta-Analysis of Recent Studies, Proceedings of the 2004 ACEEE Summer Study 

on Energy Efficiency in Buildings (2004). 

efficiency gains was 24 percent over the next 20 years (an average 

improvement of 1.2 percent per year).85 The same study found that 

a 9 percent reduction of natural gas consumption is achievable 

through efficiency measures in the next 15 to 20 years.86

Efficiency is the cheapest way of meeting demand for electricity. 

Efficiency measures are already available at a cost of roughly 

$0.03/kWh, compared to nearly $0.07/kWh for coal- or gas-fired 

generation. This differential will only grow when generators of fossil fuel-powered electricity must pay to emit global warming pollution. Energy efficiency also offers a number of other advantages 

compared to meeting demand through additional generation, including shorter lead-times, no energy conversion losses, a greatly 

reduced environmental footprint, and economic stimulus and job 

creation benefits. 

Several studies have shown that investment in complementary 

efficiency programs can substantially reduce the overall cost of climate legislation. A 2006 ACEEE analysis of the Northeast Regional Greenhouse Gas Initiative (RGGI) showed that, by doubling 

current efficiency investments in the region, wholesale power market prices could be kept flat through 2020.87 A doubling of energy 

efficiency investment would also reduce carbon allowance prices by 

about one-third below baseline allowance prices in 2024, and would 

increase regional economic growth by 0.6 percent in 2021 relative 

to the base case. Modeling by Resources for the Future predicted 

that devoting 100 percent of RGGI auction proceeds to energy efficiency measures, instead of 25 percent, would reduce allowance 

prices by 25 to 30 percent. 

Market barriers prevent optimal adoption of energy efficiency 

measures. For example, the buildings and appliances sectors are 

characterized by split incentives. While home buyers or users of appliances would achieve lifecycle cost savings from more efficient 

homes or appliances, builders and manufacturers avoid energy efficiency improvements that would increase up-front costs. In addition, consumers generally lack adequate information to distinguish 

among buildings and products on the basis of efficiency. In addition, consumers may apply irrationally high discount rates in making purchasing decisions—requiring that a more efficient home or 

product ‘‘pay back’’ the increased cost within a very short time 

frame, even though the consumer would be financially better off in 

the medium- to long-term with the more efficient home or product. 

In the power sector, electric utilities often are the actor best positioned to increase demand-side efficiency, but have a disincentive 

to do so because revenues are based on the volume of electricity 

sold. Because a price on global warming pollution does not address 

these and other market barriers, additional policies are necessary 

to achieve the full cost-saving benefits of efficiency measures. 


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88Pew Center on Global Climate Change, Toward a Climate Friendly Built Environment, at 

3–4 (June 2005). 89 American Institute of Architects, Architects and Climate Change (online at http:// 

www.aia.org/aiaucmp/groups/aia/documents/pdf/aias078740.pdf). 90 Energy Information Administration, Annual Energy Review 2007, Table 2.1a (Energy Consumption by Sector, Selected Years, 1949–2007) (June 23, 2008) (online at http://www.eia.doe.gov/ 

aer/pdf/aer.pdf). Approximately 40 percent of energy consumed in 2007 was used in residential 

and commercial buildings alone. 91 Energy Information Administration, Natural Gas Consumption by End Use 2007 (online at 

http://tonto.eia.doe.gov/dnav/ng/nglconslsumldculnusla.htm). 

INCREASING EFFICIENCY OF BUILDINGS AND APPLIANCES

Buildings and appliances represent the areas of greatest emission abatement and energy- and cost-saving potential. Efficiency 

improvements in this category include lighting retrofits, higher performance for appliances, improvements in heating, ventilation and 

air conditioning systems, as well as better building envelopes and 

building control systems. Over the next 30 years, the built environment in the United States is expected to increase by an amount 

roughly equal to 70 percent of today’s existing building stock—providing a crucial opportunity for energy savings and emission reductions.88

Buildings contribute up to 48 percent of U.S. global warming pollution, the single largest source of emissions.89 In 2007 more than 

three-quarters of the electricity generated by U.S. power plants 

was used in commercial, residential, and industrial buildings,90

and roughly one-third of the natural gas consumed was used for 

residential and commercial use.91 Most of this energy consumption, 

and resulting emissions, stem from the energy used to operate 

lighting, heating, and cooling in buildings, and could be considerably decreased. 

Building codes are critically important in driving energy efficiency. In the 110th Congress, the House passed H.R. 6899, which 

included provisions to encourage states and localities to adopt updated codes that include requirements for increased energy efficiency. Specifically, these provisions would have required DOE and 

States to adopt energy codes for new buildings that improve efficiency by 30 percent by 2010 and 50 percent by 2020. Incentive 

funding would have been offered for adopting the code and training 

officials to implement the codes. Such codes are estimated to avoid 

1.5 billion metric tons of CO2 per year by 2030 and reduce the need 

to build more than 30 new large coal-fired power plants over the 

coming decades. The Senate did not act on this legislation before 

the 110th Congress adjourned. 

SMART GRID

Modernization of the electricity transmission and distribution 

system—particularly through Smart Grid investments—promises 

substantial benefits in increased system efficiency, reliability, and 

flexibility, and reduced peak loads and electricity prices. Smart 

Grid technologies pair digital communications and information 

technology with a variety of grid functions, including monitoring, 

measuring, and responding to electricity demand and congestion; 

sensing and locating system disruptions or security threats and deploying automated protective responses; implementing ‘‘smart’’ meters in homes and businesses that allow consumers to receive timeof-use pricing information and to communicate consumer prefVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00295 Fmt 6659 Sfmt 6602 E:\HR\OC\HR137.XXX HR137

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92See, e.g, House Committee on Energy and Commerce, Hearing on Facilitating the Transition to a Smart Electric Grid (110th Cong.) (May 3, 2007). 93 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis, Summary for Policymakers, at 5 (2007). 94 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis, Summary for Policymakers, at 3 (2007). 95 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis, Summary for Policymakers, at 5 (2007). 

erences to the grid; and installing ‘‘smart’’ appliances that can be 

programmed to respond to communications from the grid regarding 

pricing or load. Collectively, these technologies can substantially 

increase the efficiency of the grid and can reduce peak load demand, both of which reduce the need for construction of new generation.92 In addition, an array of other grid modernization technologies—such as the deployment of high-efficiency superconductor 

power distribution cables—can further enhance grid efficiency and 

reliability. 

GLOBAL WARMING

A clear scientific consensus now holds that global warming is 

happening, that manmade greenhouse gas emissions are largely responsible, and that the consequences of failing to reduce such emissions will be catastrophic. 

THE SCIENTIFIC CONSENSUS ON CLIMATE CHANGE

Global warming refers to the global temperature rise and subsequent impacts from the increase of heat-trapping pollution in the 

atmosphere as a result of human activities, primarily the combustion of fossil fuels. This additional pollution enhances the so-called 

‘‘greenhouse effect’’ and warms the Earth. The IPCC declared in its 

Fourth Assessment Report, released in 2007, that the evidence for 

warming is ‘‘unequivocal’’ 93 and that most of the observed warming 

is very likely—greater than 90 percent certainty—due to the increase of global warming pollution from human activities.94 Over 

the last century, the global average temperature has increased 1.4 

°F, with almost 90 percent of the warming occurring over the last 

50 years.95

Certain gases in the atmosphere trap heat that would otherwise 

escape into space. There are a number of such anthropogenic 

greenhouse gases: carbon dioxide (CO2), methane (CH4), nitrous 

oxide (N2O), high-altitude ozone, and certain man-made industrial 

gases, including chlorofluorocarbons, hydrofluorocarbons (HFCs), 

perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen 

trifluoride (NF3). 

The impact of each gas on global warming is a combination of its 

ability to trap heat, its concentration in the atmosphere, and how 

long it stays in the atmosphere. For example, while one molecule 

of methane traps more heat than one molecule of CO2, the higher 

concentration and longer atmospheric lifetime of CO2 means it has 

contributed more to global warming than methane has. Most efforts to control global warming pollution have focused on the CO2

emissions from the burning of fossil fuels because they have the 

greatest effect and we have the greatest control over them. 

Since the Industrial Revolution, the concentration of CO2 in the 

atmosphere has increased from 280 parts per million (ppm) to more 


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96The total CO2-equivalent concentration of all greenhouse gases is 455 ppm. Intergovernmental Panel on Climate Change, Climate Change 2007: Mitigation of Climate Change, Summary for Policymakers, at 27 (2007). 97 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis, Summary for Policymakers, at 112 (2007). 98 Urs Siegenthaler, et al., Stable Carbon Cycle—Climate Relationship During the Late Pleistocene, 310 Science 1313 (2005). 99 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis, Summary for Policymakers, at 4 (2007). 100Lockwood and Froehlich, Recent Oppositely Directed Trends in Solar Climate Forcings and 

the Global Mean Surface Air Temperature, 463 Proceedings of the Royal Society, 24427 (2007). 101 Intergovernmental Panel on Climate Change, 2007, Climate Change 2007: The Physical 

Science Basis, Summary for Policymakers, at 13, 69–70 (2007). 102See, e.g., Environmental Protection Agency, EPA Analysis of Bingaman-Specter Request on 

Global CO2 Concentrations, at 7 (Oct. 1, 2007) (online at http://www.epa.gov/climatechange/ 

downloads/s1766analysispart1.pdf). 103See Intergovernmental Panel on Climate Change, Climate Change 2007: Mitigation of Climate Change, Summary for Policymakers, at 39 (Table TS.2) (2007). 104Sergey A. Zimov, et al., Permafrost and the Global Carbon Budget, 312 Science 1612 

(2006). 

than 380 ppm.96 This 100 ppm change is the same increase as the 

world experienced from the last ice age about 20,000 years ago 

until just before the 1800s.97 Human activities have changed the 

atmosphere as much in 200 years as natural variations changed it 

over 20,000 years. The current level is higher than any level seen 

in the last 650 thousand years.98

Scientists can model the temperature effects of natural and 

human-induced, or anthropogenic, changes in the global temperature. The results show that natural variations alone cannot explain 

the observed temperature rise of the last decades. The changes 

from human activities are necessary to fully explain the observed 

warming. Indeed, the IPCC has estimated that of the processes 

that can change global temperature, what they call ‘‘radiative 

forcings,’’ the components from human activities are cumulatively 

ten times larger than the best estimates of the changes from solar 

activity.99 A 2007 study found that all the trends in the sun’s activity that could influence the temperature of the Earth have been in 

the opposite direction needed to explain the rise in temperature 

over the last 20 years.100

Scientists predict that if global warming pollution continues to 

grow unchecked, climate changes will accelerate. The IPCC’s estimate of the likely increase in global average surface temperature 

by 2100 ranges from 2 °F to 11.5 °F above 2000 levels, depending 

on the scenario for greenhouse gas emissions growth.101 It should 

be emphasized, however, that current trends in emissions growth 

are consistent with or higher than the scenarios on the high end 

of this range. Business-as-usual emissions growth could result in 

atmospheric CO2 concentrations of well above 700 ppm by 2100,102

yielding a likely temperature increase of 8.8 °F to 11 °F.103 These 

levels of warming will result in disastrous impacts for the planet. 

Many scientists are increasingly concerned that, because of ‘‘positive feedback’’ mechanisms associated with climate change, we are 

approaching a ‘‘tipping point’’ beyond which climate change will accelerate and will become increasingly difficult to reverse. For example, the global warming potential of the methane stored in frozen 

arctic soils likely exceeds by five times the amount of global warming pollution that humans have released into the atmosphere from 

the burning of fossil fuels since the Industrial Revolution.104 As 

these soils warm and release this stored methane, temperatures 


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105 Environmental Protection Agency, Inventory of U.S. Greenhouse Gas Emissions and 

Sinks:1990–2007, at ES–3 to ES–6 (April 2009) (online at http://www.epa.gov/climatechange/ 

emissions/downloads09/ExecutiveSummary.pdf). 106World Resources Institute, Navigating the Numbers: Greenhouse Gas Data and International Policy, at 18 (2005) (online at http://pdf.wri.org/navigatinglnumbers.pdf). 107 Environmental Protection Agency, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 

1990–2007, at ES–3 to ES–6 (April 2009) (online at http://www.epa.gov/climatechange/emissions/ 

downloads09/ExecutiveSummary.pdf). 108 Environmental Protection Agency, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 

1990–2007, at ES–3 to ES–6 (April 2009) (online at http://www.epa.gov/climatechange/emissions/ 

downloads09/ExecutiveSummary.pdf). 109 Intergovernmental Panel on Climate Change, Climate Change 2007: Mitigation of Climate 

Change, Summary for Policymakers at 27 (2007). 

will increase, causing more melting and increased methane releases. 

GREENHOUSE GAS EMISSIONS SOURCES AND TRENDS

The United States accounts for roughly 20 percent of global CO2

emissions, and U.S. emissions have grown over the past two decades at a rate of roughly 1 percent per year. In 2007 (the most recent year for which data is available), the United States emitted 

7,150 million metric tons CO2 equivalent in greenhouse gases—a 

17 percent increase since 1990. Net emissions, including sources 

and sinks, similarly increased from 1990 to 2007, from 5,257 to 

6,088 million metric tons CO2 equivalent.105 Absent policy interventions, U.S. emissions are expected to increase between 20 and 

52 percent by 2025 from 2000 levels.106

In 2007, U.S. emissions were dominated by emissions from the 

electric power sector (comprising 34 percent of total U.S. emissions), transportation sector (28 percent), and industrial sector (20 

percent). The remaining emissions were due to the agricultural (7 

percent), commercial (6 percent), and residential (5 percent) sectors. Emissions from the electric power, transportation, and agricultural sectors have increased since1990, while emissions from the 

industrial, commercial, and residential sectors have held steady or 

declined over the same period. If emissions from the generation of 

electric power are instead attributed to the end-use sectors, these 

proportions shift somewhat: the industrial (30 percent), commercial 

(17 percent), and residential (17 percent) sectors play an increasing 

role, while contributions from the transportation (28 percent) and 

agriculture (7 percent) sectors remain relatively constant.107

In 2007, roughly 80 percent of U.S. emissions were CO2 from the 

combustion of fossil fuels. Additional CO2 emissions (representing 

5 percent total U.S. emissions) were generated from other activities, such as the manufacture of iron and steel and cement. Remaining emissions were comprised of methane (8 percent) and nitrous oxide (4 percent)—largely from agricultural activities, landfills, natural gas systems, and coal mines—and HFCs (2 percent) 

used as a substitute for ozone-depleting substances. PFCs and SF6

each comprised less than 1 percent of U.S. emissions. Net carbon 

sequestration (primarily in U.S. forests and agricultural soils) was 

1063 million metric tons CO2 equivalent—offsetting 15 percent of 

total U.S. emissions.108

Global greenhouse gas emissions increased by 24 percent between 1990 and 2004.109 Emissions growth has accelerated since 

then, and is now above the IPCC’s high emissions (A1F1) sceVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00298 Fmt 6659 Sfmt 6602 E:\HR\OC\HR137.XXX HR137

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110Global Carbon Project, Carbon budget and trends 2007 (Sept. 26, 2008), (online at http:// 

www.globalcarbonproject.org/carbontrends/index.htm). 111 International Energy Agency, Key World Energy Statistics 2008, at 45, 50, 56 (2008) (online 

at http://www.iea.org/textbase/nppdf/free/2008/keylstatsl2008.pdf). 112 International Energy Agency, Key World Energy Statistics 2008, at 45, 50, 56 (2008) (online 

at http://www.iea.org/textbase/nppdf/free/2008/keylstatsl2008.pdf). 113World Resources Institute, Navigating the Numbers: Greenhouse Gas Data and International Policy, at 57 (2005) (online at http://pdf.wri.org/navigatinglnumbers.pdf). 114 International Energy Agency, World Energy Outlook 2008 (2008); and International Energy 

Agency, Key World Energy Statistics 2008 (2008). 115 Energy Information Administration, International Energy Annual 2005, Table H.1cco2 

World Per Capita Carbon Dioxide Emissions from the Consumption and Flaring of Fossil 

Fuels,1980–2005 (2007) (online at http://www.eia.doe.gov/pub/international/iealf/tableh1cco2.xls). 116Global Carbon Project, Carbon budget and trends 2007 (Sept. 26, 2008), (online at http:// 

www.globalcarbonproject.org/carbontrends/index.htm). 

nario.110 In 2006, China and the United States each emitted more 

than 20 percent of total global warming pollution.111 The EU–25 

countries accounted for 15 percent of emissions. When the United 

Nations Framework Convention on Climate Change was drafted in 

1992, the 38 countries initially agreeing to limit their greenhouse 

gas emissions were responsible for 62 percent of all carbon dioxide 

emissions. Rapid emissions growth occurring in the developing 

world has reduced these developed nations contribution to global 

warming pollution to only 47 percent of the global total.112

Electricity and heat account for 25 percent of global emissions, 

followed by industry (21 percent), land use change and forestry (18 

percent), buildings (15 percent), agriculture (15 percent), transport 

(14 percent), and waste (4 percent).113 The International Energy 

Agency’s (IEA’s) Reference Scenario projects global greenhouse gas 

emissions to increase 45 percent between 2006 and 2030. Emissions from China and India are expected to grow by 86 and104 percent, respectively, while emissions from the United States are expected to grow by 25 percent over the same time period.114 Emissions from the EU have stayed relatively flat since 1990, and the 

EU has unilaterally committed to reduce emissions by 20 percent 

by 2020—and up to 30 percent with cooperation from the international community. 

While China has now overtaken the United States as the largest 

greenhouse gas emitter on an annual basis, the United States continues to have one of the highest per capita emission rates. In 

2005, the United States emitted 20 tons of CO2 per capita annually, compared to 12 tons per capita in Russia, 10 tons in Japan 

and the United Kingdom, and 8 tons per capita for the EU. The 

worldwide average per capita CO2 emissions level is 4.3 tons, and 

the average person in China and India is responsible for 4 tons and 

1 ton of CO2 emissions per year, respectively.115

Moreover, the United States is responsible for nearly a third of 

the cumulative greenhouse gas emissions in the atmosphere—nearly four times as much as China and more than 14 times as much 

as India. Developing countries with 80 percent of the world’s population still account for only 20 percent of the cumulative emissions 

since 1751. The poorest countries in the world—where 800 million 

people live—have contributed less than 1 percent of these cumulative emissions.116 For most industrialized countries, their historic 

(i.e., cumulative) share of global emissions is much higher than 

their current (i.e., annual) share. For the period between 1850 and 

2002, the United States contributed 29 percent world’s CO2 emissions, leading all other countries. EU–25 follows closely behind, 


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117World Resources Institute, Navigating the Numbers: Greenhouse Gas Data and International Policy, at 32 (2005) (online at http://pdf.wri.org/navigatinglnumbers.pdf). 118 Intergovernmental Panel on Climate Change, Climate Change 2007: Mitigation of Climate 

Change, Summary for Policymakers, at 38–39 (Table TS.2) (2007); Union of Concerned Scientists, How to Avoid Dangerous Climate Change: A Target for U.S. Emission Reductions (Sept. 

2007) (online at http://www.ucsusa.org/globallwarming/solutions/biglpicturelsolutions/a-target-for-us-emissions.html). 119 In addition to the other sources cited in this report, the Committee considered the following sources that provide information regarding effects of global warming: Environmental Protection Agency, Technical support Document for Endangerment and Cause or Contribute findings 

for Greenhouse Gases (Apr.17, 2009); Intergovernmental Panel on Climate Change, IPCC Special 

Report: The Regional Impacts of Climate Change: An Assessment of Vulnerability (1997); National Assessment Synthesis Team, Climate Change Impacts on the United States: The Potential 

Consequences of Climate Variability and Change (2001); Committee on Environment and Natural Resources, National Science and Technology Council, Scientific assessment of the effects of 

global change in the United States (2008); U.S. Climate Change Science Program, Abrupt Climate Change, Synthesis and Assessment Product 3.4 (2008); U.S. Climate Change Science Program, Thresholds of Climate Change in Ecosystems, Synthesis and Assessment Product 4.2 

(2009); U.S. Climate Change Science Program, Coastal Sensitivity to Sea Level Rise: a Focus on 

the Mid-Atlantic Region, Synthesis and Assessment Product 4.1 (2009); U.S. Climate Change 

Science Program, Effects of Climate Change on Energy Production and Use in the United States, 

Synthesis and Assessment Product 4.5. (2008); National Academy of Sciences, National Academy 

of Engineering, Institute of Medicine National Research Council, Understanding & Responding 

to Climate Change (2008); Environmental Protection Agency, Preliminary Review of Adaptation 

Options for Climate-sensitive Ecosystems and Resources, Synthesis and Assessment Product 4.4 

(2008); Environmental Protection Agency, Climate Ready Estuaries Program, Synthesis of Adaptation Options for Coastal Areas (2009); Environmental Protection Agency, Analyses of the Effects of Global Change on Human Health and Welfare and Human System, Synthesis and Assessment Product 4.6 (2008); National Research Council, Potential Impacts of Climate Change on 

U.S. Transportation, Transportation Research Board Special Report (2008); United Nations 

Foundation, Confronting Climate Change: Avoiding the Unmanageable and Managing the Unavoidable, Scientific Expert Group Report (2007); Congressional Budget Office, Potential Impacts 

of Climate Change in the United States (2009); U.S. Department of State, Fourth U.S. Climate 

Action Report (2006); U.S. Climate Change Science Program, The Effects of Climate Change on 

Agriculture, Land Resources, Water Resources, and Biodiversity in the United States, Synthesis 

and Assessment Product 4.3 (2008); National Academy of Sciences, Board on Life Sciences, Division on Earth and Life Studies, National Research Council, Ecological Impacts of Climate 

Change (2008); National Academy of Sciences, National Research Council, Abrupt Climate 

Change: Inevitable Surprises (2002); Arctic Climate Impact Assessment, Arctic Climate Impact 

Assessment (2005); Government of Canada, From Impacts to Adaptation: Canada in a Changing 

Climate 2007 (2008). Note that this list includes scientific sources relied upon in whole or in 

part. 

with a contribution of 27 percent world’s CO2 emissions, but no 

other country contributes more than 10 percent. For example, China’s cumulative contribution is 8 percent, and India’s is only 2 percent.117

The IPCC has concluded that, to have even a 50–50 chance of 

avoiding the dangerous climate change associated with a 3.6° F increase in global average surface temperature, global emissions 

must be reduced by 50–85 percent by 2050. This requires the 

United States and other developed countries to reduce emissions by 

at least 80 percent by 2050.118 Given the current trajectory of rapidly rising greenhouse gas emissions, both in the United States and 

globally, a substantial change of course is required in the very near 

term to avoid the catastrophic impacts outlined below. 

THE IMPACTS OF CLIMATE CHANGE

The current and anticipated impacts of climate change have been 

increasingly well documented in the scientific literature.119 These 

impacts include effects on water scarcity and quality, the Arctic 

and Antarctic, warming and acidification of the world’s oceans, sea 

level rise and coastal impacts, extreme weather events, public 

health, forests and wildfires, wildlife and endangered species, and 

national security. 


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120German Advisory Council on Global Change, Climate Change as a Security Risk Summary 

for Policy-makers, at 2 (2007). 121 United Nations Commission on Sustainable Development, The Food Crisis and Sustainable 

Development (May 2008) (online at http://www.un.org/esa/sustdev/csd/csd16/documents/ 

bgrounderlfoodcrisis.pdf). 122 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation 

and Vulnerability, Summary for Policy Makers, at 13 (2007). 123 Intergovernmental Panel on Climate Change, Climate Change and Water, at 36 (2008). 124 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation, 

and Vulnerability, Summary for Policymakers, at 11 (2007). 125 Intergovernmental Panel on Climate Change, Climate Change and Water, at 28 (2008). 126 Intergovernmental Panel on Climate Change, Climate Change and Water, at 19–26 (2008). 127 Intergovernmental Panel on Climate Change, Climate Change and Water, at 3 (2008). 128 Intergovernmental Panel on Climate Change, Climate Change and Water, at 88 (2008). 129 Intergovernmental Panel on Climate Change, Climate Change and Water, at 86 (2008). 130 Intergovernmental Panel on Climate Change, Climate Change and Water, at 87 (2008). 

INCREASING WATER SCARCITY AND DECLINING WATER QUALITY

One of the most dramatic impacts of global warming in the 21st 

century will be the exacerbation of already severe water scarcity— 

both in the United States and abroad. Freshwater scarcity and 

threats to water quality are increasing dramatically both in the 

United States and across the world. More than a billion people currently lack access to safe drinking water.120 By 2025, 1.8 billion 

people are expected to be living in regions experiencing water scarcity and ‘‘two-thirds of the world’s population could be living under 

water stressed conditions.’’ 121 Climate change will greatly exacerbate current and future water stress. For example, the IPCC 

projects that by 2020, between 75 and 250 million people in Africa 

alone will experience an increase of water stress due to climate 

change.122 For Asia, the number is between 120 million and 1.2 billion people, and for Latin American it is 12 to 81 million.123

Global warming is leading to rapid melting of land ice, glaciers, 

ice caps, and snow fields which over time will exacerbate water 

scarcity in many regions of the globe. One-sixth of the world population currently relies on meltwater from glaciers and snow cover 

for drinking water and irrigation for agriculture.124 The IPCC’s 

2008 Climate Change and Water report projects widespread reductions in snow cover throughout the 21st Century, and a 60 percent 

volume loss in glaciers in various regions.125 The melting of these 

ice reservoirs, which store 75 percent of the world’s freshwater, will 

exacerbate water scarcity conditions.126 While melting will temporarily increase freshwater supply, more winter precipitation falling 

as rain rather than snow, and an earlier snowmelt season will deplete frozen freshwater reserves. 

Increased water stress due to climate change will disproportionately affect the dry tropics and dry regions at lower mid-latitudes— 

notably Southeast Asia, southern Africa, Brazil, and the American 

Southwest.127 According to the 2008 IPCC Climate Change and 

Water Report, semi-arid and arid areas in Southeast Asia, Southern Africa, Brazil, and the western United States are ‘‘projected to 

suffer a decrease of water resources due to climate change.’’ 128 In 

Asia, decreasing precipitation and rising temperatures result in increasing frequency and intensity of droughts.129 In northwestern 

China and Mongolia, snow and glacier melt will cause floods in the 

spring in the near term but result in freshwater shortages by the 

end of the century.130 Global warming of 5.4 °F to 7.2 °F may result in more persistent El Nin ̃ o conditions that would shift the 


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131Timothy M. Lenton et al., Tipping Elements in the Earth’s climate system, 105 Proceedings 

of the National Academy of Sciences 1790 (2008). 132WWF Climate Change Programme, Climate Change Impacts in the Amazon: Review of Scientific Literature (online at 133The Future is Drying Up, New York Times (Oct. 21, 2008) (online at http:// 

www.nytimes.com/2007/10/21/magazine/21water-t.html?lr=1&ref=todayspaper&oref=slogin). 134The Future is Drying Up, New York Times (Oct. 21, 2008) (online at http:// 

www.nytimes.com/2007/10/21/magazine/21water-t.html?lr=1&ref=todayspaper&oref=slogin). 135The Future is Drying Up, New York Times (Oct. 21, 2008) (online at http:// 

www.nytimes.com/2007/10/21/magazine/21water-t.html?lr=1&ref=todayspaper&oref=slogin). 136The Future is Drying Up, New York Times (Oct. 21, 2008) (online at http:// 

www.nytimes.com/2007/10/21/magazine/21water-t.html?lr=1&ref=todayspaper&oref=slogin). 137 University of Maryland Center for Integrative Environmental Research, The U.S. Economic 

Impacts of Climate Change and the Costs of Inaction at 24, 27 (October 2007) (online at http:// 

dl.klima2008.net/ccsl/usleconomic.pdf). 138Susan Solomon et al., Irreversible climate change due to carbon dioxide emissions, Proceedings of the National Academy of Sciences 1704 (2009). 139 Intergovernmental Panel on Climate Change, Climate Change and Water, at 67 (2008). 140 Intergovernmental Panel on Climate Change, Climate Change and Water, at 68 (2008). 141 Environmental Protection Agency, National Water Program Strategy: Response to Climate 

Change, at ii (Mar. 2008) (online at http://www.epa.gov/water/climatechange/docs/ 

TO5lDRAFTlCCRlRevisedl10–16.pdf). 142Fisheries: Freshwater species in steep decline—USGS, Greenwire (Sept. 10, 2008). 

Amazon rainforest from ‘‘tropical forest to dry savannah’’ 131—imperiling an ecosystem that sustains thousands of people and is one 

of the greatest concentrations of biodiversity on Earth.132

The United States is already experiencing water stress, which 

will worsen severely in the coming decades due to climate change. 

In the American West, the Sierra Nevada snowpack is at its lowest 

level in 20 years and threatens most of the water supply to Northern California.133 Experts warn that ‘‘even the most optimistic climate models for the second half of this century suggest that 30 to 

70 percent of this snowpack will disappear.’’ 134 The Southwest is 

already experiencing a severely reduced flow in the Colorado 

River—upon which 30 million people depend for water—as a consequence to decreasing snowmelt from the Rocky Mountains.135

The Midwest is expected to experience ‘‘drought-like conditions resulting from elevated temperatures, which increases levels of evaporation, contributing to decreases in soil moisture and reductions 

in lake and river beds’’ as a result of climate change.136 In addition 

to a range of other costs, agriculture in the Great Plains and the 

Southwest is likely to suffer massive economic losses due to increasing water scarcity.137 A recent study led by NOAA found that 

if CO2 is allowed to peak above 450 parts per million, the impacts 

would include ‘‘irreversible dry season rainfall reductions . . . comparable to those of the ‘dust bowl’ era’’ in the southwestern U.S.138

Climate change will also negatively impact the quality of freshwater resources. For example, reduced flows will reduce rivers’ 

ability to dilute effluent, leading to increased pathogen or chemical 

loading.139 In addition, increased heavy precipitation events due to 

climate change—discussed below—‘‘may increase the total microbial load in watercourses and drinking-water reservoirs.’’ 140 And 

warmer water temperature combined with higher phosphorus concentrations will increase the occurrence of freshwater algal blooms, 

with adverse impacts on freshwater ecosystems and fisheries. Fish 

habitat may also be compromised because altered water chemistry 

will promote the intrusion of invasive species.141 These impacts 

will exacerbate the precarious state of freshwater fish species in 

North America, nearly 40 percent of which are already at risk.142


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143 Arctic Climate Impact Assessment, Impacts of a Warming Arctic: Highlights, at 4 (2004) 

(online at http://www.amap.no/acia/Highlights.pdf). 144 Arctic Climate Impact Assessment, Impacts of a Warming Arctic: Highlights, at 4 (2004) 

(online at http://www.amap.no/acia/Highlights.pdf). 145 European Space Agency, Satellites Witness Lowest Arctic Ice Coverage in History (Sept. 14, 

2007) (online at http://www.esa.int/esaCP/SEMYTC13J6Flindexl0.html). 146 National Snow and Ice Data Center, Arctic Sea Ice Down to Second-Lowest Extent; Likely 

Record-Low Volume (Oct. 2, 2008) (online at http://nsidc.org/news/press/ 

20081002lseaicelpressrelease.html). 147 Julienne Stroeve et al. Arctic Sea Ice Decline: Faster Than Forecast, 34 Geophysical Research Letters L09501 (2007). 148 Arctic Climate Impact Assessment, Impacts of a Warming Arctic: Highlights, at 6 (2004) 

(online at http://www.amap.no/acia/Highlights.pdf). 149Sebastian H. Mernild et al., Surface Melt Area and Water Balance Modeling on the Greenland Ice Sheet 1995–2005, Journal of Hydrometeorology: In Press (2008). 150 United States Geological Survey, Sea Level and Climate (2000) (online at http:// 

pubs.usgs.gov/fs/fs2–00/). 151 N. F. Glasser & T.A. Scambos, A structural glaciological analysis of the 2002 Larsen B ice 

shelf collapse, 54 Journal of Glaciology 316 (2008). 

IMPACTS ON THE ARCTIC AND ANTARCTIC

The Arctic is one of the hotspots of global warming. Over the 

past 50 years average temperatures in the Arctic have increased as 

much as 7 °F, five times the global average.143 In the next 100 

years, some areas in the Arctic may see an increase in average 

temperatures as high as 13 °F.144

As temperatures rise in the Arctic, sea ice and glaciers are melting at an unprecedented and alarming rate. In 2007, a record 

386,000 square miles of Arctic sea ice melted away, an area larger 

than Texas and Arizona combined and as big a decline in one year 

as has occurred over the last decade.145 In 2008, the sea ice extent 

was only slightly greater than in 2007, but the sea ice volume is 

likely the lowest on record due to the decline in multiyear old ice 

and the thinness of the remaining ice.146 Recent observations suggest that Arctic sea ice could completely disappear during the summer as early as 2020.147

The Greenland ice sheet is melting at an alarming rate. Between 

1979 and 2002, the extent of melting in Greenland has increased 

on average by 16 percent—an area roughly the size of Sweden.148

In the record-breaking year of 2005, parts of Greenland melted that 

have never melted during the 27-year-long satellite record.149

A complete melting of Greenland would result in a rise in global 

sea level of more than 20 feet,150 with catastrophic consequences 

for coastal regions around the world. Furthermore, melting Arctic 

glaciers would contribute large amounts of fresh water into the 

ocean, potentially changing oceanic currents, damaging eco-systems 

and altering current weather conditions. 

At the opposite end of world, massive amounts of water are 

stored in the two ice sheets of Antarctica. The larger East Antarctic 

ice sheet covers the majority of the continent, while the West Antarctic ice sheet has significant ice shelves partially floating in the 

ocean. In the spring of 2002, scientists were shocked to discover 

that an ice shelf the size of Rhode Island had disintegrated from 

the West Antarctica ice sheet in just over a month,151 rather than 

the millennium previously assumed. Until recently, it was believed 

that only coastal areas of the West Antarctic were vulnerable to 

melting. Satellite analysis has now revealed that large inland regions are also showing signs of the impacts of warming. NASA and 

university researchers have found clear evidence that an area the 


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152S. V. Nghiem et al., Snow Accumulation and Snowmelt Monitoring in Greenland and Antarctica, in Dynamic Planet (2007). 153 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis at 387 (2007). 154 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis, at 389 (2007). 155Pacific Marine Environmental Laboratory, National Oceanic and Atmospheric Administration, Carbon Dioxide and Our Ocean Legacy (April 2006) (online at http://www.pmel.noaa.gov/ 

pubs/PDF/feel2899/feel2899.pdf). 156 National Oceanic and Atmospheric Administration, Impacts of Anthropogenic CO2 on Ocean Chemistry and Biology (Oct. 20, 2008) (online at http://www.oar.noaa.gov/spotlite/ 

spotlgcc.html). 157One-Third of Reef-Building Corals Face Elevated Extinction Risk from Climate Change and 

Local Impacts, Science Express (July 10, 2008). 

size of California melted in January 2005 in response to warm temperatures.152

WARMING AND ACIDIFICATION OF THE WORLD’S OCEANS

The world’s oceans will suffer devastating impacts as a result of 

global climate change. 

The oceans are already warming due to climate change. The 

oceans cover 70 percent of the Earth’s surface and are critical components of the climate system for redistributing heat around the 

world and absorbing CO2 from the atmosphere. According to the 

IPCC, global ocean temperature has risen by 0.18° F from 1961 to 

2003.153 Since the ocean has a heat capacity 1,000 times greater 

than that of the atmosphere, it has taken up 20 times more heat 

than the atmosphere during this same period.154 As a result of the 

ocean’s relatively large heat capacity, it has a great effect on the 

Earth’s heat balance and how energy from solar radiation is distributed throughout the global environment. 

Increasing atmospheric CO2 concentrations are causing acidification of the oceans. Elevated atmospheric CO2 concentrations lead 

to higher absorption of CO2 into the upper ocean, which makes the 

surface waters more acidic and reduces the concentration of carbonate ions. According to the National Oceanic and Atmospheric 

Administration (NOAA), ocean chemistry currently is changing at 

least 100 times more rapidly than it has changed during the 

650,000 years preceding our industrial era.155 If current emission 

trends continue, the ocean will experience acidification to an extent 

and at rates that have not occurred for tens of millions of years. 

Ocean acidification has serious implications for the calcification 

rates of organisms living at all levels within the global ocean, from 

corals to zooplankton that serve as the foundation of many ocean 

food chains. According to NOAA, when dissolved carbon dioxide 

was increased to two times pre-industrial levels, a decrease in the 

calcification rate by 5 to 50 percent was observed.156

Warming and acidification of ocean waters due to climate change 

are contributing to the collapse of coral reefs around the globe. 

Coral reefs are habitat for about a quarter of marine species, are 

the most diverse among marine ecosystems, and are already in a 

state of decline. Recent studies indicate that more than a third of 

all coral species are already endangered.157 When key temperature 

thresholds are exceeded, mass bleaching and complete coral mortality often result. By mid-century, these temperature thresholds 

are expected to be exceeded on an annual or bi-annual basis for the 

majority of reefs worldwide. After bleaching, algae quickly colonize 

dead corals and may make future coral growth and restoration 


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158 R.A. Cropp and A.J. Gabric, Evidence for Global Coupling of Phytoplankton and Atmospheric Aerosols, 4 Oceans 2003. Proceedings 2341 (2003). 159 National Oceanic and Atmospheric Administration, Importance of Coral Reefs (March 25, 

2008) (online at http://oceanservice.noaa.gov/education/kits/corals/coral07limportance.html). 160Scientists: Global Warming could kill coral reefs by 2050, USA Today (Dec. 13, 2007) (online at http://www.usatoday.com/weather/climate/globalwarming/2007–12–13–coralreefslN.htm). 161World Resources Institute, The Value of Ecosystems (Dec. 5, 2006) (online at http:// 

www.wri.org/stories/2006/12/value-coastal-ecosystems). 162Pacific Fisheries and Environmental Laboratory, National Oceanic and Atmospheric Administration, Climate Variability and Marine Fisheries: How Does Climate Affect Fish Populations? (online at http://www.pfeg.noaa.gov/research/climatemarine/cmffish/cmffishery.html). 163 James R. McGoodwin, Effects of Climate Variability on Three Fisheries Economies in HighAltitude Regions: Implications for Fisheries Policies, 31 Marine Policy 40–55 (2007). 164 United Nations Environmental Programme, Warmer World May Mean Less Fish (Feb. 22, 

2008) (online at http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=528&ArticleID=5751). 165Senate Committee on Commerce, Science, and Transportation, Testimony of James L. 

Connaughton, Hearing on Magnuson-Stevens Reauthorization (109th Cong.) (Nov. 16, 2005). 

more difficult. Other factors that influence the health of reefs are 

impacted by climate change, including sea level rise, storm severity 

and dust and mineral aerosols.158 These, together with non-climate 

factors such as over-fishing, invasion of non-native species, pollution, and increased nutrient and sediment loads, add multiple 

stresses, increasing coral reefs’ vulnerability to climate change. 

Corals could become rare on tropical and subtropical reefs by 2050 

due to the combined effects of acidification and increasing frequency of extreme temperature events that cause bleaching. 

NOAA estimates the commercial value of United States fisheries 

from coral reefs is more than $100 million,159 and the total economic value of coral is estimated to be $30 billion.160 Coastal 

states, like Florida, would be especially harmed where reef-based 

tourism in the Florida Keys generates $1.2 billion in annual revenue.161 Healthy coral reefs provide other benefits, as well, including shoreline protection, beach sand supply, potential pharmaceuticals, biodiversity, and fish habitat. 

Climate change threatens global fisheries. Warmer water and 

acidification not only harm coral reefs that function as fish hatcheries, but could also change the circulation of the world’s ocean currents. Most fish species have a fairly narrow range of optimum 

temperatures due to temperature effects on their basic metabolism 

and the availability of food sources that have their own optimum 

temperature ranges.162 A given species’ geographic range may expand, shrink, or be relocated with changes in ocean conditions 

caused by climate change.163 The United Nations Environment 

Programme found that ‘‘climate change may slow down ocean 

thermohaline circulation crucial to coastal water quality and nutrient cycling in more than 75 percent of the world’s fishing 

grounds.’’ 164 Less hospitable waters would have a significant effect 

on the global fishing industry. In the United States alone, commercial and recreational fisheries contribute $60 billion to the economy 

each year and employ more than 500,000 people.165

SEA LEVEL RISE AND COASTAL IMPACTS

Sea levels are already rising, and are predicted to rise by at least 

1–2 feet by 2100—with the potential for a nearly 40-foot rise in sea 

level if the Greenland and West Antarctica ice sheets were to melt 

completely. The IPCC predicts that sea levels will rise by 8 to 24 

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166 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis, Summary for Policymakers, at 70 (2007). 167 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis, Summary for Policymakers, at 14 (2007). 168 United States Geological Survey, Sea Level and Climate (2000) (online at http:// 

pubs.usgs.gov/fs/fs2–00/); United States Geological Survey, Coastal Change and Glaciological 

Maps of Antarctica (2007) (online at http://pubs.usgs.gov/fs/2005/3055/index.html). 169 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis, Summary for Policymakers, at 12 (2007). 170 Environmental Protection Agency, Coastal Zones and Sea Level Rise (Feb. 20, 2009) (online 

at http://www.epa.gov/climatechange/effects/coastal/index.html). 171 Environmental Protection Agency, Coastal Zones and Sea Level Rise (Feb. 20, 2009) (online 

at http://www.epa.gov/climatechange/effects/coastal/index.html). 172 Environmental Protection Agency, Coastal Zones and Sea Level Rise (Feb. 20, 2009) (online 

at http://www.epa.gov/climatechange/effects/coastal/index.html). 

pansion from rising ocean temperatures 166—with current emissions trends more consistent with the higher end of this range. 

However, how much and how quickly the polar ice sheets will melt 

in response to global warming is a critical question. Many scientists are increasingly concerned that the Greenland and West 

Antarctic ice sheets are melting at a greater rate than previously 

predicted. Because scientists do not fully understand the dynamics 

of ice sheet melting, the IPCC found that larger values of sea level 

rise could not be excluded.167 A complete melting of the Greenland 

ice sheet alone would cause a 20-foot rise in sea level, and complete 

melting of the West Antarctic ice sheet would cause a 16-foot sea 

level rise.168

Sea level rise will have severe impacts on the world’s coastal populations, including in the United States. Rising sea levels are already causing inundation of low-lying lands, erosion of wetlands 

and beaches, exacerbation of storm surges and flooding, and increases in the salinity of coastal estuaries and aquifers. The most 

dramatic near-term effects of sea level rise are being felt by inhabitants of small island states, the very existence of which is now endangered. Further, about one billion people live in areas within 75 

feet elevation of today’s sea level, including many U.S. cities on the 

East Coast and Gulf of Mexico, almost all of Bangladesh, and areas 

occupied by more than 250 million people in China.169 In total, 

more than 70 percent of the world’s population lives on coastal 

plains, and 11 of the world’s 15 largest cities are on the coast. 

In addition, rising sea level due to climate change will threaten 

drinking water supplies in coastal areas—causing intrusion of saltwater into both surface water and ground water.170 If sea level rise 

pushes salty water further upstream, existing water intakes might 

draw on salty water during dry periods. The freshwater Everglades 

currently recharge Florida’s Biscayne aquifer, the primary water 

supply to the most populous counties in South Florida, including 

the cities of Miami and Fort Lauderdale. As rising water levels 

submerge low-lying portions of the Everglades, portions of the aquifer would become saline.171 Aquifers in New Jersey east of Philadelphia are recharged by the Delaware River which also may become saline in parts in the future, leading to a degradation of 

drinking water quality.172

EXTREME WEATHER EVENTS

Global warming has already changed the intensity, duration, frequency, and geographic range of a variety of weather patterns and 

will continue to do so—with potentially severe impacts on the 


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173 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis, at 8 (2007); see generally U.S. Climate Change Science Program, Synthesis Assessment 

Product 3.3, Weather and Climate Extremes in a Changing Climate: Regions of Focus: North 

America, Hawaii, Caribbean, and U.S. Pacific Islands, at 8 (June 2008). 174See National Climatic Data Center, Billion Dollar U.S. Weather Disasters, (Jan. 29, 2009) 

(online at http://www.ncdc.noaa.gov/oa/reports/billionz.html). 175 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis, Summary for Policymakers, at 8 (2007). 176 U.S. Climate Change Science Program, Synthesis Assessment Product 3.3, Weather and Climate Extremes in a Changing Climate: Regions of Focus: North America, Hawaii, Caribbean, 

and U.S. Pacific Islands, at 4 (June 2008). 177 National Climatic Data Center, Climate of 2008: Midwestern U.S. Flood Overview (July 9, 

2008) (online at http://www.ncdc.noaa.gov/oa/climate/research/2008/flood08.html#impacts). 178 National Climatic Data Center, Climate of 2008: Midwestern U.S. Flood Overview (July 9, 

2008) (online at http://www.ncdc.noaa.gov/oa/climate/research/2008/flood08.html#impacts). 179Purdue researchers to assess damage from Midwestern floods, Lafayette Online (Sept. 29, 

2008) (online at http://www.lafayette-online.com/purdue-news/2008/09/purdue-researchers-assess-flood-impact/). 180 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis, Summary for Policymakers, at 9 (2007). 181 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adapatation, 

and Vulnerability, at 110 (2007). 

United States and the world.173 There is a broad scientific consensus that the United States is vulnerable to weather hazards 

that will be exacerbated by climate change. The cost of damages 

from weather disasters has increased markedly from the 1980s, rising to more than 100 billion dollars in 2007. In addition to a rise 

in total cost, the frequency of weather disasters costing more than 

one billion dollars has increased.174

Global warming will lead to more extreme precipitation events 

and flooding. The IPCC has found that ‘‘[t]he frequency of heavy 

precipitation events has increased over most land areas, consistent 

with warming and observed increases of atmospheric water 

vapor.’’ 175 The U.S. Climate Change Science Program has concluded that heavy precipitation events averaged over North America have increased over the past 50 years.176

Flooding and extreme precipitation events cost lives and can 

cause massive damages to infrastructure, property, and agricultural lands, as was highlighted by the flooding in the Midwestern 

United States in the summer of 2008. Those floods washed away 

nearly 2 percent of the nation’s corn crop. The American Farm Bureau Federation estimated there were crop losses in excess of $8 

billion across the Midwest, with half of the total occurring in 

Iowa.177 An additional $1.5 billion in property damage occurred in 

Iowa 178 and $1 billion in Indiana.179

Increased sea surface temperatures are a critical determining 

factor in the strength of hurricanes, and some scientists predict 

that global warming will result in an increase in hurricane and 

tropical cyclone frequency and intensity. The IPCC has found observational evidence for the increase in intense hurricanes in the 

North Atlantic since the 1970s, correlated with increasing sea surface temperatures.180 Some researchers have argued that there is 

evidence for increased hurricane intensity around the world and 

emerging evidence for an increase in frequency of hurricanes in the 

Atlantic.181 Stronger hurricanes lead to more destructive winds 

and higher storm surges, increasing the risk to coastal communities in their paths. As sea level rises and storm surges increase, 

the vulnerability of cities to flooding, and the related impacts, increases significantly. 

Severe thunderstorms, hail, tornados, and winter storms may 

also increase. The current observational record for these smaller 


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182 Intergovernmental Panel on Climate Change, Climate Change 2007: The Physical Science 

Basis, Summary for Policymakers, at 9 (2007); U.S. Climate Change Science Program, Synthesis 

Assessment Product 3.3, Weather and Climate Extremes in a Changing Climate: Regions of 

Focus: North America, Hawaii, Caribbean, and U.S. Pacific Islands, at 7 (June 2008).. 183Twisters ‘on a record pace’, L.A. Times (May 13, 2008) (online at http://articles.latimes.com/ 

2008/may/13/nation/na-tornado13). 184 U.S. Climate Change Science Program, Synthesis Assessment Product 3.3, Weather and Climate Extremes in a Changing Climate: Regions of Focus: North America, Hawaii, Caribbean, 

and U.S. Pacific Islands, at 7 (June 2008) 185 Intergovernmental Panel on Climate Change, Climate Change 2007: Synthesis Report, 

Summary for Policymakers, at 48 (2007). 186 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation 

and Vulnerability, at 617–652 (2007). 187 Environmental Protection Agency, Climate Change—Health and Environmental Effects 

(Feb. 18, 2009) (online at http://www.epa.gov/climatechange/effects/health.html). 188 Centers for Disease Control and Prevention, CDC Policy on Climate Change and Public 

Health (online at http://www.cdc.gov/climatechange/pubs/ClimatelChangelPolicy.pdf). 189World Health Organization, Climate and Health (Aug. 2007) (online at http://www.who.int/ 

globalchange/en/). 190 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation 

and Vulnerability, at 391–431 (2007). 

scale storms is insufficient to determine whether there are trends 

correlated to warming temperatures.182 However, these phenomena 

are often associated with heavy precipitation events and hurricanes; as the latter storms become more frequent and possibly increase in intensity, then the probability of thunderstorms, hail, and 

tornadoes should also increase. Warming temperatures may also 

expand the range over which tornados occur. Over the last few 

years, tornados have occurred earlier in the year and further north 

than what is typically thought of as ‘‘tornado alley.’’ 183 Finally, 

strong cold season storms are also likely to become more frequent, 

with stronger winds and more extreme wave heights.184

PUBLIC HEALTH

There is a broad consensus among experts within the worldwide 

public health community that climate change poses a serious risk 

to public health. The IPCC’s Fourth Assessment report concluded 

that climate change’s likely impacts on public health include: • More frequent and more intense heat waves, leading to marked 

short-term increases in mortality. • Increased numbers of people suffering from death, disease, and 

injury from floods, storms, fires and droughts. 

• Increased cardio-respiratory morbidity and mortality associated with ground-level ozone pollution. 

• Changes in the range of some infectious disease vectors. 

• Increased malnutrition and consequent disorders, including 

those relating to child growth and development.185

This assessment included a specific analysis of regional impacts 

to health, including in the United States.186 In addition, EPA,187

the Centers for Disease Control and Prevention (CDC),188 and 

NOAA have all concluded climate change poses a serious public 

health risk. The World Health Organization (WHO) released a 

quantitative assessment concluding that the effects of climate 

change may have caused more than 150,000 deaths in 2000 and 

that these impacts are likely to increase in the future.189 According 

to the IPCC, climate change contributes to the global burden of disease, premature death and other adverse health impacts.190

There is consensus that heat waves ‘‘have become more frequent 

over most land areas’’ and there is confidence that climate change 

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191 Intergovernmental Panel on Climate Change, Climate Change 2007: Synthesis Report, 

Summary for Policymakers, at 2, 8 (2007). 192Gerald A. Meehl & Claudia Tebaldi, More Intense, More Frequent, and Longer Lasting Heat 

Waves in the 21st Century, 305 Science 994 (2004). 193Gerald A. Meehl & Claudia Tebaldi, More Intense, More Frequent, and Longer Lasting Heat 

Waves in the 21st Century, 305 Science 994 (2004). 194Gerald A. Meehl & Claudia Tebaldi, More Intense, More Frequent, and Longer Lasting Heat 

Waves in the 21st Century, 305 Science 994 (2004). 195 Natural Resources Defense Council, The Cost of Climate Change: What We’ll Pay if Global 

Warming Continues Unchecked at vi (May 2008) (online at http://www.nrdc.org/globalwarming/ 

cost/cost.pdf). 196 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation 

and Vulnerability at 632 (2007). 197 U.S. Climate Change Science Program, Analyses of the Effects of Global Change on Human 

Health and Welfare and Human Systems at ES–6 (Sept. 2008) (online at http:// 

downloads.climatescience.gov/sap/sap4–6/sap4–6–final-report-all.pdf). 198 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation 

and Vulnerability at 632 (2007). 199 R. K. McConnell et al., Asthma in exercising children exposed to ozone: A cohort study, 359 

The Lancet 386 (2002); J.F. Gent et al., Association of low-level ozone and fine particles with 

respiratory symptoms in children with asthma, 29 J. Am. Med. Assoc. 1859 (2003). 

tremes.’’ 191 There is evidence that present day heat waves over Europe and North America ‘‘coincide with a specific atmospheric circulation pattern that is intensified by ongoing increases in greenhouse gasses.’’ 192 The intensity, duration and frequency of heat 

waves will increase in western and southern regions of the United 

States and in the Mediterranean region.193 Other areas not currently as susceptible, such as northwest North America, France, 

Germany, and the Balkans will also experience ‘‘increased heat 

wave severity in the 21st century.’’ 194 With continued warming by 

2100, Washington, D.C. will experience the temperatures that 

Houston does today, Denver will be as warm as Memphis is today, 

and Anchorage will be as warm as New York City is today.195 The 

populations most at risk of dying in a heat wave are the elderly 

and people in underserved communities, and as growth in the U.S. 

population over the age of 65 coincides with warmer temperatures, 

more deaths can be anticipated. 

Global warming will exacerbate ground-level ozone pollution, 

leading to substantial increases in deaths and respiratory illness. 

The ozone forming reaction occurs at a higher rate with more intense sunlight and higher temperatures. Thus, as temperatures 

rise from global warming, ground level ozone is expected to increase. Ozone is a known public health threat that can damage 

lung tissue causing respiratory illness, and exacerbate pre-existing 

respiratory conditions. The IPCC predicts increased levels of ozone 

across the eastern United States, ‘‘with the cities most polluted 

today experiencing the greatest increase in ozone pollution.’’ 196 The 

increase in temperature in urban areas specifically and increases 

in ozone can increase rates of cardiovascular and pulmonary illnesses as well as temperature-related morbidity and mortality for 

children and the elderly.197 Similar impacts will be felt in urban 

areas around the globe. By mid-century, ozone related deaths from 

climate change are predicted to increase by approximately 4.5 percent from the 1990s levels.198 Even modest exposure to ozone may 

encourage the development of asthma in children.199 Recently, an 

analysis linking CO2 emissions to mortality revealed that for each 

increase of 1.8 °F caused by CO2, the resulting air pollution would 

lead annually to about a thousand additional deaths and many 


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200Mark Jacobson, On the Causal Link Between Carbon Dioxide and Air Pollution Mortality, 

35 Geophysical Research Letters L03809 (2008). 201 Environmental Protection Agency, Climate Change Health and Environment Effects: 

Health, (online at http://www.epa.gov/climatechange/effects/health.html#climate). 202 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation 

and Vulnerability at 409 (2007). 203 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation 

and Vulnerability at 619 (2007). 204 Centers for Disease Control and Prevention, West Nile Virus Human Case Counts for 

1999–2008, (online at http://www.cdc.gov/ncidod/dvbid/westnile/surv&control.htm). 205 U.S. Climate Change Science Program, Analyses of the Effects of Global Change on Human 

Health and Welfare and Human Systems, at 53 (Sept. 2008) (online at http:// 

downloads.climatescience.gov/sap/sap4–6/sap4–6–final-report-all.pdf). 206 Richard A. Houghton, ‘‘Tropical Deforestation as a source of greenhouse gas emissions,’’ in 

Tropical Deforestation and Climate Change at 13 (2005) (online at http://www.edf.org/documents/ 

4930lTropicalDeforestationlandlClimateChange.pdf). 207 Richard A. Houghton, Carbon Flux to the Atmosphere from Land-Use Changes: 1850–2005 

in TRENDS: A Compendium of Data on Global Change (2008) (online at http://cdiac.ornl.gov/ 

trends/landuse/houghton/houghton.html). 208 Richard A. Houghton, ‘‘Tropical Deforestation as a source of greenhouse gas emissions,’’ in 

Tropical Deforestation and Climate Change at 13 (2005) (online at http://www.edf.org/documents/ 

4930lTropicalDeforestationlandlClimateChange.pdf). 

more cases of respiratory illness and asthma in the United 

States.200

Climate change is predicted to lead to changes in geographic distribution of infectious diseases, with potentially serious impacts on 

public health in the United States and globally. According to EPA, 

‘‘Climate change may increase the risk of some infectious diseases, 

particularly those diseases that appear in warm areas and are 

spread by mosquitoes and other insects.’’ 201 For example, the IPCC 

has concluded that the global population at risk from vector-borne 

malaria will increase by between 220 million and 400 million in the 

next century.202 Similarly, the IPCC predicts that climate change 

is likely to increase risk and geographic spread of the West Nile 

virus—another mosquito-borne disease.203 West Nile virus was first 

identified in the United States during the summer of 1999, and has 

since killed 1,112 people.204 Shifting patterns of temperature may 

also redistribute ticks that transmit pathogens causing Lyme disease.205

FORESTS AND WILDFIRES

The clearing and degradation of tropical forests is a major driver 

of global climate change. Forests cover about 30 percent of the 

Earth’s land surface and hold almost half of the world’s terrestrial 

carbon.206 They can act both as a source of carbon emissions to the 

atmosphere when cut, burned, or otherwise degraded and as a sink 

when they grow, removing carbon dioxide from the air through 

photosynthesis. 

Since the 1950s, greenhouse gas emissions from land use change, 

including deforestation and degradation, have been significant, on 

the order of 20 to 50 percent of fossil fuel emissions.207 Deforestation and degradation currently account for 20 to 25 percent of 

global anthropogenic greenhouse gas emissions, roughly equivalent 

to the total fossil fuel emissions from the United States.208 These 

emissions come predominantly from deforestation of tropical 

rainforests. 

Tropical forests play an especially crucial role. When forests are 

destroyed by fire, much of the carbon they store returns to the atmosphere, enhancing global warming. When a forest is cleared for 

crop or grazing land, the soils can become a large source of global 


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209 Anthony L. Westerling et al., Warming and Earlier Spring Increase Western U.S. Forest 

Wildfire Activity, 313 Science 940 (2006). 210 N. P. Gillett et al., Detecting the Effect of Climate Change on Canadian Forest Fires, 31 

Geophysical Research Letters L18211 (2004). 211M. D. Flannigan et al., Future Area Burned in Canada, 72 Climatic Change 1 (2005). 212Guido R. Van der Werf et al, Continental-Scale Partitioning of Fire Emissions During the 

1997 to 2001 El Nin ̃ o/La Nin ̃a Period, 303 Science 73 (2004). 213 U.S. Climate Change Science Program, Synthesis and Assessment Product 4.3, The Effects 

of Climate Change on Agriculture, Land Resources, Water Resources, and Biodiversity in the 

United States, at 81–82 (May 2008). 214 U.S. Global Change Research Program, The Potential Consequences of Climate Variability 

and Change: Foundation Report, at 620 (2001) (online at http://www.usgcrp.gov/usgcrp/Library/ 

nationalassessment/foundation.htm). 

warming emissions, depending on how farmers and ranchers manage the land. In places such as Indonesia, the soils of swampy lowland forests are rich in partially decayed organic matter, known as 

peat. During extended droughts, such as during El Nin ̃ o events, the 

forests and the peat become flammable, especially if they have been 

degraded by logging or accidental fire. When they burn, they release huge volumes of CO2 and other greenhouse gases. 

There is growing scientific consensus that climate change is already increasing the frequency and intensity of wildfires in the 

United States, and this trend is likely to worsen in the coming decades. Scientists have concluded that from 1986 to 2006, longer, 

warmer summers have resulted in a four-fold increase in major 

wildfires and a six-fold increase in the area of forest burned, compared to the period from 1970–1986.209 Similar results were published regarding wildfire activity in Canada from 1920–1999.210 In 

addition to more intense and more frequent fires, the length of the 

fire season and the burn duration of large fires have also increased. 

Models of future climate have consistently concluded that the areas 

burned will increase in the coming years and decades. For example, 

wildfire burn areas in Canada are expected to increase by 74 to 118 

percent in the next century,211 and similar increases are predicted 

for the western United States. With more wildfires come more 

greenhouse gas emissions. Although estimates vary widely, 

wildfires may represent up to 10 percent of total U.S. greenhouse 

gas emissions.212

Global warming is also exacerbating insect infestations (most notably bark beetles), which in turn make forests more susceptible to 

wildfire. Drought stress makes trees and vegetation more susceptible to attack by insects, and warmer winter temperatures allow 

a higher number of insects to survive and increase their populations. Warmer temperatures can also increase reproductive rates 

of insects, resulting in two generations in a single year. Finally, 

warmer temperatures allow insects to invade areas previously outside their natural range, as has happened with the mountain pine 

beetle in the western United States.213 Research has also demonstrated links between warmer temperatures and drought on extensive insect outbreaks in southwestern forests and Alaska.214

WILDLIFE AND ENDANGERED SPECIES

If climate change goes unchecked, it could lead to the extinction 

of up to 40 percent of the world’s species by the latter half of this 

century. The International Union for the Conservation of Nature’s 

2008 annual report lists 38 percent of catalogued species as already 

threatened with extinction—including nearly 25 percent of all 


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215 International Union for the Conservation of Nature, IUCN Red List Reveals World’s Mammals in Crisis (Oct. 6, 2008) (online at http://www.iucn.org/newslevents/events/congress/ 

index.cfm?uNewsID=1695). 216 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation 

and Vulnerability, Summary for Policy Makers at 11 (2007). 217 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation 

and Vulnerability, Summary for Policy Makers at 11 (2007). 218 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation 

and Vulnerability, Summary for Policy Makers at 16 (2007). 219 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation 

and Vulnerability, Summary for Policymakers at 214 (2007). 220See, e.g., Experts Predict Polar Bear Decline, Washington Post (July 7, 2005) (online at 

http://www.washingtonpost.com/wp-dyn/content/article/2005/07/06/AR2005070601899.html). 

mammals.215 According to the IPCC’s Fourth Assessment Report, 

‘‘the resilience of many ecosystems is likely to be exceeded this century by an unprecedented combination of climate change, associated disturbances, (e.g. flooding, drought, wildfire, insects, ocean 

acidification), and other global change drivers.’’ 216

According to the IPCC: ‘‘Approximately 20–30 percent of plant 

and animal species assessed so far are likely to be at an increased 

risk of extinction if increases in global average temperature exceed 

1.5 ¥ 2.5 °C [2.7 ¥ 4.5 °F].’’ 217 Additional warming could lead to 

‘‘significant extinctions around the globe,’’ including the loss of 

more than 40 percent of all plant and animal species.218

The species most vulnerable to climate change have a specialized 

habitat, a narrow environmental tolerance that is likely to be exceeded due to climate change, and dependence on specific environmental triggers or interactions that are likely to be disrupted by 

climate change. The IPCC identifies ‘‘coral reefs, the sea-ice biome, 

and other high-latitude ecosystems (e.g. boreal forests), mountain 

ecosystems and mediterranean-climate ecosystems’’ as the systems 

most vulnerable to the impacts of climate change.219 One tragic 

and iconic example is the polar bear. Polar bear populations are expected to decline by 30 percent in the next 35 to 50 years—and to 

disappear from Alaska altogether—due to disappearing habitat resulting from global warming.220

NATIONAL SECURITY IMPACTS

The current and projected impacts of global warming have serious national security consequences for the United States and our 

allies, in many cases acting as ‘‘threat multipliers.’’ The security 

issues raised by global warming have received increasing scrutiny 

in the last few years both in Congress and in international venues, 

including a debate at the UN Security Council in April 2007. The 

first-ever U.S. government analysis of the security threats posed by 

global climate change was issued in June 2008 as the National Intelligence Assessment (NIA), National Security Implications of 

Global Climate Change to 2030. The 2008 NIA was the result of 

a process initiated, in part, by the introduction of H.R. 1961, the 

‘‘Climate Change Security Oversight Act,’’ which required the U.S. 

Intelligence Community to analyze the national security implications of global climate change. In addition, U.S. and European military and security policy analysts have issued a number of public 

reports exploring the security consequences of global warming and 

potential responses. All of these reports emphasize concerns over a 

few key security impacts, including migration, water scarcity, infrastructure at risk from extreme weather, and new economic routes 

and access to new energy resources. In most cases, global warming 


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221 House Committee on Energy and Commerce, Subcommittee on Energy and Environment, 

Hearing on The American Clean Energy and Security Act of 2009 (111th Cong.) (April 24, 2009) 

(online at http://energycommerce.house.gov/Pressl111/20090424/testimonylwarner.pdf ). 222The Gathering Storm, OnEarth (Summer 2008) (online at http://www.onearth.org/article/ 

the-gathering-storm?page=all). 

is not creating ‘‘new’’ security threats, but rather is acting as a 

‘‘threat multiplier.’’ 221

Numerous impacts of global warming could ultimately increase 

both the temporary and permanent migration of people inside and 

across existing national borders—increasing risks of geopolitical instability. Nations dealing with an influx may have neither the resources nor the desire to support climate migrants. As in the past, 

movement of people into new territory can increase the likelihood 

of conflict and the potential need for intervention from U.S. and allied military forces. 

Rising sea levels threaten low-lying island nations and populous 

coastal areas. Even if not totally inundated, rising sea levels can 

render these areas uninhabitable due to sea water incursion into 

fresh water resources and increased exposure to storms. For example, the risk of coastal flooding in Bangladesh is growing and could 

force 30 million people to search for higher ground in a country already known for political violence. India is already building a wall 

along its border with Bangladesh.222 The densely-populated and 

oil-rich Niger Delta is already the scene of conflict over the sharing 

of oil revenues. Land loss and increased risk of storms will exacerbate these tensions as well as the challenge of maintaining the existing oil infrastructure. Other important economic and agricultural 

coastal areas, like Egypt’s Nile Delta and China’s southeast coast, 

are also threatened from rising sea-levels and severe storms. Similar impacts in Central America and the Caribbean could add pressure to pre-existing migration patterns from those areas to the 

United States. 

Increased water scarcity due to climate change exacerbates the 

risk of conflict over water resources. As discussed above, changing 

precipitation patterns and increasing temperatures are likely to increase the risk of water scarcity and degraded water quality in 

many areas. Security experts have long been concerned about the 

prospects for conflict over water resources in many regions of the 

developing world, which will be exacerbated by climate change. 

Water scarcity will also increase the pressure on groups to migrate 

to areas perceived to have more resources. 

Global warming is predicted to directly impact U.S. military infrastructure at risk of damage from extreme weather and melting 

permafrost. Infrastructure upgrades, repair and replacement to increase resilience to global warming impacts, and rebuilding after 

extreme weather events will be costly. For example, the East and 

Gulf Coasts will be at increased risk from storm surge, and U.S. 

naval shipbuilding facilities have already been damaged by Hurricanes Katrina and Rita. Many active U.S. coastal military installations around the world are at a significant and increasing risk of 

damage from storm surges and associated flooding and damages. 

For example, the U.S. airbase at Diego Garcia in the Indian Ocean, 

which is critical to operations in Iraq and the surrounding region, 


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223The CNA Corporation, National Security and the Threat of Climate Change at 37 (2007) 

(online at http://securityandclimate.cna.org/report/National percent20Security percent20and 

percent20the percent20Threat percent20of percent20Climate percent20Change.pdf). 224Senate Committee on Energy and Natural Resources, Testimony of Secretary of Energy 

Samuel Bodman, Hurricanes Katrina and Rita, 109th Cong. (Oct. 27, 2005). an adequate 

amount of snow for exploration purposes could hinder oil production and transport of oil from 

fields on the North Slope. 225Scott Borgerson, Arctic Meltdown: The Economic and Security Implications of Global 

Warming, Foreign Affairs (Mar./Apr. 2008). 226Scott Borgerson, Arctic Meltdown: The Economic and Security Implications of Global 

Warming, Foreign Affairs (Mar./Apr. 2008). 227 Nicholas Stern, Stern Review on The Economics of Climate Change (2007) (online at http:// 

www.hm-treasury.gov.uk/sternlreviewlreport.htm). 228 CIA World Fact Book (online at https://www.cia.gov/library/publications/the-world-factbook/ 

geos/xx.html#Econ). 

is an average of four feet above sea level and is threatened by sea 

level rise and storm surges.223

Changes in severe weather can also threaten energy supplies, as 

demonstrated in the devastating hurricane season in 2005. The 

paths of Hurricane Katrina and Hurricane Rita passed through 

three-quarters of the oil platforms and two-thirds of the natural 

gas platforms in the Gulf of Mexico and a major concentration of 

refining capacity on land. Together they destroyed more than a 

hundred offshore platforms and damaged 183 pipelines. More than 

1.5 million barrels of oil and 10 billion cubic feet of natural gas production per day were taken off-line for both hurricanes. Katrina 

also significantly affected electricity supply with 2.7 million customers and other critical infrastructure losing power.224 In Alaska, 

melting permafrost and fewer days with 

Finally, accelerating melting of Arctic sea ice is impacting the 

United States’ strategic interests in the region. Russia has moved 

to stake claim to more than 460,000 square miles of territory, including areas with potential oil and natural gas resources.225 With 

the opening of the Northwest Passage for the first time in recorded 

history, the Prime Minister of Canada announced his intention to 

increase his country’s military presence in the Arctic.226 Other circumpolar nations, including the United States, have begun to examine their potential claims on Arctic territory and identify necessary preparations for increased maritime traffic in the area. 

THE ECONOMIC COSTS OF CLIMATE CHANGE

Climate change impacts of the types described above will have 

staggering economic impacts in the United States and the rest of 

the world in the coming decades. Measuring these impacts in dollars is a unique challenge, requiring analysis of local and global impacts, long time horizons, quantification of risk and uncertainty, 

and capturing the possibility of tipping points that induce major, 

catastrophic change. While the variables are many and complex, 

estimates of potential economic impacts are massive. The Stern Review—one of the most in-depth and respected economic impact 

analyses on climate change conducted thus far—used formal economic models to estimate that unabated climate change will cost 

at least 5 percent of global gross domestic product (GDP) each 

year.227 This amounts to around $3.3 trillion per year at the current value of the global economy.228 If a wider range of risks and 

impacts is taken into account, the damages could rise to 20 percent 

of GDP or more annually over the next two centuries. 


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229 University of Maryland Center for Integrative Environmental Research, The U.S. Economic 

Impacts of Climate Change and the Costs of Inaction at 10–15 (October 2007) (online at http:// 

dl.klima2008.net/ccsl/usleconomic.pdf). 230 Natural Resources Defense Council, The Cost of Climate Change: What We’ll Pay if Global 

Warming Continues Unchecked at vi (May 2008) (online at http://www.nrdc.org/globalwarming/ 

cost/cost.pdf). 231 Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation 

and Vulnerability, Summary for Policymakers at 7, 22 (2007). 232 Nicholas Stern, Stern Review on The Economics of Climate Change at 55 (2007) (online at 

http://www.hm-treasury.gov.uk/sternlreviewlreport.htm). 233 Congressional Black Caucus Foundation, Climate Change and Extreme Weather Events: An 

Unequal Burden on African Americans (Sept. 2005) (online at http://www.cbcfinc.org/pdf/ 

climatechangelissuebrf.pdf). 

In the United States, the economic impacts of climate change are 

predicted to be felt throughout the country and within all sectors 

of the economy. The greatest economic impacts are predicted to 

stem from stress to fresh water supply networks, changes to the 

agricultural sector, threats to coastal infrastructure from storms 

and sea level rise, effects on energy supply and demand, increased 

risk to human health, and more frequent and extensive forest 

fires.229 Tourism and other weather-dependent industries may be 

hit especially hard. Modeling results from a recent Tufts University 

and Natural Resources Defense Council study show that if present 

trends continue, the total cost of four global warming impacts 

alone—hurricane damage, real estate losses, energy costs, and 

water costs—could cost the United States nearly $1.9 trillion annually by 2100 (in constant 2008 dollars), or 1.8 percent of U.S. GDP. 

Factoring in a wider range of harms such as health impacts and 

wildlife damages, these costs could reach 3.6 percent of GDP annually in the United States by 2100.230

IMPACTS ON VULNERABLE COMMUNITIES

Climate change is predicted to have devastating impacts on the 

developing world, reversing gains in poverty reduction, food security and nutrition, health, and basic services and putting millions 

of lives at risk. Poor communities are especially vulnerable because 

they have less capacity to adapt to changes in climate and are 

more dependent on climate-sensitive resources such as local water 

and food supplies.231 Increased exposure to drought and water 

scarcity, more intense storms, floods, and other environmental 

pressures are projected to reverse many of the recent gains in poverty alleviation around the world, adding to the total of 2.6 billion 

people now living on $2 a day or less. By the end of the century, 

an additional 145–220 million people in South Asia and Sub Saharan Africa could fall below the $2 per day poverty level as a result 

of climate change impacts.232

Poor communities and communities of color within the United 

States are vulnerable to climate change impacts as well, and suffer 

disproportionately from illnesses due to the social determinants of 

health. As Hurricane Katrina demonstrated, poorer communities 

are especially vulnerable to extreme weather events. Poorer communities and communities of color are also more vulnerable to public health impacts of climate change. Today, more than 70 percent 

of African Americans live in counties in violation of federal air pollution standards.233 As a result, African Americans are nearly 


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234 Environmental Justice and Climate Change Initiative, Climate of Change: African Americans, Global Warming, and a Just Climate Policy for the U.S. at 2 (2008) (online at http:// 

www.ejcc.org/climateofchange.pdf). 235Study Finds Asthma in 25 percent of Children in Central Harlem, New York Times (April 

19, 2003). 236 Natural Resources Defense Council, Hidden Danger: Environmental Health Threats in the 

Latino Community, at vii, 14 (Oct. 2004) (online at http://www.nrdc.org/health/effects/ 

latinolenglish/latino—en.pdf). 237 U.S. Army Corps of Engineers, Alaska Village Erosion Technical Assistance Program (April 

2006) (online at http://housemajority.org/coms/cli/AVETAlReport.pdf). 238Government Accountability Office, Alaska Native Villages (June 29, 2004) (GAO–04–895T) 

(online at http://www.gao.gov/new.items/d04895t.pdf). 239 U.S. Army Corps of Engineers, Alaska Village Erosion Technical Assistance Program (April 

2006) (online at http://housemajority.org/coms/cli/AVETAlReport.pdf). 

three times as likely to be hospitalized or killed by asthma.234 In 

Harlem, New York, 25 percent of children now have asthma.235

Latinos—66 percent of whom live in areas that violate federal air 

quality standards—face disproportionate health impacts as well.236

These impacts are exacerbated by their disproportionate lack of 

health insurance and lower utilization of health services compared 

with both non-Hispanic whites and African Americans. 

Vulnerable Alaskans are already dealing with the harsh reality 

of global warming. According to the U.S. Army Corps of Engineers, 

at least three Alaskan villages—Shishmaref, Kivalina, and 

Newtok—will be lost to coastal erosion due to rising sea levels in 

the next 8 to 13 years.237 With flooding and erosion currently affecting 184 out of 213, or 86 percent, of Alaska Native villages to 

some extent,238 the number of villages needing major assistance is 

likely to increase. The cost of saving these villages through either 

man-made erosion protection or total community relocation could 

be up to $200 million or more per village.239

INTERNATIONAL CLIMATE NEGOTIATIONS

Because a global effort will be required to protect the planet from 

the looming climate crisis, the Committee crafted this legislation 

with an international treaty in mind. A December 2007 meeting in 

Bali, Indonesia in December 2007 established a ‘‘roadmap’’ for future negotiations, which calls for the completion of such an agreement to govern international global warming pollution reduction efforts at the Fifteenth Conference of the Parties to the United Nations Framework Convention on Climate Change at Copenhagen in 

December 2009. 

UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE

In 1992, the United Nations convened 172 nations at the Earth 

Summit in Rio de Janeiro for the first attempt of governments to 

fundamentally address global warming. From the summit, the 

United Nations Framework Convention on Climate Change 

(UNFCCC) emerged. It came into effect in 1994 and was ultimately 

ratified by 192 nations, including the United States. The Convention set the ultimate objective of stabilizing atmospheric greenhouse gas concentrations at safe levels and incorporated a voluntary initial goal that industrialized countries should take the 

lead in tackling the problem by cutting their emissions to 1990 levels by 2000. 


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240Decision 1/CP.13, ‘‘Bali Action Plan,’’ available at http://unfccc.int/resource/docs/2007/cop13/ 

eng/06a01.pdf#page=3. 

THE KYOTO PROTOCOL

In 1995, the first meeting of the Conference of the Parties (COP) 

to the UNFCCC adopted the Berlin Mandate, which called for the 

negotiation of a new agreement that would augment the UNFCCC 

with stricter demands for reducing emissions. This led to the development of the Kyoto Protocol, which was signed in 1997 by 84 

countries. The Protocol set mandatory targets for the reduction of 

greenhouse gas emissions from the world’s developed countries by 

an average of 5.2 percent below 1990 levels between 2008 and 

2012. Ultimately 175 countries—including virtually all developed 

countries other than the United States and Australia—ratified the 

Protocol, which officially entered into force in February 2005. Australia ratified the Protocol in December 2007, leaving the United 

States as the only industrialized country that has not done so. 

Kyoto establishes a cap-and-trade system that allows developed 

countries to meet their commitments through trading of marketable credits under the International Emissions Trading System 

(IET). Kyoto’s other ‘‘flexibility mechanisms’’—Joint Implementation (JI) and the Clean Development Mechanism (CDM)—allow developed countries to meet their emissions targets in part through 

the purchase of tradable offset credits generated by emission reduction projects in other countries. Through this array of market-based 

mechanisms, the Kyoto Protocol laid the groundwork for what has 

become known as the global ‘‘carbon market.’’ 

UNITED NATIONS CLIMATE CHANGE CONFERENCE IN BALI, INDONESIA

From December 3–15, 2007, representatives from more than 180 

countries met in Bali, Indonesia for the thirteenth conference of the 

parties to the UNFCCC. The principal item on the agenda was the 

development of a ‘‘roadmap’’ for the negotiation of a new global climate change agreement governing the period after 2012, when the 

Kyoto Protocol’s commitment period ends. 

The Bali Action Plan—the ‘‘roadmap’’ agreement reached at the 

conference—calls upon the parties to negotiate a new agreement to 

be adopted at the Fifteenth Conference of the Parties, to be held 

in Copenhagen, Denmark in December 2009.240 The roadmap recognizes the findings of the IPCC’s 2007 Fourth Assessment Report 

that global warming is unequivocal and that delay in reducing 

emissions increases the risk of severe climate change impacts and 

decreases the opportunity to achieve lower stabilization levels of 

greenhouse gases. The agreement further recognizes that ‘‘deep 

cuts in global emissions will be required’’ to avoid dangerous impacts from climate change and emphasizes the IPCC’s findings regarding the ‘‘urgency to address climate change’’—referring in a 

footnote to the IPCC’s conclusions regarding the range of emission 

reductions required to meet certain atmospheric greenhouse gas 

stabilization targets. 

The roadmap identifies four major pillars of climate policy as the 

basis for future negotiations: mitigation, adaptation, technology development and transfer, and financial resources and investment. 

With regard to mitigation, the agreement calls for consideration of 

actions by both developed and developing countries. For developed 


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241Subcommittee on Energy and Air Quality, Hearing on Addressing Climate Change—Views 

from Private Sector Panels (Feb. 13, 2007); Subcommittee on Energy and Air Quality, Hearing 

on A Review of the Administration’s Proposal for the Transportation Sector (Feb. 28, 2007); Subcommittee on Energy and Air Quality, Hearing on Carbon Capture and Sequestration: An Overview (Mar. 6, 2007); Subcommittee on Energy and Air Quality, Hearing on Climate Change: Are 

Greenhouse Gas Emissions from Human Activities Contributing to a Warming of the Planet? 

(Mar. 7, 2007); Subcommittee on Energy and Air Quality, The Environmental Protection Agency’s Fiscal Year 2008 Budget Request (Mar. 8, 2007); Subcommittee on Energy and Air Quality, 

Hearing on Climate Change and Energy Security: Perspectives from the Automobile Industry 

(Mar. 14, 2007); Subcommittee on Energy and Air Quality, Hearing on Climate Change: State 

and Local Perspectives (Mar. 15, 2007); Subcommittee on Energy and Air Quality, Hearing on 

Climate Change: Perspectives of Utility CEOs (Mar. 20, 2007); Subcommittee on Energy and Air 

Quality, Hearing on Perspectives on Climate Change (Mar. 21, 2007); Subcommittee on Energy 

and Air Quality, Hearing on Climate Change—International Issues, Engaging Developing Countries (Mar. 27, 2007); Subcommittee on Energy and Air Quality, Hearing on Climate Change— 

Lessons Learned from Existing Cap-and-Trade Programs (Mar. 29, 2007); Subcommittee on Energy and Air Quality, Hearing on Alternative Transportation Fuels: An Overview (Apr. 18, 2007); 

Subcommittee on Energy and Air Quality, Hearing on Implementation of the EPACT 2005 Loan 

Guarantee Programs by the Department of Energy (Apr. 24, 2007); Subcommittee on Energy and 

Air Quality, Hearing on Achieving—At Long Last—Appliance Efficiency Standards (May 1, 

2007); Subcommittee on Energy and Air Quality, Hearing on Facilitating the Transition to a 

Smart Electric Grid (May 3, 2007); Subcommittee on Energy and Air Quality, Hearing on Alternative Fuels: Current Status, Proposals for New Standards, and Related Infrastructure Issues 

(May 8, 2007); Subcommittee on Energy and Air Quality, Hearing on Legislative Hearing on Discussion Drafts concerning Energy Efficiency, Smart Electricity Grid, Energy Policy Act of 2005 

Title XVII Loan Guarantees, and Standby Loans for Coal-to-Liquids Projects (May 24, 2007); 

Subcommittee on Energy and Air Quality, Hearing on Legislative Hearing on Discussion Draft 

Concerning Alternative Fuels, Infrastructure, and Vehicles (June 7, 2007); Subcommittee on Energy and Air Quality, Hearing on Administration Perspectives on United Nations Climate 

Change Conference in Bali (Jan. 17, 2008); Subcommittee on Energy and Air Quality, Hearing 

on Climate Change: Competitiveness Concerns and Prospects for Engaging Developing Countries 

(Mar. 5, 2008); Subcommittee on Energy and Air Quality, Hearing on Strengths and Weaknesses 

of Regulating Greenhouse Gas Emissions Using Existing Clean Air Act Authorities (Apr. 10, 

2008); Subcommittee on Energy and Air Quality, Hearing on The Renewable Fuels Standard: 

Issues, Implementation, and Opportunities (May 6, 2008); Subcommittee on Energy and Air 

Quality, Hearing on Legislative Proposals to Reduce Greenhouse Gas Emissions: An Overview 

(June 19, 2008); Subcommittee on Energy and Air Quality, Hearing on Climate Change: Costs 

of Inaction (June 26, 2008); Subcommittee on Energy and Air Quality, Hearing on H.R. 6258, 

the Carbon Capture and Storage Early Deployment Act (July 10, 2008); Subcommittee on Energy 

and Air Quality, Hearing on Climate Benefits of Improved Building Energy Efficiency (July 17, 

2008); Subcommittee on Environment and Hazardous Materials, Carbon Sequestration: Risks, 

Opportunities, and Protection of Drinking Water (July 24, 2008). 

countries, the roadmap calls for consideration of ‘‘measurable, reportable, and verifiable nationally appropriate mitigation commitments or actions, including quantified emission limitation and reduction objectives.’’ The roadmap also included developing countries in the mitigation agreement for the first time. Developing nations agreed to consider ‘‘nationally appropriate mitigation actions’’ 

that are ‘‘measurable, reportable and verifiable’’ so long as they are 

supported by ‘‘measurable, reportable and verifiable’’ support in the 

form of technology transfer, financing, and capacity-building. In addition, the roadmap calls, among other things, for consideration of 

enhanced action on adaptation to climate change, technology transfer to developing countries, and financial support for mitigation 

and adaptation activities in developing countries. 

LEGISLATIVE HISTORY

During the 110th Congress, the House Committee on Energy and 

Commerce held dozens of hearings on energy and climate change 

policy that have built a detailed, factual record regarding the need 

for energy and climate change legislation. These hearings examined the scientific understanding of climate change, the views of 

various stakeholders, promising clean energy and environmental 

technologies and other policy-relevant issues.241 The Committee 

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242 Committee on Energy and Commerce, Scope of a Cap-and-Trade Program (Oct. 3, 2007); 

Committee on Energy and Commerce, Competitiveness Concerns/Engaging Developing Countries 

(Jan. 31, 2008); Committee on Energy and Commerce, Appropriate Roles for Different Levels of 

Government (Feb. 25, 2008); Committee on Energy and Commerce, Getting the Most Greenhouse 

Gas Reductions for Our Money (May 27, 2008). 243 Committee on Energy and Commerce, Hearing on the U.S. Climate Action Partnership 

(Jan. 15, 2009). 

mate legislation.242 In October 2008, Chairman John D. Dingell 

and Subcommittee on Environment and Air Quality Chairman Rick 

Boucher released a discussion draft of climate legislation. 

The first hearing held by the Committee in the 111th Congress 

focused on climate change and a legislative proposal put forward 

by the U.S. Climate Action Partnership, a coalition of industry and 

environmental organizations.243 The Subcommittee on Energy and 

Environment had an aggressive hearing schedule—holding eight 

hearings in a six-week period: • Subcommittee on Energy and the Environment, Hearing on 

The Climate Crisis: National Security, Economic, and Public Health 

Threats (Feb. 12, 2009); • Subcommittee on Energy and the Environment, Hearing on 

Energy Efficiency: Complementary Policies for Climate Legislation 

(Feb. 24, 2009); • Subcommittee on Energy and the Environment, Hearing on Renewable Energy: Complementary Policies for Climate Legislation 

(Feb. 26, 2009); 

• Subcommittee on Energy and the Environment, Hearing on the 

Role of Offsets in Climate Legislation (Mar. 5, 2009); 

• Subcommittee on Energy and the Environment, Hearing on the 

Future of Coal Under Climate Legislation (Mar. 10, 2009); 

• Subcommittee on Energy and the Environment, Hearing on 

Consumer Protection Provisions in Climate Legislation (Mar. 12, 

2009); 

• Subcommittee on Energy and the Environment, Hearing on 

Competitiveness and Climate Policy: Avoiding Leakage of Jobs and 

Emissions (Mar. 18, 2009); and 

• Subcommittee on Energy and the Environment, Hearing on 

Preparing for Climate Change: Adaptation Policies and Programs 

(Mar. 25, 2009). 

The Subcommittee also convened informal sessions to engage in 

discussion with leaders from the international community. On 

March 4, 2009, the Subcommittee held a briefing on international 

climate negotiations and policy with the U.K. Minister of Energy 

and Climate Change Ed Miliband and the Danish Minister of Climate and Energy Connie Hedegaard. Also, on March 18, 2009, the 

Subcommittee hosted a briefing by the Secretary-General of the 

United Nations Ban Ki-moon. The Secretary-General informed the 

Subcommittee about his views on the importance of addressing climate change and the status of the international climate negotiations. 

On March 31, 2009, Chairman Henry A. Waxman and Subcommittee Chairman Edward J. Markey released a discussion draft 

of the American Clean Energy and Security Act of 2009. Committee 

staff subsequently briefed more than 300 diverse entities and organizations about the legislation. Participants in Committee briefings 

represented the broad array of stakeholders interested in and affect 

by energy and climate legislation, including representatives of the 


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electricity industry, manufacturers, refiners, agricultural and forestry interests, labor, environmental advocacy groups, faith groups, 

and state and local governments. 

From April 21 to 24, 2009, the Committee held four days of legislative hearings on the discussion draft. Nearly 70 witnesses testified, including former Vice President Al Gore and former Speaker 

of the House Newt Gingrich. The legislation was available for review by both majority and minority Committee members, as well 

as outside experts and the public, for nearly seven weeks prior to 

Committee markup. On May 15, 2009, Chairman Waxman and 

Subcommittee Chairman Markey introduced H.R. 2454, the ‘‘American Clean Energy and Security Act of 2009’’. 

COMMITTEE CONSIDERATION

On Monday, May 18, 2009, Tuesday, May 19, 2009, Wednesday, 

May 20, 2009, and Thursday, May 21, 2009, the full Committee 

met in open markup session to consider H.R. 2454. During the 4 

days of markup, there were 96 amendments offered of which 36 

amendments were adopted. On May 21, 2009, the Committee ordered H.R. 2454 favorably reported to the House, amended. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. A motion by Mr. 

Markey to order H.R. 2454 favorably reported to the House, 

amended, was agreed to by a record vote of 33 yeas and 25 nays. 

The following is the recorded votes taken during Committee consideration, including the names of those Members voting for and 

against: 


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APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act of 1985. 

STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF

THE COMMITTEE

In accordance with clause 3(c)(1) of rule XIII and clause (2)(b)(1) 

of rule X of the Rules of the House of Representatives, the Committee’s oversight findings and recommendations are reflected in the 

descriptive portions of this report. 

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

In accordance with clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee’s performance goals and 

objectives are reflected in the descriptive portions of this report. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to 3(d)(1) of rule XIII of the Rules of the House of Representatives, the Committee finds that the constitutional authority 

for this legislation is provided in Article I, Section 8, Clause 18 of 

the Constitution of the United States. 

ADVISORY COMMITTEE STATEMENT

The Committee finds that the legislation establishes or authorizes the establishment of advisory committees within the definition 

of 5 U.S.C. App., Section 5(b). Section 186 of the bill establishes an 

Energy Technology Advisory Council to advise the Clean Energy 

Deployment Administration established by the bill. The Committee 

finds this advisory committee is needed to assist the CEDA in evaluating clean energy technology issues and deployment goals. Section 194 establishes a consumer advocacy advisory board. The 

Committee finds this advisory committee is needed to make recommendations on rates, services, and disputes to the Director of 

the Federal Energy Regulatory Commission Office of Consumer Advocacy. Section 464 establishes a science advisory board that the 

Committee finds is necessary to advise the Secretary of Health and 

Human Services on public health issues relating to climate change 

and the best science available for purposes of issuing a national 

strategic action plan. Section 477 establishes a science advisory 

board that the Committee finds is necessary to advise the Secretaries of Commerce and the Interior on state of the science regarding the impacts of climate change and ocean acidification on natural resources. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 


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EARMARKS AND TAX AND TARIFF BENEFITS

H.R. 2454 does not include any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9(d), 9(e), 

or 9(f) of rule XXI. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate on H.R. 2454 

prepared by the Director of the Congressional Budget Office pursuant to section 402 of the Congressional Budget Act. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

Regarding compliance with clause 3(c)(2) of rule XIII of the Rules 

of the House of Representatives, the Committee adopts as its own 

the estimate prepared by the Director of the Congressional Budget 

Office pursuant to section 402 of the Congressional Budget Act of 

1974. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate on H.R. 2454 

provided by the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, June 5, 2009. 

Hon. HENRY A. WAXMAN, 

Chairman, Committee on Energy and Commerce, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2454, the American Clean 

Energy and Security Act of 2009. 

If you wish further details on these estimates, we will be pleased 

to provide them. The CBO staff contact is Susanne S. Mehlman. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

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

Summary: H.R. 2454 would make a number of changes in energy 

and environmental policies largely aimed at reducing emissions of 

gases that contribute to global warming. The bill would limit or cap 

the quantity of certain greenhouse gases (GHGs) emitted from facilities that generate electricity and from other industrial activities 

over the 2012–2050 period. The Environmental Protection Agency 

(EPA) would establish two separate regulatory initiatives known as 

cap-and-trade programs—one covering emissions of most types of 

GHGs and one covering hydrofluorocarbons (HFCs). EPA would 

issue allowances to emit those gases under the cap-and-trade programs. Some of those allowances would be auctioned by the federal 

government, and the remainder would be distributed at no charge. 

Other major provisions of the legislation would: 


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• Provide energy tax credits or energy rebates to certain 

low-income families to offset the impact of higher energy-related prices from the cap-and-trade programs; • Require certain retail electricity suppliers to satisfy a minimum percentage of their electricity sales with electricity generated by facilities that use qualifying renewable fuels or energy sources; • Establish a Carbon Storage Research Corporation to support research and development of technologies related to carbon capture and sequestration; • Increase, by $25 billion, the aggregate amount of loans 

DOE is authorized to make to automobile manufacturers and 

component suppliers under the existing Advanced Technology 

Vehicle Manufacturing Loan Program; • Establish a Clean Energy Deployment Administration 

(CEDA) within the Department of Energy (DOE), which would 

be authorized to provide direct loans, loan guarantees, and letters of credit for clean energy projects; • Authorize the Department of Transportation (DOT) to provide individuals with vouchers to acquire new vehicles that 

achieve greater fuel efficiency than the existing qualifying vehicles owned by the individuals; and 

• Authorize appropriations for various programs under EPA, 

DOE, and other agencies. 

CBO and the Joint Committee on Taxation (JCT) estimate that 

over the 2010–2019 period enacting this legislation would: 

• Increase federal revenues by about $846 billion; and 

• Increase direct spending by about $821 billion. 

In total, those changes would reduce budget deficits (or increase 

future surpluses) by about $24 billion over the 2010–2019 period. 

In addition, assuming appropriation of the necessary amounts, 

CBO estimates that implementing H.R. 2454 would increase discretionary spending by about $50 billion over the 2010–2019 period. 

Most of that funding would stem from spending auction proceeds 

from various funds established under this legislation. 

CBO has determined that the non-tax provisions of H.R. 2454 

contain intergovernmental and private-sector mandates as defined 

in the Unfunded Mandates Reform Act (UMRA). Several of those 

mandates would require utilities, manufacturers, and other entities 

to reduce greenhouse gas emissions through cap-and-trade programs and performance standards. CBO estimates that the cost of 

mandates in the bill would well exceed the annual thresholds established in UMRA for intergovernmental and private-sector mandates (in 2009, $69 million and $139 million respectively, adjusted 

annually for inflation). 

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

Sections 

Page 

Major Provisions ...................................................................................................... 360 

Basis of Estimate 

Budgetary Treatment of Allowances, RECs, and Offset Credits .................. 366 

Revenues Resulting from Cap-and-Trade Programs ..................................... 367 

Other Revenues ................................................................................................ 374 

Direct Spending ................................................................................................ 377 

Spending Subject to Appropriation ................................................................. 382 


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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. 

Provisions with Budgetary Impacts That Begin After 2019 ................................ 388 

Intergovernmental and Private-Sector Impact ...................................................... 388 

Tables 

1. GHG Emission Allowances Under H.R. 2454 and the Percentage Auctioned 

and Freely Allocated ............................................................................................ 362 

2. Estimated Budgetary Impact of H.R. 2454 ....................................................... 365 

3. CBO Estimates of Allowance Prices Under H.R. 2454 .................................... 368 

4. Estimated Changes in Revenues and Direct Spending Under H.R. 2454 ..... 379 

5. Estimated Spending Subject to Appropriation Under H.R. 2454 ................... 383 

Common Abbreviations Used in the Cost Estimate 

CCS = Carbon capture and sequestration 

CO2 = Carbon dioxide 

CEDA = Clean Energy Development Administration 

CFC = Chlorofluorocarbon 

mtCO2e = Metric ton of carbon dioxide equivalent 

GHG = Greenhouse gas 

HFC = Hydrofluorocarbon 

MWh = Megawatt hour 

REC = Renewable electricity credit 

RES = Renewable electricity standard 

MAJOR PROVISIONS 

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

sections. 

CAP-AND-TRADE PROGRAMS FOR GREENHOUSE GASES

This legislation would designate as GHGs: carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, perfluorocarbons, nitrogen 

trifluoride, and HFCs from a chemical manufacturing process at a 

stationary industrial source. EPA would be required to establish 

two cap-and-trade programs aimed at reducing the emission of 

GHGs in the United States over the 2012–2050 period. One program would cover emissions of GHGs other than HFCs. A second 

program would cover the production and importation of HFCs and 

the importation of products containing HFCs. (Although HFCs are 

considered to be greenhouse gases, this cost estimate will subsequently refer to the larger program as the GHG cap-and-trade program and the smaller program specific to HFCs as the HFC capand-trade program). 

A cap-and-trade program is a regulatory policy aimed at controlling pollution emissions from specific sources. The legislation would 

set a limit on total emissions for each year and would require regulated entities to hold rights, or allowances, to the emissions permitted under that cap. Each allowance would entitle companies to 

emit the equivalent of one metric ton of carbon dioxide equivalent 

(mtCO2e).1 After the allowances for a given period were distributed, entities would be free to buy and sell allowances. 

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, attribuVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00360 Fmt 6659 Sfmt 6602 E:\HR\OC\HR137.XXX HR137

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tion of emissions to covered entities, and the timing of implementation vary by type of entity and sector of the economy: • Beginning in 2012, all electricity generators would be required to submit allowances for all GHG emissions from their 

sites, with the exception of emissions from the combustion of 

liquid fuels, coke, and renewable biomass; • Also beginning in 2012, any facility or entity that produces 

or imports petroleum- or coal-based liquids, petroleum coke, or 

natural gas liquids would be required to submit allowances for 

the GHG emissions that would result from the combustion of 

those fuels, if combustion of the fuel resulted in the emission 

of more than 25,000 mtCO2e per year. Similarly, all facilities 

or entities that produce or import GHGs for direct use would 

be required to submit allowances for the emissions that would 

result when those gases were released into the atmosphere. 

Emissions from sites that geologically sequester CO2 also 

would be covered beginning in 2012; • Beginning in 2014, industrial facilities that manufacture a 

wide variety of products or that burn fossil fuels would be required to submit allowances for all GHG emissions from their 

sites—with the exception of emissions from the combustion of 

various types of liquid fuels, coke, and renewable biomass—if 

their activities result in more than 25,000 mtCO2e of emissions; 

• Beginning in 2016, natural gas distributors that deliver at 

least 460 million cubic feet of natural gas to customers that are 

not covered by the cap-and-trade provisions of the bill would 

need to submit allowances for the GHG emissions that would 

result from the combustion of the gas delivered to those customers; and 

• Under a separate cap, beginning in 2012, producers and 

importers of HFCs, and importers of products containing 

HFCs, would be required to submit allowances for the carbon 

dioxide-equivalent tons of HFC they produce or import. 

According to CBO’s estimates, the programs would cover about 

72 percent of U.S. emissions of GHGs in 2012, about 78 percent in 

2015, and about 86 percent in 2020. 

OPERATION OF THE GHG CAP-AND-TRADE PROGRAM

H.R. 2454 would not restrict the types of entities or individuals 

who could purchase, hold, exchange, or retire emission allowances 

under the GHG cap-and-trade program. An unlimited number of allowances obtained in one year could be saved or ‘‘banked’’ by market participants indefinitely to be used or sold in future years. Limited borrowing of allowances (that is, the use in one year of an allowance that has been established for use in a future year) also 

would be permitted. The program would allocate to covered entities 

4,627 million mtCO2e allowances in 2012—about 97 percent of the 

amount of such emissions by covered entities in 2005. The number 

of allowances would increase to as high as 5,482 million mtCO2e 

in 2016 to account for certain covered entities that would not begin 

compliance until that time, and then decline by 100 million to 150 

million mtCO2e per year—falling to 1,035 million mtCO2e in 2050, 

about 14 percent of projected emissions from covered entities in the 

absence of and regulation of such emissions. 


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The legislation also would require EPA to create a ‘‘strategic reserve’’ of about 2.7 billion allowances by setting aside a small number of allowances authorized to be issued each year. EPA would 

auction allowances from its strategic reserve only if the market 

price of allowances rose to unexpectedly high levels. 

A portion of an entity’s compliance obligation under the bill could 

be met by purchasing domestic or international ‘‘offsets’’ in lieu of 

purchasing an allowance. An offset would be created by activities 

(as certified by EPA) that are not directly related to the emissions 

of the facilities covered under the bill, but would reduce GHG emissions or increase the amount of such gases that are captured from 

the atmosphere and stored (this process is referred to as sequestration). Examples of such offset activities include reducing emissions 

of methane gas from solid waste landfills, sequestering GHGs on 

agricultural lands, rangelands, and forests, altering agricultural 

tillage practices, planting winter crops, and reducing the use of nitrogen fertilizer. Under the bill, such offsets could occur domestically or in another country if the United States is a party to a bilateral or multilateral agreement or arrangement with the relevant 

country. Those international agreements or arrangements would 

specify the types of qualifying projects and methods for verifying 

the validity of offset activities. Covered entities could also purchase 

GHG emission allowances established by other countries or international organizations if approved by EPA. 

The cap for the GHG cap-and-trade program would take effect in 

2012. Of the emission allowances established for this program less 

the amount set aside for the strategic reserve (4,581 million 

mtCO2e in 2012), 29.6 percent would initially be auctioned for sale 

from that vintage year (that is, the calendar year for which an allowance is established) to covered industries and other entities that 

wish to purchase them. Auctions would occur four times a year, 

with the first auction occurring no later than March 31, 2011. 

Emission allowances not specified for auction in the bill would be 

distributed free of charge to covered entities, states, and other 

specified recipients, who could then retire, sell, or use such allowances to meet the annual obligation for their own emissions. The 

percentage of emission allowances auctioned and freely allocated by 

vintage years 2012 through 2019 is provided in Table 1. By 2022, 

the percentage of allowances auctioned would increase to 18.4 percent and gradually increase to about 70 percent in 2031 and remain at that level through 2050. 

TABLE 1—GHG EMISSION ALLOWANCES UNDER H.R. 2454 AND THE PERCENTAGE AUCTIONED AND 

FREELY ALLOCATED 

By vintage year— 

2012 2013 2014 2015 2016 2017 2018 2019 

Quantity of Emission Allowances Less Amount Available for Strategic Reserve (In millions of metric 

tons) ....................................................................... 4,581 4,499 5,048 4,953 5,427 5,321 5,216 5,110 

Percentage Auctioned ................................................. 29.6 29.6 17.9 17.9 17.5 17.5 17.5 17.5 

Percentage Freely Allocated ........................................ 70.4 70.4 82.1 82.1 82.5 82.5 82.5 82.5 

Note: Vintage year is the calendar year for which an allowance is established. 


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Operation of the HFC cap-and-trade program 

Beginning in 2012, producers and importers of HFCs as well as 

importers of products containing HFCs would be required to submit 

to EPA a consumption allowance or a destruction offset credit for 

each carbon dioxide-equivalent ton of HFC. EPA would be authorized to issue destruction offset credits to producers and importers 

of HFCs if those entities perform or arrange for the recovery and 

destruction of chlorofluorocarbons (CFCs) from products or equipment already in use in the United States. The allowances available 

would steadily decline from 90 percent of the baseline use of HFCs 

(defined in the legislation as the average annual consumption of 

HFCs plus the average annual quantity of HFCs contained in imported products over the 2004–2006 period) to 15 percent of that 

baseline after 2032. Destruction offset credits could be used by producers and importers to satisfy a portion of the requirement to submit consumption allowances. 

The bill would allow entities to bank an unlimited number of 

HFC allowances for future use. In contrast to the GHG cap-andtrade program, only those entities that produce and import HFCs 

or import products containing HFCs would be permitted to purchase an allowance directly from EPA, although EPA would have 

the authority to establish certain exceptions. (The legislation, however, would not restrict which entities could hold, sell, transfer, exchange, or retire consumption allowances in any secondary market 

for HFC allowances.) 

All of the consumption allowances established for the HFC capand-trade program would be either auctioned or offered through a 

fixed-price sale to producers and importers of HFCs and products 

containing HFCs. The legislation specifies how the HFC allowance 

price would be calculated for certain auctions and for all fixed-price 

sales. 

Refundable low-income energy tax credit and energy rebate program 

The bill would create a new refundable energy tax credit and rebate program aimed at offsetting the impact of the GHG cap-andtrade program on energy prices faced by low-income families. The 

credit would be based on the average loss of purchasing power for 

the poorest fifth of people caused by higher prices for energy and 

other goods. The credit would vary with family size, based on the 

average spending for families of different sizes at the bottom of the 

income scale. The credit amount would be calculated using the 

share of total expenditures made by those families, the GHG intensity of that spending, the amount of other relief provided to consumers under the bill, and how much of recipients’ reduced purchasing power would be automatically offset by federal cost-of-living adjustments in other federal benefit programs. 

Combined energy efficiency and renewable electricity standard 

(RES) 

H.R. 2454 would require that, starting in 2012, certain retail 

electricity suppliers provide a minimum percentage of their electricity sales from electricity generated by facilities that use qualifying renewable fuels or energy sources. That percentage would be 

measured relative to the portion of a supplier’s base sales of electricity generated from sources specified in the bill and would need 


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to equal or exceed 6 percent of such sales by each covered supplier 

in 2012 and increase to 20 percent by 2020. To meet the RES requirement, suppliers would have to generate their own qualifying 

renewable power, purchase renewable energy credits (RECs) from 

other firms, or make alternative compliance payments to the state 

in which they operate. Upon request from a state government, electricity suppliers in that state could satisfy up to 40 percent of their 

RES compliance obligation by demonstrating a reduction in their 

customers’ electricity consumption through qualified energy-efficiency projects initiated after the date of the bill’s enactment. 

Under the bill, one federal REC would be created for each megawatt hour (MWh) of electricity generated from a renewable energy 

source (for example, wind, solar, or geothermal). RECs could be 

traded on a secondary market, enabling firms in regions where renewable energy sources are scarce or relatively expensive to purchase credits generated in regions with an excess supply of RECs. 

In the event an electricity supplier does not have the requisite 

number of RECs or sufficient reductions in customers’ electricity 

consumption to comply with the proposed standard, such entities 

could choose to remit, to the state in which they operate, alternative compliance payments equal to $25 per MWh needed to meet 

the suppliers’ compliance requirement (those payments would be 

adjusted annually for inflation). The legislation would require 

states to use any amounts received from alternative compliance 

payments to support the deployment of technologies to generate renewable energy and the implementation of energy-efficiency programs. 

Carbon Storage Research Corporation 

The legislation would authorize utilities that distribute electricity 

generated from fossil fuels to establish, subject to approval in a referendum by members of the electricity distribution industry, a Carbon Storage Research Corporation. The corporation would levy annual assessments on distribution utilities based on certain electricity deliveries to retail consumers. Assessments would total between $1.0 billion and $1.1 billion annually and would support research and development of technologies related to carbon capture 

and sequestration (CCS). Although formation of the corporation 

would be voluntary, once it was created, assessments would be 

compulsory, enforced by the federal government’s sovereign authority. Therefore, CBO believes the corporation should be considered 

governmental in nature and all of its activities should be included 

in the federal budget. 

Loans to manufacturers of advanced technology vehicles 

H.R. 2454 would increase the amount of direct loans the DOE is 

authorized to provide under section 136 of the Energy Independence and Security Act (EISA). That act authorizes DOE to provide 

up to $25 billion in loans to automobile manufacturers and component suppliers to support capital investments in facilities designed 

to produce vehicles with greater fuel efficiency and reduced emissions. H.R. 2454 would amend EISA to authorize DOE to provide 

up to $50 billion in loans. Under the Credit Reform Act of 1990, 

any spending for the additional $25 billion in loans authorized 

under H.R. 2454 would be subject to appropriation. 


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Clean Energy Deployment Administration 

H.R. 2454 would establish a Clean Energy Deployment Administration (CEDA) within DOE, which would be authorized to provide 

direct loans, loan guarantees, and letters of credit for privately 

sponsored projects using clean energy technologies. Such assistance 

would be available for investments in the energy, transportation, 

manufacturing, commodities, residential, commercial, and financial 

services sectors. The bill also would modify the terms of an existing 

loan-guarantee program administered by DOE. 

Implementing this provision would affect discretionary spending. 

Under the Credit Reform Act, commitments for direct loans, loan 

guarantees, and similar credit assistance would be contingent on 

future appropriation action. 

Fuel-efficient vehicle vouchers 

The bill would authorize a program within DOT that would provide vouchers for the purchase or lease of a new car or truck to individuals who trade in an eligible vehicle for one that is more fuel 

efficient. The bill defines an eligible vehicle as one that averages 

18-miles-per-gallon or less and would set minimum fuel-economy 

requirements for vehicles purchased or leased with a voucher. The 

eligible vehicle would have to be subsequently dismantled. The 

vouchers would range in value from $3,500 to $4,500 depending on 

the characteristics of both the old and the new vehicles. CBO estimates that this provision would accelerate the rate at which some 

older, less fuel-efficient vehicles are replaced, and cause the fleet 

of new vehicles purchased under the program to be more fuel efficient than it would otherwise be. As a result, fewer taxes would be 

collected on the sale of fuel, reducing federal revenues. 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 2454 is shown in Table 2. The costs of this 

legislation fall within budget functions 270 (energy), 300 (natural 

resources and environment), 350 (agriculture), 370 (commerce and 

housing credit), 400 (transportation), 500 (education, training, employment, and social services), 550 (health), and 600 (income security). For this estimate, CBO assumes that H.R. 2454 will be enacted near the end of fiscal year 2009, that the amounts necessary 

to implement the bill will be appropriated each year, and that outlays will follow historical spending patterns for similar programs. 

TABLE 2.—ESTIMATED BUDGETARY IMPACT OF H.R. 2454 

By fiscal year, in billions of dollars— 

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 

2014 

2010– 

2019 

CHANGES IN REVENUES 

Total Estimated 

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

CHANGES IN DIRECT SPENDING 

Estimated 

Budget Authority .......... 1.0 33.4 51.9 67.5 88.7 102.1 110.0 116.1 122.9 128.8 242.6 822.6 

Estimated Outlays .............. 0.3 32.9 51.6 67.7 88.8 102.2 110.0 116.1 122.9 128.8 241.3 821.2 


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TABLE 2.—ESTIMATED BUDGETARY IMPACT OF H.R. 2454—Continued 

By fiscal year, in billions of dollars— 

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 

2014 

2010– 

2019 

NET CHANGE IN THE BUDGET DEFICIT FROM 

CHANGES IN REVENUES AND DIRECT SPENDING 

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

CHANGES IN SPENDING SUBJECT TO APPROPRIATION 

Estimated Authorization 

Level ............ 5.5 9.3 3.0 3.6 4.4 5.4 6.0 6.9 8.2 8.7 25.8 61.1 

Estimated Outlays .............. 3.4 1.6 2.7 3.8 4.9 5.8 6.6 6.5 6.8 7.8 16.4 49.9 

Note: Components may not sum to totals because of rounding. 

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

Basis of estimate: CBO estimates that implementing this legislation would result in additional revenues, net of income and payroll 

tax offsets, of $253.2 billion over the 2010–2014 period and $845.6 

billion over the 2010–2019 period. We estimate that direct spending would increase by $241.3 billion and $821.2 billion over the 

same periods, respectively. Those changes in revenues and direct 

spending would mainly stem from the process of auctioning and 

freely distributing allowances under the cap-and-trade programs 

established under this legislation. In addition, CBO estimates that 

implementing this legislation would increase discretionary federal 

spending by $49.9 billion over the 2010–2019 period, assuming appropriation of the amounts estimated to be necessary. 

Budgetary treatment of allowances, RECs, and offset credits 

Efforts to control GHG emissions in this legislation would be enforced through the federal government’s sovereign powers and 

would alter the use of scarce economic resources. While similar in 

some ways to command-and-control approaches for regulating economic activities, the cap-and-trade system that would be established by the bill for GHG and HFC emissions is fundamentally different because it would create cash-like assets (allowances) whose 

supply and distribution would be determined by the federal government. As such, CBO believes it is appropriate to include all transactions involving GHG and HFC allowances (including those distributed at no cost) in the budget. 

Under H.R. 2454, both firms and individuals would be eligible to 

trade GHG and HFC allowances acquired from the federal government in a secondary market that would exceed $60 billion in value 

in 2012, CBO estimates. Within such a large and liquid market, allowances could be easily and immediately traded for cash. In addition, the legislation would allow the federal government to determine the supply of allowances by defining the scope of covered 

emissions and limiting the number of allowances to be issued. 

Under those circumstances, the free distribution of allowances by 

the federal government would be essentially equivalent to the distribution of cash grants, so CBO believes that such transactions 

should be treated as additional outlays. At the same time, those allowances would be valuable financial instruments, so CBO thinks 


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that the creation of allowances by the federal government should 

be recorded as an increase in revenues. 

That logic does not hinge on whether the federal government 

sells or, instead, gives away the allowances. Allowances would have 

significant value even if given away because the recipients could 

sell them or, in the case of a covered entity, use them to avoid incurring the cost of compliance. In either case, the recipient receives 

an asset of equivalent value with no estimated change in the policy 

effect (i.e., total GHG emissions). For example, the government 

could either raise $100 by selling allowances and then give that 

amount in cash to an entity, or it could simply give $100 worth of 

allowances to that same entity, which could immediately and easily 

transform the allowances into cash through the secondary market. 

Sound budgeting requires that the budget treat equivalent transactions in the same way, in CBO’s view. Therefore, this estimate 

treats the creation of 11 allowances and their disposition as budgetary transactions, regardless of whether the allowances would be 

sold or distributed at no cost. 

In contrast, CBO believes the creation and subsequent allocation 

of federal RECs under the legislation’s combined efficiency and renewable electricity standard should not be included within the federal budget. While a large and liquid secondary market for RECs 

would make them cash-like in nature, the supply of credits would 

be determined by the amount of renewable energy generated, not 

by the federal government. Unlike a GHG or HFC allowance, the 

creation of an REC, and thus its value, would stem from actions 

undertaken by private entities. The federal government would be 

unable to achieve the same policy effect (in this case, a target percentage of energy generation from renewable sources) through the 

sale of RECs since the quantity of RECs needed to meet this target 

would be a function of business decisions about how much electricity to produce. 

Domestic and international offset credits authorized to be used 

within the GHG cap-and-trade program have similar characteristics similar to those of RECs. Once created, such credits would 

have value because the firms that are covered by the cap could use 

them in lieu of allowances for a share of their compliance obligation. Unlike allowances, however, the government would not determine the supply of offsets; that supply would depend on the actions 

of private entities. Therefore, CBO believes offset credits should not 

be accounted for in the federal budget. 

Revenues resulting from cap-and-trade programs 

The impact of H.R. 2454 on net federal revenues would largely 

be determined by the value of allowances created by the bill less 

the resulting reductions in receipts from income and payroll taxes. 

Penalties for noncompliance and fees collected to administer the 

legislation would add a small amount to total revenues, and tax 

credits available to low-income individuals would reduce federal 

revenues. The following sections discuss how CBO estimated the allowance prices for GHG and HFC cap-and-trade programs and detail other revenue impacts of the bill. 

Estimating the Prices for Emission Allowances. CBO estimates 

that the price of GHG allowances would rise from about $15 per 

mtCO2e of emissions in 2011 to about $26 per mtCO2e in 2019. 


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2For a more detailed discussion of the methods CBO used to estimate the price for carbon 

allowances for previous legislation, see How CBO Estimates the Costs of Reducing GreenhouseGas Emissions, CBO Background Paper (April 2009). 

Table 3 provides CBO’s estimate of annual allowance prices for the 

separate GHG and HFC cap-and-trade programs that would be created by the bill. 

TABLE 3.—CBO ESTIMATES OF ALLOWANCE PRICES UNDER H.R. 2454 

By fiscal year, in dollars— 

2011 2012 2013 2014 2015 2016 2017 2018 2019 

Estimated GHG Allowance Price .................. 15 16 17 18 19 21 22 24 26 

Estimated HFC Allowance Price 1 ................ n.a. 2 3 4 10 12 13 19 20 

Note: n.a. = not applicable. 

1 Prices provided are the weighted average of the estimated auction prices and fixed-price sales. 

To estimate the marginal cost of reducing GHG emissions— 

which ultimately would determine the price of allowances—CBO 

took several steps: • First, CBO constructed a base case that includes projections of future GHG emissions in the absence of any federal 

policies to control them, as well as projections of future prices 

of fossil fuels, electricity, and other products and services closely associated with such emissions; • Next, we developed estimates of how firms and households 

would respond to increases in prices for fossil fuels and other 

sources of GHG emissions; • Finally, CBO assessed the impact of other features of the 

legislation that would influence the market price of allowances. 

Such other provisions include regulations that would influence 

GHG emissions and electricity consumption, subsidies for various GHG emission-reducing activities, opportunities for firms 

to bank allowances in one year and use them in another, and 

the availability of domestic or international offsets.2

CBO began with its estimate of the emissions that would occur 

in the absence of the bill and lowered that baseline to reflect the 

extent to which the bill would require particular methods of reducing emissions (such as using renewable energy sources or increasing energy efficiency) to be used to a greater extent than they otherwise would have under the cap-and-trade program. We then estimate the price of allowances that would be necessary to generate 

the remaining reduction in emissions necessary to meet the cap. 

This estimate uses a ‘‘middle of the road’’ estimate of price responsiveness, which indicates how much firms and households would 

reduce their emissions for any given allowance price (and its implied effect of fossil fuel energy prices). In making that calculation 

CBO simultaneously estimated the extent to which firms would 

comply by purchasing domestic or international offsets (in lieu of 

purchasing allowances or reducing their emissions). Our estimate 

of the allowance price accounts for the fact that firms might find 

it profitable to exceed their emission reductions in the early years 

of the policy and bank their excess allowances to use in later years. 

To do so, we estimate emissions reductions and allowance prices 

during the full duration of the program through 2050. 

Base Case Emission Projections. For its base case of GHG emissions, CBO relied primarily on projections of energy use, fossil fuel 


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3See U.S. Environmental Protection Agency, Inventory of U.S. Greenhouse Gas Emissions and 

Sinks: 1990–2007 (EPA 430–R–09–004, April 2009). CBO also used information provided by EPA 

to project the consumption of HFCs. 4 EIA reports projections of GHG emissions in the AEO 2009 only through 2030. 

5The models analyzed include the EIA’s National Energy Modeling System (NEMS), the 

Emissions Prediction and Policy Analysis (EPPA) model used by climate researchers at the Massachusetts Institute of Technology, the Applied Dynamic Analysis of the Global Economy 

(ADAGE) model developed at RTI International and used by EPA, the Second Generation Model 

(SGM) and MiniCAM models developed and used by the Joint Global Change Research Institute, 

the Model for Evaluating the Regional and Global Effects of GHG Reduction Policies (MERGE) 

developed by Stanford University and EPRI, and the Multi-region National-North American 

Electricity and Environment (MRN–NEEM) model developed and used by CRA International. 6For 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). 

prices, and GHG emissions from the April 2009 update of the Annual Energy Outlook 2009 (AEO 2009) published by the Energy Information Administration (EIA). EIA’s inventory of emissions is 

based on a slightly different methodology than used by EPA, whose 

inventory is considered the official U.S. estimate for purposes of 

international negotiations and agreements.3 CBO adjusted the EIA 

data to align with EPA estimates for the most recent year where 

actual data is published, while retaining EIA’s projected growth 

rates. CBO assumes that emissions per dollar of the nation’s gross 

domestic product (GDP) will grow (or decline) at the same rate beyond 2030 as they are projected to grow in the preceding decade.4

Response by Firms and Households. A key factor in determining 

the price of an allowance is how quickly and cheaply firms and 

households can decrease CO2 emissions by reducing their use of 

fossil fuels (either directly or indirectly via the goods and services 

that they consume). The easier it is for firms and households to cut 

their emissions, the lower the allowance price would need to be to 

reach a given cap. Available economic models differ considerably in 

their estimates of how much emissions would decrease for a given 

allowance price (and its implied effect on fossil fuel prices) because 

they make different assumptions about the long-run ability of businesses to substitute low-carbon fuels and more efficient technology 

for high-carbon fuels; the long-run sensitivity of energy usage to 

higher energy prices; and the speed at which those responses unfold. CBO generated a ‘‘middle of the road’’ response to allowance 

prices by examining available peer-reviewed models and calculating 

an average response, measured across multiple models and across 

different types of end users (households, electric utilities, and manufacturers, for example).5

Using those models, CBO concludes that the response to price increases (that is the decrease in emissions that would result from 

any given allowance price) would rise substantially over time as 

firms and households replace existing vehicles, equipment, structures, and electricity-generating capacity with newer items that use 

less energy or emit smaller quantities of carbon emissions.6 CBO’s 

approach provides an estimate of the quantity of emission reductions that would occur at various allowance prices but does not 

specify how they would occur. That is, it does not provide detail 

about the timing or magnitude of the adoption of specific technologies, such as nuclear power or CCS, or the quantity of reductions in specific parts of the economy, such as the transportation 

sector. 


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CBO estimates that, in 2015, a price on emissions of CO2 that 

raised the average price of end-use energy produced from fossil 

fuels by 10 percent would induce about a 5 percent reduction in 

such emissions. By 2025, a similar increase in price would result 

in a 9 percent reduction in emissions, with the response continuing 

to increase over time at a gradually decreasing rate. 

Response to Opportunities for Banking of Emission Allowances. If 

covered entities were required to use all of their emission allowances in the year for which they were originally designated, the 

price of allowances would rise at a rate that was dictated by the 

speed at which the cap became more stringent (relative to the 

growth of emissions in the absence of the policy). Given the rate 

at which the cap on emissions would become more stringent over 

time under H.R. 2454, the inflation-adjusted price of allowances 

would rise at a rate that is significantly greater than CBO’s estimate of the rate of return that firms might obtain on alternative 

investments, which CBO assumed to be the after-tax long-run inflation-adjusted rate of return to capital in the U.S. nonfinancial 

corporate sector (5.6 percent) that CBO is currently using to project 

the long-run budget outlook. 

If firms were allowed to bank unlimited amounts of allowances, 

as they are under H.R. 2454, then profit-maximizing behavior by 

firms would cause the price of an allowance to increase at the same 

rate as the return that firms might receive on alternative investments. Specifically, firms would have an incentive to exceed their 

emission reduction requirements in the initial years of the program 

(when the cost of meeting the annual caps would be relatively low) 

and to bank their excess allowances to use in future years when 

the cost of meeting the cap would be much higher. Because banking would increase the demand for allowances in the early years 

(pushing up the allowance price) and increase the supply of allowances in later years (pushing down the allowance price), it would 

reduce the rate of increase in the price of allowances. Firms would 

continue to bank allowances up to the point where the rate of increase in the price of allowances was 5.6 percent, the rate of return 

that they might receive by making alternative investments. 

In the early years of the cap-and-trade program, the banking provision included in the bill would have a significant impact on the 

amount of emissions reductions, and thus on the allowance price. 

CBO estimates that by 2019, covered entities would undertake significantly more mitigation than necessary to meet their annual 

emission caps, banking about 2 billion mtCO2e of allowances and 

raising the allowance price by 13 percent, compared with a policy 

that prohibited banking. 

Response to Offset Credits. H.R. 2454 would allow covered entities to substitute offset credits in lieu of up to two billion GHG allowances each year. CBO expects covered entities would take advantage of this provision when costs are less than other methods 

of compliance. CBO finds that this provision would have a significant effect on allowance prices. As discussed below, by reducing the 

cost of complying with the cap, offsets are likely to lower the price 

of allowances by a substantial amount. 

Under the bill, domestic offset credits could be used in lieu of up 

to one billion allowances per year. Based on EPA data on the available supply of domestic offsets at different prices, CBO estimates 


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that covered entities would use domestic offsets to substitute for 

about 230 million allowances in 2012 and about 300 million allowances in 2020. 

Covered entities may use international offsets in lieu of either 

one billion allowances, or depending on whether or not domestic 

offsets are used up to their full potential, up to 1.5 billion allowances in a given year. In no case could domestic and international 

offsets substitute for more than two billion allowances. 

To calculate the supply of offsets from international sources, 

CBO used information from EPA and made adjustments based on 

provisions in the legislation, assumptions about demand from other 

countries, and an estimate of the transactions costs associated with 

creating and verifying offsets. Based on information from the Department of State, EPA, and outside experts, CBO expects that the 

agreements necessary to generate offsets with certain countries 

would take significant time to negotiate. Over the period covered 

by this bill, the number of agreements and the scope of their coverage is assumed to increase. CBO also assumed that other developed countries (for example, those in the European Union) would 

seek offsets for their own emissions reduction programs, thereby 

reducing the supply available to U.S. entities. 

CBO estimates that covered entities would use international offsets in lieu of about 190 million allowances in 2012 and in lieu of 

about 425 million allowances in 2020. Together, the provisions allowing the use of domestic and international offsets would decrease 

the price of GHG allowances by $35 (69 percent) in 2012. 

Response to Emissions Allowances from Other Markets. H.R. 2454 

also would allow covered entities to submit an unlimited number 

of emissions allowances obtained from 16 other cap-and-trade markets of ‘‘comparable stringency’’ in lieu of GHG allowances issued 

by EPA. For this estimate, CBO assumed that a market of ‘‘comparable stringency’’ would essentially be equivalent to a cap-andtrade market where allowances sell for a comparable price. Therefore, this provision would have no effect on the U.S. GHG allowance price. 

Sensitivity of the GHG Allowance Price Estimates to Changes in 

Assumptions. In cap-and-trade systems such as the one established 

by this legislation, the most important assumptions affecting the 

price of allowances involve: 

• Base-case projections of GHG emissions and energy prices; 

• The responsiveness of households and firms to changes in 

the prices of goods and services associated with emissions; 

• The discount rate that allowance holders apply to decisions 

about whether to bank allowances and how many to bank; 

• The availability of offsets from domestic and international 

sources and the extent to which they are allowed to meet compliance obligations; and 

• Other regulatory programs included as part of an overall 

emissions-reduction policy. 

CBO examined each of those parameters to evaluate how sensitive the estimated allowance prices might be to alternative assumptions about how the program might operate into the future. 

Changes in the allowance prices under those alternative assumptions are made by holding the other parameters constant. (Note: it 

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7See discussion of the differences in the EIA Annual Energy Outlook (2009), available online 

at: http://www.eia.doe.gov/oiaf/aeo/forecast.html. 

8 EPA’s analysis of S. 2191 showed that initial allowance prices were 80 percent higher when 

nuclear, biomass, and CCS technologies were constrained. Such an effect would be equivalent 

to lowering the projected sensitivity of the U.S. economy by more than 50 percent. 

eters simultaneously by simply adding together the independent effects of changing one parameter assumption while keeping other 

parameters constant.) 

Base-Case Projections. Energy-related emissions from the U.S. 

economy are projected in the AEO 2009 to be almost 3 percent 

lower in 2012 and 7 percent lower in 2030 compared with those 

made by EIA last year.7 All else constant, a lower baseline for 

emissions from a covered sector will result in lower allowance 

prices. 

Responsiveness. CBO’s estimates of the responsiveness of firms 

and households to changes in energy prices strongly influences its 

estimates. If that responsiveness were 10 percent stronger (or 

weaker), on average, allowance prices would be roughly 8 percent 

lower or 9 percent higher.8

Discount Rate. The discount rate that firms would use when deciding whether or not to bank allowances is important in determining the allowance price because it affects the supply and demand for allowances in a given year. A higher discount rate would 

suggest that a firm would be more willing to put off expenses in 

the near term and pay them in the future, causing firms to bank 

fewer allowances. Assuming a lower discount rate of 5 percent (the 

rate used by EPA), firms would choose to lower emissions more in 

the near term (that is, bank more allowances) and less in future 

years. Use of a 5 percent rate would increase CBO’s estimate of initial year prices by 13 percent and decrease projected prices in 2050 

by 9 percent. 

Availability of Offsets. Allowance prices would be lower if firms 

were allowed to use more offset credits to meet the bill’s compliance obligations and if those offsets were cheaper than the costs of 

lowering emissions. Under the bill, the use of international offsets 

lowers the allowance price by about 70 percent. Doubling the extent to which international offsets could be used in lieu of allowances in each year would decrease the allowance price by about 30 

percent more. 

Regulatory Programs. Other programs or standards that influence GHG emissions would affect the price of allowances by affecting the magnitude of the emission reductions necessary to meet the 

cap. For example, a regulatory program that requires increasing 

amounts of electricity generation to come from renewable energy 

sources (for example, wind, solar, and biomass) could lower emissions from the electricity sector that would be subject to the capand-trade program. Allowances prices could therefore be lower than 

they otherwise might have been in the absence of that regulation. 

The effect that such programs and standards would have on 

emissions will vary with the base price of allowances and the stringency of those standards. If allowance prices are high, consumers 

and firms would have more incentives to undertake actions to 

lower emissions. In that case, it is less likely that a separate regulatory program would affect the allowance price because the behavior that the regulatory program is intended to achieve would occur 


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9Two previous letters on this subject can be found on CBO’s website at: http://www.cbo.gov/ 

ftpdocs/102xx/doc10236/BartonCapnTradeLtr.pdf and http://www.cbo.gov/ftpdocs/102xx/doc10232/ 

5-15-WaxmanLetter.pdf. 

in any event as a result of the relatively high allowance price. Conversely, when allowance prices are relatively low, and/or regulatory 

standards are relatively stringent, those standards would be more 

likely to motivate additional emission reductions through the use 

of the regulated technology (by using renewable energy, for example) beyond those that would result under the cap. In that case, the 

standards would reduce the emissions reductions that must be 

achieved to meet the cap and the price of allowances would be 

lower. Using one example from the legislation, CBO finds that distributing allowances to those facilities that invest in CCS technology, the price of allowances is reduced by 9 percent. In other 

cases, such as the RES, CBO estimates that the response to the 

GHG cap-and-trade program would result in enough renewable 

electricity generation on a national level to satisfy the new RES. 

Estimating the Price of Consumption Allowances for 

HFCs. CBO estimates that the average price of consumption allowances for HFCs would be in the vicinity of $2 beginning in 2012 

and would rise to approximately $20 by 2019. The cap would reduce HFC emissions by about 50 percent by 2020 from about 500 

million mtCO2e to about 250 million mtCO2e. 

For this estimate, CBO constructed a base-case projection of HFC 

consumption through 2025 similar to a base case produced by EPA. 

After consulting with industry sources, CBO concluded that the 

growth in HFC consumption after 2025 would be equal to the population growth rate in the United States, an assumption similar to 

that made by the International Panel on Climate Change. Using 

engineering cost data for HFC alternatives provided by EPA, CBO 

estimated the supply of HFC reductions as a function of price and 

year. From this data, CBO concluded that the ability to replace 

HFCs with lower-cost chemical alternatives would increase over 

time. 

As prices for HFC allowances increase, firms would find it more 

profitable to recycle those chemicals and develop alternatives to 

these products. To the extent those changes occur, the price of HFC 

allowances would be different than would otherwise occur. 

Net Revenue Calculation. CBO estimates that gross receipts 

to the federal government from the auction and free allocation of 

allowances under the bill would total $298 billion over the 2010– 

2014 period and $973 billion over the 2010–2019 period. This estimate is based on the projected prices of allowances for both the 

GHG and HFC cap-and-trade programs. 

However, the cost of purchasing allowances, whether from the 

government or from other entities that would receive allowances 

under the bill, would become an additional business expense for 

companies that would have to comply with that cap on emissions. 

Those additional expenses would result in a decrease in taxable income, resulting in a loss of government revenue from income and 

payroll taxes referred to as a ‘‘revenue offset’’. The amount of this 

revenue offset would be equal to 25 percent—an approximate marginal tax rate on overall economic activity—of the gross receipts 

from the auction and free allocation of allowances.9


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Depending on the manner in which the proceeds or allowances 

are used by the government or conveyed to private entities, this reduction in taxable income (the revenue offset) might be accompanied by a matching increase in taxable income elsewhere in the 

economy. In such cases, CBO views the distribution of allowances 

or allowance proceeds as offsetting the revenue offset—that is, compensating for the initial loss of tax revenues associated with the acquisition of the allowances. In those cases, the distribution and use 

of the allowances or the auction proceeds would be budget neutral. 

For this estimate, CBO applied this offsetting offset to some of the 

revenues arising from the distribution of allowances, depending on 

who would receive those allowances (or auction proceeds) and what 

they would be used for. 

In general, allowances provided under section 321 to businesses 

(merchant coal generators, generators with long-term power purchase agreements, petroleum refiners), and some of the allowances 

provided to natural gas distributors would fit in the category of 

transactions that would be budget neutral because they would generate taxable income. In contrast, allowances provided to nonbusiness entities—such as states to support specific activities, or to 

other countries to support efforts to reduce greenhouse gases— 

would not be budget neutral because they would not generate taxable income. 

On balance, CBO estimates that the auction of GHG and HFC 

allowances and distribution of GHG allowances at no cost would 

generate revenues, net of income and payroll tax offsets, of about 

$254 billion over the 2010–2014 period and $858 billion over the 

next 10 years (see Table 4). 

OTHER REVENUES

Refundable Low-Income Energy Tax Credit. H.R. 2454 

would create a refundable energy tax credit, aimed at offsetting the 

impact of higher energy prices on low-income families. The credit 

would be based on the average loss of purchasing power for the 

poorest fifth of people caused by higher prices for energy and other 

goods under the bill. The credit would vary with family size, based 

on the average spending of different size families at the bottom of 

the income scale. The credit amount would be based on the share 

of total expenditures made by those families, the GHG intensity of 

that spending, the amount of other relief provided under the bill, 

and how much of their reduced purchasing power would be automatically offset with federal cost-of-living adjustments. In 2012, 

CBO estimates that the credit would range from $161 for a single 

person to $359 for a five-person household. By 2019, those credit 

amounts would rise by roughly 75 percent. 

Only taxpayers with income below certain levels would receive 

the credit. The level at which a family would become ineligible for 

the credit depends on the family structure. In 2012, CBO estimates 

that single people with no children would be ineligible if their income exceeded $23,000, while families with at least two children 

would be ineligible if their income exceeded $42,000. The credit 

would be refundable, meaning that taxpayers would not need to 

owe any tax in order to receive the credit. Taxpayers who would 

participate in the energy rebate program for low-income consumers 

would not be eligible for that credit. 


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The Joint Committee on Taxation estimates that the credit 

would cost $83 billion over the 2009–2019 period. Of that amount, 

about $22 billion would be recorded in the budget as a reduction 

in tax receipts and about $61 billion as an increase in direct spending in the amount in excess of taxes owed. 

In addition, people who participate in other federal benefits programs could receive a cash rebate under another provision (see Direct Spending section below). 

Increased Use of Production Tax Credits. By increasing electricity production through renewable sources, H.R. 2454 would result in businesses claiming increased business tax credits for the 

renewable electricity production credit (section 45 of the Internal 

Revenue Code) and the energy credit which applies primarily to investments in solar and geothermal energy production (section 48 of 

the Internal Revenue Code). JCT estimates that increased use of 

those credits would reduce revenues by $1.1 billion over the 2010– 

2019 period. This estimate reflects one aspect of the revenue consequences of a shift in economic activity away from use of fossil 

fuels. 

Carbon Storage Research Corporation. Section 114 would 

authorize utilities that distribute fossil fuels to establish, by a referendum involving members of the electricity distribution industry, 

a Carbon Storage Research Corporation. The corporation would 

levy annual assessments on distribution utilities based on the volume of certain electricity deliveries to retail consumers. Assessments would amount to at least $1 billion, but not more than $1.1 

billion each year. While formation of the corporation would be voluntary, once it was created, assessments would be compulsory, enforced by the federal government’s sovereign authority. As such, 

CBO believes the corporation should be considered governmental in 

nature, and all of its activities should be included in the federal 

budget. 

For this estimate, CBO assumes that the corporation would be created and would collect assessments totaling $1 billion in 2010 

and $1.1 billion each year thereafter through 2019. Those amounts 

should be recorded in the budget as revenues, and subsequent expenditures should be considered direct spending. 

Additionally, the cost of those assessments would become an additional business expense for utilities, resulting in a loss of other 

federal tax revenue (primarily income and payroll taxes). The 

amount of this revenue loss would be equal to about 25 percent of 

the assessments. However, half of the funds collected by the corporation would go back to electric utilities in the form of grants to 

subsidize the operations of existing electricity generation units that 

use integrated CCS or conversion. Those grants would generate 

new taxable income which would increase federal revenues. Consequently, the net loss in tax revenue would equal about one-eighth 

of the income from the assessments, resulting in an overall increase in revenues from this provision of $4.7 billion over the 2010– 

2014 period and $9.5 billion over the next 10 years. 

Commodity Futures Trading Commission. H.R. 2454 would 

authorize the Commodity Futures Trading Commission (CFTC) to 

charge and collect fees on transactions executed on certain exchanges. The fee would be calculated to recover the annual cost of 

the commission’s supervision and regulation of futures markets 


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(the cost of CFTC’s enforcement activities would not be included in 

this amount). Fees would be deposited into a special account and 

would be authorized to be appropriated to fund the commission’s 

activities. CBO estimates that enacting these provisions would increase revenues by about $400 million over the 2010–2014 period, 

and by about $800 million over the 2010–2019 period, net of income and payroll tax losses. 

Alternative Compliance Payments for the Renewable Electricity Standard (RES). Section 101 would establish a new federal standard requiring an increasing percentage of electricity sold 

by certain retail electricity suppliers to be generated from renewable sources beginning in 2012. Covered suppliers of retail electricity would meet this requirement by submitting a federal renewable energy credit (REC) or by making an alternative compliance 

payment equal to $25 (in 2009, adjusted for inflation) for each 

megawatt hour of renewable electricity necessary to comply with 

the standard. Under the bill, alternative compliance payments 

would be paid directly to states; nevertheless, because they would 

result from an exercise of the federal government’s sovereign power 

to regulate industry, CBO believes that collections and subsequent 

expenditures of alternative compliance payments should be considered governmental in nature and included in the federal budget. 

CBO estimates that the response to the GHG cap-and-trade program would result in the generation of enough renewable electricity, on a national level, to satisfy the federal standard. However, based on information from DOE, CBO expects that some regions of the country—particularly the southeast—would probably 

not generate sufficient RECs to satisfy the federal standard. Thus, 

covered electricity suppliers in those areas would have to either 

purchase RECs generated elsewhere or make alternative compliance payments to the states in which they operate. 

CBO expects that, in some cases, covered electricity suppliers 

would choose to make alternative compliance payments rather than 

purchase RECs. H.R. 2454 would require states to use any alternative compliance payments received pursuant to the federal RES 

to promote the development of renewable energy resources. To the 

extent that electricity suppliers that are subject to the RES would 

benefit from states’ spending of alternative compliance payments, 

H.R. 2454 might provide an incentive for suppliers to favor those 

payments over REC purchases as a means of complying with the 

federal RES. 

CBO believes that this incentive would most likely affect the behavior of electricity suppliers in instances where the price of a REC 

is at or only slightly below the compliance payment. Based on information from DOE about estimated prices of RECs under H.R. 

2454, however, CBO expects that most suppliers would use RECs 

to comply with the federal RES. We estimate that alternative compliance payments would probably not exceed $500 million over the 

2012–2019 period. The volume of electricity associated with estimated payments is small—less than one-tenth of one percent of all 

electricity generation. 

In addition, the cost of the alternative compliance payments 

would become an additional business expense for utilities, thus reducing federal tax revenue. The amount of this revenue offset 

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all increase in revenues from this provision of about $100 million 

over the 2010–2014 period and nearly $400 million over the next 

10 years. 

Fuel-Efficient Vehicle Vouchers. CBO expects that the 

issuance of vouchers to individuals who replace existing vehicles 

with new ones of greater fuel efficiency would result in a slight increase in the overall fuel efficiency of the domestic vehicle fleet. 

New vehicles purchased as a result of the program would generally 

be more fuel efficient than ones that would otherwise be purchased 

as replacements. This increase in fuel efficiency would cause a 

slight decline in gasoline consumption, thereby reducing federal 

revenues generated by excise taxes on motor fuels. CBO estimates 

that this provision of the legislation would reduce federal revenues 

by $16 million over the 2010–2014 period and $28 million over the 

2010–2019 period. 

Penalties. Under H.R. 2454, civil penalties would be assessed on 

those owners and operators who fail to meet their compliance obligation on time. The penalty would equal the emissions generated 

by an entity in excess of the allowances they held multiplied by 

twice the fair market value of emission allowances in the relevant 

year. In addition, the covered entities would be required to submit, 

in the following year or other time period determined by EPA, 

emission allowances to cover excess emissions from the previous 

year. The legislation also would establish penalties for those entities that violate any of the rules associated with the regulation of 

the allowance market. Such penalties could be as high $1 million 

per day under certain circumstances. This legislation also includes 

various other penalties, including penalties for nonpayment of allowances and for fraud. 

Because many of the penalties could be substantial, CBO expects 

most firms would comply with the requirements of the bill. However, the number of entities covered by this legislation is large, and 

thus it is likely that some entities would not comply. Penalties collected on emissions of sulfur dioxide and nitrogen oxides in excess 

of submitted allowances under EPA’s Acid Rain Program, a similar 

program, are usually small, though there have been two large collections over the past few years totaling about $4 million. Based on 

that information, CBO estimates that penalty collections under 

H.R. 2454 would total between $25 million and $50 million dollars 

annually, beginning in 2012. 

Effect on Unemployment Compensation. The bill would create a program to compensate workers who lose their jobs as a result of the bill’s provisions. That program would provide cash benefits, job training, and a subsidy for health care costs. Individuals 

who collect benefits under that program would not be eligible to receive unemployment compensation; consequently, outlays of that 

program would be reduced. Because such outlays are paid from 

state employment taxes, CBO estimates that states would reduce 

their taxes (which are recorded as revenues on the federal budget) 

accordingly. Over the 2012–2019 period, CBO estimates that the 

reduction in tax revenues to be less than $100 million. 

DIRECT SPENDING

CBO estimates that enacting this legislation would increase direct spending by $821 billion over the 2010–2019 period. Outlays 


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would primarily stem from spending of auction proceeds and giving 

GHG allowances to states and other entities free of charge. Also, 

substantial amounts of auction proceeds would be available for 

other spending programs that would be subject to appropriation action. A more detailed description of those programs is included 

under the discussion of spending subject to appropriation. 

Worker Assistance. A portion of the revenues from the auction 

of emission allowances for the GHG cap-and-trade program would 

fund a program for Climate Change Worker Adjustment Assistance 

(CCWAA), which would be administered by the Department of 

Labor (DOL). Under that program, workers who lose their jobs as 

a result of measures their employers take to comply with provisions of the bill could be certified to receive up to 156 weeks of benefits, including cash benefits equal to 70 percent of their average 

weekly wage, job training and employment search assistance, and 

an 80 percent subsidy of the cost of continuing health insurance. 

Funding for the program would be capped at a specified portion of 

auction proceeds actually received, which CBO estimates would 

total $4.3 billion over the 2011–2019 period. Gross outlays for 

CCWAA would total $4.2 billion over that period, CBO estimates. 

Individuals receiving CCWAA would not be eligible to receive unemployment compensation. Thus, CBO estimates outlays for unemployment benefits would drop by about $0.1 billion over the 2011– 

2012 period. (That drop in outlays would be offset over time by a 

corresponding reduction in unemployment tax revenues, as discussed in the revenue section of this estimate.) 


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TABLE 4.—ESTIMATED CHANGES IN REVENUES AND DIRECT SPENDING UNDER H.R. 2454 

By fiscal year, in billions of dollars— 

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 

CHANGES IN REVENUES 

Net Revenues Resulting from Cap-and-Trade Programs a ................................................................ 0 38.0 58.6 64.8 92.2 105.9 114.4 120.1 128.6 134.9 253.6 857.6

Refundable Low-Income Energy Tax Credit ....................................................................................... 0 0 ¥0.6 ¥2.3 ¥2.5 ¥2.9 ¥3.1 ¥3.4 ¥3.5 ¥3.6 ¥5.5 ¥22.0 Increased Production Tax Credit Use ................................................................................................. 0 0 * ¥0.1 ¥0.1 ¥0.1 ¥0.1 ¥0.2 ¥0.2 ¥0.2 ¥0.2 ¥1.1 

Carbon Storage Research Corporation ............................................................................................... 0.9 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 4.7 9.5 Alternative Compliance Payments for the RES ................................................................................. 0 0 * * * * * * 0.1 0.1 0.1 0.4 Commodity Futures Trading Commission .......................................................................................... 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.4 0.8 Fuel-Efficient Vehicle Vouchers ......................................................................................................... * * * * * * * * * * * * Penalties and Other Revenue Changes ............................................................................................. 0 0 * * * * * * * * 0.1 0.2 

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

CHANGES IN DIRECT SPENDING 

Worker Assistance: b

Estimated Budget Authority ...................................................................................................... 0 0.2 0.3 0.4 0.4 0.5 0.5 0.6 0.6 0.6 1.3 4.2 Estimated Outlays ..................................................................................................................... 0 0 0.1 0.6 0.5 0.5 0.6 0.6 0.6 0.6 1.3 4.1 

Outlays Associated with Emission Allowances Freely Allocated: 

Estimated Budget Authority ...................................................................................................... 0 32.2 46.3 54.4 74.5 86.0 92.7 96.4 102.7 107.5 207.4 692.7 Estimated Outlays ..................................................................................................................... 0 32.2 46.3 54.4 74.5 86.0 92.7 96.4 102.7 107.5 207.4 692.7 

Refundable Low-Income Energy Tax Credit Payments: 

Estimated Budget Authority ...................................................................................................... 0 0 0 6.1 6.5 8.0 8.4 10.4 10.5 11.2 12.6 61.1 Estimated Outlays ..................................................................................................................... 0 0 0 6.1 6.5 8.0 8.4 10.4 10.5 11.2 12.6 61.1 

Low-Income Energy Rebates: 

Estimated Budget Authority ...................................................................................................... 0 0 4.1 5.4 6.1 6.4 7.2 7.5 7.8 8.2 15.7 52.8 Estimated Outlays ..................................................................................................................... 0 0 4.1 5.4 6.1 6.4 7.2 7.5 7.8 8.2 15.7 52.8 

Carbon Storage Research Corporation: 

Estimated Budget Authority ...................................................................................................... 1.0 1.1 1.1 1.2 1.2 1.2 1.2 1.2 1.2 1.2 5.6 11.4 Estimated Outlays ..................................................................................................................... 0.3 0.7 1.0 1.1 1.1 1.2 1.2 1.2 1.2 1.2 4.3 10.1 

Spending of Alternative Compliance Payments: 

Estimated Budget Authority ...................................................................................................... 0 0 * * * * 0.1 0.1 0.1 0.1 0.1 0.5 Estimated Outlays ..................................................................................................................... 0 0 * * * * 0.1 0.1 0.1 0.1 0.1 0.5 

Total Changes in Direct Spending: 

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


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TABLE 4.—ESTIMATED CHANGES IN REVENUES AND DIRECT SPENDING UNDER H.R. 2454—Continued 

By fiscal year, in billions of dollars— 

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 

Net Change in the Budget Deficit 

from Changes in Revenues and Direct Spending 

Impact on Deficit: c ............................................................................................................................ 0.6 6.1 7.5 ¥4.2 1.8 1.8 2.4 1.5 3.2 3.5 12.0 24.4 

Memorandum—Details on Auction Revenues: Gross Revenues from Auctioned Allowances ..................................................................................... 0 9.9 21.5 19.7 30.1 33.7 37.0 39.6 42.9 45.4 81.2 279.9 Net Revenues from Auctioned Allowances ......................................................................................... 0 7.4 16.2 14.8 22.6 25.3 27.7 29.7 32.2 34.1 60.9 209.9 Gross Revenues from Allowances Freely Allocated ............................................................................ 0 32.2 46.3 54.4 74.5 86.0 92.7 96.4 102.7 107.5 207.4 692.7 Net Revenues from Allowances Freely Allocated ............................................................................... 0 30.6 42.5 50.1 69.6 80.6 86.7 90.4 96.4 100.8 192.7 647.7 

Notes: RES = renewable electricity standard, * = between ¥$50 million and $50 million. Numbers may not sum to totals because of rounding. a. Revenues are net of income and payroll tax offsets. b. Includes $0.1 billion reduction in other unemployment benefits over the 2010–2019 period. c. Positive numbers indicate decreases in deficits; negative numbers indicate increases in deficits. 


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Outlays Associated with Emission Allowances Freely Allocated. CBO estimates that direct spending would increase by about $693 billion over the 2010–2019 period when the government 

distributes emission allowances free of charge to various recipients. 

Most of this distribution would begin in 2012. Recipients, such as 

states, natural gas distributers, and federal agencies, would use 

the allowances to fund programs to encourage energy efficiency and 

other types of government initiatives. 

Refundable Low-Income Energy Tax Credit Payments. 

H.R. 2454 would create a refundable energy tax credit for low-income families. (See section on ‘‘Other Revenues.’’) Taxpayers would 

receive any credit amount in excess of their income tax liability as 

a direct payment. The JCT estimates that direct spending would 

increase by $61 billion over the 2010–2019 period. 

Low-Income Energy Rebates. The bill would create a new energy rebate, aimed at offsetting the impact of the GHG cap-andtrade program on energy prices for low-income families. The rebate 

would complement the low-income energy tax credit program, 

reaching families who may not file tax returns. The rebate amount 

would be the same as the tax credit amount, equaling the average 

loss of purchasing power caused by higher prices for energy and 

other goods for the poorest fifth of people. Like the credit, the rebate would vary with family size. In 2012, CBO estimates the rebate would be $161 for a single person, ranging up to $359 for a 

five-person household. By 2019, those credit amounts would rise by 

roughly 75 percent. 

Families who participate in the Supplemental Nutrition Assistance Program or the Medicare Part D low-income subsidy would 

automatically be enrolled in the rebate program. Other families 

with income below 150 percent of the poverty level could apply for 

the rebates through their state benefit agencies. Enrolled families 

would receive one-twelfth of the annual rebate amount each month. 

Families would not be eligible to receive both the rebate and the 

tax credit. State benefit agencies would notify both credit recipients 

and the Internal Revenue Service of the amounts of rebate received 

each year, and the amount of the tax credit a family receives would 

be reduced by any rebate they receive. 

CBO estimates that this rebate program would increase direct 

spending by $53 billion over the 2012–2019 period. CBO expects 

that all families receiving the low-income subsidy or participating 

in the Supplemental Nutrition Assistance Program would receive 

the rebate. CBO expects minimal participation from eligible families not enrolled in those programs, as the rebate amounts are not 

large enough to induce many to participate in a new program. CBO 

also expects that the coordination mechanism between the state 

benefit agencies and the Internal Revenue Service would be effective in minimizing the number of families that receive both the tax 

credit and the rebate. 

Carbon Storage Research Corporation. As previously discussed in the section on revenues, H.R. 2454 would authorize a 

governmental corporation to levy and spend assessments on distribution utilities totaling between $1.0 billion and $1.1 billion a 

year over the 2010–2019 period. Under the bill, the corporation 

could invest those assessments in interest-bearing securities, thereby generating additional funding for its activities. Expenditures of 


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assessments and interest, which would be considered direct spending, would support research and development of technologies related to CCS. Based on historical spending patterns for similar activities, CBO estimates that expenditures by the proposed corporation would total about $300 million in 2010 and $10.1 billion over 

the 2010–2019 period. 

Spending of Alternative Compliance Payments Under the 

RES. The legislation would require states to use any amounts received from alternative compliance payments under the proposed 

RES to support the deployment of technologies to generate renewable energy and to implement energy-efficiency programs. Based on 

historical spending patterns for similar activities, CBO estimates 

that such spending would total about $500 million over the 2012– 

2019 period. 

SPENDING SUBJECT TO APPROPRIATION

Assuming appropriation of the necessary amounts, CBO estimates that implementing this legislation would increase discretionary spending by $49.9 billion over the 2010–2019 period (see 

Table 5). Most of that amount would stem from provisions that authorize spending of revenues from the auction of emission and consumption allowances. These funds would be used to support a variety of programs by federal agencies. Additional spending would 

support: 

• Certain credit-related activities of the proposed Clean Energy Deployment Administration; 

• Federal loans to manufacturers of certain types of vehicles; 

• Federal agencies’ costs to administer programs established 

under the bill; 

• A wide array of activities to improve energy efficiency 

throughout the nation; 

• Federal costs to provide vouchers to individuals who purchase or lease certain fuel-efficient vehicles; and 

• Programs to promote clean energy technologies. 


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Table 5.—ESTIMATED SPENDING SUBJECT TO APPROPRIATION UNDER H.R. 2454 

By fiscal year, in billions of dollars— 

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010– 2014 2010– 2019 

CHANGES IN SPENDING SUBJECT TO APPROPRIATION 

Spending of Auction Proceeds: 

Estimated Authorization Level .............................................................................................................. 0 0.2 0.9 1.4 1.8 2.9 3.5 4.0 5.1 5.6 4.4 25.5 Estimated Outlays ................................................................................................................................. 0 * 0.3 0.8 1.3 2.1 2.9 3.5 4.3 5.1 2.3 20.1 

Clean Energy Deployment Administration: 

Estimated Authorization Level .............................................................................................................. * * 0.1 0.2 0.4 0.6 1.0 1.5 1.5 1.6 0.8 6.9 Estimated Outlays ................................................................................................................................. * * * 0.1 0.1 0.2 0.4 0.6 0.9 1.2 0.3 3.6 

DOE Loans to Manufacturers of Advanced Technology Vehicles: 

Estimated Authorization Level .............................................................................................................. 0 7.5 * * * * * * * * 7.5 7.6 Estimated Outlays ................................................................................................................................. 0 0.4 0.8 1.1 1.5 1.5 1.5 0.8 * * 3.8 7.5 

Administrative Costs to Federal Agencies: 

Estimated Authorization Level .............................................................................................................. 0.5 0.5 0.8 0.8 0.8 0.8 0.9 0.9 0.9 1.0 3.3 7.8 Estimate Outlays ................................................................................................................................... 0.4 0.5 0.7 0.8 0.8 0.8 0.8 0.9 0.9 0.9 3.1 7.5 

Energy-Efficiency Programs: 

Estimated Authorization Level .............................................................................................................. 0.7 0.8 0.8 0.9 1.1 0.8 0.4 0.4 0.4 0.4 4.3 6.7 Estimated Outlays ................................................................................................................................. 0.3 0.6 0.7 0.8 0.9 0.9 0.7 0.5 0.5 0.4 3.2 6.2 

Vouchers to Purchase or Lease Fuel-Efficient Vehicles: 

Authorization Level ................................................................................................................................ 4.0 0 0 0 0 0 0 0 0 0 4.0 4.0 Estimated Outlays ................................................................................................................................. 2.6 * 0 0 0 0 0 0 0 0 2.6 2.6 

Clean Energy Programs: 

Estimated Authorization Level .............................................................................................................. 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 1.5 2.6 Estimated Outlays ................................................................................................................................. 0.1 0.2 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 1.1 2.4 Total Changes: Estimated Authorization Level .............................................................................................................. 5.5 9.3 3.0 3.6 4.4 5.4 6.0 6.9 8.2 8.7 25.8 61.1 Estimated Outlays ................................................................................................................................. 3.4 1.6 2.7 3.8 4.9 5.8 6.6 6.5 6.8 7.8 16.4 49.9 

Note. DOE = Department of Energy; * = between ¥$50 million and $50 million. Numbers may not sum to totals because of rounding. 


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Spending of Auction Proceeds. Under the legislation, about 

$25.5 billion in revenues from the auction of emission and consumption allowances over the 2011–2019 period would be deposited 

into three funds established by the Department of the Treasury. 

Spending from those funds would require further appropriation action. None of the amounts subject to appropriation would be directly offset by revenues generated under the bill. CBO’s estimate 

of the spending by funds over the 2010–2019 period is as follows: 

• $5.3 billion would be credited to the Natural Resources Climate Change Adaptation Fund and used to support adaptation 

activities, such as activities to assist fish and wildlife in adapting to the impacts of climate change, by various federal agencies, including the Department of the Interior, the Department 

of Commerce, and EPA; 

• $900 million would be credited to the Climate Change 

Health Protection and Promotion Fund and would primarily 

support efforts by the Department of Health and Human Services to assist health professionals in preparing for and responding to the impacts of climate change on public health; and 

• $19.3 billion would be credited to the Stratospheric Ozone 

and Climate Protection Fund and would be used to support 

DOE’s best-in-class appliances deployment program, an EPA 

program to encourage the recovery, recycling, and reclamation 

of HFCs, and any multilateral agreement related to HFCs that 

includes the United States. 

Assuming appropriation of amounts estimated to be credited to 

the proposed funds, CBO estimates that discretionary spending of 

revenues from auctions would total $20.1 billion over the 2010– 

2019 period. That estimate is based on historical spending patterns 

in agencies that would administer the new programs funded with 

auction proceeds. 

Clean Energy Deployment Administration. The bill would 

establish a Clean Energy Deployment Administration (CEDA) 

within DOE, which would be authorized to provide direct loans, 

loan guarantees, and letters of credit for clean energy projects. 

Such assistance would be available for investments in the energy, 

transportation, manufacturing, commodities, residential, commercial, and financial services sectors. 

The budgetary accounting for CEDA’s activities would be largely 

governed by the Federal Credit Reform Act of 1990, which requires 

appropriations for subsidy costs in advance of commitments for 

loans and loan guarantees. Under that act, the subsidy cost is the 

estimated long-term cost to the government of the transactions (excluding administrative expenses), calculated on a present-value 

basis. Subsidy costs are typically expressed as a percentage of the 

loan principal (the subsidy rate) multiplied by the amounts being 

loaned or guaranteed. 

The potential budgetary impact of CEDA programs is difficult to 

predict for several reasons. The amount and timing of any spending 

would depend on investment decisions made by private firms and 

nonfederal entities in response to market and other conditions. The 

subsidy rate for participating projects would vary depending on 

their particular technological and market risks. Finally, some of 

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gible for federal loan guarantees under existing law, especially 

those involving advanced energy and automotive technologies. 

CBO estimates that implementing this provision would increase discretionary spending by $3.6 billion over the 2010–2019 period, 

assuming appropriation of the amounts necessary to cover the program’s subsidy and administrative costs. According to the Conference Board and other private-sector analysts, approximately $1 

trillion could be invested over the 2010–2030 period to achieve costeffective reductions in carbon emissions in the United States, over 

half of which could be spent by the energy and transportation sectors. For this estimate, CBO assumes that CEDA would provide direct loans or loan guarantees for about 5 percent of those projected 

investments or a total volume of about $50 billion through 2019. 

(Those amounts would be in addition to the tens of billions of dollars authorized to be guaranteed under existing law.) CBO estimates that the subsidy rate for CEDA’s portfolio would average 13 

percent, which is similar to the credit risk posed by speculativegrade bonds. 

Although certain letters of credit and changes to DOE’s existing 

loan guarantee program could affect direct spending, CBO estimates that the net effect of those provisions would be negligible 

over the 2010–2019 period. 

DOE Loans to Manufacturers of Advanced Technology Vehicles. Under the existing Advanced Technology Vehicles Manufacturing (ATVM) loan program, DOE is currently authorized to provide up to $25 billion in direct loans to automobile manufacturers 

and component suppliers to support capital investments in manufacturing facilities designed to produce vehicles with greater fuel 

efficiency and reduced emissions. The agency currently has $7.5 

billion available to cover the anticipated subsidy cost of such loans. H.R. 2454 would increase, to $50 billion, the amount of loans 

DOE is authorized to make under the ATVM loan program. CBO 

estimates that funding an additional $25 billion in such loans 

under that program would require appropriations totaling $7.6 billion over the 2010–2019 period. That amount includes $7.5 billion 

to cover anticipated subsidy costs of loans and $0.1 billion for the 

agency’s administrative costs. Estimated subsidy costs take into account the financial condition of borrowers and reflect factors such 

as default risk, anticipated recoveries in the case of a default, and 

statutorily specified terms and conditions of ATVM loans. 

Based on information from DOE about the anticipated rate of 

disbursement for ATVM loans that the agency can support with existing funding as well as historical spending patterns for other federal credit programs, CBO expects that DOE would not approve 

any new loans pursuant to H.R. 2454 before 2011. Starting in 2011, 

CBO estimates that expenditures for ATVM loans would occur 

gradually, over several years, as loans are disbursed. We further 

estimate that DOE’s administrative costs associated with additional loans authorized under the legislation would amount to 

about $10 million annually over the 2011–2019 period. 

Administrative Costs to Federal Agencies. Several federal 

agencies, including EPA, the Federal Energy Regulatory Commission (FERC), the Department of State, DOE, and others would be 

responsible for administering programs under H.R. 2454. Major 

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gram and related activities, the proposed energy-efficiency and renewable electricity standard, and rebates for low-income individuals—would significantly expand agencies’ workloads. In addition, 

many other provisions of H.R. 2454 would require federal agencies 

to undertake a variety of rulemakings, conduct studies and assessments, prepare reports, and carry out other activities related to 

new programs authorized under the bill. Finally, under the bill certain agencies, particularly EPA and the Department of Labor, 

would have to establish and administer programs to distribute proceeds from auctions of emissions and consumption allowances to 

state and local governments, private-sector firms, and certain individuals. 

In total, CBO estimates that fully funding federal agencies’ administrative costs would require gross appropriations totaling $540 

million in 2010 and $8.2 billion over the 2010–2019 period. That 

estimate is based on historical information on how large regulatory 

programs have been implemented and on information provided by 

EPA, FERC, and other agencies with significant administrative responsibilities under the bill. Assuming appropriation of the necessary amounts, we estimate that gross spending by affected agencies would total $430 million in 2010 and $7.9 billion over the next 

10 years. 

In some cases, agencies would charge fees to offset a portion of 

their administrative costs. In particular, FERC, which has authority to offset 100 percent of its administrative costs through fees on 

regulated entities, would levy additional fees sufficient to offset any 

increased administrative costs incurred under H.R. 2454. Based on 

information from FERC, CBO estimates that increased user fees to 

that agency would offset roughly $40 million of annual estimated 

costs under H.R. 2454. Consistent with current budgetary treatment, such fees would be recorded as offsetting collections, thus reducing the net appropriations that would be necessary to implement the legislation to roughly $7.8 billion over the next 10 years. 

CBO estimates that net outlays resulting from that amount of 

funding would total $390 million in 2010 and $7.5 billion over the 

2010–2019 period. 

Energy-Efficiency Programs. H.R. 2454 would establish new 

programs and requirements aimed at improving the energy efficiency of major sectors of the economy. Most of those activities 

would be administered by DOE and EPA. (Those agencies’ costs to 

implement energy-efficiency programs are included in our estimate 

of funding for administrative costs.) CBO estimates that fully funding programmatic elements of energy efficiency programs under the 

bill—including a wide array of grants and other forms of assistance 

to nonfederal entities—would require $6.7 billion over the 2010– 

2019 period. That amount includes: 

• $3.1 billion for activities to increase lighting efficiency; 

• $2.1 billion to improve the energy efficiency of federal and 

nonfederal buildings; and 

• $1.5 billion for energy-efficiency programs aimed at industry and certain state and local governments and for other related activities. 

Assuming appropriation of the necessary amounts, CBO estimates that implementing energy-efficiency programs under H.R. 


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2454 would cost about $300 million in 2010 and $6.2 billion over 

the 2010–2019 period. 

Vouchers to Purchase or Lease Fuel-Efficient Vehicles. 

H.R. 2454 would authorize the appropriation of $4 billion for DOT 

to operate a one-year program to provide vouchers for the purchase 

or lease of a new car or truck to individuals who trade in an eligible vehicle for one that is more fuel efficient. The eligible vehicle 

would have to be subsequently dismantled. The vouchers would 

range in value from $3,500 to $4,500 depending on the type of vehicle being purchased and the difference in the fuel economy from 

the eligible vehicle. 

Based on information from DOT, CBO estimates that up to 77 

million vehicles sold over the 1990–2006 period could fall below the 

18-mile-per-gallon threshold specified in the bill. Of those, CBO expects that fewer than 25 million would both still be registered and 

be worth less than the voucher amounts. The vast majority of those 

vehicles are trucks. Information from the automotive industry suggests that most owners of those vehicles are not currently in the 

market for a new vehicle and that a relatively small voucher—the 

average light-duty truck costs more than $25,000—is unlikely to induce them to purchase or lease new vehicles. Current cash incentives from manufacturers and dealers have not significantly increased car sales. Sales of new vehicles in the United States are 

projected to total about 10 million in calendar year 2009, down 

from 16 million in 2007, a portion of which are fleet sales and 

would not be eligible for the program. In addition, financial constraints in the form of credit availability and additional monthly 

payments by the consumer would play a role in limiting the use of 

the vouchers. At the same time, it is likely that most vouchers 

would be used by individuals with eligible vehicles who are currently in the market for a new vehicle or soon will be. 

Further, CBO does not expect a significant number of vouchers 

to be used on purchases that occurred before the enactment of the 

bill. As a result of the combination of these factors and the limited 

time that the program would be available, CBO estimates that 

about 625,000 vouchers would be used, that it would cost DOT 

about $55 million to administer the program, and that the program 

would cost about $2.6 billion in 2010 and the same amount over 

the 2010–2014 period. 

Clean Energy Programs. H.R. 2454 would establish new programs and requirements aimed at promoting clean energy. CBO estimates that fully funding those activities, which would be implemented primarily by DOE, EPA, and the Department of Education, 

would require appropriations totaling $2.6 billion over the 2010– 

2019 period. That amount includes: 

• $1.5 billion for activities related to modernizing the nation’s electricity infrastructure, including $550 million for rebates on purchases of certain appliances; 

• $870 million to establish centers to focus on research and 

development of clean energy technologies; 

• $250 million for the Department of Education to award 

grants to educational agencies, postsecondary institutions, and 

representatives from the community to develop programs of 

study focusing on emerging careers and jobs in renewable energy, energy efficiency, and climate-change mitigation; and 


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• $22 million for other activities. 

Assuming appropriation of the necessary amounts, CBO estimates that implementing clean energy programs under H.R. 2454 

would cost $92 million in 2010 and $2.4 billion over the 2010–2019 

period, with additional spending occurring in later years. 

PROVISIONS WITH MAJOR BUDGETARY IMPACTS THAT 

BEGIN AFTER 2019 

No later than 2022, the President would be required to assess 

the extent to which the distribution of emission allowances has 

mitigated or addressed carbon leakage. (Carbon leakage is defined 

in the legislation as any substantial increase in GHG emissions by 

industrial entities located in other countries if such increase is 

caused by an incremental cost of production increase in the United 

States resulting from the implementation of the GHG cap-andtrade program.) Specifically, if the President determines that more 

than 70 percent of global output for each eligible sector is produced 

or manufactured in countries that meet certain criteria, such as 

being a party to an international agreement to which the United 

States is a party, then the President may implement an International Reserve Allowance Program within two years of that determination. Under such a program, foreign manufacturers and importers would be required to pay for and hold allowances to cover 

the carbon contained in U.S.-bound products. CBO expects that 

revenues generated from this program could be significant. 

Under this legislation, starting in 2025 proceeds from auctions of 

allowances would be deposited into the Climate Change Consumer 

Rebate Fund. The Secretary of the Treasury would provide tax refunds on a per-capita basis to each household in the United States 

that would collectively equal the amount deposited into that fund. 

INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT 

CBO has determined that the non-tax provisions of H.R. 2454 

contain intergovernmental and private-sector mandates as defined 

in the Unfunded Mandates Reform Act. Several of those mandates 

would require utilities, manufacturers, and other entities to reduce 

greenhouse gas emissions through cap-and-trade programs and performance standards. CBO estimates that the aggregate cost of 

mandates in the bill would well exceed the annual thresholds established in UMRA for intergovernmental and private-sector mandates (in 2009, $69 million and $139 million respectively, adjusted 

annually for inflation). In some cases, because of a lack of information about future regulations, CBO has no basis for estimating the 

costs of the mandates. 

MANDATES THAT APPLY TO BOTH PUBLIC AND PRIVATE ENTITIES

Cap-and-Trade Program for Greenhouse Gases. The capand-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 


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allowances, CBO estimates that the cost of this requirement would 

amount to tens of billions of dollars annually for private-sector entities and about $1 billion annually for public entities. 

Although not available to cover the mandate costs of the cap-andtrade requirements, about $50 billion in allowances would be provided to states over the 2012–2016 period for specific purposes, including programs for improving energy efficiency, implementing 

regulations, and supporting other climate change programs (see additional discussion under ‘‘Other Impacts on State and Local Governments’’ below). 

Reporting Requirements. Public and private entities also 

would be required to report information on greenhouse gases to a 

federal registry. Assuming EPA’s proposed rule for a federal registry of greenhouse gases is adopted under current law, CBO expects that most public entities and some private entities would already be required to report, and therefore the public sector would 

incur minimal costs. However, CBO expects that additional privatesector entities would be required to report information to the registry under the bill. Based on information about compliance costs 

from EPA’s impact analysis of the proposed rule, CBO estimates 

that the reporting requirements could increase costs to private entities by about $50 million per year. 

The bill also would impose reporting requirements on public and 

private entities to assist with implementing the cap-and-trade program. CBO expects that the cost to comply with those mandates 

would be small. 

Carbon Capture and Sequestration Assessments. Section 

114 would authorize the Carbon Storage Research Corporation to 

collect annual assessments on public and private utilities following 

a referendum by the affected utilities. The funds collected along 

with an allocation of emission allowances would be used to support 

the development of technologies related to CCS. The bill also would 

require state regulatory authorities to indicate whether they support or oppose the creation of the corporation. Assuming that the 

referendum is approved, all utilities would be required to pay the 

assessments. The assessments would be based on the amount of 

electricity delivered to retail customers, and would generate between $1.0 billion and $1.1 billion annually. CBO estimates the annual cost to be between $150 million and $175 million for public 

utilities and $850 million and $925 million for private utilities. The 

cost of the requirement to regulatory authorities would be small. 

Performance Standards for Coal-fueled Power Plants. Section 116 would establish performance standards for new sources of 

power from coal power plants. Those requirements would compel 

owners and operators of new units of electric generation (EGUs) to 

reduce annual CO2 emissions and would apply to both public and 

private power plants. Beginning in 2020 or 2025, at the latest, 

EGUs would be required to reduce annual emissions of CO2 by 50 

percent or 65 percent, depending on when the EGU received a 

preconstruction permit. The cost of the mandate would be either 

the cost of adopting CCS or switching to a different fuel source. Because EGUs would likely use CCS technology, along with other 

measures, to comply with the cap-and-trade program established in 

the bill, CBO cannot determine the extent to which EGUs would 


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adopt additional CCS technology due to the performance standard 

alone. Consequently, the cost of the mandate is uncertain. 

Emission Reduction Standards. Section 331 would direct EPA 

to publish an inventory of stationary sources that emit greenhouse 

gases that are not covered by the federal cap-and-trade program. 

The inventory would include categories of sources responsible for a 

certain percentage of uncapped emissions. Based on information 

from EPA, those categories could include landfills, natural gas systems, and small fuel combustion sources. The bill would require 

EPA to establish performance standards for those categories, which 

could include standards for work practices as well as technological 

standards. Section 333 would authorize EPA to propose regulations 

to reduce emissions of black carbon or to publish a finding that existing regulations adequately control such emissions. Because the 

costs to comply with the new standards established by sections 331 

and 333 would depend on future regulatory action, CBO has no 

basis for estimating the cost of these mandates. 

Limitations on Transactions in Commodities. Subtitle E of 

Title III would impose several mandates on participants in certain 

commodities markets. Those mandates would include limits on the 

number of contracts that can be held (known as ‘‘position limits’’) 

as well as transaction and reporting requirements, with respect to 

energy commodities, on public and private entities such as pension 

funds and swap dealers. The bill would impose other requirements 

on transactions, including fees for transactions executed on certain 

exchanges. Because of limited information about the transactions 

in the affected markets, the position limits that would be established, and the extent to which position limits would result in 

lower returns, CBO has no basis for estimating the cost of the 

mandates to public or private-sector entities. 

Combined Energy Efficiency and Renewable Electricity 

Standard. Section 101 would create a renewable portfolio standard 

for certain electricity suppliers. Covered entities would have to submit credits to certify that a minimum percentage of their base sales 

came from renewable sources. Approximately 21 public and 105 

private utilities would be subject to those requirements. As noted 

earlier in the discussion of federal effects, CBO anticipates electricity generated from renewable sources on a national level to be 

greater than the amount that would be required by the standard 

in the first five years that mandate is in effect. Therefore, CBO expects the costs associated with this mandate to be small in those 

years. 

Other Mandates. The bill contains several mandates that would 

affect both public and private entities, but CBO estimates that the 

costs of those mandates would be small: 

• Sections 121 and 152 would require state regulatory authorities and nonregulated utilities to consider implementing 

certain standards relating to electric vehicle infrastructure and 

the ability of federal agencies to generate electricity and sell it 

back to utilities; 

• Section 144 would require both public and private electric 

utilities to publish goals for reducing peak demand reduction 

and to prepare a plan that demonstrates their ability to meet 

those goals; and 


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• Section 332 would authorize EPA to establish new requirements governing the repair of air conditioners in motor vehicles. 

MANDATES THAT APPLY TO PUBLIC ENTITIES ONLY

The bill would impose some mandates solely on public entities, 

some of which would be preemptions of state and local authority. 

CBO estimates that the costs of those intergovernmental mandates 

would be small: 

• Section 216 would require the District of Columbia to purchase certain products and services designated to be water efficient by EPA or DOE. 

• Section 224 would direct the Secretary of Energy to revise 

the list of vehicles available for states to comply with an existing mandate that a certain percentage of fleet purchases be alternative fueled vehicles. 

Preemptions of State and Local Authority. In addition to the 

mandates discussed above, H.R. 2454 contains several preemptions 

of state and local authority. Because preemptions limit the authority of state and local governments, they are considered intergovernmental mandates under UMRA, but CBO estimates that those preemptions would not impose significant additional costs on state, 

local, or tribal governments as regulators. 

• Section 161 would expand an existing preemption of state 

laws that set energy standards for appliances to include walkin coolers and freezers as well as commercial refrigerators, 

freezers, and ice makers. 

• Section 211 would preempt state and local laws governing 

the energy efficiency of certain outdoor luminaires. 

• Section 619 would preempt state laws relating to the production and import of certain hydrofluorocarbons. 

• Section 861 would preempt state authority to enforce a 

cap-and-trade program that covers any capped emissions during the years 2012 through 2017. 

OTHER IMPACTS ON STATE AND LOCAL GOVERNMENTS

The bill would provide allowances to states for a number of specific purposes. States would create State Energy and Environment 

Development (SEED) accounts for implementing building regulations and programs to retrofit buildings. SEED accounts could also 

be used to provide rebates to low-income individuals for the purchase of energy efficient homes and to fund grants to community 

development organizations for energy efficiency programs. States 

could also use SEED allowances for transportation planning, smart 

grid development, and financial incentives to convert or construct 

manufacturing facilities and expand renewable energy. Other allowance allocations would be available for natural resource adaptation, infrastructure improvements, and programs to benefit low-income consumers of home heating oil or propane. CBO estimates 

that the allowances would total about $50 billion through 2016. 

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ments, and any costs would be incurred voluntarily as a condition 

of receiving federal assistance. 

MANDATES THAT APPLY TO PRIVATE ENTITIES ONLY

Hydrofluorocarbon Restrictions. The cap-and-trade program for 

HFCs would require any entity that produces or imports HFCs, or 

imports a product containing HFCs, to hold one consumption allowance or destruction offset credit per metric ton of carbon dioxide 

equivalent beginning in 2012. The direct cost would be equal to the 

cost of purchasing allowances and offset credits, and the cost of reducing the use of HFCs. The bill also would impose several other 

requirements for the use of HFCs including restrictions on HFCs 

used in refrigeration and labeling and reporting requirements. 

Based on the price of a consumption allowances established in 

the bill, CBO estimates that the cost of this requirement would 

amount to about $600 million in the first year the mandates are 

in effect. 

Lighting and Appliance Efficiency Standards. The bill 

would establish new requirements for lighting and appliances. CBO 

estimates that the aggregate cost of those mandates would exceed 

the threshold in at least one of the first five years the mandates 

are in effect. Those requirements include: 

• Efficiency standards for outdoor luminaries, portable light 

fixtures, art work fixtures, incandescent reflector lamps, and 

certain base lamps; 

• Efficiency standards for appliances including commercial 

hot food holding cabinets, water dispensers, portable electric 

spas, and commercial furnaces; and 

• Inclusion of Smart Grid capability on Energy Guide labels 

for appliances, if required by the Federal Trade Commission. 

Allowances for Carbon-Intensive Goods. The bill would establish two programs to mitigate the costs to manufacturers of carbon-intensive goods. The bill would provide rebates in the form of 

allowances to those manufacturers and authorize EPA to implement an international reserve allowance program. If implemented, 

that program would require importers of carbon-intensive goods to 

purchase and submit international reserve allowances for those 

goods beginning in 2025. The cost of the mandate would depend on 

the price of an international reserve allowance and the number of 

international reserve allowances required to be submitted for those 

goods. 

Motor Vehicle Standards. The bill would authorize the Secretary 

of Transportation to establish a standard for the manufacture of 

vehicles capable of using alternative fuels such as ethanol, methanol, and biodiesel. The bill also would direct the EPA to establish 

emissions standards for new heavy-duty vehicles and engines. Because both standards would depend on future regulatory action, the 

costs of the mandates are uncertain. 

Estimate prepared by: Federal Revenues: Mark Booth, David 

Weiner, Pamela Greene, Edward Harris, Kevin Perese, and Grant 

Driessen. Federal Costs: Susanne S. Mehlman and Daniel Hoople 

(cap-and-trade programs), Megan Carroll (RES, clean energy programs, energy efficiency programs), Kathleen Gramp (CEDA), 

Christi Hawley Anthony (Department of Labor), Sarah Puro and 

Matthew Pickford (vouchers for fuel-efficient vehicles), and Susan 


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Willie (CFTC); Allowance Prices: Robert G. Shackleton Jr., Rob 

Johansson, Terry Dinan, and Natalie Tawil; Impact on state, local, 

and tribal governments: Ryan Miller; impact on the private sector: 

Amy Petz. 

Estimate approved by: Theresa Gullo, Deputy Assistant Director 

for Budget Analysis; Frank J. Sammartino, Acting Assistant Director for Tax Analysis; Joseph Kile, Assistant Director for Microeconomic Studies; Robert A. Dennis, Assistant Director for Macroeconomic Analysis. 

SECTION-BY-SECTION

TITLE I—CLEAN ENERGY

SUBTITLE A—COMBINED EFFICIENCY AND RENEWABLE ELECTRICITY

STANDARD

Section 101, Combined Efficiency and Renewable Electricity 

Standard: Amends the Public Utility Regulatory Policies Act to require retail electric suppliers—defined as utilities that sell more 

than 4 million megawatt hours (MWh) of electricity to consumers 

for purposes other than resale—to meet a certain percentage of 

their load with electricity generated from renewable resources and 

electricity savings. The combined renewable electricity and electricity savings requirement begins at 6 percent in 2012 and gradually rises to 20 percent in 2020. Up to one quarter of the 20 percent 

requirement automatically may be met with electricity savings. 

Upon petition of the governor of any state, the Federal Energy Regulatory Commission is authorized to increase the proportion of the 

requirement that can be met with electricity savings to up to two 

fifths for electric suppliers located within that state. This would reduce the renewable requirement for such suppliers to a minimum 

of 12 percent renewables by 2020, with the remaining 8 percent of 

the combined target satisfied through electricity savings. 

Defines renewable energy resources to include wind, biomass, 

solar, geothermal, certain hydropower projects, marine and 

hydrokinetic renewable energy, and biogas and biofuels derived exclusively from eligible biomass. Other qualifying energy resources 

include landfill gas, wastewater treatment gas, coal mine methane, 

and qualified waste-to-energy. An electric supplier’s requirement is 

reduced in proportion to any portion of its electricity sales that is 

generated from certain existing hydroelectric facilities, new nuclear 

generating units, and fossil-fueled units that capture and geologically sequester greenhouse gas emissions. 

Requires retail electric suppliers to submit Federal renewable 

electricity credits and electricity savings each year equal to the 

combined target for that year times the supplier’s retail sales. One 

renewable electricity credit is given for each MWh of electricity produced from a renewable or other qualifying energy resource. To encourage greater deployment of distributed generation, like small 

wind and rooftop solar, these projects meeting certain criteria are 

eligible for three credits for each MWh produced. Retail electric 

suppliers may submit, in lieu of a renewable electricity credits and 

demonstrated electricity savings, an alternative compliance payment equal to $25 per MWh (2.5 cents per kilowatt hour). 


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Electric suppliers choosing to use efficiency for a portion of their 

compliance are required to demonstrate achievement of electricity 

savings relative to business-as-usual projections through efficiency 

measures, including savings achieved through reductions in enduse electricity consumption attributable to measures or technologies such as equipment or facility upgrades, combined heat and 

power, energy recycling (waste heat recovery), and fuel cells. Electric suppliers may meet the efficiency standards either by achieving electricity savings directly or by using bilateral contracts to acquire savings achieved within the same state by other suppliers or 

distribution companies, states, or third-party efficiency providers. 

Section 102, Clarifying State Authority to Adopt Renewable Energy Incentives: Provides that, notwithstanding any provision to the 

contrary in the Public Utility and Regulatory Policies Act of 1978 

(PURPA), any State may establish rates to be paid by state-regulated utilities intended to provide incentives for development of renewable energy. In the past, some have interpreted PURPA to bar 

such incentive rates to the extent they exceed the ‘‘avoided cost’’ of 

power a utility could generate or procure from any other source, denying States the ability to account for the additional benefits of renewable energy. 

SUBTITLE B—CARBON CAPTURE AND SEQUESTRATION

Section 111, National Strategy: Requires the EPA Administrator, 

in consultation with the heads of other relevant federal agencies, 

to submit to Congress a report setting forth a unified and comprehensive strategy to address the key legal and regulatory barriers to the commercial-scale deployment of carbon capture and sequestration. 

Section 112, Regulations for Geologic Sequestration Sites: 

Amends the Clean Air Act to require the Administrator to establish 

a coordinated approach to the certification and permitting of sites 

where geologic sequestration of carbon dioxide will occur. Requires 

the Administrator to promulgate regulations to minimize the risk 

of escape to the atmosphere of carbon dioxide injected for geologic 

sequestration and details the requirements of such regulations. 

Such regulations will apply in tandem with regulations promulgated under the Safe Drinking Water Act. Together, these regulations will provide a comprehensive, multi-media regulatory framework for geologic sequestration activities. 

Section 112 also amends the Safe Drinking Water Act to establish a deadline for promulgation of regulations for carbon dioxide 

geologic sequestration wells and to clarify financial responsibility 

requirements to be established under such regulations. 

Injection of carbon dioxide for geologic sequestration can take 

place either solely for the purpose of storing carbon dioxide, or for 

the dual purposes of storing carbon dioxide and conducting enhanced hydrocarbon recovery activities. For example, carbon dioxide can be injected for permanent storage in a saline aquifer, or it 

can be injected as part of enhanced oil recovery operations and 

then be permanently stored in a depleted oil field. Regulations promulgated under Section 112, and under the Safe Drinking Water 

Act as amended, should apply to all instances where carbon dioxide 

is injected for geologic sequestration, regardless of whether or not 


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the injection also serves the purposes of enhancing hydrocarbon recovery activities. 

Section 113, Studies and Reports: Section 113(a) requires the Administrator to establish a multi-stakeholder task force to conduct 

a study of the legal framework for geologic sequestration sites. Section 113(b) directs the Administrator to conduct a study that examines how the multiple environmental statutes that EPA administers, including but not limited to the Comprehensive Environmental Response, Compensation, and Liability Act and the Resource Conservation and Recovery Act, would apply to geologic sequestration activities. 

Section 114, Carbon Capture and Sequestration Demonstration 

and Early Deployment Program: Establishes a program for the 

demonstration and early deployment of carbon capture and sequestration (CCS) technologies. Authorizes fossil-based electricity distribution utilities to hold a referendum on the establishment of a 

Carbon Storage Research Corporation. If approved by entities representing two-thirds of the nation’s fossil fuel-based delivered electricity, the Corporation would be established and would be authorized to collect assessments on distribution utilities for all fossil 

fuel-based electricity delivered directly to retail consumers. The 

Corporation would be operated as a division or affiliate of the Electric Power Research Institute and would assess fees totaling approximately $1 billion annually for ten years, to be used by the 

Corporation to fund the large-scale demonstration of CCS technologies in order to accelerate the commercial availability of the 

technologies. 

Section 115, Commercial Deployment of Carbon Capture and Sequestration Technologies: Amends the Clean Air Act to direct the 

EPA Administrator to establish an incentive program to distribute 

allowances to support the commercial deployment of CCS technologies in both electric power generation and industrial applications. Establishes eligibility requirements for facilities to receive allowances based on the number of tons of carbon dioxide sequestered. The allowance disbursement program is structured to provide greater incentives for facilities to deploy CCS technologies 

early in the program and for facilities to capture and sequester 

larger amounts of carbon dioxide. 

Section 116, Performance Standards for Coal-Fueled Power 

Plants: Amends the Clean Air Act to establish performance standards for new coal-fired power plants permitted in 2009 or thereafter. Describes eligibility criteria, applicable emission standards, 

and the schedule upon which such standards must be met. Plants 

permitted in 2020 or thereafter are required to meet specified 

standards upon commencement of operations. Plants permitted 

from 2009–2020 are required to meet the specified standard within 

four years after certain technology deployment criteria are met but 

no later than 2025. 

SUBTITLE C—CLEAN TRANSPORTATION

Section 121, Electric Vehicle Infrastructure: Amends the Public 

Utility Regulatory Policies Act to require utilities to consider developing plans to support electric vehicle infrastructure and to consider establishing protocols for integration with smart grid systems. 


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Section 122, Large-Scale Vehicle Electrification Program: Authorizes the Secretary of Energy to provide financial assistance for regional deployment and integration of grid-connected vehicles. 

Funds may be used for offsetting the incremental cost of purchasing new plug-in electric drive vehicles, deployment of electric 

charging stations or battery exchange locations, or facilitating the 

integration of smart grid equipment with plug-in electric drive vehicles. Makes data and results from the regional deployments publicly available. 

Section 123, Plug-In Electric Drive Vehicle Manufacturing: Authorizes the Secretary of Energy to provide financial assistance for 

retooling existing factories for the manufacture of electric vehicles. 

Authorizes the Secretary of Energy to provide financial assistance 

to help auto manufacturers purchase batteries for first production 

vehicles. 

Section 124, Investment in Clean Vehicles: Provides for distribution of allowances for plug-in electric drive vehicle manufacturing 

and deployment and advanced technology vehicles. 

Section 125, Advanced Technology Vehicle Manufacturing Incentive Loans: Increases the authorization for loan guarantees under 

section 136 of the Energy Independence and Security Act of 2007 

to $50,000,000,000. Loan guarantees are for reequipping, expanding or establishing manufacturing facilities for advanced technology 

vehicles or their components, as well as the engineering integration 

work for such vehicles. 

Section 126, Amendment to Renewable Fuels Standard: Amends 

the definition of ‘‘renewable biomass’’ in section 211 of the Clean 

Air Act to increase the types of biomass from Federal and non-Federal lands that may be used to make renewable fuel the qualifies 

for the Renewable Fuels Standard. 

Section 127, Open Fuel Standard: Provides the Secretary of 

Transportation with the authority to require light-duty automobile 

manufacturers to make vehicles capable of operating on ethanol 

and methanol-based fuels if the Secretary determines that such requirements are a cost-effective way to achieve the nation’s energy 

independence and environmental objectives. 

Section 128, Temporary Vehicle Trade-In Program: Establishes a 

‘‘Cash for Clunkers’’ program. Under this program, consumers may 

trade in their old, gas-guzzling vehicles and receive vouchers worth 

up to $4,500 to help pay for new, more fuel efficient cars and 

trucks. The program is authorized for $4 billion for one year, and 

providing for approximately one million new car or truck purchases. 

New passenger cars which achieve at least 22 mpg are eligible 

for a $3,500 voucher if the performance of the new car is at least 

4 mpg higher than the old vehicle and a $4,500 voucher if the performance of the new car is at least 10 mpg higher than the old vehicle. Light duty trucks which achieve at least 18 mpg are eligible 

for a $3,500 voucher if the performance of the new truck is at least 

2 mpg higher than the old vehicle and a $4,500 voucher if the performance of the new truck is at least 5 mpg higher than the old 

vehicle. Large light duty trucks which achieve at least 15 mpg are 

eligible for a $3,500 voucher if the performance of the new truck 

is at least 1 mpg higher than the old vehicle and a $4,500 voucher 

if the performance of the new truck is at least 2 mpg higher than 


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the old vehicle. Consumers can also trade in a pre–2002 work truck 

(defined as a pick-up truck or cargo van weighing from 8,500– 

10,000 pounds) and receive a voucher worth $3,500 for a new work 

truck in the same or smaller weight class. Consumers can also 

‘‘trade down,’’ receiving a $3,500 voucher for trading in an older 

work truck and purchasing a smaller light-duty truck weighing 

from 6,000 8,500 pounds. Work truck purchases are capped such 

that the total funds used to purchase work trucks cannot exceed 

7.5 percent of all program funds. The section also includes important consumer protections and protections against program fraud. 

Section 129, Diesel Emissions Reduction: Amends the diesel emission reduction grant program established by Subtitle G of title VII 

of the Energy Policy Act of 2005 (42 U.S.C. 16131 et seq.) by adding American Samoa, Guam, the Commonwealth of the Northern 

Mariana Islands, Puerto Rico, and the Virgin Islands to the list of 

States eligible to receive grants, and by adjusting the grant distribution formula accordingly. 

Section 130, Loan Guarantees for Projects to Construct Renewable 

Fuel Pipelines: Amends title XXII of the Energy Policy Act of 2005 

to add renewable fuel pipelines to the list of projects and technologies available for loan guarantees under the title. 

SUBTITLE D—STATE ENERGY AND ENVIRONMENT DEVELOPMENT

ACCOUNTS

Section 131, Establishment of SEED Accounts: Creates a program 

for each state to establish a State Energy and Environment Development (SEED) Account, to serve as a state-level repository for 

managing and accounting for all emission allowances designated 

primarily for renewable energy and energy efficiency purposes. 

Section 132, Support of State Renewable Energy and Energy Efficiency Programs: Distributes emission allowances among states for 

energy efficiency programs and renewable energy deployment and 

manufacturing support. At least 12.5 percent of the allowances are 

distributed to local governments for these purposes. 

SUBTITLE E—SMART GRID ADVANCEMENT

Section 141, Definitions: Provides relevant definitions. 

Section 142, Assessment of Smart Grid Cost Effectiveness in Products: Instructs the Department of Energy and the Environmental 

Protection Agency to assess products evaluated for Energy Star ratings for benefits of Smart Grid capability. 

Section 143, Inclusions of Smart Grid Capability on Appliance 

ENERGY GUIDE Labels: Instructs Federal Trade Commission to 

include relevant information on the ENERGY GUIDE labels for 

those products that include cost-effective Smart Grid capability. 

Section 144, Smart Grid Peak Demand Reduction Goals: Requires the Federal Energy Regulatory Commission to coordinate 

and support a national program to reduce peak electric demand for 

load-serving electric utilities with peak loads in excess of 250 

megawatts. 

Section 145, Reauthorization of Energy Efficiency Public Information Program to Include Smart Grid Information: Amends the Energy Policy Act of 2005 to reauthorize the joint Department of Energy and Environmental Protection Agency energy efficiency public 


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information initiative and expands the initiative to include information on smart grid technologies, practices, and benefits. 

Section 146, Inclusion of Smart Grid Features in Appliance Rebate Program: Amends the Energy Policy Act of 2005 to expand energy efficient appliance rebate program to include rebates for efficient appliances with smart grid features and capability. Clarifies 

program cost-sharing requirements from states. 

SUBTITLE F—TRANSMISSION PLANNING

Section 151, Transmission Planning: Amends the Federal Power 

Act to establish a federal policy on electric grid planning that recognizes the need for new transmission capacity to deploy renewable 

energy as well as the potential for more efficient operation of the 

current grid through new technology, demand-side management, 

and storage capacity. Enhances existing regional transmission 

planning processes by incorporating this federal policy. Charges the 

Federal Energy Regulatory Commission with supporting, coordinating, and integrating regional planning efforts. 

Section 152, Net Metering for Federal Agencies: Adopts a standard requiring utilities (that sell in excess of 4,000,000 megawatt 

hours of electricity) to interconnect with and to provide net metering of power deliveries to and receipts from Federal agencies that 

own, operate or site facilities generating renewable energy. The net 

metering service is to be offered to such Federal agencies on the 

basis of non-discriminatory time-sensitive rates. 

Section 153, Support for Qualified Advanced Electric Transmission Manufacturing Plants, Qualified High Efficiency Transmission Property, and Qualified Advanced Electric Transmission 

Property: Amends Title XVII of the Energy Policy Act of 2005 to extend the loan guarantee authority in that Title to cover the development, construction, or integration of high-efficiency or superconductive high-voltage electricity transmission technologies. It 

also provides such loan guarantees for manufacturing plants producing such technologies. It separately authorizes the Secretary of 

Energy to make grants for up to 50 percent of the cost of the first 

project incorporating such technologies, up to a maximum of 

$100,000,000. 

SUBTITLE G—TECHNICAL CORRECTIONS TO ENERGY LAWS

Sections 161–162, Technical Corrections to Energy Independence 

and Security Act of 2007 and Energy Policy Act of 2005: Makes 

technical corrections to the Energy Independence and Security Act 

of 2007 and the Energy Policy Act of 2005. 

SUBTITLE H—CLEAN ENERGY INNOVATION CENTERS

Section 171, Clean Energy Innovation Centers: Establishes a program to support development and commercialization of clean energy technologies through eight regional Clean Energy Innovation 

Centers selected competitively by the Secretary of Energy. Emission allowances to support the establishment of Centers may be 

awarded to consortiums consisting of research universities, private 

research entities, industry, and relevant state institutions. Each 

Center has a unique technology focus to which at least 40 percent 

of support would be directed. 


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Section 172, Building Assessment Centers: Requires the Secretary 

of Energy to create building assessment centers at institutions of 

higher education to identify opportunities to optimize the energy 

and environmental performance of buildings. The centers would 

also promote emerging technologies and research and development 

to improve buildings’ energy and environmental performance. Additionally, the centers would train engineers, architects, and building 

technicians in energy efficient building design and operation. 

Section 173, Centers for Energy and Environmental Knowledge 

and Outreach: Provides for the establishment of not more than 10 

regional centers for energy and environmental knowledge and outreach (CEEKO) to coordinate various energy-related research centers. Operating in coordination with each CEEKO would be one or 

more industrial research and assessment center, building assessment center, and clean energy application center located in that 

CEEKO’s region. Institutions of higher education would compete to 

house such centers and would operate internship programs to train 

students in energy efficiency with Federal funding supporting up to 

50 percent of the costs. 

SUBTITLE I—NUCLEAR AND ADVANCED TECHNOLOGIES

Section 181–189: Establishes a self-sustaining Clean Energy Deployment Administration (CEDA) within the Department of Energy 

to promote the domestic development and deployment of clean energy technologies. The Clean Energy Deployment Administration 

would partner with and support private capital markets to promote 

access to affordable financing for a range of clean energy technologies that might otherwise be unable to secure financing. CEDA 

ensures support for a variety of next generation technologies by 

limiting to 30 percent the amount of financial assistance provided 

to any one technology. This subtitle also reforms the loan guarantee program established by Title 17 of the Energy Policy Act of 

2005. 

SUBTITLE J—MISCELLANEOUS

Section 191, Study of Ocean Renewable Energy and Transmission 

Planning and Siting: Requires the Federal Energy Regulatory 

Commission, the Department of the Interior, and the National Oceanic and Atmospheric Administration to jointly recommend an approach for the development of regional marine spatial plans for the 

siting of offshore renewable energy facilities. The Council on Environmental Quality determines whether the recommended approach 

should be implemented and coordinates the implementation. The 

Committee intends that the relevant agencies will continue to implement their existing leasing, licensing, and permitting programs 

while the study is underway and while marine spatial plans are 

being developed. 

Section 192, Clean Technology Business Competition Grant Program: Provides for grants by the Secretary of Energy to nonprofit 

organizations that conduct competitive programs to identify and 

support start-up businesses proposing products or services in areas 

of energy efficiency, renewable energy, air quality, water quality 

and conservation, transportation, smart grid, green building, and 

waste management. 


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Section 193, National Bioenergy Partnership: Requires the Secretary of Energy to establish a National Bioenergy Partnership to 

support the institutional and physical infrastructure necessary to 

promote the deployment of sustainable biomass fuels and bioenergy 

technologies. 

Section 194, Office of Consumer Advocacy: Establishes an Office 

of Consumer Advocacy at the Federal Energy Regulatory Commission to identify and defend the consumer interest in proceedings 

before the Commission. The office would be headed by a Presidentially-appointed Director, and would represent energy customers through investigations of rates, in complaints, and on appeal of Commission decisions concerning such matters. 

TITLE II—ENERGY EFFICIENCY

SUBTITLE A—BUILDING ENERGY EFFICIENCY PROGRAMS

Section 201, Greater Energy Efficiency in Building Codes: 

Amends the Energy Conservation and Production Act to establish 

upon enactment and in 2014 (or 2015 for new commercial buildings), respectively, targets for improved energy efficiency building 

codes to achieve 30 percent and 50 percent reductions in energy 

use in new buildings. The Secretary of Energy is required to support consensus code-setting organizations in developing and publishing codes meeting those targets; to adopt such codes directly if 

such organizations fail to do so; to include cool roofs standards; to 

support state and local adoption of such advanced codes by supporting training and funding for energy efficiency code enforcement; and to provide direct federal enforcement of such codes if 

states and local governments decline to do so. 

Section 202, Building Retrofit Program: Establishes a program 

under which the Administrator of EPA, in consultation with the 

Secretary of Energy, supports development of standards and processes for retrofitting existing residential and nonresidential buildings. Authorizes the Secretary of Energy to provide funding to 

states to conduct cost-effective building retrofits, using local governments, other agencies or entities to carry out the work, through 

flexible forms of financial assistance up to 50 percent of the costs 

of retrofits, with funding increasing in proportion to efficiency 

achievement. Also supports retrofits of historic buildings. 

Section 203, Energy Efficient Manufactured Homes: Establishes a 

program to provide federal rebates of up to $7,500 toward purchases of new Energy Star-rated manufactured homes for low-income families residing in pre-1976 manufactured homes. 

Section 204, Building Energy Performance Labeling Program: Establishes an EPA program to develop procedures to label buildings 

for their energy performance characteristics, using building type 

and consumption data to be developed by the Energy Information 

Administration. The program would be implemented by states in a 

manner suited to increasing public knowledge of building energy 

performance without hindering real estate transactions. 

Section 205, Tree Planting Programs: Authorizes a grant program through the Department of Energy to provide technical and 

financial assistance to retail power providers that carry out targeted tree planting programs, which reduce energy use and demand peaks in residential and small office settings. 


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Section 206, Energy Efficiency for Data Center Buildings: Establishes a deadline for the designation by the Secretary of Energy 

and the Administrator of the Environmental Protection Agency of 

an information technology organization to consult and coordinate 

with them on data center energy efficiency, as called for—but without a deadline—in Section 453(c)(1) of the Energy Independence 

and Security Act of 2007. The deadline would effectively be set at 

December 19, 2009. 

SUBTITLE B—LIGHTING AND APPLIANCE ENERGY EFFICIENCY

PROGRAMS

Section 211, Lighting Efficiency Standards: Amends the Energy 

Policy and Conservation Act to adopt negotiated agreements on 

technical standards for lighting, including outdoor lighting—street 

lights, parking lot lights, and parking structure lights—and portable light fixtures such as typical household and commercial plugin lamps. 

Section 212, Other Appliance Efficiency Standards: Amends the 

Energy Policy and Conservation Act to adopt consensus agreements 

on technical standards for hot food holding cabinets, bottle-type 

drinking water dispensers, portable spas (hot tubs), and commercial-grade natural gas furnaces. 

Section 213, Appliance Efficiency Determinations and Procedures: 

Amends the Energy Policy and Conservation Act to improve the 

Department of Energy process for setting energy-efficiency standards by enabling adoption of consensus testing procedures; requiring the adoption of a new television standard; improving standardsetting cost-effectiveness formula; authorizing the Secretary to obtain product-specific information as needed; authorizing state injunctive enforcement of standards violations; changing the role of 

appliance efficiency in building codes; and including greenhouse 

gas emissions, smart grid capability, and availability of more-efficient models among factors affecting efficiency standard ratings. 

Section 214, Best-in-Class Appliances Deployment Program: Creates a Department of Energy program to provide rewards to retailers for successful marketing of high-efficiency appliances, designating top performers as ‘‘best-in-class,’’ and providing bonuses 

based on efficiency improvement compared to average product. Provides additional rewards to retailers when best-in-class sale includes return and recycling of inefficient appliances. Creates program to reward manufacturers of new high-efficiency best-in-class 

models representing significant incremental energy efficiency gain. 

The rewards programs for products in this section should not in 

any way interfere with, discourage, or prevent DOE from adopting 

minimum standards under the Energy Policy and Conservation Act 

(42 U.S.C. 6291–6317) that require all products to achieve the 

same or better efficiency levels as products eligible for awards 

under this section, where such standards are technologically feasible and economically justified. 

Section 215, Water Sense: Authorizes the EPA’s WaterSense program, a voluntary labeling program that labels water-efficient 

high-performance products and services. This will provide the same 

type of labeling for water efficient products and services as is already done for energy efficient products under the existing Energy 

Star program. 


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Section 216, Federal Procurement of Water Efficient Products: Directs federal agencies to make cost-effective water-efficient procurement decisions by purchasing WaterSense or Federal Energy Management Program certified products whenever possible. 

Section 217, Water Efficient Product Rebate Programs: Authorizes 

grants to state governments that establish programs that offer financial incentives to consumers who purchase and install water-efficient products and services such as those labeled by WaterSense. 

Section 218, Certified Stoves: This section directs the Environmental Protection Agency (EPA) to establish a program to assist in 

the replacement of old polluting inefficient wood stoves or pellet 

stoves with cleaner burning units. It would build on the successes 

of the EPA’s voluntary partnership program, known as the Great 

American Wood Stove Changeout Program, by providing grants, incentives and loans for people who rely on wood as a source of heat. 

It would improve air quality in many communities and save money 

for those who heat their homes with wood. Climate change benefits 

would occur from reductions in methane and carbon dioxide from 

improved combustion efficiency. 

The Committee intends that, under section 218(a)(3), all ‘‘certified stoves’’ under the program will have been tested by an EPAaccredited laboratory specified by the methods required under the 

standards of performance for new residential wood heaters under 

subpart AAA of part 60 of subchapter C of chapter I of title 40, 

Code of Federal Regulations (or successor regulations). 

Section 218(b)(1) is meant to apply to sales of new wood stoves 

or pellet stoves. Although the standards of performance for new 

residential wood heaters under subpart AAA of part 60 of subchapter C of chapter I of title 40, Code of Federal Regulations (or 

successor regulations) already apply to new wood stoves, section 

218(b)(1) additionally addresses pellet stoves. 

The requirement in section 218(b)(2) that ‘‘no wood stove or pellet stove replaced under this program is sold or returned to active 

service, but that it is instead destroyed and recycled to the maximum extent feasible’’ should be implemented as part of the Certified Stoves Program. This provision does not require the promulgation of regulations. 

Section 219, Energy Star Standards: Adds new requirements to 

the administration by the Department of Energy and the Environmental Protection Agency of the Energy Star program, including 

consideration of prototype products, consideration of ways of providing more detailed comparative information among Energy Star 

products, review of product qualifications on a regular basis, updating qualifications as necessary, and providing proof of performance 

through testing of products purchased in the market. 

SUBTITLE C—TRANSPORTATION EFFICIENCY

Section 221, Emissions Standards: Amends Title VIII of the 

Clean Air Act to require EPA to establish greenhouse gas emissions standards for new heavy-duty vehicles and engines, for 

nonroad vehicles and engines, and for aircraft and aircraft engines. 

Section 222, Greenhouse Gas Emissions Reductions through 

Transportation Efficiency: Amends Title VIII of the Clean Air Act 

to require states to establish goals for greenhouse gas reductions 

from the transportation sector and requires the submission of 


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transportation plans to meet those goals by Metropolitan Planning 

Organizations for areas with populations exceeding 200,000 people. 

Imposes sanctions on states that fail to submit goals or plans. Authorizes a competitive grant program for development and implementation of plans. 

Section 223, SmartWay Transportation Efficiency Program: 

Amends Title VIII of the Clean Air Act to expand an existing EPA 

loan and fuel saving technology deployment program, the 

SmartWay Transport Partnership, to help American truckers upgrade to more fuel efficient and less polluting vehicles. 

Section 224, State Vehicle Fleets: Requires the Secretary of Energy to update state fleet rules to be consistent with current law. 

SUBTITLE D—INDUSTRIAL ENERGY EFFICIENCY PROGRAMS

Section 241, Industrial Plant Energy Efficiency Standards: Requires the Secretary of Energy to establish standards for industrial 

energy efficiency and to seek recognition of result by American National Standards Institute. 

Section 242, Electric and Thermal Waste Energy Recovery Award 

Programs: Creates an award program for innovation in increasing 

the efficiency of thermal electric generation processes, including encouragement for utilities to capture and separately market excess 

thermal energy. 

Section 243, Clarifying Election of Waste Heat Recovery Financial 

Incentives: Clarifies Section 451 of the Energy Independence and 

Security Act of 2007 to ensure that those who recover waste energy 

can elect to receive the incentive grants provided in that section, 

or tax credits provided for combined heat and power, but not both. 

Section 244, Motor Market Assessment and Commercial Awareness Program: Provides for the Secretary of Energy to conduct an 

assessment of the stock and usage of electric motors and motordriven equipment from an energy efficiency perspective, and to 

identify opportunities for upgrading such motors to improve energy 

efficiency. The Secretary is then instructed to establish a national 

program targeted at motor end-users to make them aware of the 

potential energy efficiency gains that could be realized by using 

more efficient motors and motor control equipment. 

Section 245, Motor Efficiency Rebate Program: Establishes a rebate program for replacement of low efficiency industrial-scale electric motors with high-efficiency motors. The rebate amount is $25 

per unit of nameplate horsepower of the new motor to the purchaser of that motor, and $5 to the distributor of that motor. 

SUBTITLE E—IMPROVEMENTS IN ENERGY SAVINGS PERFORMANCE

CONTRACTING

Section 251, Energy Savings Performance Contracts: Amends the 

National Energy Conservation Policy Act to establish competition 

requirements for specific energy savings performance contract task 

orders. 

SUBTITLE F—PUBLIC INSTITUTIONS

Section 261, Public Institutions: Amends the Energy Independence and Security Act to include non-profit hospitals and public 


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health facilities among public institutions eligible for grants and 

loans and clarifies loan and cost-share conditions. 

Section 262, Community Energy Efficiency Flexibility: Amends 

the Energy Independence and Security Act to remove limits on 

funds received by communities through the Energy Efficiency and 

Conservation Block Grant program that can be used to fund revolving loan accounts or through sub-grants for purposes of the program. 

Section 263, Small Community Joint Participation: Amends the 

Energy Independence and Security Act to allow small communities 

to join with other neighboring small communities in a joint program of sufficient size to be defined as an eligible local government 

recipient under the Energy Efficiency and Conservation Block 

Grant program. 

Section 264, Low-Income Community Energy Efficiency Program: 

Authorizes grants to community development organizations to provide financing to improve energy efficiency, develop alternative, renewable, and distributed energy supplies, promote opportunities for 

low-income residents, and increase energy conservation in low income rural and urban communities. 

SUBTITLE G—MISCELLANEOUS

Section 271, Energy Efficient Information and Communications 

Technologies: Requires the Director of the Office of Management 

and Budget to collaborate with each Federal agency to create an 

implementation strategy for the purchase and use of energy efficiency information and communication technologies and practices, 

establishing performance goals for each agency within 6 months of 

enactment. Such technologies and practices include advanced metering, efficient data center strategies, updated applications, building systems, and telework. 

Section 272, National Energy Efficiency Goals: Declares a national energy efficiency goal of improving overall energy productivity of the United States by 2.5 percent per year beginning in 

2012 and continuing through 2030. Instructs the Secretary of Energy, the Administrator of the Environmental Protection Agency, 

and other relevant federal agencies, with public input, to collaborate on a strategic plan to achieve such a national goal, detailing 

the regulatory, funding, and policy priorities required to do so, and 

to update that plan biennially. 

Section 273, Affiliated Island Energy Independence Team: Requires the Secretary of Energy to establish a team of technical, policy, and financial experts to address the energy needs of the islands 

that make up U.S. territories or otherwise affiliated with the U.S. 

The team will assess the means of reducing these islands’ reliance 

on imported fossil energy, increasing the use of indigenous energy, 

and increasing the efficiency of energy use on the islands. The 

team will also develop an energy action plan for each island based 

on that assessment. 

Section 274, Product Carbon Disclosure Program: Creates a new 

product carbon disclosure program at EPA. Not later than 18 

months after the date of enactment, EPA would be required to 

issue a report to Congress regarding whether a national product 

carbon disclosure program and labeling program would be effective 

in reducing greenhouse gas emissions and other related matters. 


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No later than 36 months after the date of enactment, EPA would 

be required to establish a national product carbon disclosure program, participation in which shall be voluntary. The national product carbon disclosure program may include a product carbon labeling program. 

TITLE III—REDUCING GLOBAL WARMING

Section 301, Short Title: Title III and sections 112, 115, 116, 221, 

222, 223, and 401 of the American Clean Energy and Security Act 

shall be known as the Safe Climate Act. 

SUBTITLE A—REDUCING GLOBAL WARMING POLLUTION

Section 311, Section 312, and Section 321, Reducing Global 

Warming Pollution: Establishes Title VII of the Clean Air Act to 

provide a declining limit on global warming pollution and to hold 

industries accountable for reducing global warming pollution pursuant to this limit. 

TITLE VII—GLOBAL WARMING POLLUTION REDUCTION 

PROGRAM 

PART A—GLOBAL WARMING POLLUTION REDUCTION GOALS AND

TARGETS

Section 701, Findings and Purposes. 

Section 702, Economy-wide Reduction Goals: States that the 

goals of Title VII and Title VIII are to reduce economy-wide global 

warming pollution to 97 percent of 2005 levels by 2012, 80 percent 

by 2020, 58 percent by 2030, and 17 percent by 2050. 

Section 703, Reduction Targets for Specified Sources: Requires 

that the regulations issued under section 721 reduce emissions of 

covered sources to 97 percent of 2005 levels by 2012, 83 percent by 

2020, 58 percent by 2030, and 17 percent by 2050. 

Section 704, Supplemental Pollution Reductions: Directs the Administrator to achieve additional low-cost reductions in global 

warming pollution by using a small portion of the emissions allowances to provide incentives to reduce emissions from international 

deforestation. 

Section 705, Review and Program Recommendations: Directs the 

Administrator to submit a report to Congress every four years. 

These reports will include: an analysis of the latest science relevant 

to climate change, an analysis of capacity to monitor and verify 

greenhouse gas reductions, and an analysis of worldwide and domestic progress in reducing global warming pollution. The reports 

will identify steps that could be taken to better improve our understanding of climate impacts, improve monitoring and verification, 

and any additional reductions in emissions that may be needed to 

avoid dangerous climate change. 

Section 706, National Academy Review: Directs the Administrator to commission reports from the National Academy of 

Sciences every four years. These reports will include: an update on 

the progress of various clean technologies, and an evaluation of the 

most recent EPA report submitted under Section 705. The reports 

will identify steps that could be taken to better improve our understanding of climate impacts, improve monitoring and verification, 

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ductions in emissions that may be needed to avoid dangerous climate change. 

Section 707, Presidential Response and Recommendations: Directs the President to use existing authority to respond to recommendations in the reports. If the National Academy review confirms that further emissions reductions are needed, either domestically or globally, the President must submit a report to Congress 

recommending steps (including legislation) to achieve those reductions. 

PART B—DESIGNATION AND REGISTRATION OF GREENHOUSE GASES

Section 711, Designation of Greenhouse Gases: Establishes a list 

of greenhouse gases regulated under this title: carbon dioxide, 

methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons 

(HFCs) emitted as a byproduct, perfluorocarbons, and nitrogen 

trifluoride. Section 711(a)(5) is intended to address 

hydrofluorocarbons (HFCs) that are emitted from a chemical manufacturing process at an industrial stationary source. HFCs that are 

sold for an industrial or commercial purpose after their initial production or importation are covered under Title VI. This section includes provisions for listing other anthropogenic gases as greenhouse gases if 1 metric ton of the gas contributes as much as or 

more to global warming over 100 years than does one metric ton 

of carbon dioxide. Water vapor cannot be listed as a greenhouse gas 

under this title because one metric ton of water vapor in the troposphere does not contribute as much as or more to global warming 

over 100 years than does one metric ton of carbon dioxide. 

Section 712, Carbon Dioxide Equivalent Value of Greenhouse 

Gases: Lists carbon dioxide equivalents for each gas. Requires periodic review of equivalence values by the Administrator. 

Section 713, Greenhouse Gas Registry: Directs EPA to establish 

a federal greenhouse gas registry and comprehensive reporting system for greenhouse gas emissions. 

PART C—PROGRAM RULES

Section 721, Emission Allowances: Establishes an annual tonnage limit on greenhouse gas emissions from specified activities. 

Directs the Administrator to establish allowances equal to the tonnage limit for each year (with one allowance representing the permission to emit one ton of greenhouse gases, measured in tons of 

carbon dioxide equivalent). 

Protecting the environmental integrity and economic value of 

emission allowances and offsets are fundamental to achieving the 

American Clean Energy and Security Act’s broad economic, energy, 

national security, environmental, and health objectives and requirements. Consistent with this broad set of objectives and requirements, ‘‘the zone of interests to be protected or regulated’’ by 

the Act is broad and inclusive. See, e.g., Ass’n of Data Processing 

Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153–56 (1970). For the Act 

to serve its purposes, the ‘‘zone of interests’’ under this Act includes, among others, persons with economic interests or competitive injury, such as holders of allowances, holders of offsets, and 

entities engaged in renewable energy, energy efficiency, or other 

advanced energy or pollution control technologies. 


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Section 722, Prohibition of Excess Emissions: Prohibits covered 

entities from emitting or having attributable greenhouse gases in 

excess of their allowable emissions level, which is determined by 

the number of emission allowances and offset credits they hold on 

the specified date. Electricity generators, refiners and importers of 

petroleum-based and other specified liquid fuels, fluorinated gas 

manufacturers, and emitters of nitrogen trifluoride are covered entities starting with emissions in 2012. Specified industrial sources 

are covered starting with emissions in 2014. Local distribution 

companies that deliver natural gas are covered starting with emissions in 2016. 

Section 722(a) prohibits a covered entity from emitting greenhouse gases, or having attributable greenhouse gas emissions, in 

excess of its allowable emissions level in a given year. The allowable emissions level is determined by the number of allowances and 

offset credits a covered entity holds on April 1 (or such other date 

as set by the Administrator). Section 722(b) sets forth the number 

of emission allowances that each type of covered entity must hold 

to demonstrate compliance with title VII of the Clean Air Act. 

Section 722(b)(9) provides that where carbon dioxide is used as 

an input in the production of algae-based fuels, the Administrator 

shall ensure that emission allowances are held either for the carbon dioxide used to grow the algae or for the carbon dioxide emitted from combustion of the fuel used to produce the algae, but not 

for both. For example, a power plant could capture its carbon dioxide and transfer it to an entity that uses the carbon dioxide in the 

production of algae-based transportation fuel. The carbon captured 

at the power plant would not be emitted at the plant’s stack, but 

would ultimately be emitted to the atmosphere when the fuel is 

combusted. Under this scenario, and pursuant to section 722(b)(9), 

EPA could designate either the power plant or the fuel producer as 

the entity with compliance obligations under Section 722 (to require both would be double-counting). 

Section 722(d) allows covered entities to use offset credits in lieu 

of allowances to demonstrate compliance for a portion of their emissions. Under this section, offset credits may be used to demonstrate 

compliance for a maximum of two billion tons of emissions from all 

covered entities combined. A large number of offset credits are projected to be less expensive than allowances for compliance in any 

given year. To meet the twin goals of ensuring that offset credits 

are used to demonstrate compliance for no more than two billion 

tons of emissions and that all covered entities have an equal opportunity to use this cheaper method of compliance, the bill distributes 

the ability to use offset credits on a pro rata basis among all covered entities. It does so by allowing each covered entity to use offset credits to meet a specified percentage of the allowances it must 

hold to demonstrate compliance. For each year, the percentage is 

calculated by dividing two billion by the sum of two billion plus the 

annual tonnage limit for that year. For example, in 2012, when the 

annual tonnage limit is 4.627 billion tons, the percentage would be 

30.20 percent (2 divided by 6.627 times 100 percent). In that year, 

a source that emitted 100,000 tons of carbon dioxide equivalent 

could use offset credits to demonstrate compliance for 30,200 tons 

of emissions. In 2030, when the annual tonnage limit is 3.533 billion tons, the percentage would be 36.15 percent; and a source that 


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emitted 100,000 tons of carbon dioxide equivalent could use offset 

credits to demonstrate compliance for 36,150 tons of emissions. (Although these examples use percentages rounded to the second decimal point, the Administrator has discretion to round to a different 

decimal point.) 

Section 722(d) also sets separate limits on the ability to use domestic and international offsets. System-wide, compliance can be 

demonstrated for up to one billion tons of emissions using domestic 

offsets and up to one billion tons of emissions using international 

offsets. This is accomplished by splitting each covered entity’s ability to use offsets equally between international and domestic offsets. Using the example from above, the source in 2030 could offset 

up to 18,075 tons of its emissions with domestic offsets and up to 

the same amount with international offsets. However, to address 

the concern that there may be an insufficient supply of domestic 

offset credits in any given year to offset 1 billion tons of emissions, 

section 722(d)(1)(C) allows up to 1.5 billion tons of emissions to be 

offset with international credits under certain circumstances. This 

is accomplished by directing the Administrator to change the balance between the percentages of international and domestic offsets 

that may be used to demonstrate compliance in certain circumstances. If, for example, the Administrator determines that 

only 0.5 billion tons of domestic offset credits will be available in 

any given year, the Administrator shall allow a maximum of 1.5 

billion tons of emissions to be offset through international projects. 

Using the 2030 example from above, this would mean that a covered entity with 100,000 tons of emissions could use international 

offsets to demonstrate compliance for 3⁄4 of 36,150 tons of emissions 

(or 27,112 tons) and domestic offsets for 1⁄4 (or 9,038 tons). In assessing the availability of domestic offset credits for purposes of determining whether to increase the percentage that can be met 

using international offsets, the Administrator shall only consider 

domestic offset credits that are projected to cost no more than the 

projected allowance price. 

Section 722(d) requires that, starting with the 2018 compliance 

obligation, for every 4 tons of emissions that are offset with international reductions, 5 international offset credits must be used. 

This 5:4 turn-in ratio provides greenhouse gas reductions and environmental benefits in addition to those provided by the annual tonnage limits. Thus, using the 2030 example from above in the situation where the ability to offset emissions is split evenly between domestic and international offsets, to demonstrate compliance for 

36,150 tons of its emissions, the covered entity could rely on 18,075 

domestic offset credits and 22,594 international offset credits. (The 

Administrator has discretion to set appropriate rounding conventions for fractions of allowances.) 

Section 722(l) explains that the year of a compliance obligation, 

as used in Title VII, refers to the year in which compliance is determined. Thus, for emissions in 2013, the year of the compliance 

obligation would be 2014. 

Section 723, Penalty for Noncompliance: Establishes penalties for 

parties that fail to comply with the requirements of Title VII. 

Section 724, Trading: Clarifies that the legislation does not restrict who can hold an allowance, nor does it restrict the purchase, 

sale, or other transaction involving allowances. 


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Section 725, Banking and Borrowing: Section 725 explains the 

extent to which allowances may be banked or borrowed from the 

future. Under section 725(a) and (b), allowances can be banked for 

use at any time in the future, subject to limitations set by the Administrator in a rulemaking pursuant to section 725(b). Offset credits, once issued by the Administrator pursuant to Part D of Title 

VII, may be banked for future use. Neither allowances nor offset 

credits expire unless retired, except pursuant to rules issued by the 

Administrator necessary to ensure the authenticity and integrity of 

allowances, credits, or the allowance tracking system. Under section 725(c)(1), a covered entity can ‘‘borrow’’ an allowance from one 

year in the future (i.e., an allowance with a vintage year one year 

greater than the calendar year in which the emissions occurred), 

providing that it is an allowance that the entity holds. Under section 725(c)(2), a covered entity can ‘‘borrow’’ an allowance that it 

holds from two to six years in the future (i.e., an allowance with 

a vintage year two to six years greater than the calendar year in 

which the emissions occurred, or a vintage year one to five years 

greater than the calendar year of the compliance obligation), provided that it is an allowance the entity holds and that the covered 

entity prepays a specified amount of interest. A covered entity can 

only demonstrate compliance for up to 15 percent of its emissions 

by using allowances borrowed pursuant to section 725(c)(2). This 

section addresses borrowing from the future, it does not address 

borrowing current or earlier year vintage allowances from a private 

entity (which is allowed). 

As an example, under section 725, compliance for emissions in 

2016 could be demonstrated by holding on April 1 of 2017 (or such 

later date as set by the Administrator), a sufficient number of: • allowances with vintage years 2012 through 2016 (pursuant to 

section 725(a)); or • 2017 vintage year allowances (under section 725(c)(1)). 

In addition, compliance for up to 15 percent of emissions in 2016 

could be demonstrated by holding allowances with vintage years 

2018 through 2022 (pursuant to section 725(c)(2)). 

Section 726, Strategic Reserve: Directs the Administrator to create a ‘‘strategic reserve’’ of emission allowances that will be available to help contain the costs of meeting the annual tonnage limits. 

At the start of the program, the Administrator is required to fill 

the reserve with allowances that are taken from each year of the 

program in amounts specified in section 726(b)(1). 

Every quarter, the Administrator shall auction a specified number of allowances from the reserve with a minimum reserve price 

specified in the bill. Proceeds from such auctions, if any, shall be 

used to refill the reserve. The Administrator shall accomplish this 

by using any such proceeds to purchase international offset credits 

for reduced deforestation. The Administrator shall then retire those 

offset credits and establish four new allowances (in addition to 

those established under section 721) for every five tons of offset 

credits retired. The Administrator shall then refill the strategic reserve to its original level by placing the newly-established allowances into the strategic reserve to the extent necessary to return 

the reserve to its original size. Once the reserve reaches its original 

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that were originally taken (pursuant to section 726(b)(1)) from current or future vintage years. Newly-established allowances shall be 

retired if they are not needed to refill the reserve or to replace the 

allowances taken from current or future years. For example, if the 

Administrator sells 1,000,000 allowances in the strategic reserve 

auction in 2018, and prices are such that the Administrator uses 

the proceeds to buy 1,600,000 offset credits, the Administrator 

would then be required to retire those 1,600,000 offset credits and 

establish 1,280,000 newly-established allowances. The Administrator would be required to place 1,000,000 of the newly-established allowances into the strategic reserve. The Administrator 

would then take the remaining 600,000 newly-established allowances and use them to replace allowances that had been used to 

fill the strategic reserve initially. For example, the Administrator 

could designate all of the 280,000 allowances as vintage year 2018 

and add them to auctions of 2018 (or later) allowances. If the Administrator had already returned to 2018 the same number of allowances that was taken from 2018 to fill the reserve, the Administrator could designate the allowances as 2019 vintage and auction 

them with the 2019 allowances. The Administrator has discretion 

to determine the best way to replace the allowances that were 

taken to fill the reserve, except that the Administrator cannot replace allowances that were taken from years that have already 

ended (e.g., in 2018, the Administrator could not replace allowances 

that were taken from 2017 or earlier). 

At the request of an international deforestation offset credit holder, the Administrator can auction such credits in a strategic reserve auction if specified criteria are met. 

Section 727, Permits: Clarifies the obligations of stationary 

sources under the Clean Air Act’s Title V operating permit program 

under the newly-established Title VII program. 

Section 728, International Emission Allowances: Establishes criteria that must be met before allowances from foreign programs 

can be used for compliance by covered entities. 

PART D—OFFSETS

Section 731, Offsets Integrity Advisory Board: Establishes an 

independent Offsets Integrity Advisory Board composed of scientists and others with relevant expertise. The Advisory Board is 

charged with providing recommendations to the Administrator on: 

the types of offset project types that should be listed by EPA as eligible; potential levels of scientific uncertainty associated with certain offset types; appropriate quantification or other methodologies; 

and other areas of the offsets and deforestation provisions in the 

draft. The Board is also charged with conducting a regular review 

of all relevant areas. 

Section 732, Establishment of Offsets Program: Directs the EPA 

Administrator to establish an offsets program and requires that 

regulations ensure offsets are verifiable, additional, and permanent. 

Section 733, Eligible Project Types: Requires the Administrator 

to establish a list of offset project types that are eligible under the 

program, taking into account the recommendations of the Offsets 

Integrity Advisory Board. Provides guidelines for establishing and 

updating the list. 


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In implementing this provision, the Committee expects the Administrator to fully evaluate each of the following categories of activities for potential inclusion as eligible offset project types: 

(1) agricultural, grassland, and rangeland sequestration and 

management practices, including— 

(A) altered tillage practices; 

(B) winter cover cropping, diversified rotations and other 

means to increase biomass returned to soil in lieu of planting 

followed by fallowing; 

(C) conversion of cropland to rangeland or grassland, on the 

condition that the land has been in nonforest use for at least 

10 years before the date of initiation of the project; 

(D) reduction of nitrogen use or increase in nitrogen use efficiency; 

(E) reduction in the frequency and duration of flooding of 

rice paddies; 

(F) reduction in carbon emissions from organic soils; 

(G) reduction in greenhouse gas emissions from manure and 

effluent; and 

(H) reduction in greenhouse gas emissions due to changes in 

animal management practices, including dietary modifications; 

(2) changes in carbon stocks attributed to land use change and 

forestry activities, including— 

(A) afforestation or reforestation of acreage not forested as of 

January 1, 2007; 

(B) forest management resulting in an increase in forest carbon stores including but not limited to harvested wood products; 

(C) management of peatland or wetland; 

(D) conservation of grassland and forested land; 

(E) improved forest management, including accounting for 

carbon stored in wood products; 

(F) reduced deforestation or avoided forest conversion; 

(G) urban tree-planting and maintenance; 

(H) agroforestry; and 

(I) adaptation of plant traits or new technologies that increase sequestration by forests; 

(3) manure management and disposal, including— 

(A) waste aeration; and 

(B) biogas capture and combustion; and 

(4) non-agriculture and forestry project types, including— 

(A) recycling, reuse, and waste minimization; 

(B) methane collection and combustion projects at mines; 

(C) methane collection and combustion projects at landfills; 

(D) methane collection and combustion projects at natural 

gas systems; 

(E) projects to reduce emissions from municipal or industrial 

wastewater treatment systems; 

(F) projects that capture and geologically sequester uncapped 

greenhouse gas emissions with or without enhanced oil or 

methane recovery in active or depleted oil, carbon dioxide, or 

natural gas reservoirs; and 

(G) projects to capture and destroy or avoid emissions of 

greenhouse gases from industrial sources for which entities do 


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not have compliance obligations under section 722 or other provisions of Title III. 

In considering these potential project types, the Administrator 

must take into account recommendations of the Offsets Integrity 

Advisory Board. 

The Committee expects the Administrator to issue an initial list 

of offset project types and their associated methodologies under section 734 as expeditiously as practicable, but in no case later than 

one year from the date of enactment. The Administrator should add 

additional project types, along with their associated methodologies, 

to the list as expeditiously as practicable, but in no case later than 

two years from the date of enactment. In developing baselines, 

measurement, and monitoring methodologies for a broad range of 

offset project types as quickly as possible, EPA should build on its 

experience in programs such as Natural Gas STAR, Climate Leaders, and the Landfill Methane Outreach Program. The Committee 

understands that EPA is already working with USDA and DOE on 

the AgSTAR program to encourage the use of methane recovery 

from manure digesters and is working on afforestation, reforestation, and forest management protocols under the Climate Leaders 

program. 

The Committee strongly encourages the Administrator to consult 

closely with the Secretary of Agriculture on all elements of the offsets program related to agricultural and forestry practices. 

Section 734, Requirements for Offset Projects: Section 734(a) requires that for each offset project type, the Administrator establish 

standardized methodologies for determining additionality; establishing activity baselines; measuring performance; accounting for 

and mitigating potential leakage. It is the Committee’s intent that 

the Administrator, in establishing standardized methodologies for 

determining additionality, may adopt an approach based on performance standards. Section 734(b) requires that for each offsets 

project type the Administrator establish requirements to account 

for and address reversals from offset projects. 

Sections 735, Approval of Offset Projects: Establishes procedures 

to approve offset projects. It is the expectation of the Committee 

that the requirements for standardized methodologies under section 734 will result in a simple and efficient approval process. 

Section 736, Verification of Offset Projects: Directs the Administrator to establish requirements for the verification of offset project 

performance, and requires that verification reports be prepared by 

accredited third-party verifiers. 

Section 737, Issuance of Offset Credits: Establishes procedures 

for the issuance of offset credits and directs the Administrator to 

issue offset credits only if the emissions reduction or sequestration 

has already occurred and other specified conditions are met. 

Section 738, Audits: Requires the Administrator to conduct, on 

an on-going basis, random audits of offset projects, offset credits, 

and practices of third-party verifiers. 

Section 739, Program Review and Revision: Requires the periodic 

evaluation and updating of specified areas and components of the 

offsets program. 

Section 740, Early Offset Supply: To ensure a supply of offset 

credits in the early years of the program, allows for the issuance 

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teria. Such credits may only be issued for a limited timeframe and 

only for reductions achieved for a specified time period. 

Section 741, Environmental Considerations: Provides requirements for additional environmental considerations for forestry and 

other land management-related projects. 

Section 742, Trading: Provides that the trading provisions applicable to allowances are also applicable to offset credits. 

Section 743, International Offset Credits: Allows the Administrator to issue international offset credits for activities that take 

place in developing countries. Requires that all international offset 

credits meet the criteria established for all offsets under sections 

732–742, as well as the requirements specific to international offsets established under section 743. In addition, requires that the 

United States be a party to a bilateral or multilateral agreement 

or arrangement with the country where an offset activity would 

take place before any international offset credits can be issued. 

Subsections 743(c), (d) and (e) provide additional specifications 

for three potential categories of international offset credits that are 

distinct from the issuance of international offset credits for international offset project types listed under section 733. Subsection 

743(c) requires the Administrator, in consultation with the Secretary of State, to identify sectors in specific countries for which 

the issuance of international offset credits on a sector-wide, rather 

than project-specific, basis is appropriate. 

Subsection 743(d) Establishes the terms under which the Administrator may issue international offset credits in exchange for other 

international instruments. These include a requirement that the 

Administrator has determined that the issuing international body 

has implemented substantive and procedural requirements for the 

relevant project type that provide equal or greater assurance of environmental integrity as the requirements established under Part 

D. 

Subsection 743(e) establishes procedures and requirements regarding the issuance of international offset credits for activities 

that reduce deforestation. For major emitting nations, international 

offset credits may only be issued for national-scale activities, or for 

state or province-level activities in states or provinces that would 

themselves be considered major emitters. Smaller-scale offset 

projects are only allowed in countries that generate less than 1 percent of global greenhouse gas emissions as well as less than 3 percent of global forest sector and land use change emissions. After an 

initial period, all countries must transition to national baselines to 

continue generating credits. 

PART E—SUPPLEMENTAL EMISSIONS REDUCTIONS FROM REDUCED

DEFORESTATION

Section 751–752, Definitions and Findings: Defines forest carbon 

activities and finds that land use change, primarily deforestation, 

accounts for roughly 20 percent of global greenhouse gas emissions. 

Section 753, Supplemental Emissions Reductions through Reduced Deforestation: Directs the Administrator of EPA, in consultation with the Administrator of the U.S. Agency for International 

Development (USAID), to establish a program to build capacity in 

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forestation reduction offset credits), to achieve emissions reductions 

in addition to those achieved under the domestic emissions limit, 

and to protect intact forest from any shifts in land use as a result 

of reduced deforestation in other areas. By building capacity and 

providing powerful incentives to develop national efforts to reduce 

deforestation, the Committee intends that this program will both 

achieve significant reductions in emissions from deforestation 

(more than 6 billion metric tons of emissions) and allow many forest nations to participate in carbon markets, which will expand the 

supply of available offset credits. 

Section 754, Requirements for International Deforestation Reduction Program: Directs the Administrators of EPA and USAID to 

support a broad range of activities to reduce deforestation, build capacity to measure, monitor and enforce reductions in deforestation 

generate for sale deforestation reduction offset credits for sale, and 

reduce the leakage of emissions. Activities supported through this 

program must be environmentally sound and should protect the 

rights of indigenous peoples and local communities. Support for 

emissions reductions must ensure that countries are transitioning 

to nationwide accounting of reduced deforestation. 

Section 755, Reports and Reviews: Directs the Administrators of 

EPA and USAID to report annually to Congress on progress in reducing deforestation through this program and perform a review of 

the program every four years. 

Section 756, Legal Effect of Part: Clarifies that this program does 

not supersede or limit any other federal or international law. 

Section 312, Definitions 

Section 700, Definitions: Defines key terms for Titles VII and 

VIII of the Clean Air Act. 

Section 700(13)(B) defines one type of covered entity as ‘‘any stationary source that produces . . . petroleum-based or coal-based liquid fuel, petroleum coke, or natural gas liquid.’’ Because there are 

multiple steps in the production of natural gas liquids, additional 

language on natural gas liquid regulation is included elsewhere in 

Title III to specify the covered entity with respect to natural gas 

liquid production or importation. 

The term ‘‘natural gas liquid’’ is defined in section 700(36) to 

mean ‘‘ethane, butane, isobutane, natural gasoline and propane 

which is ready for commercial sale or use.’’ The Committee’s intent 

in including the phrase ‘‘ready for commercial sale or use’’ in the 

definition is to indicate that the point of regulation for natural gas 

liquids is at the point of fractionation. This step in the production 

of natural gas liquids, where a mixture of multiple natural gas liquids is separated (fractionated) into its constituent parts, occurs 

after the separation of natural gas liquids from natural gas (often 

done by natural gas processing facilities), but prior to the sale or 

transfer of the individual natural gas liquids to the petrochemical, 

refining, or propane sectors. Some natural gas processing plants 

also fractionate; in other cases natural gas processing facilities are 

separate from fractionating facilities, and are owned by different 

entities. 

The owner or operator of the covered entity that produces or imports natural gas liquids under section 700(13)(B) in some cases 

will own the natural gas liquids, but in other cases may not. SecVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00414 Fmt 6659 Sfmt 6602 E:\HR\OC\HR137.XXX HR137

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tion 722(b)(12) requires that in situations where the covered entity 

described in section 700(13)(B) does not take ownership of the liquids, the owner of the liquids shall be the entity with compliance 

obligations under section 722, section 723, and other relevant sections of the title. 

Section 700(45) defines the terms ‘‘sequestered’’ and ‘‘sequestration’’ to mean ‘‘the separation, isolation, or removal of greenhouse 

gases from the atmosphere, as determined by the Administrator. 

The terms include biological, geologic, and mineral sequestration, 

but do not include ocean fertilization techniques.’’ The Committee 

recognizes that new sequestration technologies that do not exist 

today may develop in the future, and the Committee intends the 

Administrator to have discretion to define the types of sequestration technologies or processes that are appropriate to include within the definition, in light of the purposes of the Act. 

SUBTITLE B—DISPOSITION OF ALLOWANCES

Section 321, Disposition of Allowances for Global Warming Pollution Reduction Program: Provides for emission allowances to be distributed for three primary goals: to protect consumers from energy 

price increases, to assist industry in the transition to a clean energy, and to spur energy efficiency and the deployment of clean energy technology. Also allocates allowances to prevent deforestation 

and support national and international adaptation efforts and for 

other purposes. 

PART H—DISPOSITION OF ALLOWANCES

Section 781, Allocation of Allowances for Supplemental Reductions: Directs the Administrator to allocate allowances for the program under part E to achieve supplemental emissions reductions 

from reduced deforestation. Allocates 5 percent of allowances for 

the years 2012–2025, 3 percent for 2026–2030, and 2 percent for 

2031–2050. 

Section 782, Allocation of Emission Allowances: Provides for allocation of allowances to electricity consumers; natural gas consumers; home heating oil and propane consumers; low-income consumers; trade-vulnerable industries; investment in carbon capture 

and sequestration technologies; investment in energy efficiency and 

renewable energy; Clean Energy Innovation Centers; clean vehicle 

technology; domestic fuel production; workers; domestic, wildlife, 

and natural resources adaptation; international adaptation; international clean technology transfer; deficit reduction; and consumer 

refunds. 

Section 783, Electricity Consumers: Directs the Administrator on 

how to distribute the approximately 30 percent of allowances allocated for the benefit of consumers to local electricity distribution 

companies, whose retail rates are regulated by states or other entities. Directs the Administrator on how to distribute the approximately 5 percent of allowances for merchant coal generators and 

certain generators with long-term power purchase agreements. 

Section 784, Natural Gas Consumers: Directs the Administrator 

on how to distribute the approximately 9 percent allocated for the 

benefit of consumers to local natural gas distribution companies, 

whose retail rates are regulated by states or other entities. 


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Section 785, Home Heating Oil and Propane Consumers: Directs 

the Administrator on how to distribute the approximately 1.5 percent of allowances to states for programs to benefit residential and 

commercial users of home heating oil and propane. 

Section 787, Allocations to Refineries: Directs the Administrator 

on how to distribute the approximately 2 percent of allowances to 

domestic refiners. 

Section 786–788 [Reserved] 

Section 789, Climate Change Consumer Refunds: Directs the Secretary of the Treasury to use proceeds from the sales of specified 

2026 and later year allowances to provide rebates to consumers. 

Section 790, Exchange for State-Issued Allowances: Provides for 

fair compensation and exchange of allowances issued by the State 

of California, the Regional Greenhouse Gas Initiative and the 

Western Climate Initiative prior to commencement of federal program. 

Section 791, Auction Procedures: Establishes single-round, 

sealed-bid, uniform-price auction procedures, which may be modified by the Administrator. 

Section 792, Auctioning Allowances for Other Entities: Establishes rules by which the Administrator may auction allowances on 

behalf of other entities. 

Section 793, Establishment of Funds: Establishes the Strategic 

Reserve Fund and the Climate Change Consumer Rebate Fund in 

the U.S. Treasury. 

Section 794, Oversight of Allocations: Requires the Comptroller 

General to prepare biannual reviews of the programs administered 

by the Federal Government that distribute emission allowances or 

funds from Federal auctions of allowances. 

SUBTITLE C—ADDITIONAL GREENHOUSE GAS STANDARDS

Section 331, Greenhouse Gas Standards: Establishes Title VIII of 

the Clean Air Act to achieve additional greenhouse gas reductions 

outside of Title VII. 

Title VIII—ADDITIONAL GREENHOUSE GAS STANDARDS 

SECTION 801, DEFINITIONS

PART A—STATIONARY SOURCE STANDARDS

Section 811, Standards of Performance: Section 811 directs the 

Administrator to establish minimum standards of performance 

under section 111 of the Clean Air Act as an means of achieving 

reductions of greenhouse gas emissions from certain stationary 

sources of air pollution not subject to title III of the Clean Air Act. 

When authorizing the Administrator to consider greenhouse gas 

emissions as ‘‘nonair quality health and environmental impacts’’ 

under section 811(b), it is the Committee’s intent to allow the Administrator to require controls on non-greenhouse gases that maximize greenhouse gas reduction benefits and to allow, but not require, the Administrator to limit controls on other pollutants that 

interfere significantly with greenhouse gas control effectiveness. 

Thus where additional reductions in emissions of non-greenhouse 

gases resulting from the use of certain technologies may be relatively small, while associated energy penalties may be significant, 


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the Administrator would have the discretion not to require such 

controls. However, any such decisions must be wholly consistent 

with other health and welfare considerations; where these considerations associated with other non-greenhouse gas pollutants are 

found to outweigh impacts on greenhouse gas emissions, the Administrator is permitted to require further reductions of those pollutants notwithstanding resulting energy penalties or greenhouse 

gas emissions impacts. 

Section 811(c)(2) allows the Administrator to establish work practice standards without regard to any determination of the feasibility of other forms of emissions control that would otherwise be 

required under section 111(h) of the Clean Air Act. Congress intends to allow the Administrator to require improvements in process or energy efficiency that would reduce greenhouse gas emissions directly or indirectly without first having to find that other 

forms of capture or control are infeasible. The Administrator is also 

allowed to require efficiency improvements in lieu of capture or 

control technologies that exceed the bill’s cost limitations and may 

also require such energy efficiency improvements in addition to 

controls that meet the cost limiting criteria. 

The cost-containment provisions provided in section 811(c)(3) are 

intended to keep the costs of requirements for uncapped sources 

roughly in line with or below the costs of requirements for those 

of capped sources when viewed on a source category basis. That is, 

so long as costs are acceptable when viewed on average for the 

source category, the provisions do not provide a bar to enforcement 

of performance standards on any individual source where the cost 

of compliance may exceed the projected price of allowances during 

the applicable period. The Administrator’s analysis of selected technologies must reflect a reasonable expectation that costs will not 

exceed projected allowance prices, but is not required to provide absolute certainty, nor shall actual costs in any individual case provide a basis for exemption from any standards, as noted above. 

Under section 811(a), the Administrator may list under section 

111(b) the source categories identified in the inventory without 

making an endangerment finding. The inventory called for in this 

subsection is intended to identify the specific source categories that 

meet the specific criteria identified by Congress, and Congress has 

determined that the Administrator must establish standards of 

performance for greenhouse gas emissions from these categories. 

Therefore, the Administrator may list new source categories under 

section 111(b), without making the required endangerment finding, 

as necessary to ensure that every source category on the inventory 

is properly listed under 111(b). Such listings may be necessary, for 

example, if the category is not already listed under section 111(b) 

or if the scope of the source category identified in the inventory 

does not correspond with the scope of the source category currently 

listed under section 111(b). 

PART C—EXEMPTIONS FROM OTHER PROGRAMS

Section 831, Criteria Pollutants: Provides that greenhouse gases 

may not be added to the list of criteria air pollutants on the basis 

of their effect on climate change. 


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Section 832, International Air Pollution: Provides that section 

115 of the Clean Air Act shall not apply to an air pollutant with 

respect to that pollutant’s contribution to global warming. 

Section 833, Hazardous Air Pollutants: Provides that greenhouse 

gases may not be listed as hazardous air pollutants on the basis 

of their effect on climate change. 

Section 834, New Source Review: Provides that New Source Review shall not apply to a major emitting facility that is initially 

permitted or modified after January 1, 2009, on the basis of its 

emissions of any greenhouse gases. This language is intended to 

make clear on a going forward basis that New Source Review does 

not apply to greenhouse gases. It is not an expression of congressional intent with respect to the application of New Source Review 

to greenhouse gases prior to that date. 

Section 835, Title V Permits: Provides that greenhouse gases 

shall not be considered when determining whether a stationary 

source is required to operate pursuant to a permit under Title V. 

Where sources are required to have a Title V permit due to the 

sources’ emissions of any pollutant that is regulated for any reason 

other than its effect on global climate change, this section does not 

alter the applicability of title V for such sources, nor does it provide 

any exclusion from any of the requirements of Title V (including 

but not limited to reporting requirements and certification requirements, as they would apply to such sources). Any applicable requirements of the Safe Climate Act would be considered applicable 

requirements of the Clean Air Act and must be incorporated into 

Title V permits for such sources. Additional provisions governing 

how the requirements of title VII of this bill are to be addressed 

in title V permits for such sources may be found in section 727. 

Section 332, HFC Regulation: Section 332 amends Title VI of the 

Clean Air Act by adding a new section 619 to phase down the consumption of hydrofluorocarbons (HFCs), many of which are extremely potent greenhouse gases, under a separate limit and reduction schedule. Using a market-based regulatory approach similar to 

the one that continues to be successful in addressing substances 

that deplete the stratospheric ozone layer, the bill requires HFC 

consumption to be phased-down to 15 percent of the baseline by 

2032. Allowances would be distributed through a combination of 

annual auctions and non-auction sales. 

This new section 619 includes numerous references to existing 

sections of Title VI. Except as otherwise provided in this section, 

EPA is expected to treat class II, group II substances similarly to 

the way in which it has treated ozone depleting substances in implementing and interpreting these existing sections of Title VI. 

In section 619, production of class II, group II substances refers 

to production of such substances in the United States. Importation 

of class II, group II substances refers to the importation of such 

substances in bulk into the United States. Importation of products 

containing any class II, group II substances refers to the importation of such products into the United States. 

The bill provides for bidding limits in 2014 and beyond to be 

based in part on the highest number of allowances required to be 

held by the participant in the prior three years. The number of allowances actually held by a participant may be higher or lower 

than the number of allowances required to be held (if allowances 


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were banked or if destruction offset credits were used to meet a 

portion of the compliance obligation), but the number of allowances 

actually held by a participant will not be used in determining the 

bidding limits. 

It is the intent of this section to provide a financial incentive for 

the recovery and destruction of chlorofluorocarbons (and potentially 

other ozone depleting substances that have been globally phased 

out of production under the Montreal Protocol). Generation of destruction offset credits through the destruction of CFCs (and potentially other ozone depleting substances) offers an additional path to 

meet compliance obligations under section 619(b). With the exception of offset credits issued under section 740, offsets generated 

pursuant to section 619(b)(9) may be used as offset credits under 

Title VII only if the Administrator extends their use to Title VII 

under section 619(b)(9)(E), pursuant to the requirements of Part D 

of Title VII, and based on the carbon dioxide equivalent value of 

the substance destroyed. In the event of such an extension, destruction offset credits for the destruction of a quantity of CFCs (or potentially other ozone depleting substances) may be issued under either Title VI or Title VII, but in no case may an offset credit be 

issued under both titles for the destruction of the same quantity of 

a substance. 

The specific reporting provisions in section 619(n) do not preclude 

EPA’s use of the general authority under section 114 to obtain information for the purpose of carrying out any provision of Title VI, 

including the provisions concerning class II, group II substances. 

Section 332(c)(4) amends section 605(a) of the Clean Air Act to 

allow introduction into interstate commerce or use of HCFCs that 

are listed as acceptable for use as fire suppression agents for nonresidential applications under section 612. The phrase ‘‘listed as acceptable for use’’ is intended to include substances listed as acceptable for use ‘‘subject to use conditions’’ or ‘‘subject to narrowed use 

limits’’ as well as those listed as acceptable without qualification. 

Section 333, Black Carbon: Directs the Administrator to report 

on existing efforts to reduce domestic black carbon pollution and 

use existing authority to achieve further reductions. Directs the 

Administrator, in coordination with the Secretary of State, to report to Congress on current and potential future assistance to foreign nations to help reduce black carbon pollution. 

Section 334, States: Preserves states’ existing authority to adopt 

and enforce standards or limitations on air pollution under the 

Clean Air Act, including greenhouse gas emissions. 

Section 335, State Programs: Bars states from implementing or 

enforcing a cap-and-trade program to control on greenhouse gas 

emissions covered by Title VII between the years 2012 to 2017, but 

allows regulation of such emissions by other means during this period. 

Section 336, Enforcement: Provides that for petitions for review 

under the Clean Air Act, the court may remand an action of the 

Administrator without vacatur under specified circumstances. Requires the Administrator to take final action on a petition for reconsideration under the Clean Air Act within 150 days of receipt. 

Section 337, Conforming Amendments: Provides for conforming 

amendments to Clean Air Act enforcement and administrative provisions to incorporate titles VII and VIII. 


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Section 338, Davis-Bacon Compliance: Requires that recipients of 

emission allowances or funding under this Act provide reasonable 

assurances that all laborers and mechanics employed by contractors and subcontractors on projects funded directly by or assisted 

in whole or in part by the Federal Government pursuant to this 

Act will be paid at least prevailing wages as determined by the 

Secretary of Labor in accordance with what is commonly known as 

the Davis-Bacon Act (subchapter IV of chapter 31 of title 40, 

United States Code). The provisions would not apply, however, to 

retrofitting of any residential building or of specified nonresidential 

buildings. 

SUBTITLE D—CARBON MARKET ASSURANCE

Section 341, Carbon Market Assurance: Amends the Federal 

Power Act to provide for strict oversight and regulation of the new 

markets for emission allowances, offset credits, and Federal renewable electricity credits (RECs). Ensures market transparency and 

liquidity and allows trading in allowance, offset credit, and REC futures so that regulated entities can protect themselves against future cost increases and obtain the allowances or credits they need 

for compliance at a fair price. The Federal Energy Regulatory Commission is charged with regulating the cash market in allowances, 

offsets, and RECs. The President is empowered to delegate regulatory responsibility for the markets in derivatives if these instruments to an appropriate agency, based on the advice of an interagency working group. Protects market participants from speculation and market manipulation, by including default position limits 

of 10 percent on allowance, offset credit and REC derivatives and 

a default ban on over-the-counter trading of such derivatives, and 

other regulatory requirements for both the cash and derivatives 

markets. 

SUBTITLE E—ADDITIONAL MARKET ASSURANCE

Sections 351 through 358: Amends the Commodity Exchange Act 

to provide greater oversight of energy commodity derivatives and 

credit default swaps. Establishes default Commodity Futures Trading Commission regulatory authority over and regulations of allowance derivative markets. 

Section 359, Cease-and-desist authority: Amends the Natural Gas 

Act and Natural Gas Policy Act to grant the Federal Energy Regulatory Commission cease-and-desist authority to prevent violations 

of these Acts. 

TITLE IV—TRANSITIONING TO A CLEAN ENERGY ECONOMY

SUBTITLE A—ENSURING REAL REDUCTIONS IN INDUSTRIAL EMISSIONS

Section 401, Ensuring Real Reductions in Industrial Emissions: 

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

Part F—Ensuring Real Reductions in Industrial Emissions 

Section 761, Purposes: Outlines the purposes of Subtitle A and 

the additional purposes of Part 1 of Subtitle A. The purposes of 


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Subtitle A include: promoting a strong global effort to significantly 

reduce greenhouse gas emissions and preventing an increase in 

greenhouse gas emissions in foreign countries as a result of compliance costs incurred under title VII of the Clean Air Act, as added 

by ACES of 2009. The additional purposes of Part 1 include: compensating eligible domestic industrial sectors and subsectors for 

costs incurred under Title VII; limiting such compensation to 

amounts that meet the goals of the program; and rewarding innovation and facility-level investments in efficiency upgrades and performance improvements. 

Section 762, International Negotiations: Finds that the purposes 

of this subtitle can be most effectively achieved through international agreements and states that it is the policy of the United 

States to work proactively under the UNFCCC and in other forums 

to establish binding agreements committing all major-emitting 

countries to contribute equitably to the reduction of global greenhouse gas emissions. 

Section 763, Definitions: Provides relevant definitions. 

Subpart 1—Emission Allowance Rebate Program 

Section 764, 765, Eligible Industrial Sectors, Distribution of 

Emission Allowance Rebates: Establishes a program that rebates 

allowances to eligible industrial sectors and subsectors in an 

amount intended to compensate entities in those sectors for the 

costs they incur as a result of complying with the pollution limit 

established by Title VII. 

Instructs the EPA Administrator to annually distribute rebates 

to the owners and operators of entities in eligible industrial sectors. 

The Administrator is required to determine which facilities should 

be eligible for rebates through a rule based on an assessment of 

economic factors, including (1) the energy or greenhouse gas intensity in a sector and (2) the trade intensity in such sectors. Sectors 

meeting the listed criteria for both factors would be deemed eligible 

to receive rebates. 

Subsection (b)(3)(A) is designed to address an anomaly that 

arises when an industrial subsector meets the eligibility criteria of 

paragraph (2)(A), but its 6-digit NAICS code fails to meet the eligibility criteria. The result is that an otherwise eligible subsector 

does not presumptively qualify to receive emission allowance rebates. For example, the industrial subsector that manufactures ceramic substrates for mobile source emissions control equipment 

may fall within a NAICS code that includes manufacturers of a 

wide variety of products, and the entire 6-digit NAICS code may 

not presumptively be eligible for emission allowance rebates, even 

though the specific industrial subsector would, if it was classified 

in its own NAICS code, presumptively qualify for rebates. Recognizing this anomaly, the Committee included Subsection (b)(3)(A) 

to give firms in such subsectors an opportunity to petition the Administrator for relief based upon evidence demonstrating that the 

industrial subsector meets the criteria of paragraph (2)(A) to be eligible to receive emission allowance rebates. 

Rebates are distributed to eligible facilities on a product output 

basis, with compensation provided for both direct and indirect compliance costs. For direct compliance costs, allowance distribution is 

calculated by multiplying a facility’s product output by the sector 


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average tonnage of greenhouse gas emissions per unit of product 

output. For indirect costs passed on by electric utilities, allowance 

distribution is calculated by multiplying a covered or uncovered facility’s product output (1) by the ‘‘emissions intensity’’ of each facility’s electric power supplier and (2) by the sector average electricity 

use per unit of product output. 

Subpart 2—International Reserve Allowance Program 

Section 766, International Reserve Allowance Program: Establishes an international reserve allowance program, which may be 

implemented by the President beginning in 2025 pursuant to a determination under Part 3. 

Subpart 3—Presidential Determination 

Section 767, Presidential Reports and Determinations: Requires 

the President to submit a report to Congress no later than January 

1, 2018, regarding the effectiveness of the distribution of emission 

allowance rebates under Part 1 in mitigating the risk of increased 

greenhouse gas emissions in foreign countries resulting from compliance costs incurred under title VII. 

Requires the President to make a determination, no later than 

June 30, 2022, and every four years thereafter, for each sector eligible for rebates under Part 1, of whether more than 70 percent of 

global output of that sector is produced in countries that meet at 

least one of the following criteria: (1) party to an international treaty to which the U.S. is a party that includes a nationally enforceable emissions reduction commitment that is at least as stringent 

as that of the U.S.; (2) party to an international sectoral agreement 

for that sector to which the U.S. is a party; (3) energy or greenhouse gas intensity for that sector that is equal or less than that 

of the U.S.; or (4) implemented emissions reduction policies that together impose a cost on that sector that is at least 60 percent of 

the cost of complying with Title VII for that sector in the United 

States. 

If the President determines that less than 70 percent of global 

output of a sector is produced in countries that meet one or more 

of the above criteria, then the President shall continue emission allowance rebate program under Part 1 or implement the International Reserve Allowance Program under Part 2 or a combination of the two for that sector. In the absence of such a determination, the emission allowance rebates for entities in the sector will 

decline by 10 percent per year. 

SUBTITLE B—GREEN JOBS AND WORKER TRANSITION

Part 1—Green Jobs 

Section 421, Clean Energy Curriculum Development Grants: 

Amends the Carl. D. Perkins Career and Technical Education Act 

of 2006 to authorize the Secretary of Education to award grants to 

universities and colleges to develop programs of study that prepare 

students for careers in renewable energy, energy efficiency, and 

other forms of global warming mitigation. These grants are peer reviewed by experts with relevant experience in the areas being considered for funding. 


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Section 422, Increased Funding for Energy Worker Training Program: Increases the authorization for the Green Jobs Act, authorized in the Energy Independence and Security Act, from $125 million to $150 million. 

Part 2—Climate Change Worker Adjustment Assistance 

Section 425–427, Petitions, Eligibility Requirements, and Determinations; Program Benefits; General Provisions: Establishes a program pursuant to which any worker displaced as a result of the 

Title VII of the Clean Air Act would be entitled to 156 weeks of 

income supplement, 80 percent of their monthly health care premium, up to $1,500 for job search assistance, up to $1,500 for moving assistance, and additional employment services for skills assessment, job counseling, training, and other services. Payments 

under the program cannot exceed the proceeds from the auction of 

allowances set aside for this purpose. 

SUBTITLE C—CONSUMER ASSISTANCE

Section 431, Energy Tax Credit: In the event of any reduced purchasing power as a result of Title VII of the Clean Air Act, provides 

tax credits to the lowest-income households to compensate for such 

losses. 

Section 432, Energy Refund Program for Low-Income Consumers: 

Directs the EPA Administrator to administer an ‘‘Energy Refund 

Program’’ to provide monthly cash energy refunds to low-income individuals to compensate for any reduced purchasing power resulting from Title VII of this Act. Provides that energy refunds shall 

not be considered taxable income. 

The cost of this subtitle—including both the energy refund program and the refundable tax credit—are offset by the set aside of 

the proceeds from the auction sale of 15 percent of the emission allowances. The proceeds from these allowances are deposited into 

the U.S. Treasury. The amount of assistance provided is not, however, limited by the auction proceeds deposited into the Treasury. 

SUBTITLE D—EXPORTING CLEAN TECHNOLOGY

Sections 441–443, Findings and Purposes, Definitions, Governance: States that the purpose of this subtitle is to provide U.S. resources to encourage widespread deployment of clean technologies 

to developing countries. Establishes a Clean Technology Account 

administered by the State Department in consultation with an 

interagency group. The Account will supplement and not supplant 

other federal funding. 

Section 444, Determination of Eligible Countries: Generally, only 

developing countries that have ratified an international treaty or 

agreement or have undertaken nationally appropriate mitigation 

activities achieving substantial greenhouse gas reductions are eligible for bilateral assistance. Least developed countries may use assistance to build capacity toward meeting eligibility criteria. 

Sections 445, Qualifying Activities: Eligible projects must achieve 

substantial greenhouse gas reductions that are substantial, measurable, reportable, and verifiable. Eligible activities include deployment of carbon capture and storage, renewable electricity, efficiency projects, deployment of low-emissions technology, transporVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00423 Fmt 6659 Sfmt 6602 E:\HR\OC\HR137.XXX HR137

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tation reductions, black carbon reductions, and capacity building 

activities. 

Section 446, Assistance: The Secretary of State is authorized to 

provide assistance through the distribution of allowances bilaterally, through an international fund, or through a multilateral institution pursuant to the UNFCCC. Preference is given to projects 

that promise to achieve large-scale greenhouse gas reductions, may 

catalyze widespread deployment of clean technology, build institutional capacity, and leverage private resources. To the extent practicable, assistance should reinforce other foreign policy goals. 

SUBTITLE E—ADAPTING TO CLIMATE CHANGE

Part 1—Domestic Adaptation 

Subpart A—National Climate Change Adaptation Program 

Section 451, National Climate Change Adaptation Program. Establishes a climate change adaptation program within the U.S. 

Global Change Research Program. 

Section 452, Climate Services. Establishes a National Climate 

Service within NOAA to develop climate information, data, forecasts, and warnings at national and regional scales and to distribute information on climate impacts to state and local decisionmakers. 

Section 453, State Programs to Build Resilience to Climate 

Change Impacts: Distributes emission allowances to states for implementation of adaptation projects, programs, or measures to 

build resilience to the impacts of climate change, contingent on the 

completion of an approved State Adaptation Plan. Eligible projects 

include, but are not limited to, those designed to respond to extreme weather events such as flooding or hurricanes, changes in 

water availability, heat waves, sea level rise, ecosystem disruption, 

and air pollution. 

Subpart B—Public Health and Climate Change 

Sections 461. Sense of Congress on Public Health and Climate 

Change: States that it is the sense of Congress that the federal government should take all means and measures to prepare for and 

respond to the public health impacts of climate change. 

Section 462, Relationship to Other Laws: Clarifies that nothing in 

the subpart limits authorities or responsibilities conferred by other 

law. 

Section 463. National Strategic Action Plan: Requires the Secretary of Health and Human Services to prepare a strategic plan 

to assist health professionals in preparing for and responding to 

the impacts of climate change on public health with disease surveillance, research, communications, education, and training programs. Authorizes the Secretary to implement these programs 

using authorities under this subpart and other federal laws. 

Sections 464–465, Advisory Board, Reports: Establishes a science 

advisory board to advise the Secretary on science related to the 

health effects of climate change. Requires a needs assessment for 

health effects of climate change and periodic reports on scientific 

developments and recommendations for updating the national 

strategy. 


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Sections 466–467. Definitions, Climate Change Health Protection 

and Promotion Fund: Establishes a fund in the Treasury for carrying out this subpart. Funding will be distributed by HHS but 

may be made available to other agencies and state and local governments. Funding will supplement, not replace other public health 

funding. 

Subpart C—Natural Resource Adaptation 

Section 471–475, Purposes, Policy, Definitions, CEQ, Resources 

Adaptation Panel: States that it is the policy of the federal government to use all practicable means and measures to assist natural 

resources to adapt to climate change. Establishes a Natural Resources Climate Change Adaptation Panel, chaired by the White 

House Council on Environmental Quality, as a forum for interagency coordination on natural resources adaptation. 

Section 476, Natural Resources Climate Change Adaptation 

Strategy: Requires the Panel to develop a strategy for making natural resources more resilient to the impacts of climate change and 

ocean acidification. The strategy must assess likely impacts to natural resources, strategies for helping wildlife adapt, and specific actions that federal agencies should take. 

Section 477, Natural Resources Adaptation Science and Information: Establishes a process through NOAA and the U.S. Geological 

Survey National Global Warming and Wildlife Science Center to 

provide technical assistance, conduct research, and furnish decision 

tools, monitoring, and strategies for adaptation. Requires a survey 

of resources that are likely to be adversely affected and the establishment of a Science Advisory Board to advise the science program 

and recommend research priorities. 

Section 478, Federal Natural Resource Agency Adaptation Plans: 

Requires federal agencies to develop natural resource adaptation 

plans, consistent with the National Strategy, including prioritized 

goals and a schedule for implementation of adaptation programs 

within their respective jurisdictions. 

Section 479, State Natural Resources Adaptation Plans: Requires 

states to develop Natural Resources Adaptation Plans as a condition for receiving funds under the programs in this subtitle. 

Section 480, Natural Resources Climate Change Adaptation 

Fund: Establishes a Natural Resources Climate Change Adaptation 

Fund. Allowances devoted to Natural Resources Adaptation are distributed to the States—84.4 percent to State wildlife agencies and 

15.6 percent to State coastal agencies. Funds placed in the Natural 

Resources Climate Change Adaptation Fund are distributed to Federal agencies: 27.6 percent to the Department of the Interior (DOI) 

for endangered species, bird, and Fish and Wildlife Service programs, wildlife refuges, and the Bureau of Reclamation; 8.1 percent 

to DOI for cooperative grant programs; 4.9 percent to DOI for tribal 

programs; 19.5 percent to the Land and Water Conservation Fund 

(1⁄6 to DOI for competitive grants, 1⁄3 for land acquisition under § 

1A7 of the Land and Water Conservation Fund Act, 1⁄3 to the Department of Agriculture for land acquisition, 1⁄6 to USDA for the 

Forestry Assistance Act); 5 percent to USDA for the Forest Service; 

12.2 percent to EPA for freshwater ecosystems; 8.1 percent to the 

Army Corps of Engineers for freshwater ecosystems; and 11.5 percent to NOAA for coastal and marine ecosystems. All funds authorVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00425 Fmt 6659 Sfmt 6602 E:\HR\OC\HR137.XXX HR137

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ized must be used for adaptation activities, consistent with federal 

plans. 

Section 481, National Wildlife Habitat and Corridors Information 

Program: Establishes a program in the Department of the Interior 

to support States and tribes in the development of a GIS database 

of fish and wildlife habitat corridors, and to facilitate the use of 

database tools in wildlife management programs. 

Section 482, Additional Provisions Regarding Indian Tribes: 

Clarifies that nothing in this subpart amends federal trust responsibilities to tribes, exempts information on Indian tribe sacred sites 

or cultural activities from FOIA, and clarifies that the Department 

of the Interior may apply the provisions of the Indian Self-Determination and Education Assistance Act as appropriate. 

Part 2—International Climate Change Adaptation Program 

Sections 491–493, Findings and Purposes, Definitions, International Climate Change Adaptation Program: Establishes an 

International Climate Change Adaptation Program within USAID 

to provide U.S. assistance to the most vulnerable developing countries for adaptation to climate change. Resources allocated to this 

program will supplement and not replace other international adaptation assistance. 

Section 494, Distribution of Allowances: The Administrator of 

USAID shall distribute allowances bilaterally and through multilateral funds or institutions pursuant to the UNFCCC. Multilateral 

institutions must receive between 40 and 60 percent of allowances; 

multilateral fund eligibility is contingent on developing world participation, transparency requirements, and community engagement. 

Sections 495, Bilateral Assistance. The Administrator of USAID 

shall distribute allowances through public or private organizations 

to provide assistance to the most vulnerable developing countries 

for adaptation efforts. The Administrator must prioritize assistance 

based on vulnerability to climate change. The bilateral assistance 

program must ensure community engagement and consultation, 

and will seek to align broader U.S. foreign policy goals with its assistance. The program may use its assistance to support projects, 

policies, or programs, or to build program capacity in developing 

countries. 

EXPLANATION OF AMENDMENTS

During full Committee consideration of H.R. 2454, there were 94 

amendments offered and 36 of those amendments were adopted. An 

amendment in the nature of a substitute offered by Mr. Waxman 

and Mr. Markey served as the markup vehicle for consideration of 

H.R. 2454. The amendments offered were to the Waxman-Markey 

substitute amendment, which was adopted by a voice vote, amended. 

The following is a brief explanation of each of the amendments 

adopted by the Committee to H.R. 2454: 

Tuesday, May 19, 2009. The Committee approved the following 

11 amendments during consideration of H.R. 2454: 

Amendment offered by Rep. Dingell: Agreed to by a recorded 

vote, 51–6. This amendment establishes a self-sustaining Clean Energy Deployment Administration within the Department of Energy 

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ergy technologies. The Clean Energy Deployment Administration 

would partner with and support private capital markets to promote 

access to affordable financing for a range of clean energy technologies that might otherwise be unable to secure financing. The 

amendment ensures support for a variety of next generation technologies by limiting to 30 percent the amount of financial assistance provided to any one technology. It also includes reforms to the 

loan guarantee program established by Title 17 of the Energy Policy Act of 2005. 

Amendment offered by Rep. Sutton: Agreed to by a recorded vote, 

50–4, 1 present. This amendment authorizes a new ‘‘Cash for 

Clunkers’’ program. Under this program, consumers may trade in 

their old, gas-guzzling vehicles and receive vouchers worth up to 

$4,500 to help pay for new, more fuel efficient cars and trucks. The 

program is authorized for $4 billion for one year, providing for approximately one million new car or truck purchases. 

New passenger cars which achieve at least 22 mpg are eligible 

for a $3,500 voucher if the performance of the new car is at least 

4 mpg higher than the old vehicle and a $4,500 voucher if the performance of the new car is at least 10 mpg higher than the old vehicle. Light duty trucks which achieve at least 18 mpg are eligible 

for a $3,500 voucher if the performance of the new truck is at least 

2 mpg higher than the old vehicle and a $4,500 voucher if the performance of the new truck is at least 5 mpg higher than the old 

vehicle. Large light duty trucks which achieve at least 15 mpg are 

eligible for a $3,500 voucher if the performance of the new truck 

is at least 1 mpg higher than the old vehicle and a $4,500 voucher 

if the performance of the new truck is at least 2 mpg higher than 

the old vehicle. Consumers can also trade in a pre-2002 work truck 

(defined as a pick-up truck or cargo van weighing from 8,500– 

10,000 pounds) and receive a voucher worth $3,500 for a new work 

truck in the same or smaller weight class. Consumers can also 

‘‘trade down,’’ receiving a $3,500 voucher for trading in an older 

work truck and purchasing a smaller light-duty truck weighing 

from 6,000–8,500 pounds. Work truck purchases are capped such 

that the total funds used to purchase work trucks cannot exceed 

7.5 percent of all program funds. The section also includes important consumer protections and protections against program fraud. 

Amendment offered by Rep. Eshoo: Agreed to by a voice vote. 

This amendment authorizes the Secretary of Energy to provide 

grants to nonprofit organizations that conduct competitive programs to identify and support start-up businesses proposing products or services in areas of energy efficiency, renewable energy, air 

quality, water quality and conservation, transportation, smart grid, 

green building, and waste management. 

Amendment offered by Rep. Baldwin: Agreed to by a recorded 

vote, 30–19. This amendment requires the Secretary of Energy to 

create building assessment centers at institutions of higher education to identify opportunities to optimize the energy and environmental performance of buildings. The centers would also promote 

emerging technologies and research and development to improve 

buildings’ energy and environmental performance. Additionally, the 

centers would train engineers, architects, and building technicians 

in energy efficient building design and operation. 


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This amendment also provides for the establishment of not more 

than 10 regional centers for energy and environmental knowledge 

and outreach (CEEKO) to coordinate various energy-related research centers. Operating in coordination with each CEEKO would 

be one or more industrial research and assessment center, building 

assessment center, and clean energy application center located in 

that CEEKO’s region. Institutions of higher education would compete to house such centers and would operate internship programs 

to train students in energy efficiency with Federal funding supporting up to 50 percent of the costs. 

Amendment offered by Rep. Christensen: Agreed to by a voice 

vote. 

This amendment would amend the diesel emission reduction 

grant program established by Subtitle G of title VII of the Energy 

Policy Act of 2005 (42 U.S.C. 16131 et seq.) by adding American 

Samoa, Guam, the Commonwealth of the Northern Mariana Islands, Puerto Rico, and the Virgin Islands to the list of States eligible to receive grants, and by adjusting the grant distribution formula accordingly. 

Amendment offered by Rep. Space: Agreed to by a voice vote. 

This amendment modifies the eligibility criteria that owners or operators of certain electric generating projects must meet in order 

to receive allowances under section 786 (commercial deployment of 

carbon capture and sequestration technologies). The amendment 

establishes the conditions under which projects that retrofit carbon 

capture and sequestration (CCS) equipment onto a portion of a 

large, existing power plant’s flue gas stream would be eligible to receive allowances. It is likely that at least some existing electric 

generating units would be unable, for technical reasons, to retrofit 

CCS technologies such that the entire flue gas stream of the electric generating unit is treated by those technologies. Early retrofit 

applications are likely only to treat a portion of a power plant’s flue 

gas stream, rather than all of it. Under the amended language, retrofit projects that apply CCS technology to the flue gas of at least 

200 megawatts of the plant’s capacity would be eligible (though retrofits projects that treat the full stream would still qualify under 

786(b)(1)(A)(i)). Such projects would need to measure emission reductions only for the relevant portion of the flue gas, not for 100 

percent of the plant’s flue gas. The amendment limits the eligibility 

of retrofit projects to receive allowances under subsections 

(b)(1)(A)(ii) and ((b)(1)(A)(iv)(II) to the first 1 gigawatt of treated 

flue gas (that is, the retrofit of CCS technologies to the flue gas 

generated by 1 gigawatt in cumulative generating capacity), as reported by the Administrator. 

En Bloc Amendment offered by Rep. Baldwin: Rep. Baldwin offered en bloc an amendment offered by herself and Rep. Rush. The 

Baldwin en bloc amendment was considered and agreed to by voice 

vote. 

1. Amendment offered by Rep. Baldwin: This amendment requires Federal Energy Regulatory Commission regulations implementing the Combined Efficiency and Renewable Electricity Standard to include procedures for counting electricity savings achieved 

by solar water heating and solar light pipe technology. 

2. Amendment offered by Rep. Rush: This amendment makes two 

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sion allowances distributed to States to support energy efficiency 

and renewable energy programs. First, the amendment makes lowincome community energy efficiency programs that are consistent 

with the Department of Energy grant program established under 

section 264 of the Act eligible for receipt of support under section 

132. Second, it requires that each State use at least 1 percent of 

the emission allowances that it receives under section 132 to support such programs. 

En Bloc Amendment offered by Rep. Baldwin: Rep. Baldwin offered en bloc an amendment offered by Reps. Inslee and 

Schakowsky. The Inslee and Schakowsky amendments were agreed 

to by a recorded vote, 36–20. 

3. Amendment offered by Rep. Inslee: This amendment requires 

the Secretary of Energy to establish a National Bioenergy Partnership to support the institutional and physical infrastructure necessary to promote the deployment of sustainable biomass fuels and 

bioenergy technologies. 

4. Amendment offered by Rep. Schakowsky: This amendment establishes an Office of Consumer Advocacy at the Federal Energy 

Regulatory Commission to identify and defend the consumer interest in proceedings before the Commission. The office would be 

headed by a Presidentially-appointed Director, and would represent 

energy customers through investigations of rates, in complaints, 

and on appeal of Commission decisions concerning such matters. 

Amendment offered by Rep. Castor: Agreed to by a recorded vote, 

32–18. This amendment provides that, notwithstanding any provision in the Public Utility and Regulatory Policies Act of 1978 

(PURPA), any State may establish rates to be paid by state-regulated utilities intended to provide incentives for development of renewable energy. In the past, some have interpreted PURPA to bar 

such incentive rates to the extent they exceed the ‘‘avoided cost’’ of 

power a utility could generate or procure from any other source. 

Wednesday, May 20, 2009. The Committee approved the following 16 amendments during consideration of H.R. 2454: 

Amendment offered by Rep. Green: Agreed to by a voice vote. 

This amendment to section 786(b)(1)(B)(ii) changes the applicable 

point of application for eligible industrial projects under section 786 

(commercial deployment of carbon capture and sequestration technologies). The original text referred to a ‘‘50 percent reduction in 

emissions of the carbon dioxide produced by the source’’; the 

amendment strikes the word ‘‘source’’ and replaces it with the term 

‘‘emission point.’’ This modification reflects the recognition that an 

industrial facility may have many emission points, as opposed to 

one large emission source, such as the flue gas stack of a power 

plant. Under the amended language, a single emission point at an 

industrial facility—for example, a particular emission unit within 

a refinery, rather than the refinery as a whole—would be the relevant point against which to measure emission limits for an industrial source project under section 786. 

Amendment offered by Rep. Shadegg: Modified by unanimous 

consent, agreed to as modified by a voice vote. This amendment requires the EPA Administrator, in consultation with the Department of State and the United States Trade Representative, to annually prepare a report to Congress on whether China and India 

have adopted greenhouse gas emissions standards at least as strict 


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as the standards required under this Act. In the case of a determination that China and India have not adopted such standards, 

the Administrator is to notify the media and Congress of the determination. 

En Bloc Amendment offered by Rep. Matsui: Rep. Matsui offered 

en bloc an amendment offered by Reps. Baldwin and Eshoo. The 

amendments were agreed to by voice vote. 

1. Amendment offered by Rep. Baldwin: This amendment provides for the Secretary of Energy to conduct an assessment of the 

stock and usage of electric motors and motor-driven equipment 

from an energy efficiency perspective and to identify opportunities 

for upgrading such motors to improve energy efficiency. The Secretary is then instructed to establish a national program targeted 

at motor end-users to make them aware of the potential energy efficiency gains that could be realized by using more efficient motors 

and motor control equipment. 

2. Amendment offered by Rep. Eshoo: This amendment requires 

the Director of the Office of Management and Budget to collaborate 

with each Federal agency to create an implementation strategy for 

the purchase and use of energy efficient information and communication technologies and practices, establishing performance goals 

for each agency within 6 months of enactment. Such technologies 

and practices include advanced metering, efficient data center 

strategies, updated applications, building systems, and telework. 

En Bloc Amendment offered by Rep. Matsui: Rep. Matsui offered 

en bloc an amendment offered by herself and Reps. Baldwin and 

Welch. The amendments were agreed to by voice vote. 

3. Amendment offered by Rep. Baldwin: This amendment establishes a rebate program for replacement of low efficiency industrialscale electric motors with high-efficiency motors. The rebate 

amount is $25 per unit of nameplate horsepower of the new motor 

to the purchaser of that motor, and $5 to the distributor of that 

motor. 

4. Amendment offered by Rep. Matsui: This amendment authorizes a grant program through the Department of Energy to provide 

technical and financial assistance to retail power providers that 

carry out targeted tree planting programs, which reduce energy use 

and demand peaks in residential and small office settings. 

5. Amendment offered by Rep. Welch: This amendment declares 

a national energy efficiency goal of improving overall energy productivity of the United States by 2.5 percent per year beginning in 

2012 and continuing through 2030. It instructs the Secretary of Energy, the Administrator of the Environmental Protection Agency, 

and other relevant federal agencies, with public input, to collaborate on a strategic plan to achieve such a national goal, detailing 

the regulatory, funding, and policy priorities required to do so, and 

to update that plan biennially. 

Amendment offered by Rep. Matheson: Agreed to by a voice vote. 

This amendment modifies the violation and enforcement provisions 

of the building code provisions in section 201 of the Act. The 

amendment directs the Secretary of Energy to conduct a rulemaking to determine appropriate violations and penalties within 

three years of enactment, thus allowing for stakeholder input. 

En Bloc Amendment offered by Rep. McNerney: Rep. McNerney 

offered en bloc an amendment offered by Rep. Christensen. The 


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Christensen amendment was considered was agreed to by voice 

vote. 

1. Amendment offered by Rep. Christensen: This amendment requires the Secretary of Energy to establish a team of technical, policy, and financial experts to address the energy needs of the islands 

that make up U.S. territories or are otherwise affiliated with the 

U.S. The team will assess the means of reducing these islands’ reliance on imported fossil energy, increasing the use of indigenous energy, and increasing the efficiency of energy use on the islands. The 

team will also develop an energy action plan for each island based 

on that assessment. 

En Bloc Amendment offered by Rep. McNerney: Rep. McNerney 

offered en bloc an amendment offered by himself and Rep. Baldwin. 

The McNerney and Baldwin amendments were agreed to by a recorded vote, 34–21. 

2. Amendment offered by Rep. McNerney: This amendment authorizes the EPA’s WaterSense program, a voluntary labeling program that labels water-efficient high-performance products and 

services. This will provide the same type of labeling for water efficient products and services as is already done for energy efficient 

products under the existing Energy Star program. It also directs 

federal agencies to make cost-effective water-efficient procurement 

decisions whenever possible. Finally, it authorizes grants to state 

governments that establish programs that offer financial incentives 

to consumers who purchase and install water-efficient products and 

services such as those labeled by WaterSense. 

3. Amendment offered by Rep. Baldwin: This amendment would 

create a new product carbon disclosure program at EPA. Not later 

than 18 months after the date of enactment, EPA would be required to issue a report to Congress regarding whether a national 

product carbon disclosure program and labeling program would be 

effective in reducing greenhouse gas emissions and other related 

matters. No later than 36 months after the date of enactment, EPA 

would be required to establish a national product carbon disclosure 

program, participation in which shall be voluntary. The national 

product carbon disclosure program may include a product carbon 

labeling program. 

Amendment offered by Rep. Sullivan: Agreed to by a voice vote. 

This amendment adds use of alternative fuel transit buses to the 

list of strategies to be considered when planning to reduce greenhouse gas emissions from the transportation sector, pursuant to 

section 222. 

Amendment offered by Rep. Welch: Agreed to by a division vote 

of, 25–4. This amendment would create and authorize funds for an 

EPA program to replace wood stoves or pellet stoves that do not 

meet specified EPA standards of performance for new residential 

wood heaters with ones that do meet those standards. The amendment would also allow EPA to continue to accept wood stove or pellet stove replacement projects as Supplemental Environmental 

Projects provided that certain conditions are met. 

Amendment offered by Rep. Eshoo: Agreed to by a division vote 

of, 26–10. This amendment adds a new subsection 721(h) that requires the Administrator to conduct, by no later than March 31, 

2014, an assessment of how non-HFC (hydrofluorocarbon) 

fluorinated gases are regulated under Title III. H.R. 2454 regulates 


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non-HFC fluorinated gases in either of two ways. Emissions of nitrogen trifluoride (NF3) are regulated at the point of emission (or 

‘‘downstream’’), meaning the entity at which NF3 emissions occur 

is the same entity with compliance obligations for those emissions 

under section 722(b)(4). Other non-HFC fluorinated gases are regulated at the point of manufacture or importation (‘‘upstream’’), 

meaning the entity that produces or imports the gas is the entity 

with compliance obligations under section 722(b)(3). Section 721(h) 

directs the Administrator to assess the regulation of non-HFC 

fluorinated gases (other than NF3, which is addressed separately) 

to determine whether regulation of such gases should be moved 

downstream to the point of emission. The Administrator is required 

to examine a number of factors, including the environmental effectiveness, cost effectiveness, and administrative feasibility of changing the point of regulation. The amendment gives the Administrator discretion to change the point of regulation for some or all 

non-HFC, non-NF3 fluorinated gases by rule if, based on the assessment, the Administrator determines that such gases can be 

best regulated downstream. This would be accomplished by changing the definition of covered entity under section 700(13)(C) with 

respect to such fluorinated gases and establishing other requirements that may be necessary to ensure compliance by relevant entities. Section 721(h) does not give the Administrator authority to 

change the point of regulation with respect to emissions of NF3. 

Amendment offered by Rep. Stupak: Agreed to by a recorded 

vote, 33–20. This amendment grants cease-and-desist authority to 

the Federal Energy Regulatory Commission under the Federal 

Power Act, Natural Gas Act, and Natural Gas Policy Act to prevent 

violations of these Acts. 

Amendment offered by Rep. Hill: Agreed to by a voice vote. This 

amendment modifies new Clean Air Act section 711(d) regarding 

the procedure the Administrator would be required to follow in deciding whether to list a substance as a greenhouse gas. As amended, prior to making a determination regarding the listing of a substance as a greenhouse gas, section 711(d) would require the Administrator to notify the Science Advisory Board (SAB), consider 

written recommendations from the SAB, and consult with the SAB. 

The SAB would be required to formulate recommendations regarding such determination, subject to a peer review process, and submit those recommendations to the Administrator. 

Thursday, May 21, 2009. The Committee approved the following 

9 amendments during consideration of H.R. 2454: 

Amendment offered by Rep. Space: Agreed to by a voice vote. 

This amendment modifies new Clean Air Act sections 783 and 784 

regarding the allocation of allowances to electricity and natural gas 

local distribution companies, clarifying and strengthening provisions to ensure that the allowances are used for the benefit of retail 

ratepayers. Changes to sections 783(b)(1) and 784(b)(1) clarify that 

allowances are distributed to local distribution companies ‘‘for the 

benefit of retail ratepayers.’’ Changes to sections 783(b)(7) and 

784(b)(7) require that the Administrator’s audits of local distribution companies’ use of allowances ensure that the allowances have 

been used exclusively for the benefit of retail ratepayers. 

Amendment offered by Rep. Butterfield: Agreed to by a voice 

vote. This amendment modifies the provisions governing emission 


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standards for heavy-duty motor vehicles and engines and non-road 

vehicles and engines in section 221. With regard to heavy-duty vehicles and engines, the amendment provides adequate stability and 

lead-time for implementation of the standards, ensuring that 

standards apply for a period no less than 3 model years beginning 

no earlier than the model year commencing 4 years after such regulations are promulgated. The amendment also included provisions 

to ensure that heavy-duty vehicles and engines are not doubly regulated. With regard to nonroad vehicles and engines, the amendment directs the Administrator to focus initially on classes or categories of new nonroad vehicles or engines that both contribute significantly to the total emissions of greenhouse gases from nonroad 

engines and vehicles and provide the greatest potential for significant and cost-effective reductions in emissions of greenhouse gases. 

Amendment offered by Rep. Braley: Agreed to by voice vote. This 

amendment adds renewable fuel pipelines to the list of projects and 

technologies available for loan guarantees under Title XXII of the 

Energy Policy Act of 2005. 

Amendment offered by Rep. Weiner: Agreed to by voice vote, as 

amended. This amendment directs the Department of Energy and 

the Environmental Protection Agency in carrying out the Energy 

Star program to include consideration of prototype products, consider ways of providing more detailed comparative information 

among Energy Star products, review product qualifications on a 

regular basis, update qualifications as necessary, and provide proof 

of performance through testing of products purchased in the market. 

Amendment offered by Rep. Buyer: Agreed to by voice vote. This 

amendment adopts a standard requiring utilities (that sell in excess of 4,000,000 megawatt hours of electricity) to interconnect 

with and to provide net metering of power deliveries to and receipts from Federal agencies that own, operate or site facilities generating renewable energy. The net metering service is to be offered 

to such Federal agencies on the basis of non-discriminatory timesensitive rates. 

Amendment offered by Rep. Sutton: Agreed to by a recorded vote, 

39–18. This amendment would require recipients of emission allowances or funding under the Act to provide reasonable assurances 

that all laborers and mechanics employed by contractors and subcontractors on projects funded directly by or assisted in whole or 

in part by the federal government pursuant to this Act will be paid 

at least prevailing wages as determined by the Secretary of Labor 

in accordance with what is commonly known as the Davis-Bacon 

Act (subchapter IV of chapter 31 of title 40, United States Code). 

The provisions would not apply, however, to retrofitting of any residential building or of specified nonresidential buildings. 

Amendment offered by Rep. Inslee: Agreed to by voice vote. This 

amendment amends Title XVII of the Energy Policy Act of 2005 to 

extend the loan guarantee authority in that Title to cover the development, construction, or integration of high-efficiency or superconductive high-voltage electricity transmission technologies. It 

also provides such loan guarantees for manufacturing plants producing such technologies. It separately authorizes the Secretary of 

Energy to make grants for up to 50 percent of the cost of the first 


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project incorporating such technologies, up to a maximum of 

$100,000,000 during Fiscal Year 2010. 

Amendment offered by Rep. Space: Agreed to by voice vote. This 

amendment modifies the criteria for determining whether emissions reductions achieved by an offset project are additional. The 

underlying text provides in part that a reduction in greenhouse gas 

emissions or a sequestration of greenhouse gases would be considered additional only if it resulted from an activity that began after 

January 1, 2009, or began after January 1, 2001, and had been registered under an approved early offset program. The amendment 

adds a second exception to the January 1, 2009, date by providing 

that with respect to activities that are readily reversible, the Administrator may set an alternative date between January 1, 2001, 

and January 1, 2009, if the Administrator determines that setting 

an alternative date may produce an environmental benefit by removing an incentive to cease and then reinitiate activities that 

began prior to January 1, 2009. 

Managers Amendment: Agreed to by voice vote. This amendment 

includes a number of changes. It changes the mechanism for distributing allowance proceeds to consumers by amending new section 789 of the Clean Air Act and directing the Secretary of the 

Treasury (rather than the President) to provide tax refunds on a 

per capita basis using funds deposited in the Climate Change Consumer Fund from the sale of allowances. 

This amendment strikes section 432(j). 

This amendment amends new section 782(m) of the Clean Air 

Act and section 480 of ACES Act by modifying the method of using 

allowance value to support Natural Resource Adaptation. Instead 

of auctioning all allowances allocated to this purpose, under the 

amendment, states will receive allowances directly for specified 

purposes. The changes in percentages reflect the division of allowance value into two components (direct allocation to states and auctioning of other allowances), but does not change the amount of 

total allowance value distributed to specific purposes under this 

section. This amendment also changes the provision in section 480 

regarding appropriations. 

This amendment amends section 453 in several ways, including: 

adding a requirement for state climate adaptation plans; adding 

section 453(d) and other provisions regarding projects to reduce 

flood events; and adding section 453(g) to state Congress’s intent 

that emission allowances distributed under subpart E of Title IV 

should be used to supplement, not replace, existing sources of funding. 

This amendment amends certain market oversight provisions 

added to the Federal Power Act by this bill. 

The amendment modifies the definition of ‘‘distributed renewable 

generation facility’’ in section 101 of the Act (the Combined Efficiency and Renewable Electricity Standard). The amendment expands the definition to include facilities that are no greater than 

4 megawatts in capacity, are placed in service after the date of enactment, and generate electricity from a renewable energy resource 

other than by means of combustion. 

This amendment modifies new section 786(e) of the Clean Air Act 

regarding limitations on allowances provided for the commercial 

deployment of carbon capture and storage technology. 


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This amendment makes technical modifications to new section 

619 of the Clean Air Act. 

This amendment makes technical modifications to new section 

764 of the Clean Air Act and adds phosphate to a provision regarding treatment of data for metals. 

This amendment makes technical corrections to new section 

782(e) regarding the allocation of allowances to trade-vulnerable industries. 

This amendment adds clarifying language to section 144(d)(1). 

This amendment modifies new section 216A(a) of the Federal 

Power Act to provide greater specificity regarding the type of higher efficiency transmission conductors that should be considered in 

the transmission planning process. 

This amendment adds a new section 794 to the Clean Air Act 

that requires the Comptroller General to prepare biannual reviews 

of the programs administered by the Federal Government that distribute emission allowances or funds from Federal auctions of allowances. 

This amendment makes minor modifications to allowance allocation formulas in section 782(f) and (p). 

This amendment adds section 205, which amends section 

453(c)(1) of the Energy Independence and Security Act of 2007, regarding energy efficiency for data center buildings. 

This amendment makes technical corrections to new section 821 

of the Clean Air Act. 

This amendment modifies new section 32920 of title 49, U.S.C., 

regarding open fuel standard for vehicles. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978 

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

(a) * * * 

(b) TABLE OF CONTENTS.— 

* * * * * * * 

TITLE VI—MISCELLANEOUS PROVISIONS 

* * * * * * * 

Sec. 610. Combined efficiency and renewable electricity standard. 

* * * * * * * 

TITLE I—RETAIL REGULATORY 

POLICIES FOR ELECTRIC UTILITIES 

* * * * * * * 


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Subtitle B—Standards For Electric 

Utilities 

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

(a) * * * 

* * * * * * * 

(d) ESTABLISHMENT.—The following Federal standards are hereby 

established: 

(1) * * * 

* * * * * * * 

(20) PLUG-IN ELECTRIC DRIVE VEHICLE INFRASTRUCTURE.— 

(A) UTILITY PLAN FOR INFRASTRUCTURE.—Each electric 

utility shall develop a plan to support the use of plug-in 

electric drive vehicles, including heavy-duty hybrid electric 

vehicles. The plan may provide for deployment of electrical 

charging stations in public or private locations, including 

street parking, parking garages, parking lots, homes, gas 

stations, and highway rest stops. Any such plan may also 

include— 

(i) battery exchange, fast charging infrastructure and 

other services; 

(ii) triggers for infrastructure deployment based upon 

market penetration of plug-in electric drive vehicles; 

and 

(iii) such other elements as the State determines necessary to support plug-in electric drive vehicles. 

Each plan under this paragraph shall provide for the deployment of the charging infrastructure or other infrastructure necessary to adequately support the use of plug-in electric drive vehicles. 

(B) SUPPORT REQUIREMENTS.—Each State regulatory authority (in the case of each electric utility for which it has 

ratemaking authority) and each utility (in the case of a 

nonregulated utility) shall— 

(i) require that charging infrastructure deployed is 

interoperable with products of all auto manufacturers 

to the extent possible; and 

(ii) consider adopting minimum requirements for deployment of electrical charging infrastructure and 

other appropriate requirements necessary to support 

the use of plug-in electric drive vehicles. 

(C) COST RECOVERY.—Each State regulatory authority (in 

the case of each electric utility for which it has ratemaking 

authority) and each utility (in the case of a nonregulated 

utility) shall consider whether, and to what extent, to allow 

cost recovery for plans and implementation of plans. 

(D) SMART GRID INTEGRATION.—The State regulatory authority (in the case of each electric utility for which it has 

ratemaking authority) and each utility (in the case of a 

nonregulated utility) shall, in accordance with regulations 

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suant to section 1305(d) of the Energy Independence and 

Security Act of 2007— 

(i) establish any appropriate protocols and standards 

for integrating plug-in electric drive vehicles into an 

electrical distribution system, including Smart Grid 

systems and devices as described in title XIII of the Energy Independence and Security Act of 2007; 

(ii) include, to the extent feasible, the ability for each 

plug-in electric drive vehicle to be identified individually and to be associated with its owner’s electric utility account, regardless of the location that the vehicle 

is plugged in, for purposes of appropriate billing for 

any electricity required to charge the vehicle’s batteries 

as well as any crediting for electricity provided to the 

electric utility from the vehicle’s batteries; and 

(iii) review the determination made in response to 

section 1252 of the Energy Policy Act of 2005 in light 

of this section, including whether time-of-use pricing 

should be employed to enable the use of plug-in electric 

drive vehicles to contribute to meeting peak-load and 

ancillary service power needs. 

SEC. 112. OBLIGATIONS TO CONSIDER AND DETERMINE. 

(a) * * * 

(b) TIME LIMITATIONS.—(1) * * * 

* * * * * * * 

(7)(A) Not later than 3 years after the date of enactment of this 

paragraph, each State regulatory authority (with respect to each 

electric utility for which it has ratemaking authority) and each nonregulated utility shall commence the consideration referred to in section 111, or set a hearing date for consideration, with respect to the 

standard established by paragraph (20) of section 111(d). 

(B) Not later than 4 years after the date of enactment of the this 

paragraph, each State regulatory authority (with respect to each 

electric utility for which it has ratemaking authority), and each 

nonregulated electric utility, shall complete the consideration, and 

shall make the determination, referred to in section 111 with respect 

to the standard established by paragraph (20) of section 111(d). 

(c) FAILURE TO COMPLY.—Each State regulatory authority (with 

respect to each electric utility for which it has ratemaking authority) and each nonregulated electric utility shall undertake the consideration, and make the determination, referred to in section 111 

with respect to each standard established by section 111(d) in the 

first rate proceeding commenced after the date three years after 

the date of enactment of this Act respecting the rates of such utility if such State regulatory authority or nonregulated electric utility has not, before such date, complied with subsection (b)(2) with 

respect to such standard. In the case of each standard established 

by paragraphs (11) through (13) of section 111(d), the reference 

contained in this subsection to the date of enactment of this Act 

shall be deemed to be a reference to the date of enactment of such 

paragraphs (11) through (13). In the case of the standard established by paragraph (14) of section 111(d), the reference contained 

in this subsection to the date of enactment of this Act shall be 

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graph (14). In the case of the standard established by paragraph 

(15), the reference contained in this subsection to the date of enactment of this Act shall be deemed to be a reference to the date of 

enactment of paragraph (15). In the case of the standards established by paragraphs (16) through (19) of section 111(d), the reference contained in this subsection to the date of enactment of this 

Act shall be deemed to be a reference to the date of enactment of 

such paragraphs. In the case of the standards established by paragraph (20) of section 111(d), the reference contained in this subsection to the date of enactment of this Act shall be deemed to be 

a reference to the date of enactment of such paragraph. 

(d) PRIOR STATE ACTIONS.—Subsections (b) and (c) of this section 

shall not apply to the standards established by paragraphs (11) 

through (13) and paragraphs (16) through ø(19)¿ (20) of section 

111(d) in the case of any electric utility in a State if, before the enactment of this subsection— 

(1) * * * 

* * * * * * * 

SEC. 113. ADOPTION OF CERTAIN STANDARDS. 

(a) * * * 

(b) ESTABLISHMENT.—The following Federal standards are hereby 

established: 

(1) * * * 

* * * * * * * 

(6) NET METERING FOR FEDERAL AGENCIES.—Each electric 

utility shall offer to arrange (either directly or through a third 

party) to make interconnection and net metering available to 

Federal Government agencies, offices, or facilities in accordance 

with the requirements of section 115(j). The standard under this 

paragraph shall apply only to electric utilities that sold over 

4,000,000 megawatt hours of electricity in the preceding year to 

the ultimate consumers thereof. In the case of a standard under 

this paragraph, a period of 1 year after the date of the enactment of this section shall be substituted for the 2-year period referred to in other provisions of this section. 

* * * * * * * 

SEC. 115. SPECIAL RULES FOR STANDARDS. 

(a) * * * 

* * * * * * * 

(j) NET METERING FOR FEDERAL AGENCIES.—(1) The standard 

under paragraph (6) of section 113(b) shall require that rates and 

charges and contract terms and conditions for the sale of electric energy to the Federal Government or agency shall be the same as the 

rates and charges and contract terms and conditions that would be 

applicable if the agency did not own or operate a qualified generation unit and use a net metering system. 

(2)(A) The standard under paragraph (6) of section 113(b) shall 

require that each electric utility shall arrange to provide to the Government office or agency that qualifies for net metering an electrical 

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tomer, using a single meter and single register, the cost of which 

shall be recovered from the customer. 

(B) In a case in which it is not practicable to provide a meter 

under subparagraph (A), the utility (either directly or through a 

third party) shall, at the expense of the utility install 1 or more of 

those electric energy meters. 

(3)(A) The standard under paragraph (6) of section 113(b) shall 

require that each electric utility shall calculate the electric energy 

consumption for the Government office or agency using a net metering system that meets the requirements of this subsection and paragraph (6) of section 113(b) and shall measure the net electricity produced or consumed during the billing period using the metering installed in accordance with this paragraph. 

(B) If the electricity supplied by the retail electric supplier exceeds 

the electricity generated by the Government office or agency during 

the billing period, the Government office or agency shall be billed 

for the net electric energy supplied by the retail electric supplier in 

accordance with normal billing practices. 

(C) If electric energy generated by the Government office or agency 

exceeds the electric energy supplied by the retail electric supplier 

during the billing period, the Government office or agency shall be 

billed for the appropriate customer charges for that billing period 

and credited for the excess electric energy generated during the billing period, with the credit appearing as a kilowatt-hour credit on 

the bill for the following billing period. 

(D) Any kilowatt-hour credits provided to the Government office 

or agency as provided in this subsection shall be applied to the Government office or agency electric energy consumption on the following billing period bill (except for a billing period that ends in 

the next calendar year). At the beginning of each calendar year, any 

unused kilowatt-hour credits remaining from the preceding year 

will carry over to the new year. 

(4) The standard under paragraph (6) of section 113(b) shall require that each electric utility shall offer a meter and retail billing 

arrangement that has time-differentiated rates. The kilowatt-hour 

credit shall be based on the ratio representing the difference in retail rates for each time-of-use rate, or the credits shall be reflected 

on the bill of the Government office or agency as a monetary credit 

reflecting retail rates at the time of generation of the electric energy 

by the customer-generator. 

(5) The standard under paragraph (6) of section 113(b) shall require that the qualified generation unit, interconnection standards, 

and net metering system used by the Government office or agency 

shall meet all applicable safety and performance and reliability 

standards established by the National Electrical Code, the Institute 

of Electrical and Electronics Engineers, Underwriters Laboratories, 

and the American National Standards Institute. 

(6) The standard under paragraph (6) of section 113(b) shall require that electric utilities shall not make additional charges, including standby charges, for equipment or services for safety or performance that are in addition to those necessary to meet the other 

standards and requirements of this subsection and paragraph (6) of 

section 113(b). 

(7) For purposes of this subsection and paragraph (6) of section 

113(b): 


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(A) The term ‘‘Government’’ means any office, facility, or 

agency of the Federal Government. 

(B) The term ‘‘customer-generator’’ means the owner or operator of a electricity generation unit. 

(C) The term ‘‘electric generation unit’’ means any renewable 

electric generation unit that is owned, operated, or sited on a 

Federal Government facility. 

(D) The term ‘‘net metering’’ means the process of— 

(i) measuring the difference between the electricity supplied to a customer-generator and the electricity generated 

by the customer-generator that is delivered to a utility at 

the same point of interconnection during an applicable billing period; and 

(ii) providing an energy credit to the customer-generator 

in the form of a kilowatt-hour credit for each kilowatt-hour 

of electricity produced by the customer-generator from an 

electric generation unit. 

* * * * * * * 

TITLE II—CERTAIN FEDERAL ENERGY 

REGULATORY COMMISSION AND DEPARTMENT OF ENERGY AUTHORITIES 

* * * * * * * 

SEC. 210. COGENERATION AND SMALL, POWER PRODUCTION. 

(a) * * * 

* * * * * * * 

(o) CLARIFICATION OF STATE AUTHORITY TO ADOPT RENEWABLE

ENERGY INCENTIVES.—Notwithstanding any other provision of this 

Act or the Federal Power Act, a State legislature or regulatory authority may set the rates for a sale of electric energy by a facility 

generating electric energy from renewable energy sources pursuant 

to a State-approved production incentive program under which the 

facility voluntarily sells electric energy. For purposes of this subsection, ‘‘State-approved production incentive program’’ means a requirement imposed pursuant to State law, or by a State regulatory 

authority acting within its authority under State law, that an electric utility purchase renewable energy (as defined in section 609 of 

this Act) at a specified rate. 

* * * * * * * 

TITLE VI—MISCELLANEOUS 

PROVISIONS 

* * * * * * * 

SEC. 610. COMBINED EFFICIENCY AND RENEWABLE ELECTRICITY 

STANDARD. 

(a) DEFINITIONS.—For purposes of this section: 

(1) CHP SAVINGS.—The term ‘‘CHP savings’’ means— 


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(A) CHP system savings from a combined heat and power 

system that commences operation after the date of enactment of this section; and 

(B) the increase in CHP system savings from, at any time 

after the date of the enactment of this section, upgrading, 

replacing, expanding, or increasing the utilization of a combined heat and power system that commenced operation on 

or before the date of enactment of this section. 

(2) CHP SYSTEM SAVINGS.—The term ‘‘CHP system savings’’ 

means the electric output, and the electricity saved due to the 

mechanical output, of a combined heat and power system, adjusted to reflect any increase in fuel consumption by that system 

as compared to the fuel that would have been required to 

produce an equivalent useful thermal energy output in a separate thermal-only system. 

(3) COMBINED HEAT AND POWER SYSTEM.—The term ‘‘combined heat and power system’’ means a system that uses the 

same energy source both for the generation of electrical or mechanical power and the production of steam or another form of 

useful thermal energy, provided that— 

(A) the system meets such requirements relating to efficiency and other operating characteristics as the Commission may promulgate by regulation; and 

(B) the net sales of electricity by the facility to customers 

not consuming the thermal output from that facility will 

not exceed 50 percent of total annual electric generation by 

the facility. 

(4) CUSTOMER FACILITY SAVINGS.—The term ‘‘customer facility savings’’ means a reduction in end-use electricity consumption (including recycled energy savings) at a facility of an enduse consumer of electricity served by a retail electric supplier, 

as compared to— 

(A) in the case of a new facility, consumption at a reference facility of average efficiency; 

(B) in the case of an existing facility, consumption at 

such facility during a base period, except as provided in 

subparagraphs (C) and (D); 

(C) in the case of new equipment that replaces existing 

equipment with remaining useful life, the projected consumption of the existing equipment for the remaining useful 

life of such equipment, and thereafter, consumption of new 

equipment of average efficiency of the same equipment type; 

and 

(D) in the case of new equipment that replaces existing 

equipment at the end of the useful life of the existing equipment, consumption by new equipment of average efficiency 

of the same equipment type. 

(5) DISTRIBUTED RENEWABLE GENERATION FACILITY.—The 

term ‘‘distributed renewable generation facility’’ means a facility 

that— 

(A) generates renewable electricity; 

(B) primarily serves 1 or more electricity consumers at or 

near the facility site; and 

(C) is no greater than— 

(i) 2 megawatts in capacity; or 


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(ii) 4 megawatts in capacity, in the case of a facility 

that is placed in service after the date of enactment of 

this section and generates electricity from a renewable 

energy resource other than by means of combustion. 

(6) ELECTRICITY SAVINGS.—The term ‘‘electricity savings’’ 

means reductions in electricity consumption, relative to business-as-usual projections, achieved through measures implemented after the date of enactment of this section, limited to— 

(A) customer facility savings of electricity, adjusted to reflect any associated increase in fuel consumption at the facility; 

(B) reductions in distribution system losses of electricity 

achieved by a retail electricity distributor, as compared to 

losses attributable to new or replacement distribution system equipment of average efficiency; 

(C) CHP savings; and 

(D) fuel cell savings. 

(7) FEDERAL LAND.—The term ‘‘Federal land’’ means land 

owned by the United States, other than land held in trust for 

an Indian or Indian tribe. 

(8) FEDERAL RENEWABLE ELECTRICITY CREDIT.—The term 

‘‘Federal renewable electricity credit’’ means a credit, representing one megawatt hour of renewable electricity, issued 

pursuant to subsection (e). 

(9) FUEL CELL.—The term ‘‘fuel cell’’ means a device that directly converts the chemical energy of a fuel and an oxidant into 

electricity by electrochemical processes occurring at separate 

electrodes in the device. 

(10) FUEL CELL SAVINGS.—The term ‘‘fuel cell savings’’ means 

the electricity saved by a fuel cell that is installed after the date 

of enactment of this section, or by upgrading a fuel cell that 

commenced operation on or before the date of enactment of this 

section, as a result of the greater efficiency with which the fuel 

cell transforms fuel into electricity as compared with sources of 

electricity delivered through the grid, provided that— 

(A) the fuel cell meets such requirements relating to efficiency and other operating characteristics as the Commission may promulgate by regulation; and 

(B) the net sales of electricity from the fuel cell to customers not consuming the thermal output from the fuel cell, 

if any, do not exceed 50 percent of the total annual electricity generation by the fuel cell. 

(11) HIGH CONSERVATION PRIORITY LAND.—The term ‘‘high 

conservation priority land’’ means land that is not Federal land 

and is— 

(A) globally or State ranked as critically imperiled or imperiled under a State Natural Heritage Program; or 

(B) old-growth or late-successional forest, as identified by 

the office of the relevant State Forester or relevant State 

agency with regulatory jurisdiction over forestry activities. 

(12) OTHER QUALIFYING ENERGY RESOURCE.—The term ‘‘other 

qualifying energy resource’’ means any of the following: 

(A) Landfill gas. 

(B) Wastewater treatment gas. 


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(C) Coal mine methane used to generate electricity at or 

near the mine mouth. 

(D) Qualified waste-to-energy. 

(13) QUALIFIED HYDROPOWER.—The term ‘‘qualified hydropower’’ means— 

(A) energy produced from increased efficiency achieved, 

or additions of capacity made, on or after January 1, 1992, 

at a hydroelectric facility that was placed in service before 

that date and does not include additional energy generated 

as a result of operational changes not directly associated 

with efficiency improvements or capacity additions; or 

(B) energy produced from generating capacity added to a 

dam on or after January 1, 1992, provided that the Commission certifies that— 

(i) the dam was placed in service before the date of 

the enactment of this section and was operated for 

flood control, navigation, or water supply purposes and 

was not producing hydroelectric power prior to the addition of such capacity; 

(ii) the hydroelectric project installed on the dam is 

licensed (or is exempt from licensing) by the Commission and is in compliance with the terms and conditions of the license or exemption, and with other applicable legal requirements for the protection of environmental quality, including applicable fish passage requirements; and 

(iii) the hydroelectric project installed on the dam is 

operated so that the water surface elevation at any 

given location and time that would have occurred in 

the absence of the hydroelectric project is maintained, 

subject to any license or exemption requirements that 

require changes in water surface elevation for the purpose of improving the environmental quality of the affected waterway. 

(14) QUALIFIED WASTE-TO-ENERGY.—The term ‘‘qualified 

waste-to-energy’’ means energy from the combustion of municipal solid waste or construction, demolition, or disaster debris, 

or from the gasification or pyrolization of such waste or debris 

and the combustion of the resulting gas at the same facility, 

provided that— 

(A) such term shall include only the energy derived from 

the non-fossil biogenic portion of such waste or debris; 

(B) the Commission determines, with the concurrence of 

the Administrator of the Environmental Protection Agency, 

that the total lifecycle greenhouse gas emissions attributable to the generation of electricity from such waste or debris are lower than those attributable to the likely alternative method of disposing of such waste or debris; and 

(C) the owner or operator of the facility generating electricity from such energy provides to the Commission, on an 

annual basis— 

(i) a certification that the facility is in compliance 

with all applicable State and Federal environmental 

permits; 


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(ii) in the case of a facility that commenced operation 

before the date of enactment of this section, a certification that the facility meets emissions standards promulgated under sections 112 or 129 of the Clean Air 

Act (42 U.S.C. 7412 or 7429) that apply as of the date 

of enactment of this section to new facilities within the 

relevant source category; and 

(iii) in the case of the combustion, pyrolization, or 

gasification of municipal solid waste, a certification 

that each local government unit from which such waste 

originates operates, participates in the operation of, 

contracts for, or otherwise provides for, recycling services for its residents. 

(15) RECYCLED ENERGY SAVINGS.—The term ‘‘recycled energy 

savings’’ means a reduction in electricity consumption that results from a modification of an industrial or commercial system 

that commenced operation before the date of enactment of this 

section, in order to recapture electrical, mechanical, or thermal 

energy that would otherwise be wasted. 

(16) RENEWABLE BIOMASS.—The term ‘‘renewable biomass’’ 

means any of the following: 

(A) Plant material, including waste material, harvested 

or collected from actively managed agricultural land that 

was in cultivation, cleared, or fallow and nonforested on 

January 1, 2009. 

(B) Plant material, including waste material, harvested 

or collected from pastureland that was nonforested on January 1, 2009. 

(C) Nonhazardous vegetative matter derived from waste, 

including separated yard waste, landscape right-of-way 

trimmings, construction and demolition debris or food 

waste (but not municipal solid waste, recyclable waste 

paper, painted, treated or pressurized wood, or wood contaminated with plastic or metals). 

(D) Animal waste or animal byproducts, including products of animal waste digesters. 

(E) Algae. 

(F) Trees, brush, slash, residues, or any other vegetative 

matter removed from within 600 feet of any building, 

campground, or route designated for evacuation by a public 

official with responsibility for emergency preparedness, or 

from within 300 feet of a paved road, electric transmission 

line, utility tower, or water supply line. 

(G) Residues from or byproducts of milled logs. 

(H) Any of the following removed from forested land that 

is not Federal and is not high conservation priority land: 

(i) Trees, brush, slash, residues, interplanted energy 

crops, or any other vegetative matter removed from an 

actively managed tree plantation established— 

(I) prior to January 1, 2009; or 

(II) on land that, as of January 1, 2009, was 

cultivated or fallow and non-forested. 

(ii) Trees, logging residue, thinnings, cull trees, pulpwood, and brush removed from naturally-regenerated 

forests or other non-plantation forests, including for the 


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purposes of hazardous fuel reduction or preventative 

treatment for reducing or containing insect or disease 

infestation. 

(iii) Logging residue, thinnings, cull trees, pulpwood, 

brush and species that are non-native and noxious, 

from stands that were planted and managed after January 1, 2009, to restore or maintain native forest types. 

(iv) Dead or severely damaged trees removed within 

5 years of fire, blowdown, or other natural disaster, 

and badly infested trees. 

(I) Materials, pre-commercial thinnings, or removed 

invasive species from National Forest System land and 

public lands (as defined in section 103 of the Federal Land 

Policy and Management Act of 1976 (43 U.S.C. 1702)), including those that are byproducts of preventive treatments 

(such as trees, wood, brush, thinnings, chips, and slash), 

that are removed as part of a federally recognized timber 

sale, or that are removed to reduce hazardous fuels, to reduce or contain disease or insect infestation, or to restore 

ecosystem health, and that are— 

(i) not from components of the National Wilderness 

Preservation System, Wilderness Study Areas, Inventoried Roadless Areas, old growth or mature forest 

stands, components of the National Landscape Conservation System, National Monuments, National Conservation Areas, Designated Primitive Areas, or Wild 

and Scenic Rivers corridors; 

(ii) harvested in environmentally sustainable quantities, as determined by the appropriate Federal land 

manager; and 

(iii) harvested in accordance with Federal and State 

law and applicable land management plans. 

(17) RENEWABLE ELECTRICITY.—The term ‘‘renewable electricity’’ means electricity generated (including by means of a 

fuel cell) from a renewable energy resource or other qualifying 

energy resources. 

(18) RENEWABLE ENERGY RESOURCE.—The term ‘‘renewable 

energy resource’’ means each of the following: 

(A) Wind energy. 

(B) Solar energy. 

(C) Geothermal energy. 

(D) Renewable biomass. 

(E) Biogas derived exclusively from renewable biomass. 

(F) Biofuels derived exclusively from renewable biomass. 

(G) Qualified hydropower. 

(H) Marine and hydrokinetic renewable energy, as that 

term is defined in section 632 of the Energy Independence 

and Security Act of 2007 (42 U.S.C. 17211). 

(19) RETAIL ELECTRIC SUPPLIER.— 

(A) IN GENERAL.—The term ‘‘retail electric supplier’’ 

means, for any given year, an electric utility that sold not 

less than 4,000,000 megawatt hours of electric energy to 

electric consumers for purposes other than resale during the 

preceding calendar year. 


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(B) INCLUSIONS AND LIMITATIONS.—For purposes of determining whether an electric utility qualifies as a retail 

electric supplier under subparagraph (A)— 

(i) the sales of any affiliate of an electric utility to 

electric consumers, other than sales to the affiliate’s lessees or tenants, for purposes other than resale shall be 

considered to be sales of such electric utility; and 

(ii) sales by any electric utility to an affiliate, lessee, 

or tenant of such electric utility shall not be treated as 

sales to electric consumers. 

(C) AFFILIATE.—For purposes of this paragraph, the term 

‘‘affiliate’’ when used in relation to a person, means another 

person that directly or indirectly owns or controls, is owned 

or controlled by, or is under common ownership or control 

with, such person, as determined under regulations promulgated by the Commission. 

(20) RETAIL ELECTRIC SUPPLIER’S BASE AMOUNT.—The term 

‘‘retail electric supplier’s base amount’’ means the total amount 

of electric energy sold by the retail electric supplier, expressed 

in megawatt hours, to electric customers for purposes other than 

resale during the relevant calendar year, excluding— 

(A) electricity generated by a hydroelectric facility that is 

not qualified hydropower; 

(B) electricity generated by a nuclear generating unit 

placed in service after the date of enactment of this section; 

and 

(C) the proportion of electricity generated by a fossilfueled generating unit that is equal to the proportion of 

greenhouse gases produced by such unit that are captured 

and geologically sequestered. 

(21) RETIRE AND RETIREMENT.—The terms ‘‘retire’’ and ‘‘retirement’’ with respect to a Federal renewable electricity credit, 

means to disqualify such credit for any subsequent use under 

this section, regardless of whether the use is a sale, transfer, exchange, or submission in satisfaction of a compliance obligation. 

(22) THIRD-PARTY EFFICIENCY PROVIDER.—The term ‘‘thirdparty efficiency provider’’ means any retailer, building owner, 

energy service company, financial institution or other commercial, industrial or nonprofit entity that is capable of providing 

electricity savings in accordance with the requirements of this 

section. 

(23) TOTAL ANNUAL ELECTRICITY SAVINGS.—The term ‘‘total 

annual electricity savings’’ means electricity savings during a 

specified calendar year from measures that were placed into 

service since the date of the enactment of this section, taking 

into account verified measure lifetimes or verified annual savings attrition rates, as determined in accordance with such regulations as the Commission may promulgate and measured in 

megawatt hours. 

(b) ANNUAL COMPLIANCE OBLIGATION.— 

(1) IN GENERAL.—For each of calendar years 2012 through 

2039, not later than March 31 of the following calendar year, 

each retail electric supplier shall submit to the Commission an 

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onstrated total annual electricity savings that, in the aggregate, 

is equal to such retail electric supplier’s annual combined target 

as set forth in subsection (d), except as otherwise provided in 

subsection (g). 

(2) DEMONSTRATION OF SAVINGS.—For purposes of this subsection, submission of demonstrated total annual electricity savings means submission of a report that demonstrates, in accordance with the requirements of subsection (f), the total annual 

electricity savings achieved by the retail electric supplier within 

the relevant compliance year. 

(3) RENEWABLE ELECTRICITY CREDITS PORTION.—Except as 

provided in paragraph (4), each retail electric supplier must 

submit Federal renewable electricity credits equal to at least 

three quarters of the retail electric supplier’s annual combined 

target. 

(4) STATE PETITION.— (A) IN GENERAL.—Upon written request from the Governor of any State (including, for purposes of this paragraph, the Mayor of the District of Columbia), the Commission shall increase, to not more than two fifths, the proportion of the annual combined targets of retail electric suppliers located within such State that may be met through 

submission of demonstrated total annual electricity savings, provided that such increase shall be effective only 

with regard to the portion of a retail electric supplier’s annual combined target that is attributable to electricity sales 

within such State. 

(B) CONTENTS.—A Governor’s request under this paragraph shall include an explanation of the Governor’s rationale for determining, after consultation with the relevant 

State regulatory authority and other retail electricity ratemaking authorities within the State, to make such request. 

The request shall specify the maximum proportion of annual combined targets (not more than two fifths) that can 

be met through demonstrated total annual electricity savings, and the period for which such proportion shall be effective. 

(C) REVISION.—The Governor of any State may, after 

consultation with the relevant State regulatory authority 

and other retail electricity ratemaking authorities within 

the State, submit a written request for revocation or revision of a previous request submitted under this paragraph. 

The Commission shall grant such request, provided that— 

(i) any revocation or revision shall not apply to the 

combined annual target for any year that is any earlier 

than 2 calendar years after the calendar year in which 

such request is submitted, so as to provide retail electric suppliers with adequate notice of such change; and 

(ii) any revision shall meet the requirements of subparagraph (A). 

(c) ESTABLISHMENT OF PROGRAM.—Not later than 1 year after the 

date of enactment of this section, the Commission shall promulgate 

regulations to implement and enforce the requirements of this section. In promulgating such regulations, the Commission shall, to 

the extent practicable— 


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(1) preserve the integrity, and incorporate best practices, of existing State renewable electricity and energy efficiency programs; 

(2) rely upon existing and emerging State or regional tracking 

systems that issue and track non-Federal renewable electricity 

credits; and 

(3) cooperate with the States to facilitate coordination between State and Federal renewable electricity and energy efficiency programs and to minimize administrative burdens and 

costs to retail electric suppliers. 

(d) ANNUAL COMPLIANCE REQUIREMENT.— (1) ANNUAL COMBINED TARGETS.—For each of calendar years 

2012 through 2039, a retail electric supplier’s annual combined 

target shall be the product of— 

(A) the required annual percentage for such year, as set 

forth in paragraph (2); and 

(B) the retail electric supplier’s base amount for such 

year. 

(2) REQUIRED ANNUAL PERCENTAGE.—For each of calendar 

years 2012 through 2039, the required annual percentage shall 

be as follows: 

Calendar year Required annual percentage 

2012 ..................................................................................................... 6.0 

2013 ..................................................................................................... 6.0 

2014 ..................................................................................................... 9.5 

2015 ..................................................................................................... 9.5 

2016 ..................................................................................................... 13.0 

2017 ..................................................................................................... 13.0 

2018 ..................................................................................................... 16.5 

2019 ..................................................................................................... 16.5 

2020 ..................................................................................................... 20.0 

2021 through 2039 ............................................................................. 20.0 

(e) FEDERAL RENEWABLE ELECTRICITY CREDITS.— 

(1) IN GENERAL.—The regulations promulgated under this 

section shall include provisions governing the issuance, tracking, and verification of Federal renewable electricity credits. Except as provided in paragraphs (2), (3), and (4) of this subsection, the Commission shall issue to each generator of renewable electricity, 1 Federal renewable electricity credit for each 

megawatt hour of renewable electricity generated by such generator after December 31, 2011. The Commission shall assign a 

unique serial number to each Federal renewable electricity credit. 

(2) GENERATION FROM CERTAIN STATE RENEWABLE ELECTRICITY PROGRAMS.—Where renewable electricity is generated 

with the support of payments from a retail electric supplier pursuant to a State renewable electricity program (whether through 

State alternative compliance payments or through payments to 

a State renewable electricity procurement fund or entity), the 

Commission shall issue Federal renewable electricity credits to 

such retail electric supplier for the proportion of the relevant renewable electricity generation that is attributable to the retail 

electric supplier’s payments, as determined pursuant to regulations issued by the Commission. For any remaining portion of 


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the relevant renewable electricity generation, the Commission 

shall issue Federal renewable electricity credits to the generator, 

as provided in paragraph (1), except that in no event shall more 

than 1 Federal renewable electricity credit be issued for the 

same megawatt hour of electricity. In determining how Federal 

renewable electricity credits will be apportioned among retail 

electric suppliers and generators in such circumstances, the 

Commission shall consider information and guidance furnished 

by the relevant State or States. 

(3) CERTAIN POWER SALES CONTRACTS.—When a generator 

has sold renewable electricity to a retail electric supplier under 

a contract for power from a facility placed in service before the 

date of enactment of this section, and the contract does not provide for the determination of ownership of the Federal renewable electricity credits associated with such generation, the 

Commission shall issue such Federal renewable electricity credits to the retail electric supplier for the duration of the contract. 

(4) CREDIT MULTIPLIER FOR DISTRIBUTED RENEWABLE GENERATION.— 

(A) IN GENERAL.—Except as provided in subparagraph 

(B), the Commission shall issue 3 Federal renewable electricity credits for each megawatt hour of renewable electricity generated by a distributed renewable generation facility. 

(B) ADJUSTMENT.—Except as provided in subparagraph 

(C), not later than January 1, 2014, and not less frequently 

than every 4 years thereafter, the Commission shall review 

the effect of this paragraph and shall, as necessary, reduce 

the number of Federal renewable electricity credits per 

megawatt hour issued under this paragraph for any given 

energy source or technology, but not below 1, to ensure that 

such number is no higher than the Commission determines 

is necessary to make distributed renewable generation facilities using such source or technology cost competitive 

with other sources of renewable electricity generation. 

(C) FACILITIES PLACED IN SERVICE AFTER ENACTMENT.— 

For any distributed renewable generation facility placed in 

service after the date of enactment of this section, subparagraph (B) shall not apply for the first 10 years after the 

date on which the facility is placed in service. For each year 

during such 10-year period, the Commission shall issue to 

the facility the same number of Federal renewable electricity credits per megawatt hour as are issued to that facility in the year in which such facility is placed in service. 

After such 10-year period, the Commission shall issue Federal renewable electricity credits to the facility in accordance with the current multiplier as determined pursuant to 

subparagraph (B). 

(5) CREDITS BASED ON QUALIFIED HYDROPOWER.—For purposes of this subsection, the number of Federal renewable electricity credits issued for qualified hydropower shall be calculated— 

(A) based solely on the increase in average annual generation directly resulting from the efficiency improvements 


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or capacity additions described in subsection (a)(13)(A); 

and 

(B) using the same water flow information used to determine a historic average annual generation baseline for the 

hydroelectric facility, as certified by the Commission. 

(6) GENERATION FROM MIXED RENEWABLE AND NONRENEWABLE RESOURCES.—If electricity is generated using both a renewable energy resource or other qualifying energy resource and 

an energy source that is not a renewable energy resource or 

other qualifying energy resource (as, for example, in the case of 

co-firing of renewable biomass and fossil fuel), the Commission 

shall issue Federal renewable electricity credits based on the 

proportion of the electricity that is attributable to the renewable 

energy resource or other qualifying energy resource. 

(7) PROHIBITION AGAINST DOUBLE-COUNTING.—Except as provided in paragraph (4) of this subsection, the Commission shall 

ensure that no more than 1 Federal renewable electricity credit 

will be issued for any megawatt hour of renewable electricity 

and that no Federal renewable electricity credit will be used 

more than once for compliance with this section. 

(8) TRADING.—The lawful holder of a Federal renewable electricity credit may sell, exchange, transfer, submit for compliance 

in accordance with subsection (b), or submit such credit for retirement by the Commission. 

(9) BANKING.—A Federal renewable electricity credit may be 

submitted in satisfaction of the compliance obligation set forth 

in subsection (b) for the compliance year in which the credit 

was issued or for any of the 3 immediately subsequent compliance years. The Commission shall retire any Federal renewable 

electricity credit that has not been retired by April 2 of the calendar year that is 3 years after the calendar year in which the 

credit was issued. 

(10) RETIREMENT.—The Commission shall retire a Federal renewable electricity credit immediately upon submission by the 

lawful holder of such credit, whether in satisfaction of a compliance obligation under subsection (b) or on some other basis. 

(f) ELECTRICITY SAVINGS.— 

(1) STANDARDS FOR MEASUREMENT OF SAVINGS.—As part of 

the regulations promulgated under this section, the Commission 

shall prescribe standards and protocols for defining and measuring electricity savings and total annual electricity savings 

that can be counted towards the compliance obligation set forth 

in subsection (b). Such protocols and standards shall, at minimum— 

(A) specify the types of energy efficiency and energy conservation measures that can be counted; 

(B) require that energy consumption estimates for customer facilities or portions of facilities in the applicable 

base and current years be adjusted, as appropriate, to account for changes in weather, level of production, and 

building area; 

(C) account for the useful life of measures; 

(D) include deemed savings values for specific, commonly 

used measures; 


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(E) allow for savings from a program to be estimated 

based on extrapolation from a representative sample of participating customers; 

(F) include procedures for counting CHP savings, recycled energy savings, and fuel cell savings; 

(G) include procedures for counting electricity savings 

achieved by solar water heating and solar light pipe technology that has the capability to provide measureable data 

on the amount of megawatt-hours displaced; 

(H) avoid double-counting of savings used for compliance 

with this section, including savings that are transferred 

pursuant to paragraph (3); 

(I) ensure that, except as provided in subparagraph (K), 

the retail electric supplier claiming the savings played a 

significant role in achieving the savings (including through 

the activities of a designated agent of the supplier or 

through the purchase of transferred savings); 

(J) include savings from programs administered by a retail electric supplier (or a retail electricity distributor that 

is not a retail electric supplier) that are funded by State, 

Federal, or other sources; 

(K) in any State in which the State regulatory authority 

has designated 1 or more entities to administer electric 

ratepayer-funded efficiency programs approved by such 

State regulatory authority, provide that electricity savings 

achieved through such programs shall be distributed equitably among retail electric suppliers in accordance with the 

direction of the relevant State regulatory authority; and 

(L) exclude savings achieved as a result of compliance 

with mandatory appliance and equipment efficiency standards or building codes. 

(2) STANDARDS FOR THIRD-PARTY VERIFICATION OF SAVINGS.— 

The regulations promulgated under this section shall establish 

procedures and standards requiring third-party verification of 

all reported electricity savings, including requirements for accreditation of third-party verifiers to ensure that such verifiers 

are professionally qualified and have no conflicts of interest. 

(3) TRANSFERS OF SAVINGS.— 

(A) BILATERAL CONTRACTS FOR SAVINGS TRANSFERS.— 

Subject to the limitations of this paragraph, a retail electric 

supplier may use electricity savings transferred, pursuant 

to a bilateral contract, from another retail electric supplier, 

an owner of an electric distribution facility that is not a retail electric supplier, a State, or a third-party efficiency provider to meet the applicable compliance obligation under 

subsection (b). 

(B) REQUIREMENTS.—Electricity savings transferred and 

used for compliance pursuant to this paragraph shall be— 

(i) measured and verified in accordance with the procedures specified under this subsection; 

(ii) reported in accordance with paragraph (4) of this 

subsection; and 

(iii) achieved within the same State as is served by 

the retail electric supplier. 


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(C) REGULATORY APPROVAL.—Nothing in this paragraph 

shall limit or affect the authority of a State regulatory authority to require a retail electric supplier that is regulated 

by such authority to obtain such authority’s authorization 

or approval of a contract for transfer of savings under this 

paragraph. 

(4) REPORTING SAVINGS.— 

(A) REQUIREMENTS.—The regulations promulgated under 

this section shall establish requirements governing the submission of reports to demonstrate, in accordance with the 

protocols and standards for measurement and third-party 

verification established under this subsection, the total annual electricity savings achieved by a retail electric supplier 

within the relevant year. 

(B) REVIEW AND APPROVAL.—The Commission shall review each report submitted to the Commission by a retail 

electric supplier and shall exclude any electricity savings 

that have not been adequately demonstrated in accordance 

with the requirements of this subsection. 

(5) STATE ADMINISTRATION.— 

(A) DELEGATION OF AUTHORITY.—Upon receipt of an application from the Governor of a State (including, for purposes of this subsection, the Mayor of the District of Columbia), the Commission may delegate to the State the authority to review and verify reported electricity savings for purposes of determining demonstrated total annual electricity 

savings that may be counted towards a retail electric supplier’s compliance obligation under subsection (b). The 

Commission shall make a substantive determination approving or disapproving a State application under this subparagraph, after notice and comment, within 180 days of 

receipt of a complete application. 

(B) ALTERNATIVE MEASUREMENT AND VERIFICATION PROCEDURES AND STANDARDS.—As part of an application submitted under subparagraph (A), a State may request to use 

alternative measurement and verification procedures and 

standards to those specified in paragraphs (1) and (2), provided the State demonstrates that such alternative procedures and standards provide a level of accuracy of measurement and verification at least equivalent to the Federal 

procedures and standards promulgated under paragraphs 

(1) and (2). 

(C) REVIEW OF STATE IMPLEMENTATION.—The Commission shall, not less frequently than once every 4 years, review each State’s implementation of delegated authority 

under this paragraph to ensure conformance with the requirements of this section. The Commission may, at any 

time, revoke the delegation of authority under this section 

upon a finding that the State is not implementing its delegated responsibilities in conformity with this paragraph. As 

a condition of maintaining its delegated authority under 

this paragraph, the Commission may require a State to 

submit a revised application under subparagraph (A) if the 

Commission has— 


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(i) promulgated new or substantially revised measurement and verification procedures and standards 

under this subsection; or 

(ii) otherwise substantially revised the program established under this section. 

(g) ALTERNATIVE COMPLIANCE PAYMENTS.— 

(1) IN GENERAL.—A retail electric supplier may satisfy the requirements of subsection (b) in whole or in part by submitting 

in accordance with this subsection, in lieu of each Federal renewable electricity credit or megawatt hour of demonstrated 

total annual electricity savings that would otherwise be due, a 

payment equal to $25, adjusted for inflation on January 1 of 

each year following calendar year 2009, in accordance with 

such regulations as the Commission may promulgate. 

(2) PAYMENT TO STATE FUNDS.—Except as otherwise provided 

in this paragraph, payments made under this subsection shall 

be made directly to the State or States in which the retail electric supplier is located, in proportion to the portion of the retail 

electric supplier’s base amount that is sold within each relevant 

State, provided that such payments are deposited directly into 

a fund in the State treasury established for this purpose and 

that the State uses such funds in accordance with paragraphs 

(3) and (4). If the Commission determines at any time that a 

State is in substantial noncompliance with paragraph (3) or (4), 

the Commission shall direct that any future alternative compliance payments that would otherwise be paid to such State 

under this subsection shall instead be paid to the Commission 

and deposited in the United States Treasury. 

(3) STATE USE OF FUNDS.—As a condition of continued receipt 

of alternative compliance payments pursuant to this subsection, 

a State shall use such payments exclusively for the purposes 

of— 

(A) deploying technologies that generate electricity from 

renewable energy resources; or 

(B) implementing cost-effective energy efficiency programs 

to achieve electricity savings. 

(4) REPORTING.—As a condition of continued receipt of alternative compliance payments pursuant to this subsection, a State 

shall, within 12 months of receipt of any such payments and at 

12-month intervals thereafter until such payments are expended, provide a report to the Commission, in accordance with 

such regulations as the Commission may prescribe, giving a full 

accounting of the use of such payments, including a detailed description of the activities funded thereby. 

(h) INFORMATION COLLECTION.—The Commission may require 

any retail electric supplier, renewable electricity generator, or such 

other entities as the Commission deems appropriate, to provide any 

information the Commission determines appropriate to carry out 

this section. Failure to submit such information or submission of 

false or misleading information under this subsection shall be a violation of this section. 

(i) ENFORCEMENT AND JUDICIAL REVIEW.— 

(1) FAILURE TO SUBMIT CREDITS OR DEMONSTRATE SAVINGS.— 

If any person fails to comply with the requirements of subVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00453 Fmt 6659 Sfmt 6603 E:\HR\OC\HR137.XXX HR137

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section (b) or (g), such person shall be liable to pay to the Commission a civil penalty equal to the product of— 

(A) double the alternative compliance payment calculated 

under subsection (g)(1), and 

(B) the aggregate quantity of Federal renewable electricity credits, total annual electricity savings, or equivalent 

alternative compliance payments that the person failed to 

submit in violation of the requirements of subsections (b) 

and (g). 

(2) ENFORCEMENT.—The Commission shall assess a civil penalty under paragraph (1) in accordance with the procedures described in section 31(d) of the Federal Power Act (16 U.S.C. 

823b(d)). 

(3) VIOLATION OF REQUIREMENT OF REGULATIONS OR ORDERS.—Any person who violates, or fails or refuses to comply 

with, any requirement of a regulation promulgated or order 

issued under this section shall be subject to a civil penalty 

under section 316A(b) of the Federal Power Act (16 U.S.C. 

825o–1). Such penalty shall be assessed by the Commission in 

the same manner as in the case of a violation referred to in section 316A(b) of such Act. 

(j) JUDICIAL REVIEW.—Any person aggrieved by a final action 

taken by the Commission under this section, other than the assessment of a civil penalty under subsection (i), may use the procedures 

for review described in section 313 of the Federal Power Act (16 

U.S.C. 825l). For purposes of this paragraph, references to an order 

in section 313 of such Act shall be deemed to refer also to all other 

final actions of the Commission under this section other than the 

assessment of a civil penalty under subsection (i). 

(k) SAVINGS PROVISIONS.—Nothing in this section shall— 

(1) diminish or qualify any authority of a State or political 

subdivision of a State to— 

(A) adopt or enforce any law or regulation respecting renewable electricity or energy efficiency, including any law 

or regulation establishing requirements more stringent 

than those established by this section, provided that no 

such law or regulation may relieve any person of any requirement otherwise applicable under this section; or 

(B) regulate the acquisition and disposition of Federal renewable electricity credits by retail electric suppliers within 

the jurisdiction of such State or political subdivision, including the authority to require such retail electric supplier 

to acquire and submit to the Secretary for retirement Federal renewable electricity credits in excess of those submitted under this section; or 

(2) affect the application of, or the responsibility for compliance with, any other provision of law or regulation, including 

environmental and licensing requirements. 

(l) SUNSET.—This section expires on December 31, 2040. 


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CLEAN AIR ACT 

TITLE I—AIR POLLUTION PREVENTION AND CONTROL 

PART A—AIR QUALITY AND EMISSION LIMITATIONS

* * * * * * * 

SEC. 113. FEDERAL ENFORCEMENT. 

(a) IN GENERAL.— (1) * * * 

* * * * * * * 

(3) EPA ENFORCEMENT OF OTHER REQUIREMENTS.—Except for 

a requirement or prohibition enforceable under the preceding 

provisions of this subsection, whenever, on the basis of any information available to the Administrator, the Administrator 

finds that any person has violated, or is in violation of, any 

other requirement or prohibition of this title, section 303 of 

title III, title IV, title V, øor title VI,¿ title VI, title VII, or title 

VIII including, but not limited to, a requirement or prohibition 

of any rule, plan, order, waiver, or permit promulgated, issued, 

or approved under those provisions or titles, or for the payment 

of any fee owed to the United States under this Act (other than 

title II), the Administrator may— 

(A) * * * 

* * * * * * * 

(b) CIVIL JUDICIAL ENFORCEMENT.—The Administrator shall, as 

appropriate, in the case of any person that is the owner or operator 

of an affected source, a major emitting facility, øor a major stationary source¿ a major stationary source, or a covered EGU under 

title VIII, and may, in the case of any other person, commence a 

civil action for a permanent or temporary injunction, or to assess 

and recover a civil penalty of not more than $25,000 per day for 

each violation, or both, in any of the following instances: 

(1) * * * 

(2) Whenever such person has violated, or is in violation of, 

any other requirement or prohibition of this title, section 303 

of title III, title IV, title V, øor 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 


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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), øor 

title VI (relating to stratospheric ozone control),¿ title VI, title VII, 

or title VIII, including a requirement of any rule, order, waiver, or 

permit promulgated or approved under such sections or titles, and 

including any requirement for the payment of any fee owed the 

United States under this Act (other than title II) shall, upon conviction, be punished by a fine pursuant to title 18 of the United 

States Code, or by imprisonment for not to exceed 5 years, or both. 

If a conviction of any person under this paragraph is for a violation 

committed after a first conviction of such person under this paragraph, the maximum punishment shall be doubled with respect to 

both the fine and imprisonment. 

* * * * * * * 

(3) Any person who knowingly fails to pay any fee owed the 

United States under this title, title III, IV, V, øor VI¿ VI, VII, or 

VIII shall, upon conviction, be punished by a fine pursuant to title 

18 of the United States Code, or by imprisonment for not more 

than 1 year, or both. If a conviction of any person under this paragraph is for a violation committed after a first conviction of such 

person under this paragraph, the maximum punishment shall be 

doubled with respect to both the fine and imprisonment. 

* * * * * * * 

(d) ADMINISTRATIVE ASSESSMENT OF CIVIL PENALTIES.—(1) The 

Administrator may issue an administrative order against any person assessing a civil administrative penalty of up to $25,000, per 

day of violation, whenever, on the basis of any available information, the Administrator finds that such person— 

(A) * * * 

(B) has violated or is violating any other requirement or prohibition of title I, III, IV, V, øor 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, øor VI¿ 

VI, VII, or VIII of this Act enforced under this section. Such payment is subject to available appropriations for such purposes as 

provided in annual appropriation Acts. Any officer, or employee of 

the United States or any State or local government who furnishes 

information or renders service in the performance of an official 

duty is ineligible for payment under this subsection. The Administrator may, by regulation, prescribe additional criteria for eligibility for such an award. 

* * * * * * * 


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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 øsection 112,, or any regulation of solid waste 

combustion under section 129, or any regulation under section 129 

(relating to solid waste combustion), (ii)¿ section 112, or any regulation of greenhouse gas emissions under title VII or VIII, (ii) of determining whether any person is in violation of any such standard or 

any requirement of such a plan, or (iii) carrying out any provision 

of this Act (except a provision of title II with respect to a manufacturer of new motor vehicles or new motor vehicle engines)— 

(1) * * * 

* * * * * * * 

RETENTION OF STATE AUTHORITY

SEC. 116. Except as otherwise provided in sections 119 (c), (e), 

and (f) (as in effect before the date of the enactment of the Clean 

Air Act Amendments of 1977), 209, 211(c)(4), øand 233¿ 233 (preempting certain State regulation øof moving sources)¿ of moving 

sources), and 861 (preempting certain State greenhouse gas programs for a limited time) nothing in this Act shall preclude or deny 

the right of any State or political subdivision thereof to adopt or 

enforce (1) any standard or limitation respecting emissions of air 

pollutants or (2) any requirement respecting control or abatement 

of air pollution; except that if an emission standard or limitation 

is in effect under an applicable implementation plan or under section 111 or 112, such State or political subdivision may not adopt 

or enforce any emission standard or limitation which is less stringent than the standard or limitation under such plan or section. 

For the purposes of this section, the phrases ‘‘standard or limitation 

respecting emissions of air pollutants’’ and ‘‘requirements respecting 

control or abatement of air pollution’’ shall include any provision to: 

cap greenhouse gas emissions, require surrender to the State or a 

political subdivision thereof of emission allowances or offset credits 

established or issued under this Act, and require the use of such allowances or credits as a means of demonstrating compliance with 

requirements established by a State or political subdivision thereof. 

* * * * * * * 

TITLE II—EMISSION STANDARDS FOR MOVING SOURCES 

* * * * * * * 

PART A—MOTOR VEHICLE EMISSION AND FUEL STANDARDS

* * * * * * * 

REGULATION OF FUELS

SEC. 211. (a) * * * 

* * * * * * * 

(o) RENEWABLE FUEL PROGRAM.— 

(1) DEFINITIONS.—In this section: 


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(A) * * * 

* * * * * * * 

ø(I) RENEWABLE BIOMASS.—The term ‘‘renewable biomass’’ means each of the following: 

ø(i) Planted crops and crop residue harvested from 

agricultural land cleared or cultivated at any time 

prior to the enactment of this sentence that is either 

actively managed or fallow, and nonforested. 

ø(ii) Planted trees and tree residue from actively 

managed tree plantations on non-federal land cleared 

at any time prior to enactment of this sentence, including land belonging to an Indian tribe or an Indian 

individual, that is held in trust by the United States 

or subject to a restriction against alienation imposed 

by the United States. 

ø(iii) Animal waste material and animal byproducts. 

ø(iv) Slash and pre-commercial thinnings that are 

from non-federal forestlands, including forestlands belonging to an Indian tribe or an Indian individual, 

that are held in trust by the United States or subject 

to a restriction against alienation imposed by the 

United States, but not forests or forestlands that are 

ecological communities with a global or State ranking 

of critically imperiled, imperiled, or rare pursuant to 

a State Natural Heritage Program, old growth forest, 

or late successional forest. 

ø(v) Biomass obtained from the immediate vicinity 

of buildings and other areas regularly occupied by people, or of public infrastructure, at risk from wildfire. 

ø(vi) Algae. 

ø(vii) Separated yard waste or food waste, including 

recycled cooking and trap grease.¿ 

(I) RENEWABLE BIOMASS.—The term ‘‘renewable biomass’’ 

means any of the following: 

(i) Plant material, including waste material, harvested or collected from actively managed agricultural 

land that was in cultivation, cleared, or fallow and 

nonforested on January 1, 2009. 

(ii) Plant material, including waste material, harvested or collected from pastureland that was nonforested on January 1, 2009. 

(iii) Nonhazardous vegetative matter derived from 

waste, including separated yard waste, landscape 

right-of-way trimmings, construction and demolition 

debris or food waste (but not recyclable waste paper, 

painted, treated or pressurized wood, or wood contaminated with plastic or metals). 

(iv) Animal waste or animal byproducts, including 

products of animal waste digesters. 

(v) Algae. 

(vi) Trees, brush, slash, residues, or any other vegetative matter removed from within 600 feet of any building, campground, or route designated for evacuation by 

a public official with responsibility for emergency preparedness, or from within 300 feet of a paved road, 


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electric transmission line, utility tower, or water supply 

line. 

(vii) Residues from or byproducts of milled logs. 

(viii) Any of the following removed from forested 

land that is not Federal and is not high conservation 

priority land: 

(I) Trees, brush, slash, residues, interplanted energy crops, or any other vegetative matter removed 

from an actively managed tree plantation established— 

(aa) prior to January 1, 2009; or 

(bb) on land that, as of January 1, 2009, 

was cultivated or fallow and non-forested. 

(II) Trees, logging residue, thinnings, cull trees, 

pulpwood, and brush removed from naturally-regenerated forests or other non-plantation forests, 

including for the purposes of hazardous fuel reduction or preventative treatment for reducing or containing insect or disease infestation. 

(III) Logging residue, thinnings, cull trees, pulpwood, brush and species that are non-native and 

noxious, from stands that were planted and managed after January 1, 2009, to restore or maintain 

native forest types. 

(IV) Dead or severely damaged trees removed 

within 5 years of fire, blowdown, or other natural 

disaster, and badly infested trees. 

(ix) Materials, pre-commercial thinnings, or removed 

invasive species from National Forest System land and 

public lands (as defined in section 103 of the Federal 

Land Policy and Management Act of 1976 (43 U.S.C. 

1702)), including those that are byproducts of preventive treatments (such as trees, wood, brush, thinnings, 

chips, and slash), that are removed as part of a federally recognized timber sale, or that are removed to reduce hazardous fuels, to reduce or contain disease or 

insect infestation, or to restore ecosystem health, and 

that are— 

(I) not from components of the National Wilderness Preservation System, Wilderness Study Areas, 

Inventoried Roadless Areas, old growth or mature 

forest stands, components of the National Landscape Conservation System, National Monuments, 

National Conservation Areas, Designated Primitive 

Areas, or Wild and Scenic Rivers corridors; 

(II) harvested in environmentally sustainable 

quantities, as determined by the appropriate Federal land manager; and 

(III) harvested in accordance with Federal and 

State law and applicable land management plans. 

* * * * * * * 

(M) HIGH CONSERVATION PRIORITY LAND.—The term 

‘‘high conservation priority land’’ means land that is not 

Federal land and is— 


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(i) globally or State ranked as critically imperiled or 

imperiled under a State Natural Heritage Program; or 

(ii) old-growth or late-successional forest, as identified by the office of the State Forester or relevant State 

agency with regulatory jurisdiction over forestry activities. 

* * * * * * * 

TITLE III—GENERAL 

* * * * * * * 

CITIZEN SUITS

SEC. 304. (a) * * * 

* * * * * * * 

(f) For purposes of this section, the term ‘‘emission standard or 

limitation under this Act’’ means— 

(1) * * * 

* * * * * * * 

(3) any condition or requirement of a permit under part C of 

title I (relating to significant deterioration of air quality) or 

part D of title I (relating to nonattainment),, section 119 (relating to primary nonferrous smelter orders), any condition or requirement under an applicable implementation plan relating to 

transportation control measures, air quality maintenance 

plans, vehicle inspection and maintenance programs or vapor 

recovery requirements, section 211 (e) and (f) (relating to fuels 

and fuel additives), section 169A (relating to visibility protection), any condition or requirement under title VI (relating to 

ozone protection), or any requirement under section 111 or 112 

(without regard to whether such requirement is expressed as 

an emission standard or otherwise)ø; 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 operationsø.¿, or 

(5) any requirement of title VII or VIII. 

* * * * * * * 

GENERAL PROVISIONS RELATING TO ADMINISTRATIVE PROCEEDINGS

AND JUDICIAL REVIEW

SEC. 307. (a) In connection with any determination under section 

110(f), or for purposes of obtaining information under section 

202(b)(4) or 211(c)(3),, any investigation, monitoring, reporting requirement, entry, compliance inspection, or administrative enforcement proceeding under the Act (including but not limited to section 

113, section 114, section 120, section 129, section 167, section 205, 

section 206, section 208, section 303ø, 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. 

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ministrator by such owner or operator that such papers, books, documents, or information or particular part thereof, if made public, 

would divulge trade secrets or secret processes of such owner or operator, the Administrator shall consider such record, report, or information or particular portion thereof confidential in accordance 

with the purposes of section 1905 of title 18 of the United States 

Code, except that such paper, book, document, or information may 

be discussed to other officers, employees, or authorized representatives of the United States concerned with carrying out this Act, to 

persons carrying out the National Academy of Sciences’ study and 

investigation provided for in section 202(c), or when relevant in any 

proceeding under this Act. Witnesses summoned shall be paid the 

same fees and mileage that are paid witnesses in the courts of the 

United States. In cases of contumacy or refusal to obey a subpena 

served upon any person under this subparagraph, the district court 

of the United States for any district in which such person is found 

or resides or transacts business, upon application by the United 

States and after notice to such person, shall have jurisdiction to 

issue an order requiring such person to appear and give testimony 

before the Administrator to appear and produce papers, books, and 

documents before the Administrator, or both, and any failure to 

obey such order of the court may be punished by such court as a 

contempt thereof. 

(b)(1) A petition for review of action of the Administrator in promulgating any national primary or secondary ambient air quality 

standard, any emission standard or requirement under section 112, 

any standard of performance or requirement under section 111ø,,¿, 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 øsection 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 

112ø,,¿, under section 119, or under section 120, or his action 

under section 119(c)(2) (A), (B), or (C) (as in effect before the date 

of enactment of the Clean Air Act Amendments of 1977) or under 

regulations thereunder, or revising regulations for enhanced monitoring and compliance certification programs under section 

114(a)(3) of this Act, or any other final action of the Administrator 

under this Act (including any denial or disapproval by the Administrator under title I) which is local or regionally applicable may be 

filed only in the United States Court of Appeals for the appropriate 

circuit. Notwithstanding the preceding sentence a petition for review of any action referred to in such sentence may be filed only 

in the United States Court of Appeals for the District of Columbia 

if such action is based on a determination of nationwide scope or 

effect and if in taking such action the Administrator finds and publishes that such action is based on such a determination. Any petition for review under this subsection shall be filed within sixty 

days from the date notice of such promulgation, approval, or action 


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appears in the Federal Register, except that if such petition is 

based solely on grounds arising after such sixtieth day, then any 

petition for review under this subsection shall be filed within sixty 

days after such grounds arise. The filing of a petition for reconsideration by the Administrator of any otherwise final rule or action 

shall not affect the finality of such rule or action for purposes of 

judicial review nor extend the time within which a petition for judicial review of such rule or action under this section may be filed, 

and shall not postpone the effectiveness of such rule or action. 

* * * * * * * 

(3) If the court determines that any action of the Administrator 

is arbitrary, capricious, or otherwise unlawful, the court may remand such action, without vacatur, if vacatur would impair or 

delay protection of the environment or public health or otherwise 

undermine the timely achievement of the purposes of this Act. 

* * * * * * * 

(d)(1) This subsection applies to— 

(A) * * * 

* * * * * * * 

ø(S) the promulgation or revision of any regulation under 

title IV (relating to acid deposition),¿ 

(S) the promulgation or revision of any regulation under title 

VII or VIII, 

* * * * * * * 

(7)(A) * * * 

(B) Only an objection to a rule or procedure which was raised 

with reasonable specificity during the period for public comment 

(including any public hearing) may be raised during judicial review. If the person raising an objection can demonstrate to the Administrator that it was impracticable to raise such objection within 

such time or if the grounds for such objection arose after the period 

for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome 

of the rule, the Administrator shall convene a proceeding for reconsideration of the rule and provide the same procedural rights as 

would have been afforded had the information been available at the 

time the rule was proposed. øIf the Administrator refuses to convene such a proceeding, such person may seek review of such refusal in the United States court of appeals for the appropriate circuit (as provided in subsection (b)).¿ If a petition for reconsideration 

is filed, the Administrator shall take final action on such petition, 

including promulgation of final action either revising or determining not to revise the action for which reconsideration is sought, 

within 150 days after the petition is received by the Administrator 

or the petition shall be deemed denied for the purpose of judicial review. Such person may seek judicial review of such denial, or of any 

other final action, by the Administrator, in response to a petition for 

reconsideration, in the United States court of appeals for the appropriate circuit (as provided in subsection (b)). Such reconsideration 

shall not postpone the effectiveness of the rule. The effectiveness 

of the rule may be stayed during such reconsideration, however, by 


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the Administrator or the court for a period not to exceed three 

months. 

* * * * * * * 

TITLE VI—STRATOSPHERIC OZONE 

PROTECTION 

TABLE OF CONTENTS

Sec. 601. Definitions. 

* * * * * * * 

Sec. 619. Hydrofluorocarbons (HFCs). 

* * * * * * * 

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

II SUBSTANCES. 

(a) RESTRICTION OF USE OF CLASS II SUBSTANCES.—Effective 

January 1, 2015, it shall be unlawful for any person to introduce 

into interstate commerce or use any class II substance unless such 

substance— 

(1) * * * 

(2) is used and entirely consumed (except for trace quantities) in the production of other chemicals; øor¿ 

(3) is used as a refrigerant in appliances manufactured prior 

to January 1, 2020ø.¿; or 

(4) is listed as acceptable for use as a fire suppression agent 

for nonresidential applications in accordance with section 

612(c). 

* * * * * * * 

SEC. 609. SERVICING OF MOTOR VEHICLE AIR CONDITIONERS. 

(a) * * * 

* * * * * * * 

(e) SMALL CONTAINERS OF CLASS I OR CLASS II, GROUP I SUBSTANCES.—Effective 2 years after the date of the enactment of the 

Clean Air Act Amendments of 1990, it shall be unlawful for any 

person to sell or distribute, or offer for sale or distribution, in interstate commerce to any person (other than a person performing 

service for consideration on motor vehicle air-conditioning systems 

in compliance with this section) any class I or class II, group I substance that is suitable for use as a refrigerant in a motor vehicle 

air-conditioning system and that is in a container which contains 

less than 20 pounds of such refrigerant. 

(f) CLASS II, GROUP II SUBSTANCES.— 

(1) REPAIR.—The Administrator may promulgate regulations 

establishing requirements for repair of motor vehicle air conditioners prior to adding a class II, group II substance. 

(2) SMALL CONTAINERS.—(A) The Administrator may promulgate regulations establishing servicing practices and procedures 

for recovery of class II, group II substances from containers 

which contain less than 20 pounds of such class II, group II 

substances. 

(B) Not later than 18 months after enactment of this subsection, the Administrator shall either promulgate regulations 


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requiring that containers which contain less than 20 pounds of 

a class II, group II substance be equipped with a device or technology that limits refrigerant emissions and leaks from the container and limits refrigerant emissions and leaks during the 

transfer of refrigerant from the container to the motor vehicle 

air conditioner or issue a determination that such requirements 

are not necessary or appropriate. 

(C) Not later than 18 months after enactment of this subsection, the Administrator shall promulgate regulations establishing requirements for consumer education materials on best 

practices associated with the use of containers which contain 

less than 20 pounds of a class II, group II substance and prohibiting the sale or distribution, or offer for sale or distribution, 

of any class II, group II substance in any container which contains less than 20 pounds of such class II, group II substance, 

unless consumer education materials consistent with such requirements are displayed and available at point-of-sale locations, provided to the consumer, or included in or on the packaging of the container which contain less than 20 pounds of a 

class II, group II substance. 

(D) The Administrator may, through rulemaking, extend the 

requirements established under this paragraph to containers 

which contain 30 pounds or less of a class II, group II substance if the Administrator determines that such action would 

produce significant environmental benefits. 

(3) RESTRICTION OF SALES.—Effective January 1, 2014, no 

person may sell or distribute or offer to sell or distribute or otherwise introduce into interstate commerce any motor vehicle air 

conditioner refrigerant in any size container unless the substance has been found acceptable for use in a motor vehicle air 

conditioner under section 612. 

* * * * * * * 

SEC. 612. SAFE ALTERNATIVES POLICY. 

(a) * * * 

* * * * * * * 

(e) STUDIES AND NOTIFICATION.—The Administrator shall require 

any person who produces a chemical substitute for a class I or class 

II substance to provide the Administrator with such person’s unpublished health and safety studies on such substitute and require 

producers to notify the Administrator not less than 90 days before 

new or existing chemicals are introduced into interstate commerce 

for significant new uses as substitutes for a class I or class II substance. This subsection shall be subject to section 114(c). 

* * * * * * * 

SEC. 619. HYDROFLUOROCARBONS (HFCS). 

(a) TREATMENT AS CLASS II, GROUP II SUBSTANCES.—Except as 

otherwise provided in this section, hydrofluorocarbons shall be 

treated as class II substances for purposes of applying the provisions 

of this title. The Administrator shall establish two groups of class 

II substances. Class II, group I substances shall include all 

hydrochlorofluorocarbons (HCFCs) listed pursuant to section 602(b). 

Class II, group II substances shall include each of the following: 

(1) Hydrofluorocarbon-23 (HFC-23). 


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(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 SUB- STANCES.— 

(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 


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of class II, group II substances, the Administrator shall 

promulgate regulations establishing a baseline for the production of class II, group II substances in the United States 

and phasing down the production of class II, group II substances in the United States, in accordance with such multilateral agreement and subject to the same exceptions and 

other provisions as are applicable to the phase down of consumption of class II, group II substances under this section 

(except that the Administrator shall not require a person 

who obtains production allowances from the Administrator 

to make payment for such allowances if the person is making payment for a corresponding quantity of consumption 

allowances of the same vintage year). Upon the effective 

date of such regulations, it shall be unlawful for any person to produce any class II, group II substance without 

holding one consumption allowance and one production allowance, or one destruction offset credit, for each carbon dioxide equivalent ton of the class II, group II substance. 

(C) INTEGRITY OF CAP.—To maintain the integrity of the 

class II, group II cap, the Administrator may, through rulemaking, limit the percentage of each person’s compliance 

obligation that may be met through the use of destruction 

offset credits or banked allowances. 

(D) COUNTING OF VIOLATIONS.—Each emission allowance 

or destruction offset credit not held as required by this section shall be a separate violation of this section. 

(2) SCHEDULE.—Pursuant to the regulations promulgated 

pursuant to paragraph (1), the number of class II, group II consumption allowances established by the Administrator for each 

calendar year beginning in 2012 shall be the following percentage of the baseline, as established by the Administrator pursuant to paragraph (3): 

Calendar Year Percent of Baseline 

2012 90 

2013 87.5 

2014 85 

2015 82.5 

2016 80 

2017 77.5 

2018 75 

2019 71 

2020 67 

2021 63 

2022 59 

2023 54 

2024 50 

2025 46 

2026 42 

2027 38 

2028 34 

2029 30 

2030 25 

2031 21 

2032 17 

after 2032 15 


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(3) BASELINE.—(A) Within 12 months after the date of enactment of this section, the Administrator shall promulgate regulations to establish the baseline for purposes of paragraph (2). 

The baseline shall be the sum, expressed in tons of carbon dioxide equivalents, of— 

(i) the annual average consumption of all class II substances in calendar years 2004, 2005, and 2006; plus 

(ii) the annual average quantity of all class II substances 

contained in imported products in calendar years 2004, 

2005, and 2006. 

(B) Notwithstanding subparagraph (A), if the Administrator 

determines that the baseline is higher than 370 million metric 

tons of carbon dioxide equivalents, then the Administrator shall 

establish the baseline at 370 million metric tons of carbon dioxide equivalents. 

(C) Notwithstanding subparagraph (A), if the Administrator 

determines that the baseline is lower than 280 million metric 

tons of carbon dioxide equivalents, then the Administrator shall 

establish the baseline at 280 million metric tons of carbon dioxide equivalents. 

(4) DISTRIBUTION OF ALLOWANCES.— (A) IN GENERAL.—Pursuant to the regulations promulgated under paragraph (1), for each calendar year beginning in 2012, the Administrator shall sell consumption allowances in accordance with this paragraph. 

(B) ESTABLISHMENT OF POOLS.—The Administrator shall 

establish two allowance pools. Eighty percent of the consumption allowances available for a calendar year shall be 

placed in the producer-importer pool, and 20 percent of the 

consumption allowances available for a calendar year shall 

be placed in the secondary pool. 

(C) PRODUCER-IMPORTER POOL.— 

(i) AUCTION.—(I) For each calendar year, the Administrator shall offer for sale at auction the following percentage of the consumption allowances in the producerimporter 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). 


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(III) Not later than three years after the date of the 

initial auction and from time to time thereafter, the 

Administrator shall determine through rulemaking 

whether any persons who did not produce or import a 

class II substance during calendar year 2004, 2005, or 

2006 will be permitted to participate in future auctions. The Administrator shall base this determination 

on the duration, consistency, and scale of such person’s 

purchases of consumption allowances in the secondary 

pool under subparagraph (D), as well as economic or 

technical hardship and other factors deemed relevant 

by the Administrator. 

(IV) The Administrator shall set a minimum bid per 

consumption allowance of the following: (aa) For vintage year 2012, $1.00. 

(bb) For vintage year 2013, $1.20. 

(cc) For vintage year 2014, $1.40. 

(dd) For vintage year 2015, $1.60. 

(ee) For vintage year 2016, $1.80. 

(ff) For vintage year 2017, $2.00. 

(gg) For vintage year 2018 and thereafter, $2.00 

adjusted for inflation after vintage year 2017 

based upon the producer price index as published 

by the Department of Commerce. 

(ii) NON-AUCTION SALE.—(I) For each calendar year, 

as soon as practicable after auction, the Administrator 

shall offer for sale the remaining consumption allowances in the producer-importer pool at the following 

prices: (aa) A fee of $1.00 per vintage year 2012 allowance. 

(bb) A fee of $1.20 per vintage year 2013 allowance. 

(cc) A fee of $1.40 per vintage year 2014 allowance. 

(dd) For each vintage year 2015 allowance, a fee 

equal to the average of $1.10 and the auction 

clearing price for vintage year 2014 allowances. 

(ee) For each vintage year 2016 allowance, a fee 

equal to the average of $1.30 and the auction 

clearing price for vintage year 2015 allowances. 

(ff) For each vintage year 2017 allowance, a fee 

equal to the average of $1.40 and the auction 

clearing price for vintage year 2016 allowances. 

(gg) For each allowance of vintage year 2018 

and subsequent vintage years, a fee equal to the 

auction clearing price for that vintage year. 

(II) The Administrator shall offer to sell the remaining consumption allowances in the producer-importer 

pool to producers of class II, group II substances and 

importers of class II, group II substances in proportion 

to their relative allocation share. 

(III) Such allocation share for such sale shall be determined by the Administrator using such producer’s or 

importer’s annual average data on class II substances 


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from calendar years 2004, 2005, and 2006, on a carbon 

dioxide equivalent basis, and— 

(aa) shall be based on a producer’s production, 

plus importation, plus acquisitions and purchases 

from persons who produced class II substances in 

the United States during calendar years 2004, 

2005, or 2006, less exportation, less transfers and 

sales to persons who produced class II substances 

in the United States during calendar years 2004, 

2005, or 2006; and 

(bb) for an importer of class II substances that 

did not produce in the United States any class II 

substance during calendar years 2004, 2005, and 

2006, shall be based on the importer’s importation 

less exportation. 

For purposes of item (aa), the Administrator shall account for 100 percent of class II, group II substances 

and 60 percent of class II, group I substances. For purposes of item (bb), the Administrator shall account for 

100 percent of class II, group II substances and 100 

percent of class II, group I substances. 

(IV) Any consumption allowances made available for 

nonauction sale to a specific producer or importer of 

class II, group II substances but not purchased by the 

specific producer or importer shall be made available 

for sale to any producer or importer of class II substances during calendar years 2004, 2005, or 2006. If 

demand for such consumption allowances exceeds supply of such consumption allowances, the Administrator 

shall develop and utilize criteria for the sale of such 

consumption allowances that may include pro rata 

shares, historic production and importation, economic 

or technical hardship, or other factors deemed relevant 

by the Administrator. If the supply of such consumption allowances exceeds demand, the Administrator 

may offer such consumption allowances for sale in the 

secondary pool as set forth in subparagraph (D). 

(D) SECONDARY POOL.—(i) For each calendar year, as 

soon as practicable after the auction required in subparagraph (C), the Administrator shall offer for sale the consumption allowances in the secondary pool at the prices 

listed in subparagraph (C)(ii). 

(ii) The Administrator shall accept applications for purchase of secondary pool consumption allowances from— 

(I) importers of products containing class II, group II 

substances; 

(II) persons who purchased any class II, group II 

substance directly from a producer or importer of class 

II, group II substances for use in a product containing 

a class II, group II substance, a manufacturing process, or a reclamation process; 

(III) persons who did not produce or import a class 

II substance during calendar year 2004, 2005, or 2006, 

but who the Administrator determines have subsequently taken significant steps to produce or import a 


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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. 


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(IV) Each person who purchases consumption allowances in a non-auction sale under this subparagraph 

shall be required to disclose the person or entity sponsoring or benefitting from the purchases if such person 

or entity is, in whole or in part, other than the purchaser or the purchaser’s employer. 

(E) DISCRETION TO WITHHOLD ALLOWANCES.—Nothing in 

this paragraph prevents the Administrator from exercising 

discretion to withhold and retire consumption allowances 

that would otherwise be available for auction or nonauction 

sale. Not later than 18 months after the date of enactment 

of this section, the Administrator shall promulgate regulations establishing criteria for withholding and retiring consumption allowances. 

(5) BANKING.—A consumption allowance or destruction offset 

credit may be used to meet the compliance obligation requirements of paragraph (1) in— 

(A) the vintage year for the allowance or destruction offset credit; or 

(B) any calendar year subsequent to the vintage year for 

the allowance or destruction offset credit. 

(6) AUCTIONS.— (A) INITIAL REGULATIONS.—Not later than 18 months 

after the date of enactment of this section, the Administrator shall promulgate regulations governing the auction 

of allowances under this section. Such regulations shall include the following requirements: 

(i) FREQUENCY; FIRST AUCTION.—Auctions shall be 

held one time per year at regular intervals, with the 

first auction to be held no later than October 31, 2011. 

(ii) AUCTION FORMAT.—Auctions shall follow a single-round, sealed-bid, uniform price format. 

(iii) FINANCIAL ASSURANCE.—The Administrator may 

establish financial assurance requirements to ensure 

that auction participants can and will perform on their 

bids. 

(iv) DISCLOSURE OF BENEFICIAL OWNERSHIP.—Each 

bidder in the auction shall be required to disclose the 

person or entity sponsoring or benefitting from the bidder’s participation in the auction if such person or entity is, in whole or in part, other than the bidder or the 

bidder’s employer. 

(v) PUBLICATION OF INFORMATION.—After the auction, the Administrator shall, in a timely fashion, publish the number of bidders, number of winning bidders, 

the quantity of allowances sold, and the auction clearing price. 

(vi) BIDDING LIMITS IN 2012.—In the vintage year 

2012 auction, no auction participant may, directly or 

in concert with another participant, bid for or purchase 

more allowances offered for sale at the auction than the 

greater of— 

(I) the number of allowances which, when added 

to the number of allowances available for purchase 

by the participant in the producer-importer pool 


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non-auction sale, would equal the participant’s annual average consumption of class II, group II substances in calendar years 2004, 2005, and 2006; or 

(II) the number of allowances equal to the product of— 

(aa) 1.20 multiplied by the participant’s allocation share of the producer-importer pool 

non-auction sale as determined under paragraph (4)(C)(ii); and 

(bb) the number of vintage year 2012 allowances offered at auction. 

(vii) BIDDING LIMITS IN 2013.—In the vintage year 

2013 auction, no auction participant may, directly or 

in concert with another participant, bid for or purchase 

more allowances offered for sale at the auction than the 

product of— 

(I) 1.15 multiplied by the ratio of the total number of vintage year 2012 allowances purchased by 

the participant from the auction and from the producer-importer pool non-auction sale to the total 

number of vintage year 2012 allowances in the 

producer-importer pool; and 

(II) the number of vintage year 2013 allowances 

offered at auction. 

(viii) BIDDING LIMITS IN SUBSEQUENT YEARS.—In the 

auctions for vintage year 2014 and subsequent vintage 

years, no auction participant may, directly or in concert with another participant, bid for or purchase more 

allowances offered for sale at the auction than the 

product of— 

(I) 1.15 multiplied by the ratio of the highest 

number of allowances held by the participant in 

any of the three prior vintage years to meet its 

compliance obligation under paragraph (1) to the 

total number of allowances in the producer-importer pool for such vintage year; and 

(II) the number of allowances offered at auction 

for that vintage year. 

(ix) OTHER REQUIREMENTS.—The Administrator may 

include in the regulations such other requirements or 

provisions as the Administrator considers necessary to 

promote effective, efficient, transparent, and fair administration of auctions under this section. 

(B) REVISION OF REGULATIONS.—The Administrator may, 

at any time, revise the initial regulations promulgated 

under subparagraph (A) based on the Administrator’s experience in administering allowance auctions. Such revised 

regulations need not meet the requirements identified in 

subparagraph (A) if the Administrator determines that an 

alternative auction design would be more effective, taking 

into account factors including costs of administration, 

transparency, fairness, and risks of collusion or manipulation. In determining whether and how to revise the initial 

regulations under this paragraph, the Administrator shall 


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not consider maximization of revenues to the Federal Government. 

(C) DELEGATION OR CONTRACT.—Pursuant to regulations 

under this section, the Administrator may, by delegation or 

contract, provide for the conduct of auctions under the Administrator’s supervision by other departments or agencies 

of the Federal Government or by nongovernmental agencies, 

groups, or organizations. 

(7) PAYMENTS FOR ALLOWANCES.— (A) INITIAL REGULATIONS.—Not later than 18 months 

after the date of enactment of this section, the Administrator shall promulgate regulations governing the payment 

for allowances purchased in auction and non-auction sales 

under this section. Such regulations shall include the requirement that, in the event that full payment for purchased allowances is not made on the date of purchase, 

equal payments shall be made one time per calendar quarter with all payments for allowances of a vintage year 

made by the end of that vintage year. 

(B) REVISION OF REGULATIONS.— The Administrator 

may, at any time, revise the initial regulations promulgated 

under subparagraph (A) based on the Administrator’s experience in administering collection of payments. Such revised regulations need not meet the requirements identified 

in subparagraph (A) if the Administrator determines that 

an alternative payment structure or frequency would be 

more effective, taking into account factors including cost of 

administration, transparency, and fairness. In determining 

whether and how to revise the initial regulations under this 

paragraph, the Administrator shall not consider maximization of revenues to the Federal Government. 

(C) PENALTIES FOR NON-PAYMENT.—Failure to pay for 

purchased allowances in accordance with the regulations 

promulgated pursuant to this paragraph shall be a violation of the requirements of subsection (b). Section 113(c)(3) 

shall apply in the case of any person who knowingly fails 

to pay for purchased allowances in accordance with the 

regulations promulgated pursuant to this paragraph. 

(8) IMPORTED PRODUCTS.—If the United States becomes a 

party or otherwise adheres to a multilateral agreement, including any amendment to the Montreal Protocol on Substances 

That Deplete the Ozone Layer, which restricts the production 

and consumption of class II, group II substances— 

(A) as of the date on which such agreement or amendment enters into force, it shall no longer be unlawful for 

any person to import from a party to such agreement or 

amendment any product containing any class II, group II 

substance whose production and consumption are regulated 

by such agreement or amendment without holding one consumption allowance or one destruction offset credit for each 

carbon dioxide equivalent ton of the class II, group II substance; 

(B) the Administrator shall promulgate regulations within 12 months of the date the United States becomes a party 

or otherwise adheres to such agreement or amendment, or 


hsrobinson on PROD1PC76 with HEARING
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the date on which such agreement or amendment enters 

into force, whichever is later, to establish a new baseline for 

purposes of paragraph (2), which new baseline shall be the 

original baseline less the carbon dioxide equivalent of the 

annual average quantity of any class II substances regulated by such agreement or amendment contained in products imported from parties to such agreement or amendment in calendar years 2004, 2005, and 2006; 

(C) as of the date on which such agreement or amendment enters into force, no person importing any product 

containing any class II, group II substance may, directly or 

in concert with another person, purchase any consumption 

allowances for sale by the Administrator for the importation of products from a party to such agreement or amendment that contain any class II, group II substance restricted by such agreement or amendment; and 

(D) the Administrator may adjust the two allowance 

pools established in paragraph (4) such that up to 90 percent of the consumption allowances available for a calendar 

year are placed in the producer-importer pool with the remaining consumption allowances placed in the secondary 

pool. 

(9) OFFSETS.— (A) CHLOROFLUOROCARBON DESTRUCTION.—Within 18 

months after the date of enactment of this section, the Administrator shall promulgate regulations to provide for the 

issuance of offset credits for the destruction, in the calendar 

year 2012 or later, of chlorofluorocarbons in the United 

States. The Administrator shall establish and distribute to 

the destroying entity a quantity of destruction offset credits 

equal to 0.8 times the number of tons of carbon dioxide 

equivalents of reduction achieved through the destruction. 

No destruction offset credits shall be established for the destruction of a class II, group II substance. 

(B) DEFINITION.—For purposes of this paragraph, the 

term ‘‘destruction’’ means the conversion of a substance by 

thermal, chemical, or other means to another substance 

with little or no carbon dioxide equivalent value and no 

ozone depletion potential. 

(C) REGULATIONS.—The regulations promulgated under 

this paragraph shall include standards and protocols for 

project eligibility, certification of destroyers, monitoring, 

tracking, destruction efficiency, quantification of project 

and baseline emissions and carbon dioxide equivalent 

value, and verification. The Administrator shall ensure 

that destruction offset credits represent real and verifiable 

destruction of chlorofluorocarbons or other class I or class 

II, group I, substances authorized under subparagraph (D). 

(D) OTHER SUBSTANCES.—The Administrator may promulgate regulations to add to the list of class I and class 

II, group I, substances that may be destroyed for destruction offset credits, taking into account a candidate substance’s carbon dioxide equivalent value, ozone depletion 

potential, prevalence in banks in the United States, and 

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tainment under the class II, group II cap and the integrity 

of the class II, group II cap. The Administrator shall not 

add a class I or class II, group I substance to the list if the 

consumption of the substance has not been completely 

phased-out internationally (except for essential use exemptions or other similar exemptions) pursuant to the Montreal 

Protocol. 

(E) EXTENSION OF OFFSETS.—(i) At any time after the 

Administrator promulgates regulations pursuant to subparagraph (A), the Administrator may add the types of destruction projects authorized to receive destruction offset 

credits under this paragraph to the list of types of projects 

eligible for offset credits under section 733. Nothing in this 

paragraph shall affect the issuance of offset credits under 

section 740. 

(ii) The Administrator shall not make the addition under 

clause (i) unless the Administrator finds that insufficient 

destruction is occurring or is projected to occur under this 

paragraph and that the addition would increase destruction. 

(iii) In no event shall more than one destruction offset 

credit be issued under title VII and this section for the destruction of the same quantity of a substance. 

(10) LEGAL STATUS OF ALLOWANCES AND CREDITS.—None of 

the following constitutes a property right: 

(A) A production or consumption allowance. 

(B) A destruction offset credit. 

(c) DEADLINES FOR COMPLIANCE.—Notwithstanding the deadlines 

specified for class II substances in sections 608, 609, 610, 612, and 

613 that occur prior to January 1, 2009, the deadline for promulgating regulations under those sections for class II, group II substances shall be January 1, 2012. 

(d) EXCEPTIONS FOR ESSENTIAL USES.—Notwithstanding any 

phase down of production and consumption required by this section, 

to the extent consistent with any applicable multilateral agreement 

to which the United States is a party or otherwise adheres, the Administrator may provide the following exceptions for essential uses: 

(1) MEDICAL DEVICES.—The Administrator, after notice and 

opportunity for public comment, and in consultation with the 

Commissioner of the Food and Drug Administration, may provide an exception for the production and consumption of class 

II, group II substances solely for use in medical devices. 

(2) AVIATION SAFETY.—The Administrator, after notice and 

opportunity for public comment, may authorize the production 

and consumption of limited quantities of class II, group II substances solely for the purposes of aviation safety if the Administrator of the Federal Aviation Administration, in consultation 

with the Administrator, determines that no safe and effective 

substitute has been developed and that such authorization is 

necessary for aviation safety purposes. 

(e) DEVELOPING COUNTRIES.—Notwithstanding any phase down 

of production required by this section, the Administrator, after notice and opportunity for public comment, may authorize the production of limited quantities of class II, group II substances in excess 

of the amounts otherwise allowable under this section solely for exVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00475 Fmt 6659 Sfmt 6603 E:\HR\OC\HR137.XXX HR137

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port 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’’. 


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(2) The Administrator may, through rulemaking, exempt from the 

requirements of section 611 products containing or manufactured 

with class II, group II substances determined to have little or no 

carbon dioxide equivalent value compared to other substances used 

in similar products. 

(j) NONESSENTIAL PRODUCTS.—For the purposes of section 610, 

class II, group II substances shall be regulated under section 610(b), 

except that in applying section 610(b) the word ‘‘hydrofluorocarbon’’ 

shall be substituted for the word ‘‘chlorofluorocarbon’’ and the term 

‘‘class II, group II’’ shall be substituted for the term ‘‘class I’’. Class 

II, group II substances shall not be subject to the provisions of section 610(d). 

(k) INTERNATIONAL TRANSFERS.—In the case of class II, group II 

substances, in lieu of sections 616(a) and 616(b), this subsection 

shall apply. To the extent consistent with any applicable international agreement to which the United States is a party or otherwise adheres, including any amendment to the Montreal Protocol, 

the United States may engage in transfers with other parties to such 

agreement or amendment under the following conditions: 

(1) The United States may transfer production allowances to 

another party to such agreement or amendment if, at the time 

of the transfer, the Administrator establishes revised production 

limits for the United States accounting for the transfer in accordance with regulations promulgated pursuant to this subsection. 

(2) The United States may acquire production allowances 

from another party to such agreement or amendment if, at the 

time of the transfer, the Administrator finds that the other 

party has revised its domestic production limits in the same 

manner as provided with respect to transfers by the United 

States in the regulations promulgated pursuant to this subsection. 

(l) RELATIONSHIP TO OTHER LAWS.— (1) STATE LAWS.—For purposes of section 116, the requirements of this section for class II, group II substances shall be 

treated as requirements for the control and abatement of air 

pollution. 

(2) MULTILATERAL AGREEMENTS.—Section 614 shall apply to 

the provisions of this section concerning class II, group II substances, except that for the words ‘‘Montreal Protocol’’ there 

shall be substituted the words ‘‘Montreal Protocol, or any applicable multilateral agreement to which the United States is a 

party or otherwise adheres that restricts the production or consumption of class II, group II substances,’’ and for the words 

‘‘Article 4 of the Montreal Protocol’’ there shall be substituted 

‘‘any provision of such multilateral agreement regarding trade 

with non-parties’’. 

(3) FEDERAL FACILITIES.—For purposes of section 118, the requirements of this section for class II, group II substances and 

corresponding State, interstate, and local requirements, administrative authority, and process and sanctions shall be treated 

as requirements for the control and abatement of air pollution 

within the meaning of section 118. 

(m) CARBON DIOXIDE EQUIVALENT VALUE.—(1) In lieu of section 

602(e), the provisions of this subsection shall apply in the case of 


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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 


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Layer, that restricts the production and consumption of class II, 

group II substances, then, if all other reporting is complete, no 

such report shall be required from a person with respect to importation from parties to such agreement or amendment of 

products containing any class II, group II substance restricted 

by such agreement or amendment, after April 1 of the calendar 

year following the year during which such agreement or amendment enters into force. 

(2) BASELINE REPORTS FOR CLASS II, GROUP II SUBSTANCES.— (A) IN GENERAL.—Unless such information has been previously reported to the Administrator, on the date on which 

the first report under paragraph (1) of this subsection is required to be filed, each person who produced, imported, or 

exported a class II, group II substance, or who imported a 

product containing a class II substance, (other than a substance added to the list of class II, group II substances after 

the publication of the initial list of such substances under 

this section), shall file a report with the Administrator setting forth the amount of such substance that such person 

produced, imported, exported, or that was contained in 

products imported by that person, during each of calendar 

years 2004, 2005, and 2006. 

(B) PRODUCERS.—In reporting under subparagraph (A), 

each person who produced in the United States a class II 

substance during calendar years 2004, 2005, or 2006 

shall— 

(i) report all acquisitions or purchases of class II 

substances during each of calendar years 2004, 2005, 

and 2006 from all other persons who produced in the 

United States a class II substance during calendar 

years 2004, 2005, or 2006, and supply evidence of such 

acquisitions and purchases as deemed necessary by the 

Administrator; and 

(ii) report all transfers or sales of class II substances 

during each of calendar years 2004, 2005, and 2006 to 

all other persons who produced in the United States a 

class II substance during calendar years 2004, 2005, or 

2006, and supply evidence of such transfers and sales 

as deemed necessary by the Administrator. 

(C) ADDED SUBSTANCES.—In the case of a substance 

added to the list of class II, group II substances after publication of the initial list of such substances under this section, each person who produced, imported, exported, or imported products containing such substance in calendar year 

2004, 2005, or 2006 shall file a report with the Administrator within 180 days after the date on which such substance is added to the list, setting forth the amount of the 

substance that such person produced, imported, and exported, as well as the amount that was contained in products imported by that person, in calendar years 2004, 2005, 

and 2006. 

(o) STRATOSPHERIC OZONE AND CLIMATE PROTECTION FUND.— (1) IN GENERAL.—There is established in the Treasury of the 

United States a Stratospheric Ozone and Climate Protection 

Fund. 


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(2) DEPOSITS.—The Administrator shall deposit all proceeds 

from the auction and non-auction sale of allowances under this 

section into the Stratospheric Ozone and Climate Protection 

Fund. 

(3) USE.—Amounts deposited into the Stratospheric Ozone 

and Climate Protection Fund shall be available, subject to appropriations, exclusively for the following purposes: 

(A) RECOVERY, RECYCLING, AND RECLAMATION.—The Administrator may utilize funds to establish a program to 

incentivize the recovery, recycling, and reclamation of any 

Class II substances in order to reduce emissions of such 

substances. 

(B) MULTILATERAL FUND.—If the United States becomes 

a party or otherwise adheres to a multilateral agreement, 

including any amendment to the Montreal Protocol on Substances That Deplete the Ozone Layer, which restricts the 

production and consumption of class II, group II substances, the Administrator may utilize funds to meet any 

related contribution obligation of the United States to the 

Multilateral Fund for the Implementation of the Montreal 

Protocol or similar multilateral fund established under 

such multilateral agreement. 

(C) BEST-IN-CLASS APPLIANCES DEPLOYMENT PROGRAM.— The Secretary of Energy is authorized to utilize funds to 

carry out the purposes of section 214 of the American Clean 

Energy and Security Act of 2009. 

(D) LOW GLOBAL WARMING PRODUCT TRANSITION ASSIST- ANCE PROGRAM.— (i) IN GENERAL.—The Administrator, in consultation 

with the Secretary of Energy, may utilize funds in fiscal years 2012 through 2022 to establish a program to 

provide financial assistance to manufacturers of products containing class II, group II substances to facilitate the transition to products that contain or utilize 

alternative substances with no or low carbon dioxide 

equivalent value and no ozone depletion potential. 

(ii) DEFINITION.—In this subparagraph, the term 

‘‘products’’ means refrigerators, freezers, dehumidifiers, 

air conditioners, foam insulation, technical aerosols, 

fire protection systems, and semiconductors. 

(iii) FINANCIAL ASSISTANCE.—The Administrator 

may provide financial assistance to manufacturers pursuant to clause (i) for— 

(I) the design and configuration of new products 

that use alternative substances with no or low carbon dioxide equivalent value and no ozone depletion potential; and 

(II) the redesign and retooling of facilities for the 

manufacture of products in the United States that 

use alternative substances with no or low carbon 

dioxide equivalent value and no ozone depletion 

potential. 

(iv) REPORTS.—For any fiscal year during which the 

Administrator provides financial assistance pursuant 

to this subparagraph, the Administrator shall submit 


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a report to the Congress within 3 months of the end of 

such fiscal year detailing the amounts, recipients, specific purposes, and results of the financial assistance 

provided. 

TITLE VII—GLOBAL WARMING 

POLLUTION REDUCTION PROGRAM 

SEC. 700. DEFINITIONS. 

In this title: 

(1) ADDITIONAL.—The term ‘‘additional’’, when used with respect to reductions or avoidance of greenhouse gas emissions, or 

to sequestration of greenhouse gases, means reductions, avoidance, or sequestration that result in a lower level of net greenhouse gas emissions or atmospheric concentrations than would 

occur in the absence of an offset project. 

(2) ADDITIONALITY.—The term ‘‘additionality’’ means the extent to which reductions or avoidance of greenhouse gas emissions, or sequestration of greenhouse gases, are additional. 

(3) ADVISORY BOARD.—The term ‘‘Advisory Board’’ means the 

Offsets Integrity Advisory Board established under section 731. 

(4) AFFILIATED.—The term ‘‘affiliated’’— 

(A) when used in relation to an entity means owned or 

controlled by, or under common ownership or control with, 

another entity, as determined by the Administrator; and 

(B) when used in relation to a natural gas local distribution company, means owned or controlled by, or under common ownership or control with, another natural gas local 

distribution company, as determined by the Administrator. 

(5) ALLOWANCE.—The term ‘‘allowance’’ means a limited authorization to emit, or have attributable greenhouse gas emissions in an amount of, 1 ton of carbon dioxide equivalent of a 

greenhouse gas in accordance with this title; it includes an 

emission allowance, a compensatory allowance, or an international emission allowance. 

(6) ATTRIBUTABLE GREENHOUSE GAS EMISSIONS.—The term 

‘‘attributable greenhouse gas emissions’’ means— 

(A) for a covered entity that is a fuel producer or importer described in paragraph (13)(B), greenhouse gases 

that would be emitted from the combustion of any petroleum-based or coal-based liquid fuel, petroleum coke, or 

natural gas liquid, produced or imported by that covered 

entity for sale or distribution in interstate commerce, assuming no capture and sequestration of any greenhouse gas 

emissions; 

(B) for a covered entity that is an industrial gas producer 

or importer described in paragraph (13)(C), the tons of carbon dioxide equivalent of fossil fuel-based carbon dioxide, 

nitrous oxide, any fluorinated gas, other than nitrogen 

trifluoride, that is a greenhouse gas, or any combination 

thereof— 

(i) produced or imported by such covered entity during the previous calendar year for sale or distribution 

in interstate commerce; or 


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(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 SEQUES- TERED.—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, petroleumbased or coal-based liquid fuel, petroleum coke, or natural gas 

liquid to which section 722(b)(2) or (8) applies. 

(9) CAPPED SOURCE.—The term ‘‘capped source’’ means a 

source that directly emits capped emissions. 

(10) CARBON DIOXIDE EQUIVALENT.—The term ‘‘carbon dioxide 

equivalent’’ means the unit of measure, expressed in metric tons, 

of greenhouse gases as provided under section 711 or 712. 

(11) CARBON STOCK.—The term ‘‘carbon stock’’ means the 

quantity of carbon contained in a biological reservoir or system 

which has the capacity to accumulate or release carbon. 

(12) COMPENSATORY ALLOWANCE.—The term ‘‘compensatory 

allowance’’ means an allowance issued under section 721(f). 

(13) COVERED ENTITY.—The term ‘‘covered entity’’ means each 

of the following: 

(A) Any electricity source. 

(B) Any stationary source that produces, and any entity 

that (or any group of two or more affiliated entities that, 

in the aggregate) imports, for sale or distribution in interstate commerce in 2008 or any subsequent year, petroleumbased or coal-based liquid fuel, petroleum coke, or natural 

gas liquid, the combustion of which would emit more than 

25,000 tons of carbon dioxide equivalent, as determined by 

the Administrator. 

(C) Any stationary source that produces, and any entity 

that (or any group of two or more affiliated entities that, 

in the aggregate) imports, for sale or distribution in interstate commerce, in bulk, or in products designated by the 

Administrator, in 2008 or any subsequent year more than 

25,000 tons of carbon dioxide equivalent of— 

(i) fossil fuel-based carbon dioxide; 

(ii) nitrous oxide; 

(iii) perfluorocarbons; 

(iv) sulfur hexafluoride; 

(v) any other fluorinated gas, except for nitrogen 

trifluoride, that is a greenhouse gas, as designated by 

the Administrator under section 711(b) or (c); or 


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(vi) any combination of greenhouse gases described 

in clauses (i) through (vi). 

(D) Any stationary source that has emitted 25,000 or 

more tons of carbon dioxide equivalent of nitrogen 

trifluoride in 2008 or any subsequent year. 

(E) Any geologic sequestration site. 

(F) Any stationary source in the following industrial sectors: 

(i) Adipic acid production. 

(ii) Primary aluminum production. 

(iii) Ammonia manufacturing. 

(iv) Cement production, excluding grinding-only operations. 

(v) Hydrochlorofluorocarbon production. 

(vi) Lime manufacturing. 

(vii) Nitric acid production. 

(viii) Petroleum refining. 

(ix) Phosphoric acid production. 

(x) Silicon carbide production. 

(xi) Soda ash production. 

(xii) Titanium dioxide production. 

(xiii) Coal-based liquid or gaseous fuel production. 

(G) Any stationary source in the chemical or petrochemical sector that, in 2008 or any subsequent year— 

(i) produces acrylonitrile, carbon black, ethylene, 

ethylene dichloride, ethylene oxide, or methanol; or 

(ii) produces a chemical or petrochemical product if 

producing that product results in annual combustion 

plus process emissions of 25,000 or more tons of carbon 

dioxide equivalent. 

(H) Any stationary source that— 

(i) is in one of the following industrial sectors: ethanol production; ferroalloy production; fluorinated gas 

production; food processing; glass production; hydrogen 

production; iron and steel production; lead production; 

pulp and paper manufacturing; and zinc production; 

and 

(ii) has emitted 25,000 or more tons of carbon dioxide equivalent in 2008 or any subsequent year. 

(I) Any fossil fuel-fired combustion device (such as a boiler) or grouping of such devices that— 

(i) is all or part of an industrial source not specified 

in subparagraph (D), (F), (G), or (H); and 

(ii) has emitted 25,000 or more tons of carbon dioxide equivalent in 2008 or any subsequent year. 

(J) Any natural gas local distribution company that (or 

any group of 2 or more affiliated natural gas local distribution companies that, in the aggregate) in 2008 or any subsequent year, delivers 460,000,000 cubic feet or more of natural gas to customers that are not covered entities. 

(14) CREDITING PERIOD.—The term ‘‘crediting period’’ means 

the period with respect to which an offset project is eligible to 

earn offset credits under part D, as determined under section 

734(c). 


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(15) DESIGNATED REPRESENTATIVE.—The term ‘‘designated 

representative’’ means, with respect to a covered entity, a reporting entity, an offset project developer, or any other entity receiving or holding allowances or offset credits under this title, an 

individual authorized, through a certificate of representation 

submitted to the Administrator by the owners and operators or 

similar entity official, to represent the owners and operators or 

similar entity official in all matters pertaining to this title (including the holding, transfer, or disposition of allowances or 

offset credits), and to make all submissions to the Administrator under this title. 

(16) DEVELOPING COUNTRY.—The term ‘‘developing country’’ 

means a country eligible to receive official development assistance according to the income guidelines of the Development Assistance Committee of the Organization for Economic Cooperation and Development. 

(17) DOMESTIC OFFSET CREDIT.—The term ‘‘domestic offset 

credit’’ means an offset credit issued under part D, other than 

an international offset credit. 

(18) ELECTRICITY SOURCE.—The term ‘‘electricity source’’ 

means a stationary source that includes one or more utility 

units. 

(19) EMISSION.—The term ‘‘emission’’ means the release of a 

greenhouse gas into the ambient air. Such term does not include gases that are captured and sequestered, except to the extent that they are later released into the atmosphere, in which 

case compliance must be demonstrated pursuant to section 

722(b)(5). 

(20) EMISSION ALLOWANCE.—The term ‘‘emission allowance’’ 

means an allowance established under section 721(a) or section 

726(g)(2) or (h)(1)(C). 

(21) FAIR MARKET VALUE.—The term ‘‘fair market value’’ 

means the average daily closing price on registered exchanges 

or, if such a price is unavailable, the average price as determined by the Administrator, during a specified time period, of 

an emission allowance. 

(22) FEDERAL LAND.—The term ‘‘Federal land’’ means land 

that is owned by the United States, other than land held in 

trust for an Indian or Indian tribe. 

(23) FOSSIL FUEL.—The term ‘‘fossil fuel’’ means natural gas, 

petroleum, or coal, or any form of solid, liquid, or gaseous fuel 

derived from such material, including consumer products that 

are derived from such materials and are combusted. 

(24) FOSSIL FUEL-FIRED.—The term ‘‘fossil fuel-fired’’ means 

powered by combustion of fossil fuel, alone or in combination 

with any other fuel, regardless of the percentage of fossil fuel 

consumed. 

(25) FUGITIVE EMISSIONS.—The term ‘‘fugitive emissions’’ 

means emissions from leaks, valves, joints, or other small openings in pipes, ducts, or other equipment, or from vents. 

(26) GEOLOGIC SEQUESTRATION; GEOLOGICALLY SEQUESTERED.—The terms ‘‘geologic sequestration’’ and ‘‘geologically 

sequestered’’ mean the sequestration of greenhouse gases in subsurface geologic formations for purposes of permanent storage. 


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(27) GEOLOGIC SEQUESTRATION SITE.—The term ‘‘geologic sequestration site’’ means a site where carbon dioxide is geologically sequestered. 

(28) GREENHOUSE GAS.—The term ‘‘greenhouse gas’’ means 

any gas described in section 711(a) or designated under section 

711(b), (c), or (e), except to the extent that it is regulated under 

title VI. 

(29) HIGH CONSERVATION PRIORITY LAND.—The term ‘‘high 

conservation priority land’’ means land that is not Federal land 

and is— 

(A) globally or State ranked as critically imperiled or imperiled under a State Natural Heritage Program; or 

(B) old-growth or late-successional forest, as identified by 

the office of the State Forester or relevant State agency with 

regulatory jurisdiction over forestry activities. 

(30) HOLD.—The term ‘‘hold’’ means, with respect to an allowance or offset credit, to have in the appropriate account in the 

allowance tracking system, or submit to the Administrator for 

recording in such account. 

(31) INDUSTRIAL SOURCE.—The term ‘‘industrial source’’ 

means any stationary source that— 

(A) is not an electricity source; and 

(B) is in— 

(i) the manufacturing sector (as defined in North 

American Industrial Classification System codes 31, 

32, and 33); or 

(ii) the natural gas processing or natural gas pipeline transportation sector (as defined in North American Industrial Classification System codes 211112 or 

486210). 

(32) INTERNATIONAL EMISSION ALLOWANCE.—The term ‘‘international emission allowance’’ means a tradable authorization to 

emit 1 ton of carbon dioxide equivalent of greenhouse gas that 

is issued by a national or supranational foreign government 

pursuant to a qualifying international program designated by 

the Administrator pursuant to section 728(a). 

(33) INTERNATIONAL OFFSET CREDIT.—The term ‘‘international offset credit’’ means an offset credit issued by the Administrator under section 743. 

(34) LEAKAGE.—The term ‘‘leakage’’ means a significant increase in greenhouse gas emissions, or significant decrease in 

sequestration, which is caused by an offset project and occurs 

outside the boundaries of the offset project. 

(35) MINERAL SEQUESTRATION.—The term ‘‘mineral sequestration’’ means sequestration of carbon dioxide from the atmosphere by capturing carbon dioxide into a permanent mineral, 

such as the aqueous precipitation of carbonate minerals that results in the storage of carbon dioxide in a mineral form. 

(36) NATURAL GAS LIQUID.—The term ‘‘natural gas liquid’’ 

means ethane, butane, isobutane, natural gasoline, and propane 

which is ready for commercial sale or use. 

(37) NATURAL GAS LOCAL DISTRIBUTION COMPANY.—The term 

‘‘natural gas local distribution company’’ has the meaning given 

the term ‘‘local distribution company’’ in section 2(17) of the 

Natural Gas Policy Act of 1978 (15 U.S.C. 3301(17)). 


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(38) OFFSET CREDIT.—The term ‘‘offset credit’’ means a credit 

issued under part D. 

(39) OFFSET PROJECT.—The term ‘‘offset project’’ means a 

project or activity that reduces or avoids greenhouse gas emissions, or sequesters greenhouse gases, and for which offset credits are issued under part D. 

(40) OFFSET PROJECT DEVELOPER.—The term ‘‘offset project 

developer’’ means the individual or entity designated as the offset project developer in an offset project approval petition under 

section 735(c)(1). 

(41) PETROLEUM.—The term ‘‘petroleum’’ includes crude oil, 

tar sands, oil shale, and heavy oils. 

(42) RENEWABLE BIOMASS.—The term ‘‘renewable biomass’’ 

means any of the following: 

(A) Plant material, including waste material, harvested 

or collected from actively managed agricultural land that 

was in cultivation, cleared, or fallow and nonforested on 

January 1, 2009. 

(B) Plant material, including waste material, harvested 

or collected from pastureland that was nonforested on January 1, 2009. 

(C) Nonhazardous vegetative matter derived from waste, 

including separated yard waste, landscape right-of-way 

trimmings, construction and demolition debris or food 

waste (but not municipal solid waste, recyclable waste 

paper, painted, treated or pressurized wood, or wood contaminated with plastic or metals). 

(D) Animal waste or animal byproducts, including products of animal waste digesters. 

(E) Algae. 

(F) Trees, brush, slash, residues, or any other vegetative 

matter removed from within 600 feet of any building, 

campground, or route designated for evacuation by a public 

official with responsibility for emergency preparedness, or 

from within 300 feet of a paved road, electric transmission 

line, utility tower, or water supply line. 

(G) Residues from or byproducts of milled logs. 

(H) Any of the following removed from forested land that 

is not Federal and is not high conservation priority land: 

(i) Trees, brush, slash, residues, interplanted energy 

crops, or any other vegetative matter removed from an 

actively managed tree plantation established— 

(I) prior to January 1, 2009; or 

(II) on land that, as of January 1, 2009, was 

cultivated or fallow and non-forested. 

(ii) Trees, logging residue, thinnings, cull trees, pulpwood, and brush removed from naturally-regenerated 

forests or other non-plantation forests, including for the 

purposes of hazardous fuel reduction or preventative 

treatment for reducing or containing insect or disease 

infestation. 

(iii) Logging residue, thinnings, cull trees, pulpwood, 

brush and species that are non-native and noxious, 

from stands that were planted and managed after January 1, 2009, to restore or maintain native forest types. 


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(iv) Dead or severely damaged trees removed within 

5 years of fire, blowdown, or other natural disaster, 

and badly infested trees. 

(I) Materials, pre-commercial thinnings, or removed 

invasive species from National Forest System land and 

public lands (as defined in section 103 of the Federal Land 

Policy and Management Act of 1976 (43 U.S.C. 1702)), including those that are byproducts of preventive treatments 

(such as trees, wood, brush, thinnings, chips, and slash), 

that are removed as part of a federally recognized timber 

sale, or that are removed to reduce hazardous fuels, to reduce or contain disease or insect infestation, or to restore 

ecosystem health, and that are— 

(i) not from components of the National Wilderness 

Preservation System, Wilderness Study Areas, Inventoried Roadless Areas, old growth or mature forest 

stands, components of the National Landscape Conservation System, National Monuments, National Conservation Areas, Designated Primitive Areas; or Wild 

and Scenic Rivers corridors; 

(ii) harvested in environmentally sustainable quantities, as determined by the appropriate Federal land 

manager; and 

(iii) are harvested in accordance with Federal and 

State law, and applicable land management plans. 

(43) RETIRE.—The term ‘‘retire’’, with respect to an allowance 

or offset credit established or issued under this title, means to 

disqualify such allowance or offset credit for any subsequent 

use under this title, regardless of whether the use is a sale, exchange, or submission of the allowance or offset credit to satisfy 

a compliance obligation. 

(44) REVERSAL.—The term ‘‘reversal’’ means an intentional or 

unintentional loss of sequestered greenhouse gases to the atmosphere. 

(45) SEQUESTERED AND SEQUESTRATION.—The terms ‘‘sequestered’’ and ‘‘sequestration’’ mean the separation, isolation, or removal of greenhouse gases from the atmosphere, as determined 

by the Administrator. The terms include biological, geologic, 

and mineral sequestration, but do not include ocean fertilization techniques. 

(46) STATIONARY SOURCE.—The term ‘‘stationary source’’ 

means any integrated operation comprising any plant, building, 

structure, or stationary equipment, including support buildings 

and equipment, that is located within one or more contiguous 

or adjacent properties, is under common control of the same 

person or persons, and emits or may emit a greenhouse gas. 

(47) STRATEGIC RESERVE ALLOWANCE.—The term ‘‘strategic 

reserve allowance’’ means an emission allowance reserved for, 

transferred to, or deposited in the strategic reserve, or established, under section 726. 

(48) UNCAPPED EMISSIONS.—The term ‘‘uncapped emissions’’ 

means emissions of greenhouse gases emitted after December 

31, 2011, that are not capped emissions. 

(49) UNITED STATES GREENHOUSE GAS EMISSIONS.—The term 

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tity of annual greenhouse gas emissions from the United States, 

as calculated by the Administrator and reported to the United 

Nations Framework Convention on Climate Change Secretariat. 

(50) UTILITY UNIT.—The term ‘‘utility unit’’ means a combustion device that, on January 1, 2009, or any date thereafter, is 

fossil fuel-fired and serves a generator that produces electricity 

for sale, unless such combustion device, during the 12-month 

period starting the later of January 1, 2009, or the commencement of commercial operation and each calendar year starting 

after such later date— 

(A) is part of an integrated cycle system that cogenerates 

steam and electricity during normal operation and that 

supplies one-third or less of its potential electric output capacity and 25 MW or less of electrical output for sale; or 

(B) combusts materials of which more than 95 percent is 

municipal solid waste on a heat input basis. 

(51) VINTAGE YEAR.—The term ‘‘vintage year’’ means the calendar year for which an emission allowance is established 

under section 721(a) or which is assigned to an emission allowance under section 726(g)(3)(A), except that the vintage year for 

a strategic reserve allowance shall be the year in which such allowance is purchased at auction. 

PART A—GLOBAL WARMING POLLUTION 

REDUCTION GOALS AND TARGETS 

SEC. 701. FINDINGS AND PURPOSE. 

(a) FINDINGS.—The Congress finds as follows: 

(1) Global warming poses a significant threat to the national 

security, economy, public health and welfare, and environment 

of the United States, as well as of other nations. 

(2) Reviews of scientific studies, including by the Intergovernmental Panel on Climate Change and the National Academy of 

Sciences, demonstrate that global warming is the result of the 

combined anthropogenic greenhouse gas emissions from numerous sources of all types and sizes. Each increment of emission, 

when combined with other emissions, causes or contributes materially to the acceleration and extent of global warming and its 

adverse effects for the lifetime of such gas in the atmosphere. 

Accordingly, controlling emissions in small as well as large 

amounts is essential to prevent, slow the pace of, reduce the 

threats from, and mitigate global warming and its adverse effects. 

(3) Because they induce global warming, greenhouse gas 

emissions cause or contribute to injuries to persons in the 

United States, including— 

(A) adverse health effects such as disease and loss of life; 

(B) displacement of human populations; 

(C) damage to property and other interests related to 

ocean levels, acidification, and ice changes; 

(D) severe weather and seasonal changes; 

(E) disruption, costs, and losses to business, trade, employment, farms, subsistence, aesthetic enjoyment of the environment, recreation, culture, and tourism; 

(F) damage to plants, forests, lands, and waters; 


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(G) harm to wildlife and habitat; 

(H) scarcity of water and the decreased abundance of 

other natural resources; 

(I) worsening of tropospheric air pollution; 

(J) substantial threats of similar damage; and 

(K) other harm. 

(4) That many of these effects and risks of future effects of 

global warming are widely shared does not minimize the adverse effects individual persons have suffered, will suffer, and 

are at risk of suffering because of global warming. 

(5) That some of the adverse and potentially catastrophic effects of global warming are at risk of occurring and not a certainty does not negate the harm persons suffer from actions that 

increase the likelihood, extent, and severity of such future impacts. 

(6) Nations of the world look to the United States for leadership in addressing the threat of and harm from global warming. Full implementation of the Safe Climate Act is critical to 

engage other nations in an international effort to mitigate the 

threat of and harm from global warming. 

(7) Global warming and its adverse effects are occurring and 

are likely to continue and increase in magnitude, and to do so 

at a greater and more harmful rate, unless the Safe Climate Act 

is fully implemented and enforced in an expeditious manner. 

(b) PURPOSE.—It is the general purpose of the Safe Climate Act 

to help prevent, reduce the pace of, mitigate, and remedy global 

warming and its adverse effects. To fulfill such purpose, it is necessary to— 

(1) require the timely fulfillment of all governmental acts and 

duties, both substantive and procedural, and the prompt compliance of covered entities with the requirements of the Safe Climate Act; 

(2) establish and maintain an effective, transparent, and fair 

market for emission allowances and preserve the integrity of the 

cap on emissions and of offset credits; 

(3) advance the production and deployment of clean energy 

and energy efficiency technologies; and 

(4) ensure effective enforcement of the Safe Climate Act by 

citizens, States, Indian tribes, and all levels of government because each violation of the Safe Climate Act is likely to result 

in an additional increment of greenhouse gas emission and will 

slow the pace of implementation of the Safe Climate Act and 

delay the achievement of the goals set forth in section 702, and 

cause or contribute to global warming and its adverse effects. 

SEC. 702. ECONOMY-WIDE REDUCTION GOALS. 

The goals of the Safe Climate Act are to reduce steadily the quantity of United States greenhouse gas emissions such that— 

(1) in 2012, the quantity of United States greenhouse gas 

emissions does not exceed 97 percent of the quantity of United 

States greenhouse gas emissions in 2005; 

(2) in 2020, the quantity of United States greenhouse gas 

emissions does not exceed 80 percent of the quantity of United 

States greenhouse gas emissions in 2005; 


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(3) in 2030, the quantity of United States greenhouse gas 

emissions does not exceed 58 percent of the quantity of United 

States greenhouse gas emissions in 2005; and 

(4) in 2050, the quantity of United States greenhouse gas 

emissions does not exceed 17 percent of the quantity of United 

States greenhouse gas emissions in 2005. 

SEC. 703. REDUCTION TARGETS FOR SPECIFIED SOURCES. 

(a) IN GENERAL.—The regulations issued under section 721 shall 

cap and reduce annually the greenhouse gas emissions of capped 

sources each calendar year beginning in 2012 such that— 

(1) in 2012, the quantity of greenhouse gas emissions from 

capped sources does not exceed 97 percent of the quantity of 

greenhouse gas emissions from such sources in 2005; 

(2) in 2020, the quantity of greenhouse gas emissions from 

capped sources does not exceed 83 percent of the quantity of 

greenhouse gas emissions from such sources in 2005; 

(3) in 2030, the quantity of greenhouse gas emissions from 

capped sources does not exceed 58 percent of the quantity of 

greenhouse gas emissions from such sources in 2005; and 

(4) in 2050, the quantity of greenhouse gas emissions from 

capped sources does not exceed 17 percent of the quantity of 

greenhouse gas emissions from such sources in 2005. 

(b) DEFINITION.—For purposes of this section, the term ‘‘greenhouse gas emissions from such sources in 2005’’ means emissions to 

which section 722 would have applied if the requirements of this 

title for the specified year had been in effect for 2005. 

SEC. 704. SUPPLEMENTAL POLLUTION REDUCTIONS. 

For the purposes of decreasing the likelihood of catastrophic climate change, preserving tropical forests, building capacity to generate offset credits, and facilitating international action on global 

warming, the Administrator shall set aside the percentage specified 

in section 781 of the quantity of emission allowances established 

under section 721(a) for each year, to be used to achieve a reduction 

of greenhouse gas emissions from deforestation in developing countries in accordance with part E. In 2020, activities supported under 

part E shall provide greenhouse gas reductions in an amount equal 

to an additional 10 percentage points of reductions from United 

States greenhouse gas emissions in 2005. The Administrator shall 

distribute these allowances with respect to activities in countries 

that enter into and implement agreements or arrangements relating 

to reduced deforestation as described in section 754(a)(2). 

SEC. 705. REVIEW AND PROGRAM RECOMMENDATIONS. 

(a) IN GENERAL.—The Administrator shall, in consultation with 

appropriate Federal agencies, submit to Congress a report not later 

than July 1, 2013, and every 4 years thereafter, that includes— 

(1) an analysis of key findings based on the latest scientific 

information and data relevant to global climate change; 

(2) an analysis of capabilities to monitor and verify greenhouse gas reductions on a worldwide basis, including for the 

United States, as required under the Safe Climate Act; and 

(3) an analysis of the status of worldwide greenhouse gas reduction efforts, including implementation of the Safe Climate 

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pheric concentrations of greenhouse gases, preventing significant irreversible consequences of climate change, and reducing 

vulnerability to the impacts of climate change. 

(b) EXCEPTION.—Paragraph (3) of subsection (a) shall not apply 

to the first report submitted under such subsection. 

(c) LATEST SCIENTIFIC INFORMATION.—The analysis required 

under subsection (a)(1) shall— 

(1) address existing scientific information and reports, considering, to the greatest extent possible, the most recent assessment 

report of the Intergovernmental Panel on Climate Change, reports by the United States Global Change Research Program, 

the Natural Resources Climate Change Adaptation Panel established under section 475 of the American Clean Energy and Security Act of 2009, and Federal agencies, and the European 

Union’s global temperature data assessment; and 

(2) review trends and projections for— 

(A) global and country-specific annual emissions of 

greenhouse gases, and cumulative greenhouse gas emissions 

produced between 1850 and the present, including— 

(i) global cumulative emissions of anthropogenic 

greenhouse gases; 

(ii) global annual emissions of anthropogenic greenhouse gases; and 

(iii) by country, annual total, annual per capita, and 

cumulative anthropogenic emissions of greenhouse 

gases for the top 50 emitting nations; 

(B) significant changes, both globally and by region, in 

annual net non-anthropogenic greenhouse gas emissions 

from natural sources, including permafrost, forests, or 

oceans; 

(C) global atmospheric concentrations of greenhouse 

gases, expressed in annual concentration units as well as 

carbon dioxide equivalents based on 100-year global warming potentials; 

(D) major climate forcing factors, such as aerosols; 

(E) global average temperature, expressed as seasonal 

and annual averages in land, ocean, and land-plus-ocean 

averages; and 

(F) sea level rise; 

(3) assess the current and potential impacts of global climate 

change on— 

(A) human populations, including impacts on public 

health, economic livelihoods, subsistence, human infrastructure, and displacement or permanent relocation due to 

flooding, severe weather, extended drought, erosion, or 

other ecosystem changes; 

(B) freshwater systems, including water resources for 

human consumption and agriculture and natural and 

managed ecosystems, flood and drought risks, and relative 

humidity; 

(C) the carbon cycle, including impacts related to the 

thawing of permafrost, the frequency and intensity of wildfire, and terrestrial and ocean carbon sinks; 


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(D) ecosystems and animal and plant populations, including impacts on species abundance, phenology, and distribution; 

(E) oceans and ocean ecosystems, including effects on sea 

level, ocean acidity, ocean temperatures, coral reefs, ocean 

circulation, fisheries, and other indicators of ocean ecosystem health; 

(F) the cryosphere, including effects on ice sheet mass 

balance, mountain glacier mass balance, and sea-ice extent 

and volume; 

(G) changes in the intensity, frequency, or distribution of 

severe weather events, including precipitation, tropical cyclones, tornadoes, and severe heat waves; 

(H) agriculture and forest systems; and 

(I) any other indicators the Administrator deems appropriate; 

(4) summarize any significant socio-economic impacts of climate change in the United States, including the territories of 

the United States, drawing on work by Federal agencies and 

the academic literature, including impacts on— 

(A) public health; 

(B) economic livelihoods and subsistence; 

(C) displacement or permanent relocation due to flooding, 

severe weather, extended drought, or other ecosystem 

changes; 

(D) human infrastructure, including coastal infrastructure vulnerability to extreme events and sea level rise, river 

floodplain infrastructure, and sewer and water management systems; 

(E) agriculture and forests, including effects on potential 

growing season, distribution, and yield; 

(F) water resources for human consumption, agriculture 

and natural and managed ecosystems, flood and drought 

risks, and relative humidity; 

(G) energy supply and use; and 

(H) transportation; 

(5) in assessing risks and impacts, use a risk management 

framework, including both qualitative and quantitative measures, to assess the observed and projected impacts of current 

and future climate change, accounting for— 

(A) both monetized and non-monetized losses; 

(B) potential nonlinear, abrupt, or essentially irreversible 

changes in the climate system; 

(C) potential nonlinear increases in the cost of impacts; 

(D) potential low-probability, high impact events; and 

(E) whether impacts are transitory or essentially permanent; and 

(6) based on the findings of the Administrator under this section, as well as assessments produced by the Intergovernmental 

Panel on Climate Change, the United States Global Change Research program, and other relevant scientific entities— 

(A) describe increased risks to natural systems and society that would result from an increase in global average 

temperature 3.6 degrees Fahrenheit (2 degrees Celsius) 

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pheric greenhouse gas concentrations above 450 parts per 

million carbon dioxide equivalent; and 

(B) identify and assess— 

(i) significant residual risks not avoided by the 

thresholds described in subparagraph (A); 

(ii) alternative thresholds or targets that may more 

effectively limit the risks identified pursuant to clause 

(i); and 

(iii) thresholds above those described in subparagraph (A) which significantly increase the risk of certain impacts or render them essentially permanent. 

(d) STATUS OF MONITORING AND VERIFICATION CAPABILITIES TO

EVALUATE GREENHOUSE GAS REDUCTION EFFORTS.—The analysis 

required under subsection (a)(2) shall evaluate the capabilities of 

the monitoring, reporting, and verification systems used to quantify 

progress in achieving reductions in greenhouse gas emissions both 

globally and in the United States (as described in section 702), including— 

(1) quantification of emissions and emission reductions by entities participating in the cap and trade program under this 

title; 

(2) quantification of emissions and emission reductions by entities participating in the offset program under this title; 

(3) quantification of emission and emissions reductions by entities regulated by performance standards; 

(4) quantification of aggregate net emissions and emissions 

reductions by the United States; and 

(5) quantification of global changes in net emissions and in 

sources and sinks of greenhouse gases. 

(e) STATUS OF GREENHOUSE GAS REDUCTION EFFORTS.—The 

analysis required under subsection (a)(3) shall address— 

(1) whether the programs under Safe Climate Act and other 

Federal statutes are resulting in sufficient United States greenhouse gas emissions reductions to meet the emissions reduction 

goals described in section 702, taking into account the use of 

offsets; and 

(2) whether United States actions, taking into account international actions, commitments, and trends, and considering the 

range of plausible emissions scenarios, are sufficient to avoid— 

(A) atmospheric greenhouse gas concentrations above 450 

parts per million carbon dioxide equivalent; 

(B) global average surface temperature 3.6 degrees Fahrenheit (2 degrees Celsius) above the pre-industrial average, 

or such other temperature thresholds as the Administrator 

deems appropriate; and 

(C) other temperature or greenhouse gas thresholds identified pursuant to subsection (c)(6)(B). 

(f) RECOMMENDATIONS.— 

(1) LATEST SCIENTIFIC INFORMATION.—Based on the analysis 

described in subsection (a)(1), each report under subsection (a) 

shall identify actions that could be taken to— 

(A) improve the characterization of changes in the earthclimate system and impacts of global climate change; 

(B) better inform decision making and actions related to 

global climate change; 


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(C) mitigate risks to natural and social systems; and 

(D) design policies to better account for climate risks. 

(2) MONITORING, REPORTING AND VERIFICATION.—Based on 

the analysis described in subsection (a)(2), each report under 

subsection (a) shall identify key gaps in measurement, reporting, and verification capabilities and make recommendations to 

improve the accuracy and reliability of those capabilities. 

(3) STATUS OF GREENHOUSE GAS REDUCTION EFFORTS.— 

Based on the analysis described in subsection (a)(3), taking into 

account international actions, commitments, and trends, and 

considering the range of plausible emissions scenarios, each report under subsection (a) shall identify— 

(A) the quantity of additional reductions required to meet 

the emissions reduction goals in section 702; 

(B) the quantity of additional reductions in global greenhouse gas emissions needed to avoid the concentration and 

temperature thresholds identified in subsection (e); and 

(C) possible strategies and approaches for achieving additional reductions. 

(g) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 

be appropriated to carry out this section such sums as may be necessary. 

SEC. 706. NATIONAL ACADEMY REVIEW. 

(a) IN GENERAL.—Not later than 1 year after the date of enactment of this title, the Administrator shall offer to enter into a contract with the National Academy of Sciences (in this section referred 

to as the ‘‘Academy’’) under which the Academy shall, not later than 

July 1, 2014, and every 4 years thereafter, submit to Congress and 

the Administrator a report that includes— 

(1) a review of the most recent report and recommendations 

issued under section 705; and 

(2) an analysis of technologies to achieve reductions in greenhouse gas emissions. 

(b) FAILURE TO ISSUE A REPORT.—In the event that the Administrator has not issued all or part of the most recent report required 

under section 705, the Academy shall conduct its own review and 

analysis of the required information. 

(c) TECHNOLOGICAL INFORMATION.—The analysis required under 

subsection (a)(2) shall— 

(1) review existing technological information and reports, including the most recent reports by the Department of Energy, 

the United States Global Change Research Program, the Intergovernmental Panel on Climate Change, and the International 

Energy Agency and any other relevant information on technologies or practices that reduce or limit greenhouse gas emissions; 

(2) include the participation of technical experts from relevant 

private industry sectors; 

(3) review the current and future projected deployment of 

technologies and practices in the United States that reduce or 

limit greenhouse gas emissions, including— 

(A) technologies for capture and sequestration of greenhouse gases; 

(B) technologies to improve energy efficiency; 


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(C) low- or zero-greenhouse gas emitting energy technologies; 

(D) low- or zero-greenhouse gas emitting fuels; 

(E) biological sequestration practices and technologies; 

and 

(F) any other technologies the Academy deems relevant; 

and 

(4) review and compare the emissions reduction potential, 

commercial viability, market penetration, investment trends, 

and deployment of the technologies described in paragraph (3), 

including— 

(A) the need for additional research and development, including publicly funded research and development; 

(B) the extent of commercial deployment, including, 

where appropriate, a comparison to the cost and level of deployment of conventional fossil fuel-fired energy technologies and devices; and 

(C) an evaluation of any substantial technological, legal, 

or market-based barriers to commercial deployment. 

(d) RECOMMENDATIONS.— (1) LATEST SCIENTIFIC INFORMATION.—Based on the review 

described in subsection (a)(1), the Academy shall identify actions that could be taken to— 

(A) improve the characterization of changes in the earthclimate system and impacts of global climate change; 

(B) better inform decision making and actions related to 

global climate change; 

(C) mitigate risks to natural and social systems; 

(D) design policies to better account for climate risks; and 

(E) improve the accuracy and reliability of capabilities to 

monitor, report, and verify greenhouse gas emissions reduction efforts. 

(2) TECHNOLOGICAL INFORMATION.—Based on the analysis described in subsection (a)(2), the Academy shall identify— 

(A) additional emissions reductions that may be possible 

as a result of technologies described in the analysis; 

(B) barriers to the deployment of such technologies; and 

(C) actions that could be taken to speed deployment of 

such technologies. 

(3) STATUS OF GREENHOUSE GAS REDUCTION EFFORTS.— Based on the review described in subsection (a)(1), the Academy 

shall identify— 

(A) the quantity of additional reductions required to meet 

the emissions reduction goals described in section 702; and 

(B) the quantity of additional reductions in global greenhouse gas emissions needed to avoid the concentration and 

temperature thresholds described in section 705(c)(6)(A) or 

identified pursuant to section 705(c)(6)(B). 

(e) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 

be appropriated to carry out this section such sums as may be necessary. 

SEC. 707. PRESIDENTIAL RESPONSE AND RECOMMENDATIONS. 

Not later than July 1, 2015, and every 4 years thereafter— 

(1) the President shall direct relevant Federal agencies to use 

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fied in the reports submitted under sections 705 and 706 and 

to address any shortfalls identified in such reports; and 

(2) in the event that the National Academy of Sciences has 

concluded, in the most recent report submitted under section 

706, that the United States will not achieve the necessary domestic greenhouse gas emissions reductions, or that global actions will not maintain safe global average surface temperature 

and atmospheric greenhouse gas concentration thresholds, the 

President shall submit to Congress a plan identifying domestic 

and international actions that will achieve necessary additional 

greenhouse gas reductions, including any recommendations for 

legislative action. 

PART B—DESIGNATION AND REGISTRATION 

OF GREENHOUSE GASES 

SEC. 711. DESIGNATION OF GREENHOUSE GASES. 

(a) GREENHOUSE GASES.—For purposes of this title, the following 

are greenhouse gases: 

(1) Carbon dioxide. 

(2) Methane. 

(3) Nitrous oxide. 

(4) Sulfur hexafluoride. 

(5) Hydrofluorocarbons from a chemical manufacturing process at an industrial stationary source. 

(6) Any perfluorocarbon. 

(7) Nitrogen trifluoride. 

(8) Any other anthropogenic gas designated as a greenhouse 

gas by the Administrator under this section. 

(b) DETERMINATION ON ADMINISTRATOR’S INITIATIVE.—The Administrator shall, by rule— 

(1) determine whether 1 metric ton of another anthropogenic 

gas makes the same or greater contribution to global warming 

over 100 years as 1 metric ton of carbon dioxide; 

(2) determine the carbon dioxide equivalent value for each gas 

with respect to which the Administrator makes an affirmative 

determination under paragraph (1); 

(3) for each gas with respect to which the Administrator 

makes an affirmative determination under paragraph (1) and 

that is used as a substitute for a class I or class II substance 

under title VI, determine the extent to which to regulate that 

gas under section 619 and specify appropriate compliance obligations under section 619; 

(4) designate as a greenhouse gas for purposes of this title 

each gas for which the Administrator makes an affirmative determination under paragraph (1), to the extent that it is not regulated under section 619; and 

(5) specify the appropriate compliance obligations under this 

title for each gas designated as a greenhouse gas under paragraph (4). 

(c) PETITIONS TO DESIGNATE A GREENHOUSE GAS.— (1) IN GENERAL.—Any person may petition the Administrator 

to designate as a greenhouse gas any anthropogenic gas 1 metric ton of which makes the same or greater contribution to global warming over 100 years as 1 metric ton of carbon dioxide. 


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(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— 


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(A) formulate recommendations regarding such determination, subject to a peer review process; and 

(B) submit such recommendations in writing to the Administrator. 

(e) MANUFACTURING AND EMISSION NOTICES.— 

(1) NOTICE REQUIREMENT.— 

(A) IN GENERAL.—Effective 24 months after the date of 

enactment of this title, no person may manufacture or introduce into interstate commerce a fluorinated gas, or emit 

a significant quantity, as determined by the Administrator, 

of any fluorinated gas that is generated as a byproduct 

during the production or use of another fluorinated gas, 

unless— 

(i) the gas is designated as a greenhouse gas under 

this section or is an ozone-depleting substance listed as 

a class I or class II substance under title VI; 

(ii) the Administrator has determined that 1 metric 

ton of such gas does not make a contribution to global 

warming that is equal to or greater than that made by 

1 metric ton of carbon dioxide; or 

(iii) the person manufacturing or importing the gas 

for distribution into interstate commerce, or emitting 

the gas, has submitted to the Administrator, at least 90 

days before the start of such manufacture, introduction 

into commerce, or emission, a notice of such person’s 

manufacture, introduction into commerce, or emission 

of such gas, and the Administrator has not determined 

that notice or a substantially similar notice is incomplete. 

(B) ALTERNATIVE COMPLIANCE.—For a gas that is a substitute for a class I or class II substance under title VI and 

either has been listed as acceptable for use under section 

612 or is currently subject to evaluation under section 612, 

the Administrator may accept the notice and information 

provided pursuant to that section as fulfilling the obligation under clause (iii) of subparagraph (A). 

(2) REVIEW AND ACTION BY THE ADMINISTRATOR.— 

(A) COMPLETENESS.—Not later than 90 days after receipt 

of notice under paragraph (1)(A)(iii) or (B), the Administrator shall determine whether the notice is complete. 

(B) DETERMINATION.— If the Administrator determines 

that the notice is complete, the Administrator shall, after 

notice and an opportunity for comment, not later than 12 

months after receipt of the notice— 

(i) issue and publish in the Federal Register a determination that 1 metric ton of the gas does not make a 

contribution to global warming over 100 years that is 

equal to or greater than that made by 1 metric ton of 

carbon dioxide and an explanation of the decision; or 

(ii) determine that 1 metric ton of the gas makes a 

contribution to global warming over 100 years that is 

equal to or greater than that made by 1 metric ton of 

carbon dioxide, and take the actions described in subsection (b) with respect to such gas. 


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(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 


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CARBON DIOXIDE EQUIVALENT OF 1 TON OF 

LISTED GREENHOUSE GASES—Continued 

Greenhouse gas (1 metric ton) Carbon dioxide equivalent 

(metric tons) 

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 

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ties, corporations, and other organizations to support various 

greenhouse gas emission reporting and reduction policies for the 

member States and Indian tribes. 

(2) REPORTING ENTITY.—The term ‘‘reporting entity’’ means— 

(A) a covered entity; 

(B) an entity that— 

(i) would be a covered entity if it had emitted, produced, imported, manufactured, or delivered in 2008 or 

any subsequent year more than the applicable threshold level in the definition of covered entity in paragraph (13) of section 700; and 

(ii) has emitted, produced, imported, manufactured, 

or delivered in 2008 or any subsequent year more than 

the applicable threshold level in the definition of covered entity in paragraph (13) of section 700, provided 

that the figure of 25,000 tons of carbon dioxide equivalent is read instead as 10,000 tons of carbon dioxide 

equivalent and the figure of 460,000,000 cubic feet is 

read instead as 184,000,000 cubic feet; 

(C) any other entity that emits a greenhouse gas, or produces, imports, manufactures, or delivers material whose 

use results or may result in greenhouse gas emissions if the 

Administrator determines that reporting under this section 

by such entity will help achieve the purposes of this title or 

title VIII; 

(D) any vehicle fleet with emissions of more than 25,000 

tons of carbon dioxide equivalent on an annual basis, if the 

Administrator determines that the inclusion of such fleet 

will help achieve the purposes of this title or title VIII; or 

(E) any entity that delivers electricity to an energy-intensive facility in an industrial sector that meets the energy or 

greenhouse gas intensity criteria in section 764(b)(2)(A)(i). 

(b) REGULATIONS.— (1) IN GENERAL.—Not later than 6 months after the date of 

enactment of this title, the Administrator shall issue regulations 

establishing a Federal greenhouse gas registry. Such regulations shall— 

(A) require reporting entities to submit to the Administrator data on— 

(i) greenhouse gas emissions in the United States; 

(ii) the production and manufacture in the United 

States, importation into the United States, and, at the 

discretion of the Administrator, exportation from the 

United States, of fuels and industrial gases the uses of 

which result or may result in greenhouse gas emissions; 

(iii) deliveries in the United States of natural gas, 

and any other gas meeting the specifications for commingling with natural gas for purposes of delivery, the 

combustion of which result or may result in greenhouse 

gas emissions; and 

(iv) the capture and sequestration of greenhouse 

gases; 

(B) require covered entities and, where appropriate, other 

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cient 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; 


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(J) establish measurement protocols for carbon capture 

and sequestration systems, taking into consideration the 

regulations promulgated under section 813; 

(K) require that reporting entities provide the data required under this paragraph in reports submitted electronically to the Administrator, in such form and containing 

such information as may be required by the Administrator; 

(L) include requirements for keeping records supporting 

or related to, and protocols for auditing, submitted data; 

(M) establish consistent policies for calculating carbon 

content and greenhouse gas emissions for each type of fossil 

fuel with respect to which reporting is required; 

(N) subsequent to implementation of policies developed 

under subparagraph (M), provide for immediate dissemination, to States, Indian tribes, and on the Internet, of all 

data reported under this section as soon as practicable after 

electronic audit by the Administrator and any resulting 

correction of data, except that data shall not be disseminated under this subparagraph if— 

(i) its nondissemination is vital to the national security of the United States, as determined by the President; or 

(ii) it is confidential business information that cannot be derived from information that is otherwise publicly available and that would cause significant calculable competitive harm if published, except that— 

(I) data relating to greenhouse gas emissions, including any upstream or verification data from reporting entities, shall not be considered to be confidential business information; and 

(II) data that is confidential business information shall be provided to a State or Indian tribe 

within whose jurisdiction the reporting entity is located, if the Administrator determines that such 

State or Indian tribe has in effect protections for 

confidential business information that are equivalent to protections applicable to the Federal Government; 

(O) prescribe methods by which the Administrator shall, 

in cases in which satisfactory data are not submitted to the 

Administrator for any period of time, estimate emission, 

production, importation, manufacture, or delivery levels— 

(i) for covered entities with respect to greenhouse gas 

emissions, production, importation, manufacture, or 

delivery regulated under this title to ensure that emissions, production, importation, manufacture, or deliveries are not underreported, and to create a strong incentive for meeting data monitoring and reporting requirements— 

(I) with a conservative estimate of the highest 

emission, production, importation, manufacture, or 

delivery levels that may have occurred during the 

period for which data are missing; or 

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ing 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 


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metrics and levels are easier to administer and cover the same 

size and type of sources as the threshold defined in this section. 

(c) INTERRELATIONSHIP WITH OTHER SYSTEMS.—In developing the 

regulations issued under subsection (b), the Administrator shall 

take into account the work done by the Climate Registry and other 

mandatory State or multistate programs. Such regulations shall include an explanation of any major differences in approach between 

the system established under the regulations and such registries 

and programs. 

PART C—PROGRAM RULES 

SEC. 721. EMISSION ALLOWANCES. 

(a) IN GENERAL.—The Administrator shall establish a separate 

quantity of emission allowances for each calendar year starting in 

2012, in the amounts prescribed under subsection (e). 

(b) IDENTIFICATION NUMBERS.—The Administrator shall assign to 

each emission allowance established under subsection (a) a unique 

identification number that includes the vintage year for that emission allowance. 

(c) LEGAL STATUS OF EMISSION ALLOWANCES.— (1) IN GENERAL.—An allowance established by the Administrator under this title does not constitute a property right. 

(2) TERMINATION OR LIMITATION.—Nothing in this Act or any 

other provision of law shall be construed to limit or alter the 

authority of the United States, including the Administrator acting pursuant to statutory authority, to terminate or limit allowances or offset credits. 

(3) OTHER PROVISIONS UNAFFECTED.—Except as otherwise 

specified in this Act, nothing in this Act relating to allowances 

or offset credits established or issued under this title shall affect 

the application of any other provision of law to a covered entity, 

or the responsibility for a covered entity to comply with any 

such provision of law. 

(d) SAVINGS PROVISION.—Nothing in this part shall be construed 

as requiring a change of any kind in any State law regulating electric utility rates and charges, or as affecting any State law regarding such State regulation, or as limiting State regulation (including 

any prudency review) under such a State law. Nothing in this part 

shall be construed as modifying the Federal Power Act or as affecting the authority of the Federal Energy Regulatory Commission 

under that Act. Nothing in this part shall be construed to interfere 

with or impair any program for competitive bidding for power supply in a State in which such program is established. 

(e) ALLOWANCES FOR EACH CALENDAR YEAR.— (1) IN GENERAL.—Except as provided in paragraph (2), the 

number of emission allowances established by the Administrator under subsection (a) for each calendar year shall be as 

provided in the following table: 

Calendar year Emission allowances (in millions) 

2012 4,627 

2013 4,544 


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Calendar year Emission allowances (in millions) 

2014 5,099 

2015 5,003 

2016 5,482 

2017 5,375 

2018 5,269 

2019 5,162 

2020 5,056 

2021 4,903 

2022 4,751 

2023 4,599 

2024 4,446 

2025 4,294 

2026 4,142 

2027 3,990 

2028 3,837 

2029 3,685 

2030 3,533 

2031 3,408 

2032 3,283 

2033 3,158 

2034 3,033 

2035 2,908 

2036 2,784 

2037 2,659 

2038 2,534 

2039 2,409 

2040 2,284 

2041 2,159 

2042 2,034 

2043 1,910 

2044 1,785 

2045 1,660 

2046 1,535 

2047 1,410 

2048 1,285 

2049 1,160 

2050 and each year thereafter 1,035 

(2) REVISION.— 

(A) IN GENERAL.—The Administrator may adjust, in accordance with subparagraph (B), the number of emission 

allowances established pursuant to paragraph (1) if, after 

notice and an opportunity for public comment, the Administrator determines that— 

(i) United States greenhouse gas emissions in 2005 

were other than 7,206 million metric tons carbon dioxide equivalent; 

(ii) if the requirements of this title for 2012 had been 

in effect in 2005, section 722 would have required 

emission allowances to be held for other than 66.2 percent of United States greenhouse gas emissions in 

2005; 

(iii) if the requirements of this title for 2014 had been 

in effect in 2005, section 722 would have required 

emission allowances to be held for other than 75.7 percent of United States greenhouse gas emissions in 

2005; or 

(iv) if the requirements of this title for 2016 had been 

in effect in 2005, section 722 would have required 


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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 petroleumbased 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 


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(C) the conversionary use, in 2012 or later, of fluorinated 

gases in a manufacturing process, including semiconductor 

research or manufacturing, if allowances or offset credits 

were retired for the production or importation of such gas. 

(2) ESTABLISHMENT AND DISTRIBUTION.— (A) IN GENERAL.—Not later than 90 days after the end of 

each calendar year, the Administrator shall establish and 

distribute to the entity taking the actions described in subparagraph (A), (B), or (C) of paragraph (1) a quantity of 

compensatory allowances equivalent to the number of tons 

of carbon dioxide equivalent of avoided emissions achieved 

through such actions. In establishing the quantity of compensatory allowances, the Administrator shall take into account the carbon dioxide equivalent value of any greenhouse gas resulting from such action. 

(B) SOURCE OF ALLOWANCES.—Compensatory allowances 

established under this subsection shall not be emission allowances established under subsection (a). 

(C) IDENTIFICATION NUMBERS.—The Administrator shall 

assign to each compensatory allowance established under 

subparagraph (A) a unique identification number. 

(3) DEFINITIONS.—For purposes of this subsection— 

(A) the term ‘‘destruction’’ means the conversion of a 

greenhouse gas by thermal, chemical, or other means to another gas or set of gases with little or no carbon dioxide 

equivalent value; 

(B) the term ‘‘nonemissive use’’ means the use of fossil 

fuel as a feedstock in an industrial or manufacturing process to the extent that greenhouse gases are not emitted from 

such process, and to the extent that the products of such 

process are not intended for use as, or to be contained in, 

a fuel; and 

(C) the term ‘‘conversionary use’’ means the conversion 

during research or manufacturing of a fluorinated gas into 

another greenhouse gas or set of gases with a lower carbon 

dioxide equivalent value. 

(4) FEEDSTOCK EMISSIONS STUDY.— (A) The Administrator may conduct a study to determine 

the extent to which petroleum-based or coal-based liquid or 

gaseous fuel, petroleum coke, natural gas liquid, or natural 

gas are used as feedstocks in manufacturing processes to 

produce products and the greenhouse gas emissions resulting from such uses. 

(B) If as a result of such a study, the Administrator determines that the use of such products by noncovered 

sources results in substantial emissions of greenhouse gases 

or their precursors and that such emissions have not been 

adequately addressed under other requirements of this Act, 

the Administrator may, after notice and comment rulemaking, promulgate a regulation reducing compensatory 

allowances commensurately if doing so will not result in 

leakage. 

(g) FLUORINATED GASES ASSESSMENT.—No later than March 31, 

2014, the Administrator shall conduct an assessment of the regulation of non-HFC fluorinated gases under this title to determine 


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whether the most appropriate point of regulation is at the gas manufacturer or importer level, or at the source of emissions downstream. If the Administrator determines, based on consideration of 

environmental effectiveness, cost effectiveness, administrative feasibility, extent of coverage of emissions, and competitiveness considerations, that emissions of non-HFC fluorinated gases can best be regulated by designating downstream emission sources as covered entities with compliance obligations under section 722, the Administrator shall, after notice and comment rulemaking, change the definition of covered entity with respect to fluorinated gases (other than 

HFCs) accordingly and establish such requirements as are necessary to ensure compliance for such entities with the requirements 

of this title. 

(h) REGULATIONS.—Not later than 24 months after the date of enactment of this title, the Administrator shall promulgate regulations 

to carry out the provisions of this title. 

SEC. 722. PROHIBITION OF EXCESS EMISSIONS. 

(a) PROHIBITION.—Except as provided in subsection (c), effective 

January 1, 2012, each covered entity is prohibited from emitting 

greenhouse gases, and having attributable greenhouse gas emissions, in combination, in excess of its allowable emissions level. A 

covered entity’s allowable emissions level for each calendar year is 

the number of emission allowances (or credits or other allowances 

as provided in subsection (d)) it holds as of 12:01 a.m. on April 1 

(or a later date established by the Administrator under subsection 

(j)) of the following calendar year. 

(b) METHODS OF DEMONSTRATING COMPLIANCE.—Except as otherwise provided in this section, the owner or operator of a covered entity shall not be considered to be in compliance with the prohibition 

in subsection (a) unless, as of 12:01 a.m. on April 1 (or a later date 

established by the Administrator under subsection (j)) of each calendar year starting in 2013, the owner or operator holds a quantity 

of emission allowances (or credits or other allowances as provided 

in subsection (d)) at least as great as the quantity calculated as follows: 

(1) ELECTRICITY SOURCES.—For a covered entity described in 

section 700(13)(A), 1 emission allowance for each ton of carbon 

dioxide equivalent of greenhouse gas that such covered entity 

emitted in the previous calendar year, excluding emissions resulting from the combustion of— 

(A) petroleum-based or coal-based liquid fuel; 

(B) natural gas liquid; 

(C) renewable biomass or gas derived from renewable 

biomass; or 

(D) petroleum coke or gas derived from petroleum coke. 

(2) FUEL PRODUCERS AND IMPORTERS.—For a covered entity 

described in section 700(13)(B), 1 emission allowance for each 

ton of carbon dioxide equivalent of greenhouse gas that would 

be emitted from the combustion of any petroleum-based or coalbased 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. 


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(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 fuelbased carbon dioxide, nitrous oxide, or any other fluorinated 

gas that is a greenhouse gas (except for nitrogen trifluoride), or 

any combination thereof, produced or imported by such covered 

entity during the previous calendar year for sale or distribution 

in interstate commerce or released as fugitive emissions in the 

production of fluorinated gas. 

(4) NITROGEN TRIFLUORIDE SOURCES.—For a covered entity 

described in section 700(13)(D), 1 emission allowance for each 

ton of carbon dioxide equivalent of nitrogen trifluoride that 

such covered entity emitted in the previous calendar year. 

(5) GEOLOGICAL SEQUESTRATION SITES.—For a covered entity 

described in section 700(13)(E), 1 emission allowance for each 

ton of carbon dioxide equivalent of greenhouse gas that such 

covered entity emitted in the previous calendar year. 

(6) INDUSTRIAL STATIONARY SOURCES.—For a covered entity 

described in section 700(13)(F), (G), or (H), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas 

that such covered entity emitted in the previous calendar year, 

excluding emissions resulting from— 

(A) the combustion of petroleum-based or coal-based liquid fuel; 

(B) the combustion of natural gas liquid; 

(C) the combustion of renewable biomass or gas derived 

from renewable biomass; 

(D) the combustion of petroleum coke or gas derived from 

petroleum coke; or 

(E) the use of any fluorinated gas that is a greenhouse 

gas purchased for use at that covered entity, except for nitrogen trifluoride. 

(7) INDUSTRIAL FOSSIL FUEL-FIRED COMBUSTION DEVICES.— For a covered entity described in section 700(13)(I), 1 emission 

allowance for each ton of carbon dioxide equivalent of greenhouse gas that the devices emitted in the previous calendar 

year, excluding emissions resulting from the combustion of— 

(A) petroleum-based or coal-based liquid fuel; 

(B) natural gas liquid; 

(C) renewable biomass or gas derived from renewable 

biomass; or 

(D) petroleum coke or gas derived from petroleum coke. 

(8) NATURAL GAS LOCAL DISTRIBUTION COMPANIES.—For a 

covered entity described in section 700(13)(J), 1 emission allowance for each ton of carbon dioxide equivalent of greenhouse gas 

that would be emitted from the combustion of the natural gas, 

and any other gas meeting the specifications for commingling 

with natural gas for purposes of delivery, that such entity delivered during the previous calendar year to customers that are 

not covered entities, assuming no capture and sequestration of 

that greenhouse gas. 

(9) ALGAE-BASED FUELS.—Where carbon dioxide (or another 

greenhouse gas) is used as an input in the production of algaebased fuels, the Administrator shall ensure that allowances are 

required to be held either for the carbon dioxide used to grow 


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the algae or for the carbon dioxide emitted from combustion of 

the fuel produced from such algae, but not for both. 

(10) FUGITIVE EMISSIONS.—The greenhouse gas emissions to 

which paragraphs (1), (4), (6), and (7) apply shall not include 

fugitive emissions of greenhouse gas, except to the extent the Administrator determines that data on the carbon dioxide equivalent value of greenhouse gas in the fugitive emissions can be 

provided with sufficient precision, reliability, accessibility, and 

timeliness to ensure the integrity of emission allowances, the allowance tracking system, and the cap on emissions. 

(11) EXPORT EXEMPTION.—This section shall not apply to any 

petroleum-based or coal-based liquid fuel, petroleum coke, natural gas liquid, fossil fuel-based carbon dioxide, nitrous oxide, 

or fluorinated gas that is exported for sale or use. 

(12) NATURAL GAS LIQUIDS.—Notwithstanding subsection (a), 

if the owner or operator of a covered entity described in section 

700(13)(B) that produces natural gas liquids does not take ownership of the liquids, and is not responsible for the distribution 

or use of the liquids in commerce, the owner of the liquids shall 

be responsible for compliance with this section, section 723, and 

other relevant sections of this title with respect to such liquids. 

In the regulations promulgated under section 721, the Administrator shall include such provisions with respect to such liquids 

as the Administrator determines are appropriate to determine 

and ensure compliance, and to penalize noncompliance. In such 

a case, the owner of the covered entity shall provide to the Administrator, in a manner to be determined by the Administrator, information regarding the quantity and ownership of 

liquids produced at the covered entity. 

(13) APPLICATION OF MULTIPLE PARAGRAPHS.—For a covered 

entity to which more than 1 of paragraphs (1) through (8) 

apply, all applicable paragraphs shall apply, except that not 

more than 1 emission allowance shall be required for the same 

emission. 

(c) PHASE-IN OF PROHIBITION.— (1) INDUSTRIAL STATIONARY SOURCES.—The prohibition under 

subsection (a) shall first apply to a covered entity described in 

section 700(13)(D), (F), (G), (H), or (I), with respect to emissions 

occurring during calendar year 2014. 

(2) NATURAL GAS LOCAL DISTRIBUTION COMPANIES.—The prohibition under subsection (a) shall first apply to a covered entity described in section 700(13)(J) with respect to deliveries occurring during calendar year 2016. 

(d) ADDITIONAL METHODS.—In addition to using the method of 

compliance described in subsection (b), a covered entity may do the 

following: 

(1) OFFSET CREDITS.— 

(A) IN GENERAL.—Covered entities collectively may, in accordance with this paragraph, use offset credits to demonstrate compliance for up to a maximum of 2 billion tons 

of greenhouse gas emissions annually. The ability to demonstrate compliance with offset credits shall be divided pro 

rata among covered entities by allowing each covered entity 

to satisfy a percentage of the number of allowances required 

to be held under subsection (b) to demonstrate compliance 


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by holding 1 domestic offset credit or 1.25 international offset credits in lieu of an emission allowance, except as provided in subparagraph (D). 

(B) APPLICABLE PERCENTAGE.—The percentage referred to 

in subparagraph (A) for a given calendar year shall be determined by dividing 2 billion by the sum of 2 billion plus 

the number of emission allowances established under section 721(a) for the previous year, and multiplying that 

number by 100. Not more than one half of the applicable 

percentage under this paragraph may be used by holding 

domestic offset credits, and not more than one half of the 

applicable percentage under this paragraph may be used by 

holding international offset credits, except as provided in 

subparagraph (C). 

(C) MODIFIED PERCENTAGES.—If the Administrator determines that domestic offset credits available for use in demonstrating compliance in any calendar year at domestic offset prices generally equal to or less than allowance prices, 

are likely to offset less than 0.9 billion tons of greenhouse 

gas emissions (measured in tons of carbon dioxide equivalents), the Administrator shall increase the percent of emissions that can be offset through the use of international offset credits (and decrease the percent of emissions that can 

be allowed through the use of domestic offset credits by the 

same amount) to reflect the amount that 1.0 billion exceeds 

the number of domestic offset credits the Administrator determines is available for that year, up to a maximum of 0.5 

billion tons of greenhouse gas emissions. 

(D) INTERNATIONAL OFFSET CREDITS.—Notwithstanding 

subparagraph (A), to demonstrate compliance prior to calendar year 2018, a covered entity may use 1 international 

offset credit in lieu of an emission allowance up to the 

amount permitted under this paragraph. 

(E) PRESIDENT’S RECOMMENDATION.—The President may 

make a recommendation to Congress as to whether the 

number 2 billion specified in subparagraphs (A) and (B) 

should be increased or decreased. 

(2) INTERNATIONAL EMISSION ALLOWANCES.—To demonstrate 

compliance, a covered entity may hold an international emission allowance in lieu of an emission allowance, except as modified under section 728(d). 

(3) COMPENSATORY ALLOWANCES.—To demonstrate compliance, a covered entity may hold a compensatory allowance obtained under section 721(f) in lieu of an emission allowance. 

(e) RETIREMENT OF ALLOWANCES AND CREDITS.—As soon as practicable after a deadline established for covered entities to demonstrate compliance with this title, the Administrator shall retire 

the quantity of allowances or credits required to be held under this 

title. 

(f) ALTERNATIVE METRICS.—For categories of covered entities described in subparagraph (B), (C), (D), (G), (H), or (I) of section 

700(13), the Administrator may, by rule, establish an applicability 

threshold for inclusion under those subparagraphs using an alternative metric and level, provided that such metric and level are 


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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 

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tion of this Act. It shall be a violation of this Act for a covered entity 

to emit greenhouse gases, and have attributable greenhouse gas 

emissions, in combination, in excess of its allowable emissions level 

as provided in section 722(a). Each ton of carbon dioxide equivalent 

for which a covered entity fails to demonstrate compliance under 

section 722(b) shall be a separate violation. 

(b) EXCESS EMISSIONS PENALTY.— 

(1) IN GENERAL.—The owner or operator of any covered entity 

that fails for any year to comply, on the deadline described in 

section 722(a) or (j), shall be liable for payment to the Administrator of an excess emissions penalty in the amount described 

in paragraph (2). 

(2) AMOUNT.—The amount of an excess emissions penalty required to be paid under paragraph (1) shall be equal to the 

product obtained by multiplying— 

(A) the tons of carbon dioxide equivalent of greenhouse 

gas emissions or attributable greenhouse gas emissions for 

which the owner or operator of a covered entity failed to 

comply under section 722(b) on the deadline; by 

(B) twice the fair market value of emission allowances established for emissions occurring in the calendar year for 

which the emission allowances were due. 

(3) TIMING.—An excess emissions penalty required under this 

subsection shall be immediately due and payable to the Administrator, without demand, in accordance with regulations promulgated by the Administrator, which shall be issued not later 

than 2 years after the date of enactment of this title. 

(4) NO EFFECT ON LIABILITY.—An excess emissions penalty 

due and payable by the owners or operators of a covered entity 

under this subsection shall not diminish the liability of the 

owners or operators for any fine, penalty, or assessment against 

the owners or operators for the same violation under any other 

provision of this Act or any other law. 

(c) EXCESS EMISSIONS ALLOWANCES.—The owner or operator of a 

covered entity that fails for any year to comply on the deadline described in section 722(a) or (j) shall be liable to offset the covered 

entity’s excess combination of greenhouse gases emitted and attributable greenhouse gas emissions by an equal quantity of emission 

allowances during the following calendar year, or such longer period as the Administrator may prescribe. During the year in which 

the covered entity failed to comply, or any year thereafter, the Administrator may deduct the emission allowances required under this 

subsection to offset the covered entity’s excess actual or attributable 

emissions. 

SEC. 724. TRADING. 

(a) PERMITTED TRANSACTIONS.—Except as otherwise provided in 

this title, the lawful holder of an emission allowance, compensatory 

allowance, or offset credit may, without restriction, sell, exchange, 

transfer, hold for compliance in accordance with section 722, or request that the Administrator retire the emission allowance, compensatory allowance, or offset credit. 

(b) NO RESTRICTION ON TRANSACTIONS.—The privilege of purchasing, holding, selling, exchanging, transferring, and requesting 

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set credits shall not be restricted to the owners and operators of covered entities, except as otherwise provided in this title. 

(c) EFFECTIVENESS OF ALLOWANCE TRANSFERS.—No transfer of 

an allowance or offset credit shall be effective for purposes of this 

title until a certification of the transfer, signed by the designated 

representative of the transferor, is received and recorded by the Administrator in accordance with regulations promulgated under section 721(h). 

(d) ALLOWANCE TRACKING SYSTEM.—The regulations promulgated 

under section 721(h) shall include a system for issuing, recording, 

holding, and tracking allowances and offset credits that shall specify all necessary procedures and requirements for an orderly and 

competitive functioning of the allowance and offset credit markets. 

Such regulations shall provide for appropriate publication of the information in the system on the Internet. 

SEC. 725. BANKING AND BORROWING. 

(a) BANKING.—An emission allowance may be used to comply with 

section 722 or section 723 for emissions in— 

(1) the vintage year for the allowance; or 

(2) any calendar year subsequent to the vintage year for the 

allowance. 

(b) EXPIRATION.— (1) REGULATIONS.—The Administrator may establish by regulation criteria and procedures for determining whether, and for 

implementing a determination that, the expiration of an allowance or credit established or issued by the Administrator under 

this title, or expiration of the ability to use an international 

emission allowance to comply with section 722, is necessary to 

ensure the authenticity and integrity of allowances or credits or 

the allowance tracking system. 

(2) GENERAL RULE.—An allowance or credit established or 

issued by the Administrator under this title shall not expire unless— 

(A) it is retired by the Administrator as required under 

this title; or 

(B) it is determined to expire or to have expired by a specific date by the Administrator in accordance with regulations promulgated under paragraph (1). 

(3) INTERNATIONAL EMISSION ALLOWANCES.—The ability to 

use an international emission allowance to comply with section 

722 shall not expire unless— 

(A) the allowance is retired by the Administrator as required by this title; or 

(B) the ability to use such allowance to meet such compliance obligation requirements is determined to expire or to 

have expired by a specific date by the Administrator in accordance with regulations promulgated under paragraph 

(1). 

(c) BORROWING FUTURE VINTAGE YEAR ALLOWANCES.— 

(1) BORROWING WITHOUT INTEREST.—In addition to the uses 

described in subsection (a), an emission allowance may be used 

to comply with section 722(a) or section 723 for emissions, production, importation, manufacture, or deliveries in the calendar 

year immediately preceding the vintage year for the allowance. 

(2) BORROWING WITH INTEREST.— 


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(A) IN GENERAL.—A covered entity may demonstrate compliance under subsection (b) in a specific calendar year for 

up to 15 percent of its emissions by holding emission allowances with a vintage year 1 to 5 years later than that calendar year. 

(B) LIMITATIONS.—An emission allowance borrowed pursuant to this paragraph shall be an emission allowance 

that is established by the Administrator for a specific future calendar year under section 721(a) and that is held by 

the borrower. 

(C) PREPAYMENT OF INTEREST.—For each emission allowance that an owner or operator of a covered entity borrows 

pursuant to this paragraph, such owner or operator shall, 

at the time it borrows the allowance, hold for retirement by 

the Administrator a quantity of emission allowances that is 

equal to the product obtained by multiplying— 

(i) 0.08; by 

(ii) the number of years between the calendar year in 

which the allowance is being used to satisfy a compliance obligation and the vintage year of the allowance. 

SEC. 726. STRATEGIC RESERVE. 

(a) STRATEGIC RESERVE AUCTIONS.— (1) IN GENERAL.—Once each quarter of each calendar year for 

which allowances are established under section 721(a), the Administrator shall auction strategic reserve allowances. 

(2) RESTRICTION TO COVERED ENTITIES.—In each auction conducted under paragraph (1), only covered entities that the Administrator expects will be required to comply with section 722 

in the following calendar year shall be eligible to make purchases. 

(b) POOL OF EMISSION ALLOWANCES FOR STRATEGIC RESERVE

AUCTIONS.— (1) FILLING THE STRATEGIC RESERVE INITIALLY.— (A) IN GENERAL.—The Administrator shall, not later than 

2 years after the date of enactment of this title, establish a 

strategic reserve account, and shall place in that account 

an amount of emission allowances established under section 721(a) for each calendar year from 2012 through 2050 

in the amounts specified in subparagraph (B) of this paragraph. 

(B) AMOUNT.—The amount referred to in subparagraph 

(A) shall be— 

(i) for each of calendar years 2012 through 2019, 1 

percent of the quantity of emission allowances established for that year pursuant to section 721(e)(1); 

(ii) for each of calendar years 2020 through 2029, 2 

percent of the quantity of emission allowances established for that year pursuant to section 721(e)(1); and 

(iii) for each of calendar years 2030 through 2050, 3 

percent of the quantity of emission allowances established for that year pursuant to section 721(e)(1). 

(C) EFFECT ON OTHER PROVISIONS.—Any provision in 

this title (except for subparagraph (B) of this paragraph) 

that refers to a quantity or percentage of the emission allowances established for a calendar year under section 


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721(a) shall be considered to refer to the amount of emission allowances as determined pursuant to section 721(e), 

less any emission allowances established for that year that 

are placed in the strategic reserve account under this paragraph. 

(2) SUPPLEMENTING THE STRATEGIC RESERVE.—The Administrator shall also— 

(A) at the end of each calendar year, transfer to the strategic reserve account each emission allowance that was offered for sale but not sold at any auction conducted under 

section 791; and 

(B) transfer emission allowances established under subsection (g) from auction proceeds, and deposit them into the 

strategic reserve, to the extent necessary to maintain the reserve at its original size. 

(c) MINIMUM STRATEGIC RESERVE AUCTION PRICE.— (1) IN GENERAL.—At each strategic reserve auction, the Administrator shall offer emission allowances for sale beginning 

at a minimum price per emission allowance, which shall be 

known as the ‘‘minimum strategic reserve auction price’’. 

(2) INITIAL MINIMUM STRATEGIC RESERVE AUCTION PRICES.— The minimum strategic reserve auction price shall be $28 (in 

constant 2009 dollars) for the strategic reserve auctions held in 

2012. For the strategic reserve auctions held in 2013 and 2014, 

the minimum strategic reserve auction price shall be the strategic reserve auction price for the previous year increased by 5 

percent plus the rate of inflation (as measured by the Consumer 

Price Index for All Urban Consumers). 

(3) MINIMUM STRATEGIC RESERVE AUCTION PRICE IN SUBSE- QUENT YEARS.—For each strategic reserve auction held in 2015 

and each year thereafter, the minimum strategic reserve auction 

price shall be 60 percent above a rolling 36-month average of 

the daily closing price for that year’s emission allowance vintage as reported on registered carbon trading facilities, calculated using constant dollars. 

(d) QUANTITY OF EMISSION ALLOWANCES RELEASED FROM THE

STRATEGIC RESERVE.— (1) INITIAL LIMITS.—For each of calendar years 2012 through 

2016, the annual limit on the number of emission allowances 

from the strategic reserve account that may be auctioned is an 

amount equal to 5 percent of the emission allowances established for that calendar year under section 721(a). This limit 

does not apply to international offset credits sold on consignment pursuant to subsection (h). 

(2) LIMITS IN SUBSEQUENT YEARS.—For calendar year 2017 

and each year thereafter, the annual limit on the number of 

emission allowances from the strategic reserve account that may 

be auctioned is an amount equal to 10 percent of the emission 

allowances established for that calendar year under section 

721(a). This limit does not apply to international offset credits 

sold on consignment pursuant to subsection (h). 

(3) ALLOCATION OF LIMITATION.—One-fourth of each year’s 

annual strategic reserve auction limit under this subsection 

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able for sale in a quarterly auction and not sold shall be rolled 

over and added to the quantity available for sale in the following quarter, except that allowances not sold at auction in 

the fourth quarter of a year shall not be rolled over to the following calendar year’s auctions, but shall be returned to the 

strategic reserve account. 

(e) PURCHASE LIMIT.— (1) IN GENERAL.—Except as provided in paragraph (2) or (3), 

the annual number of emission allowances that a covered entity 

may purchase at the strategic reserve auctions in each calendar 

year shall not exceed 20 percent of the covered entity’s emissions 

during the most recent year for which allowances or credits 

were retired under section 722. 

(2) 2012 LIMIT.—For calendar year 2012, the maximum aggregate number of emission allowances that a covered entity 

may purchase from that year’s strategic reserve auctions shall 

be 20 percent of the covered entity’s greenhouse gas emissions 

that the covered entity reported to the registry established under 

section 713 for 2011 and that would be subject to section 722(a) 

if occurring in later calendar years. 

(3) NEW ENTRANTS.—The Administrator shall, by regulation, 

establish a separate purchase limit applicable to entities that 

expect to become a covered entity in the year of the auction, permitting them to purchase emission allowances at the strategic 

reserve auctions in their first calendar year of operation in an 

amount of at least 20 percent of their expected combined emissions and attributable greenhouse gas emissions for that year. 

(f) DELEGATION OR CONTRACT.—Pursuant to regulations under 

this section, the Administrator may, by delegation or contract, provide for the conduct of strategic reserve auctions under the Administrator’s supervision by other departments or agencies of the Federal 

Government or by nongovernmental agencies, groups, or organizations. 

(g) USE OF AUCTION PROCEEDS.— 

(1) DEPOSIT IN STRATEGIC RESERVE FUND.—The proceeds 

from strategic reserve auctions shall be placed in the Strategic 

Reserve Fund established under section 793(1), and shall be 

available without further appropriation or fiscal year limitation 

for the purposes described in this subsection. 

(2) INTERNATIONAL OFFSET CREDITS FOR REDUCED DEFORESTATION.—The Administrator shall use the proceeds from each 

strategic reserve auction to purchase international offset credits 

issued for reduced deforestation activities pursuant to section 

743(e). The Administrator shall retire those international offset 

credits and establish a number of emission allowances equal to 

80 percent of the number of international offset credits so retired. Emission allowances established under this paragraph 

shall be in addition to those established under section 721(a). 

(3) EMISSION ALLOWANCES.—The Administrator shall deposit 

emission allowances established under paragraph (2) in the 

strategic reserve, except that, with respect to any such emission 

allowances in excess of the amount necessary to fill the strategic 

reserve to its original size, the Administrator shall— 

(A) except as provided in subparagraph (B), assign a vintage year to the emission allowance, which shall be no earVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00518 Fmt 6659 Sfmt 6603 E:\HR\OC\HR137.XXX HR137

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lier than the year in which the allowance is established 

under paragraph (2) and shall treat such allowances as 

ones that are not designated for distribution or auction for 

purposes of section 782(q) and (r); and 

(B) to the extent any such allowances cannot be assigned 

a vintage year because of the limitation in paragraph (4), 

retire the allowances. 

(4) LIMITATION.—In no case may the Administrator assign 

under paragraph (3)(A) more emission allowances to a vintage 

year than the number of emission allowances from that vintage 

year that were placed in the strategic reserve account under 

subsection (b)(1). 

(h) AVAILABILITY OF INTERNATIONAL OFFSET CREDITS FOR AUC- TION.— 

(1) IN GENERAL.—The regulations promulgated under section 

721(h) shall allow any entity holding international offset credits 

from reduced deforestation issued under section 743(e) to request that the Administrator include such offset credits in an 

upcoming strategic reserve auction. The regulations shall provide that— 

(A) such international offset credits will be used to fill 

bid orders only after the supply of strategic reserve allowances available for sale at that auction has been depleted; 

(B) international offset credits may be sold at a strategic 

reserve auction under this subsection only if the Administrator determines that it is highly likely that covered entities will, to cover emissions occurring in the year the auction is held, use offset credits to demonstrate compliance 

under section 722 for emissions equal to or greater than 80 

percent of 2 billion tons of carbon dioxide equivalent; 

(C) upon sale of such international offset credits, the Administrator shall retire those international offset credits, 

and establish and provide to the purchasers a number of 

emission allowances equal to 80 percent of the number of 

international offset credits so retired, which allowances 

shall be in addition to those established under section 

721(a); and 

(D) for international offset credits sold pursuant to this 

subsection, the proceeds for the entity that offered the international offset credits for sale shall be the lesser of— 

(i) the average daily closing price for international 

offset credits sold on registered exchanges (or if such 

price is unavailable, the average price as determined 

by the Administrator) during the six months prior to 

the strategic reserve auction at which they were auctioned, with the remaining funds collected upon the 

sale of the international offset credits deposited in the 

Treasury; and 

(ii) the amount received for the international offset 

credits at the auction. 

(2) PROCEEDS.—For international offset credits sold pursuant 

to this subsection, notwithstanding section 3302 of title 31, 

United States Code, or any other provision of law, within 90 

days of receipt, the United States shall transfer the proceeds 

from the auction, as defined in paragraph (1)(D), to the entity 


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that offered the international offset credits for sale. No funds 

transferred from a purchaser to a seller of international offset 

credits under this paragraph shall be held by any officer or employee of the United States or treated for any purpose as public 

monies. 

(3) PRICING.—When the Administrator acts under this subsection as the agent of an entity in possession of international 

offset credits, the Administrator is not obligated to obtain the 

highest price possible for the international offset credits, and instead shall auction such international offset credits in the same 

manner and pursuant to the same rules (except as modified in 

paragraph (1)) as set forth for auctioning strategic reserve allowances. Entities requesting that such international offset 

credits be offered for sale at a strategic reserve auction may not 

set a minimum reserve price for their international offset credits 

that is different than the minimum strategic reserve auction 

price set pursuant to subsection (c). 

(i) INITIAL REGULATIONS.—Not later than 24 months after the 

date of enactment of this title, the Administrator shall promulgate 

regulations, in consultation with other appropriate agencies, governing the auction of allowances under this section. Such regulations shall include the following requirements: 

(1) FREQUENCY; FIRST AUCTION.—Auctions shall be held four 

times per year at regular intervals, with the first auction to be 

held no later than March 31, 2012. 

(2) AUCTION FORMAT.—Auctions shall follow a single-round, 

sealed-bid, uniform price format. 

(3) PARTICIPATION; FINANCIAL ASSURANCE.—Auctions shall be 

open to any covered entity eligible to purchase emission allowances at the auction under subsection (a)(2), except that the Administrator may establish financial assurance requirements to 

ensure that auction participants can and will perform on their 

bids. 

(4) DISCLOSURE OF BENEFICIAL OWNERSHIP.—Each bidder in 

an auction shall be required to disclose the person or entity 

sponsoring or benefitting from the bidder’s participation in the 

auction if such person or entity is, in whole or in part, other 

than the bidder. 

(5) PURCHASE LIMITS.—No person may, directly or in concert 

with another participant, purchase more than 20 percent of the 

allowances offered for sale at any quarterly auction. 

(6) PUBLICATION OF INFORMATION.—After the auction, the Administrator shall, in a timely fashion, publish the identities of 

winning bidders, the quantity of allowances obtained by each 

winning bidder, and the auction clearing price. 

(7) OTHER REQUIREMENTS.—The Administrator may include 

in the regulations such other requirements or provisions as the 

Administrator, in consultation with other agencies as appropriate, considers appropriate to promote effective, efficient, 

transparent, and fair administration of auctions under this section. 

(j) REVISION OF REGULATIONS.—The Administrator may, at any 

time, in consultation with other agencies as appropriate, revise the 

initial regulations promulgated under subsection (i). Such revised 

regulations need not meet the requirements identified in subsection 


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(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, 


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leasehold, or contractual interest for the purpose of holding or distributing emission allowances as provided in this subsection, during 

either the term of such leasehold or thereafter, unless expressly provided for in the leasehold agreement. Except as otherwise provided 

in this subsection, where all legal or equitable title to or interest in 

a covered entity, or other entity, is held by a single person, the certificate shall state that all emission allowances received by the entity are deemed to be held for that person. 

(c) PROHIBITION.—It shall be unlawful for any person to operate 

any stationary source subject to the requirements of this section except in compliance with the terms and requirements of a permit 

issued by the Administrator or a State with an approved permit 

program in accordance with this section. For purposes of this subsection, compliance, as provided in section 504(f), with a permit 

issued under title V which complies with this title for covered entities shall be deemed compliance with this subsection as well as section 502(a). 

(d) RELIABILITY.—Nothing in this section or title V shall be construed as requiring termination of operations of a stationary source 

that is a covered entity for failure to have an approved permit, or 

compliance plan, that is consistent with the requirements in the second and fifth sentences of subsection (a) concerning the holding of 

emission allowances, compensatory allowances, international emission allowances, or offset allowances, except that any such covered 

entity may be subject to the applicable enforcement provision of section 113. 

(e) REGULATIONS.—The Administrator shall promulgate regulations to implement this section. To provide for permits required 

under this section, each State in which one or more stationary 

sources and that are covered entities are located shall submit, in accordance with this section and title V, revised permit programs for 

approval. 

SEC. 728. INTERNATIONAL EMISSION ALLOWANCES. 

(a) QUALIFYING PROGRAMS.—The Administrator, in consultation 

with the Secretary of State, may by rule designate an international 

climate change program as a qualifying international program if— 

(1) the program is run by a national or supranational foreign 

government, and imposes a mandatory absolute tonnage limit 

on greenhouse gas emissions from 1 or more foreign countries, 

or from 1 or more economic sectors in such a country or countries; and 

(2) the program is at least as stringent as the program established by this title, including provisions to ensure at least comparable monitoring, compliance, enforcement, quality of offsets, 

and restrictions on the use of offsets. 

(b) DISQUALIFIED ALLOWANCES.—An international emission allowance may not be held under section 722(d)(2) if it is in the nature of an offset instrument or allowance awarded based on the 

achievement of greenhouse gas emission reductions or avoidance, or 

greenhouse gas sequestration, that are not subject to the mandatory 

absolute tonnage limits referred to in subsection (a)(1). 

(c) RETIREMENT.— 

(1) ENTITY CERTIFICATION.—The owner or operator of an entity that holds an international emission allowance under section 

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national emission allowance has not previously been used to 

comply with any foreign, international, or domestic greenhouse 

gas regulatory program. 

(2) RETIREMENT.— 

(A) FOREIGN AND INTERNATIONAL REGULATORY ENTITIES.—The Administrator, in consultation with the Secretary of State, shall seek, by whatever means appropriate, 

including agreements and technical cooperation on allowance tracking, to ensure that any relevant foreign, international, and domestic regulatory entities— 

(i) are notified of the use, for purposes of compliance 

with this title, of any international emission allowance; 

and 

(ii) provide for the disqualification of such international emission allowance for any subsequent use 

under the relevant foreign, international, or domestic 

greenhouse gas regulatory program, regardless of 

whether such use is a sale, exchange, or submission to 

satisfy a compliance obligation. 

(B) DISQUALIFICATION FROM FURTHER USE.—The Administrator shall ensure that, once an international emission 

allowance has been disqualified or otherwise used for purposes of compliance with this title, such allowance shall be 

disqualified from any further use under this title. 

(d) USE LIMITATIONS.—The Administrator may, by rule, modify 

the percentage applicable to international emission allowances 

under section 722(d)(2), consistent with the purposes of the Safe Climate Act. 

PART D—OFFSETS 

SEC. 731. OFFSETS INTEGRITY ADVISORY BOARD. 

(a) ESTABLISHMENT.—Not later than 30 days after the date of enactment of this title, the Administrator shall establish an independent Offsets Integrity Advisory Board. The Advisory Board shall 

make recommendations to the Administrator for use in promulgating and revising regulations under this part and part E, and for 

ensuring the overall environmental integrity of the programs established pursuant to those regulations. 

(b) MEMBERSHIP.—The Advisory Board shall be comprised of at 

least nine members. Each member shall be qualified by education, 

training, and experience to evaluate scientific and technical information on matters referred to the Board under this section. The Administrator shall appoint Advisory Board members, including a 

chair and vice-chair of the Advisory Board. Terms shall be 3 years 

in length, except for initial terms, which may be up to 5 years in 

length to allow staggering. Members may be reappointed only once 

for an additional 3-year term, and such second term may follow directly after a first term. 

(c) ACTIVITIES.—The Advisory Board established pursuant to subsection (a) shall— 

(1) provide recommendations, not later than 90 days after the 

Advisory Board’s establishment and periodically thereafter, to 

the Administrator regarding offset project types that should be 


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considered for eligibility under section 733, taking into consideration relevant scientific and other issues, including— 

(A) the availability of a representative data set for use in 

developing the activity baseline; 

(B) the potential for accurate quantification of greenhouse 

gas reduction, avoidance, or sequestration for an offset 

project type; 

(C) the potential level of scientific and measurement uncertainty associated with an offset project type; and 

(D) any beneficial or adverse environmental, public 

health, welfare, social, economic, or energy effects associated with an offset project type; 

(2) make available to the Administrator its advice and comments on offset methodologies that should be considered under 

regulations promulgated pursuant to section 734(a) and (b), including methodologies to address the issues of additionality, activity baselines, measurement, leakage, uncertainty, permanence, and environmental integrity; 

(3) make available to the Administrator, and other relevant 

Federal agencies, its advice and comments regarding scientific, 

technical, and methodological issues specific to the issuance of 

international offset credits under section 743; 

(4) make available to the Administrator, and other relevant 

Federal agencies, its advice and comments regarding scientific, 

technical, and methodological issues associated with the implementation of part E; 

(5) make available to the Administrator its advice and comments on areas in which further knowledge is required to appraise the adequacy of existing, revised, or proposed methodologies for use under this part and part E, and describe the research efforts necessary to provide the required information; 

and 

(6) make available to the Administrator its advice and comments on other ways to improve or safeguard the environmental 

integrity of programs established under this part and part E. 

(d) SCIENTIFIC REVIEW OF OFFSET AND DEFORESTATION REDUC- TION PROGRAMS.—Not later than January 1, 2017, and at five-year 

intervals thereafter, the Advisory Board shall submit to the Administrator and make available to the public an analysis of relevant scientific and technical information related to this part and part E. 

The Advisory Board shall review approved and potential methodologies, scientific studies, offset project monitoring, offset project 

verification reports, and audits related to this part and part E, and 

evaluate the net emissions effects of implemented offset projects. The 

Advisory Board shall recommend changes to offset methodologies, 

protocols, or project types, or to the overall offset program under this 

part, to ensure that offset credits issued by the Administrator do not 

compromise the integrity of the annual emission reductions established under section 703, and to avoid or minimize adverse effects 

to human health or the environment. 

SEC. 732. ESTABLISHMENT OF OFFSETS PROGRAM. 

(a) REGULATIONS.—Not later than 2 years after the date of enactment of this title, the Administrator, in consultation with appropriate Federal agencies and taking into consideration the recommendations of the Advisory Board, shall promulgate regulations 


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establishing a program for the issuance of offset credits in accordance with the requirements of this part. The Administrator shall periodically revise these regulations as necessary to meet the requirements of this part. 

(b) REQUIREMENTS.—The regulations described in subsection (a) 

shall— 

(1) authorize the issuance of offset credits with respect to 

qualifying offset projects that result in reductions or avoidance 

of greenhouse gas emissions, or sequestration of greenhouse 

gases; 

(2) ensure that such offset credits represent verifiable and additional greenhouse gas emission reductions or avoidance, or increases in sequestration; 

(3) ensure that offset credits issued for sequestration offset 

projects are only issued for greenhouse gas reductions that are 

permanent; 

(4) provide for the implementation of the requirements of this 

part; and 

(5) include as reductions in greenhouse gases reductions 

achieved through the destruction of methane and its conversion 

to carbon dioxide. 

(c) COORDINATION TO MINIMIZE NEGATIVE EFFECTS.—In promulgating and implementing regulations under this part, the Administrator shall act (including by rejecting projects, if necessary) to 

avoid or minimize, to the maximum extent practicable, adverse effects on human health or the environment resulting from the implementation of offset projects under this part. 

(d) OFFSET REGISTRY.—The Administrator shall establish within 

the allowance tracking system established under section 724(d) an 

Offset Registry for qualifying offset projects and offset credits issued 

with respect thereto under this part. 

(e) LEGAL STATUS OF OFFSET CREDIT.—An offset credit does not 

constitute a property right. 

(f) FEES.—The Administrator shall assess fees payable by offset 

project developers in an amount necessary to cover the administrative costs to the Environmental Protection Agency of carrying out 

the activities under this part. Amounts collected for such fees shall 

be available to the Administrator for carrying out the activities 

under this part to the extent provided in advance in appropriations 

Acts. 

SEC. 733. ELIGIBLE PROJECT TYPES. 

(a) LIST OF ELIGIBLE PROJECT TYPES.— 

(1) IN GENERAL.—As part of the regulations promulgated 

under section 732(a), the Administrator shall establish, and 

may periodically revise, a list of types of projects eligible to generate offset credits, including international offset credits, under 

this part. 

(2) ADVISORY BOARD RECOMMENDATIONS.—In determining the 

eligibility of project types, the Administrator shall take into consideration the recommendations of the Advisory Board. If a list 

established under this section differs from the recommendations 

of the Advisory Board, the regulations promulgated under section 732(a) shall include a justification for the discrepancy. 

(3) INITIAL DETERMINATION.—The Administrator shall establish the initial eligibility list under paragraph (1) not later than 


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one year after the date of enactment of this title. The Administrator shall add additional project types to the list not later 

than 2 years after the date of enactment of this title. In determining the initial list, the Administrator shall give priority to 

consideration of offset project types that are recommended by 

the Advisory Board and for which there are well developed 

methodologies that the Administrator determines would meet 

the criteria of section 734, with such modifications as the Administrator deems appropriate. In issuing methodologies pursuant to section 734, the Administrator shall give priority to 

methodologies for offset types included on the initial eligibility 

list. 

(b) MODIFICATION OF LIST.—The Administrator— 

(1) may at any time, by rule, add a project type to the list established under subsection (a) if the Administrator, in consultation with appropriate Federal agencies and taking into consideration the recommendations of the Advisory Board, determines 

that the project type can generate additional reductions or 

avoidance of greenhouse gas emissions, or sequestration of 

greenhouse gases, subject to the requirements of this part; 

(2) may at any time, by rule, determine that a project type on 

the list does not meet the requirements of this part, and remove 

a project type from the list established under subsection (a), in 

consultation with appropriate Federal agencies and taking into 

consideration any recommendations of the Advisory Board; and 

(3) shall consider adding to or removing from the list established under subsection (a), at a minimum, project types proposed to the Administrator— 

(A) by petition pursuant to subsection (c); or 

(B) by the Advisory Board. 

(c) PETITION PROCESS.—Any person may petition the Administrator to modify the list established under subsection (a) by adding 

or removing a project type pursuant to subsection (b). Any such petition shall include a showing by the petitioner that there is adequate 

data to establish that the project type does or does not meet the requirements of this part. Not later than 12 months after receipt of 

such a petition, the Administrator shall either grant or deny the petition and publish a written explanation of the reasons for the Administrator’s decision. The Administrator may not deny a petition 

under this subsection on the basis of inadequate Environmental 

Protection Agency resources or time for review. 

SEC. 734. REQUIREMENTS FOR OFFSET PROJECTS. 

(a) METHODOLOGIES.—As part of the regulations promulgated 

under section 732(a), the Administrator shall establish, for each 

type of offset project listed as eligible under section 733, the following: 

(1) ADDITIONALITY.—A standardized methodology for determining the additionality of greenhouse gas emission reductions 

or avoidance, or greenhouse gas sequestration, achieved by an 

offset project of that type. Such methodology shall ensure, at a 

minimum, that any greenhouse gas emission reduction or 

avoidance, or any greenhouse gas sequestration, is considered 

additional only to the extent that it results from activities 

that— 


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(A) are not required by or undertaken to comply with any 

law, including any regulation or consent order; 

(B) were not commenced prior to January 1, 2009, except 

in the case of— 

(i) offset project activities that commenced after January 1, 2001, and were registered as of the date of enactment of this title under an offset program with respect to which the Administrator has made an affirmative determination under section 740(a)(2); or 

(ii) activities that are readily reversible, with respect 

to which the Administrator may set an alternative earlier date under this subparagraph that is not earlier 

than January 1, 2001, where the Administrator determines that setting such an alternative date may 

produce an environmental benefit by removing an incentive to cease and then reinitiate activities that began 

prior to January 1, 2009; 

(C) are not receiving support under part E of this title or 

title IV, subtitle D of the American Clean Energy and Security Act of 2009; and 

(D) exceed the activity baseline established under paragraph (2). 

(2) ACTIVITY BASELINES.—A standardized methodology for establishing activity baselines for offset projects of that type. The 

Administrator shall set activity baselines to reflect a conservative estimate of business-as-usual performance or practices for 

the relevant type of activity such that the baseline provides an 

adequate margin of safety to ensure the environmental integrity 

of offsets calculated in reference to such baseline. 

(3) QUANTIFICATION METHODS.—A standardized methodology 

for determining the extent to which greenhouse gas emission reductions or avoidance, or greenhouse gas sequestration, 

achieved by an offset project of that type exceed a relevant activity baseline, including protocols for monitoring and accounting 

for uncertainty. 

(4) LEAKAGE.—A standardized methodology for accounting for 

and mitigating potential leakage, if any, from an offset project 

of that type, taking uncertainty into account. 

(b) ACCOUNTING FOR REVERSALS.— (1) IN GENERAL.—For each type of sequestration project listed 

under section 733, the Administrator shall establish requirements to account for and address reversals, including— 

(A) a requirement to report any reversal with respect to 

an offset project for which offset credits have been issued 

under this part; 

(B) provisions to require emission allowances to be held 

in amounts to fully compensate for greenhouse gas emissions attributable to reversals, and to assign responsibility 

for holding such emission allowances; and 

(C) any other provisions the Administrator determines 

necessary to account for and address reversals. 

(2) MECHANISMS.—The Administrator shall prescribe mechanisms to ensure that any sequestration with respect to which an 

offset credit is issued under this part results in a permanent net 

increase in sequestration, and that full account is taken of any 


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actual or potential reversal of such sequestration, with an adequate margin of safety. The Administrator shall prescribe at 

least one of the following mechanisms to meet the requirements 

of this paragraph: 

(A) An offsets reserve, pursuant to paragraph (3). 

(B) Insurance that provides for purchase and provision to 

the Administrator for retirement of an amount of offset 

credits or emission allowances equal in number to the tons 

of carbon dioxide equivalents of greenhouse gas emissions 

released due to reversal. 

(C) Another mechanism that the Administrator determines satisfies the requirements of this part. 

(3) OFFSETS RESERVE.— 

(A) IN GENERAL.—An offsets reserve referred to in paragraph (2)(A) is a program under which, before issuance of 

offset credits under this part, the Administrator shall subtract and reserve from the quantity to be issued a quantity 

of offset credits based on the risk of reversal. The Administrator shall— 

(i) hold these reserved offset credits in the offsets reserve; and 

(ii) register the holding of the reserved offset credits 

in the Offset Registry established under section 732(d). 

(B) PROJECT REVERSAL.— 

(i) IN GENERAL.—If a reversal has occurred with respect an offset project for which offset credits are reserved under this paragraph, the Administrator shall 

remove offset credits from the offsets reserve and cancel 

them to fully account for the tons of carbon dioxide 

equivalent that are no longer sequestered. 

(ii) INTENTIONAL REVERSALS.—If the Administrator 

determines that a reversal was intentional, the offset 

project developer for the relevant offset project shall 

place into the offsets reserve a quantity of offset credits, 

or combination of offset credits and emission allowances, equal in number to the number of reserve offset 

credits that were canceled due to the reversal pursuant 

to clause (i). 

(iii) UNINTENTIONAL REVERSALS.—If the Administrator determines that a reversal was unintentional, 

the offset project developer for the relevant offset project 

shall place into the offsets reserve a quantity of offset 

credits, or combination of offset credits and emission 

allowances, equal in number to half the number of offset credits that were reserved for that offset project, or 

half the number of reserve offset credits that were canceled due to the reversal pursuant to clause (i), whichever is less. 

(C) USE OF RESERVED OFFSET CREDITS.—Offset credits 

placed into the offsets reserve under this paragraph may 

not be used to comply with section 722. 

(c) CREDITING PERIODS.— 

(1) IN GENERAL.—For each offset project type, the Administrator shall specify a crediting period, and establish provisions 


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for petitions for new crediting periods, in accordance with this 

subsection. 

(2) DURATION.—The crediting period shall be no less than 5 

and no greater than 10 years for any project type other than 

those involving sequestration. 

(3) ELIGIBILITY.—An offset project shall be eligible to generate 

offset credits under this part only during the project’s crediting 

period. During such crediting period, the project shall remain 

eligible to generate offset credits, subject to the methodologies 

and project type eligibility list that applied as of the date of 

project approval under section 735, except as provided in paragraph (4) of this subsection. 

(4) PETITION FOR NEW CREDITING PERIOD.—An offset project 

developer may petition for a new crediting period to commence 

after termination of a crediting period, subject to the methodologies and project type eligibility list in effect at the time when 

such petition is submitted. A petition may not be submitted 

under this paragraph more than 18 months before the end of 

the pending crediting period. The Administrator may limit the 

number of new crediting periods available for projects of particular project types. 

(d) ENVIRONMENTAL INTEGRITY.—In establishing the requirements 

under this section, the Administrator shall apply conservative assumptions or methods to maximize the certainty that the environmental integrity of the cap established under section 703 is not compromised. 

(e) PRE-EXISTING METHODOLOGIES.—In promulgating requirements under this section, the Administrator shall give due consideration to methodologies for offset projects existing as of the date of 

enactment of this title. 

(f) ADDED PROJECT TYPES.—The Administrator shall establish 

methodologies described in subsection (a), and, as applicable, requirements and mechanisms for reversals as described in subsection 

(b), for any project type that is added to the list pursuant to section 

733. 

SEC. 735. APPROVAL OF OFFSET PROJECTS. 

(a) APPROVAL PETITION.—An offset project developer shall submit 

an offset project approval petition providing such information as the 

Administrator requires to determine whether the offset project is eligible for issuance of offset credits under rules promulgated pursuant 

to this part. 

(b) TIMING.—An approval petition shall be submitted to the Administrator under subsection (a) no later than the time at which an 

offset project’s first verification report is submitted under section 

736. 

(c) APPROVAL PETITION REQUIREMENTS.—As part of the regulations promulgated under section 732, the Administrator shall include provisions for, and shall specify, the required components of 

an offset project approval petition required under subsection (a), 

which shall include— 

(1) designation of an offset project developer; and 

(2) any other information that the Administrator considers to 

be necessary to achieve the purposes of this part. 

(d) APPROVAL AND NOTIFICATION.—Not later than 90 days after 

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ministrator shall approve or deny the petition in writing and, if the 

petition is denied, provide the reasons for denial. After an offset 

project is approved, the offset project developer shall not be required 

to resubmit an approval petition during the offset project’s crediting 

period, except as provided in section 734(c)(4). 

(e) APPEAL.—The Administrator shall establish procedures for appeal and review of determinations made under subsection (d). 

(f) VOLUNTARY PREAPPROVAL REVIEW.—The Administrator may 

establish a voluntary preapproval review procedure, to allow an offset project developer to request the Administrator to conduct a preliminary eligibility review for an offset project. Findings of such reviews shall not be binding upon the Administrator. The voluntary 

preapproval review procedure— 

(1) shall require the offset project developer to submit such 

basic project information as the Administrator requires to provide a meaningful review; and 

(2) shall require a response from the Administrator not later 

than 6 weeks after receiving a request for review under this subsection. 

SEC. 736. VERIFICATION OF OFFSET PROJECTS. 

(a) IN GENERAL.—As part of the regulations promulgated under 

section 732(a), the Administrator shall establish requirements, including protocols, for verification of the quantity of greenhouse gas 

emission reductions or avoidance, or sequestration of greenhouse 

gases, resulting from an offset project. The regulations shall require 

that an offset project developer shall submit a report, prepared by 

a third-party verifier accredited under subsection (d), providing 

such information as the Administrator requires to determine the 

quantity of greenhouse gas emission reductions or avoidance, or sequestration of greenhouse gas, resulting from the offset project. 

(b) SCHEDULE.—The Administrator shall prescribe a schedule for 

the submission of verification reports under subsection (a). 

(c) VERIFICATION REPORT REQUIREMENTS.—The Administrator 

shall specify the required components of a verification report required under subsection (a), which shall include— 

(1) the name and contact information for a designated representative for the offset project developer; 

(2) the quantity of greenhouse gas reduced, avoided, or sequestered; 

(3) the methodologies applicable to the project pursuant to 

section 734; 

(4) a certification that the project meets the applicable requirements; 

(5) a certification establishing that the conflict of interest requirements in the regulations promulgated under subsection 

(d)(1) have been complied with; and 

(6) any other information that the Administrator considers to 

be necessary to achieve the purposes of this part. 

(d) VERIFIER ACCREDITATION.— 

(1) IN GENERAL.—As part of the regulations promulgated 

under section 732(a), the Administrator shall establish a process and requirements for periodic accreditation of third-party 

verifiers to ensure that such verifiers are professionally qualified and have no conflicts of interest. 

(2) STANDARDS.— 


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(A) AMERICAN NATIONAL STANDARDS INSTITUTE ACCREDITATION.—The Administrator may accredit, or accept for 

purposes of accreditation under this subsection, verifiers accredited under the American National Standards Institute 

(ANSI) accreditation program in accordance with ISO 

14065. The Administrator shall accredit, or accept for accreditation, verifiers under this subparagraph only if the 

Administrator finds that the American National Standards 

Institute accreditation program provides sufficient assurance that the requirements of this part will be met. 

(B) EPA ACCREDITATION.—As part of the regulations promulgated under section 732(a), the Administrator may establish accreditation standards for verifiers under this subsection, and may establish related training and testing programs and requirements. 

(3) PUBLIC ACCESSIBILITY.—Each verifier meeting the requirements for accreditation in accordance with this subsection shall 

be listed in a publicly accessible database, which shall be maintained and updated by the Administrator. 

SEC. 737. ISSUANCE OF OFFSET CREDITS. 

(a) DETERMINATION AND NOTIFICATION.—Not later than 90 days 

after receiving a complete verification report under section 736, the 

Administrator shall— 

(1) make the report publicly available; 

(2) make a determination of the quantity of greenhouse gas 

emissions reduced or avoided, or greenhouse gases sequestered, 

resulting from an offset project approved under section 735; and 

(3) notify the offset project developer in writing of such determination. 

(b) ISSUANCE OF OFFSET CREDITS.—The Administrator shall 

issue one offset credit to an offset project developer for each ton of 

carbon dioxide equivalent that the Administrator has determined 

has been reduced, avoided, or sequestered during the period covered 

by a verification report submitted in accordance with section 736, 

only if— 

(1) the Administrator has approved the offset project pursuant to section 735; and 

(2) the relevant emissions reduction, avoidance, or sequestration has— 

(A) already occurred, during the offset project’s crediting 

period; and 

(B) occurred after January 1, 2009. 

(c) APPEAL.—The Administrator shall establish procedures for appeal and review of determinations made under subsection (a). 

(d) TIMING.—Offset credits meeting the criteria established in subsection (b) shall be issued not later than 2 weeks following the 

verification determination made by the Administrator under subsection (a). 

(e) REGISTRATION.—The Administrator shall assign a unique serial number to and register each offset credit to be issued in the Offset Registry established under section 732(d). 

SEC. 738. AUDITS. 

(a) IN GENERAL.—The Administrator shall, on an ongoing basis, 

conduct random audits of offset projects, offset credits, and practices 


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of third-party verifiers. In each year, the Administrator shall conduct audits, at minimum, for a representative sample of project 

types and geographic areas. 

(b) DELEGATION.—The Administrator may delegate to a State or 

tribal government the responsibility for conducting audits under 

this section if the Administrator finds that the program proposed by 

the State or tribal government provides assurances equivalent to 

those provided by the auditing program of the Administrator, and 

that the integrity of the offset program under this part will be maintained. Nothing in this subsection shall prevent the Administrator 

from conducting any audit the Administrator considers necessary 

and appropriate. 

SEC. 739. PROGRAM REVIEW AND REVISION. 

At least once every 5 years, the Administrator shall review and, 

based on new or updated information and taking into consideration 

the recommendations of the Advisory Board, update and revise— 

(1) the list of eligible project types established under section 

733; 

(2) the methodologies established, including specific activity 

baselines, under section 734(a); 

(3) the reversal requirements and mechanisms established or 

prescribed under section 734(b); 

(4) measures to improve the accountability of the offsets program; and 

(5) any other requirements established under this part to ensure the environmental integrity and effective operation of this 

part. 

SEC. 740. EARLY OFFSET SUPPLY. 

(a) PROJECTS REGISTERED UNDER OTHER GOVERNMENT-RECOGNIZED PROGRAMS.—Except as provided in subsection (b) or (c), the 

Administrator shall issue one offset credit for each ton of carbon dioxide equivalent emissions reduced, avoided, or sequestered— 

(1) under an offset project that was started after January 1, 

2001; 

(2) for which a credit was issued under any regulatory or voluntary greenhouse gas emission offset program that the Administrator determines— 

(A) was established under State or tribal law or regulation prior to January 1, 2009, or has been approved by the 

Administrator pursuant to subsection (e); 

(B) has developed offset project type standards, methodologies, and protocols through a public consultation process or a peer review process; 

(C) has made available to the public standards, methodologies, and protocols that require that credited emission 

reductions, avoidance, or sequestration are permanent, additional, verifiable, and enforceable; 

(D) requires that all emission reductions, avoidance, or 

sequestration be verified by a State regulatory agency or an 

accredited third-party independent verification body; 

(E) requires that all credits issued are registered in a 

publicly accessible registry, with individual serial numbers 

assigned for each ton of carbon dioxide equivalent emission 

reductions, avoidance, or sequestration; and 


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(F) ensures that no credits are issued for activities for 

which the entity administering the program, or a program 

administrator or representative, has funded, solicited, or 

served as a fund administrator for the development of, the 

project or activity that caused the emission reduction, 

avoidance, or sequestration; and 

(3) for which the credit described in paragraph (2) is transferred to the Administrator. 

(b) INELIGIBLE CREDITS.—Subsection (a) shall not apply to offset 

credits that have expired or have been retired, canceled, or used for 

compliance under a program established under State or tribal law 

or regulation. 

(c) LIMITATION.—Notwithstanding subsection (a)(1), offset credits 

shall be issued under this section— 

(1) only for reductions or avoidance of greenhouse gas emissions, or sequestration of greenhouse gases, that occur after 

January 1, 2009; and 

(2) only until the date that is 3 years after the date of enactment of this title, or the date that regulations promulgated 

under section 732(a) take effect, whichever occurs sooner. 

(d) RETIREMENT OF CREDITS.—The Administrator shall seek to 

ensure that offset credits described in subsection (a)(2) are retired 

for purposes of use under a program described in subsection (b). 

(e) OTHER PROGRAMS.—(1) Offset programs that either— 

(A) were not established under State or tribal law; or 

(B) were not established prior to January 1, 2009, 

but that otherwise meet all of the criteria of subsection (a)(2) may 

apply to the Administrator to be approved under this subsection as 

an eligible program for early offset credits under this section. 

(2) The Administrator shall approve any such program that the 

Administrator determines has criteria and methodologies of at least 

equal stringency to the criteria and methodologies of the programs 

established under State or tribal law that the Administrator determines meet the criteria of subsection (a)(2). The Administrator may 

approve types of offsets under any such program that are subject to 

criteria and methodologies of at least equal stringency to the criteria 

and methodologies for such types of offsets applied under the programs established under State or tribal law that the Administrator 

determines meet the criteria of subsection (a)(2). The Administrator 

shall make a determination on any application received under this 

subsection by no later than 180 days from the date of receipt of the 

application. 

SEC. 741. ENVIRONMENTAL CONSIDERATIONS. 

If the Administrator lists forestry projects as eligible offset project 

types under section 733, the Administrator, in consultation with appropriate Federal agencies, shall promulgate regulations for the selection and use of species in forestry and other relevant land management-related offset projects— 

(1) to ensure that native species are given primary consideration in such projects; 

(2) to enhance biological diversity in such projects; 

(3) to prohibit the use of federally designated or State-designated noxious weeds; 


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(4) to prohibit the use of a species listed by a regional or State 

invasive plant authority within the applicable region or State; 

and 

(5) in accordance with widely accepted, environmentally sustainable forestry practices. 

SEC. 742. TRADING. 

Section 724 shall apply to the trading of offset credits. 

SEC. 743. INTERNATIONAL OFFSET CREDITS. 

(a) IN GENERAL.—The Administrator, in consultation with the 

Secretary of State and the Administrator of the United States Agency for International Development, may issue, in accordance with 

this section, international offset credits based on activities that reduce or avoid greenhouse gas emissions, or increase sequestration of 

greenhouse gases, in a developing country. Such credits may be 

issued for projects pursuant to the requirements of this part or as 

provided in subsection (c), (d), or (e). 

(b) ISSUANCE.— 

(1) REGULATIONS.—Not later than 2 years after the date of 

enactment of this title, the Administrator, in consultation with 

the Secretary of State, the Administrator of the United States 

Agency for International Development, and any other appropriate Federal agency, and taking into consideration the recommendations of the Advisory Board, shall promulgate regulations for implementing this section. Except as otherwise provided in this section, the issuance of international offset credits 

under this section shall be subject to the requirements of this 

part. 

(2) REQUIREMENTS FOR INTERNATIONAL OFFSET CREDITS.— 

The Administrator may issue international offset credits only 

if— 

(A) the United States is a party to a bilateral or multilateral agreement or arrangement that includes the country in 

which the project or measure achieving the relevant greenhouse gas emission reduction or avoidance, or greenhouse 

gas sequestration, has occurred; 

(B) such country is a developing country; and 

(C) such agreement or arrangement— 

(i) ensures that all of the requirements of this part 

apply to the issuance of international offset credits 

under this section; and 

(ii) provides for the appropriate distribution of international offset credits issued. 

(c) SECTOR-BASED CREDITS.— (1) IN GENERAL.—In order to minimize the potential for leakage and to encourage countries to take nationally appropriate 

mitigation actions to reduce or avoid greenhouse gas emissions, 

or sequester greenhouse gases, the Administrator, in consultation with the Secretary of State and the Administrator of the 

United States Agency for International Development, shall— 

(A) identify sectors of specific countries with respect to 

which the issuance of international offset credits on a sectoral basis is appropriate; and 

(B) issue international offset credits for such sectors only 

on a sectoral basis. 


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(2) IDENTIFICATION OF SECTORS.— (A) GENERAL RULE.—For purposes of paragraph (1)(A), a 

sectoral basis shall be appropriate for activities— 

(i) in countries that have comparatively high greenhouse gas emissions, or comparatively greater levels of 

economic development; and 

(ii) that, if located in the United States, would be 

within a sector subject to the compliance obligation 

under section 722. 

(B) FACTORS.—In determining the sectors and countries 

for which international offset credits should be awarded 

only on a sectoral basis, the Administrator, in consultation 

with the Secretary of State and the Administrator of the 

United States Agency for International Development, shall 

consider the following factors: 

(i) The country’s gross domestic product. 

(ii) The country’s total greenhouse gas emissions. 

(iii) Whether the comparable sector of the United 

States economy is covered by the compliance obligation 

under section 722. 

(iv) The heterogeneity or homogeneity of sources 

within the relevant sector. 

(v) Whether the relevant sector provides products or 

services that are sold in internationally competitive 

markets. 

(vi) The risk of leakage if international offset credits 

were issued on a project-level basis, instead of on a sectoral basis, for activities within the relevant sector. 

(vii) The capability of accurately measuring, monitoring, reporting, and verifying the performance of 

sources across the relevant sector. 

(viii) Such other factors as the Administrator, in consultation with the Secretary of State and the Administrator of the United States Agency for International Development, determines are appropriate to— 

(I) ensure the integrity of the United States 

greenhouse gas emissions cap established under 

section 703; and 

(II) encourage countries to take nationally appropriate mitigation actions to reduce or avoid greenhouse gas emissions, or sequester greenhouse gases. 

(3) SECTORAL BASIS.— 

(A) DEFINITION.—In this subsection, the term ‘‘sectoral 

basis’’ means the issuance of international offset credits 

only for the quantity of sector-wide reductions or avoidance 

of greenhouse gas emissions, or sector-wide increases in sequestration of greenhouse gases, achieved across the relevant sector of the economy relative to a baseline level of 

performance established in an agreement or arrangement 

described in subsection (b)(2)(A) for the sector. 

(B) BASELINE.—The baseline for a sector shall be established at levels of greenhouse gas emissions lower than 

would occur under a business-as-usual scenario taking into 

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tors, and additionality and performance shall be determined on the basis of such baseline. 

(d) CREDITS ISSUED BY AN INTERNATIONAL BODY.— (1) IN GENERAL.—The Administrator, in consultation with the 

Secretary of State, may issue international offset credits in exchange for instruments in the nature of offset credits that are 

issued by an international body established pursuant to the 

United Nations Framework Convention on Climate Change, to 

a protocol to such Convention, or to a treaty that succeeds such 

Convention. The Administrator may issue international offset 

credits under this subsection only if, in addition to the requirements of subsection (b), the Administrator has determined that 

the international body that issued the instruments has implemented substantive and procedural requirements for the relevant project type that provide equal or greater assurance of the 

integrity of such instruments as is provided by the requirements 

of this part. 

(2) RETIREMENT.—The Administrator, in consultation with 

the Secretary of State, shall seek, by whatever means appropriate, including agreements, arrangements, or technical cooperation with the international issuing body described in paragraph (1), to ensure that such body— 

(A) is notified of the Administrator’s issuance, under this 

subsection, of an international offset credit in exchange for 

an instrument issued by such international body; and 

(B) provides, to the extent feasible, for the disqualification of the instrument issued by such international body for 

subsequent use under any relevant foreign or international 

greenhouse gas regulatory program, regardless of whether 

such use is a sale, exchange, or submission to satisfy a compliance obligation. 

(e) OFFSETS FROM REDUCED DEFORESTATION.— 

(1) REQUIREMENTS.—The Administrator, in accordance with 

the regulations promulgated under subsection (b)(1) and an 

agreement or arrangement described in subsection (b)(2)(A), 

shall issue international offset credits for greenhouse gas emission reductions achieved through activities to reduce deforestation only if, in addition to the requirements of subsection (b)— 

(A) the activity occurs in— 

(i) a country listed by the Administrator pursuant to 

paragraph (2); 

(ii) a state or province listed by the Administrator 

pursuant to paragraph (5); or 

(iii) a country listed by the Administrator pursuant 

to paragraph (6); 

(B) except as provided in paragraph (5) or (6), the quantity of the international offset credits is determined by comparing the national emissions from deforestation relative to 

a national deforestation baseline for that country established, in accordance with an agreement or arrangement 

described in subsection (b)(2)(A), pursuant to paragraph 

(4); 

(C) the reduction in emissions from deforestation has occurred before the issuance of the international offset credit 

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ards, has been demonstrated using ground-based inventories, remote sensing technology, and other methodologies 

to ensure that all relevant carbon stocks are accounted; 

(D) the Administrator has made appropriate adjustments, such as discounting for any additional uncertainty, 

to account for circumstances specific to the country, including its technical capacity described in paragraph (2)(A); 

(E) the activity is designed, carried out, and managed— 

(i) in accordance with widely accepted, environmentally sustainable forest management practices; 

(ii) to promote or restore native forest species and 

ecosystems where practicable, and to avoid the introduction of invasive nonnative species; 

(iii) in a manner that gives due regard to the rights 

and interests of local communities, indigenous peoples, 

forest-dependent communities, and vulnerable social 

groups; 

(iv) with consultations with, and full participation 

of, local communities, indigenous peoples, and forestdependent communities, in affected areas, as partners 

and primary stakeholders, prior to and during the design, planning, implementation, and monitoring and 

evaluation of activities; and 

(v) with equitable sharing of profits and benefits derived from offset credits with local communities, indigenous peoples, and forest-dependent communities; and 

(F) the reduction otherwise satisfies and is consistent 

with any relevant requirements established by an agreement reached under the auspices of the United Nations 

Framework Convention on Climate Change. 

(2) ELIGIBLE COUNTRIES.—The Administrator, in consultation 

with the Secretary of State and the Administrator of the United 

States Agency for International Development, and in accordance 

with an agreement or arrangement described in subsection 

(b)(2)(A), shall establish, and periodically review and update, a 

list of the developing countries that have the capacity to participate in deforestation reduction activities at a national level, including— 

(A) the technical capacity to monitor, measure, report, 

and verify forest carbon fluxes for all significant sources of 

greenhouse gas emissions from deforestation with an acceptable level of uncertainty, as determined taking into account relevant internationally accepted methodologies, such 

as those established by the Intergovernmental Panel on Climate Change; 

(B) the institutional capacity to reduce emissions from 

deforestation, including strong forest governance and mechanisms to equitably distribute deforestation resources for 

local actions; and 

(C) a land use or forest sector strategic plan that— 

(i) assesses national and local drivers of deforestation and forest degradation and identifies reforms to 

national policies needed to address them; 

(ii) estimates the country’s emissions from deforestation and forest degradation; 


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(iii) identifies improvements in data collection, monitoring, and institutional capacity necessary to implement a national deforestation reduction program; and 

(iv) establishes a timeline for implementing the program and transitioning to low-emissions development. 

(3) PROTECTION OF INTERESTS.—With respect to an agreement 

or arrangement described in subsection (b)(2)(A) with a country 

that addresses international offset credits under this subsection, 

the Administrator, in consultation with the Secretary of State 

and the Administrator of the United States Agency for International Development, shall seek to ensure the establishment 

and enforcement by such country of legal regimes, processes, 

standards, and safeguards that— 

(A) give due regard to the rights and interests of local 

communities, indigenous peoples, forest-dependent communities, and vulnerable social groups; 

(B) promote consultations with, and full participation of, 

forest-dependent communities and indigenous peoples in affected areas, as partners and primary stakeholders, prior to 

and during the design, planning, implementation, and 

monitoring and evaluation of activities; and 

(C) encourage equitable sharing of profits and benefits 

derived from international offset credits with local communities, indigenous peoples, and forest-dependent communities. 

(4) NATIONAL DEFORESTATION BASELINE.—A national deforestation baseline established under this subsection shall— 

(A) be national in scope; 

(B) be consistent with nationally appropriate mitigation 

commitments or actions with respect to deforestation, taking into consideration the average annual historical deforestation rates of the country during a period of at least 5 

years, the applicable drivers of deforestation, and other factors to ensure additionality; 

(C) establish a trajectory that would result in zero net deforestation by not later than 20 years after the national deforestation baseline has been established; 

(D) be adjusted over time to take account of changing national circumstances; 

(E) be designed to account for all significant sources of 

greenhouse gas emissions from deforestation in the country; 

and 

(F) be consistent with the national deforestation baseline, 

if any, established for such country under section 754(d)(1). 

(5) STATE-LEVEL OR PROVINCE-LEVEL ACTIVITIES.— 

(A) ELIGIBLE STATES OR PROVINCES.—The Administrator, 

in consultation with the Secretary of State and the Administrator of the United States Agency for International Development, shall establish, and periodically review and update, a list of states or provinces in developing countries 

where— 

(i) the developing country is not included on the list 

of countries established pursuant to paragraph (6)(A); 

(ii) the state or province by itself is a major emitter 

of greenhouse gases from tropical deforestation on a 


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scale commensurate to the emissions of other countries; 

and 

(iii) the state or province meets the eligibility criteria 

in paragraphs (2) and (3) for the geographic area 

under its jurisdiction. 

(B) ACTIVITIES.—The Administrator may issue international offset credits for greenhouse gas emission reductions achieved through activities to reduce deforestation at 

a state or provincial level that meet the requirements of this 

section. Such credits shall be determined by comparing the 

emissions from deforestation within that state or province 

relative to the state or province deforestation baseline for 

that state or province established, in accordance with an 

agreement or arrangement described in subsection (b)(2)(A), 

pursuant to subparagraph (C) of this paragraph. 

(C) STATE-LEVEL OR PROVINCE-LEVEL DEFORESTATION

BASELINE.—A state-level or province-level deforestation 

baseline shall— 

(i) be consistent with any existing nationally appropriate mitigation commitments or actions for the country in which the activity is occurring, taking into consideration the average annual historical deforestation 

rates of the state or province during a period of at least 

5 years, relevant drivers of deforestation, and other factors to ensure additionality; 

(ii) establish a trajectory that would result in zero 

net deforestation by not later than 20 years after the 

state-level or province-level deforestation baseline has 

been established; and 

(iii) be designed to account for all significant sources 

of greenhouse gas emissions from deforestation in the 

state or province and adjusted to fully account for 

emissions leakage outside the state or province. 

(D) PHASE OUT.—Beginning 5 years after the first calendar year for which a covered entity must demonstrate 

compliance with section 722(a), the Administrator shall 

issue no further international offset credits for eligible 

state-level or province-level activities to reduce deforestation 

pursuant to this paragraph. 

(6) PROJECTS AND PROGRAMS TO REDUCE DEFORESTATION.— 

(A) ELIGIBLE COUNTRIES.—The Administrator, in consultation with the Secretary of State and the Administrator 

of the United States Agency for International Development, 

shall establish, and periodically review and update, a list 

of developing countries that— 

(i) the Administrator determines, based on recent, 

credible, and reliable emissions data, account for less 

than 1 percent of global greenhouse gas emissions and 

less than 3 percent of global forest-sector and land use 

change greenhouse gas emissions; and 

(ii) have, or in the determination of the Administrator are making a good faith effort to develop, a land 

use or forest sector strategic plan that meets the criteria described in paragraph (2)(C). 


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(B) ACTIVITIES.—The Administrator may issue international offset credits for greenhouse gas emission reductions achieved through project or program level activities to 

reduce deforestation in countries listed under subparagraph 

(A) that meet the requirements of this section. The quantity 

of international offset credits shall be determined by comparing the project-level or program-level emissions from deforestation to a deforestation baseline for such project or 

program established pursuant to subparagraph (C). 

(C) PROJECT-LEVEL OR PROGRAM-LEVEL BASELINE.—A 

project-level or program-level deforestation baseline shall— 

(i) be consistent with any existing nationally appropriate mitigation commitments or actions for the country in which the project or program is occurring, taking 

into consideration the average annual historical deforestation rates in the project or program boundary during a period of at least 5 years, applicable drivers of 

deforestation, and other factors to ensure additionality; 

(ii) be designed to account for all significant sources 

of greenhouse gas emissions from deforestation in the 

project or program boundary; and 

(iii) be adjusted to fully account for emissions leakage outside the project or program boundary. 

(D) PHASE OUT.—(i) Beginning 5 years after the first calendar year for which a covered entity must demonstrate 

compliance with section 722(a), the Administrator shall 

issue no further international offset credits for project-level 

or program-level activities as described in this paragraph, 

except as provided in clause (ii). 

(ii) The Administrator may extend the phase out deadline 

for the issuance of international offset credits under this 

section by up to 8 years with respect to eligible activities 

taking place in a least developed nation, which is a foreign 

country that the United Nations has identified as among 

the least developed of developing countries at the time that 

the Administrator determines to provide an extension, provided that the Administrator, in consultation with the Secretary of State and the Administrator of the United States 

Agency for International Development, determines the nation— 

(I) lacks sufficient capacity to adopt and implement 

effective programs to achieve reductions in deforestation measured against national baselines; 

(II) is receiving support under part E to develop such 

capacity; and 

(III) has developed and is working to implement a 

credible national strategy or plan to reduce deforestation. 

(7) DEFORESTATION.—In implementing this subsection, the 

Administrator, taking into consideration the recommendations 

of the Advisory Board, may include forest degradation, or soil 

carbon losses associated with forested wetlands or peatlands, 

within the meaning of deforestation. 

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national offset credits under subsection (c), (d), or (e), the Administrator, in consultation with the Secretary of State and the Administrator of the United States Agency for International Development, 

may modify or omit a requirement of this part (excluding the requirements of this section) if the Administrator determines that the 

application of that requirement to such subsection is not feasible. In 

modifying or omitting such a requirement on the basis of infeasibility, the Administrator, in consultation with the Secretary of State 

and the Administrator of the United States Agency for International 

Development, shall ensure, with an adequate margin of safety, the 

integrity of international offset credits issued under this section and 

of the greenhouse gas emissions cap established pursuant to section 

703. 

(g) AVOIDING DOUBLE COUNTING.—The Administrator, in consultation with the Secretary of State, shall seek, by whatever means 

appropriate, including agreements, arrangements, or technical cooperation, to ensure that activities on the basis of which international offset credits are issued under this section are not used for 

compliance with an obligation to reduce or avoid greenhouse gas 

emissions, or increase greenhouse gas sequestration, under a foreign 

or international regulatory system. In addition, no international offset credits shall be issued for emission reductions from activities 

with respect to which emission allowances were allocated under section 781 for distribution under part E. 

(h) LIMITATION.—The Administrator shall not issue international 

offset credits generated by projects based on the destruction of 

hydrofluorocarbons. 

PART E—SUPPLEMENTAL EMISSIONS REDUCTIONS FROM REDUCED DEFORESTATION 

SEC. 751. DEFINITIONS. 

In this part: 

(1) LEAKAGE PREVENTION ACTIVITIES.—The term ‘‘leakage prevention activities’’ means activities in developing countries that 

are directed at preserving existing forest carbon stocks, including forested wetlands and peatlands, that might, absent such 

activities, be lost through leakage. 

(2) NATIONAL DEFORESTATION REDUCTION ACTIVITIES.—The 

term ‘‘national deforestation reduction activities’’ means activities in developing countries that reduce a quantity of greenhouse gas emissions from deforestation that is calculated by 

measuring actual emissions against a national deforestation 

baseline established pursuant to section 754(d)(1) and (2). 

(3) SUBNATIONAL DEFORESTATION REDUCTION ACTIVITIES.— The term ‘‘subnational deforestation reduction activities’’ means 

activities in developing countries that reduce a quantity of 

greenhouse gas emissions from deforestation that are calculated 

by measuring actual emissions using an appropriate baseline 

established by the Administrator that is less than national in 

scope. 

(4) SUPPLEMENTAL EMISSIONS REDUCTIONS.—The term ‘‘supplemental emissions reductions’’ means greenhouse gas emissions reductions achieved from reduced or avoided deforestation 

under this part. 


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(5) USAID.—The term ‘‘USAID’’ means the United States 

Agency for International Development. 

SEC. 752. FINDINGS. 

Congress finds that— 

(1) as part of a global effort to mitigate climate change, it is 

in the national interest of the United States to assist developing 

countries to reduce and ultimately halt emissions from deforestation; 

(2) deforestation is one of the largest sources of greenhouse 

gas emissions in developing countries, amounting to roughly 20 

percent of overall emissions globally; 

(3) recent scientific analysis shows that it will be substantially more difficult to limit the increase in global temperatures 

to less than 2 degrees centigrade above preindustrial levels 

without reducing and ultimately halting net emissions from deforestation; 

(4) reducing emissions from deforestation is highly cost-effective, compared to many other sources of emissions reductions; 

(5) in addition to contributing significantly to worldwide efforts to address global warming, this assistance will generate 

significant environmental and social cobenefits, including protection of biodiversity, ecosystem services, and forest-related 

livelihoods; and 

(6) Under the Bali Action Plan, developed country parties to 

the United Nations Framework Convention on Climate Change, 

including the United States, committed to ‘‘enhanced action on 

the provision of financial resources and investment to support 

action on mitigation and adaptation and technology cooperation,’’ including, inter alia, consideration of ‘‘improved access to 

adequate, predictable, and sustainable financial resources and 

financial and technical support, and the provision of new and 

additional resources, including official and concessional funding for developing country parties’’. 

SEC. 753. SUPPLEMENTAL EMISSIONS REDUCTIONS THROUGH REDUCED DEFORESTATION. 

(a) REGULATIONS.—Not later than 2 years after the date of enactment of this title, the Administrator, in consultation with the Administrator of USAID and any other appropriate agencies, shall 

promulgate regulations establishing a program to use emission allowances set aside for this purpose under section 781 to achieve the 

reduction of greenhouse gas emissions from deforestation in developing countries in accordance with the requirements of this part. 

(b) OBJECTIVES.—The objectives of the program established under 

this section shall be to— 

(1) achieve supplemental emissions reductions of at least 

720,000,000 tons of carbon dioxide equivalent in 2020, a cumulative amount of at least 6,000,000,000 tons of carbon dioxide 

equivalent by December 31, 2025, and additional supplemental 

emissions reductions in subsequent years; 

(2) build capacity to reduce deforestation in developing countries experiencing deforestation, including preparing developing 

countries to participate in international markets for international offset credits for reduced emissions from deforestation; 

and 


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(3) preserve existing forest carbon stocks in countries where 

such forest carbon may be vulnerable to international leakage, 

particularly in developing countries with largely intact native 

forests. 

SEC. 754. REQUIREMENTS FOR INTERNATIONAL DEFORESTATION REDUCTION PROGRAM. 

(a) ELIGIBLE COUNTRIES.—The Administrator may support activities under this part only with respect to a developing country that— 

(1) the Administrator, in consultation with the Administrator 

of USAID, determines is experiencing deforestation or forest 

degradation or has standing forest carbon stocks that may be 

at risk of deforestation or degradation; and 

(2) has entered into a bilateral or multilateral agreement or 

arrangement with the United States establishing the conditions 

of its participation in the program established under this part, 

which shall include an agreement to meet the standards established under subsection (d) for the activities to which those 

standards apply. 

(b) ACTIVITIES.—(1) Subject to the requirements of this part, the 

Administrator, in consultation with the Administrator of USAID, 

may support activities to achieve the objectives identified in section 

753(b), including— 

(A) national deforestation reduction activities; 

(B) subnational deforestation reduction activities, including 

pilot activities that reduce greenhouse gas emissions but are 

subject to significant uncertainty; 

(C) activities to measure, monitor, and verify deforestation, 

avoided deforestation, and deforestation rates; 

(D) leakage prevention activities; 

(E) development of measurement, monitoring, and verification 

capacities to enable a country to quantify supplemental emissions reductions and to generate for sale offset credits from reduced or avoided deforestation; 

(F) development of governance structures to reduce deforestation and illegal logging; 

(G) enforcement of requirements for reduced deforestation or 

forest conservation; 

(H) efforts to combat illegal logging and increase enforcement 

cooperation; 

(I) providing incentives for policy reforms to achieve the objectives identified in section 753(b); and 

(J) monitoring and evaluation of the results of the activities 

conducted under this section. 

(2) ACTIVITIES SELECTED BY USAID.— 

(A) The Administrator of USAID, in consultation with the 

Administrator, may select for support and implementation pursuant to subsection (c) any of the activities described in paragraph (1), consistent with this part and the regulations promulgated under subsection (d), and subject to the requirement to 

achieve the objectives listed in section 753(b)(1). 

(B) With respect to the activities listed in subparagraphs (D) 

through (J) of paragraph (1), the Administrator of USAID, in 

consultation with the Administrator, shall have primary but 

not exclusive responsibility for selecting the activities to be supported and implemented. 


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(3) INTERAGENCY COORDINATION.—The Administrator and the Administrator of USAID shall jointly develop and biennially update a 

strategic plan for meeting the objectives listed in section 753(b) and 

shall execute a memorandum of understanding delineating the 

agencies’ respective roles in implementing this part. 

(c) MECHANISMS.— (1) IN GENERAL.—The Administrator may support activities to 

achieve the objectives identified in section 753(b) by— 

(A) developing and implementing programs and projects 

that achieve such objectives; and 

(B) distributing emission allowances to a country that is 

eligible under subsection (a), to any private or public group 

(including international organizations), or to an international fund established by an international agreement to 

which the United States is a party, to carry out activities 

to achieve such objectives. 

(2) USAID ACTIVITIES.—With respect to activities selected and 

implemented by the Administrator of USAID pursuant to (b)(2), 

the Administrator shall distribute emission allowances as provided in subparagraph (1) based upon the direction of the Administrator of USAID, subject to the availability of allowances 

for such activities. 

(3) IMPLEMENTATION THROUGH INTERNATIONAL ORGANIZA- TIONS.—If support is distributed through an international organization, the agency responsible for selecting activities in accordance with subparagraph (b)(1) or (2), in consultation with 

the Secretary of State, shall ensure the establishment and implementation of adequate mechanisms to apply and enforce the 

eligibility requirements and other requirements of this section. 

(4) ROLE OF THE SECRETARY OF STATE.—The Administrator 

may not distribute emission allowances to the government of 

another country or to an international organization or international fund unless the Secretary of State has concurred with 

such distribution. 

(d) STANDARDS.—The Administrator, in consultation with the Administrator of USAID, shall promulgate standards to ensure that 

supplemental emissions reductions achieved through supported activities are additional, measurable, verifiable, permanent, monitored, and account for leakage and uncertainty. In addition, such 

standards shall— 

(1) require the establishment of a national deforestation baseline for each country with national deforestation reduction activities that is used to account for reductions achieved from 

such activities; 

(2) provide that a national deforestation baseline established 

under paragraph (1) shall— 

(A) be national in scope; 

(B) be consistent with nationally appropriate mitigation 

commitments or actions with respect to deforestation, taking into consideration the average annual historical deforestation rates of the country during a period of at least 5 

years and other factors to ensure additionality; 

(C) establish a trajectory that would result in zero net deforestation by not later than 20 years from the date the 

baseline is established; 


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(D) be adjusted over time to take account of changing national circumstances; 

(E) be designed to account for all significant sources of 

greenhouse gas emissions from deforestation in the country; 

and 

(F) be consistent with the national deforestation baseline, 

if any, established for such country under section 743(e)(4); 

(3) with respect to support provided pursuant to subsection 

(b)(1)(A) or (B), require supplemental emissions reductions to be 

achieved and verified prior to compensation through the distribution of emission allowances under this part; 

(4) with respect to accounting for subnational deforestation 

reduction activities that lack the standardized or precise measurement and monitoring techniques needed for a full accounting of changes in emissions or baselines, or are subject to other 

sources of uncertainty, apply a conservative discount factor to 

reflect the uncertainty regarding the levels of reductions 

achieved; 

(5) ensure that activities under this part shall be designed, 

carried out, and managed— 

(A) in accordance with widely accepted, environmentally 

sustainable forestry practices; 

(B) to promote native species and conservation or restoration of native forests, if practicable, and to avoid the introduction of invasive nonnative species; 

(C) in a manner that gives due regard to the rights and 

interests of local communities, indigenous peoples, forestdependent communities, and vulnerable social groups; 

(D) with consultations with, and full participation of, 

local communities, indigenous peoples, and forest-dependent communities in affected areas, as partners and primary 

stakeholders, prior to and during the design, planning, implementation, and monitoring and evaluation of activities; 

and 

(E) with equitable sharing of profits and benefits derived 

from the activities with local communities, indigenous peoples, and forest-dependent communities; and 

(6) with respect to support for all activities under this part, 

seek to ensure the establishment and enforcement by the recipient country of legal regimes, standards, processes, and safeguards that— 

(A) give due regard to the rights and interests of local 

communities, indigenous peoples, forest-dependent communities, and vulnerable social groups; 

(B) promote consultations with local communities and indigenous peoples and forest-dependent communities in affected areas, as partners and primary stakeholders, prior to 

and during the design, planning, implementation, monitoring, and evaluation of activities under this part; and 

(C) encourage equitable sharing of profits and benefits 

from incentives for emissions reductions or leakage prevention with local communities, indigenous peoples, and forestdependent communities. 

(e) EXPANSION OF SCOPE.—The Administrator, in consultation 

with the Administrator of USAID, may decide, taking into account 


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any advice from the Advisory Board, to expand, where appropriate, 

the scope of activities under this part to include— 

(1) reduced emissions from forest degradation; or 

(2) reduced soil carbon-derived emissions associated with deforestation and degradation of forested wetlands and peatlands. 

(f) ACCOUNTING.—The Administrator shall establish a publicly 

accessible registry of the supplemental emissions reductions 

achieved through support provided under this part each year, after 

appropriately discounting for uncertainty and other relevant factors 

as required by the standards established under subsection (d). 

(g) TRANSITION TO NATIONAL REDUCTIONS.—Beginning 5 years 

after the date that a country entered into the agreement or arrangement required under subsection (a)(2), the Administrator shall provide no further compensation through emission allowances to that 

country under this part for any subnational deforestation reduction 

activities, except that the Administrator may extend this period by 

an additional 5 years if the Administrator, in consultation with the 

Administrator of USAID, determines that— 

(1) the country is making substantial progress towards adopting and implementing a program to achieve reductions in deforestation measured against a national baseline; 

(2) the greenhouse gas emissions reductions achieved are not 

resulting in significant leakage; and 

(3) the greenhouse gas emissions reductions achieved are 

being appropriately discounted to account for any leakage that 

is occurring. 

The limitation under this subsection shall not apply to support for 

activities to further the objectives listed in section 753(b)(2) or (3). 

(h) COORDINATION WITH U.S. FOREIGN ASSISTANCE.—Subject to 

the direction of the President, the Administrator and the Administrator of USAID shall, to the extent practicable and consistent with 

the objectives of this program, seek to align activities under this section with broader development, poverty alleviation, or natural resource management objectives and initiatives in the recipient country. 

(i) SUPPORT AS SUPPLEMENT.—The provision of support for activities under this part shall be used to supplement, and not to supplant, any other Federal, State, or local support available to carry 

out such qualifying activities under this part. 

SEC. 755. REPORTS AND REVIEWS. 

(a) REPORTS.—Not later than January 1, 2014, and annually 

thereafter, the Administrator and the Administrator of USAID shall 

submit to the Committee on Energy and Commerce and the Committee on Foreign Affairs of the House of Representatives, and the 

Committee on Environment and Public Works and the Committee 

on Foreign Relations of the Senate, and make available to the public, a report on the support provided under this part during the 

prior fiscal year. The report shall include— 

(1) a statement of the quantity of supplemental emissions reductions for which compensation in the form of emission allowances was provided under this part during the prior fiscal year, 

as registered by the Administrator under section 754(f); and 

(2) a description of the national and subnational deforestation reduction activities, capacity-building activities, and leakage prevention activities supported under this part, including a 


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statement of the quantity of emission allowances distributed to 

each recipient for each activity during the prior fiscal year, and 

a description of what was accomplished through each of the activities. 

(b) REVIEWS.—Not later than 4 years after the date of enactment 

of this title and every 5 years thereafter, the Administrator and the 

Administrator of USAID and taking into consideration any evaluation by or recommendations from the Advisory Board established 

under section 731, shall conduct a review of the activities undertaken pursuant to this part and make any appropriate changes in 

the program established under this part based on the findings of the 

review. The review shall include the effects of the activities on— 

(1) total documented carbon stocks of each country that directly or indirectly received support under this part compared 

with such country’s national deforestation baseline established 

under section 754(d)(1); 

(2) the number of countries with the capacity to generate for 

sale instruments in the nature of offset credits from forest-related activities, and the amount of such activities; 

(3) forest governance in each country that directly or indirectly received support under this part; 

(4) indigenous peoples and forest-dependent communities residing in areas affected by such activities; 

(5) biodiversity and ecosystem services within forested areas 

associated with the activities; 

(6) international leakage; and 

(7) any program or mechanism established under the United 

Nations Framework Convention on Climate Change related to 

greenhouse gas emissions from deforestation. 

SEC. 756. LEGAL EFFECT OF PART. 

(1) IN GENERAL.—Nothing in this part supersedes, limits, or 

otherwise affects any restriction imposed by Federal law (including regulations) on any interaction between an entity located in the United States and an entity located in a foreign 

country. 

(2) ROLE OF THE SECRETARY OF STATE.—Nothing in this part 

shall be construed as affecting the role of the Secretary of State 

or the responsibilities of the Secretary under section 622 (c) of 

the Foreign Assistance Act of 1961. 

PART F—ENSURING REAL REDUCTIONS IN 

INDUSTRIAL EMISSIONS 

SEC. 761. PURPOSES. 

(a) PURPOSE OF PART.—The purposes of this part are— 

(1) to promote a strong global effort to significantly reduce 

greenhouse gas emissions, and, through this global effort, stabilize greenhouse gas concentrations in the atmosphere at a 

level that will prevent dangerous anthropogenic interference 

with the climate system; and 

(2) to prevent an increase in greenhouse gas emissions in 

countries other than the United States as a result of direct and 

indirect compliance costs incurred under this title. 


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(b) PURPOSES OF SUBPART 1.—The purposes of subpart 1 are additionally— 

(1) to rebate the owners and operators of entities in domestic 

eligible industrial sectors for their greenhouse gas emission 

costs incurred under this title, but not for costs associated with 

other related or unrelated market dynamics; 

(2) to design such rebates in a way that will prevent carbon 

leakage while also rewarding innovation and facility-level investments in energy efficiency performance improvements; and 

(3) to eliminate or reduce distribution of emission allowances 

under this part when such distribution is no longer necessary 

to prevent carbon leakage from eligible industrial sectors. 

SEC. 762. INTERNATIONAL NEGOTIATIONS. 

(a) FINDING.—Congress finds that the purposes of this part, as set 

forth in section 761, can be most effectively addressed and achieved 

through agreements negotiated between the United States and foreign countries. 

(b) STATEMENT OF POLICY.—It is the policy of the United States 

to work proactively under the United Nations Framework Convention on Climate Change, and in other appropriate forums, to establish binding agreements, including sectoral agreements, committing 

all major greenhouse gas-emitting nations to contribute equitably to 

the reduction of global greenhouse gas emissions. 

(c) NOTIFICATION OF FOREIGN COUNTRIES.—Not later than January 1, 2020, the President shall notify foreign countries that an 

International Reserve Allowance Program, as described in subpart 

2, may apply to primary products produced in a foreign country by 

a sector for which the President has made a determination described in section 767(c). 

SEC. 763. DEFINITIONS. 

In this part: 

(1) CARBON LEAKAGE.—The term ‘‘carbon leakage’’ means any 

substantial increase (as determined by the Administrator) in 

greenhouse gas emissions by industrial entities located in other 

countries if such increase is caused by an incremental cost of 

production increase in the United States resulting from the implementation of this title. 

(2) ELIGIBLE INDUSTRIAL SECTOR.—The term ‘‘eligible industrial sector’’ means an industrial sector determined by the Administrator under section 764(b) to be eligible to receive emission allowance rebates under subpart 1. 

(3) INDUSTRIAL SECTOR.—The term ‘‘industrial sector’’ means 

any sector that is in the manufacturing sector (as defined in 

NAICS codes 31, 32, and 33). 

(4) NAICS.—The term ‘‘NAICS’’ means the North American 

Industrial Classification System of 2002. 

(5) OUTPUT.—The term ‘‘output’’ means the total tonnage or 

other standard unit of production (as determined by the Administrator) produced by an entity in an industrial sector. The output of the cement sector is hydraulic cement, and not clinker. 

(6) PRIMARY PRODUCT.—The term ‘‘primary product’’ means a 

product manufactured by an eligible industrial sector that is— 

(A) iron, steel, steel mill products (including pipe and 

tube), aluminum, cement, glass (including flat, container, 


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and specialty glass and fiberglass), pulp, paper, chemicals, 

or industrial ceramics; or 

(B) any other manufactured product that is sold in bulk 

for purposes of further manufacture or inclusion in a finished product. 

Subpart 1—Emission Allowance Rebate Program 

SEC. 764. ELIGIBLE INDUSTRIAL SECTORS. 

(a) LIST.— (1) INITIAL LIST.—Not later than June 30, 2011, the Administrator shall publish in the Federal Register a list of eligible industrial sectors pursuant to subsection (b). Such list shall include the amount of the emission allowance rebate per unit of 

production that shall be provided to entities in each eligible industrial sector in the following two calendar years pursuant to 

section 765. 

(2) SUBSEQUENT LISTS.—Not later than February 1, 2013, 

and every four years thereafter, the Administrator shall publish 

in the Federal Register an updated version of the list published 

under paragraph (1). 

(b) ELIGIBLE INDUSTRIAL SECTORS.— (1) IN GENERAL.—Not later than June 30, 2011, the Administrator shall promulgate a rule designating, based on the criteria 

under paragraph (2), the industrial sectors eligible for emission 

allowance rebates under this subpart. 

(2) PRESUMPTIVELY ELIGIBLE INDUSTRIAL SECTORS.— (A) ELIGIBILITY CRITERIA.—An owner or operator of an 

entity shall be eligible to receive emission allowance rebates 

under this subpart if such entity is in an industrial sector 

that is included in a six-digit classification of the NAICS 

that meets the criteria in both clauses (i) and (ii), or the criteria in clause (iii). 

(i) ENERGY OR GREENHOUSE GAS INTENSITY.—As determined by the Administrator, the industrial sector 

had— 

(I) an energy intensity of at least 5 percent, calculated by dividing the cost of purchased electricity 

and fuel costs of the sector by the value of the shipments of the sector, based on data described in 

subparagraph (E); or 

(II) a greenhouse gas intensity of at least 5 percent, calculated by dividing— 

(aa) the number 20 multiplied by the number of tons of carbon dioxide equivalent greenhouse gas emissions (including direct emissions from fuel combustion, process emissions, 

and indirect emissions from the generation of 

electricity used to produce the output of the 

sector) of the sector based on data described in 

subparagraph (E); by 

(bb) the value of the shipments of the sector, 

based on data described in subparagraph (E). 

(ii) TRADE INTENSITY.—As determined by the Administrator, the industrial sector had a trade intensity of 


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at least 15 percent, calculated by dividing the value of 

the total imports and exports of such sector by the 

value of the shipments plus the value of imports of 

such sector, based on data described in subparagraph 

(E). 

(iii) VERY HIGH ENERGY OR GREENHOUSE GAS INTEN- SITY.—As determined by the Administrator, the industrial sector had an energy or greenhouse gas intensity, 

as calculated under clause (i)(I) or (II), of at least 20 

percent. 

(B) IRON AND STEEL SECTOR.—For purposes of this subpart, in carrying out this section and section 765, the Administrator shall consider as in different industrial sectors— 

(i) entities using integrated iron and steelmaking 

technologies (including coke ovens, blast furnaces, and 

other iron-making technologies); and 

(ii) entities using electric arc furnace technologies. 

(C) METAL AND PHOSPHATE PRODUCTION CLASSIFIED

UNDER MORE THAN ONE NAICS CODE.—For purposes of this 

subpart, in carrying out this section and section 765, the 

Administrator shall— 

(i) aggregate data for the beneficiation or other processing of iron and copper ores and phosphate with subsequent steps in the process of metal and phosphate 

manufacturing regardless of the NAICS code under 

which such activity is classified; and 

(ii) aggregate data for the manufacturing of steel 

with the manufacturing of steel pipe and tube made 

from purchased steel in a nonintegrated process. 

(D) EXCLUSION.—The petroleum refining sector shall not 

be an eligible industrial sector. 

(E) DATA SOURCES.— (i) ELECTRICITY AND FUEL COSTS, VALUE OF SHIPMENTS.—The Administrator shall determine electricity 

and fuel costs and the value of shipments under this 

subsection from data from the United States Census of 

Mineral Industries and the United States Census Annual Survey of Manufacturers. The Administrator 

shall take the average of data from as many of the 

years of 2004, 2005, and 2006 for which such data are 

available. If such data are unavailable, the Administrator shall make a determination based upon 2002 or 

2006 data from the most detailed industrial classification level of Energy Information Agency’s Manufacturing Energy Consumption Survey (using 2006 data if 

it is available) and the 2002 or 2007 Economic Census 

of the United States (using 2007 data if it is available). 

If data from the Manufacturing Energy Consumption 

Survey are unavailable for any sector at the six-digit 

classification level in the NAICS, then the Administrator may extrapolate the information necessary to determine the eligibility of a sector under this paragraph 

from available Manufacturing Energy Consumption 

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egory classified in the NAICS. Fuel cost data shall not 

include the cost of fuel used as feedstock by an industrial sector. 

(ii) IMPORTS AND EXPORTS.—The Administrator shall 

base the value of imports and exports under this subsection on United States International Trade Commission data. The Administrator shall take the average of 

data from as many of the years of 2004, 2005, and 

2006 for which such data are available. 

(iii) PERCENTAGES.—The Administrator shall round 

the energy intensity, greenhouse gas intensity, and 

trade intensity percentages under subparagraph (A) to 

the nearest whole number. 

(iv) GREENHOUSE GAS EMISSION CALCULATIONS.— When calculating the tons of carbon dioxide equivalent 

greenhouse gas emissions for each sector under subparagraph (A)(i)(II)(aa), the Administrator— 

(I) shall use the best available data from as 

many of the years 2004, 2005, and 2006 for which 

such data is available; and 

(II) may, to the extent necessary with respect to 

a sector, use economic and engineering models and 

the best available information on technology performance levels for such sector. 

(3) ADMINISTRATIVE DETERMINATION OF ADDITIONAL ELIGIBLE

INDUSTRIAL SECTORS.— (A) INDIVIDUAL SHOWING PETITION.— (i) PETITION.—The owner or operator of an entity in 

an industrial sector may petition the Administrator to 

designate as eligible industrial sectors under this subpart an entity or a group of entities that— 

(I) represent a subsector of a six-digit section of 

the NAICS code; and 

(II) meet the eligibility criteria in both clauses (i) 

and (ii) of paragraph (2)(A), or the eligibility criteria in clause (iii) of paragraph (2)(A). 

(ii) DATA.—In making a determination under this 

subparagraph, the Administrator shall consider data 

submitted by the petitioner that is specific to the entity, 

data solicited by the Administrator from other entities 

in the subsector, if such other entities exist, and data 

specified in paragraph (2)(E). 

(iii) BASIS OF SUBSECTOR DETERMINATION.—The Administrator shall determine an entity or group of entities to be a subsector of a six-digit section of the NAICS 

code based only upon the products manufactured and 

not the industrial process by which the products are 

manufactured, except that the Administrator may determine an entity or group of entities that manufacture 

a product from a virgin material to be a separate subsector from another entity or group of entities that 

manufacture the same product from recycled material. 

(iv) FINAL ACTION.—The Administrator shall take 

final action on such petition no later than 6 months 

after the petition is received by the Administrator. 


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(B) UPDATED TRADE INTENSITY DATA.—The Administrator shall designate as eligible to receive emission allowance rebates under this subpart an industrial sector that— 

(i) met the energy or greenhouse gas intensity criteria 

in paragraph (2)(A)(i) as of the date of promulgation of 

the rule under paragraph (1); and 

(ii) meets the trade intensity criteria in paragraph 

(2)(A)(ii), using data from any year after 2006. 

(C) USE OF MOST RECENT DATA.—In determining whether 

to designate a sector or subsector as an eligible industrial 

sector under this paragraph, the Administrator shall use 

the most recent data available from the sources described 

in paragraph (2)(E), rather than the data from the years 

specified in paragraph (2)(E), to determine the trade intensity of such sector or subsector, but only for determining 

such trade intensity. 

SEC. 765. DISTRIBUTION OF EMISSION ALLOWANCE REBATES. 

(a) DISTRIBUTION SCHEDULE.— (1) IN GENERAL.—For each vintage year, the Administrator 

shall distribute allowances pursuant to this section no later 

than October 31 of the preceding calendar year. The Administrator shall make such annual distributions to the owners and 

operators of each entity in an eligible industrial sector in the 

amount of emission allowances calculated under subsection (b), 

except that— 

(A) for vintage years 2012 and 2013, the distribution for 

a covered entity shall be the entity’s indirect carbon factor 

as calculated under subsection (b)(3); and 

(B) for vintage year 2026 and thereafter, the distribution 

shall be the amount calculated under subsection (b) multiplied by, except as modified by the President pursuant to 

section 767(c)(3)(A) for a sector— 

(i) 90 percent for vintage year 2026; 

(ii) 80 percent for vintage year 2027; 

(iii) 70 percent for vintage year 2028; 

(iv) 60 percent for vintage year 2029; 

(v) 50 percent for vintage year 2030; 

(vi) 40 percent for vintage year 2031; 

(vii) 30 percent for vintage year 2032; 

(viii) 20 percent for vintage year 2033; 

(ix) 10 percent for vintage year 2034; and 

(x) 0 percent for vintage year 2035 and thereafter. 

(2) RESUMPTION OF REDUCTION.—If the President has modified the percentage stated in paragraph (1)(B) under section 

767(c)(3)(A), and the President subsequently makes a determination under section 767(b) for an eligible industrial sector 

that more than 70 percent of global output for that sector is produced or manufactured in countries that have met at least one 

of the criteria in that subsection, then the reduction schedule set 

forth in paragraph (1)(B) of this subsection shall begin in the 

next vintage year, with the percentage reduction based on the 

amount of the distribution of emission allowances under this 

section in the previous year. 

(3) NEWLY ELIGIBLE SECTORS.—In addition to receiving a distribution of emission allowances under this section in the first 


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distribution occurring after an industrial sector is designated 

as eligible under section 764(b)(3), the owner or operator of an 

entity in that eligible industrial sector may receive a prorated 

share of any emission allowances made available for distribution under this section that were not distributed for the year in 

which the petition for eligibility was granted under section 

764(b)(3)(A). 

(b) CALCULATION OF DIRECT AND INDIRECT CARBON FACTORS.— (1) IN GENERAL.— (A) COVERED ENTITIES.—Except as provided in subsection 

(a), for covered entities that are in eligible industrial sectors, the amount of emission allowance rebates shall be 

based on the sum of the covered entity’s direct and indirect 

carbon factors. 

(B) OTHER ELIGIBLE ENTITIES.—For entities that are in 

eligible industrial sectors but are not covered entities, the 

amount of emission allowance rebates shall be based on the 

entity’s indirect carbon factor. 

(C) NEW ENTITIES.—Not later than 2 years after the date 

of enactment of this title, the Administrator shall issue regulations governing the distribution of emission allowance 

rebates for the first and second years of operation of a new 

entity in an eligible industrial sector. These regulations 

shall provide for— 

(i) the distribution of emission allowance rebates to 

such entities based on comparable entities in the same 

sector; and 

(ii) an adjustment in the third and fourth years of 

operation to reconcile the total amount of emission allowance rebates received during the first and second 

years of operation to the amount the entity would have 

received during the first and second years of operation 

had the appropriate data been available. 

(2) DIRECT CARBON FACTOR.—The direct carbon factor for a 

covered entity for a vintage year is the product of— 

(A) the average output of the covered entity for the two 

years preceding the year of the distribution; and 

(B) the most recent calculation of the average direct 

greenhouse gas emissions (expressed in tons of carbon dioxide equivalent) per unit of output for all covered entities in 

the sector, as determined by the Administrator under paragraph (4). 

(3) INDIRECT CARBON FACTOR.— 

(A) IN GENERAL.—The indirect carbon factor for an entity 

for a vintage year is the product obtained by multiplying 

the average output of the entity for the two years preceding 

the years of the distribution by both the electricity emissions intensity factor determined pursuant to subparagraph 

(B) and the electricity efficiency factor determined pursuant 

to subparagraph (C) for the year concerned. 

(B) ELECTRICITY EMISSIONS INTENSITY FACTOR.—Each 

person selling electricity to the owner or operator of an entity in any sector designated as an eligible industrial sector 

under section 764(b) shall provide the owner or operator of 

the entity and the Administrator, on an annual basis, the 


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electricity emissions intensity factor for the entity. The electricity emissions intensity factor for the entity, expressed in 

tons of carbon dioxide equivalents per kilowatt hour, is determined by dividing— 

(i) the annual sum of the hourly product of— 

(I) the electricity purchased by the entity from 

that person in each hour (expressed in kilowatt 

hours), multiplied by 

(II) the marginal or weighted average tons of 

carbon dioxide equivalent per kilowatt hour that 

the person selling the electricity charges to the entity, taking into account the entity’s retail rate arrangements, by 

(ii) the total kilowatt hours of electricity purchased 

by the entity from that person during that year. 

(C) ELECTRICITY EFFICIENCY FACTOR.—The electricity efficiency factor is the average amount of electricity (in kilowatt hours) used per unit of output for all entities in the 

relevant sector, as determined by the Administrator based 

on the best available data, including data provided under 

paragraph (6). 

(D) INDIRECT CARBON FACTOR REDUCTION.—If an electricity provider received a free allocation of emission allowances pursuant to section 782(a), the Administrator shall 

adjust the indirect carbon factor to avoid rebates to the eligible entity for costs that the Administrator determines 

were not incurred by the industrial entity because the allowances were freely allocated to the eligible entity’s electricity provider and used for the benefit of industrial consumers. 

(4) GREENHOUSE GAS INTENSITY CALCULATIONS.—The Administrator shall calculate the average direct greenhouse gas emissions (expressed in tons of carbon dioxide equivalent) per unit 

of output for all covered entities in each eligible industrial sector every four years using an average of the two most recent 

years of the best available data. 

(5) ENSURING EFFICIENCY IMPROVEMENTS.—When making 

greenhouse gas calculations, the Administrator shall— 

(A) limit the average direct greenhouse gas emissions per 

unit of output, calculated under paragraph (4), for any eligible industrial sector to an amount that is not greater 

than it was in any previous calculation under this subsection; and 

(B) limit the electricity emissions intensity factor, calculated under paragraph (3)(B) and resulting from a 

change in electricity supply, for any entity to an amount 

that is not greater than it was during any previous year. 

(6) DATA SOURCES.—For the purposes of this subsection— 

(A) the Administrator shall use data from the greenhouse 

gas registry, established under section 713, where it is 

available; and 

(B) each owner or operator of an entity in an eligible industrial sector and each department, agency, and instrumentality of the United States shall provide the Administrator with such information as the Administrator finds 


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necessary to determine the direct carbon factor and the indirect carbon factor for each entity subject to this section. 

(c) TOTAL MAXIMUM DISTRIBUTION.—Notwithstanding subsections 

(a) and (b), the Administrator shall not distribute more allowances 

for any vintage year pursuant to this section than are allocated for 

use under this part pursuant to section 782 for that vintage year. 

For any vintage year for which the total emission allowance rebates 

calculated pursuant to this section exceed the number of allowances 

allocated pursuant to section 782, the Administrator shall reduce 

each entity’s distribution on a pro rata basis so that the total distribution under this section equals the number of allowances allocated under section 782. 

Subpart 2—International Reserve Allowance 

Program 

SEC. 766. INTERNATIONAL RESERVE ALLOWANCE PROGRAM. 

(a) ESTABLISHMENT.— (1) IN GENERAL.—If the President takes an action described 

in section 767(c)(3)(B) with respect to a sector then, not later 

than 24 months after that determination, the Administrator 

shall issue regulations— 

(A) determining an appropriate price for and offering for 

sale to United States importers international reserve allowances; 

(B) requiring the submission of appropriate amounts of 

such allowances in conjunction with the importation into 

the United States of a primary product produced or manufactured by that sector; 

(C) exempting from the requirements of subparagraph (B) 

primary products produced in— 

(i) foreign countries that the United Nations has 

identified as among the least developed of developing 

countries; or 

(ii) foreign countries that the President has determined to be responsible for less than 0.5 percent of 

total global greenhouse gas emissions; and 

(D) prohibiting the introduction into interstate commerce 

of a primary product without submitting the required number of international reserve allowances in accordance with 

such regulations, unless the product was produced by a 

covered entity under this title, or by an entity that is or 

could be regulated under this title. 

(2) PURPOSE OF PROGRAM.—The Administrator shall establish the program under paragraph (1) in a manner that addresses, consistent with international agreements to which the 

United States is a party, the competitive imbalance in the costs 

of producing or manufacturing primary products in industrial 

sectors resulting from the difference between— 

(A) the direct and indirect costs of complying with this 

title; and 

(B) the direct and indirect costs, if any, of complying in 

other countries with greenhouse gas regulatory programs, 

requirements, export tariffs, or other measures adopted or 

imposed to reduce greenhouse gas emissions. 


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(3) EMISSION ALLOWANCE REBATES.—The Administrator shall 

take into account the value of emission allowance rebates distributed under subpart 1 when making calculations under 

paragraph (2). 

(4) LIMITATION.—The International Reserve Allowance Program may not begin before January 1, 2025. 

(b) COVERED ENTITIES.—International reserve allowances may not 

be held by covered entities to comply with section 722. 

Subpart 3—Presidential Determination 

SEC. 767. PRESIDENTIAL REPORTS AND DETERMINATIONS. 

(a) REPORT.—Not later than January 1, 2018, the President shall 

submit a report to Congress on the effectiveness of the distribution 

of emission allowance rebates under subpart 1 in mitigating carbon 

leakage in industrial sectors. Such report shall also include— 

(1) recommendations on how to better achieve the purposes of 

this part, including an assessment of the feasibility and usefulness of an International Reserve Allowance Program; and 

(2) an assessment of the amount and duration of assistance, 

including distribution of free allowances, being provided to eligible industrial sectors in other developed countries to mitigate 

costs of compliance with domestic greenhouse gas reduction programs in such countries. 

(b) PRESIDENTIAL DETERMINATION.—Not later than June 30, 

2022, and every four years thereafter, the President, in consultation 

with the Administrator and other appropriate agencies, shall determine, for each eligible industrial sector, whether more than 70 percent of global output for that sector is produced or manufactured in 

countries that have met at least one of the following criteria: 

(1) The country is a party to an international agreement to 

which the United States is a party that includes a nationally 

enforceable greenhouse gas emissions reduction commitment for 

that country that is at least as stringent as that of the United 

States. 

(2) The country is a party to a multilateral or bilateral emission reduction agreement for that sector to which the United 

States is a party. 

(3) The country has an annual energy or greenhouse gas intensity, as described in section 764(b)(2)(A)(i), for the sector that 

is equal to or less than the energy or greenhouse gas intensity 

for such sector in the United States in the most recent calendar 

year for which data are available. 

(4) The country has implemented policies, including sectoral 

caps, export tariffs, production fees, electricity generation regulations, or greenhouse gas emissions fees, that individually or 

collectively impose an incremental increase on the cost of production associated with greenhouse gas emissions from the sector that is at least 60 percent of the cost of complying with this 

title in the United States for such sector, averaged over a twoyear period. 

(c) EFFECT OF PRESIDENTIAL DETERMINATION.—If the President 

makes a determination under subsection (b) with respect to an eligible industrial sector that 70 percent or less of the global output for 

the sector is produced or manufactured in countries that have met 


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one or more of the criteria in subsection (b), then the President 

shall, not later than June 30, 2022, and every four years thereafter— 

(1) assess the extent to which the emission allowance rebates 

provided pursuant to subpart 1 have mitigated or addressed, or 

could mitigate or address, carbon leakage in that sector; 

(2) assess the extent to which an International Reserve Allowance Program has mitigated or addressed, or could mitigate or 

address, carbon leakage in that sector and the feasibility of establishing such a program; and 

(3) with respect to that sector— 

(A) modify the percentage by which direct and indirect 

carbon factors will be multiplied under section 765(a)(1)(B); 

(B) implement an International Reserve Allowance Program under section 766 for the products of the sector; or 

(C) take the actions in both subparagraph (A) and (B). 

(d) REPORT TO CONGRESS.—Not later than June 30, 2022, and 

every four years thereafter, the President shall transmit to the Congress a report providing notice of any determination made under 

subsection (b), explaining the reasons for such determination, and 

identifying the actions taken by the President under subsection (c). 

(e) LIMITATION.—The President may only implement an International Reserve Allowance Program for sectors producing primary 

products. 

(f) IRON AND STEEL SECTOR.—For the purposes of this subpart, 

the Administrator shall consider to be in the same industrial sector— 

(1) entities using integrated iron and steelmaking technologies (including coke ovens, blast furnaces, and other ironmaking technologies); and 

(2) entities using electric arc furnace technologies. 

PART H—DISPOSITION OF ALLOWANCES 

SEC. 781. ALLOCATION OF ALLOWANCES FOR SUPPLEMENTAL REDUCTIONS. 

(a) IN GENERAL.—The Administrator shall allocate for each vintage year the following percentage of the emission allowances established under section 721(a), for distribution in accordance with part 

E: 

(1) For vintage years 2012 through 2025, 5 percent. 

(2) For vintage years 2026 through 2030, 3 percent. 

(3) For vintage years 2031 through 2050, 2 percent. 

(b) ADJUSTMENT.—The Administrator shall modify the percentages set forth in subsection (a) as necessary to ensure the achievement of the annual supplemental emission reduction objective for 

2020, and the cumulative reduction objective through 2025, set forth 

in section 753(b)(1). 

(c) CARRYOVER.—If the Administrator has not distributed all of 

the allowances allocated pursuant to this section for a given vintage 

year by the end of that year, the Administrator shall— 

(1) auction the remaining emission allowances under section 

791 not later than March 31 of the year following that vintage 

year; and 


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(2) increase the allocation for the vintage year after the vintage year for which emission allowances were undistributed by 

the amount of undistributed emission allowances. 

SEC. 782. ALLOCATION OF EMISSION ALLOWANCES. 

(a) ELECTRICITY CONSUMERS.—The Administrator shall allocate 

emission allowances for the benefit of electricity consumers, to be 

distributed in accordance with section 783 in the following 

amounts: 

(1) For vintage years 2012 and 2013, 43.75 percent of the 

emission allowances established for each year under section 

721(a). 

(2) For vintage years 2014 and 2015, 38.89 percent of the 

emission allowances established for each year under section 

721(a). 

(3) For vintage years 2016 through 2025, 35.00 percent of the 

emission allowances established for each year under section 

721(a). 

(4) For vintage year 2026, 28 percent of the emission allowances established for each year under section 721(a). 

(5) For vintage year 2027, 21 percent of the emission allowances established for each year under section 721(a). 

(6) For vintage year 2028, 14 percent of the emission allowances established for each year under section 721(a). 

(7) For vintage year 2029, 7 percent of the emission allowances established for each year under section 721(a). 

(b) NATURAL GAS CONSUMERS.—The Administrator shall allocate 

emission allowances for the benefit of natural gas consumers to be 

distributed in accordance with section 784 in the following 

amounts: 

(1) For vintage years 2016 through 2025, 9 percent of the 

emission allowances established for each year under section 

721(a). 

(2) For vintage year 2026, 7.2 percent of the emission allowances established for each year under section 721(a). 

(3) For vintage year 2027, 5.4 percent of the emission allowances established for each year under section 721(a). 

(4) For vintage year 2028, 3.6 percent of the emission allowances established for each year under section 721(a). 

(5) For vintage year 2029, 1.8 percent of the emission allowances established for each year under section 721(a). 

(c) HOME HEATING OIL AND PROPANE CONSUMERS.—The Administrator shall allocate emission allowances for the benefit of home 

heating oil and propane consumers to be distributed in accordance 

with section 785 in the following amounts: 

(1) For vintage years 2012 and 2013, 1.875 percent of the 

emission allowances established for each year under section 

721(a). 

(2) For vintage years 2014 and 2015, 1.67 percent of the emission allowances established for each year under section 721(a). 

(3) For vintage years 2016 through 2025, 1.5 percent of the 

emission allowances established for each year under section 

721(a). 

(4) For vintage year 2026, 1.2 percent of the emission allowances established for each year under section 721(a). 


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(5) For vintage year 2027, 0.9 percent of the emission allowances established for each year under section 721(a). 

(6) For vintage year 2028, 0.6 percent of the emission allowances established for each year under section 721(a). 

(7) For vintage year 2029, 0.3 percent of the emission allowances established for each year under section 721(a). 

(d) LOW INCOME CONSUMERS.—For each vintage year starting in 

2012, the Administrator shall auction pursuant to section 791 15 

percent of the emission allowances established for each year under 

section 721(a), with the proceeds used for the benefit of low income 

consumers to fund the program set forth in subtitle C of title IV of 

American Clean Energy and Security Act of 2009. 

(e) TRADE-VULNERABLE INDUSTRIES.—The Administrator shall allocate emission allowances to energy-intensive, trade-exposed entities, to be distributed in accordance with section 765, in the following amounts: 

(1) For vintage years 2012 and 2013, up to 2.0 percent of the 

emission allowances established for each year under section 

721(a). 

(2) For vintage year 2014, up to 15 percent of the emission allowances established for that year under section 721(a). 

(3) For vintage year 2015, up to the product of the amount 

specified in paragraph (2), multiplied by the quantity of emission allowances established for 2015 under section 721(a) divided by the quantity of emission allowances established for 

2014 under section 721(a). 

(4) For vintage year 2016, up to the product of the amount 

specified in paragraph (3), multiplied by the quantity of emission allowances established for 2015 under section 721(a) divided by the quantity of emission allowances established for 

2014 under section 721(a). 

(5) For vintage years 2017 through 2025, up to the product 

of the amount specified in paragraph (4), multiplied by the 

quantity of emission allowances established for that year under 

section 721(a) divided by the quantity of emission allowances 

established for 2016 under section 721(a). 

(6) For vintage years 2026 through 2050, up to the product 

of the amount specified in paragraph (4)— 

(A) multiplied by the quantity of emission allowances established for the applicable year during 2026 through 2050 

under section 721(a) divided by the quantity of emission allowances established for 2016 under section 721(a); and 

(B) multiplied by a factor, not exceeding 100 percent, that 

shall equal 90 percent for 2026 and decline 10 percent for 

each year thereafter until reaching zero, 

except that, if the President sets one or more factors for a year 

under section 767(c)(3)(A), the highest factor set (not exceeding 

100 percent) shall be used for that year instead of the factor 

specified in subparagraph (B). 

(f) DEPLOYMENT OF CARBON CAPTURE AND SEQUESTRATION TECH- NOLOGY.— 

(1) ANNUAL ALLOCATION.—The Administrator shall allocate 

emission allowances for the deployment of carbon capture and 

sequestration technology to be distributed in accordance with 

section 786 in the following amounts: 


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(A) For vintage years 2014 through 2017, 1.75 percent of 

the emission allowances established for each year under 

section 721(a). 

(B) For vintage years 2018 and 2019, 4.75 percent of the 

emission allowances established for each year under section 

721(a). 

(C) For vintage years 2020 through 2050, 5 percent of the 

emission allowances established for each year under section 

721(a). 

(2) CARRYOVER.—If the Administrator has not distributed all 

of the allowances allocated pursuant to this subsection for a 

given vintage year by the end of that year, the Administrator 

shall— 

(A) auction those emission allowances under section 791 

not later than March 31 of the year following that vintage 

year; and 

(B) increase the allocation under this subsection for the 

vintage year after the vintage year for which emission allowances were undisbursed by the amount of undisbursed 

emission allowances, but only to the extent that allowances 

for that later year are to be auctioned. 

(g) INVESTMENT IN ENERGY EFFICIENCY AND RENEWABLE EN- ERGY.—The Administrator shall allocate emission allowances to invest in energy efficiency and renewable energy as follows: 

(1) To be distributed in accordance with section 132 of the 

American Clean Energy and Security Act of 2009 in the following amounts: 

(A) For vintage years 2012 through 2015, 9.5 percent of 

the emission allowances established for each year under 

section 721(a). 

(B) For vintage years 2016 through 2017, 6.5 percent of 

the emission allowances established for each year under 

section 721(a). 

(C) For vintage years 2018 through 2021, 5.5 percent of 

the emission allowances established for each year under 

section 721(a). 

(D) For vintage years 2022 through 2025, 1.0 percent of 

the emission allowances established for each year under 

section 721(a). 

(E) For vintage years 2026 through 2050, 4.5 percent of 

the emission allowances established for each year under 

section 721(a). 

(F) At the same time the vintage year 2022 through 2025 

allowances are distributed, 3.55 percent of emission allowances established under section 721(a) for the vintage year 

four years greater shall also be distributed (which shall be 

in addition to the emission allowances in subparagraph 

(E)). 

(2) To be distributed in accordance with section 201 of the 

American Clean Energy and Security Act of 2009, for each vintage year from 2012 through 2050, 0.5 percent of emission allowances established under section 721(a). 

(h) CLEAN ENERGY INNOVATION CENTERS.—For each vintage year 

from 2012 through 2050, the Administrator shall allocate for Clean 

Energy Innovation Centers, 1.5 percent of emission allowances esVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00560 Fmt 6659 Sfmt 6603 E:\HR\OC\HR137.XXX HR137

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tablished under section 721(a), to be distributed in accordance with 

section 171 of the American Clean Energy and Security Act of 2009. 

(i) INVESTMENT IN CLEAN VEHICLE TECHNOLOGY.—The Administrator shall allocate emission allowances to invest in the development and deployment of clean vehicles, to be distributed in accordance with section 124 of the American Clean Energy and Security 

Act of 2009 in the following amounts: 

(1) For vintage years 2012 through 2017, 3 percent of the 

emission allowances established for each year under section 

721(a). 

(2) For vintage years 2018 through 2025, 1 percent of the 

emission allowances established for each year under section 

721(a). 

(j) DOMESTIC FUEL PRODUCTION.—For vintage years 2014 

through 2026, the Administrator shall allocate 2.0 percent of the 

emission allowances established under section 721(a) to domestic refiners, to be distributed in accordance with section 787. 

(k) INVESTMENT IN WORKERS.—The Administrator shall auction 

pursuant to section 791 emission allowances for workers in the following amounts and shall report to the Secretary of Labor the 

amount of proceeds from the sale of these allowances: 

(1) For vintage years 2012 through 2021, 0.5 percent of the 

emission allowances established for each year under section 

721(a). 

(2) For vintage years 2022 through 2050, 1.0 percent of the 

emission allowances established for each year under section 

721(a). 

(l) DOMESTIC ADAPTATION.—The Administrator shall allocate 

emission allowances for domestic adaptation as follows: 

(1) To be distributed in accordance with section 453 of the 

American Clean Energy and Security Act of 2009 in the following amounts: 

(A) For vintage years 2012 through 2021, 0.9 percent of 

the emission allowances established for each year under 

section 721(a). 

(B) For vintage years 2022 through 2026, 1.9 percent of 

the emission allowances established for each year under 

section 721(a). 

(C) For vintage years 2027 through 2050, 3.9 percent of 

the emission allowances established for each year under 

section 721(a). 

(2) For vintage year 2012 and thereafter, the Administrator 

shall auction, pursuant to section 791, 0.1 percent of the emission allowances established for each year under section 721(a), 

and shall deposit the proceeds in the Climate Change Health 

Protection and Promotion Fund established by section 467 of 

the American Clean Energy and Security Act of 2009. 

(m) WILDLIFE AND NATURAL RESOURCE ADAPTATION.—The Administrator shall allocate emission allowances for wildlife and natural resource adaptation as follows: 

(1) To be distributed to State agencies in accordance with section 480(c)(1) of the American Clean Energy and Security Act 

of 2009 in the following amounts: 


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(A) For vintage years 2012 through 2021, 0.385 percent 

of the emission allowances established for each year under 

section 721(a). 

(B) For vintage years 2022 through 2026, 0.77 percent of 

the emission allowances established for each year under 

section 721(a). 

(C) For vintage years 2027 through 2050, 1.54 percent of 

the emission allowances established for each year under 

section 721(a). 

(2) To be auctioned pursuant to section 791, with the proceeds 

to be deposited in the Natural Resources Climate Change Adaptation Fund established pursuant to section 480(a), in the following amounts: 

(A) For vintage years 2012 through 2021, 0.615 percent 

of the emission allowances established for each year under 

section 721(a). 

(B) For vintage years 2022 through 2026, 1.23 percent of 

the emission allowances established for each year under 

section 721(a). 

(C) For vintage years 2027 through 2050, 2.46 percent of 

the emission allowances established for each year under 

section 721(a). 

(n) INTERNATIONAL ADAPTATION.—The Administrator shall allocate emission allowances for international adaptation to be distributed in accordance with part 2 of subtitle E of title IV of the American Clean Energy and Security Act of 2009 in the following 

amounts: 

(1) For vintage years 2012 through 2021, 1.0 percent of the 

emission allowances established for each year under section 

721(a). 

(2) For vintage years 2022 through 2026, 2.0 percent of the 

emission allowances established for each year under section 

721(a). 

(3) For vintage years 2027 through 2050, 4.0 percent of the 

emission allowances established for each year under section 

721(a). 

(o) INTERNATIONAL CLEAN TECHNOLOGY DEPLOYMENT.—The Administrator shall allocate emission allowances for international 

clean technology deployment for distribution in accordance with 

subtitle D of title IV of the American Clean Energy and Security Act 

of 2009 in the following amounts: 

(1) For vintage years 2012 through 2021, 1.0 percent of the 

emission allowances established for each year under section 

721(a). 

(2) For vintage years 2022 through 2026, 2.0 percent of the 

emission allowances established for each year under section 

721(a). 

(3) For vintage years 2027 through 2050, 4.0 percent of the 

emission allowances established for each year under section 

721(a). 

(p) RELEASE OF FUTURE ALLOWANCES.—The Administrator shall 

make future year allowances available by auctioning allowances, 

pursuant to section 791, in the following amounts: 

(1) In each of calendar years 2014 through 2019, a string of 

0.70 billion allowances with vintage years 12 to 17 years after 


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the year of the auction, with an equal number of allowances 

from each vintage year in the string. 

(2) In each of calendar years 2020 through 2025, a string of 

0.50 billion allowances with vintage years 12 to 17 years after 

the year of the auction, with an equal number of allowances 

from each vintage year in the string. 

(3) In each of calendar years 2026 through 2030, a string of 

0.3 billion allowances with vintage years 12 to 17 years after 

the year of the auction, with an equal number of allowances 

from each vintage year in the string. 

(q) DEFICIT REDUCTION.— (1) For each of vintage years 2012 through 2025, any allowances not designated for distribution or auction pursuant to section 781, subsections (a) through (o) of this section, or section 

790 shall be auctioned by the Administrator pursuant to section 

791 and the proceeds shall be deposited into the Treasury. 

(2) Unless otherwise specified, any allowances allocated pursuant to subsections (a) through (o) and not distributed by 

March 31 of the calendar year following the allowance’s vintage 

year, shall be auctioned by the Administrator and the proceeds 

shall be deposited into the Treasury. 

(3) For auctions conducted through calendar year 2020 pursuant to subsection (p), the auction proceeds shall be deposited 

into the Treasury. 

(r) CLIMATE CHANGE CONSUMER REFUND.— (1) For each of vintage years 2026 through 2050, the Administrator shall auction the following allowances established 

under section 721(a) and deposit the proceeds into the Climate 

Change Consumer Refund Account: 

(A) Any allowances not designated for distribution or 

auction pursuant to section 781, subsections (a) through (p) 

of this section, or section 790. 

(B) Unless otherwise specified, any allowances allocated 

pursuant to subsections (a) through (o) and not distributed 

by March 31 of the calendar year following the allowance’s 

vintage year. 

(2) For auctions conducted pursuant to subsection (p) in calendar years 2021 and thereafter, the Administrator shall place 

the proceeds from the sales of the these allowances into the Climate Change Consumer Refund Account. Funds deposited into 

the Climate Change Consumer Refund Account shall be used as 

specified in section 789 and shall be available for expenditure, 

without further appropriation or fiscal year limitation. 

SEC. 783. ELECTRICITY CONSUMERS. 

(a) DEFINITIONS.—For purposes of this section: 

(1) ELECTRICITY LOCAL DISTRIBUTION COMPANY.—The term 

‘‘electricity local distribution company’’ means an electric utility— 

(A) that has a legal, regulatory, or contractual obligation 

to deliver electricity directly to retail consumers in the 

United States, regardless of whether that entity or another 

entity sells the electricity as a commodity to those retail 

consumers; and 

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latory authority, regulatory commission, municipality, public utility, or by an Indian tribe pursuant to tribal law. 

(2) LONG-TERM CONTRACT GENERATOR.—The term ‘‘long-term 

contract generator’’ means a qualifying small power production 

facility or a qualifying cogeneration facility (within the meaning of section 3(17)(C) or 3(18)(B) of the Federal Power Act), or 

a new independent power production facility (within the meaning of section 416(a)(2) of this Act, except that subparagraph (C) 

of such definition shall not apply for purposes of this paragraph), that is— 

(A) a covered entity; 

(B) as of the commencement of operation, a facility consisting of one or more utility units with total installed net 

output capacity (in MWe) of no more than 130 percent of 

the facility’s total planned net output capacity (in MWe); 

(C) as of the date of enactment of this title, a facility with 

a power sales agreement executed before January 1, 2007, 

that governs the facility’s electricity sales and provides for 

sales at a price (whether a fixed price or a price formula) 

for electricity that does not allow for recovery of the costs 

of compliance with the limitation on greenhouse gas emissions under this title; and 

(D) not a merchant coal generator. 

(3) MERCHANT COAL GENERATOR.—The term ‘‘merchant coal 

generator’’ means an electric generation facility that— 

(A) is a covered entity; 

(B) derives at least 85 percent of its heat input from coal, 

petroleum coke, or any combination of these 2 fuels; 

(C) is not owned by a Federal, State, or regional agency 

or power authority; and 

(D) generates electricity for sale to others, provided that 

such sales are not subject to— 

(i) retail rate regulation by a State public utility 

commission; or 

(ii) self-regulation of rates by a local government, 

State agency, or electric cooperative. 

(4) STATE REGULATORY AUTHORITY.—The term ‘‘State regulatory authority’’ has the meaning given that term in section 

3(17) of the Public Utility Regulatory Policies Act of 1978 (16 

U.S.C. 2602(17)). 

(b) ELECTRICITY LOCAL DISTRIBUTION COMPANIES.— 

(1) ALLOCATION.—Not later than June 30 of 2011 and each 

calendar year thereafter through 2028, the Administrator shall 

distribute to electricity local distribution companies for the benefit of retail ratepayers the quantity of emission allowances allocated for the electricity sector for the following vintage year pursuant to section 782(a), provided that the Administrator shall 

first subtract from such quantity and distribute or reserve for 

distribution the quantity of emission allowances for the relevant 

vintage year that are required for distribution under subsections (c) and (d) of this section. 

(2) DISTRIBUTION OF ALLOWANCES BASED ON EMISSIONS.— (A) IN GENERAL.—For each vintage year, 50 percent of the 

emission allowances available for distribution under paragraph (1) shall be distributed by the Administrator among 


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individual electricity local distribution companies ratably 

based on the annual average carbon dioxide emissions attributable to generation of electricity delivered at retail by 

each such company during the base period determined 

under subparagraph (B). 

(B) BASE PERIOD.— (i) VINTAGE YEARS 2012 AND 2013.—For vintage years 

2012 and 2013, an electricity local distribution company’s base period shall be— 

(I) calendar years 2006 through 2008; or 

(II) any 3 consecutive calendar years between 

1999 and 2008, inclusive, that such company selects, provided that the company timely informs 

the Administrator of such selection. 

(ii) VINTAGE YEARS 2014 AND THEREAFTER.—For vintage years 2014 and thereafter, the base period shall 

be— 

(I) the base period selected under clause (i); or 

(II) any 3 consecutive calendar years between 

2009 through 2012, inclusive, or, for local distribution companies with new units that are not fully 

operational before 2012, solely calendar year 2012, 

provided that such company selects a period from 

among these options and timely informs the Administrator of such selection. 

(C) DETERMINATION OF EMISSIONS.—As part of the regulations promulgated pursuant to subsection (e), the Administrator, after consultation with the Energy Information Administration, shall determine the average amount of carbon 

dioxide emissions attributable to generation of electricity 

delivered at retail by each electricity local distribution company for each of the years 1999 through 2009 or the most 

recent calendar year for which appropriate data are available, taking into account entities’ electricity generation, 

electricity purchases, and electricity sales. Not later than 

March 31, 2013, the Administrator, after consultation with 

the Energy Information Administration, shall update such 

determination to include emissions for any additional calendar years through 2012. Such determinations shall be as 

precise as practicable, taking into account the nature of 

data currently available and the nature of markets and 

regulation in effect in various regions of the country. The 

following requirements shall apply to such determinations: 

(i) The Administrator shall determine the amount of 

fossil fuel-based electricity delivered at retail by each 

electricity local distribution company, and shall use 

appropriate emission factors to calculate carbon dioxide emissions associated with the generation of such 

electricity. 

(ii) Where it is not practical to determine the precise 

fuel mix for the electricity delivered at retail by an individual electricity local distribution company, the Administrator may use the best available data, including 

average data on a regional basis with reference to Regional Transmission Organizations or regional entities 


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(as that term is defined in section 215(a)(7) of the Federal Power Act (16 U.S.C. 824o(a)(7)), to estimate fuel 

mix and emissions. Different methodologies may be applied in different regions if appropriate to obtain the 

most accurate estimate. 

(3) DISTRIBUTION OF ALLOWANCES BASED ON DELIVERIES.— (A) INITIAL ALLOCATION FORMULA.—Except as provided 

in subparagraph (B), for each vintage year, the Administrator shall distribute 50 percent of the emission allowances 

allocated under paragraph (1) of this subsection among individual electricity local distribution companies ratably 

based on each electricity local distribution company’s annual average retail electricity deliveries for 2006 through 

2008, unless the owner or operator of the company selects 

3 other consecutive years between 1999 and 2008, inclusive, 

and timely notifies the Administrator of its selection. 

(B) UPDATING.—Prior to distributing 2015 vintage emission allowances under this subparagraph and at 3-year intervals thereafter, the Administrator shall update the distribution formula under this subparagraph to reflect 

changes in each electricity local distribution company’s 

service territory since the most recent formula was established. For each successive 3-year period, the Administrator 

shall distribute allowances ratably among individual electricity local distribution companies based on the product 

of— 

(i) each electricity local distribution company’s average annual deliveries per customer during calendar 

years 2006 through 2008, or during the 3 alternative 

consecutive years selected by such company under subparagraph (A); and 

(ii) the number of customers of such electricity local 

distribution company in the most recent year in which 

the formula is updated under this clause. 

(4) USE OF ALLOWANCES.— (A) RATEPAYER BENEFIT.—Emission allowances distributed to an electricity local distribution company under this 

subsection shall be used exclusively for the benefit of retail 

ratepayers of such electricity local distribution company 

and may not be used to support electricity sales or deliveries to entities or persons other than such ratepayers. 

(B) RATEPAYER CLASSES.—In using emission allowances 

distributed under this section for the benefit of ratepayers, 

an electricity local distribution company shall ensure that 

ratepayer benefits are distributed— 

(i) among ratepayer classes ratably based on electricity deliveries to each class; and 

(ii) equitably among individual ratepayers within 

each ratepayer class, including entities that receive 

emission allowances pursuant to part F. 

(C) LIMITATION.—An electricity local distribution company shall not use the value of emission allowances distributed under this subsection to provide to any ratepayer a rebate that is based solely on the quantity of electricity delivered to such ratepayer. To the extent an electricity local disVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00566 Fmt 6659 Sfmt 6603 E:\HR\OC\HR137.XXX HR137

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tribution company uses the value of emission allowances 

distributed under this subsection to provide rebates, it 

shall, to the maximum extent practicable, provide such rebates with regard to the fixed portion of ratepayers’ bills or 

as a fixed credit or rebate on electricity bills. 

(D) GUIDELINES.—As part of the regulations promulgated 

under subsection (e), the Administrator shall prescribe specific guidelines for the implementation of the requirements 

of this paragraph. 

(5) REGULATORY PROCEEDINGS.— 

(A) REQUIREMENT.—No electricity local distribution company shall be eligible to receive emission allowances under 

this subsection unless the State regulatory authority with 

authority over such company, or the entity with authority 

to regulate retail electricity rates of an electricity local distribution company not regulated by a State regulatory authority, has— 

(i) promulgated a regulation or completed a rate proceeding (or the equivalent, in the case of a ratemaking 

entity other than a State regulatory authority) that provides for the full implementation of the requirements of 

paragraph (4) of this subsection; and 

(ii) made available to the Administrator and the 

public a report describing, in adequate detail, the manner in which the requirements of paragraph (4) will be 

implemented. 

(B) UPDATING.—The Administrator shall require, as a 

condition of continued receipt of emission allowances under 

this subsection by an electricity local distribution company, 

that a new regulation be promulgated or rate proceeding be 

completed, and a new report be made available to the Administrator and the public, pursuant to subparagraph (A), 

not less frequently than every 5 years. 

(6) PLANS AND REPORTING.— 

(A) REGULATIONS.—As part of the regulations promulgated under subsection (e), the Administrator shall prescribe requirements governing plans and reports to be submitted in accordance with this paragraph. 

(B) PLANS.—Not later than April 30 of 2011 and every 5 

years thereafter through 2026, each electricity local distribution company shall submit to the Administrator a 

plan, approved by the State regulatory authority or other 

entity charged with regulating the retail rates of such company, describing such company’s plans for the disposition 

of the value of emission allowances to be received pursuant 

to this subsection, in accordance with the requirements of 

this subsection. 

(C) REPORTS.—Not later than June 30 of 2013 and each 

calendar year thereafter through 2031, each electricity local 

distribution company shall submit a report to the Administrator, and to the relevant State regulatory authority or 

other entity charged with regulating the retail electricity 

rates of such company, describing the disposition of the 

value of any emission allowances received by such company 


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in the prior calendar year pursuant to this subsection, including— 

(i) a description of sales, transfer, exchange, or use 

by the company for compliance with obligations under 

this title, of any such emission allowances; 

(ii) the monetary value received by the company, 

whether in money or in some other form, from the sale, 

transfer, or exchange of emission allowances received 

by the company under this subsection; 

(iii) the manner in which the company’s disposition 

of emission allowances received under this subsection 

complies with the requirements of this subsection, including each of the requirements of paragraph (4); and 

(iv) such other information as the Administrator may 

require pursuant to subparagraph (A). 

(D) PUBLICATION.—The Administrator shall make available to the public all plans and reports submitted under 

this subsection, including by publishing such plans and reports on the Internet. 

(7) AUDITS.—Each year, the Administrator shall audit a representative sample of electricity local distribution companies to 

ensure that emission allowances distributed under this subsection have been used exclusively for the benefit of retail ratepayers and that such companies are complying with the requirements of this subsection. In selecting companies for audit, 

the Administrator shall take into account any credible evidence 

of noncompliance with such requirements. The Administrator 

shall make available to the public a report describing the results of each such audit, including by publishing such report on 

the Internet. 

(8) ENFORCEMENT.—A violation of any requirement of this 

subsection shall be a violation of this Act. Each emission allowance the value of which is used in violation of the requirements 

of this subsection shall be a separate violation. 

(c) MERCHANT COAL GENERATORS.— 

(1) QUALIFYING EMISSIONS.—The qualifying emissions for a 

merchant coal generator for a given calendar year shall be the 

product of the number of megawatt hours of electricity generated by such generator in such calendar year and the average 

carbon dioxide emissions per megawatt hour generated by such 

generator during calendar years 2006 through 2008, provided 

that the number of megawatt hours in a given calendar year for 

purposes of such calculation shall be reduced in proportion to 

the portion of such generator’s carbon dioxide emissions that 

are either— 

(A) captured and sequestered in such calendar year; or 

(B) attributable to the combustion or gasification of renewable biomass, such that the generator is not required to 

hold emission allowances for such emissions. 

(2) PHASE-DOWN SCHEDULE.—The Administrator shall identify an annual phase-down factor, applicable to distributions to 

merchant coal generators for each of vintage years 2012 

through 2029, that corresponds to the overall decline in the 

amount of emission allowances to be allocated to the electricity 


hsrobinson on PROD1PC76 with HEARING
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sector in such years pursuant to section 782(a). Such factor 

shall— 

(A) for vintage year 2012, be equal to 1.0; 

(B) for each of vintage years 2013 through 2029, correspond to the quotient of— 

(i) the quantity of emission allowances allocated to 

the electricity sector under section 782(a) for such vintage year; divided by 

(ii) the quantity of emission allowances allocated to 

the electricity sector under section 782(a) for vintage 

year 2012. 

(3) DISTRIBUTION OF EMISSION ALLOWANCES.—Not later than 

March 1 of 2013 and each calendar year through 2030, the Administrator shall distribute emission allowances of the preceding vintage year to the owner or operator of each merchant 

coal generator equal to the product of— 

(A) 0.5; 

(B) the qualifying emissions for such merchant coal generator for the preceding year, as determined under paragraph (1); and 

(C) the phase-down factor for the preceding calendar 

year, as identified under paragraph (2). 

(4) ADJUSTMENT.— 

(A) STUDY.—Not later than July 1, 2014, the Administrator, in consultation with the Federal Energy Regulatory 

Commission, shall complete a study to determine whether 

the allocation formula under paragraph (3) is resulting in, 

or is likely to result in, windfall profits to merchant coal 

generators or substantially disparate treatment of merchant 

coal generators operating in different markets or regions. 

(B) REGULATION.—If the Administrator, in consultation 

with the Federal Energy Regulatory Commission, makes an 

affirmative finding of windfall profits or disparate treatment under subparagraph (A), the Administrator shall, not 

later than 18 months after the completion of the study described in subparagraph (A), promulgate regulations providing for the adjustment of the allocation formula under 

paragraph (3) to mitigate, to the extent practicable, such 

windfall profits, if any, and such disparate treatment, if 

any. 

(5) LIMITATION ON ALLOWANCES.—Notwithstanding paragraph (3) or (4), for any vintage year the Administrator shall 

distribute under this subsection no more than 10 percent of the 

total quantity of emission allowances available for such vintage 

year for distribution to the electricity sector under section 

782(a). If the quantity of emission allowances that would otherwise be distributed pursuant to paragraph (3) or (4) for any 

vintage year would exceed such limit, the Administrator shall 

distribute 10 percent of the total emission allowances available 

for distribution under section 782(a) for such vintage year ratably among merchant coal generators based on the applicable 

formula under paragraph (3) or (4). 

(d) GENERATORS WITH LONG-TERM POWER PURCHASE AGREEMENTS.— 


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(1) RESERVED ALLOWANCES.—Notwithstanding subsections (b) 

and (c) of this section, the Administrator shall withhold from 

distribution to electricity local distribution companies a number 

of emission allowances equal to 105 percent of the emission allowances the Administrator anticipates will be distributed to 

long-term contract generators under this subsection. If not required to distribute all of these reserved allowances under this 

subsection, the Administrator shall distribute any remaining 

emission allowances to the electricity local distribution companies in accordance with subsection (b). 

(2) DISTRIBUTION.—Not later than March 1 of 2013 and each 

calendar year through 2030, the Administrator shall distribute 

to the owner or operator of each long-term contract generator 

the number of emission allowances of the preceding vintage 

year that are equal to the number of tons of carbon dioxide 

emitted as a result of a qualifying long-term power purchase 

agreement referred to in subsection (a)(2)(C). 

(3) DURATION.—A long-term contract generator shall cease to 

be eligible to receive allocations under this subsection upon the 

earliest of the following dates: 

(A) The date when the facility no longer qualifies as a 

qualifying small power production facility or a qualifying 

cogeneration facility (within the meaning of section 3(17)(C) 

or 3(18)(B) of the Federal Power Act), or a new independent 

power production facility (within the meaning of section 

416(a)(2) of this Act, except that subparagraph (C) of such 

definition shall not apply for purposes of this clause). 

(B) The date when the facility no longer meets the total 

installed net output capacity criterion required to be met as 

of the commencement of operation in subsection (a)(2)(B). 

(C) The date when the power purchase agreement referred to in subsection (a)(2)(C)— 

(i) expires; 

(ii) is terminated; or 

(iii) is amended in any way that changes the location 

of the facility, the price (whether a fixed price or price 

formula) for electricity sold under such agreement, the 

quantity of electricity sold under the agreement, or the 

expiration or termination date of the agreement. 

(4) ELIGIBILITY.—To be eligible to receive allowance distributions under this subsection, the owner or operator of a longterm 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. 


hsrobinson on PROD1PC76 with HEARING
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(E) The expiration date of the power purchase agreement 

referred to in subsection (a)(2)(C). 

(F) A copy of the power purchase agreement referred to 

in subsection (a)(2)(C). 

(5) NOTIFICATION.—Not later than 30 days after a facility 

loses, in accordance with paragraph (3), its eligibility for emission allowances distributed pursuant to this subsection, the designated representative of such facility shall notify the Administrator in writing when, and on what basis, the facility lost its 

eligibility to receive emission allowances. 

(e) REGULATIONS.—Not later than 2 years after the date of enactment of this title, the Administrator, in consultation with the Federal Energy Regulatory Commission, shall promulgate regulations 

to implement the requirements of this section. 

SEC. 784. NATURAL GAS CONSUMERS. 

(a) DEFINITIONS.—For purposes of this section: 

(1) NATURAL GAS LOCAL DISTRIBUTION COMPANY.—The term 

‘‘natural gas local distribution company’’ means a natural gas 

local distribution company that is a covered entity. 

(2) COST-EFFECTIVE.—The term ‘‘cost-effective’’, with respect 

to an energy efficiency program, means that the program meets 

the Total Resource Cost Test, which requires that the net 

present value of economic benefits over the life of the program, 

including avoided supply and delivery costs and deferred or 

avoided investments, is greater than the net present value of the 

economic costs over the life of the program, including program 

costs and incremental costs borne by the energy consumer. 

(b) ALLOCATION.—Not later than June 30 of 2015 and each calendar year thereafter through 2028, the Administrator shall distribute to natural gas local distribution companies for the benefit of 

retail ratepayers the quantity of emission allowances allocated for 

the following vintage year pursuant to section 782(b). Such allowances shall be distributed among local natural gas distribution 

companies based on the following formula: 

(1) INITIAL FORMULA.—Except as provided in paragraph (2), 

for each vintage year, the Administrator shall distribute emission allowances among natural gas local distribution companies ratably based on each such company’s annual average retail natural gas deliveries for 2006 through 2008, unless the 

owner or operator of the company selects 3 other consecutive 

years between 1999 and 2008, inclusive, and timely notifies the 

Administrator of its selection. 

(2) UPDATING.—Prior to distributing 2019 vintage emission 

allowances and at 3-year intervals thereafter, the Administrator 

shall update the distribution formula under this subsection to 

reflect changes in each natural gas local distribution company’s 

service territory since the most recent formula was established. 

For each successive 3-year period, the Administrator shall distribute allowances ratably among natural gas local distribution 

companies based on the product of— 

(A) each natural gas local distribution company’s average 

annual natural gas deliveries per customer during calendar 

years 2006 through 2008, or during the 3 alternative consecutive years selected by such company under paragraph 

(1); and 


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(B) the number of customers of such natural gas local 

distribution company in the most recent year in which the 

formula is updated under this paragraph. 

(c) USE OF ALLOWANCES.— (1) RATEPAYER BENEFIT.—Emission allowances distributed to 

a natural gas local distribution company under this section 

shall be used exclusively for the benefit of retail ratepayers of 

such natural gas local distribution company and may not be 

used to support natural gas sales or deliveries to entities or persons other than such ratepayers. 

(2) RATEPAYER CLASSES.—In using emission allowances distributed under this section for the benefit of ratepayers, a natural gas local distribution company shall ensure that ratepayer 

benefits are distributed— 

(A) among ratepayer classes ratably based on natural gas 

deliveries to each class; and 

(B) equitably among individual ratepayers within each 

ratepayer class. 

(3) LIMITATION.—A natural gas local distribution company 

shall not use the value of emission allowances distributed under 

this section to provide to any ratepayer a rebate that is based 

solely on the quantity of natural gas delivered to such ratepayer. To the extent a natural gas local distribution company 

uses the value of emission allowances distributed under this 

section to provide rebates, it shall, to the maximum extent practicable, provide such rebates with regard to the fixed portion of 

ratepayers’ bills or as a fixed creditor rebate on natural gas 

bills. 

(4) ENERGY EFFICIENCY PROGRAMS.—The value of no less 

than one third of the emission allowances distributed to natural 

gas local distribution companies pursuant to this section in any 

calendar year shall be used for cost-effective energy efficiency 

programs for natural gas consumers. Such programs must be 

authorized and overseen by the State regulatory authority, or by 

the entity with regulatory authority over retail natural gas rates 

in the case of a natural gas local distribution company that is 

not regulated by a State regulatory authority. 

(5) GUIDELINES.—As part of the regulations promulgated 

under subsection (h), the Administrator shall prescribe specific 

guidelines for the implementation of the requirements of this 

subsection. 

(d) REGULATORY PROCEEDINGS.— 

(1) REQUIREMENT.—No natural gas local distribution company shall be eligible to receive emission allowances under this 

section unless the State regulatory authority with authority over 

such company, or the entity with authority to regulate retail 

rates of a natural gas local distribution company not regulated 

by a State regulatory authority, has— 

(A) promulgated a regulation or completed a rate proceeding (or the equivalent, in the case of a ratemaking entity other than a State regulatory authority) that provides for 

the full implementation of the requirements of subsection 

(c); and 

(B) made available to the Administrator and the public 

a report describing, in adequate detail, the manner in 


hsrobinson on PROD1PC76 with HEARING
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which the requirements of subsection (c) will be implemented. 

(2) UPDATING.—The Administrator shall require, as a condition of continued receipt of emission allowances under this section, that a new regulation be promulgated or rate proceeding 

be completed, and a new report be made available to the Administrator and the public, pursuant to paragraph (1), not less 

frequently than every 5 years. 

(e) PLANS AND REPORTING.— (1) REGULATIONS.—As part of the regulations promulgated 

under subsection (h), the Administrator shall prescribe requirements governing plans and reports to be submitted in accordance with this subsection. 

(2) PLANS.—Not later than April 30 of 2015 and every 5 years 

thereafter through 2025, each natural gas local distribution 

company shall submit to the Administrator a plan, approved by 

the State regulatory authority or other entity charged with regulating the retail rates of such company, describing such company’s plans for the disposition of the value of emission allowances to be received pursuant to this section, in accordance with 

the requirements of this section. 

(3) REPORTS.—Not later than June 30 of 2017 and each calendar year thereafter through 2031, each natural gas local distribution company shall submit a report to the Administrator, 

approved by the relevant State regulatory authority or other entity charged with regulating the retail natural gas rates of such 

company, describing the disposition of the value of any emission 

allowances received by such company in the prior calendar year 

pursuant to this subsection, including— 

(A) a description of sales, transfer, exchange, or use by 

the company for compliance with obligations under this 

title, of any such emission allowances; 

(B) the monetary value received by the company, whether 

in money or in some other form, from the sale, transfer, or 

exchange of emission allowances received by the company 

under this section; 

(C) the manner in which the company’s disposition of 

emission allowances received under this subsection complies with the requirements of this section, including each 

of the requirements of subsection (c); 

(D) the cost-effectiveness of, and energy savings achieved 

by, energy efficiency programs supported through such 

emission allowances; and 

(E) such other information as the Administrator may require pursuant to paragraph (1). 

(4) PUBLICATION.—The Administrator shall make available to 

the public all plans and reports submitted by natural gas local 

distribution companies under this subsection, including by publishing such plans and reports on the Internet. 

(f) AUDITS.—Each year, the Administrator shall audit a representative sample of natural gas local distribution companies to ensure 

that emission allowances distributed under this section have been 

used exclusively for the benefit of retail ratepayers and that such 

companies are complying with the requirements of this section. In 

selecting companies for audit, the Administrator shall take into acVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00573 Fmt 6659 Sfmt 6603 E:\HR\OC\HR137.XXX HR137

hsrobinson on PROD1PC76 with HEARING
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count any credible evidence of noncompliance with such requirements. The Administrator shall make available to the public a report describing the results of each such audit, including by publishing such report on the Internet. 

(g) ENFORCEMENT.—A violation of any requirement of this section 

shall be a violation of this Act. Each emission allowance the value 

of which is used in violation of the requirements of this section shall 

be a separate violation. 

(h) REGULATIONS.—Not later than January 1, 2014, the Administrator, in consultation with the Federal Energy Regulatory Commission, shall promulgate regulations to implement the requirements of 

this section. 

SEC. 785. HOME HEATING OIL AND PROPANE CONSUMERS. 

(a) DEFINITIONS.—For purposes of this section: 

(1) CARBON CONTENT.—The term ‘‘carbon content’’ means the 

amount of carbon dioxide that would be emitted as a result of 

the combustion of a fuel. 

(2) COST-EFFECTIVE.—The term ‘‘cost-effective’’ has the meaning given that term in section 784(a)(2). 

(b) ALLOCATION.—Not later than September 30 of each of calendar years 2012 through 2029, the Administrator shall distribute 

among the States, in accordance with this section, the quantity of 

emission allowances allocated pursuant to section 782(c). 

(c) DISTRIBUTION AMONG STATES.—The Administrator shall distribute emission allowances among the States under this section 

each year ratably based on the ratio of— 

(1) the carbon content of home heating oil and propane sold 

to consumers within each State in the preceding year for residential or commercial uses; to 

(2) the carbon content of home heating oil and propane sold 

to consumers within the United States in the preceding year for 

residential or commercial uses. 

(d) USE OF ALLOWANCES.— 

(1) IN GENERAL.—States shall use emission allowances distributed under this section exclusively for the benefit of consumers of home heating oil or propane for residential or commercial purposes. Such proceeds shall be used exclusively for— 

(A) cost-effective energy efficiency programs for consumers 

that use home heating oil or propane for residential or commercial purposes; or 

(B) rebates or other direct financial assistance programs 

for consumers of home heating oil or propane used for residential or commercial purposes. 

(2) ADMINISTRATION AND DELIVERY MECHANISMS.—In administering programs supported by this section, States shall— 

(A) use no less than 50 percent of the value of emission 

allowances received under this section for cost-effective energy efficiency programs to reduce consumers’ overall fuel 

costs; 

(B) to the extent practicable, deliver consumer support 

under this section through existing energy efficiency and 

consumer energy assistance programs or delivery mechanisms, including, where appropriate, programs or mechanisms administered by parties other than the State; and 


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(C) seek to coordinate the administration and delivery of 

energy efficiency and consumer energy assistance programs 

supported under this section, with one another and with existing programs for various fuel types, so as to deliver comprehensive, fuel-blind, coordinated programs to consumers. 

(e) REPORTING.—Each State receiving emission allowances under 

this section shall submit to the Administrator, within 12 months of 

each receipt of such allowances, a report, in accordance with such 

requirements as the Administrator may prescribe, that— 

(1) describes the State’s use of emission allowances distributed under this section, including a description of the energy efficiency and consumer assistance programs supported with such 

allowances; 

(2) demonstrates the cost-effectiveness of, and the energy savings achieved by, energy efficiency programs supported under 

this section; and 

(3) includes a report prepared by an independent third party, 

in accordance with such regulations as the Administrator may 

promulgate, evaluating the performance of the energy efficiency 

and consumer assistance programs supported under this section. 

(f) ENFORCEMENT.—If the Administrator determines that a State 

is not in compliance with this section, the Administrator may withhold a portion of the emission allowances, the quantity of which is 

equal to up to twice the quantity of the allowances that the State 

failed to use in accordance with the requirements of this section, 

that such State would otherwise be eligible to receive under this section in later years. Allowances withheld pursuant to this subsection 

shall be distributed among the remaining States ratably in accordance with the formula in subsection (c). 

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

(a) REGULATIONS.—Not later than 2 years after the date of enactment of this title, the Administrator shall promulgate regulations 

providing for the distribution of emission allowances allocated pursuant to section 782(f), pursuant to the requirements of this section, 

to support the commercial deployment of carbon capture and sequestration technologies in both electric power generation and industrial 

operations. 

(b) ELIGIBILITY CRITERIA.—To be eligible to receive emission allowances under this section, the owner or operator of a project 

must— 

(1) implement carbon capture and sequestration technology— 

(A) at an electric generating unit that— 

(i) has a nameplate capacity of 200 megawatts or 

more; 

(ii) in the case of a retrofit application, applies the 

carbon capture and sequestration technology to the flue 

gas from at least 200 megawatts of the total nameplate 

generating capacity of the unit, provided that clause (i) 

shall apply without exception; 

(iii) derives at least 50 percent of its annual fuel 

input from coal, petroleum coke, or any combination of 

these 2 fuels; and 


hsrobinson on PROD1PC76 with HEARING
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(iv) upon implementation of capture and sequestration technology, will achieve an emission limit that is 

at least a 50 percent reduction in emissions of the carbon dioxide produced by— 

(I) the unit, measured on an annual basis, determined in accordance with section 812(b)(2); or 

(II) in the case of retrofit applications under 

clause (ii), the treated portion of flue gas from the 

unit, measured on an annual basis, determined in 

accordance with section 812(b)(2); or 

(B) at an industrial source that— 

(i) absent carbon capture and sequestration, would 

emit greater than 50,000 tons per year of carbon dioxide; 

(ii) upon implementation, will achieve an emission 

limit that is at least a 50 percent reduction in emissions of the carbon dioxide produced by the emission 

point, measured on an annual basis, determined in accordance with section 812(b)(2); and 

(iii) does not produce a liquid transportation fuel 

from a solid fossil-based feedstock; 

(2) geologically sequester carbon dioxide at a site that meets 

all applicable permitting and certification requirements for geologic sequestration, or, pursuant to such requirements as the 

Administrator may prescribe by regulation, convert captured 

carbon dioxide to a stable form that will safely and permanently sequester such carbon dioxide; 

(3) meet all other applicable State and Federal permitting requirements; and 

(4) be located in the United States. 

(c) PHASE I DISTRIBUTION TO ELECTRIC GENERATING UNITS.— (1) APPLICATION.—This subsection shall apply only to projects 

at the first 6 gigawatts of electric generating units, measured in 

cumulative generating capacity of such units. 

(2) DISTRIBUTION.—The Administrator shall distribute emission allowances allocated under section 782(f) to the owner or 

operator of each eligible project at an electric generating unit in 

a quantity equal to the quotient obtained by dividing— 

(A) the product obtained by multiplying— 

(i) the number of metric tons of carbon dioxide emissions avoided through capture and sequestration of 

emissions by the project, as determined pursuant to 

such methodology as the Administrator shall prescribe 

by regulation; and 

(ii) a bonus allowance value, pursuant to paragraph 

(3); by 

(B) the average fair market value of an emission allowance during the preceding year. 

(3) BONUS ALLOWANCE VALUES.— (A) For a generating unit achieving the capture and sequestration of 85 percent or more of the carbon dioxide that 

otherwise would be emitted by such unit, the bonus allowance value shall be $90. 

(B) The Administrator shall by regulation establish a 

bonus allowance value for each rate of lower capture and 


hsrobinson on PROD1PC76 with HEARING
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sequestration achieved by a generating unit, from a minimum of $50 per ton for a 50 percent rate and varying directly with increasing rates of capture and sequestration up 

to $90 per ton for an 85 percent rate. 

(C) For a generating unit that achieves the capture and 

sequestration of at least 50 percent of the carbon dioxide 

that otherwise would be emitted by such unit by not later 

than January 1, 2017, the otherwise applicable bonus allowance value under this paragraph shall be increased by 

$10, provided that the owner of such unit notifies the Administrator of its intent to achieve such rate of capture and 

sequestration by not later than January 1, 2012. 

(D) For a carbon capture and sequestration project sequestering in a geological formation for purposes of enhanced hydrocarbon recovery, the Administrator shall, by 

regulation, reduce the applicable bonus allowance value 

under this paragraph to reflect the lower net cost of the 

project when compared to sequestration into geological formations solely for purposes of sequestration. 

(E) All monetary values in this section shall be adjusted 

annually for inflation. 

(d) PHASE II DISTRIBUTION TO ELECTRIC GENERATING UNITS.— 

(1) APPLICATION.—This subsection shall apply only to the distribution of emission allowances to carbon capture and sequestration projects at electric generating units after the capacity 

threshold identified in subsection (c)(1) is reached. 

(2) REGULATIONS.—Not later than 2 years prior to the date on 

which the capacity threshold identified in subsection (c)(1) is 

projected to be reached, the Administrator shall promulgate regulations to govern the distribution of emission allowances to the 

owners or operators of eligible projects under this subsection. 

(3) REVERSE AUCTIONS.— 

(A) IN GENERAL.—Except as provided in paragraph (4), 

the regulations promulgated under paragraph (2) shall provide for the distribution of emission allowances to the owners or operators of eligible projects under this subsection 

through reverse auctions, which shall be held no less frequently than once each calendar year. The Administrator 

may establish a separate auction for each of no more than 

5 different project categories, defined on the basis of coal 

type, capture technology, geological formation type, new 

unit versus retrofit application, such other factors as the 

Administrator may prescribe, or any combination thereof. 

The Administrator may establish appropriate minimum 

rates of capture and sequestration in implementing this 

paragraph. 

(B) AUCTION PROCESS.—At each reverse auction— 

(i) the Administrator shall solicit bids from eligible 

projects; 

(ii) eligible projects participating in the auction shall 

submit a bid including the desired level of carbon dioxide sequestration incentive per ton and the estimated 

quantity of carbon dioxide that the project will permanently sequester over 10 years; and 


hsrobinson on PROD1PC76 with HEARING
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(iii) the Administrator shall select bids, within each 

auction, for the sequestration amount submitted, beginning with the eligible project submitting the bid for the 

lowest level of sequestration incentive on a per ton 

basis and meeting such other requirements as the Administrator may specify, until the amount of funds 

available for the reverse auction is committed. 

(C) FORM OF DISTRIBUTION.—The Administrator shall 

provide deployment incentives to the owners or operators of 

eligible projects selected through a reverse auction under 

this paragraph pursuant to a formula equivalent to that 

described in subsection (c)(2), except that the incentive level 

that is bid by the entity shall be substituted for the bonus 

allowance value. 

(4) ALTERNATIVE DISTRIBUTION METHOD.— (A) IN GENERAL.—If the Administrator determines that 

reverse auctions would not provide for efficient and cost-effective commercial deployment of carbon capture and sequestration technologies, the Administrator may instead, 

through regulations promulgated under paragraph (2) or 

(5), prescribe a schedule for the award of bonus allowances 

to the owners or operators of eligible projects under this 

subsection, in accordance with the requirements of this 

paragraph. 

(B) MULTIPLE TRANCHES.—The Administrator shall divide emission allowances available for distribution to the 

owners or operators of eligible projects into a series of 

tranches, each supporting the deployment of a specified 

quantity of cumulative electric generating capacity utilizing 

carbon capture and sequestration technology, each of which 

shall not be greater than 6 gigawatts. 

(C) METHOD OF DISTRIBUTION.—The Administrator shall 

distribute emission allowances within each tranche, on a 

first-come, first-served basis— 

(i) based on the date of full-scale operation of capture 

and sequestration technology; and 

(ii) pursuant to a formula, similar to that set forth 

in subsection (c)(2) (except that the Administrator shall 

prescribe bonus allowance values different than those 

set forth in subsection (c)(2)), establishing the number 

of allowances to be distributed per ton of carbon dioxide sequestered by the project. 

(D) REQUIREMENTS.—For each tranche established pursuant to subparagraph (A), the Administrator shall establish a schedule for distributing emission allowances that— 

(i) is based on a sliding scale that provides higher 

bonus allowance values for projects achieving higher 

rates of capture and sequestration; 

(ii) for each capture and sequestration rate, establishes a bonus allowance value that is lower than that 

established for such rate in the previous tranche (or, in 

the case of the first tranche, than that established for 

such rate under subsection (c)(3)); and 

(iii) may establish different bonus allowance levels 

for no more than 5 different project categories, defined 


hsrobinson on PROD1PC76 with HEARING
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by coal type, capture technology, geological formation 

type, new unit versus retrofit application, such other 

factors as the Administrator may prescribe, or any 

combination thereof. 

(E) CRITERIA FOR ESTABLISHING BONUS ALLOWANCE VALUES.—In setting bonus allowance values under this paragraph, the Administrator shall seek to cover no more than 

the reasonable incremental capital and operating costs of a 

project that are attributable to implementation of carbon 

capture, transportation, and sequestration technologies, 

taking into account— 

(i) the reduced cost of compliance with section 722 of 

this Act; 

(ii) the reduced cost associated with sequestering in 

a geological formation for purposes of enhanced hydrocarbon recovery when compared to sequestration into 

geological formations solely for purposes of sequestration; 

(iii) the relevant factors defining the project category; 

and 

(iv) such other factors as the Administrator determines are appropriate. 

(5) REVISION OF REGULATIONS.—The Administrator shall review, and as appropriate revise, the applicable regulations 

under this subsection no less frequently than every 8 years. 

(e) LIMITS FOR CERTAIN ELECTRIC GENERATING UNITS.— 

(1) DEFINITIONS.—For purposes of this subsection, the terms 

‘‘covered EGU’’ and ‘‘initially permitted’’ shall have the meaning 

given those terms in section 812 of this Act. 

(2) COVERED EGUS INITIALLY PERMITTED FROM 2009 THROUGH

2014.—For a covered EGU that is initially permitted on or after 

January 1, 2009, and before January 1, 2015, the Administrator shall reduce the quantity of emission allowances that the 

owner or operator of such covered EGU would otherwise be eligible to receive under this section as follows: 

(A) In the case of a unit commencing operation on or before January 1, 2019, if the date in clause (ii)(I) is earlier 

than the date in clause (ii)(II), by the product of— 

(i) 20 percent; and 

(ii) the number of years, if any, that have elapsed between— 

(I) the earlier of January 1, 2020, or the date 

that is 5 years after the commencement of operation of such covered EGU; and 

(II) the first year that such covered EGU 

achieves (and thereafter maintains) an emission 

limit that is at least a 50 percent reduction in 

emissions of the carbon dioxide produced by the 

unit, measured on an annual basis, as determined 

in accordance with section 812(b)(2). 

(B) In the case of a unit commencing operation after January 1, 2019, by the product of— 

(i) 20 percent; and 

(ii) the number of years between— 


hsrobinson on PROD1PC76 with HEARING
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(I) the commencement of operation of such covered EGU; and 

(II) the first year that such covered EGU 

achieves (and thereafter maintains) an emission 

limit that is at least a 50 percent reduction in 

emissions of the carbon dioxide produced by the 

unit, measured on an annual basis, as determined 

in accordance with section 812(b)(2). 

(3) COVERED EGUS INITIALLY PERMITTED FROM 2015 THROUGH

2019.—The owner or operator of a covered EGU that is initially 

permitted on or after January 1, 2015, and before January 1, 

2020, shall be ineligible to receive emission allowances pursuant to this section if such unit, upon commencement of operations (and thereafter), does not achieve and maintain an emission limit that is at least a 50 percent reduction in emissions 

of the carbon dioxide produced by the unit, measured on an annual basis, as determined in accordance with section 812(b)(2). 

(f) INDUSTRIAL SOURCES.— (1) ALLOWANCES.—The Administrator may distribute not 

more than 15 percent of the allowances allocated under section 

782(a) for any vintage year to the owners or operators of eligible 

industrial sources to support the commercial-scale deployment 

of carbon capture and sequestration technologies at such 

sources. 

(2) DISTRIBUTION.—The Administrator shall, by regulation, 

prescribe requirements for the distribution of emission allowances to the owners or operators of industrial sources under this 

subsection, based on a bonus allowance formula that awards 

allowances to qualifying projects on the basis of tons of carbon 

dioxide captured and permanently sequestered. The Administrator may provide for the distribution of emission allowances 

pursuant to— 

(A) a reverse auction method, similar to that described 

under subsection (d)(3), including the use of separate auctions for different project categories; or 

(B) an incentive schedule, similar to that described under 

subsection (d)(4), which shall ensure that incentives are set 

so as to satisfy the requirement described in subsection 

(d)(4)(E). 

(3) REVISION OF REGULATIONS.—The Administrator shall review, and as appropriate revise, the applicable regulations 

under this subsection no less frequently than every 8 years. 

(g) LIMITATIONS.—Allowances may be distributed under this section only for tons of carbon dioxide emissions that have already 

been captured and sequestered. A qualifying project may receive annual emission allowances under this section only for the first 10 

years of operation. No greater than 72 gigawatts of total cumulative 

generating capacity (including industrial applications, measured by 

such equivalent metric as the Administrator may designate) may receive emission allowances under this section. Upon reaching the 

limit described in the preceding sentence, any emission allowances 

that are allocated for carbon capture and sequestration deployment 

under section 782(f) and are not yet obligated under this section 

shall be treated as allowances not designated for distribution for 

purposes of section 782(r). 


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(h) EXHAUSTION OF ACCOUNT AND ANNUAL ROLL-OVER OF SUR- PLUS ALLOWANCES.— (1) In distributing bonus allowances under this subsection, 

the Administrator shall ensure that qualifying projects receiving allowances receive distributions for 10 years. 

(2) If the Administrator determines that the allowances allocated under section 782(f) with a vintage year that matches the 

year of distribution will be exhausted once the estimated full 

10-year distributions will be provided to current eligible participants, the Administrator shall provide to new eligible projects 

allowances from vintage years after the year of the distribution. 

(i) RETROFIT APPLICATIONS.—(1) In calculating bonus allowance 

values for retrofit applications eligible under subsections (b)(1)(A)(ii) 

and (b)(1)(A)(iv)(II), the Administrator shall apply the required capture rates with respect to the treated portion of flue gas from the 

unit. 

(2) No additional projects shall be eligible for allowances under 

subsections (b)(1)(A)(ii) and (b)(1)(A)(iv)(II) as of such time as the 

Administrator reports, pursuant to section 812(d), that carbon capture and sequestration retrofit projects at electric generating units 

that are eligible for allowances under this section have been applied, 

in the aggregate, to the flue gas generated by 1 gigawatt of total cumulative generating capacity. 

(j) DAVIS-BACON COMPLIANCE.—All laborers and mechanics employed on projects funded directly by or assisted in whole or in part 

by this section through the use of bonus allowances shall be paid 

wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor 

in accordance with subchapter IV, chapter 31, part A of subtitle II 

of title 40, United States Code. With respect to the labor standards 

specified in this section, the Secretary of Labor shall have the authority and functions set forth in Reorganization Plan Numbered 14 

of 1950 (64 Stat. 1267; 5 U.S.C. App.) and section 3145 of title 40, 

United States Code. 

SEC. 787. ALLOCATIONS TO REFINERIES. 

(a) PURPOSE.—To provide emission allowance rebates to petroleum refiners in the United States in a manner that promotes energy efficiency and a reduction in greenhouse gas emissions at such 

facilities. 

(b) DEFINITIONS.—In this section: 

(1) EMISSIONS.—The term ‘‘emissions’’ means the greenhouse 

gas emissions in the calendar year preceding the calendar year 

in which emission allowances are being distributed. The term 

includes direct emissions from fuel combustion, process emissions, and indirect emissions from the generation of electricity 

used to produce the output of the petroleum refinery or sector. 

(2) INTENSITY.—The term ‘‘intensity’’ means tons of carbon dioxide equivalent emissions per unit of output in a given year. 

(3) INTENSITY FACTOR.—The term ‘‘intensity factor’’ means the 

intensity of the petroleum refining sector divided by the intensity for an individual petroleum refinery. 

(4) OUTPUT.—The term ‘‘output’’ means the average annual 

number of gallons of refined fuel produced in the three calendar 

years preceding the calendar year in which emission allowances 

are being distributed. 


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(5) PETROLEUM REFINERY.—The term ‘‘petroleum refinery’’ 

means a facility classified under 324110 of the North American 

Industrial Classification System of 2002. 

(6) PRODUCTION FACTOR.—The term ‘‘production factor’’ 

means the output of an individual petroleum refinery divided 

by the output of the petroleum refining sector. 

(c) IN GENERAL.—For each vintage year between 2014 and 2026, 

the Administrator shall distribute allowances pursuant to this section to owners and operators of petroleum refineries in the United 

States. 

(d) DISTRIBUTION SCHEDULE.—The Administrator shall distribute 

emission allowances of each vintage year no later than October 31 

of the preceding calendar year. 

(e) CALCULATION OF EMISSION ALLOWANCE REBATES.— 

(1) For each petroleum refinery, the Administrator shall calculate an individual allocation factor for each vintage year, 

based upon the product of the intensity factor for such refinery 

multiplied by the production factor for such refinery. 

(2) The Administrator shall also calculate a total allocation 

factor for each vintage year, based upon the sum of all of the 

individual allocation factors. 

(3) The Administrator shall calculate the number of emission 

allowances to be provided to each petroleum refinery in each 

vintage year by dividing the individual allocation factor for 

such refinery by the total allocation factor, then multiplying the 

result by the number of emission allowances allocated to the 

program under this section for that vintage year. 

(f) DATA SOURCES.— 

(1) The Administrator shall use data from the greenhouse gas 

registry, established under section 713, where it is available. 

(2) The Administrator shall determine, by rule, the methodology by which to calculate indirect emissions for a refinery. 

The Administrator shall also determine, by rule, the methodology by which to take into account the value of allowances provided at no cost to local distribution companies that is passed 

through to a refinery. Each person selling electricity to the 

owner or operator of a petroleum refinery shall provide the 

owner or operator and the Administrator, on an annual basis, 

such data as the Administrator determines is necessary to implement this section. 

SEC. 788. [SECTION RESERVED]. 

SEC. 789. CLIMATE CHANGE CONSUMER REFUNDS. 

(a) REFUND.—In each year after deposits are made to the Climate 

Change Consumer Refund Account, the Secretary of the Treasury 

shall provide tax refunds on a per capita basis to each household 

in the United States that shall collectively equal the amount deposited into the Climate Change Consumer Refund Account. 

(b) LIMITATIONS.—The Secretary of the Treasury shall establish 

procedures to ensure that individuals who are not— 

(1) citizens or nationals of the United States; or 

(2) immigrants lawfully residing in the United States, 

are excluded for the purpose of calculating and distributing refunds 

under this section. 


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SEC. 790. EXCHANGE FOR STATE-ISSUED ALLOWANCES. 

(a) IN GENERAL.—Not later than one year after the date of enactment of this title, the Administrator shall issue regulations allowing 

any person in the United States to exchange greenhouse gas emission allowances issued before December 31, 2011, by the State of 

California or for the Regional Greenhouse Gas Initiative, or the 

Western Climate Initiative (in this section referred to as ‘‘State allowances’’) for emission allowances established by the Administrator 

under section 721(a). 

(b) REGULATIONS.—Regulations issued under subsection (a) 

shall— 

(1) provide that a person exchanging State allowances under 

this section receive emission allowances established under section 721(a) in the amount that is sufficient to compensate for 

the cost of obtaining and holding such State allowances; 

(2) establish a deadline by which persons must exchange the 

State allowances; and 

(3) provide that the Federal emission allowances disbursed 

pursuant to this section shall be deducted from the allowances 

to be auctioned pursuant to section 782(b). 

(c) COST OF OBTAINING STATE ALLOWANCE.—For purposes of this 

section, the cost of obtaining a State allowance shall be the average 

auction price, for emission allowances issued in the year in which 

the State allowance was issued, under the program under which the 

State allowance was issued. 

SEC. 791. AUCTION PROCEDURES. 

(a) IN GENERAL.—To the extent that auctions of emission allowances by the Administrator are authorized by this part, such auctions shall be carried out pursuant to this section and the regulations established hereunder. 

(b) INITIAL REGULATIONS.—Not later than 12 months after the 

date of enactment of this title, the Administrator, in consultation 

with other agencies, as appropriate, shall promulgate regulations 

governing the auction of allowances under this section. Such regulations shall include the following requirements: 

(1) FREQUENCY; FIRST AUCTION.—Auctions shall be held four 

times per year at regular intervals, with the first auction to be 

held no later than March 31, 2011. 

(2) AUCTION SCHEDULE; CURRENT AND FUTURE VINTAGES.— The Administrator shall, at each quarterly auction under this 

section, offer for sale both a portion of the allowances with the 

same vintage year as the year in which the auction is being conducted and a portion of the allowances with vintage years from 

future years. The preceding sentence shall not apply to auctions 

held before 2012, during which period, by necessity, the Administrator shall auction only allowances with a vintage year that 

is later than the year in which the auction is held. Beginning 

with the first auction and at each quarterly auction held thereafter, the Administrator may offer for sale allowances with vintage years of up to four years after the year in which the auction is being conducted, except as provided in section 782(p). 

(3) AUCTION FORMAT.—Auctions shall follow a single-round, 

sealed-bid, uniform price format. 

(4) PARTICIPATION; FINANCIAL ASSURANCE.—Auctions shall be 

open to any person, except that the Administrator may establish 


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financial assurance requirements to ensure that auction participants can and will perform on their bids. 

(5) DISCLOSURE OF BENEFICIAL OWNERSHIP.—Each bidder in 

the auction shall be required to disclose the person or entity 

sponsoring or benefitting from the bidder’s participation in the 

auction if such person or entity is, in whole or in part, other 

than the bidder. 

(6) PURCHASE LIMITS.—No person may, directly or in concert 

with another participant, purchase more than 5 percent of the 

allowances offered for sale at any quarterly auction. 

(7) PUBLICATION OF INFORMATION.—After the auction, the Administrator shall, in a timely fashion, publish the identities of 

winning bidders, the quantity of allowances obtained by each 

winning bidder, and the auction clearing price. 

(8) OTHER REQUIREMENTS.—The Administrator may include 

in the regulations such other requirements or provisions as the 

Administrator, in consultation with other agencies, as appropriate, considers appropriate to promote effective, efficient, 

transparent, and fair administration of auctions under this section. 

(c) REVISION OF REGULATIONS.—The Administrator may, in consultation with other agencies, as appropriate, at any time, revise the 

initial regulations promulgated under subsection (b). Such revised 

regulations need not meet the requirements identified in subsection 

(b) if the Administrator determines that an alternative auction design would be more effective, taking into account factors including 

costs of administration, transparency, fairness, and risks of collusion or manipulation. In determining whether and how to revise the 

initial regulations under this subsection, the Administrator shall 

not consider maximization of revenues to the Federal Government. 

(d) RESERVE AUCTION PRICE.—The minimum reserve auction 

price shall be $10 (in constant 2009 dollars) for auctions occurring 

in 2012. The minimum reserve price for auctions occurring in years 

after 2012 shall be the minimum reserve auction price for the previous year increased by 5 percent plus the rate of inflation (as measured by the Consumer Price Index for all urban consumers). 

(e) DELEGATION OR CONTRACT.—Pursuant to regulations under 

this section, the Administrator may by delegation or contract provide for the conduct of auctions under the Administrator’s supervision by other departments or agencies of the Federal Government 

or by nongovernmental agencies, groups, or organizations. 

SEC. 792. AUCTIONING ALLOWANCES FOR OTHER ENTITIES. 

(a) CONSIGNMENT.—Any entity holding emission allowances or 

compensatory allowances may request that the Administrator auction, pursuant to section 791, the allowances on consignment. 

(b) PRICING.—When the Administrator acts under this section as 

the agent of an entity in possession of emission allowances, the Administrator is not obligated to obtain the highest price possible for 

the emission allowances, and instead shall auction consignment allowances in the same manner and pursuant to the same rules as 

auctions of other allowances under section 791. The Administrator 

may permit the entity offering the allowance for sale to condition the 

sale of its allowances pursuant to this section on a minimum reserve 

price that is different than the reserve auction price set pursuant to 

section 791(d). 


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(c) PROCEEDS.—For emission allowances and compensatory allowances auctioned pursuant to this section, notwithstanding section 

3302 of title 31, United States Code, or any other provision of law, 

within 90 days of receipt, the United States shall transfer the proceeds from the auction to the entity which held the allowances auctioned. No funds transferred from a purchaser to a seller of emission allowances or compensatory allowances under this subsection 

shall be held by any officer or employee of the United States or 

treated for any purpose as public monies. 

(d) REGULATIONS.—The Administrator shall issue regulations 

within 24 months after the date of enactment of this title to implement this section. 

SEC. 793. ESTABLISHMENT OF FUNDS. 

There is established in the Treasury of the United States the following funds: 

(1) The Strategic Reserve Fund. 

(2) The Climate Change Consumer Refund Fund. 

SEC. 794. OVERSIGHT OF ALLOCATIONS. 

(a) IN GENERAL.—Not later than January 1, 2014, and every 2 

years thereafter, the Comptroller General of the United States shall 

carry out a review of programs administered by the Federal Government that distribute emission allowances or funds from any Federal 

auction of allowances. 

(b) CONTENTS.—Each such report shall include a comprehensive 

evaluation of the administration and effectiveness of each program, 

including— 

(1) the efficiency, transparency, and soundness of the administration of each program; 

(2) the performance of activities receiving assistance under 

each program; 

(3) the cost-effectiveness of each program in achieving the 

stated purposes of the program; and 

(4) recommendations, if any, for regulatory or administrative 

changes to each program to improve its effectiveness. 

(c) FOCUS.—In evaluating program performance, each review 

under this section review shall address the effectiveness of such programs in— 

(1) creating and preserving jobs; 

(2) ensuring a manageable transition for working families 

and workers; 

(3) reducing the emissions, or enhancing sequestration, of 

greenhouse gases; 

(4) developing clean technologies; and 

(5) building resilience to the impacts of climate change. 

TITLE VIII—ADDITIONAL GREENHOUSE 

GAS STANDARDS 

SEC. 801. DEFINITIONS. 

For purposes of this title, terms that are defined in title VII, except for the term ‘‘stationary source’’, shall have the meaning given 

those terms in title VII. 


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PART A—STATIONARY SOURCE STANDARDS 

SEC. 811. STANDARDS OF PERFORMANCE. 

(a) UNCAPPED STATIONARY SOURCES.— (1) INVENTORY OF SOURCE CATEGORIES.—(A) Within 12 

months after the date of enactment of this title, the Administrator shall publish under section 111(b)(1)(A) an inventory of 

categories of stationary sources that consist of those categories 

that contain sources that individually had uncapped greenhouse gas emissions greater than 10,000 tons of carbon dioxide 

equivalent and that, in the aggregate, were responsible for emitting at least 20 percent annually of the uncapped greenhouse 

gas emissions. 

(B) The Administrator shall include in the inventory under 

this paragraph each source category that is responsible for at 

least 10 percent of the uncapped methane emissions in 2005. 

Notwithstanding any other provision, the inventory required by 

this section shall not include sources of enteric fermentation. 

The list under this paragraph shall include industrial sources, 

the emissions from which, when added to the capped emissions 

from industrial sources, constitute at least 95 percent of the 

greenhouse gas emissions of the industrial sector. 

(C) For purposes of this subsection, emissions shall be calculated using tons of carbon dioxide equivalents. In promulgating the inventory required by this paragraph and the schedule required under by paragraph (2)(C), the Administrator shall 

use the most current emissions data available at the time of 

promulgation, except as provided in subparagraph (B). 

(D) Notwithstanding any other provisions, the Administrator 

may list under 111(b) any source category identified in the inventory required by this subsection without making a finding 

that the source category causes or contributes significantly to, 

air pollution with may be reasonably anticipated to endanger 

public health or welfare. 

(2) STANDARDS AND SCHEDULE.—(A) For each category identified as provided in paragraph (1), the Administrator shall promulgate standards of performance under section 111 for the uncapped emissions of greenhouse gases from stationary sources in 

that category and shall promulgate corresponding regulations 

under section 111(d). 

(B) The Administrator shall promulgate standards as required by this subsection for stationary sources in categories 

identified as provided in paragraph (1) as expeditiously as 

practicable, assuring that— 

(i) standards for identified source categories that, combined, emitted 80 percent or more of the greenhouse gas 

emissions of the identified source categories shall be promulgated not later than 3 years after the date of enactment 

of this title and shall include standards for natural gas extraction; and 

(ii) for all other identified source categories— 

(I) standards for not less than an additional 25 percent of the identified categories shall be promulgated 

not later than 5 years after the date of enactment of 

this title; 


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(II) standards for not less than an additional 25 percent of the identified categories shall be promulgated 

not later than 7 years after the date of enactment of 

this title; and 

(III) standards for all the identified categories shall 

be promulgated not later than 10 years after the date 

of enactment of this title. 

(C) Not later than 24 months after the date of enactment of 

this title and after notice and opportunity for comment, the Administrator shall publish a schedule establishing a date for the 

promulgation of standards for each category of sources identified pursuant to paragraph (1). The date for each category shall 

be consistent with the requirements of subparagraph (B). The 

determination of priorities for the promulgation of standards 

pursuant to this paragraph is not a rulemaking and shall not 

be subject to judicial review, except that failure to promulgate 

any standard pursuant to the schedule established by this paragraph shall be subject to review under section 304(a)(2). 

(D) Notwithstanding section 307, no action of the Administrator listing a source category under paragraph (1) shall be a 

final agency action subject to judicial review, except that any 

such action may be reviewed under section 307 when the Administrator issues performance standards for such category. 

(b) CAPPED SOURCES.—No standard of performance shall be established under section 111 for capped greenhouse gas emissions 

from a capped source unless the Administrator determines that such 

standards are appropriate because of effects that do not include climate change effects. In promulgating a standard of performance 

under section 111 for the emission from capped sources of any air 

pollutant that is not a greenhouse gas, the Administrator shall treat 

the emission of any greenhouse gas by those entities as a nonair 

quality public health and environmental impact within the meaning 

of section 111(a)(1). 

(c) PERFORMANCE STANDARDS.—For purposes of setting a performance standard for source categories identified pursuant to subsection (a)— 

(1) The Administrator shall take into account the goal of reducing total United States greenhouse gas emissions as set 

forth in section 702. 

(2) The Administrator may promulgate a design, equipment, 

work practice, or operational standard, or any combination 

thereof, under section 111 in lieu of a standard of performance 

under that section without regard to any determination of feasibility that would otherwise be required under section 111(h). 

(3) Notwithstanding any other provision, in setting the level 

of each standard required by this section, the Administrator 

shall take into account projections of allowance prices, such 

that the marginal cost of compliance (expressed as dollars per 

ton of carbon dioxide equivalent reduced) imposed by the standard would not, in the judgement of the Administrator, be expected to exceed the Administrator’s projected allowance prices 

over the time period spanning from the date of initial compliance to the date that the next revisions of the standard would 

come into effect pursuant to the schedule under section 

111(b)(1)(B). 


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(d) DEFINITIONS.—In this section, the terms ‘‘uncapped greenhouse gas emissions’’ and ‘‘uncapped methane emissions’’ mean 

those greenhouse gas or methane emissions, respectively, to which 

section 722 would not have applied if the requirements of this title 

had been in effect for the same year as the emissions data upon 

which the list is based. 

(e) STUDY OF THE EFFECTS OF PERFORMANCE STANDARDS.— (1) STUDY.—The Administrator shall conduct a study of the 

impacts of performance standards required under this section, 

which shall evaluate the effect of such standards on the— 

(A) costs of achieving compliance with the economy-wide 

reduction goals specified in section 702 and the reduction 

targets specified in section 703; 

(B) available supply of offset credits; and 

(C) ability to achieve the economy-wide reduction goals 

specified in section 702 and any other benefits of such 

standards. 

(2) REPORT.—The Administrator shall submit to the House 

Energy and Commerce Committee a report that describes the results of the study not later than 18 months after the publication 

of the standards required under subsection (a)(2)(B)(i). 

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

PLANTS. 

(a) DEFINITIONS.—For purposes of this section: 

(1) COVERED EGU.—The term ‘‘covered EGU’’ means a utility 

unit that is required to have a permit under section 503(a) and 

is authorized under state or federal law to derive at least 30 

percent of its annual heat input from coal, petroleum coke, or 

any combination of these fuels. 

(2) INITIALLY PERMITTED.—The term ‘‘initially permitted’’ 

means that the owner or operator has received a Clean Air Act 

preconstruction approval or permit, for the covered EGU as a 

new (not a modified) source, but administrative review or appeal of such approval or permit has not been exhausted. A subsequent modification of any such approval or permits, ongoing 

administrative or court review, appeals, or challenges, or the existence or tolling of any time to pursue further review, appeals, 

or challenges shall not affect the date on which a covered EGU 

is considered to be initially permitted under this paragraph. 

(b) STANDARDS.—(1) A covered EGU that is initially permitted on 

or after January 1, 2020, shall achieve an emission limit that is a 

65 percent reduction in emissions of the carbon dioxide produced 

by the unit, as measured on an annual basis, or meet such more 

stringent standard as the Administrator may establish pursuant to 

subsection (c). 

(2) A covered EGU that is initially permitted after January 1, 

2009, and before January 1, 2020, shall, by the applicable compliance date established under this paragraph, achieve an emission 

limit that is a 50 percent reduction in emissions of the carbon dioxide produced by the unit, as measured on an annual basis. Compliance with the requirement set forth in this paragraph shall be required by the earliest of the following: 

(A) Four years after the date the Administrator has published 

pursuant to subsection (d) a report that there are in commercial 

operation in the United States electric generating units or other 


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stationary sources equipped with carbon capture and sequestration technology that, in the aggregate— 

(i) have a total of at least 4 gigawatts of nameplate generating capacity of which— 

(I) at least 3 gigawatts must be electric generating 

units; and 

(II) up to 1 gigawatt may be industrial applications, 

for which capture and sequestration of 3 million tons 

of carbon dioxide per year on an aggregate annualized 

basis shall be considered equivalent to 1 gigawatt; 

(ii) include at least 2 electric generating units, each with 

a nameplate generating capacity of 250 megawatts or greater, that capture, inject, and sequester carbon dioxide into 

geologic formations other than oil and gas fields; and 

(iii) are capturing and sequestering in the aggregate at 

least 12 million tons of carbon dioxide per year, calculated 

on an aggregate annualized basis. 

(B) January 1, 2025. 

(3) If the deadline for compliance with paragraph (2) is January 

1, 2025, the Administrator may extend the deadline for compliance 

by a covered EGU by up to 18 months if the Administrator makes 

a determination, based on a showing by the owner or operator of the 

unit, that it will be technically infeasible for the unit to meet the 

standard by the deadline. The owner or operator must submit a request for such an extension by no later than January 1, 2022, and 

the Administrator shall provide for public notice and comment on 

the extension request. 

(c) REVIEW AND REVISION OF STANDARDS.—Not later than 2025 

and at 5-year intervals thereafter, the Administrator shall review 

the standards for new covered EGUs under this section and shall, 

by rule, reduce the maximum carbon dioxide emission rate for new 

covered EGUs to a rate which reflects the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such 

reduction and any nonair quality health and environmental impact 

and energy requirements) the Administrator determines has been 

adequately demonstrated. 

(d) REPORTS.—Not later than the date 18 months after the date 

of enactment of this title and semiannually thereafter, the Administrator shall publish a report on the nameplate capacity of units (determined pursuant to subsection (b)(2)(A)) in commercial operation 

in the United States equipped with carbon capture and sequestration technology, including the information described in subsection 

(b)(2)(A) (including the cumulative generating capacity to which 

carbon capture and sequestration retrofit projects meeting the criteria described in section 786(b)(1)(A)(ii) and (b)(1)(A)(iv)(II) has 

been applied and the quantities of carbon dioxide captured and sequestered by such projects). 

(e) REGULATIONS.—Not later than 2 years after the date of enactment of this title, the Administrator shall promulgate regulations to 

carry out the requirements of this section. 

SEC. 813. GEOLOGIC SEQUESTRATION SITES. 

(a) COORDINATED PROCESS.—The Administrator shall establish a 

coordinated approach to certifying and permitting geologic sequesVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00589 Fmt 6659 Sfmt 6603 E:\HR\OC\HR137.XXX HR137

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tration, taking into consideration all relevant statutory authorities. 

In establishing such approach, the Administrator shall— 

(1) take into account, and reduce redundancy with, the requirements of section 1421 of the Safe Drinking Water Act (42 

U.S.C. 300h), as amended by section 112(b) of the American 

Clean Energy and Security Act of 2009, including the rulemaking for geologic sequestration wells described at 73 Fed. 

Reg. 43491-541 (July 25, 2008); and 

(2) to the extent practicable, reduce the burden on certified entities and implementing authorities. 

(b) REGULATIONS.—Not later than 2 years after the date of enactment of this title, the Administrator shall promulgate regulations to 

protect human health and the environment by minimizing the risk 

of escape to the atmosphere of carbon dioxide injected for purposes 

of geologic sequestration. 

(c) REQUIREMENTS.—The regulations under subsection (b) shall 

include— 

(1) a process to obtain certification for geologic sequestration 

under this section; and 

(2) requirements for— 

(A) monitoring, record keeping, and reporting for emissions associated with injection into, and escape from, geologic sequestration sites, taking into account any requirements or protocols developed under section 713; 

(B) public participation in the certification process that 

maximizes transparency; 

(C) the sharing of data between States, Indian tribes, and 

the Environmental Protection Agency; and 

(D) other elements or safeguards necessary to achieve the 

purpose set forth in subsection (b). 

(d) REPORT.—Not later than 2 years after the promulgation of regulations under subsection (b), and at 3-year intervals thereafter, the 

Administrator shall deliver to the Committee on Energy and Commerce of the House of Representatives and the Committee on Environment and Public Works of the Senate a report on geologic sequestration in the United States, and, to the extent relevant, other countries in North America. Such report shall include— 

(1) data regarding injection, emissions to the atmosphere, if 

any, and performance of active and closed geologic sequestration sites, including those where enhanced hydrocarbon recovery 

operations occur; 

(2) an evaluation of the performance of relevant Federal environmental regulations and programs in ensuring environmentally protective geologic sequestration practices; 

(3) recommendations on how such programs and regulations 

should be improved or made more effective; and 

(4) other relevant information. 

PART B—MOBILE SOURCES 

SEC. 821. GREENHOUSE GAS EMISSION STANDARDS FOR MOBILE 

SOURCES. 

(a) NEW MOTOR VEHICLES AND NEW MOTOR VEHICLE ENGINES.— 

(1) Pursuant to section 202(a)(1), by December 31, 2010, the Administrator shall promulgate standards applicable to emissions of 


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greenhouse gases from new heavy-duty motor vehicles or new heavyduty 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 

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graph (1) of this subsection, shall achieve the greatest degree of 

emissions reduction achievable based on the application of technology which the Administrator determines will be available at the 

time such standards take effect, taking into consideration cost, energy, and safety factors associated with the application of such technology. Any such regulations shall take effect after such period as 

the Administrator finds necessary to permit the development and 

application of the requisite technology. 

(3) For purposes of this section and standards under section 

213(a)(4) or (5) applicable to emissions of greenhouse gases, the 

term ‘‘nonroad engines and vehicles’’ shall include non-internal 

combustion engines and the vehicles these engines power (such as 

electric engines and electric vehicles), for those non-internal combustion engines and vehicles which would be in the same category and 

have the same uses as nonroad engines and vehicles that are powered by internal combustion engines. 

(c) AIRCRAFT AND AIRCRAFT ENGINES.— (1) Pursuant to section 231(a), the Administrator shall promulgate standards applicable to emissions of greenhouse gases 

from new aircraft and new engines used in aircraft by December 31, 2012. Notwithstanding any requirement in section 

231(a), the Administrator, in consultation with the Administrator of the Federal Aviation Administration, shall also promulgate standards applicable to emissions of greenhouse gases 

from other classes and categories of aircraft and aircraft engines for such classes and categories as the Administrator determines appropriate and in the timeframe the Administrator 

determines appropriate. The Administrator may revise these 

standards from time to time. 

(2) Standards under section 231(a) applicable to emissions of 

greenhouse gases from new aircraft and new engines used in 

aircraft, and any later revisions or additional standards, shall 

achieve the greatest degree of emissions reduction achievable 

based on the application of technology which the Administrator 

determines will be available at the time such standards take effect, taking into consideration cost, energy, and safety factors 

associated with the application of such technology. Any such 

standards shall take effect after such period as the Administrator finds necessary to permit the development and application of the requisite technology. 

(d) AVERAGING, BANKING, AND TRADING OF EMISSIONS CREDITS.— 

In establishing standards applicable to emissions of greenhouse 

gases pursuant to this section and sections 202(a), 213(a)(4) and (5), 

and 231(a), the Administrator may establish provisions for averaging, banking, and trading of greenhouse gas emissions credits 

within or across classes or categories of motor vehicles and motor 

vehicle engines, nonroad vehicles and engines (including marine 

vessels), and aircraft and aircraft engines, to the extent the Administrator determines appropriate and considering the factors appropriate in setting standards under those sections. Such provisions 

may include reasonable and appropriate provisions concerning generation, banking, trading, duration, and use of credits. 

(e) REPORTS.—The Administrator shall, from time to time, submit 

a report to Congress that projects the amount of greenhouse gas 

emissions from the transportation sector, including transportation 


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fuels, for the years 2030 and 2050, based on the standards adopted 

under this section. 

(f) GREENHOUSE GASES.—Notwithstanding the provisions of section 711, hydrofluorocarbons shall be considered a greenhouse gas 

for purposes of this section. 

SEC. 822. SMARTWAY TRANSPORTATION EFFICIENCY PROGRAM. 

(a) IN GENERAL.—There is established within the Environmental 

Protection Agency a SmartWay Transport Program to quantify, 

demonstrate, and promote the benefits of technologies, products, 

fuels, and operational strategies that reduce petroleum consumption, 

air pollution, and greenhouse gas emissions from the mobile source 

sector. 

(b) GENERAL DUTIES.—Under the program established under this 

section, the Administrator shall carry out each of the following: 

(1) Development of measurement protocols to evaluate the energy consumption and greenhouse gas impacts from technologies and strategies in the mobile source sector, including 

those for passenger transport and goods movement. 

(2) Development of qualifying thresholds for certifying, 

verifying, or designating energy-efficient, low-greenhouse gas 

SmartWay technologies and strategies for each mode of passenger transportation and goods movement. 

(3) Development of partnership and recognition programs to 

promote best practices and drive demand for energy-efficient, 

low-greenhouse gas transportation performance. 

(4) Promotion of the availability of, and encouragement of the 

adoption of, SmartWay certified or verified technologies and 

strategies, and publication of the availability of financial incentives, such as assistance from loan programs and other Federal 

and State incentives. 

(c) SMARTWAY TRANSPORT FREIGHT PARTNERSHIP.—The Administrator shall establish a SmartWay Transport Partnership program 

with shippers and carriers of goods to promote energy-efficient, lowgreenhouse gas transportation. In carrying out such partnership, the 

Administrator shall undertake each of the following: 

(1) Certification of the energy and greenhouse gas performance of participating freight carriers, including those operating 

rail, trucking, marine, and other goods movement operations. 

(2) Publication of a comprehensive energy and greenhouse gas 

performance index of freight modes (including rail, trucking, 

marine, and other modes of transporting goods) and individual 

freight companies so that shippers can choose to deliver their 

goods more efficiently. 

(3) Development of tools for— 

(A) carriers to calculate their energy and greenhouse gas 

performance; and 

(B) shippers to calculate the energy and greenhouse gas 

impacts of moving their products and to evaluate the relative impacts from transporting their goods by different 

modes and corporate carriers. 

(4) Provision of recognition opportunities for participating 

shipper and carrier companies demonstrating advanced practices and achieving superior levels of greenhouse gas performance. 


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(d) IMPROVING FREIGHT GREENHOUSE GAS PERFORMANCE DATABASES.—The Administrator shall, in coordination with other appropriate agencies, define and collect data on the physical and operational characteristics of the Nation’s truck population, with special 

emphasis on data related to energy efficiency and greenhouse gas 

performance to inform the performance index published under subsection (c)(2) of this section, and other means of goods transport as 

necessary, at least every 5 years. 

(e) ESTABLISHMENT OF FINANCING PROGRAM.—The Administrator 

shall establish a SmartWay Financing Program to competitively 

award funding to eligible entities identified by the Administrator in 

accordance with the program requirements in subsection (g). 

(f) PURPOSE.—Under the SmartWay Financing Program, eligible 

entities shall— 

(1) use funds awarded by the Administrator to provide flexible loan and lease terms that increase approval rates or lower 

the costs of loans and leases in accordance with guidance developed by the Administrator; and 

(2) make such loans and leases available to public and private entities for the purpose of adopting low-greenhouse gas 

technologies or strategies for the mobile source sector that are 

designated by the Administrator. 

(g) PROGRAM REQUIREMENTS.—The Administrator shall determine program design elements and requirements, including— 

(1) the type of financial mechanism with which to award 

funding, in the form of grants or contracts; 

(2) the designation of eligible entities to receive funding, including State, tribal, and local governments, regional organizations comprised of governmental units, nonprofit organizations, 

or for-profit companies; 

(3) criteria for evaluating applications from eligible entities, 

including anticipated— 

(A) cost-effectiveness of loan or lease program on a metric-ton-of-greenhouse gas-saved-per-dollar basis; 

(B) ability to promote the loan or lease program and associated technologies and strategies to the target audience; 

and 

(4) reporting requirements for entities that receive awards, including— 

(A) actual cost-effectiveness and greenhouse gas savings 

from the loan or lease program based on a methodology 

designated by the Administrator; 

(B) the total number of applications and number of approved applications; and 

(C) terms granted to loan and lease recipients compared 

to prevailing market practices. 

(h) AUTHORIZATION OF APPROPRIATIONS.—Such sums as necessary are authorized to be appropriated to the Administrator to 

carry out this section. 


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PART C—EXEMPTIONS FROM OTHER 

PROGRAMS 

SEC. 831. CRITERIA POLLUTANTS. 

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

of its effect on global climate change. 

SEC. 832. INTERNATIONAL AIR POLLUTION. 

Section 115 shall not apply to an air pollutant with respect to 

that pollutant’s contribution to global warming. 

SEC. 833. HAZARDOUS AIR POLLUTANTS. 

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

SEC. 834. NEW SOURCE REVIEW. 

The provisions of part C of title I shall not apply to a major emitting facility that is initially permitted or modified after January 1, 

2009, on the basis of its emissions of any greenhouse gas. 

SEC. 835. TITLE V PERMITS. 

Notwithstanding any provision of title III or V, no stationary 

source shall be required to apply for, or operate pursuant to, a permit under title V, solely because the source emits any greenhouse 

gases that are regulated solely because of their effect on global climate change. 

PART D—PLANNING REQUIREMENTS 

SEC. 841. GREENHOUSE GAS EMISSIONS REDUCTIONS THROUGH 

TRANSPORTATION EFFICIENCY. 

(a) IN GENERAL.—Each State shall— 

(1) not later than 3 years after the date of enactment of this 

section, submit to the Administrator goals for transportation-related greenhouse gas emissions reductions, which goals shall be 

reasonably commensurate with the targets for overall greenhouse gas emissions reduction established by this Act; and 

(2) as part of each transportation plan or transportation improvement program developed under title 23 or title 49, United 

States Code, ensure that a plan to achieve such goals, or an updated version of such a plan, is submitted to the Administrator 

and to the Secretary of Transportation (in this section referred 

to as the ‘‘Secretary’’) by each metropolitan planning organization in the State for an area with a population exceeding 

200,000. 

(b) MODELS AND METHODOLOGIES.— 

(1) IN GENERAL.—The Administrator shall promulgate regulations to establish standards for use in developing goals, 

plans, and strategies under this section and for monitoring 

progress toward such goals. Such standards shall include— 

(A) data collection techniques for assessing State and regional transportation-related greenhouse gas emissions; 

(B) methodologies for determining transportation-related 

greenhouse gas emissions baselines; 


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(C) models and methodologies for scenario analysis; and 

(D) models and methodologies for estimating transportation-related greenhouse gas emissions reductions from the 

strategies considered under this section. 

Such regulations may approve or improve existing models and 

methodologies 

(2) TIMING.—The Administrator shall— 

(A) publish proposed regulations under paragraph (1) not 

later than 1 year after the date of enactment of this section; 

and 

(B) promulgate final regulations under paragraph (1) not 

later than 2 years after such date of enactment. 

(3) ASSESSMENT.—At least every 6 years after promulgating 

final regulations under paragraph (1), the Administrator, in coordination with the Secretary, shall assess current and projected progress in reducing transportation-related greenhouse 

gas emissions. The assessment shall examine the contributions 

to emissions reductions attributable to improvements in vehicle 

efficiency, greenhouse gas performance of transportation fuels, 

and increased efficiency in utilizing transportation systems. 

(c) GREENHOUSE GAS REDUCTION GOALS.— (1) CONSULTATION.—Each State shall develop the goals referred to in subsection (a)(1)— 

(A) in concurrence with State agencies responsible for air 

quality and transportation; 

(B) in consultation with each metropolitan planning organization for an area in the State with a population exceeding 200,000 and applicable local air quality and transportation agencies; and 

(C) with public involvement, including public comment 

periods and meetings. 

(2) PERIOD.—The goals referred to in subsection (a)(1) shall 

be for 4-, 10-, and 20-year periods. 

(3) TARGETS; DESIGNATED YEAR.—The goals referred to in 

subsection (a)(1) shall establish targets to reduce transportation-related greenhouse gas emissions in the covered area. The 

targets shall be designed to ensure that the levels of such emissions stabilize and decrease after a designated year. The State 

shall consider designating 2010 as such designated year. 

(4) COVERED AREA.—The goals referred to in subsection 

(a)(1)— 

(A) shall be established on a statewide basis; 

(B) shall be established for each metropolitan planning 

organization in the State for an area with a population exceeding 200,000; and 

(C) may be established on a voluntary basis, in accordance with the provisions of this section, for any metropolitan planning organization not described in subparagraph 

(B). 

(5) REVISED GOALS.—Every 4 years, each State shall update 

and revise, as appropriate, the goals referred to in subsection 

(a)(1). 

(d) PLANNING.—A plan submitted under subsection (a)(2) shall— 

(1) be based upon the models and methodologies established 

by the Administrator under subsection (b); 


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(2) use transportation and land use scenario analysis to address transportation-related greenhouse gas emissions and economic development impacts; and 

(3) be developed— 

(A) with public involvement, including public comment 

periods and meetings that provide opportunities for comment from a variety of stakeholders based on age, race, income, and disability; 

(B) with regional coordination, including with respect 

to— 

(i) metropolitan planning organizations; 

(ii) the localities comprising the metropolitan planning organization; 

(iii) the State in which the metropolitan planning organization is located; and 

(iv) air quality, environmental health, and transportation agencies for the State and region involved; and 

(C) in consultation with the State and local housing, 

public health, economic development, land use, environment, and public transportation agencies. 

(e) STRATEGIES.—In developing goals under subsection (a)(1) and 

a plan under subsection (a)(2), the State or metropolitan planning 

organization, as applicable, shall consider transportation and land 

use planning strategies to reduce transportation-related greenhouse 

gas emissions, including the following: 

(1) Efforts to increase or improve public transportation, including— 

(A) new public transportation systems, including new 

commuter rail systems; 

(B) expansion of existing public transportation systems; 

(C) employer-based subsidies; 

(D) cleaner locomotive technologies; 

(E) quality of service improvements, including improved 

frequency of service; and 

(F) use of transit buses that are powered by alternative 

fuels. 

(2) Updates to zoning and other land use regulations and 

plans to support development that— 

(A) coordinates transportation and land use planning; 

(B) focuses future growth close to existing and planned 

job centers and public facilities; 

(C) uses existing infrastructure; 

(D) promotes walking, bicycling, and public transportation use; and 

(E) mixes land uses such as housing, retail, and schools. 

(3) Implementation of a policy (referred to as a ‘‘complete 

streets policy’’) that— 

(A) ensures adequate accommodation of all users of 

transportation systems, including pedestrians, bicyclists, 

public transportation users, motorists, children, the elderly, 

and individuals with disabilities; and 

(B) adequately addresses the safety and convenience of 

all users of the transportation system. 

(4) Construction of bicycle and pedestrian infrastructure facilities, including facilities that improve the connections with 


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networks that provide access to human services, employment, 

schools, and retail. 

(5) Projects to promote telecommuting, flexible work schedules, or satellite work centers. 

(6) Pricing measures, including tolling, congestion pricing, 

and pay-as-you-drive insurance. 

(7) Intermodal freight system strategies, including enhanced 

rail services, short sea shipping, and other strategies. 

(8) Parking policies. 

(9) Intercity rail service, including high speed rail. 

(10) Travel demand management projects. 

(11) Restriction of the use of certain roads, or lanes, by vehicles other than passenger buses and high-occupancy vehicles. 

(12) Reduction of vehicle idling, including idling associated 

with freight management, construction, transportation, and 

commuter operations. 

(13) Policies to encourage the use of retrofit technologies and 

early replacement of vehicles, engines and equipment to reduce 

transportation-related greenhouse gas emissions from existing 

mobile sources. 

(14) Other projects that the Administrator finds reduce transportation-related greenhouse gas emissions. 

(f) PUBLIC AVAILABILITY.—The Administrator shall publish, including by posting on the Environmental Protection Agency’s 

website— 

(1) the goals and plans submitted under subsection (a); and 

(2) for each plan submitted under subsection (a)(2), an analysis of the anticipated effects of the plan on greenhouse gas 

emissions and oil consumption. 

(g) CERTIFICATION.—The Administrator, in consultation with the 

Secretary, shall certify a State or metropolitan planning organization greenhouse gas reduction plan submitted under subsection 

(a)(2) if the plan’s implementation is likely to meet the corresponding greenhouse gas reduction goal referred to in subsection 

(a)(1). If the Administrator, in consultation with the Secretary, determines that a submitted plan cannot be certified, the State or metropolitan planning organization shall revise and resubmit the plan 

within 1 year. 

(h) ENFORCEMENT.—If the Administrator finds that a State has 

failed to submit goals under subsection (a)(1), has failed to ensure 

the submission of a plan under subsection (a)(2), or has failed to 

submit a revised plan under subsection (g), for any area in the State 

(irrespective of whether the area is a nonattainment area), the Administrator shall impose a prohibition in accordance with section 

179(b)(1) applicable to the area within 2 years of such a finding. 

The Administrator may not impose a prohibition under the preceding sentence, and no action may be brought by the Administrator 

or any other entity alleging a violation of this section, based on the 

content or adequacy of a goal or plan submitted under subsection 

(a)(1) or (a)(2) or failure to achieve the goal submitted under subsection (a)(1). 

(i) COMPETITIVE GRANTS.— (1) GRANTS.—The Administrator, in consultation with the 

Secretary, may award grants to States or metropolitan planning organizations— 


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(A) to support activities related to improving data collection, modeling, and monitoring systems to assess transportation-related greenhouse gas emissions and the effects of 

plans, policies, and strategies referenced in this section; 

(B) for the development of goals and plans to be submitted under sections (a)(1) or (a)(2); and 

(C) to implement plans certified under subsection (g) or 

elements thereof, provided that each project thus funded includes a measurement and evaluation component that 

meets the regulations promulgated under subsection (b). 

(2) PRIORITY.—In making grants under paragraph (1)(C), the 

Administrator shall give priority to applicants based upon— 

(A) the amount of total greenhouse gas emissions to be reduced as a result of implementation of a certified plan, 

within the covered area, as determined by methods established under subsection (b); 

(B) the amount of per capita greenhouse gas emissions to 

be reduced as a result of implementation of a certified plan, 

within the covered area, as determined by methods established under subsection (b); 

(C) the cost effectiveness, in terms of dollars per tons of 

greenhouse gas reductions, to be achieved as a result of the 

implementation of a certified plan; 

(D) the potential for both short- and long-term reductions; and 

(E) such other factors as the Administrator determines 

appropriate. 

(3) AUTHORIZATION OF APPROPRIATIONS.—To carry out this 

subsection, there are authorized to be appropriated such sums 

as may be necessary. 

(j) DEFINITIONS.—In this section: 

(1) The term ‘‘metropolitan planning organization’’ means a 

metropolitan planning organization, as such term is used in 

section 176. 

(2) The term ‘‘scenario analysis’’ means an analysis that is 

conducted by identifying different trends and making projections based on those trends to develop a range of scenarios and 

estimates of how each scenario could improve access to goods 

and services, including access to employment, education, and 

health care (especially for elderly and economically disadvantaged communities), and could affect rates of— 

(A) vehicle miles traveled; 

(B) vehicle hours traveled; 

(C) use of mobile source fuel by type, including electricity; 

and 

(D) transportation-related greenhouse gas emissions. 

(k) LAND USE AUTHORITY.—Nothing in this section may be construed to— 

(1) infringe upon the existing authority of State or local governments to plan or control land use; or 

(2) provide or transfer authority over land use to any other 

entity. 


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PART E—BLACK CARBON 

SEC. 851. BLACK CARBON. 

(a) DOMESTIC BLACK CARBON MITIGATION.—Not later than 18 

months after the date of enactment of this section, the Administrator, taking into consideration the public health and environmental impacts of black carbon emissions, including the effects on 

global and regional warming, the Arctic, and other snow and icecovered surfaces, shall propose regulations under the existing authorities of this Act to reduce emissions of black carbon or propose 

a finding that existing regulations promulgated pursuant to this Act 

adequately regulate black carbon emissions. Not later than two 

years after the date of enactment of this section, the Administrator 

shall promulgate final regulations under the existing authorities of 

this Act or finalize the proposed finding. 

(b) INTERNATIONAL BLACK CARBON MITIGATION.— 

(1) REPORT.—Not later than one year after the date of enactment of this section, the Administrator, in coordination with the 

Secretary of State and other appropriate Federal agencies, shall 

transmit a report to Congress on the amount, type, and direction of all present United States financial, technical, and related assistance to foreign countries to reduce, mitigate, and 

otherwise abate black carbon emissions. 

(2) OTHER OPPORTUNITIES.—The report required under paragraph (1) shall also identify opportunities and recommendations, including action under existing authorities, to achieve 

significant black carbon emission reductions in foreign countries through technical assistance or other approaches to— 

(A) promote sustainable solutions to bring clean, efficient, 

safe, and affordable stoves, fuels, or both stoves and fuels 

to residents of developing countries that are reliant on solid 

fuels such as wood, dung, charcoal, coal, or crop residues 

for home cooking and heating, so as to help reduce the public health, environmental, and economic impacts of black 

carbon emissions from these sources by— 

(i) identifying key regions for large-scale demonstration efforts, and key partners in each such region; and 

(ii) developing for each such region a large-scale implementation strategy with a goal of collectively reaching 20,000,000 homes over 5 years with interventions 

that will— 

(I) increase stove efficiency by over 50 percent (or 

such other goal as determined by the Administrator); 

(II) reduce emissions of black carbon by over 60 

percent (or such other goal as determined by the 

Administrator); and 

(III) reduce the incidence of severe pneumonia in 

children under 5 years old by over 30 percent (or 

such other goal as determined by the Administrator); 

(B) make technological improvements to diesel engines 

and provide greater access to fuels that emit less or no 

black carbon; 


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(C) reduce unnecessary agricultural or other biomass 

burning where feasible alternatives exist; 

(D) reduce unnecessary fossil fuel burning that produces 

black carbon where feasible alternatives exist; 

(E) reduce other sources of black carbon emissions; and 

(F) improve capacity to achieve greater compliance with 

existing laws to address black carbon emissions. 

PART F—MISCELLANEOUS 

SEC. 861. STATE PROGRAMS. 

Notwithstanding section 116, no State or political subdivision 

thereof shall implement or enforce a cap and trade program that 

covers any capped emissions emitted during the years 2012 through 

2017. For purposes of this section, the term ‘‘cap and trade program’’ means a system of greenhouse gas regulation under which a 

State or political subdivision issues a limited number of tradable 

instruments in the nature of emission allowances and requires that 

sources within its jurisdiction surrender such tradeable instruments 

for each unit of greenhouse gases emitted during a compliance period. For purposes of this section, a ‘‘cap-and-trade program’’ does 

not include a target or limit on greenhouse gas emissions adopted 

by a State or political subdivision that is implemented other than 

through the issuance and surrender of a limited number of tradable 

instruments in the nature of emission allowances, nor does it include any other standard, limit, regulation, or program to reduce 

greenhouse gas emissions that is not implemented through the 

issuance and surrender of a limited number of tradeable instruments in the nature of emission allowances. For purposes of this section, the term ‘‘cap and trade program’’ does not include, among 

other things, fleet-wide motor vehicle emission requirements that 

allow greater emissions with increased vehicle production, or requirements that fuels, or other products, meet an average pollution 

emission rate or lifecycle greenhouse gas standard. 

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

The Administrator is authorized to make grants to air pollution 

control agencies pursuant to section 105 for purposes of assisting in 

the implementation of programs to address global warming established under the Safe Climate Act. 

* * * * * * * 

SAFE DRINKING WATER ACT 

TITLE XIV—SAFETY OF PUBLIC WATER SYSTEMS 

* * * * * * * 


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PART C—PROTECTION OF UNDERGROUND SOURCES OF DRINKING

WATER

REGULATIONS FOR STATE PROGRAMS

SEC. 1421. (a) * * * 

* * * * * * * 

(e) CARBON DIOXIDE GEOLOGIC SEQUESTRATION WELLS.— 

(1) IN GENERAL.—Not later than 1 year after the date of enactment of this subsection, the Administrator shall promulgate 

regulations under subsection (a) for carbon dioxide geologic sequestration wells. 

(2) FINANCIAL RESPONSIBILITY.—The regulations referred to 

in paragraph (1) shall include requirements for maintaining 

evidence of financial responsibility, including financial responsibility for emergency and remedial response, well plugging, site 

closure, and post-injection site care. Financial responsibility 

may be established for carbon dioxide geologic sequestration 

wells in accordance with regulations promulgated by the Administrator by any one, or any combination, of the following: 

insurance, guarantee, trust, standby trust, surety bond, letter of 

credit, qualification as a self-insurer, or any other method satisfactory to the Administrator. 

* * * * * * * 

ENERGY INDEPENDENCE AND SECURITY ACT OF 2007 

TITLE I—ENERGY SECURITY THROUGH 

IMPROVED VEHICLE FUEL ECONOMY 

* * * * * * * 

Subtitle B—Improved Vehicle Technology 

* * * * * * * 

SEC. 136. ADVANCED TECHNOLOGY VEHICLES MANUFACTURING INCENTIVE PROGRAM. 

(a) * * * 

* * * * * * * 

(d) DIRECT LOAN PROGRAM.— 

(1) IN GENERAL.—Not later than 1 year after the date of enactment of this Act, and subject to the availability of appropriated funds, the Secretary shall carry out a program to provide a total of not more than ø$25,000,000,000¿ 

$50,000,000,000 in loans to eligible individuals and entities (as 

determined by the Secretary) for the costs of activities described in subsection (b). The loans shall be made through the 

Federal Financing Bank, with the full faith and credit of the 

United States Government on the principal and interest. The 


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full credit subsidy shall be paid by the Secretary using appropriated funds. 

* * * * * * * 

TITLE III—ENERGY SAVINGS THROUGH 

IMPROVED STANDARDS FOR APPLIANCE AND LIGHTING 

Subtitle A—Appliance Energy Efficiency 

* * * * * * * 

SEC. 302. UPDATING APPLIANCE TEST PROCEDURES. 

(a) CONSUMER APPLIANCES.—Section 323(b)(1) of the Energy Policy and Conservation Act (42 U.S.C. 6293(b)(1)) is amended by 

striking ‘‘(1)’’ and all that follows through the øend of the paragraph¿ end of subparagraph (A) and inserting the following: 

‘‘(1) TEST PROCEDURES.— 

‘‘(A) * * * 

(b) INDUSTRIAL EQUIPMENT.—Section 343(a) of the Energy Policy 

and Conservation Act (42 U.S.C. ø6313(a)¿ 6314(a)) is amended by 

striking ‘‘(a)’’ and all that follows through the end of paragraph (1) 

and inserting the following: 

‘‘(a) PRESCRIPTION BY SECRETARY; REQUIREMENTS.— 

‘‘(1) * * * 

* * * * * * * 

øSEC. 313. ELECTRIC MOTOR EFFICIENCY STANDARDS. 

ø(a) DEFINITIONS.—Section 340(13) of the Energy Policy and Conservation Act (42 U.S.C. 6311(13)) is amended— 

ø(1) by redesignating subparagraphs (B) through (H) as subparagraphs (C) through (I), respectively; and 

ø(2) by striking ‘‘(13)(A)’’ and all that follows through the end 

of subparagraph (A) and inserting the following: 

ø‘‘(13) ELECTRIC MOTOR.— 

ø‘‘(A) GENERAL PURPOSE ELECTRIC MOTOR (SUBTYPE I).— 

The term ‘general purpose electric motor (subtype I)’ 

means any motor that meets the definition of ‘General 

Purpose’ as established in the final rule issued by the Department of Energy entitled ‘Energy Efficiency Program 

for Certain Commercial and Industrial Equipment: Test 

Procedures, Labeling, and Certification Requirements for 

Electric Motors’ (10 CFR 431), as in effect on the date of 

enactment of the Energy Independence and Security Act of 

2007. 

ø‘‘(B) GENERAL PURPOSE ELECTRIC MOTOR (SUBTYPE II).— 

The term ‘general purpose electric motor (subtype II)’ 

means motors incorporating the design elements of a general purpose electric motor (subtype I) that are configured 

as 1 of the following: 

ø‘‘(i) A U-Frame Motor. 

ø‘‘(ii) A Design C Motor. 

ø‘‘(iii) A close-coupled pump motor. 


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ø‘‘(iv) A Footless motor. 

ø‘‘(v) A vertical solid shaft normal thrust motor (as 

tested in a horizontal configuration). 

ø‘‘(vi) An 8-pole motor (900 rpm). 

ø‘‘(vii) A poly-phase motor with voltage of not more 

than 600 volts (other than 230 or 460 volts.’’. 

ø(b) STANDARDS.— 

ø(1) AMENDMENTS.—Section 342(b) of the Energy Policy and 

Conservation Act (42 U.S.C. 6313(b)) is amended— 

ø(A) by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively; and 

ø(B) by inserting after paragraph (1) the following: 

ø‘‘(2) ELECTRIC MOTORS.— 

ø‘‘(A) GENERAL PURPOSE ELECTRIC MOTORS (SUBTYPE I).— 

Except as provided in subparagraph (B), each general purpose electric motor (subtype I) with a power rating of 1 

horsepower or greater, but not greater than 200 horsepower, manufactured (alone or as a component of another 

piece of equipment) after the 3-year period beginning on 

the date of enactment of the Energy Independence and Security Act of 2007, shall have a nominal full load efficiency 

that is not less than as defined in NEMA MG–1 (2006) 

Table 12–12. 

ø‘‘(B) FIRE PUMP MOTORS.—Each fire pump motor manufactured (alone or as a component of another piece of 

equipment) after the 3-year period beginning on the date 

of enactment of the Energy Independence and Security Act 

of 2007 shall have nominal full load efficiency that is not 

less than as defined in NEMA MG–1 (2006) Table 12–11. 

ø‘‘(C) GENERAL PURPOSE ELECTRIC MOTORS (SUBTYPE

II).—Each general purpose electric motor (subtype II) with 

a power rating of 1 horsepower or greater, but not greater 

than 200 horsepower, manufactured (alone or as a component of another piece of equipment) after the 3-year period 

beginning on the date of enactment of the Energy Independence and Security Act of 2007, shall have a nominal 

full load efficiency that is not less than as defined in 

NEMA MG–1 (2006) Table 12–11. 

ø‘‘(D) NEMA DESIGN B, GENERAL PURPOSE ELECTRIC MOTORS.—Each NEMA Design B, general purpose electric 

motor with a power rating of more than 200 horsepower, 

but not greater than 500 horsepower, manufactured (alone 

or as a component of another piece of equipment) after the 

3-year period beginning on the date of enactment of the 

Energy Independence and Security Act of 2007, shall have 

a nominal full load efficiency that is not less than as defined in NEMA MG–1 (2006) Table 12–11.’’. 

ø(2) EFFECTIVE DATE.—The amendments made by paragraph 

(1) take effect on the date that is 3 years after the date of enactment of this Act.¿ 

* * * * * * * 


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Subtitle B—Lighting Energy Efficiency 

SEC. 321. EFFICIENT LIGHT BULBS. 

(a) * * * 

* * * * * * * 

(e) PROHIBITED ACTS.—Section 332(a) of the Energy Policy and 

Conservation Act (42 U.S.C. 6302(a)) øis amended¿ (as amended by 

section 306(b)) is amended— 

ø(1) in paragraph (4), by striking ‘‘or’’ at the end; 

ø(2) in paragraph (5), by striking the period at the end and 

inserting ‘‘; or’’; and¿ 

(1) in paragraph (5), by striking ‘‘or’’ after the semicolon at 

the end; 

(2) in paragraph (6), by striking the period at the end and inserting ‘‘; or’’; and 

* * * * * * * 

SEC. 322. INCANDESCENT REFLECTOR LAMP EFFICIENCY STANDARDS. 

(a) * * * 

(b) STANDARDS FOR FLUORESCENT LAMPS AND INCANDESCENT REFLECTOR LAMPS.—Section 325(i) of the Energy Policy and Conservation Act (42 U.S.C. ø6995(i)¿ 6295(i)) is amended by striking 

paragraph (1) and inserting the following: 

‘‘(1) STANDARDS.— 

‘‘(A) * * * 

* * * * * * * 

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

(a) * * * 

(b) CONTENT OF LABEL.—Section 324(c) of the Energy Policy and 

Conservation Act (42 U.S.C. ø6924(c)¿ 6294(c)) is amended by adding at the end the following: 

‘‘(9) DISCRETIONARY APPLICATION.—The Commission may 

apply paragraphs (1), (2), (3), (5), and (6) of this subsection to 

the labeling of any product covered by paragraph (2)(I) or (6) 

of subsection (a).’’. 

TITLE IV—ENERGY SAVINGS IN 

BUILDINGS AND INDUSTRY 

SEC. 401. DEFINITIONS. 

In this title: 

(1) * * * 

(2) ADVISORY COMMITTEE.—The term ‘‘Advisory Committee’’ 

means the Green Building Advisory Committee established 

under section ø484¿ 494. 

* * * * * * * 

(13) HIGH-PERFORMANCE GREEN BUILDING.—The term ‘‘highperformance green building’’ means a high-performance building that, during its life-cycle, as compared with similar buildings (as measured by Commercial Buildings Energy ConsumpVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00605 Fmt 6659 Sfmt 6601 E:\HR\OC\HR137.XXX HR137

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tion Survey or Residential Energy Consumption Survey data 

from the Energy Information øAgency¿ Administration)— 

(A) * * * 

* * * * * * * 

Subtitle C—High-Performance Federal 

Buildings 

* * * * * * * 

SEC. 436. HIGH-PERFORMANCE GREEN FEDERAL BUILDINGS. 

(a) * * * 

* * * * * * * 

(c) DUTIES.—The Federal Director shall— 

(1) * * * 

* * * * * * * 

(3) establish a senior-level Federal Green Building Advisory 

Committee under section ø474¿ 494, which shall provide advice 

and recommendations in accordance with that section and subsection (d); 

* * * * * * * 

SEC. 440. AUTHORIZATION OF APPROPRIATIONS. 

There is authorized to be appropriated to carry out sections 434 

through 439 øand 482¿ $4,000,000 for each of fiscal years 2008 

through 2012, to remain available until expended. 

* * * * * * * 

Subtitle D—Industrial Energy Efficiency 

* * * * * * * 

SEC. 452. ENERGY-INTENSIVE INDUSTRIES PROGRAM. 

(a) * * * 

* * * * * * * 

(e) INSTITUTION OF HIGHER EDUCATION-BASED INDUSTRIAL RESEARCH AND ASSESSMENT CENTERS.—øThe Secretary shall provide 

funding to institution of higher education-based industrial research 

and assessment centers, whose purpose shall be—¿ 

(1) IN GENERAL.—The Secretary shall provide funding to institution of higher education-based industrial research and assessment centers, whose purposes shall be— 

ø(1)¿ (A) to identify opportunities for optimizing energy 

efficiency and environmental performance; 

ø(2)¿ (B) to promote applications of emerging concepts 

and technologies in small- and medium-sized manufacturers; 

ø(3)¿ (C) to promote research and development for the 

use of alternative energy sources to supply heat, power, 

and new feedstocks for energy-intensive industries; 

ø(4)¿ (D) to coordinate with appropriate Federal and 

State research offices, and provide a clearinghouse for inVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00606 Fmt 6659 Sfmt 6601 E:\HR\OC\HR137.XXX HR137

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dustrial process and energy efficiency technical assistance 

resources; and 

ø(5)¿ (E) to coordinate with State-accredited technical 

training centers and community colleges, while ensuring 

appropriate services to all regions of the United States. 

(2) COORDINATION WITH CENTERS FOR ENERGY AND ENVIRON- MENTAL KNOWLEDGE AND OUTREACH.—An industrial research 

and assessment center may serve as a Center for Energy and 

Environmental Knowledge and Outreach established pursuant 

to section 173 of the American Clean Energy and Security Act 

of 2009. 

SEC. 453. ENERGY EFFICIENCY FOR DATA CENTER BUILDINGS. 

(a) * * * 

* * * * * * * 

(c) DATA CENTER EFFICIENCY ORGANIZATION.— 

(1) IN GENERAL.—After the establishment of the program described in subsection (b) but not later than 2 years after the 

date of enactment of this Act, the Secretary and the Administrator shall jointly designate an information technology industry organization to consult with and to coordinate the program. 

* * * * * * * 

TITLE V—ENERGY SAVINGS IN GOVERNMENT AND PUBLIC INSTITUTIONS 

* * * * * * * 

Subtitle E—Energy Efficiency and 

Conservation Block Grants 

SEC. 541. DEFINITIONS. 

In this subtitle: 

(1) * * * 

* * * * * * * 

(3)(A) ELIGIBLE UNIT OF LOCAL GOVERNMENT-ALTERNATIVE

1.—The term ‘‘eligible unit of local government-alternative 1’’ 

means— 

(i) a city with a population— 

(I) * * * 

(II) that causes the city to be 1 of the 10 highestpopulated cities of the State in which the city is located; øand¿ 

(ii) a county with a population— 

(I) * * * 

(II) that causes the county to be 1 of the 10 highestpopulated counties of the State in which the county is 

locatedø.¿; or 

(iii) a group of adjacent, contiguous, or geographically 

proximate units of local government that reach agreement 

to act jointly for purposes of this section and that represent 

a combined population of not less than 35,000. 


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(B) ELIGIBLE UNIT OF LOCAL GOVERNMENT-ALTERNATIVE 2.— The term ‘‘eligible unit of local government-alternative 2’’ 

means— 

(i) a city with a population of at least 50,000; øor¿ 

(ii) a county with a population of at least 200,000ø.¿; or 

(iii) a group of adjacent, contiguous, or geographically 

proximate units of local government that reach agreement 

to act jointly for purposes of this section and that represent 

a combined population of not less than 50,000. 

* * * * * * * 

SEC. 545. REQUIREMENTS FOR ELIGIBLE ENTITIES. 

(a) * * * 

(b) ELIGIBLE UNITS OF LOCAL GOVERNMENT AND INDIAN

TRIBES.— 

(1) * * * 

* * * * * * * 

(3) LIMITATIONS ON USE OF FUNDS.—Of amounts provided to 

an eligible unit of local government or Indian tribe under the 

program, an eligible unit of local government or øIndian tribe 

may use— 

ø(A) for administrative expenses¿ Indian tribe may use 

for administrative expenses, excluding the cost of meeting 

the reporting requirements of this subtitle, an amount 

equal to the greater of— 

ø(i)¿ (A) 10 percent; and 

ø(ii)¿ (B) $75,000ø;¿. ø(B) for the establishment of revolving loan funds, an 

amount equal to the greater of— 

ø(i) 20 percent; and 

ø(ii) $250,000; and 

ø(C) for the provision of subgrants to nongovernmental 

organizations for the purpose of assisting in the implementation of the energy efficiency and conservation strategy of 

the eligible unit of local government or Indian tribe, an 

amount equal to the greater of— 

ø(i) 20 percent; and 

ø(ii) $250,000.¿ 

* * * * * * * 

TITLE XIII—SMART GRID 

* * * * * * * 

SEC. 1302. SMART GRID SYSTEM REPORT. 

The Secretary, acting through the Assistant Secretary of the Office of Electricity Delivery and Energy Reliability (referred to in 

this section as the ‘‘OEDER’’) and through the Smart Grid Task 

Force established in section 1303, shall, after consulting with any 

interested individual or entity as appropriate, no later than 1 year 

after øenactment¿ the date of enactment of this Act, and every 2 

years thereafter, report to Congress concerning the status of smart 

grid deployments nationwide and any regulatory or government 

barriers to continued deployment. The report shall provide the curVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00608 Fmt 6659 Sfmt 6601 E:\HR\OC\HR137.XXX HR137

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rent status and prospects of smart grid development, including information on technology penetration, communications network capabilities, costs, and obstacles. It may include recommendations for 

State and Federal policies or actions helpful to facilitate the transition to a smart grid. To the extent appropriate, it should take a regional perspective. In preparing this report, the Secretary shall solicit advice and contributions from the Smart Grid Advisory Committee created in section 1303; from other involved Federal agencies including but not limited to the Federal Energy Regulatory 

Commission (‘‘Commission’’), the National Institute of Standards 

and Technology (‘‘Institute’’), and the Department of Homeland Security; and from other stakeholder groups not already represented 

on the Smart Grid Advisory Committee. 

* * * * * * * 

SEC. 1306. FEDERAL MATCHING FUND FOR SMART GRID INVESTMENT 

COSTS. 

(a) * * * 

* * * * * * * 

(c) INVESTMENTS NOT INCLUDED.—Qualifying Smart Grid investments do not include any of the following: 

(1) * * * 

* * * * * * * 

(3) After the final date for State consideration of the Smart 

Grid Information Standard under øsection 1307 (paragraph 

(17) of section 111(d) of the Public Utility Regulatory Policies 

Act of 1978)¿ paragraph (19) of section 111(d) of the Public 

Utility Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)), an 

investment that is not in compliance with such standard. 

* * * * * * * 

TITLE 49, UNITED STATES CODE 

* * * * * * * 

SUBTITLE VI—MOTOR VEHICLE AND DRIVER 

PROGRAMS 

* * * * * * * 

PART C—INFORMATION, STANDARDS, AND 

REQUIREMENTS 

* * * * * * * 

CHAPTER 329—AUTOMOBILE FUEL ECONOMY 

Sec. 

32901. Definitions. 

* * * * * * * 

32920. Open fuel standard for transportation. 

* * * * * * * 


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§ 32920. Open fuel standard for transportation 

(a) DEFINITIONS.—In this section: 

(1) E85.—The term ‘‘E85’’ means a fuel mixture containing 85 

percent ethanol and 15 percent gasoline by volume. 

(2) FLEXIBLE FUEL AUTOMOBILE.—The term ‘‘flexible fuel 

automobile’’ means an automobile that has been warranted by 

its manufacturer to operate on gasoline, E85, and M85. 

(3) FUEL CHOICE-ENABLING AUTOMOBILE.—The term ‘‘fuel 

choice-enabling automobile’’ means— 

(A) a flexible fuel automobile; or 

(B) an automobile that has been warranted by its manufacturer to operate on biodiesel. 

(4) LIGHT-DUTY AUTOMOBILE.—The term ‘‘light-duty automobile’’ means— 

(A) a passenger automobile; or 

(B) a non-passenger automobile. 

(5) LIGHT-DUTY AUTOMOBILE MANUFACTURER’S ANNUAL COV- ERED INVENTORY.—The term ‘‘light-duty automobile manufacturer’s annual covered inventory’’ means the number of lightduty automobiles powered by an internal combustion engine 

that a manufacturer, during a given calendar year, manufactures in the United States or imports from outside of the United 

States for sale in the United States. 

(6) M85.—The term ‘‘M85’’ means a fuel mixture containing 

85 percent methanol and 15 percent gasoline by volume. 

(b) OPEN FUEL STANDARD FOR TRANSPORTATION.— (1) IN GENERAL.—The Secretary may promulgate regulations 

to require each light-duty automobile manufacturer’s annual 

covered inventory to be comprised of a minimum percentage of 

fuel-choice enabling automobiles, with sufficient lead time, if 

the Secretary, in coordination with the Secretary of Energy and 

the Administrator of the Environmental Protection Agency, determines such requirement is a cost-effective way to achieve the 

Nation’s energy independence and environmental objectives. 

The cost-effective determination shall consider the future availability of both alternative fuel supply and infrastructure to deliver the alternative fuel to the fuel-choice enabling vehicles. 

(2) TEMPORARY EXEMPTION FROM REQUIREMENTS.— (A) APPLICATION.—A manufacturer may request an exemption from the requirement described in paragraph (1) 

by submitting an application to the Secretary, at such time, 

in such manner, and containing such information as the 

Secretary may require by regulation. Each such application 

shall specify the models, lines, and types of automobiles affected. 

(B) EVALUATION.—After evaluating an application received from a manufacturer, the Secretary may at any time, 

under such terms and conditions, and to such extent as the 

Secretary considers appropriate, temporarily exempt, or 

renew the exemption of, a light-duty automobile from the 

requirement described in paragraph (1) if the Secretary determines that unavoidable events not under the control of 

the manufacturer prevent the manufacturer of such automobile from meeting its required production volume of fuel 

choice-enabling automobiles, including— 


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(i) a disruption in the supply of any component required for compliance with the regulations; 

(ii) a disruption in the use and installation by the 

manufacturer of such component; or 

(iii) application to plug-in electric drive vehicles 

causing such vehicles to fail to meet State air quality 

requirements. 

(C) CONSOLIDATION.—The Secretary may consolidate applications received from multiple manufacturers under subparagraph (A) if they are of a similar nature. 

(D) CONDITIONS.—Any exemption granted under subparagraph (B) shall be conditioned upon the manufacturer’s commitment to recall the exempted automobiles for installation of the omitted components within a reasonable 

time proposed by the manufacturer and approved by the 

Secretary after such components become available in sufficient quantities to satisfy both anticipated production and 

recall volume requirements. 

(E) NOTICE.—The Secretary shall publish in the Federal 

Register— 

(i) notice of each application received from a manufacturer; 

(ii) notice of each decision to grant or deny a temporary exemption; and 

(iii) the reasons for granting or denying such exemptions. 

* * * * * * * 

ENERGY POLICY ACT OF 2005 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

(a) * * * 

* * * * * * * 

(b) TABLE OF CONTENTS.—The table of contents for this Act is as 

follows: 

* * * * * * * 

TITLE I—ENERGY EFFICIENCY 

* * * * * * * 

Subtitle B—Energy Assistance and State Programs 

* * * * * * * 

øSec. 124. Energy efficient appliance rebate programs.¿ 

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

* * * * * * * 

Subtitle C—Energy Efficient Products 

* * * * * * * 

øSec. 134. Energy efficiency public information initiative.¿ 

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

* * * * * * * 


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TITLE I—ENERGY EFFICIENCY 

* * * * * * * 

Subtitle B—Energy Assistance and State 

Programs 

* * * * * * * 

SEC. 124. øENERGY EFFICIENT APPLIANCE REBATE PROGRAMS.¿ ENERGY EFFICIENT AND SMART APPLIANCE REBATE PROGRAM. 

(a) DEFINITIONS.—In this section: 

(1) * * * 

* * * * * * * 

(4) SMART APPLIANCE.—The term ‘‘smart appliance’’ means a 

product that the Administrator of the Environmental Protection 

Agency or the Secretary of Energy has determined qualifies for 

such a designation in the Energy Star program pursuant to section 142 of the American Clean Energy and Security Act of 

2009, or that the Secretary or the Administrator has separately 

determined includes the relevant Smart Grid capabilities listed 

in section 1301 of the Energy Independence and Security Act of 

2007 (15 U.S.C. 17381). 

ø(4)¿ (5) STATE ENERGY OFFICE.—The term ‘‘State energy office’’ means the State agency responsible for developing State 

energy conservation plans under section 362 of the Energy Policy and Conservation Act (42 U.S.C. 6322). 

ø(5)¿ (6) STATE PROGRAM.—The term ‘‘State program’’ means 

a State energy efficient appliance rebate program described in 

subsection (b)(1). 

(b) ELIGIBLE STATES.—A State shall be eligible to receive an allocation under subsection (c) if the State— 

(1) establishes (or has established) a State energy efficient 

and smart appliance rebate program to provide rebates to residential consumers for the purchase of residential Energy Star 

products, including products designated as being smart appliances, or products with improved energy efficiency in cold climates, to replace used appliances of the same type; 

* * * * * * * 

(3) provides assurances satisfactory to the Secretary that the 

State will use the allocation to supplement, but not supplant, 

funds made available to carry out the administration of the 

State program. 

* * * * * * * 

(d) USE OF ALLOCATED FUNDS.—The allocation to a State energy 

office under subsection (c) may be used to pay up to 50 percent of 

the cost of establishing and carrying out the administration of a 

State program, and up to 100 percent of the value of the rebates 

provided pursuant to this section. 

(e) ISSUANCE OF REBATES.—Rebates may be provided to residential consumers that meet the requirements of the State program. 


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The amount of a rebate shall be determined by the State energy 

office, taking into consideration— 

(1) * * * 

* * * * * * * 

(3) the difference between the cost of the residential Energy 

Star product, with separate consideration as applicable if the 

product is also a smart appliance, or product with improved 

energy efficiency in a cold climate and the cost of an appliance 

that is not a residential Energy Star product or product with 

improved energy efficiency in a cold climate, but is of the same 

type as, and is the nearest capacity, performance, and other 

relevant characteristics (as determined by the State energy office) to, the residential Energy Star product or product with 

improved energy efficiency in a cold climate or smart appliance. 

(f) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 

be appropriated to the Secretary to carry out this section 

ø$50,000,000 for each of the fiscal years 2006 through 2010.¿ 

$100,000,000 for each fiscal year from 2010 through 2015. 

* * * * * * * 

Subtitle C—Energy Efficient Products 

* * * * * * * 

SEC. 134. øENERGY EFFICIENCY PUBLIC INFORMATION INITIATIVE.¿ 

ENERGY EFFICIENCY AND SMART GRID PUBLIC INFORMATION INITIATIVE. 

(a) IN GENERAL.—The Secretary shall carry out a comprehensive 

national program, including advertising and media awareness, to 

inform consumers about— 

(1) the need to øreduce energy consumption during the 4- 

year period beginning on the date of enactment of this Act¿ increase energy efficiency and to adopt Smart Grid technology 

and practices; 

(2) the øbenefits to consumers of reducing¿ economic and environmental benefits to consumers and the United States of optimizing consumption of electricity, natural gas, and petroleum, particularly during peak use periods; 

(3) the effect of energy efficiency and Smart Grid capability 

in reducing energy and electricity prices throughout the economy, together with the importance of low energy costs to economic growth and preserving manufacturing jobs in the United 

States; and 

(4) practical, cost-effective measures that consumers can take 

to reduce consumption of electricity, natural gas, and gasoline, 

including— 

(A) * * * 

* * * * * * * 

(C) purchasing energy efficient products; øand¿ 

(D) purchasing and utilizing equipment that includes 

Smart Grid features and capability; and 


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ø(D)¿ (E) proper tire maintenance. 

* * * * * * * 

(c) REPORT.—øNot later than July 1, 2009,¿ For each year when 

appropriations pursuant to the authorization in this section exceed 

$10,000,000, the Secretary shall submit to Congress a report describing the effectiveness of the program under this section. 

(d) TERMINATION OF AUTHORITY.—The program carried out under 

this section shall terminate on December 31, ø2010¿ 2020. (e) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 

be appropriated to carry out this section $90,000,000 for each of fiscal years 2006 through ø2010¿ 2020. 

* * * * * * * 

TITLE II—RENEWABLE ENERGY 

Subtitle A—General Provisions 

* * * * * * * 

SEC. 203. FEDERAL PURCHASE REQUIREMENT. 

(a) REQUIREMENT.—The President, acting through the Secretary, 

shall seek to ensure that, to the extent economically feasible and 

technically practicable, of the total amount of øelectric¿ energy the 

Federal Government consumes during any fiscal year, the following 

amounts shall be renewable energy: 

(1) * * * 

* * * * * * * 

(b) DEFINITIONS.—In this section: 

(1) * * * 

(2) RENEWABLE ENERGY.—The term ‘‘renewable energy’’ 

means electric or thermal energy generated from solar, wind, 

biomass, landfill gas, ocean (including tidal, wave, current, and 

thermal), geothermal, municipal solid waste, or new hydroelectric generation capacity achieved from increased efficiency 

or additions of new capacity at an existing hydroelectric 

project. 

ø(c) CALCULATION.—For purposes of determining compliance with 

the requirement of this section, the amount of renewable energy 

shall be doubled if— 

ø(1) the renewable energy is produced and used on-site at a 

Federal facility; 

ø(2) the renewable energy is produced on Federal lands and 

used at a Federal facility; or 

ø(3) the renewable energy is produced on Indian land as defined in title XXVI of the Energy Policy Act of 1992 (25 U.S.C. 

3501 et seq.) and used at a Federal facility.¿ 

(c) CALCULATION.—Renewable energy produced at a Federal facility, on Federal lands, or on Indian lands (as defined in title XXVI 

of the Energy Policy Act of 1992 (25 U.S.C. 3501 et seq.)) shall be 

calculated separately from renewable energy consumed at a Federal 

facility, and each may be used to comply with the consumption requirement under subsection (a). 

* * * * * * * 


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TITLE VII—VEHICLES AND FUELS 

* * * * * * * 

Subtitle G—Diesel Emissions Reduction 

SEC. 791. DEFINITIONS. 

In this subtitle: 

(1) * * * 

* * * * * * * 

(3) ELIGIBLE ENTITY.—The term ‘‘eligible entity’’ means— 

(A) * * * 

(B) a nonprofit organization or institution in any State 

that— 

(i) * * * 

* * * * * * * 

(9) DEFINITION OF STATE.—øThe term ‘‘State’’ includes the 

District of Columbia.¿ The term ‘‘State’’ includes the District of 

Columbia, American Samoa, Guam, the Commonwealth of the 

Northern Mariana Islands, Puerto Rico, and the Virgin Islands. 

* * * * * * * 

SEC. 793. STATE GRANT AND LOAN PROGRAMS. 

(a) * * * 

* * * * * * * 

(c) ALLOCATION OF FUNDS.— 

(1) * * * 

(2) ALLOCATION.—Using not more than 20 percent of the 

funds made available to carry out this subtitle for a fiscal year, 

the Administrator shall provide to each State described in 

paragraph (1) for the fiscal year an allocation of funds that is 

equal to— 

(A) if each of the ø51 States¿ 56 States qualifies for an 

allocation, an amount equal to ø1.96 percent¿ 1.785 percent of the funds made available to carry out this section; 

or 

(B) if fewer than ø51 States¿ 56 States qualifies for an 

allocation, an amount equal to the amount described in 

subparagraph (A), plus an additional amount equal to the 

product obtained by multiplying— 

(i) * * * 

ø(ii) the amount of funds remaining after each State 

described in paragraph (1) receives the 2-percent allocation under this paragraph.¿ 

(ii) the amount of funds remaining after each State 

described in paragraph (1) receives the 1.785-percent 

allocation under this paragraph. 

* * * * * * * 


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TITLE XVII—INCENTIVES FOR 

INNOVATIVE TECHNOLOGIES 

SEC. 1701. DEFINITIONS. 

In this title: 

(1) * * * 

* * * * * * * 

(6) RENEWABLE FUEL.—The term ‘‘renewable fuel’’ has the 

meaning given the term in section 211(o)(1) of the Clean Air Act 

(42 U.S.C. 7545(o)(1)), except that the term shall include all 

ethanol and biodiesel. 

(7) RENEWABLE FUEL PIPELINE.—The term ‘‘renewable fuel 

pipeline’’ means a common carrier pipeline for transporting renewable fuel. 

(8) CONDITIONAL COMMITMENT.—The term ‘‘conditional commitment’’ means a final term sheet negotiated between the Secretary and a project sponsor or sponsors, which term sheet shall 

be binding on both parties and become a final loan guarantee 

agreement if all conditions precedent established in the term 

sheet, which shall include the acquisition of all necessary permits and licenses, are satisfied. 

SEC. 1702. TERMS AND CONDITIONS. 

(a) * * * 

ø(b) SPECIFIC APPROPRIATION OR CONTRIBUTION.—No guarantee 

shall be made unless— 

ø(1) an appropriation for the cost has been made; or 

ø(2) the Secretary has received from the borrower a payment 

in full for the cost of the obligation and deposited the payment 

into the Treasury.¿ 

(b) SPECIFIC APPROPRIATION OR CONTRIBUTION.— (1) IN GENERAL.—No guarantee shall be made unless— 

(A) an appropriation for the cost has been made; 

(B) the Secretary has received from the borrower a payment in full for the cost of the obligation and deposited the 

payment into the Treasury; or 

(C) a combination of appropriations or payments from 

the borrower has been made sufficient to cover the cost of 

the obligation. 

(2) LIMITATION.—The source of payments received from a borrower under paragraph (1)(B) shall not be a loan or other debt 

obligation that is made or guaranteed by the Federal Government. 

* * * * * * * 

(h) FEES.— 

(1) * * * 

ø(2) AVAILABILITY.—Fees collected under this subsection 

shall— 

ø(A) be deposited by the Secretary into the Treasury; 

and 

ø(B) remain available until expended, subject to such 

other conditions as are contained in annual appropriations 

Acts.¿ 


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(2) AVAILABILITY.—Fees collected under this subsection 

shall— 

(A) be deposited by the Secretary into a special fund in 

the Treasury to be known as the ‘‘Incentives For Innovative 

Technologies Fund’’; and 

(B) remain available to the Secretary for expenditure, 

without further appropriation or fiscal year limitation, for 

administrative expenses incurred in carrying out this title. 

* * * * * * * 

(k) WAGE RATE REQUIREMENTS.—No loan guarantee shall be 

made under this title unless the borrower has provided to the Secretary reasonable assurances that all laborers and mechanics employed by contractors and subcontractors in the performance of construction work financed in whole or in part by the guaranteed loan 

will be paid wages at rates not less than those prevailing on projects 

of a character similar to the contract work in the civil subdivision 

of the State in which the contract work is to be performed as determined by the Secretary of Labor in accordance with subchapter IV 

of chapter 31 of part A of subtitle II of title 40, United States Code. 

With respect to the labor standards specified in this subsection, the 

Secretary of Labor shall have the authority and functions set forth 

in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 

U.S.C. App.) and section 3145 of title 40, United States Code. 

SEC. 1703. ELIGIBLE PROJECTS. 

(a) * * * 

(b) CATEGORIES.—Projects from the following categories shall be 

eligible for a guarantee under this section: 

(1) * * * 

* * * * * * * 

(11) Renewable fuel pipelines. 

(12) The development, construction, acquisition, retrofitting, 

or engineering integration of a qualified advanced electric 

transmission manufacturing plant or the construction of a 

qualified advanced electric transmission property (whether by 

construction of new facilities or the modification of existing facilities). For purposes of this paragraph, the terms ‘‘qualified 

advanced electric transmission property’’ and ‘‘qualified advanced electric transmission manufacturing plant’’ have the 

meanings provided by section 1705(a)(5). 

* * * * * * * 

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

PROJECTS. 

(a) IN GENERAL.—Notwithstanding section 1703, the Secretary 

may make guarantees under this section only for the following categories of projects that commence construction not later than September 30, 2011: 

(1) * * * 

* * * * * * * 

(5) The development, construction, acquisition, retrofitting, or 

engineering integration of a qualified advanced electric transmission manufacturing plant or the construction of a qualified 

high efficiency transmission property or a qualified advanced 


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electric transmission property (whether by construction of new 

facilities or the modification of existing facilities). For purposes 

of this paragraph: 

(A) The term ‘‘qualified advanced electric transmission 

property’’ means any high voltage electric transmission 

cable, related substation, converter station, or other integrated facility that— 

(i) utilizes advanced ultra low resistance superconductive material or other advanced technology that 

has been determined by the Secretary of Energy as— 

(I) reasonably likely to become commercially viable within 10 years after the date of enactment of 

this paragraph; 

(II) capable of reliably transmitting at least 5 

gigawatts of high-voltage electric energy for distances greater than 300 miles with energy losses 

not exceeding 3 percent of the total power transported; and 

(III) not creating an electromagnetic field; 

(ii) has been determined by an appropriate energy 

regulatory body, upon application, to be in the public 

interest and thereby eligible for inclusion in regulated 

rates; and 

(iii) can be located safely and economically in a permanent underground right of way not to exceed 25 feet 

in width. 

The term ‘‘qualified advanced electric transmission property’’ shall not include any property placed in service after 

December 31, 2016. 

(B)(i) The term ‘‘qualified high efficiency transmission 

property’’ means any high voltage overhead electric transmission line, related substation, or other integrated facility 

that— 

(I) utilizes advanced conductor core technology 

that— 

(aa) has been determined by the Secretary of Energy as reasonably likely to become commercially 

viable within 10 years after the date of enactment 

of this paragraph; 

(bb) is suitable for use on transmission lines up 

to 765kV; and 

(cc) exhibits power losses at least 30 percent 

lower than that of transmission lines using conventional ‘‘ACSR’’ conductors; 

(II) has been determined by an appropriate energy 

regulatory body, upon application, to be in the public 

interest and thereby eligible for inclusion in regulated 

rates; and 

(III) can be located safely and economically in a 

right of way not to exceed that used by conventional 

‘‘ACSR’’ conductors; and 

(ii) The term ‘‘qualified high efficiency transmission property’’ shall not include any property placed in service after 

December 31, 2016. 


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(C) The term ‘‘qualified advanced electric transmission 

manufacturing plant’’ means any industrial facility located 

in the United States which can be equipped, re-equipped, 

expanded, or established to produce in whole or in part 

qualified advanced electric transmission property. 

* * * * * * * 

ENERGY POLICY AND CONSERVATION ACT 

Be it enacted by the Senate and House of Representatives of the 

United States of America in Congress assembled, That this Act may 

be cited as the ‘‘Energy Policy and Conservation Act’’. 

TABLE OF CONTENTS 

* * * * * * * 

TITLE III—IMPROVING ENERGY EFFICIENCY 

* * * * * * * 

PART C—CERTAIN INDUSTRIAL EQUIPMENT

* * * * * * * 

øSec. 334. Injunctive enforcement.¿ 

Sec. 334. Jurisdiction and venue. 

* * * * * * * 

Sec. 347. Motor efficiency rebate program. 

* * * * * * * 

TITLE III—IMPROVING ENERGY EFFICIENCY 

* * * * * * * 

PART B—ENERGY CONSERVATION PROGRAM FOR CONSUMER

PRODUCTS OTHER THAN AUTOMOBILES

DEFINITIONS

SEC. 321. For purposes of this part: 

(1) * * * 

* * * * * * * 

ø(6) The term ‘‘energy conservation standard’’ means— 

ø(A) a performance standard which prescribes a minimum level of energy efficiency or a maximum quantity of 

energy use, or, in the case of showerheads, faucets, water 

closets, and urinals, water use, for a covered product, determined in accordance with test procedures prescribed 

under section 323; or 

ø(B) a design requirement for the products specified in 

paragraphs (6), (7), (8), (10), (15), (16), (17), and (19) of section 322(a); and 

includes any other requirements which the Secretary may prescribe under section 325(r).¿ 

(6) ENERGY CONSERVATION STANDARD.— 

(A) IN GENERAL.—The term ‘‘energy conservation standard’’ means 1 or more performance standards that— 

(i) for covered products (excluding clothes washers, 

dishwashers, showerheads, faucets, water closets, and 


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urinals), prescribe a minimum level of energy efficiency 

or a maximum quantity of energy use, determined in 

accordance with test procedures prescribed under section 323; 

(ii) for showerheads, faucets, water closets, and urinals, prescribe a minimum level of water efficiency or 

a maximum quantity of water use, determined in accordance with test procedures prescribed under section 

323; and 

(iii) for clothes washers and dishwashers— 

(I) prescribe a minimum level of energy efficiency 

or a maximum quantity of energy use, determined 

in accordance with test procedures prescribed 

under section 323; and 

(II) may include a minimum level of water efficiency or a maximum quantity of water use, determined in accordance with those test procedures. 

(B) INCLUSIONS.—The term ‘‘energy conservation standard’’ includes— 

(i) 1 or more design requirements, if the requirements 

were established— 

(I) on or before the date of enactment of this subclause; 

(II) as part of a direct final rule under section 

325(p)(4); or 

(III) as part of a final rule published on or after 

January 1, 2012, and 

(ii) any other requirements that the Secretary may 

prescribe under section 325(r). 

(C) EXCLUSION.—The term ‘‘energy conservation standard’’ does not include a performance standard for a component of a finished covered product, unless regulation of the 

component is specifically authorized or established pursuant to this title. 

* * * * * * * 

(30)(A) * * * 

* * * * * * * 

(C) Except as provided in subparagraph (E), the term ‘‘incandescent lamp’’ means a lamp in which light is produced by a 

filament heated to incandescence by an electric current, including only the following: 

(i) * * * 

(ii) Any lamp (commonly referred to as a reflector lamp) 

which is not colored or designed for rough or vibration 

service applications, that contains an inner reflective coating on the outer bulb to direct the light, an R, PAR, ER, 

BR, BPAR, or similar bulb shapes with E26 medium screw 

bases, a rated voltage or voltage range that lies at least 

partially within 115 and 130 volts, a diameter which exceeds 2.25 inches, and has a rated wattage that is 40 watts 

or higher. 

* * * * * * * 

(D) GENERAL SERVICE INCANDESCENT LAMP.— 


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(i) IN GENERAL.—The term ‘‘general service incandescent 

lamp’’ means a standard incandescent or halogen type 

lamp that— 

(I) * * * 

* * * * * * * 

(III) has a lumen range of not less than 310 lumens 

and not more than 2,600 lumens or, in the case of a 

modified spectrum lamp, not less than 232 lumens and 

not more than 1,950 lumens; and 

* * * * * * * 

(T) APPLIANCE LAMP.—The term ‘‘appliance lamp’’ means any 

lamp that— 

(i) is specifically designed to operate in a household 

applianceø,¿ and has a maximum wattage of 40 watts, 

øand is sold at retail,¿ including an oven lamp, refrigerator lamp, and vacuum cleaner lamp; and 

(ii) when sold at retail, is designated and marketed for 

the intended application, with— 

(I) * * * 

* * * * * * * 

(67) ART WORK LIGHT FIXTURE.—The term ‘‘art work light fixture’’ means a light fixture designed only to be mounted directly 

to an art work and for the purpose of illuminating that art 

work. 

(68) LED LIGHT ENGINE.—The term ‘‘LED light engine’’ or 

‘‘LED light engine with integral heat sink’’ means a subsystem 

of an LED light fixture that— 

(A) includes 1 or more LED components, including— 

(i) an LED driver power source with electrical and 

mechanical interfaces; and 

(ii) an integral heat sink to provide thermal dissipation; and 

(B) may be designed to accept additional components that 

provide aesthetic, optical, and environmental control. 

(69) LED LIGHT FIXTURE.—The term ‘‘LED light fixture’’ 

means a complete lighting unit consisting of— 

(A) an LED light source with 1 or more LED lamps or 

LED light engines; and 

(B) parts— 

(i) to distribute the light; 

(ii) to position and protect the light source; and 

(iii) to connect the light source to electrical power. 

(70) LIGHT FIXTURE.—The term ‘‘light fixture’’ means a product designed to provide light that includes— 

(A) at least 1 lamp socket; and 

(B) parts— 

(i) to distribute the light; 

(ii) position and protect 1 or more lamps; and 

(iii) to connect 1 or more lamps to a power supply. 

(71) PORTABLE LIGHT FIXTURE.— 

(A) IN GENERAL.—The term ‘‘portable light fixture’’ means 

a light fixture that has a flexible cord and an attachment 

plug for connection to a nominal 120-volt circuit that— 


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(i) allows the user to relocate the product without 

any rewiring; and 

(ii) typically can be controlled with a switch located 

on the product or the power cord of the product. 

(B) EXCLUSIONS.—The term ‘‘portable light fixture’’ does 

not include— 

(i) direct plug-in night lights, sun or heat lamps, 

medical or dental lights, portable electric hand lamps, 

signs or commercial advertising displays, photographic 

lamps, germicidal lamps, or light fixtures for marine 

use or for use in hazardous locations (as those terms 

are defined in ANSI/NFPA 70 of the National Electrical Code); or 

(ii) decorative lighting strings, decorative lighting 

outfits, or electric candles or candelabra without lamp 

shades that are covered by Underwriter Laboratories 

(UL) standard 588, ‘‘Seasonal and Holiday Decorative 

Products’’. 

(72) GU–24.—The term ‘‘GU–24’’ means the designation of a 

lamp socket, based on a coding system by the International 

Electrotechnical Commission, under which— 

(A) ‘‘G’’ indicates a holder and socket type with 2 or more 

projecting contacts, such as pins or posts; 

(B) ‘‘U’’ distinguishes between lamp and holder designs of 

similar type that are not interchangeable due to electrical 

or mechanical requirements; and 

(C) 24 indicates the distance in millimeters between the 

electrical contact posts. 

(73) GU-24 ADAPTOR.— (A) IN GENERAL.—The term ‘‘GU-24 Adaptor’’ means a 1- 

piece device, pig-tail, wiring harness, or other such socket 

or base attachment that— 

(i) connects to a GU-24 socket on 1 end and provides 

a different type of socket or connection on the other 

end; and 

(ii) does not alter the voltage. 

(B) EXCLUSION.—The term ‘‘GU-24 Adaptor’’ does not include a fluorescent ballast with a GU–24 base. 

(74) GU–24 BASE LAMP.—‘‘GU–24 base lamp’’ means a light 

bulb designed to fit in a GU–24 socket. 

(75) The term ‘‘water dispenser’’ means a factory-made assembly that mechanically cools and heats potable water and that 

dispenses the cooled or heated water by integral or remote 

means. 

(76) The term ‘‘bottle-type water dispenser’’ means a drinking 

water dispenser designed for dispensing both hot and cold 

water that uses a removable bottle or container as the source of 

potable water. 

(77) The term ‘‘commercial hot food holding cabinet’’ means 

a heated, fully-enclosed compartment with one or more solid or 

glass doors that is designed to maintain the temperature of hot 

food that has been cooked in a separate appliance. Such term 

does not include heated glass merchandizing cabinets, drawer 

warmers, commercial hot food holding cabinets with interior 

volumes of less than 8 cubic feet, or cook-and-hold appliances. 


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(78) The term ‘‘portable electric spa’’ means a factory-built 

electric spa or hot tub, supplied with equipment for heating and 

circulating water. 

COVERAGE

SEC. 322. (a) IN GENERAL.—The following consumer products, excluding those consumer products designed solely for use in recreational vehicles and other mobile equipment, are covered products: 

(1) * * * 

* * * * * * * 

(20) Portable light fixtures. 

(21) Bottle type water dispensers. 

(22) Commercial hot food holding cabinets. 

(23) Portable electric spas. 

ø(20)¿ (24) Any other type of consumer product which the 

Secretary classifies as a covered product under subsection (b). 

* * * * * * * 

TEST PROCEDURES

SEC. 323. (a) * * * 

(b) AMENDED AND NEW PROCEDURES.— 

(1) * * * 

* * * * * * * 

(19) LED FIXTURES AND LED LIGHT ENGINES.—Test procedures 

for LED fixtures and LED light engines shall be based on Illuminating Engineering Society of North America (IESNA) test 

procedure LM–79, Approved Method for Electrical and Photometric Testing of Solid-State Lighting Devices, and IESNA-approved test procedure for testing LED light engines. 

(20) BOTTLE TYPE WATER DISPENSERS.—Test procedures for 

bottle type water dispensers shall be based on ‘‘Energy Star Program Requirements for Bottled Water Coolers version 1.1’’ published by the Environmental Protection Agency. Units with an 

integral, automatic timer shall not be tested using section 4D, 

‘‘Timer Usage,’’ of the test criteria. 

(21) COMMERCIAL HOT FOOD HOLDING CABINETS.—Test procedures for commercial hot food holding cabinets shall be based 

on the test procedures described in ANSI/ASTM F2140–01 

(Test for idle energy rate-dry test). Interior volume shall be 

based on the method shown in the Environmental Protection 

Agency’s ‘‘Energy Star Program Requirements for Commercial 

Hot Food Holding Cabinets’’ as in effect on August 15, 2003. 

(22) PORTABLE ELECTRIC SPAS.—Test procedures for portable 

electric spas shall be based on the test method for portable electric spas contained in section 1604, title 20, California Code of 

Regulations as amended on December 3, 2008. When the American National Standards Institute publishes a test procedure for 

portable electric spas, the Secretary shall revise the Department 

of Energy’s procedure. 

(23) CONSENSUS AND ALTERNATE TEST PROCEDURES.— 

(A) RECEIPT OF JOINT RECOMMENDATION OR ALTERNATE

TESTING PROCEDURE.—On receipt of— 


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(i) a statement that is submitted jointly by interested 

persons that are fairly representative of relevant points 

of view (including representatives of manufacturers of 

covered products, States, and efficiency advocates), as 

determined by the Secretary, and contains recommendations with respect to the testing procedure for 

a covered product; or 

(ii) a submission of a testing procedure currently in 

use for a covered product by a State, nation, or group 

of nations— 

(I) if the Secretary determines that the recommended testing procedure contained in the 

statement or submission is in accordance with subsection (b)(3), the Secretary may issue a final rule 

that establishes an energy or water conservation 

testing procedure that is published simultaneously 

with a notice of proposed rulemaking that proposes 

a new or amended energy or water conservation 

testing procedure that is identical to the testing 

procedure established in the final rule to establish 

the recommended testing procedure (referred to in 

this paragraph as a ‘‘direct final rule’’); or 

(II) if the Secretary determines that a direct final 

rule cannot be issued based on the statement or 

submission, the Secretary shall publish a notice of 

the determination, together with an explanation of 

the reasons for the determination. 

(B) PUBLIC COMMENT.—The Secretary shall solicit public 

comment for a period of at least 110 days with respect to 

each direct final rule issued by the Secretary under subparagraph (A)(ii)(I). 

(C) WITHDRAWAL OF DIRECT FINAL RULES.— 

(i) IN GENERAL.—Not later than 120 days after the 

date on which a direct final rule issued under subparagraph (A)(ii)(I) is published in the Federal Register, the 

Secretary shall withdraw the direct final rule if— 

(I) the Secretary receives 1 or more adverse public comments relating to the direct final rule under 

subparagraph (B)or any alternative joint recommendation; and 

(II) based on the rulemaking record relating to 

the direct final rule, the Secretary determines that 

such adverse public comments or alternative joint 

recommendation may provide a reasonable basis 

for withdrawing the direct final rule under paragraph (3) or any other applicable law. 

(ii) ACTION ON WITHDRAWAL.—On withdrawal of a 

direct final rule under clause (i), the Secretary shall— 

(I) proceed with the notice of proposed rulemaking published simultaneously with the direct 

final rule as described in subparagraph (A)(ii)(I); 

and 

(II) publish in the Federal Register the reasons 

why the direct final rule was withdrawn. 


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(iii) TREATMENT OF WITHDRAWN DIRECT FINAL

RULES.—A direct final rule that is withdrawn under 

clause (i) shall not be considered to be a final rule for 

purposes of subsection (b). 

(D) EFFECT OF PARAGRAPH.—Nothing in this paragraph 

authorizes the Secretary to issue a direct final rule based 

solely on receipt of more than 1 statement containing recommended test procedures relating to the direct final rule. 

(24) TELEVISIONS.—(A) On the date of enactment of this paragraph, Appendix H to Subpart B of Part 430 of the United 

States Code of Federal Regulations, ‘‘Uniform Test Method for 

Measuring the Energy Consumption of Television Sets’’, is repealed. 

(B) No later than 12 months after the date of enactment of 

this paragraph the Secretary shall publish in the Federal Register a final rule prescribing a new test method for televisions. 

* * * * * * * 

LABELING

SEC. 324. (a) IN GENERAL.—(1) * * * 

(2)(A) * * * 

* * * * * * * 

(I)(i) Not later than 90 days after the date of enactment of this 

subparagraph, the Commission shall initiate a rulemaking to implement the additional labeling requirements specified in subsection 

(c)(1)(C) of this section with an effective date for the revised labeling 

requirement not later than 12 months from issuance of the final 

rule. 

(ii) Not later than 24 months after the date of enactment of this 

subparagraph, the Commission shall complete the rulemaking initiated under clause (i). 

(iii) Not later than 90 days after issuance of the final rule as provided in this subparagraph, the Secretary shall issue calculation 

methods required to effectuate the labeling requirements specified in 

subsection (c)(1)(C) of this section. 

(J)(i) Not later than 3 years after the date of enactment of this 

subparagraph, the Federal Trade Commission shall initiate a rulemaking to consider making a special note in a prominent manner 

on any ENERGY GUIDE label for any product actually including 

Smart Grid capability that— 

(I) Smart Grid capability is a feature of that product; 

(II) the use and value of that feature depended on the 

Smart Grid capability of the utility system in which 

the product was installed and the active utilization of 

that feature by the customer; and 

(III) on a utility system with Smart Grid capability, 

the use of the product’s Smart Grid capability could reduce the customer’s cost of the product’s annual operation by an estimated dollar amount range representing the result of incremental energy and electricity cost savings that would result from the customer 

taking full advantage of such Smart Grid capability. 


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(ii) Not later than 3 years after the date of enactment of 

this subparagraph, the Commission shall complete the rulemaking initiated under clause (i). 

* * * * * * * 

(c) CONTENT OF LABEL.—(1) Subject to paragraph (6), a rule prescribed under this section shall require that each covered product 

in the type or class of covered products to which the rule applies 

bear a label which discloses— 

(A) the estimated annual operating cost of such product (determined in accordance with test procedures prescribed under 

section 323), except that if— 

(i) * * * 

* * * * * * * 

the Commission shall require disclosure of a different useful 

measure of energy consumption (determined in accordance 

with test procedures prescribed under section 323); øand¿ 

(B) information respecting the range of estimated annual operating costs for covered products to which the rule applies; except that if the Commission requires disclosure under subparagraph (A) of a measure of energy consumption different from 

estimated annual operating cost, then the label shall disclose 

the range of such measure of energy consumption of covered 

products to which such rule appliesø.¿; 

(C) for products or groups of products providing a comparable function (including the group of products comprising 

the heating function of heat pumps and furnaces) among covered products listed in paragraphs (3), (4), (5), (8), (9), (10), and 

(11) of section 322(a) of this part, and others designated by the 

Secretary, the estimated total annual atmospheric carbon dioxide emissions (or their equivalent in other greenhouse gases) associated with, or caused by, the product, calculated utilizing— 

(i) national average energy use for the product including 

energy consumed at the point of end use based on test procedures developed under section 323 of this part; 

(ii) national average energy consumed or lost in the production, generation, transportation, storage, and distribution of energy to the point of end use; and 

(iii) any direct emissions of greenhouse gases from the 

product during normal use; 

(D) in determining the national average energy consumption 

and total annual atmospheric carbon dioxide emissions, the 

Secretary shall utilize Federal Government sources, including 

the Energy Information Administration Annual Energy Review, 

the Environmental Protection Agency eGRID data base, Environmental Protection Agency AP–42 Emission Factors as 

amended, and other sources determined to be appropriate by the 

Secretary; and 

(E) information presenting, for each product (or group of 

products providing the comparable function) identified in section (c)(1)(C) of this section, the estimated annual carbon dioxide emissions calculated within the range of emissions calculated for all models of the product or group according to its 


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function, including those models consuming fuels and those 

models not consuming fuels. 

* * * * * * * 

ENERGY STAR PROGRAM

SEC. 324A. (a) * * * 

* * * * * * * 

(c) DUTIES.—The Administrator and the Secretary shall— 

(1) * * * 

* * * * * * * 

(6) on adoption of a new or revised product category, specification, or criterion, provide reasonable notice to interested 

parties of any changes (including effective dates) in product 

categories, specifications, or criteria, along with— 

(A) * * * 

(B) as appropriate, responses to comments submitted by 

interested parties; øand¿ 

(7) provide appropriate lead time (which shall be 270 days, 

unless the Agency or Department specifies otherwise) prior to 

the applicable effective date for a new or a significant revision 

to a product category, specification, or criterion, taking into account the timing requirements of the manufacturing, product 

marketing, and distribution process for the specific product 

addressedø.¿; 

(8) in establishing and revising an Energy Star product category, specification, or criterion, require inclusion of developmental products planned for sale within 2 years in the testing 

or evaluation of products proposed for purposes of such establishment or revision; 

(9) not later than 18 months after the date of enactment of 

this paragraph, establish and implement a rating system for 

products identified as Energy Star products pursuant to this 

section to provide consumers with the most helpful information 

on the relative energy efficiency of those products, unless the 

Administrator and the Secretary communicate to Congress that 

establishing such a system would diminish the value of the Energy Star brand to consumers; 

(10)(A) review the Energy Star product criteria for the 10 

products in each product category with the greatest energy consumption at least once every 3 years; and 

(B) based on the review, update and publish the Energy Star 

product criteria for each such category, as necessary; and 

(11) require periodic verification of compliance with the Energy Star product criteria by products identified as Energy Star 

products pursuant to this section, including— 

(A) purchase and testing of products from the market; or 

(B) other appropriate testing and compliance approaches. 

* * * * * * * 

ENERGY CONSERVATION STANDARDS

SEC. 325. (a) * * * 

* * * * * * * 


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(g) STANDARDS FOR DISHWASHERS; CLOTHES WASHERS; CLOTHES

DRYERS, FLUORESCENT LAMP BALLASTS.—(1) * * * 

* * * * * * * 

(8)(A) * * * 

* * * * * * * 

(C) The standards described in subparagraph (A) do not apply 

to— 

(i) * * * 

(ii) a ballast that is designed for use with 2 F96T12HO 

lamps at ambient temperatures of ø20°F¿ ¥20°F or less and 

for use in an outdoor sign; or 

* * * * * * * 

ø(i) GENERAL SERVICE FLUORESCENT LAMPS, GENERAL SERVICE

INCANDESCENT LAMPS, INTERMEDIATE BASE INCANDESCENT LAMPS, 

CANDELABRA BASE INCANDESCENT LAMPS, AND INCANDESCENT REFLECTOR LAMPS.— 

ø(1) STANDARDS.— 

ø(A) DEFINITION OF EFFECTIVE DATE.—In this paragraph 

(other than subparagraph (D)), the term ‘‘effective date’’ 

means, with respect to each type of lamp specified in a 

table contained in subparagraph (B), the last day of the 

period of months corresponding to that type of lamp (as 

specified in the table) that follows October 24, 1992. 

ø(B) MINIMUM STANDARDS.—Each of the following general service fluorescent lamps and incandescent reflector 

lamps manufactured after the effective date specified in 

the tables contained in this paragraph shall meet or exceed the following lamp efficacy and CRI standards: 

øFLUORESCENT LAMPS 

øLamp Type 

Nominal 

Lamp 

Wattage 

Minimum 

CRI 

Minimum Average 

Lamp Efficacy 

(LPW) 

Effective 

Date (Period of 

Months) 

4-foot medium bi-pin .... >35 W 69 75.0 36 

=35 W 45 75.0 36 

2-foot U-shaped ............. >35 W 69 68.0 36 

=35 W 45 64.0 36 

8-foot slimline ............... 65 W 69 80.0 18 

=65 W 45 80.0 18 

8-foot high output ......... >100 W 69 80.0 18 

=100 W 45 80.0 18 

INCANDESCENT REFLECTOR LAMPS 

Nominal Lamp Wattage 

Minimum Average 

Lamp Efficacy 

(LPW) 

Effective 

Date (Period of 

Months) 

40–50 ........................................................................ 10.5 36 

51–66 ........................................................................ 11.0 36 

67–85 ........................................................................ 12.5 36 

86–115 ...................................................................... 14.0 36 

116–155 ..................................................................... 14.5 36 

156–205 ..................................................................... 15.0 36 


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ø(C) EXEMPTIONS.—The standards specified in subparagraph (B) shall not apply to the following types of incandescent reflector lamps: 

ø(i) Lamps rated at 50 watts or less that are ER30, 

BR30, BR40, or ER40 lamps. 

ø(ii) Lamps rated at 65 watts that are BR30, BR40, 

or ER40 lamps. 

ø(iii) R20 incandescent reflector lamps rated 45 

watts or less. 

ø(D) EFFECTIVE DATES.— ø(i) ER, BR, AND BPAR LAMPS.—The standards specified in subparagraph (B) shall apply with respect to 

ER incandescent reflector lamps, BR incandescent reflector lamps, BPAR incandescent reflector lamps, and 

similar bulb shapes on and after January 1, 2008. 

ø(ii) LAMPS BETWEEN 2.25–2.75 INCHES IN DIAME- TER.—The standards specified in subparagraph (B) 

shall apply with respect to incandescent reflector 

lamps with a diameter of more than 2.25 inches, but 

not more than 2.75 inches, on and after the later of 

January 1, 2008, or the date that is 180 days after the 

date of enactment of the Energy Independence and Security Act of 2007. 

ø(2) Notwithstanding section 332(a)(5) and section 332(b), it shall 

not be unlawful for a manufacturer to sell a lamp which is in compliance with the law at the time such lamp was manufactured. 

ø(3) Not less than 36 months after the date of the enactment of 

this subsection, the Secretary shall initiate a rulemaking procedure 

and shall publish a final rule not later than the end of the 54- 

month period beginning on the date of the enactment of this subsection to determine if the standards established under paragraph 

(1) should be amended. Such rule shall contain such amendment, 

if any, and provide that the amendment shall apply to products 

manufactured on or after the 36-month period beginning on the 

date such final rule is published. 

ø(4) Not less than eight years after the date of the enactment of 

this subsection, the Secretary shall initiate a rulemaking procedure 

and shall publish a final rule not later than nine years and six 

months after the date of the enactment of this subsection to determine if the standards in effect for fluorescent lamps and incandescent lamps should be amended. Such rule shall contain such 

amendment, if any, and provide that the amendment shall apply 

to products manufactured on or after the 36-month period beginning on the date such final rule is published. 

ø(5) Not later than the end of the 24-month period beginning on 

the date labeling requirements under section 324(a)(2)(C) become 

effective, the Secretary shall initiate a rulemaking procedure to determine if the standards in effect for fluorescent lamps and incandescent lamps should be amended so that they would be applicable 

to additional general service fluorescent and shall publish, not later 

than 18 months after initiating such rulemaking, a final rule including such amended standards, if any. Such rule shall provide 

that the amendment shall apply to products manufactured after a 

date which is 36 months after the date such rule is published. 

ø(6) STANDARDS FOR GENERAL SERVICE LAMPS.— 


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ø(A) RULEMAKING BEFORE JANUARY 1, 2014.— ø(i) IN GENERAL.—Not later than January 1, 2014, 

the Secretary shall initiate a rulemaking procedure to 

determine whether— 

ø(I) standards in effect for general service lamps 

should be amended to establish more stringent 

standards than the standards specified in paragraph (1)(A); and 

ø(II) the exemptions for certain incandescent 

lamps should be maintained or discontinued 

based, in part, on exempted lamp sales collected 

by the Secretary from manufacturers. 

ø(ii) SCOPE.—The rulemaking— 

ø(I) shall not be limited to incandescent lamp 

technologies; and 

ø(II) shall include consideration of a minimum 

standard of 45 lumens per watt for general service 

lamps. 

ø(iii) AMENDED STANDARDS.—If the Secretary determines that the standards in effect for general service 

incandescent lamps should be amended, the Secretary 

shall publish a final rule not later than January 1, 

2017, with an effective date that is not earlier than 3 

years after the date on which the final rule is published. 

ø(iv) PHASED-IN EFFECTIVE DATES.—The Secretary 

shall consider phased-in effective dates under this subparagraph after considering— 

ø(I) the impact of any amendment on manufacturers, retiring and repurposing existing equipment, stranded investments, labor contracts, 

workers, and raw materials; and 

ø(II) the time needed to work with retailers and 

lighting designers to revise sales and marketing 

strategies. 

ø(v) BACKSTOP REQUIREMENT.—If the Secretary fails 

to complete a rulemaking in accordance with clauses 

(i) through (iv) or if the final rule does not produce 

savings that are greater than or equal to the savings 

from a minimum efficacy standard of 45 lumens per 

watt, effective beginning January 1, 2020, the Secretary shall prohibit the sale of any general service 

lamp that does not meet a minimum efficacy standard 

of 45 lumens per watt. 

ø(vi) STATE PREEMPTION.—Neither section 327(b) nor 

any other provision of law shall preclude California or 

Nevada from adopting, effective beginning on or after 

January 1, 2018— 

ø(I) a final rule adopted by the Secretary in accordance with clauses (i) through (iv); 

ø(II) if a final rule described in subclause (I) has 

not been adopted, the backstop requirement under 

clause (v); or 

ø(III) in the case of California, if a final rule described in subclause (I) has not been adopted, any 


hsrobinson on PROD1PC76 with HEARING
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California regulations relating to these covered 

products adopted pursuant to State statute in effect as of the date of enactment of the Energy 

Independence and Security Act of 2007. 

ø(B) RULEMAKING BEFORE JANUARY 1, 2020.— ø(i) IN GENERAL.—Not later than January 1, 2020, 

the Secretary shall initiate a rulemaking procedure to 

determine whether— 

ø(I) standards in effect for general service incandescent lamps should be amended to reflect lumen 

ranges with more stringent maximum wattage 

than the standards specified in paragraph (1)(A); 

and 

ø(II) the exemptions for certain incandescent 

lamps should be maintained or discontinued 

based, in part, on exempted lamp sales data collected by the Secretary from manufacturers. 

ø(ii) SCOPE.—The rulemaking shall not be limited to 

incandescent lamp technologies. 

ø(iii) AMENDED STANDARDS.—If the Secretary determines that the standards in effect for general service 

incandescent lamps should be amended, the Secretary 

shall publish a final rule not later than January 1, 

2022, with an effective date that is not earlier than 3 

years after the date on which the final rule is published. 

ø(iv) PHASED-IN EFFECTIVE DATES.—The Secretary 

shall consider phased-in effective dates under this subparagraph after considering— 

ø(I) the impact of any amendment on manufacturers, retiring and repurposing existing equipment, stranded investments, labor contracts, 

workers, and raw materials; and 

ø(II) the time needed to work with retailers and 

lighting designers to revise sales and marketing 

strategies. 

ø(7)(A) With respect to any lamp to which standards are applicable under this subsection or any lamp specified in section 346, the 

Secretary shall inform any Federal entity proposing actions which 

would adversely impact the energy consumption or energy efficiency of such lamp of the energy conservation consequences of 

such action. It shall be the responsibility of such Federal entity to 

carefully consider the Secretary’s comments. 

ø(B) Notwithstanding section 325(n)(1), the Secretary shall not 

be prohibited from amending any standard, by rule, to permit increased energy use or to decrease the minimum required energy efficiency of any lamp to which standards are applicable under this 

subsection if such action is warranted as a result of other Federal 

action (including restrictions on materials or processes) which 

would have the effect of either increasing the energy use or decreasing the energy efficiency of such product. 

ø(8) Not later than the date on which standards established pursuant to this subsection become effective, or, with respect to highintensity discharge lamps covered under section 346, the effective 

date of standards established pursuant to such section, each manuVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00631 Fmt 6659 Sfmt 6601 E:\HR\OC\HR137.XXX HR137

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facturer of a product to which such standards are applicable shall 

file with the Secretary a laboratory report certifying compliance 

with the applicable standard for each lamp type. Such report shall 

include the lumen output and wattage consumption for each lamp 

type as an average of measurements taken over the preceding 12- 

month period. With respect to lamp types which are not manufactured during the 12-month period preceding the date such standards become effective, such report shall be filed with the Secretary 

not later than the date which is 12 months after the date manufacturing is commenced and shall include the lumen output and wattage consumption for each such lamp type as an average of measurements taken during such 12-month period.¿ 

(i) GENERAL SERVICE FLUORESCENT LAMPS, GENERAL SERVICE

INCANDESCENT LAMPS, INTERMEDIATE BASE INCANDESCENT LAMPS, 

CANDELABRA BASE INCANDESCENT LAMPS, AND INCANDESCENT REFLECTOR LAMPS.— 

(1) ENERGY EFFICIENCY STANDARDS.— 

(A) IN GENERAL.—Each of the following general service 

fluorescent lamps, general service incandescent lamps, intermediate base incandescent lamps, candelabra base incandescent lamps, and incandescent reflector lamps manufactured after the effective date specified in the tables listed 

in this subparagraph shall meet or exceed the following 

lamp efficacy, new maximum wattage, and CRI standards: 

FLUORESCENT LAMPS 

Lamp Type 

Nominal 

Lamp 

Wattage 

Minimum 

CRI 

Minimum Average 

Lamp Efficacy 

(LPW) 

Effective 

Date (Period of 

Months) 

4-foot medium bi-pin .... >35 W 69 75.0 36 

=35 W 45 75.0 36 

2-foot U-shaped ............. >35 W 69 68.0 36 

=35 W 45 64.0 36 

8-foot slimline ................ 65 W 69 80.0 18 

=65 W 45 80.0 18 

8-foot high output ......... >100 W 69 80.0 18 

=100 W 45 80.0 18 

INCANDESCENT REFLECTOR LAMPS 

Nominal Lamp Wattage 

Minimum Average 

Lamp Efficacy 

(LPW) 

Effective 

Date (Period of 

Months) 

40–50 ........................................................................ 10.5 36 

51–66 ........................................................................ 11.0 36 

67–85 ........................................................................ 12.5 36 

86–115 ...................................................................... 14.0 36 

116–155 ..................................................................... 14.5 36 

156–205 ..................................................................... 15.0 36 


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GENERAL SERVICE INCANDESCENT LAMPS 

Rated Lumen Ranges Maximum Rated 

Wattage 

Minimum 

Rated Lifetime 

Effective 

Date 

1490–2600 72 1,000 hrs 1/1/2012 

1050–1489 53 1,000 hrs 1/1/2013 

750–1049 43 1,000 hrs 1/1/2014 

310–749 29 1,000 hrs 1/1/2014 

MODIFIED SPECTRUM GENERAL SERVICE INCANDESCENT LAMPS 

Rated Lumen Ranges Maximum Rated 

Wattage 

Minimum 

Rated Lifetime 

Effective 

Date 

1118–1950 72 1,000 hrs 1/1/2012 

788–1117 53 1,000 hrs 1/1/2013 

563–787 43 1,000 hrs 1/1/2014 

232–562 29 1,000 hrs 1/1/2014 

(B) APPLICATION.— (i) APPLICATION CRITERIA.—This subparagraph applies to each lamp that— 

(I) is intended for a general service or general illumination application (whether incandescent or 

not); 

(II) has a medium screw base or any other screw 

base not defined in ANSI C81.61–2006; 

(III) is capable of being operated at a voltage at 

least partially within the range of 110 to 130 volts; 

and 

(IV) is manufactured or imported after December 

31, 2011. 

(ii) REQUIREMENT.—For purposes of this paragraph, 

each lamp described in clause (i) shall have a color 

rendering index that is greater than or equal to— 

(I) 80 for nonmodified spectrum lamps; or 

(II) 75 for modified spectrum lamps. 

(C) CANDELABRA INCANDESCENT LAMPS AND INTER- MEDIATE BASE INCANDESCENT LAMPS.— (i) CANDELABRA BASE INCANDESCENT LAMPS.—Effective beginning January 1, 2012, a candelabra base incandescent lamp shall not exceed 60 rated watts. 

(ii) INTERMEDIATE BASE INCANDESCENT LAMPS.—Effective beginning January 1, 2012, an intermediate 

base incandescent lamp shall not exceed 40 rated 

watts. 

(D) EXEMPTIONS.— 

(i) STATUTORY EXEMPTIONS.—The standards specified in subparagraph (A) shall not apply to the following types of incandescent reflector lamps: 

(I) Lamps rated at 50 watts or less that are 

ER30, BR30, BR40, or ER40 lamps. 

(II) Lamps rated at 65 watts that are BR30, 

BR40, or ER40 lamps. 


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(III) R20 incandescent reflector lamps rated 45 

watts or less. 

(ii) ADMINISTRATIVE EXEMPTIONS.— (I) PETITION.—Any person may petition the Secretary for an exemption for a type of general service lamp from the requirements of this subsection. 

(II) CRITERIA.—The Secretary may grant an exemption under subclause (I) only to the extent that 

the Secretary finds, after a hearing and opportunity for public comment, that it is not technically 

feasible to serve a specialized lighting application 

(such as a military, medical, public safety, or certified historic lighting application) using a lamp 

that meets the requirements of this subsection. 

(III) ADDITIONAL CRITERION.—To grant an exemption for a product under this clause, the Secretary shall include, as an additional criterion, 

that the exempted product is unlikely to be used in 

a general service lighting application. 

(E) EXTENSION OF COVERAGE.— (i) PETITION.—Any person may petition the Secretary 

to establish standards for lamp shapes or bases that 

are excluded from the definition of general service 

lamps. 

(ii) INCREASED SALES OF EXEMPTED LAMPS.—The petition shall include evidence that the availability or 

sales of exempted incandescent lamps have increased 

significantly since the date on which the standards on 

general service incandescent lamps were established. 

(iii) CRITERIA.—The Secretary shall grant a petition 

under clause (i) if the Secretary finds that— 

(I) the petition presents evidence that demonstrates that commercial availability or sales of 

exempted incandescent lamp types have increased 

significantly since the standards on general service 

lamps were established and likely are being widely 

used in general lighting applications; and 

(II) significant energy savings could be achieved 

by covering exempted products, as determined by 

the Secretary based in part on sales data provided 

to the Secretary from manufacturers and importers. 

(iv) NO PRESUMPTION.—The grant of a petition under 

this subparagraph shall create no presumption with respect to the determination of the Secretary with respect 

to any criteria under a rulemaking conducted under 

this section. 

(v) EXPEDITED PROCEEDING.—If the Secretary grants 

a petition for a lamp shape or base under this subparagraph, the Secretary shall— 

(I) conduct a rulemaking to determine standards 

for the exempted lamp shape or base; and 

(II) complete the rulemaking not later than 18 

months after the date on which notice is provided 

granting the petition. 


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(F) EFFECTIVE DATES.— 

(i) IN GENERAL.—In this paragraph, except as otherwise provided in a table contained in subparagraph (A) 

or in clause (ii), the term ‘‘effective date’’ means the last 

day of the month specified in the table that follows October 24, 1992. 

(ii) SPECIAL EFFECTIVE DATES.— 

(I) ER, BR, AND BPAR LAMPS.—The standards 

specified in subparagraph (A) shall apply with respect to ER incandescent reflector lamps, BR incandescent reflector lamps, BPAR incandescent reflector lamps, and similar bulb shapes on and 

after January 1, 2008, or the date that is 180 days 

after the date of enactment of the Energy Independence and Security Act of 2007. 

(II) LAMPS BETWEEN 2.25–2.75 INCHES IN DIAMETER.—The standards specified in subparagraph 

(A) shall apply with respect to incandescent reflector lamps with a diameter of more than 2.25 

inches, but not more than 2.75 inches, on and after 

the later of January 1, 2008, or the date that is 

180 days after the date of enactment of the Energy 

Independence and Security Act of 2007. 

(2) COMPLIANCE WITH EXISTING LAW.—Notwithstanding section 332(a)(5) and section 332(b), it shall not be unlawful for 

a manufacturer to sell a lamp that is in compliance with the 

law at the time the lamp was manufactured. 

(3) RULEMAKING BEFORE OCTOBER 24, 1995.— 

(A) IN GENERAL.—Not later than 36 months after October 

24, 1992, the Secretary shall initiate a rulemaking procedure and shall publish a final rule not later than the end 

of the 54-month period beginning on October 24, 1992, to 

determine whether the standards established under paragraph (1) should be amended. 

(B) ADMINISTRATION.—The rule shall contain the amendment, if any, and provide that the amendment shall apply 

to products manufactured on or after the 36-month period 

beginning on the date on which the final rule is published. 

(4) RULEMAKING BEFORE OCTOBER 24, 2000.— 

(A) IN GENERAL.—Not later than 8 years after October 24, 

1992, the Secretary shall initiate a rulemaking procedure 

and shall publish a final rule not later than 9 years and 

6 months after October 24, 1992, to determine whether the 

standards in effect for fluorescent lamps and incandescent 

lamps should be amended. 

(B) ADMINISTRATION.—The rule shall contain the amendment, if any, and provide that the amendment shall apply 

to products manufactured on or after the 36-month period 

beginning on the date on which the final rule is published. 

(5) RULEMAKING FOR ADDITIONAL GENERAL SERVICE FLUORESCENT LAMPS.— 

(A) IN GENERAL.—Not later than the end of the 24-month 

period beginning on the date labeling requirements under 

section 324(a)(2)(C) become effective, the Secretary shall— 


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(i) initiate a rulemaking procedure to determine 

whether the standards in effect for fluorescent lamps 

and incandescent lamps should be amended so that the 

standards would be applicable to additional general 

service fluorescent lamps; and 

(ii) publish, not later than 18 months after initiating 

the rulemaking, a final rule including the amended 

standards, if any. 

(B) ADMINISTRATION.—The rule shall provide that the 

amendment shall apply to products manufactured after a 

date which is 36 months after the date on which the rule 

is published. 

(6) STANDARDS FOR GENERAL SERVICE LAMPS.— 

(A) RULEMAKING BEFORE JANUARY 1, 2014.— 

(i) IN GENERAL.—Not later than January 1, 2014, the 

Secretary shall initiate a rulemaking procedure to determine whether— 

(I) standards in effect for general service lamps 

should be amended; and 

(II) the exclusions for certain incandescent lamps 

should be maintained or discontinued based, in 

part, on excluded lamp sales collected by the Secretary from manufacturers. 

(ii) SCOPE.—The rulemaking— 

(I) shall not be limited to incandescent lamp 

technologies; and 

(II) shall include consideration of a minimum 

standard of 45 lumens per watt for general service 

lamps. 

(iii) AMENDED STANDARDS.—If the Secretary determines that the standards in effect for general service 

lamps should be amended, the Secretary shall publish 

a final rule not later than January 1, 2017, with an 

effective date that is not earlier than 3 years after the 

date on which the final rule is published. 

(iv) PHASED-IN EFFECTIVE DATES.—The Secretary 

shall consider phased-in effective dates under this subparagraph after considering— 

(I) the impact of any amendment on manufacturers, retiring and repurposing existing equipment, 

stranded investments, labor contracts, workers, 

and raw materials; and 

(II) the time needed to work with retailers and 

lighting designers to revise sales and marketing 

strategies. 

(v) BACKSTOP REQUIREMENT.—If the Secretary fails 

to complete a rulemaking in accordance with clauses (i) 

through (iv) or if the final rule does not produce savings that are greater than or equal to the savings from 

a minimum efficacy standard of 45 lumens per watt, 

effective beginning January 1, 2020, the Secretary shall 

prohibit the manufacture of any general service lamp 

that does not meet a minimum efficacy standard of 45 

lumens per watt. 


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(vi) STATE PREEMPTION.—Neither section 327(c) nor 

any other provision of law shall preclude California or 

Nevada from adopting, effective beginning on or after 

January 1, 2018— 

(I) a final rule adopted by the Secretary in accordance with clauses (i) through (iv); 

(II) if a final rule described in subclause (I) has 

not been adopted, the backstop requirement under 

clause (v); or 

(III) in the case of California, if a final rule described in subclause (I) has not been adopted, any 

California regulations relating to these covered 

products adopted pursuant to State statute in effect as of the date of enactment of the Energy Independence and Security Act of 2007. 

(B) RULEMAKING BEFORE JANUARY 1, 2020.— 

(i) IN GENERAL.—Not later than January 1, 2020, the 

Secretary shall initiate a rulemaking procedure to determine whether— 

(I) standards in effect for general service lamps 

should be amended; and 

(II) the exclusions for certain incandescent lamps 

should be maintained or discontinued based, in 

part, on excluded lamp sales data collected by the 

Secretary from manufacturers. 

(ii) SCOPE.—The rulemaking shall not be limited to 

incandescent lamp technologies. 

(iii) AMENDED STANDARDS.—If the Secretary determines that the standards in effect for general service 

lamps should be amended, the Secretary shall publish 

a final rule not later than January 1, 2022, with an 

effective date that is not earlier than 3 years after the 

date on which the final rule is published. 

(iv) PHASED-IN EFFECTIVE DATES.—The Secretary 

shall consider phased-in effective dates under this subparagraph after considering— 

(I) the impact of any amendment on manufacturers, retiring and repurposing existing equipment, 

stranded investments, labor contracts, workers, 

and raw materials; and 

(II) the time needed to work with retailers and 

lighting designers to revise sales and marketing 

strategies. 

(7) FEDERAL ACTIONS.— 

(A) COMMENTS OF SECRETARY.— 

(i) IN GENERAL.—With respect to any lamp to which 

standards are applicable under this subsection or any 

lamp specified in section 346, the Secretary shall inform any Federal entity proposing actions that would 

adversely impact the energy consumption or energy efficiency of the lamp of the energy conservation consequences of the action. 

(ii) CONSIDERATION.—The Federal entity shall carefully consider the comments of the Secretary. 


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(B) AMENDMENT OF STANDARDS.—Notwithstanding section 325(n)(1), the Secretary shall not be prohibited from 

amending any standard, by rule, to permit increased energy use or to decrease the minimum required energy efficiency of any lamp to which standards are applicable 

under this subsection if the action is warranted as a result 

of other Federal action (including restrictions on materials 

or processes) that would have the effect of either increasing 

the energy use or decreasing the energy efficiency of the 

product. 

(8) COMPLIANCE.— (A) IN GENERAL.—Not later than the date on which 

standards established pursuant to this subsection become 

effective, or, with respect to high-intensity discharge lamps 

covered under section 346, the effective date of standards 

established pursuant to that section, each manufacturer of 

a product to which the standards are applicable shall file 

with the Secretary a laboratory report certifying compliance 

with the applicable standard for each lamp type. 

(B) CONTENTS.—The report shall include the lumen output and wattage consumption for each lamp type as an average of measurements taken over the preceding 12-month 

period. 

(C) OTHER LAMP TYPES.—With respect to lamp types that 

are not manufactured during the 12-month period preceding the date on which the standards become effective, 

the report shall— 

(i) be filed with the Secretary not later than the date 

that is 12 months after the date on which manufacturing is commenced; and 

(ii) include the lumen output and wattage consumption for each such lamp type as an average of measurements taken during the 12-month period. 

(9) CERTAIN INCANDESCENT REFLECTOR LAMPS.—(A) No later 

than 12 months after enactment of this paragraph, the Secretary shall publish a final rule establishing standards for incandescent reflector lamp types described in paragraph (1)(D). 

Such standards shall be effective on July 1, 2013. 

(B) Any rulemaking for incandescent reflector lamps completed after enactment of this section shall consider standards 

for all incandescent reflector lamps, inclusive of those specified 

in paragraph (1)(C). 

(10) REFLECTOR LAMPS.—No later than January 1, 2015, the 

Secretary shall publish a final rule establishing and amending 

standards for reflector lamps, including incandescent reflector 

lamps. Such standards shall be effective no sooner than three 

years after publication of the final rule. Such rulemaking shall 

consider incandescent and nonincandescent technologies. Such 

rulemaking shall consider a new metric other than lumens-perwatt based on the photometric distribution of light from such 

lamps. 

* * * * * * * 

(l) STANDARDS FOR OTHER COVERED PRODUCTS.—(1) The Secretary may prescribe an energy conservation standard for any type 

(or class) of covered products of a type specified in øparagraph 


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(19)¿ paragraph (24) of section 322(a) if the requirements of subsections (o) and (p) are met and the Secretary determines that— 

(A) * * * 

* * * * * * * 

(2) Any new or amended standard for covered products of a type 

specified in øparagraph (19)¿ paragraph (24) of section 322(a) shall 

not apply to products manufactured within five years after the publication of a final rule establishing such standard. 

* * * * * * * 

(4) ENERGY EFFICIENCY STANDARDS FOR CERTAIN LAMPS.— 

(A) IN GENERAL.—The Secretary shall prescribe an energy efficiency standard for rough service lamps, vibration service 

lamps, 3-way incandescent lamps, 2,601–3,300 lumen general 

service incandescent lamps, and shatter-resistant lamps øonly¿ 

in accordance with this paragraph. 

* * * * * * * 

(o) CRITERIA FOR PRESCRIBING NEW OR AMENDED STANDARDS.— 

(1) * * * 

(2)(A) * * * 

(B)(i) In determining whether a standard is economically justified, the Secretary shall, after receiving views and comments furnished with respect to the proposed standard, determine whether 

the benefits of the standard exceed its burdens by, to the greatest 

extent practicable, considering— 

(I) * * * 

* * * * * * * 

(VI) the need for national energy and water conservation; 

øand¿ 

(VII) the estimated value of the carbon dioxide and other 

emission reductions that will be achieved by virtue of the higher 

energy efficiency of the covered products resulting from the imposition of the standard; 

(VIII) the estimated impact of standards for a particular 

product on average consumer energy prices; 

(IX) the increased energy efficiency that may be attributable 

to the installation of Smart Grid technologies or capabilities in 

the covered products, if applicable in the determination of the 

Secretary; 

(X) the availability in the United States or in other nations 

of examples or prototypes of covered products that achieve significantly higher efficiency standards for energy or for water; 

and 

ø(VII)¿ (XI) other factors the Secretary considers relevant. 

* * * * * * * 

(iii) If the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than øthree¿ 5 times the value of 

the energy, and as applicable, water, savings during the first year 

that the consumer will receive as a result of the standard, as calculated under the applicable test procedure, there shall be a rebuttable presumption that such standard level is economically justified. øA determination by the Secretary that such criterion is not 


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met shall not be taken into consideration in the Secretary’s determination of whether a standard is economically justified.¿ For 

products with an average expected useful life of less than 5 years, 

such rebuttable presumption shall be determined utilizing 75 percent of the product’s average expected useful life as a multiplier instead of 5. Such a presumption may be rebutted only if the Secretary finds, based on clear, convincing, and reliable evidence, 

that— 

(I) such standard level would cause serious and unavoidable 

hardship to the average consumer of the product, or to manufacturers supplying a significant portion of the market for the 

product, that substantially outweighs the standard level’s benefits; 

(II) the standard and implementing regulations cannot be designed to avoid or mitigate the hardship identified under subclause (I), through the adoption of regional standards consistent 

with paragraph (6) of this subsection, or other reasonable 

means consistent with this part; 

(III) the same or substantially similar hardship would not 

occur under a standard adopted in the absence of the presumption, but that otherwise meets the requirements of this section; 

and 

(IV) the hardship cannot be avoided or mitigated pursuant 

the procedures specified in section 504 of the Department of Energy Organization Act (42 U.S.C. 7194). 

* * * * * * * 

(u) BATTERY CHARGER AND EXTERNAL POWER SUPPLY ELECTRIC

ENERGY CONSUMPTION.—(1) * * * 

* * * * * * * 

ø(7)¿ (4) END-USE PRODUCTS.—An energy conservation standard 

for external power supplies shall not constitute an energy conservation standard for the separate end-use product to which the external power øsupplies is¿ supply is connected. 

* * * * * * * 

(ii) PORTABLE LIGHT FIXTURES.— 

(1) IN GENERAL.—Subject to paragraphs (2) and (3), portable 

light fixtures manufactured on or after January 1, 2012, shall 

meet 1 or more of the following requirements: 

(A) Be a fluorescent light fixture that meets the requirements of the Energy Star Program for Residential Light 

Fixtures, Version 4.2. 

(B) Be equipped with only 1 or more GU–24 line-voltage 

sockets, not be rated for use with incandescent lamps of any 

type (as defined in ANSI standards), and meet the requirements of version 4.2 of the Energy Star program for residential light fixtures. 

(C) Be an LED light fixture or a light fixture with an 

LED light engine and comply with the following minimum 

requirements: 

(i) Minimum light output: 200 lumens (initial). 

(ii) Minimum LED light engine efficacy: 40 lumens/ 

watt installed in fixtures that meet the minimum light 

fixture efficacy of 29 lumens/watt or, alternatively, a 


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minimum LED light engine efficacy of 60 lumens/watt 

for fixtures that do not meet the minimum light fixture 

efficacy of 29 lumens/watt. 

(iii) All portable fixtures shall have a minimum LED 

light fixture efficacy of 29 lumens/watt and a minimum LED light engine efficacy of 60 lumens/watt by 

January 1, 2016. 

(iv) Color Correlated Temperature (CCT): 2700K 

through 4000K. 

(v) Minimum Color Rendering Index (CRI): 75. 

(vi) Power factor equal to or greater than 0.70. 

(vii) Portable luminaries that have internal power 

supplies shall have zero standby power when the luminaire is turned off. 

(viii) LED light sources shall deliver at least 70 percent of initial lumens for at least 25,000 hours. 

(D)(i) Be equipped with an ANSI-designated E12, E17, or 

E26 screw-based socket and be prepackaged and sold together with 1 screw-based compact fluorescent lamp or 

screw-based LED lamp for each screw-based socket on the 

portable light fixture. 

(ii) The compact fluorescent or LED lamps prepackaged 

with the light fixture shall be fully compatible with any 

light fixture controls incorporated into the light fixture (for 

example, light fixtures with dimmers shall be packed with 

dimmable lamps). 

(iii) Compact fluorescent lamps prepackaged with light 

fixtures shall meet the requirements of the Energy Star Program for CFLs Version 4.0. 

(iv) Screw-based LED lamps shall comply with the minimum requirements described in subparagraph (C). 

(E) Be equipped with 1 or more single-ended, non-screw 

based halogen lamp sockets (line or low voltage), a dimmer 

control or high-low control, and be rated for a maximum 

of 100 watts. 

(2) REVIEW.— (A) REVIEW.—The Secretary shall review the criteria and 

standards established under paragraph (1) to determine if 

revised standards are technologically feasible and economically justified. 

(B) COMPONENTS.—The review shall include consideration of— 

(i) whether a separate compliance procedure is still 

needed for halogen fixtures described in subparagraph 

(E) and, if necessary, what an appropriate standard for 

halogen fixtures shall be; 

(ii) whether the specific technical criteria described 

in subparagraphs (A), (C), and (D)(iii) should be modified; and 

(iii) which fixtures should be exempted from the light 

fixture efficacy standard as of January 1, 2016, because the fixtures are primarily decorative in nature 

(as defined by the Secretary) and, even if exempted, are 

likely to be sold in limited quantities. 

(C) TIMING.— 


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642 

(i) DETERMINATION.—Not later than January 1, 

2014, the Secretary shall publish amended standards, 

or a determination that no amended standards are justified, under this subsection. 

(ii) STANDARDS.—Any standards under this paragraph shall take effect on January 1, 2016. 

(3) ART WORK LIGHT FIXTURES.—Art work light fixtures manufactured on or after January 1, 2012, shall— 

(A) comply with paragraph (1); or 

(B)(i) contain only ANSI-designated E12 screw-based 

line-voltage sockets; 

(ii) have not more than 3 sockets; 

(iii) be controlled with an integral high/low switch; 

(iv) be rated for not more than 25 watts if fitted with 1 

socket; and 

(v) be rated for not more than 15 watts per socket if fitted 

with 2 or 3 sockets. 

(4) EXCEPTION FROM PREEMPTION.—Notwithstanding section 

327, Federal preemption shall not apply to a regulation concerning portable light fixtures adopted by the California Energy 

Commission on or before January 1, 2014. 

(jj) GU–24 BASE LAMPS.— 

(1) IN GENERAL.—A GU–24 base lamp shall not be an incandescent lamp as defined by ANSI. 

(2) GU-24 ADAPTORS.—GU–24 adaptors shall not adapt a GU– 

24 socket to any other line voltage socket. 

(kk) BOTTLE TYPE WATER DISPENSERS.—Effective January 1, 

2012, bottle-type water dispensers designed for dispensing both hot 

and cold water shall not have standby energy consumption greater 

than 1.2 kilowatt-hours per day. 

(ll) COMMERCIAL HOT FOOD HOLDING CABINETS.—Effective January 1, 2012, commercial hot food holding cabinets with interior volumes of 8 cubic feet or greater shall have a maximum idle energy 

rate of 40 watts per cubic foot of interior volume. 

(mm) PORTABLE ELECTRIC SPAS.—Effective January 1, 2012, 

portable electric spas shall not have a normalized standby power 

greater than 5(V2/3) Watts where V=the fill volume in gallons. 

(nn) REVISIONS.—The Secretary of Energy shall consider revisions 

to the standards in subsections (kk), (ll), and (mm) in accordance 

with subsection (o) and publish a final rule no later than January 

1, 2013 establishing such revised standards, or make a finding that 

no revisions are technically feasible and economically justified. Any 

such revised standards shall take effect January 1, 2016. 

ø(ii)¿ (oo) APPLICATION DATE.—Section 327 applies— 

(1) * * * 

(2) to products for which energy conservation standards are 

established under subsections (w) through ø(hh)¿ (mm) on the 

date of enactment of those subsections, except that any State 

or local standard prescribed or enacted before the date of enactment of those subsections shall not be preempted until the 

energy conservation standards established under subsections 

(w) through ø(hh)¿ (mm) take effect. 


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REQUIREMENTS OF MANUFACTURERS

SEC. 326. (a) * * * 

* * * * * * * 

ø(d) INFORMATION REQUIREMENTS.—(1) For purposes of carrying 

out this part, the Secretary may require, under this part or other 

provision of law administered by the Secretary, each manufacturer 

of a covered product to submit information or reports to the Secretary with respect to energy efficiency, energy use, or, in the case 

of showerheads, faucets, water closets, and urinals, water use of 

such covered product and the economic impact of any proposed energy conservation standard, as the Secretary determines may be 

necessary to establish and revise test procedures, labeling rules, 

and energy conservation standards for such product and to insure 

compliance with the requirements of this part. In making any determination under this paragraph, the Secretary shall consider existing public sources of information, including nationally recognized 

certification programs of trade associations. 

ø(2) The Secretary shall exercise authority under this section in 

a manner designed to minimize unnecessary burdens on manufacturers of covered products. 

ø(3) The provisions of section 11(d) of the Energy Supply and Environmental Coordination Act of 1974 shall apply with respect to 

information obtained under this subsection to the same extent and 

in the same manner as they apply with respect to energy information obtained under section 11 of such Act.¿ 

(d) INFORMATION REQUIREMENTS.—(1) For purposes of carrying 

out this part, the Secretary shall publish proposed regulations not 

later than one year after the date of enactment of the American 

Clean Energy and Security Act of 2009, and after receiving public 

comment, final regulations not later than 18 months from such date 

of enactment under this part or other provision of law administered 

by the Secretary, which shall require each manufacturer of a covered product to submit information or reports to the Secretary on an 

annual basis in a form adopted by the Secretary. Such reports shall 

include information or data with respect to— 

(A) the manufacturers’ compliance with all requirements applicable pursuant to this part; 

(B) the economic impact of any proposed energy conservation 

standard; 

(C) the manufacturers’ annual shipments of each class or category of covered products, organized, to the maximum extent 

practicable, by— 

(i) energy efficiency, energy use, and, if applicable, water 

use; 

(ii) the presence or absence of such efficiency related or 

energy consuming operational characteristics or components as the Secretary determines are relevant for the purposes of carrying out this part; and 

(iii) the State or regional location of sale, for covered 

products for which the Secretary may adopt regional standards; and 

(D) such other categories of information as the Secretary 

deems relevant to carry out this part, including such other information as may be necessary to establish and revise test proVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00643 Fmt 6659 Sfmt 6603 E:\HR\OC\HR137.XXX HR137

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cedures, labeling rules, and energy conservation standards and 

to insure compliance with the requirements of this part. 

(2) In adopting regulations under this subsection, the Secretary 

shall consider existing public sources of information, including nationally recognized certification programs of trade associations. 

(3) The Secretary shall exercise authority under this section in a 

manner designed to minimize unnecessary burdens on manufacturers of covered products. 

(4) To the extent that they do not conflict with the duties of the 

Secretary in carrying out this part, the provisions of section 11(d) 

of the Energy Supply and Environmental Coordination Act of 1974 

(15 U.S.C. 796(d)) shall apply with respect to information obtained 

under this subsection to the same extent and in the same manner 

as they apply with respect to other energy information obtained 

under such section. 

EFFECT ON OTHER LAW

SEC. 327. (a) * * * 

(b) GENERAL RULE OF PREEMPTION FOR ENERGY CONSERVATION

STANDARDS BEFORE FEDERAL STANDARD BECOMES EFFECTIVE FOR

A PRODUCT.—Effective on the date of enactment of the National 

Appliance Energy Conservation Act of 1987 and ending on the effective date of an energy conservation standard established under 

section 325 for any covered product, no State regulation, or revision 

thereof, concerning the energy efficiency, energy use, or water use 

of the covered product shall be effective with respect to such covered product, unless the State regulation or revision— 

(1)(A) * * * 

(B) in the case of any portion of any regulation that establishes requirements for general service incandescent lamps, intermediate base incandescent lamps, or candelabra base lamps, 

was enacted or adopted by the State of California or Nevada 

before December 4, 2007, except that— 

(i) the regulation adopted by the California Energy Commission with an effective date of January 1, 2008, shall 

only be effective until the effective date of the Federal 

standard for the applicable lamp category under subparagraphs (A), (B), and (C) of section 325(i)(1); and 

(ii) the States of California and Nevada may, at any 

time, modify or adopt a State standard for general service 

lamps to conform with Federal standards with effective 

dates no earlier than 12 months prior to the Federal effective dates prescribed under subparagraphs (A), (B), and 

(C) of section 325(i)(1), at which time any prior regulations 

adopted by the State of California or Nevada shall no 

longer be effectiveø; and¿. 

ø(iii) all other States may, at any time, modify or adopt 

a State standard for general service lamps to conform with 

Federal standards and effective dates.¿ 

* * * * * * * 

(c) GENERAL RULE OF PREEMPTION FOR ENERGY CONSERVATION

STANDARDS WHEN FEDERAL STANDARD BECOMES EFFECTIVE FOR A

PRODUCT.—Except as provided in section 325(b)(3)(A)(ii), subparagraphs (B) and (C) of section 325(j)(3), and subparagraphs (B) and 


hsrobinson on PROD1PC76 with HEARING
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(C) of section 325(k)(3) and effective on the effective date of an energy conservation standard established in or prescribed under section 325 for any covered product, no State regulation concerning 

the energy efficiency, energy use, or water use of such covered 

product shall be effective with respect to such product unless the 

regulation— 

(1) * * * 

* * * * * * * 

(6) is a regulation (or portion thereof) concerning the water 

efficiency or water use of gravity tank-type low consumption 

water closets for installation in public places, except that such 

a regulation shall be effective only until January 1, 1997; øor¿ 

* * * * * * * 

(8)(A) * * * 

(B) is an amendment to a regulation described in subparagraph (A) that was developed to align California regulations to 

changes in the Institute for Transportation Engineers standards, entitled ‘‘Performance Specification: Pedestrian Traffic 

Control Signal Indications’’; øand¿ 

(9) is a regulation concerning metal halide lamp fixtures 

adopted by the California Energy Commission on or before 

January 1, 2011, øexcept that— 

ø(A) if the Secretary fails to issue¿ except that if the Secretary fails to issue a final rule within 180 days after the 

deadlines for rulemakings in section 325(hh), notwithstanding any other provision of this section, preemption 

shall not apply to a regulation concerning metal halide 

lamp fixtures adopted by the California Energy Commission— 

ø(i)¿ (A) * * * 

ø(ii)¿ (B) on or before July 1, 2022, if the Secretary fails 

to meet the deadline specified in section 325(hh)(3)ø.¿; 

(10) is a regulation for general service lamps that conforms 

with Federal standards and effective dates; 

(11) is an energy efficiency standard for general service lamps 

enacted into law by the State of Nevada prior to December 19, 

2007, if the State has not adopted the Federal standards and 

effective dates pursuant to subsection (b)(1)(B)(ii); or 

(12) is a regulation concerning standards for hot food holding 

cabinets, drinking water dispensers and portable electric spas 

adopted by the California Energy Commission on or before January 1, 2013. 

(d) WAIVER OF FEDERAL PREEMPTION.—(1)(A) Any State or river 

basin commission with a øState regulation¿ State statute or regulation which provides for any energy conservation standard or other 

requirement with respect to energy use, energy efficiency, or water 

use for any type (or class) of covered product for which there is a 

Federal energy conservation standard under section 325 may file a 

petition with the Secretary requesting a rule that such øState regulation¿ State statute or regulation become effective with respect to 

such covered product. 

(B) Subject to paragraphs (2) through (5), the Secretary shall, 

within the period described in paragraph (2) and after consideration of the petition and the comments of interested persons, preVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00645 Fmt 6659 Sfmt 6601 E:\HR\OC\HR137.XXX HR137

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scribe such rule if the Secretary finds (and publishes such finding) 

that the State or river basin commission has established by a preponderance of the evidence that such State regulation is needed to 

meet unusual and compelling State or local energy or water interests. In making such a finding, the Secretary may not reject a petition for failure of the petitioning State or river basin commission to 

produce confidential information maintained by any manufacturer 

or distributor, or group or association of manufacturers or distributors, and which the petitioning party does not have the legal right 

to obtain. 

(C) For purposes of this subsection, the term ‘‘unusual and compelling State or local energy or water interests’’ means interests 

which— 

(i) * * * 

(ii) are such that the øcosts¿ estimated costs, benefits, burdens, and reliability of energy or water savings resulting from 

the State regulation make such regulation preferable or necessary when measured against the øcosts¿ estimated costs, benefits, burdens, and reliability of alternative approaches to 

energy or water savings or production, including reliance on 

reasonably predictable market-induced improvements in efficiency of all products subject to the State regulation. 

The factors described in clause (ii) shall be evaluated øwithin the 

context of the State’s energy plan and forecast, and,¿ with respect 

to a State regulation for which a petition has been submitted to the 

Secretary which provides for any energy conservation standard or 

requirement with respect to water use of a covered product, within 

the context of the water supply and groundwater management 

plan, water quality program, and comprehensive plan (if any) of 

the State or river basin commission for improving, developing, or 

conserving a waterway affected by water supply development. 

* * * * * * * 

(f) EXCEPTION FOR CERTAIN BUILDING CODE REQUIREMENTS.— 

(1) * * * 

* * * * * * * 

(3) Effective on the effective date of an energy conservation 

standard for a covered product established in or prescribed under 

section 325, a regulation or other requirement contained in a State 

or local building code for new construction concerning the energy 

efficiency or energy use of such covered product is not superseded 

by this part if the code complies with all of the following requirements: 

(A) * * * 

ø(B) The code does not require that the covered product have 

an energy efficiency exceeding the applicable energy conservation standard established in or prescribed under section 325, 

except that the required efficiency may exceed such standard 

up to the level required by a regulation of that State for which 

the Secretary has issued a rule granting a waiver under subsection (d). 

ø(C) The credit to the energy consumption or conservation 

objective allowed by the code for installing covered products 

having energy efficiencies exceeding such energy conservation 

standard established in or prescribed under section 325 or the 


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efficiency level required in a State regulation referred to in 

subparagraph (B) is on a one-for-one equivalent energy use or 

equivalent cost basis. 

ø(D) If the code uses one or more baseline building designs 

against which all submitted building designs are to be evaluated and such baseline building designs contain a covered 

product subject to an energy conservation standard established 

in or prescribed under section 325, the baseline building designs are based on the efficiency level for such covered product 

which meets but does not exceed such standard or the efficiency level required by a regulation of that State for which the 

Secretary has issued a rule granting a waiver under subsection 

(d). 

ø(E) If the code sets forth one or more optional combinations 

of items which meet the energy consumption or conservation 

objective, for every combination which includes a covered product the efficiency of which exceeds either standard or level referred to in subparagraph (D), there also shall be at least one 

combination which includes such covered product the efficiency 

of which does not exceed such standard or level by more than 

5 percent, except that at least one combination shall include 

such covered product the efficiency of which meets but does not 

exceed such standard. 

ø(F) The energy consumption or conservation objective is 

specified in terms of an estimated total consumption of energy 

(which may be calculated from energy loss- or gain-based 

codes) utilizing an equivalent amount of energy (which may be 

specified in units of energy or its equivalent cost). 

ø(G) The estimated energy use of any covered product permitted or required in the code, or used in calculating the objective, is determined using the applicable test procedures prescribed under section 323, except that the State may permit 

the estimated energy use calculation to be adjusted to reflect 

the conditions of the areas where the code is being applied if 

such adjustment is based on the use of the applicable test procedures prescribed under section 323 or other technically accurate documented procedure.¿ 

(B) The code meets at least one of the following requirements: 

(i) The code does not require that the covered product 

have an energy efficiency exceeding— 

(I) the applicable energy conservation standard established in or prescribed under section 325; 

(II) the level required by a regulation of that State 

for which the Secretary has issued a rule granting a 

waiver under subsection (d) of this section; or 

(III) the required level established in the International Energy Conservation Code or in a standard of 

the American Society of Heating, Refrigerating and 

Air-Conditioning Engineers, or by the Secretary pursuant to section 304 of the Energy Conservation and Production Act. 

(ii) If the code uses one or more baseline building designs 

against which all submitted building designs are to be 

evaluated and such baseline building designs contain a 

covered product subject to an energy conservation standard 


hsrobinson on PROD1PC76 with HEARING
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established in or prescribed under section 325, the baseline 

building designs are based on an efficiency level for such 

covered product which meets but does not exceed one of the 

levels specified in clause (i). 

(iii) If the code sets forth one or more optional combinations of items which meet the energy consumption or conservation objective, in at least one combination that the 

State has found to be reasonably achievable using commercially available technologies the efficiency of the covered 

product meets but does not exceed one of the levels specified 

in clause (i). 

(C) The credit to the energy consumption or conservation objective allowed by the code for installing covered products having energy efficiencies exceeding one of the levels specified in 

subparagraph (B)(i) is on a one-for-one equivalent energy use or 

equivalent energy cost basis, taking into account the typical lifetime of the product. 

(D) The energy consumption or conservation objective is specified in terms of an estimated total consumption of energy 

(which may be calculated from energy loss- or gain-based codes) 

utilizing an equivalent amount of energy (which may be specified in units of energy or its equivalent cost) and equivalent lifetimes. 

(E) The estimated energy use of any covered product permitted or required in the code, or used in calculating the objective, is determined using the applicable test procedures prescribed under section 323, except that the State may permit the 

estimated energy use calculation to be adjusted to reflect the 

conditions of the areas where the code is being applied if such 

adjustment is based on the use of the applicable test procedures 

prescribed under section 323 or other technically accurate documented procedure. 

(4)(A) * * * 

ø(B) If a building code requires the installation of covered products with efficiencies exceeding both the applicable Federal standard established in or prescribed under section 325 and the applicable standard of such State, if any, that has been granted a waiver 

under subsection (d), such requirement of the building code shall 

not be applicable unless the Secretary has granted a waiver for 

such requirement under subsection (d).¿ 

(B) If a building code requires the installation of covered products 

with efficiencies exceeding the levels and requirements specified in 

paragraph (3)(B), such requirement of the building code shall not 

be applicable unless the Secretary has granted a waiver for such requirement under subsection (d) of this section. 

* * * * * * * 

PROHIBITED ACTS

SEC. 332. (a) IN GENERAL.—It shall be unlawful— 

(1) * * * 

* * * * * * * 

ø(6)¿ (7) for any manufacturer, distributor, retailer, or private labeler to distribute in commerce an adapter that— 


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(A) * * * 

* * * * * * * 

øINJUNCTIVE ENFORCEMENT

øSEC. 334. The United States district courts shall have jurisdiction to restrain (1) any violation of section 332 and (2) any person 

from distributing in commerce any covered product which does not 

comply with an applicable rule under section 324 or 325. Any such 

action shall be brought by the Commission, except that any such 

action to restrain any violation of section 332(a)(3) which relates to 

requirements prescribed by the Secretary, any violation of section 

332(a)(4) which relates to requests of the Secretary under section 

326(b)(2), or any violation of section 332(a)(5) shall be brought by 

the Secretary. Any such action to restrain any person from distributing in commerce a general service incandescent lamp that does 

not comply with the applicable standard established under section 

325(i) or an adapter prohibited under section 332(a)(6) may also be 

brought by the attorney general of a State in the name of the 

State. Any such action may be brought in the United States district 

court for a district wherein any act, omission, or transaction constituting the violation occurred, or in such court for the district 

wherein the defendant is found or transacts business. In any action 

under this section, process may be served on a defendant in any 

other district in which the defendant resides or may be found.¿ 

SEC. 334. JURISDICTION AND VENUE. 

(a) JURISDICTION.—The United States district courts shall have 

jurisdiction to restrain— 

(1) any violation of section 332; and 

(2) any person from distributing in commerce any covered 

product which does not comply with an applicable rule under 

section 324 or 325. 

(b) AUTHORITY.—Any action referred to in subsection (a) shall be 

brought by the Commission or by the attorney general of a State in 

the name of the State, except that— 

(1) any such action to restrain any violation of section 

332(a)(3) which relates to requirements prescribed by the Secretary or any violation of section 332(a)(4) which relates to request of the Secretary under section 326(b)(2) shall be brought 

by the Secretary; and 

(2) any violation of section 332(a)(5) or 332(a)(7) shall be 

brought by the Secretary or by the attorney general of a State 

in the name of the State. 

(c) VENUE AND SERVICE OF PROCESS.—Any such action may be 

brought in the United States district court for a district wherein any 

act, omission, or transaction constituting the violation occurred, or 

in such court of the district wherein the defendant is found or transacts business. In any action under this section, process may be 

served on a defendant in any other district in which the defendant 

resides or may be found. 

* * * * * * * 


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PART C—CERTAIN INDUSTRIAL EQUIPMENT

DEFINITIONS

SEC. 340. For purposes of this part— 

(1) The term ‘‘covered equipment’’ means one of the following 

types of industrial equipment: 

(A) * * * 

* * * * * * * 

ø(L) Any other type of industrial equipment which the 

Secretary classifies as covered equipment under section 

341(b).¿ 

(L) Outdoor luminaires. 

(M) Outdoor high light output lamps. 

(N) Any other type of industrial equipment which the 

Secretary classifies as covered equipment under section 

341(b). 

* * * * * * * 

(13) ELECTRIC MOTOR.— ø(A) GENERAL PURPOSE ELECTRIC MOTOR (SUBTYPE I).— The term ‘‘general purpose electric motor (subtype I)’’ 

means any motor that meets the definition of ‘‘General 

Purpose’’ as established in the final rule issued by the Department of Energy entitled ‘‘Energy Efficiency Program 

for Certain Commercial and Industrial Equipment: Test 

Procedures, Labeling, and Certification Requirements for 

Electric Motors’’ (10 CFR 431), as in effect on the date of 

enactment of the Energy Independence and Security Act of 

2007. 

ø(B) GENERAL PURPOSE ELECTRIC MOTOR (SUBTYPE II).— The term ‘‘general purpose electric motor (subtype II)’’ 

means motors incorporating the design elements of a general purpose electric motor (subtype I) that are configured 

as 1 of the following: 

ø(i) A U-Frame Motor. 

ø(ii) A Design C Motor. 

ø(iii) A close-coupled pump motor. 

ø(iv) A Footless motor. 

ø(v) A vertical solid shaft normal thrust motor (as 

tested in a horizontal configuration). 

ø(vi) An 8-pole motor (900 rpm). 

ø(vii) A poly-phase motor with voltage of not more 

than 600 volts (other than 230 or 460 volts.¿ 

(A) IN GENERAL.—The term ‘‘electric motor’’ means any 

motor that is— 

(i) a general purpose T-frame, single-speed, footmounting, polyphase squirrel-cage induction motor of 

the National Electrical Manufacturers Association, Design A and B, continuous rated, operating on 230/460 

volts and constant 60 Hertz line power as defined in 

NEMA Standards Publication MG1-1987; or 

(ii) a motor incorporating the design elements described in clause (i), but is configured to incorporate 

one or more of the following variations— 

(I) U-frame motor; 


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(II) NEMA Design C motor; 

(III) close-coupled pump motor; 

(IV) footless motor; 

(V) vertical solid shaft normal thrust motor (as 

tested in a horizontal configuration); 

(VI) 8-pole motor; or 

(VII) poly-phase motor with a voltage rating of 

not more than 600 volts (other than 230 volts or 

460 volts, or both, or can be operated on 230 volts 

or 460 volts, or both). 

ø(C)¿ (B) The term ‘‘definite purpose motor’’ means any 

motor designed in standard ratings with standard operating 

characteristics or standard mechanical construction for use 

under service conditions other than usual or for use on a particular type of application and which cannot be used in most 

general purpose applications. 

ø(D)¿ (C) The term ‘‘special purpose motor’’ means any 

motor, other than a general purpose motor or definite purpose 

motor, which has special operating characteristics or special 

mechanical construction, or both, designed for a particular application. 

ø(E)¿ (D) The term ‘‘open motor’’ means a motor having ventilating openings which permit passage of external cooling air 

over and around the windings of the machine. 

ø(F)¿ (E) The term ‘‘enclosed motor’’ means a motor so enclosed as to prevent the free exchange of air between the inside 

and outside of the case but not sufficiently enclosed to be 

termed airtight. 

ø(G)¿ (F) The term ‘‘small electric motor’’ means a NEMA 

general purpose alternating current single-speed induction 

motor, built in a two-digit frame number series in accordance 

with NEMA Standards Publication MG1–1987. 

ø(H)¿ (G) The term ‘‘efficiency’’ when used with respect to an 

electric motor means the ratio of an electric motor’s useful 

power output to its total power input, expressed in percentage. 

ø(I)¿ (H) The term ‘‘nominal full load efficiency’’ means the 

average efficiency of a population of motors of duplicate design 

as determined in accordance with NEMA Standards Publication MG1–1987. 

* * * * * * * 

ø(22)¿ (23) SINGLE PACKAGE VERTICAL AIR CONDITIONER.— 

The term ‘‘single package vertical air conditioner’’ means aircooled commercial package air conditioning and heating equipment that— 

(A) * * * 

* * * * * * * 

ø(23)¿ (24) SINGLE PACKAGE VERTICAL HEAT PUMP.—The term 

‘‘single package vertical heat pump’’ means a single package 

vertical air conditioner that— 

(A) * * * 

* * * * * * * 

(25) The term ‘‘luminaire’’ means a complete lighting unit 

consisting of one or more light sources and ballast(s), together 


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with parts designed to distribute the light, to position and protect such lamps, and to connect such light sources to the power 

supply. 

(26) The term ‘‘outdoor luminaire’’ means a luminaire that is 

listed as suitable for wet locations pursuant to Underwriters 

Laboratories Inc. standard UL 1598 and is labeled as ‘‘Suitable 

for Wet Locations’’ consistent with section 410.4(A) of the National Electrical Code 2005, or is designed for roadway illumination and meets the requirements of Addendum A for 

IESNA TM-15-07: Backlight, Uplight, and Glare (BUG) Ratings, except for— 

(A) luminaires designed for outdoor video display images 

that cannot be used in general lighting applications; 

(B) portable luminaires designed for use at construction 

sites; 

(C) luminaires designed for continuous immersion in 

swimming pools and other water features; 

(D) seasonal luminaires incorporating solely individual 

lamps rated at 10 watts or less; 

(E) luminaires designed to be used in emergency conditions that incorporate a means of charging a battery and 

a device to switch the power supply to emergency lighting 

loads automatically upon failure of the normal power supply; 

(F) components used for repair of installed luminaries 

and that meet the requirements of section 342(h); 

(G) a luminaire utilizing an electrode-less fluorescent 

lamp as the light source; 

(H) decorative gas lighting systems; 

(I) luminaires designed explicitly for lighting for theatrical purposes, including performance, stage, film production, and video production; 

(J) luminaires designed as theme elements in theme/ 

amusement parks and that cannot be used in most general 

lighting applications; 

(K) luminaires designed explicitly for vehicular roadway 

tunnels designed to comply with ANSI/IESNA RP-22-05; 

(L) luminaires designed explicitly for hazardous locations 

meeting UL Standard 844; 

(M) searchlights; 

(N) luminaires that are designed to be recessed into a 

building, and that cannot be used in most general lighting 

applications; 

(O) a luminaire rated only for residential applications 

utilizing a light source or sources regulated under the 

amendments made by section 321 of the Energy Independence and Security Act of 2007 and with a light output no 

greater than 2,600 lumens; 

(P) a residential pole-mounted luminaire that is not rated 

for commercial use utilizing a light source or sources meeting the efficiency requirements of section 231 of the Energy 

Independence and Security Act of 2007 and mounted on a 

post or pole not taller than 10.5 feet above ground and with 

a light output not greater than 2,600 lumens; 


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(Q) a residential fixture with E12 (Candelabra) bases 

that is rated for not more than 300 watts total; or 

(R) a residential fixture with medium screw bases that is 

rated for not more than 145 watts. 

(27) The term ‘‘outdoor high light outputlamp’’ means a lamp 

that— 

(A) has a rated lumen output not less than 2601 lumens; 

(B) is capable of being operated at a voltage not less than 

110 volts and not greater than 300 volts, or driven at a 

constant current of 6.6 amperes; 

(C) is not a Parabolic Aluminized Reflector lamp; and 

(D) is not a J-type double-ended (T-3) halogen quartz 

lamp, utilizing R-7S bases, that is manufactured before 

January 1, 2015. 

(28) The term ‘‘outdoor lighting control’’ means a device incorporated in a luminaire that receives a signal, from either a sensor (such as an occupancy sensor, motion sensor, or daylight 

sensor) or an input signal (including analog or digital signals 

communicated through wired or wireless technology), and can 

adjust the light level according to the signal. 

* * * * * * * 

STANDARDS

SEC. 342. (a) SMALL, LARGE, AND VERY LARGE COMMERCIAL

PACKAGE AIR CONDITIONING AND HEATING EQUIPMENT, PACKAGED

TERMINAL AIR CONDITIONERS AND HEAT PUMPS, WARM-AIR FUR- NACES, PACKAGED BOILERS, STORAGE WATER HEATERS, INSTANTA- NEOUS WATER HEATERS, AND UNFIRED HOT WATER STORAGE

TANKS.—(1) * * * 

* * * * * * * 

(6) AMENDED ENERGY EFFICIENCY STANDARDS.— 

(A) * * * 

(B) RULE.—øIf the Secretary¿ 

(i) IN GENERAL.—If the Secretary makes a determination described in øclause (ii)(II)¿ subparagraph 

(A)(ii)(II) for a product described in øclause (i)¿ subparagraph (A)(i), not later than 30 months after the 

date of publication of the amendment to the ASHRAE/ 

IES Standard 90.1 for the product, the Secretary shall 

issue the rule establishing the amended standard. 

(ii) FACTORS.—In determining whether a standard is 

economically justified for the purposes of subparagraph 

(A)(ii)(II), the Secretary shall, after receiving views and 

comments furnished with respect to the proposed 

standard, determine whether the benefits of the standard exceed the burden of the proposed standard by, to 

the maximum extent practicable, considering— 

(I) the economic impact of the standard on the 

manufacturers and on the consumers of the products subject to the standard; 

(II) the savings in operating costs throughout the 

estimated average life of the product in the type (or 

class) compared to any increase in the price of, or 

in the initial charges for, or maintenance expenses 


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of, the products that are likely to result from the 

imposition of the standard; 

(III) the total projected quantity of energy savings likely to result directly from the imposition of 

the standard; 

(IV) any lessening of the utility or the performance of the products likely to result from the imposition of the standard; 

(V) the impact of any lessening of competition, as 

determined in writing by the Attorney General, 

that is likely to result from the imposition of the 

standard; 

(VI) the need for national energy conservation; 

and 

(VII) other factors the Secretary considers relevant. 

(iii) ADMINISTRATION.— 

(I) ENERGY USE AND EFFICIENCY.—The Secretary 

may not prescribe any amended standard under 

this paragraph that increases the maximum allowable energy use, or decreases the minimum required energy efficiency, of a covered product. 

(II) UNAVAILABILITY.— 

(aa) IN GENERAL.—The Secretary may not 

prescribe an amended standard under this 

subparagraph if the Secretary finds (and publishes the finding) that interested persons have 

established by a preponderance of the evidence 

that a standard is likely to result in the unavailability in the United States in any product type (or class) of performance characteristics (including reliability, features, sizes, capacities, and volumes) that are substantially 

the same as those generally available in the 

United States at the time of the finding of the 

Secretary. 

(bb) OTHER TYPES OR CLASSES.—The failure 

of some types (or classes) to meet the criterion 

established under this subclause shall not affect the determination of the Secretary on 

whether to prescribe a standard for the other 

types or classes. 

(C) AMENDMENT OF STANDARD.— 

(i) * * * 

* * * * * * * 

(iv) APPLICATION TO PRODUCTS.—øAn amendment 

prescribed under this subsection¿ Notwithstanding 

subparagraph (D), an amendment prescribed under 

this subparagraph shall apply to products manufactured after a date that is the later of— 

(I) * * * 

* * * * * * * 

ø(iii)¿ (vi) CONSIDERATION OF PRICES AND OPERATING

PATTERNS.—If the Secretary is considering revised 


hsrobinson on PROD1PC76 with HEARING
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standards for air-cooled 3-phase central air conditioners and central air conditioning heat pumps with 

less 65,000 Btu per hour (cooling capacity), the Secretary shall use commercial energy prices and operating patterns in all analyses conducted by the Secretary. 

* * * * * * * 

(11) WARM AIR FURNACES.—Each warm air furnace with an input 

rating of 225,000 Btu per hour or more and manufactured after 

January 1, 2011, shall meet the following standard levels: 

(A) GAS-FIRED UNITS.— 

(i) Minimum thermal efficiency of 80 percent. 

(ii) Include an interrupted or intermittent ignition device. 

(iii) Have jacket losses not exceeding 0.75 percent of the 

input rating. 

(iv) Have either power venting or a flue damper. 

(B) OIL-FIRED UNITS.— 

(i) Minimum thermal efficiency of 81 percent. 

(ii) Have jacket losses not exceeding 0.75 percent of the 

input rating. 

(iii) Have either power venting or a flue damper. 

(b) ELECTRIC MOTORS.—(1) Except for definite purpose motors, 

special purpose motors, and those motors exempted by the Secretary under øparagraph (2)¿ paragraph (3), each electric motor 

manufactured (alone or as a component of another piece of equipment) after the 60-month period beginning on the date of the enactment of this subsection, or in the case of an electric motor which 

requires listing or certification by a nationally recognized safety 

testing laboratory, after the 84-month period beginning on such 

date, shall have a nominal full load efficiency of not less than the 

following: 

Number of poles 

Nominal Full-Load Efficiency 

Open Motors Closed Motors 

6 4 2 6 4 2 

Motor Horsepower .......... .......... .......... .......... .......... ..........

1 ........................................................ 80.0 82.5 .......... 80.0 82.5 75.5 

1.5 ..................................................... 84.0 84.0 82.5 85.5 84.0 82.5 

2 ........................................................ 85.5 84.0 84.0 86.5 84.0 84.0 

3 ........................................................ 86.5 86.5 84.0 87.5 87.5 85.5 

5 ........................................................ 87.5 87.5 85.5 87.5 87.5 87.5 

7.5 ..................................................... 88.5 88.5 87.5 89.5 89.5 88.5 

10 ...................................................... 90.2 89.5 88.5 89.5 89.5 89.5 

15 ...................................................... 90.2 91.0 89.5 90.2 91.0 90.2 

20 ...................................................... 91.0 91.0 90.2 90.2 91.0 90.2 

25 ...................................................... 91.7 91.7 91.0 91.7 92.4 91.0 

30 ...................................................... 92.4 92.4 91.0 91.7 92.4 91.0 

40 ...................................................... 93.0 93.0 91.7 93.0 93.0 91.7 

50 ...................................................... 93.0 93.0 92.4 93.0 93.0 92.4 

60 ...................................................... 93.6 93.6 93.0 93.6 93.6 93.0 

75 ...................................................... 93.6 94.1 93.0 93.6 94.1 93.0 

100 .................................................... 94.1 94.1 93.0 94.1 94.5 93.6 

125 .................................................... 94.1 94.5 93.6 94.1 94.5 94.5 


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Number of poles 

Nominal Full-Load Efficiency 

Open Motors Closed Motors 

6 4 2 6 4 2 

150 .................................................... 94.5 95.0 93.6 95.0 95.0 94.5 

200 .................................................... 94.5 95.0 94.5 95.0 95.0 95.0 

(2) STANDARDS EFFECTIVE BEGINNING DECEMBER 19, 2010.— 

(A) IN GENERAL.—Except for definite purpose motors, special 

purpose motors, and those motors exempted by the Secretary 

under paragraph (3) and except as provided for in subparagraphs (B), (C), and (D), each electric motor manufactured with 

power ratings from 1 to 200 horsepower (alone or as a component of another piece of equipment) on or after December 19, 

2010, shall have a nominal full load efficiency of not less than 

the nominal full load efficiency described in NEMA MG-1 

(2006) Table 12-12. 

(B) FIRE PUMP ELECTRIC MOTORS.—Except for those motors 

exempted by the Secretary under paragraph (3), each fire pump 

electric motor manufactured with power ratings from 1 to 200 

horsepower (alone or as a component of another piece of equipment) on or after December 19, 2010, shall have a nominal full 

load efficiency that is not less than the nominal full load efficiency described in NEMA MG-1 (2006) Table 12-11. 

(C) NEMA DESIGN B ELECTRIC MOTORS.—Except for those motors exempted by the Secretary under paragraph (3), each 

NEMA Design B electric motor with power ratings of more than 

200 horsepower, but not greater than 500 horsepower, manufactured (alone or as a component of another piece of equipment) 

on or after December 19, 2010, shall have a nominal full load 

efficiency of not less than the nominal full load efficiency described in NEMA MG-1 (2006) Table 12-11. 

(D) MOTORS INCORPORATING CERTAIN DESIGN ELEMENTS.— Except for those motors exempted by the Secretary under paragraph (3), each electric motor described in section 340(13)(A)(ii) 

manufactured with power ratings from 1 to 200 horsepower 

(alone or as a component of another piece of equipment) on or 

after December 19, 2010, shall have a nominal full load efficiency of not less than the nominal full load efficiency described 

in NEMA MG-1 (2006) Table 12-11. 

ø(2)¿ (3)(A) The Secretary may, by rule, provide that the standards specified in øparagraph (1)¿ paragraphs (1) and (2) shall not 

apply to certain types or classes of electric motors if— 

(i) * * * 

* * * * * * * 

(D) Manufacturers of types or classes of motors developed after 

the date of the enactment of this subsection to which standards 

under øparagraph (1)¿ paragraphs (1) and (2) would be applicable 

may petition the Secretary for exemptions from compliance with 

such standards based on the criteria specified in subparagraph (A). 

ø(3)¿ (4)(A) The Secretary shall publish a final rule no later than 

the end of the 24-month period beginning on the effective date of 

the standards established under paragraph (1) to determine if such 


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standards should be amended. Such rule shall provide that any 

amendment shall apply to electric motors manufactured on or after 

a date which is five years after the effective date of the standards 

established under paragraph (1). 

* * * * * * * 

(g) OUTDOOR LUMINAIRES.— 

(1) Each outdoor luminaire manufactured on or after January 1, 2011, shall— 

(A) have an initial luminaire efficacy of at least 50 

lumens per watt; and 

(B) be designed to use a light source with a lumen maintenance, calculated as mean rated lumens divided by initial 

lumens, of at least 0.6. 

(2) Each outdoor luminaire manufactured on or after January 1, 2013, shall— 

(A) have an initial luminaire efficacy of at least 70 

lumens per watt; and 

(B) be designed to use a light source with a lumen maintenance, calculated as mean rated lumens divided by initial 

lumens, of at least 0.6. 

(3) Each outdoor luminaire manufactured on or after January 1, 2015, shall— 

(A) have an initial luminaire efficacy of at least 80 

lumens per watt; and 

(B) be designed to use a light source with a lumen maintenance, calculated as mean rated lumens divided by initial 

lumens, of at least 0.65. 

(4) In addition to the requirements of paragraphs (1) through 

(3), each outdoor luminaire manufactured on or after January 

1, 2011, shall have the capability of producing at least two different light levels, including 100 percent and 60 percent of full 

lamp output as tested with the maximum rated lamp per 

UL1598 or the manufacturer’s maximum specified for the luminaire under test. 

(5)(A) Not later than January 1, 2017, the Secretary shall 

issue a final rule amending the applicable standards established in paragraphs (3) and (4) if technologically feasible and 

economically justified. 

(B) A final rule issued under subparagraph (A) shall establish efficiency standards at the maximum level that is technically feasible and economically justified, as provided in subsections (o) and (p) of section 325. The Secretary may also, in 

such rulemaking, amend or discontinue the product exclusions 

listed in section 340(26)(A) through (P), or amend the lumen 

maintenance requirements in paragraph (3) if the Secretary determines that such amendments are consistent with the purposes of this Act. 

(C) If the Secretary issues a final rule under subparagraph 

(A) establishing amended standards, the final rule shall provide that the amended standards apply to products manufactured on or after January 1, 2020, or one year after the date 

on which the final amended standard is published, whichever 

is later. 


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(h) OUTDOOR HIGH LIGHT OUTPUT LAMPS.—Each outdoor high 

light output lamp manufactured on or after January 1, 2012, shall 

have a lighting efficiency of at least 45 lumens per watt. 

TEST PROCEDURES

SEC. 343. (a) PRESCRIPTION BY SECRETARY; REQUIREMENTS.— 

(1) øTEST PROCEDURES.— 

ø(A) AMENDMENT.—¿ TEST PROCEDURES.—At least once 

every 7 years, the Secretary shall conduct an evaluation of 

each class of covered equipment and— 

ø(i)¿ (A) if the Secretary determines that amended test 

procedures would more accurately or fully comply with the 

requirements of paragraphs (2) and (3), shall prescribe test 

procedures for the class in accordance with this section; or 

ø(ii)¿ (B) shall publish notice in the Federal Register of 

any determination not to amend a test procedure. 

* * * * * * * 

(10) OUTDOOR LIGHTING.— 

(A) With respect to outdoor luminaires and outdoor high 

light output lamps, the test procedures shall be based upon 

the test procedures specified in illuminating engineering society procedures LM–79 as of March 1, 2009, and LM-31, 

and/or other appropriate consensus test procedures developed by the Illuminating Engineering Society or other appropriate consensus standards bodies. 

(B) If illuminating engineering society procedure LM—79 

is amended, the Secretary shall amend the test procedures 

established in subparagraph (A) as necessary to be consistent with the amended LM–79 test procedure, unless the 

Secretary determines, by rule, published in the Federal 

Register and supported by clear and convincing evidence, 

that to do so would not meet the requirements for test procedures under paragraph (2). 

(C) The Secretary may revise the test procedures for outdoor luminaires or outdoor high light output lamps by rule 

consistent with paragraph (2), and may incorporate as appropriate consensus test procedures developed by the Illuminating Engineering Society or other appropriate consensus standards bodies. 

* * * * * * * 

ADMINISTRATION, PENALTIES, ENFORCEMENT, AND PREEMPTION

SEC. 345. (a) The provisions of section 326 (a), (b), and (d), the 

provisions of subsections (l) through (s) of section 325, and section 

327 through 336 shall apply with respect to this part (other than 

the equipment specified in øsubparagraphs (B) through (G)¿ subparagraphs (B), (C), (D), (I), (J), and (K) of section 340(1)) to the 

same extent and in the same manner as they apply in part B. In 

applying such provisions for the purposes of this part— 

(1) * * * 

* * * * * * * 

(b)(1) The provisions of section 325(p)(5), section 326(a), (b), and 

(d), section 327(a), and sections 328 through 336 shall apply with 


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respect to the equipment specified in øsubparagraphs (B) through 

(G)¿ subparagraphs (B), (C), (D), (I), (J), and (K) of section 340(1) 

to the same extent and in the same manner as they apply in øpart 

A¿ part B. In applying such provisions for the purposes of such 

equipment, paragraphs (1), (2), (3), and (4) of subsection (a) shall 

apply. 

* * * * * * * 

(d)(1) Except as provided in paragraphs (2) and (3), section 327 

shall apply with respect to very large commercial package air conditioning and heating equipment to the same extent and in the 

same manner as section 327 applies under øpart A¿ part B on the 

date of enactment of this subsection. 

* * * * * * * 

(e)(1)(A) Subsections (a), (b), and (d) of section 326, subsections 

(m) through (s) of section 325, and sections 328 through 336 shall 

apply with respect to commercial refrigerators, freezers, and refrigerator-freezers to the same extent and in the same manner as 

those provisions apply under øpart A¿ part B. 

* * * * * * * 

(2)(A) Section 327 shall apply to commercial refrigerators, freezers, and refrigerator-freezers for which standards are established 

under paragraphs (2) and (3) of section 342(c) to the same extent 

and in the same manner as those provisions apply under øpart A¿ 

part B on the date of enactment of this subsection, except that any 

State or local standard issued before the date of enactment of this 

subsection shall not be preempted until the standards established 

under paragraphs (2) and (3) of section 342(c) take effect. 

* * * * * * * 

(3)(A) Section 327 shall apply to commercial refrigerators, freezers, and refrigerator-freezers for which standards are established 

under section 342(c)(4) to the same extent and in the same manner 

as the provisions apply under øpart A¿ part B on the date of publication of the final rule by the Secretary, except that any State or 

local standard issued before the date of publication of the final rule 

by the Secretary shall not be preempted until the standards take 

effect. 

* * * * * * * 

(f)(1)(A)(i) Except as provided in clause (ii), section 327 shall 

apply to automatic commercial ice makers for which standards 

have been established under section 342(d)(1) to the same extent 

and in the same manner as the section applies under øpart A¿ part 

B on the date of enactment of this subsection. 

* * * * * * * 

(2)(A)(i) Except as provided in clause (ii), section 327 shall apply 

to automatic commercial ice makers for which standards have been 

established under section 342(d)(2) to the same extent and in the 

same manner as the section applies under øpart A¿ part B on the 

date of publication of the final rule by the Secretary. 

* * * * * * * 

(h) WALK-IN COOLERS AND WALK-IN FREEZERS.— 

(1) COVERED TYPES.— 


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(A) RELATIONSHIP TO OTHER LAW.— (i) IN GENERAL.—Except as otherwise provided in 

this subsection, section 327 shall apply to walk-in coolers and walk-in freezers for which standards have 

been established under paragraphs (1), (2), and (3) of 

section 342(f) to the same extent and in the same 

manner as the section applies under øpart A¿ part B 

on the date of enactment of this subsection. 

* * * * * * * 

(3) CALIFORNIA.—Any standard issued in the State of California before January 1, 2011, under title 20 of the California 

Code of Regulations, that refers to walk-in coolers and walkin freezers, for which standards have been established under 

paragraphs (1), (2), and (3) of section 342(f), shall not be preempted until the standards established under øsection 

342(f)(3)¿ section 342(f)(4) take effect. 

(i)(1) Except as provided in paragraph (2), section 327 shall apply 

to outdoor luminaires to the same extent and in the same manner 

as the section applies under part B. 

(2) Any State standard that is adopted on or before January 1, 

2015, pursuant to a statutory requirement to adopt efficiency standards for reducing outdoor lighting energy use enacted prior to January 31, 2008, shall not be preempted. 

* * * * * * * 

SEC. 347. MOTOR EFFICIENCY REBATE PROGRAM. 

(a) ESTABLISHMENT.—Not later than January 1, 2010, in accordance with subsection (b), the Secretary shall establish a program to 

provide rebates for expenditures made by entities— 

(1) for the purchase and installation of a new electric motor 

that has a nominal full load efficiency that is not less than the 

nominal full load efficiency as defined in— 

(A) table 12–12 of NEMA Standards Publication MG 1– 

2006 for random wound motors rated 600 volts or lower; or 

(B) table 12–13 of NEMA Standards Publication MG 1– 

2006 for form wound motors rated 5000 volts or lower; and 

(2) to replace an installed motor of the entity the specifications of which are established by the Secretary by a date that 

is not later than 90 days after the date of enactment of this section. 

(b) REQUIREMENTS.— (1) APPLICATION.—To be eligible to receive a rebate under this 

section, an entity shall submit to the Secretary an application 

in such form, at such time, and containing such information as 

the Secretary may require, including— 

(A) demonstrated evidence that the entity purchased an 

electric motor described in subsection (a)(1) to replace an 

installed motor described in subsection (a)(2); 

(B) demonstrated evidence that the entity— 

(i) removed the installed motor of the entity from 

service; and 

(ii) properly disposed the installed motor of the entity; and 

(C) the physical nameplate of the installed motor of the 

entity. 


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(2) AUTHORIZED AMOUNT OF REBATE.—The Secretary may 

provide to an entity that meets each requirement under paragraph (1) a rebate the amount of which shall be equal to the 

product obtained by multiplying— 

(A) the nameplate horsepower of the electric motor purchased by the entity in accordance with subsection (a)(1); 

and 

(B) $25.00. 

(3) PAYMENTS TO DISTRIBUTORS OF QUALIFYING ELECTRIC MO- TORS.—To assist in the payment for expenses relating to processing and motor core disposal costs, the Secretary shall provide to the distributor of an electric motor described in subsection (a)(1), the purchaser of which received a rebate under 

this section, an amount equal to the product obtained by multiplying— 

(A) the nameplate horsepower of the electric motor; and 

(B) $5.00. 

(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 

be appropriated to carry out this section, to remain available until 

expended— (1) $80,000,000 for fiscal year 2011; 

(2) $75,000,000 for fiscal year 2012; 

(3) $70,000,000 for fiscal year 2013; 

(4) $65,000,000 for fiscal year 2014; and 

(5) $60,000,000 for fiscal year 2015. 

* * * * * * * 

PART E—INDUSTRIAL ENERGY EFFICIENCY 

* * * * * * * 

SEC. 373. WASTE ENERGY RECOVERY INCENTIVE GRANT PROGRAM. 

(a) * * * 

* * * * * * * 

(c) GRANTS TO STATES.—In the case of any State that has 

achieved 80 percent or more of waste heat recovery opportunities 

identified by the Secretary under this part, the øAdministrator¿ 

Secretary shall make a 1-time grant to the State in an amount of not more than $1,000 per megawatt of waste-heat capacity recovered (or a thermal equivalent) to support State-level programs to 

identify and achieve additional energy efficiency. 

* * * * * * * 

(e) LIMITATION.—The Secretary shall not award grants to any 

person for a combined heat and power project or a waste heat recovery project øthat qualifies for¿ who elects to claim specific Federal tax incentives for combined heat and power or for waste heat 

recovery from that project. 

* * * * * * * 

SEC. 375. CLEAN ENERGY APPLICATION CENTERS. 

(a) * * * 

* * * * * * * 

(f) COORDINATION WITH CENTERS FOR ENERGY AND ENVIRONMENTAL KNOWLEDGE AND OUTREACH.—A Clean Energy Application 


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Center may serve as a Center for Energy and Environmental Knowledge and Outreach established pursuant to section 173 of the American Clean Energy and Security Act of 2009. 

ø(f)¿ (g) AUTHORIZATION.—There is authorized to be appropriated 

to carry out this section ø$10,000,000 for each of fiscal years 2008 

through 2012¿ $30,000,000 for fiscal year 2010 and each fiscal year 

thereafter. 

* * * * * * * 

PART G—ENERGY CONSERVATION PROGRAM FOR SCHOOLS AND

HOSPITALS

* * * * * * * 

SEC. 399A. ENERGY SUSTAINABILITY AND EFFICIENCY GRANTS AND 

LOANS FOR INSTITUTIONS. 

(a) DEFINITIONS.—In this section: 

(1) * * * 

* * * * * * * 

(5) INSTITUTIONAL ENTITY.—The term ‘‘institutional entity’’ 

means an institution of higher education, a public school district, a local government, a municipal utility, øor a designee¿ 

a not-for-profit hospital or not-for-profit inpatient health care 

facility, or a designated agent of 1 of those entities. 

* * * * * * * 

(c) GRANTS FOR ENERGY EFFICIENCY IMPROVEMENT AND ENERGY

SUSTAINABILITY.— 

(1) GRANTS.— 

(A) * * * 

* * * * * * * 

ø(C) MINIMUM FUNDING.—Not less than 50 percent of 

the total funding for all grants under this subsection shall 

be awarded in grants to institutions of higher education.¿ 

* * * * * * * 

(f) GRANT AMOUNTS.— 

(1) * * * 

* * * * * * * 

(3) GRANTS FOR EFFICIENCY IMPROVEMENT AND ENERGY SUSTAINABILITY.—In the case of grants for efficiency improvement 

and energy sustainability under subsection (c), grant funds 

shall be available for not more than an amount equal to the 

lesser of— 

(A) ø$1,000,000¿ $2,500,000; or 

* * * * * * * 

(i) AUTHORIZATION.— 

(1) GRANTS.—There is authorized to be appropriated for the 

cost of grants authorized in subsections (b), (c), and (d) 

ø$250,000,000 for each of fiscal years 2009 through 2013¿ 

$250,000,000 for each of fiscal years 2010 through 2015, of 


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which not more than 5 percent may be used for administrative 

expenses. 

* * * * * * * 

FEDERAL POWER ACT 

* * * * * * * 

PART II—REGULATION OF ELECTRIC UTILITY COMPANIES 

ENGAGED IN INTERSTATE COMMERCE 

* * * * * * * 

SEC. 216A. TRANSMISSION PLANNING. 

(a) FEDERAL POLICY.— (1) OBJECTIVES.—It is the policy of the United States that regional electric grid planning should facilitate the deployment of 

renewable and other zero-carbon energy sources for generating 

electricity to reduce greenhouse gas emissions while ensuring reliability, reducing congestion, ensuring cyber-security, and providing for cost-effective electricity services throughout the 

United States. 

(2) OPTIONS.—In addition to the policy under paragraph (1), 

it is the policy of the United States that regional electric grid 

planning to meet these objectives should take into account all 

significant demand-side and supply-side options, including energy efficiency, distributed generation, renewable energy and 

zero-carbon electricity generation technologies, smart-grid technologies and practices, demand response, electricity storage, 

voltage regulation technologies, high capacity conductors with 

at least 25 percent greater efficiency than traditional ACSR 

(aluminum stranded conductors steel reinforced) conductors, 

superconductor technologies, underground transmission technologies, and new conventional electric transmission capacity 

and corridors. 

(b) PLANNING.— 

(1) PLANNING PRINCIPLES.—Not later than 1 year after the 

date of enactment of this section, the Commission shall adopt, 

after notice and opportunity for comment, national electricity 

grid planning principles derived from the Federal policy established under subsection (a) to be applied in ongoing and future 

transmission planning that may implicate interstate transmission of electricity. 

(2) REGIONAL PLANNING ENTITIES.—Not later than 3 months 

after the date of adoption by the Commission of national electricity grid planning principles pursuant to paragraph (1), entities that conduct or may conduct transmission planning pursuant to State or Federal law or regulation, including States, entities designated by States, public utility transmission providers, 

operators and owners, regional organizations, and electric utilities, and that are willing to incorporate the national electricity 

grid planning principles adopted by the Commission in their 

electric grid planning, shall identify themselves and the regions 

for which they propose to develop plans to the Commission. 


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(3) COORDINATION OF REGIONAL PLANNING ENTITIES.—The 

Commission shall encourage regional planning entities described under paragraph (2) to cooperate and coordinate across 

regions and to harmonize regional electric grid planning with 

planning in adjacent or overlapping jurisdictions to the maximum extent feasible. The Commission shall work with States, 

public utilities transmission providers, load-serving entities, 

transmission operators, and other organizations to resolve any 

conflict or competition among proposed planning entities in 

order to build consensus and promote the Federal policy established under subsection (a). The Commission shall seek to ensure that planning that is consistent with the national electricity grid planning principles adopted pursuant to paragraph 

(1) is conducted in all regions of the United States and the territories. 

(4) RELATION TO EXISTING PLANNING POLICY.—In implementing the Federal policy established under subsection (a), the 

Commission shall— 

(A) incorporate any ongoing planning efforts undertaken 

pursuant to section 217; and 

(B) consult with and invite the participation of the Secretary of Energy in relationship to the Secretary’s duties 

pursuant to section 216. 

(5) ASSISTANCE.— (A) IN GENERAL.—The Commission shall provide support 

to and participate in the regional grid planning processes 

conducted by regional planning entities. The Commission 

may provide planning resources and assistance as required 

or as requested by regional planning entities, including system data, cost information, system analysis, technical expertise, modeling support, dispute resolution services, and 

other assistance to regional planning entities, as appropriate. 

(B) AUTHORIZATION.—There are authorized to be appropriated such sums as may be necessary to carry out this 

paragraph. 

(6) CONFLICT RESOLUTION.—In the event that regional grid 

plans conflict, the Commission shall assist the regional planning entities in resolving such conflicts in order to achieve the 

objectives of the Federal policy established under subsection (a). 

(7) SUBMISSION OF PLANS.—The Commission shall require regional planning entities to submit initial regional electric grid 

plans to the Commission not later than 18 months after the 

date the Commission promulgates national electricity grid planning principles pursuant to paragraph (1). Regional electric 

grid plans should, in general, be developed from sub-regional 

requirements and plans, including planning input reflecting individual utility service areas. Regional plans may then in turn 

be combined into larger regional plans, up to interconnectionwide and national plans, as appropriate and necessary as determined by the Commission. The Commission shall review 

such plans for consistency with the national grid planning principles and may return a plan to one or more planning entities 

for further consideration, along with the Commission’s own recommendations for resolution of any conflict or for improvement. 


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To the extent practicable, all plans submitted to the Commission shall be public documents and available on the Commission’s website. 

(8) MULTI-REGIONAL MEETINGS.—As regional grid plans are 

submitted to the Commission, the Commission may convene 

multi-regional meetings to discuss regional grid plan consistency and integration, including requirements for multi-regional 

projects, and to resolve any conflicts that emerge from such 

multi-regional projects. The Commission shall provide its recommendations for eliminating any inter-regional conflicts. 

(9) REPORT TO CONGRESS.—Not later than 3 years after the 

date of enactment of this section, the Commission shall provide 

a report to Congress containing the results of the regional grid 

planning process, including summaries of the adopted regional 

plans. The Commission shall provide an electronic version of its 

report on its website with links to all regional and sub-regional 

plans taken into account. The Commission shall note and provide its recommended resolution for any conflicts not resolved 

during the planning process. The Commission shall make any 

recommendations to Congress on the appropriate Federal role 

or support required to address the needs of the electric grid, including recommendations for addressing any needs that are beyond the reach of existing State and Federal authority. 

* * * * * * * 

PART IV—CARBON MARKET ASSURANCE 

SEC. 401. OVERSIGHT AND ASSURANCE OF CARBON MARKETS. 

(a) DEFINITIONS.—In this section: 

(1) CONTRACT OF SALE.—The term ‘‘contract of sale’’ includes 

sales, agreements of sale, and agreements to sell. 

(2) COVERED ENTITY.—The term ‘‘covered entity’’ shall have 

the meaning given in section 700 of the Clean Air Act. 

(3) FUTURE DELIVERY.—The term ‘‘future delivery’’ does not 

include any sale of any cash commodity for deferred shipment 

or delivery. 

(4) OFFSET CREATION CONTRACT.—The term ‘‘offset creation 

contract’’ mean a written agreement for the origination and development of an offset project, and the related issuance of offset 

credits, pursuant to title VII of the Clean Air Act. 

(5) REGULATED ALLOWANCE.—The term ‘‘regulated allowance’’ 

means any emission allowance, compensatory allowance, offset 

credit, or Federal renewable electricity credit established or 

issued under the American Clean Energy and Security Act of 

2009. 

(6) REGULATED ALLOWANCE DERIVATIVE.—The term ‘‘regulated allowance derivative’’ means an instrument that is, or includes, an instrument— 

(A) which— 

(i) is of the character of, or is commonly known to the 

trade as, a ‘‘put option’’, ‘‘call option’’, ‘‘privilege’’, ‘‘indemnity’’, ‘‘advance guaranty’’, ‘‘decline guaranty’’, or 

‘‘swap agreement’’; or 


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(ii) is a contract of sale for future delivery other than 

an offset creation contract; and 

(B) the value of which, in whole or in part, is expressly 

linked to the price of a regulated allowance or another regulated allowance derivative. 

(7) REGULATED INSTRUMENT.—The term ‘‘regulated instrument’’ means a regulated allowance or a regulated allowance 

derivative. 

(b) REGULATED ALLOWANCE MARKET.— 

(1) AUTHORITY.—The Commission shall promulgate regulations for the establishment, operation, and oversight of markets 

for regulated allowances not later than 18 months after the date 

of the enactment of this section, and from time to time thereafter as may be appropriate. 

(2) REGULATIONS.—The regulations promulgated pursuant to 

paragraph (1) shall— 

(A) provide for effective and comprehensive market oversight; 

(B) prohibit fraud, market manipulation (including an 

entity’s fraudulent or manipulative conduct with respect to 

regulated allowance derivatives that benefits the entity in 

regulated allowance markets), and excess speculation, and 

provide measures to limit unreasonable fluctuation in the 

prices of regulated allowances; 

(C) facilitate compliance with title VII of the Clean Air 

Act by covered entities; 

(D) ensure market transparency and recordkeeping 

deemed necessary and appropriate by the Commission to 

provide for efficient price discovery; prevention of fraud, 

market manipulation, and excess speculation; and compliance with title VII of the Clean Air Act and section 610 of 

the Public Utility Regulatory Policies Act of 1978; 

(E) as necessary, ensure that position limitations for individual market participants are established with respect to 

each class of regulated allowances; 

(F) as necessary, ensure that margin requirements are established for each class of regulated allowances; 

(G) provide for the formation and operation of a fair, orderly and liquid national market system that allows for the 

best execution in the trading of regulated allowances; 

(H) limit or eliminate counterparty risks, market power 

concentration risks, and other risks associated with overthe-counter trading; and 

(I) establish standards for qualification as, and operation 

of, trading facilities for regulated allowances; 

(J) establish standards for qualification as, and operation of, clearing organizations for trading facilities for 

regulated allowances; and 

(K) include such other requirements as necessary to preserve market integrity and facilitate compliance with title 

VII of the Clean Air Act and section 610 of the Public Utility Regulatory Policies Act of 1978 and the regulations promulgated under such title and such section. 

(3) ENFORCEMENT.— 


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(A) IN GENERAL.—If the Commission determines, after 

notice and an opportunity for a hearing on the record, that 

any entity has violated any rule or order issued by the 

Commission under this subsection, the Commission may 

issue an order— 

(i) prohibiting the entity from trading on a trading 

facility for regulated allowances registered with the 

Commission, and requiring all such facilities to refuse 

the entity all privileges for such period as may be specified in the order; 

(ii) if the entity is registered with the Commission in 

any capacity, suspending for a period of not more than 

6 months, or revoking, the registration of the entity; 

(iii) assessing the entity a civil penalty of not more 

than $1,000,000 per day per violation for as long as 

the violation continues (and in determining the amount 

of a civil penalty, the Commission shall take into account the nature and seriousness of the violation and 

the efforts to remedy the violation); and 

(iv) requiring disgorgement of unjust profits, restitution to entities harmed by the violation as determined 

by the Commission, or both. 

(B) AUTHORITY TO SUSPEND OR REVOKE REGISTRATION.— 

The Commission may suspend for a period of not more 

than 6 months, or revoke, the registration of a trading facility for regulated allowances or of a clearing organization 

registered by the Commission if, after notice and opportunity for a hearing on the record, the Commission finds 

that— 

(i) the entity violated any rule or order issued by the 

Commission under this subsection; or 

(ii) a director, officer, employee, or agent of the entity 

has violated any rule or order issued by the Commission under this subsection. 

(C) CEASE AND DESIST PROCEEDINGS.— 

(i) IN GENERAL.—If the Commission determines that 

any entity may be violating, may have violated, or may 

be about to violate any provision of this part, or any 

regulation promulgated by, or any restriction, condition, or order made or imposed by, the Commission 

under this Act, and if the Commission finds that the 

alleged violation or threatened violation, or the continuation of the violation, is likely to result in significant harm to covered entities or market participants, or 

significant harm to the public interest, the Commission 

may issue a temporary order requiring the entity— 

(I) to cease and desist from the violation or 

threatened violation; 

(II) to take such action as is necessary to prevent 

the violation or threatened violation; and 

(III) to prevent, as the Commission determines to 

be appropriate— 

(aa) significant harm to covered entities or 

market participants; 


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(bb) significant harm to the public interest; 

and 

(cc) frustration of the ability of the Commission to conduct the proceedings or to redress 

the violation at the conclusion of the proceedings. 

(ii) TIMING OF ENTRY.—An order issued under clause 

(i) shall be entered only after notice and opportunity 

for a hearing, unless the Commission determines that 

notice and hearing before entry would be impracticable 

or contrary to the public interest. 

(iii) EFFECTIVE DATE.—A temporary order issued 

under clause (i) shall— 

(I) become effective upon service upon the entity; 

and 

(II) unless set aside, limited, or suspended by the 

Commission or a court of competent jurisdiction, 

remain effective and enforceable pending the completion of the proceedings. 

(D) PROCEEDINGS REGARDING DISSIPATION OR CONVERSION OF ASSETS.— 

(i) IN GENERAL.—In a proceeding involving an alleged violation of a regulation or order promulgated or 

issued by the Commission, if the Commission determines that the alleged violation or related circumstances are likely to result in significant dissipation or conversion of assets, the Commission may issue 

a temporary order requiring the respondent to take 

such action as is necessary to prevent the dissipation or 

conversion of assets. 

(ii) TIMING OF ENTRY.—An order issued under clause 

(i) shall be entered only after notice and opportunity 

for a hearing, unless the Commission determines that 

notice and hearing before entry would be impracticable 

or contrary to the public interest. 

(iii) EFFECTIVE DATE.—A temporary order issued 

under clause (i) shall— 

(I) become effective upon service upon the respondent; and 

(II) unless set aside, limited, or suspended by the 

Commission or a court of competent jurisdiction, 

remain effective and enforceable pending the completion of the proceedings. 

(E) REVIEW OF TEMPORARY ORDERS.— 

(i) APPLICATION FOR REVIEW.—At any time after a respondent has been served with a temporary cease-anddesist order pursuant to subparagraph (C) or order regarding the dissipation or conversion of assets pursuant to subparagraph (D), the respondent may apply to 

the Commission to have the order set aside, limited, or 

suspended. 

(ii) NO PRIOR HEARING.—If a respondent has been 

served with a temporary order entered without a prior 

hearing of the Commission— 


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(I) the respondent may, not later than 10 days 

after the date on which the order was served, request a hearing on the application; and 

(II) the Commission shall hold a hearing and 

render a decision on the application at the earliest 

practicable time. 

(iii) JUDICIAL REVIEW.— (I) IN GENERAL.—An entity shall not be required 

to submit a request for rehearing of a temporary 

order before seeking judicial review in accordance 

with this subparagraph. 

(II) TIMING OF REVIEW.—Not later than 10 days 

after the date on which a respondent is served with 

a temporary cease-and-desist order entered with a 

prior hearing of the Commission, or 10 days after 

the date on which the Commission renders a decision on an application and hearing under clause 

(i) with respect to any temporary order entered 

without such a prior hearing— 

(aa) the respondent may obtain a review of 

the order in a United States circuit court having jurisdiction over the circuit in which the 

respondent resides or has a principal place of 

business, or in the United States Court of Appeals for the District of Columbia Circuit, for 

an order setting aside, limiting, or suspending 

the effectiveness or enforcement of the order; 

and 

(bb) the court shall have jurisdiction to enter 

such an order. 

(III) NO PRIOR HEARING.—A respondent served 

with a temporary order entered without a prior 

hearing of the Commission may not apply to the 

applicable court described in subclause (II) except 

after a hearing and decision by the Commission on 

the application of the respondent under clauses (i) 

and (ii). 

(iv) PROCEDURES.—Section 222 and Part III shall 

apply to— 

(I) an application for review of an order under 

clause (i); and 

(II) an order subject to review under clause (iii). 

(v) NO AUTOMATIC STAY OF TEMPORARY ORDER.—The 

commencement of proceedings under clause (iii) shall 

not, unless specifically ordered by the court, operate as 

a stay of the order of the Commission. 

(F) ACTIONS TO COLLECT CIVIL PENALTIES.—If any person 

fails to pay a civil penalty assessed under this subsection 

after an order assessing the penalty has become final and 

unappealable, the Commission shall bring an action to recover the amount of the penalty in any appropriate United 

States district court. In any such action, the validity or appropriateness of the final assessment order or judgment 

shall not be subject to review. 

(4) TRANSACTION FEES.— 


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(A) IN GENERAL.—The Commission shall, in accordance 

with this paragraph, establish and collect transaction fees 

designed to recover the costs to the Federal Government of 

the supervision and regulation of regulated allowance markets and market participants, including related costs for 

enforcement activities, policy and rulemaking activities, administration, legal services, and international regulatory 

activities. 

(B) INITIAL FEE RATE.—Each trading facility on or 

through which regulated allowances are transacted shall 

pay to the Commission a fee at a rate of not more than $15 

per $1,000,000 of the aggregate dollar amount of sales of 

regulated allowances transacted through the facility. 

(C) ANNUAL ADJUSTMENT OF FEE RATE.—The Commission shall, on an annual basis— 

(i) assess the rate at which fees are to be collected as 

necessary to meet the cost recovery requirement in subparagraph (A); and 

(ii) consistent with subparagraph (B), adjust the rate 

as necessary in order to meet the requirement. 

(D) REPORT ON ADEQUACY OF FEES IN RECOVERING

COSTS.—The Commission, shall, on an annual basis, report 

to the Committee on Energy and Commerce of the House of 

Representatives and the Committee on Energy and Natural 

Resources of the Senate on the adequacy of the transaction 

fees in providing funding for the Commission to regulate 

the regulated allowance markets. 

(5) JUDICIAL REVIEW.—Judicial review of actions taken by the 

Commission under this subsection shall be pursuant to part III. 

(6) INFORMATION-SHARING.—Within 6 months after a Federal 

agency with jurisdiction over regulated allowance derivatives is 

delegated authority pursuant to subsection (c)(1), the agency 

shall enter into a memorandum of understanding with the 

Commission relating to information sharing, which shall include provisions ensuring that information requests to markets 

within the respective jurisdiction of the agency are properly coordinated to facilitate, among other things, effective information-sharing while minimizing duplicative information requests, 

and provisions regarding the treatment of proprietary information. 

(7) ADDITIONAL EMPLOYEES REPORT AND APPOINTMENT.— 

Within 18 months after the date of the enactment of this section, 

the Commission shall submit to the President, the Committee 

on Energy and Commerce of the House of Representatives, and 

the Committee on Energy and Natural Resources of the Senate, 

a report that contains recommendations as to how many additional employees would be necessary to provide robust oversight 

and enforcement of the regulations promulgated under this subsection. As soon as practicable after the completion of the report, subject to appropriations, the Commission shall appoint 

the recommended number of additional employees for such purposes. 

(c) DELEGATION OF AUTHORITY BY THE PRESIDENT.— 

(1) DELEGATION.—The President, taking into consideration 

the recommendations of the interagency working group estabVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00670 Fmt 6659 Sfmt 6603 E:\HR\OC\HR137.XXX HR137

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lished in subsection (d), shall delegate to members of the working group and the heads of other appropriate Federal agencies 

the authority to promulgate regulations for the establishment, 

operation, and oversight of all markets for regulated allowance 

derivatives. 

(2) REGULATIONS.—The regulations promulgated pursuant to 

paragraph (1) shall— 

(A) provide for effective and comprehensive market oversight; 

(B) prohibit fraud, market manipulation, and excess 

speculation, and provide measures to limit unreasonable 

fluctuation in the prices of regulated allowance derivatives; 

(C) facilitate compliance with title VII of the Clean Air 

Act by covered entities; 

(D) ensure market transparency and recordkeeping necessary to provide for efficient price discovery; prevention of 

fraud, market manipulation, and excess speculation; and 

compliance with title VII of the Clean Air Act and section 

610 of the Public Utility Regulatory Policies Act of 1978; 

(E) ensure that position limitations for individual market 

participants are established with respect to each regulated 

allowance derivative and aggregate position limitations for 

individual market participants are established with respect 

to all regulated allowance derivative markets; 

(F) ensure that margin requirements are established for 

each regulated allowance derivative; 

(G) provide for the formation and operation of a market 

system that allows for best execution in the trading of regulated allowance derivatives; 

(H) to the extent the regulations deviate from the rule set 

forth in paragraph (4)(B), limit or eliminate counterparty 

risks, market power concentration risks, and other risks associated with over-the-counter trading, and promulgate reporting and market transparency rules for large traders; 

(I) ensure that market participants do not evade position 

limits or otherwise undermine the integrity and effectiveness of the regulations promulgated under subparagraph 

(C) through participation in markets not subject to the position limits and regulations; 

(J) establish standards, as necessary, for qualification as, 

and operation of, trading facilities for regulated allowance 

derivatives; 

(K) establish standards, as necessary, for qualification 

as, and operation of, clearing organizations for trading facilities for regulated allowance derivatives; 

(L) provide boards of trade designated as contract markets under the Commodity Exchange Act, and market participants, with an adequate transition period for compliance with any new regulatory requirements established 

under this paragraph; 

(M) determine whether and to what extent offset creation 

contracts, to the extent incorporating regulated allowance 

derivatives, should be governed by the same regulations 

that apply to other regulated allowance derivatives; and 


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(N) include such other requirements as necessary to preserve market integrity and facilitate compliance with title 

VII of the Clean Air Act and section 610 of the Public Utility Regulatory Policies Act of 1978 and the regulations promulgated under such title and such section. 

(3) DEADLINE.—The agencies authorized to promulgate regulations for the establishment, operation, and oversight of markets for regulated allowance derivatives pursuant to paragraph 

(1) shall promulgate such regulations not later than 18 months 

after the date of the enactment of this section, and from time 

to time thereafter as may be appropriate. 

(4) DEFAULT RULES.— 

(A) An individual market participant, directly or in concert with another participant, shall not control more than 

10 percent of the open interest in any regulated allowance 

derivative. 

(B) All contracts for the purchase or sale of any regulated 

allowance derivative shall be executed on or through a 

board of trade designated as a contract market under the 

Commodity Exchange Act. 

(C) To the extent that regulations promulgated under this 

subsection provide different rules with respect to the matters described in subparagraph (A) or (B), the regulations 

shall supersede subparagraph (A) or (B), as the case may 

be. 

(d) WORKING GROUP.— 

(1) ESTABLISHMENT.—Not later than 30 days after the date of 

the enactment of this section, the President shall establish an 

interagency working group on carbon market oversight, which 

shall include the Administrator of the Environmental Protection Agency and representatives of other relevant agencies, to 

make recommendations to the President regarding proposed 

regulations for the establishment, operation, and oversight of 

markets for regulated allowance derivatives. 

(2) REPORT.—Not later than 180 days after the date of the enactment of this section, and biennially thereafter, the interagency working group shall submit a written report to the 

President and Congress that includes its recommendations to 

the President regarding proposed regulations for the establishment, operation, and oversight of markets for regulated allowance derivatives and any recommendations to Congress for statutory changes needed to ensure the establishment, operation, 

and oversight of transparent, fair, stable, and efficient markets 

for regulated allowance derivatives. 

(e) ENFORCEMENT OF REGULATIONS.—Each Federal agency that 

promulgates under subsection (c) a regulation of conduct with respect to a regulated allowance derivative shall have the same authority to enforce compliance with the regulation as the Commodity 

Futures Trading Commission has to enforce compliance with any 

regulation of similar conduct with respect to a contract, agreement, 

or transaction over which the Commodity Futures Trading Commission has jurisdiction, except that any enforcement by the Federal 

Energy Regulatory Commission shall be pursuant to section 222 

and Part III. 


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(f) PROHIBITION ON PRICE OR MARKET MANIPULATION, FRAUD, 

AND FALSE OR MISLEADING STATEMENTS OR REPORTS.—(1) It shall 

be a felony punishable by a fine of not more than $25,000,000 (or 

$5,000,000 in the case of a person who is an individual) or imprisonment for not more than 20 years, or both, together with the costs 

of prosecution for any person, directly or indirectly— 

(A) in connection with a transaction involving a regulated instrument, to knowingly— 

(i) use any manipulative or deceptive device or contrivance in violation of regulations promulgated pursuant to 

this section; 

(ii) corner or attempt to corner the regulated instrument; 

or 

(iii) cheat or defraud, or attempt to cheat or defraud, any 

other person; 

(B) to knowingly deliver or cause to be delivered a false, misleading, or inaccurate report concerning information or conditions that affect or tend to affect the price of a regulated instrument; 

(C) to knowingly make, or cause to be made, in an application, report, or document required to be filed under any regulation promulgated pursuant to this section, a statement which is 

false or misleading with respect to a material fact, or to omit 

any material fact required to be stated therein or necessary to 

make the statements therein not misleading; or 

(D) to knowingly falsify, conceal, or cover up by any trick, 

scheme, or artifice a material fact, make any false, fictitious, or 

fraudulent statements or representations, or make or use any 

false writing or document that contains a false, fictitious, or 

fraudulent statement or entry, to an entity on or through which 

transactions in regulated instruments occur, or are settled or 

cleared, acting in furtherance of its official duties under this 

section or regulations promulgated under this section. 

(2) If a person is found guilty of a felony established in paragraph 

(1), the person may be prohibited from holding or trading regulated 

instruments for a period of not more than 5 years pursuant to the 

regulations promulgated under this section, except that, if the person is a covered entity, the person shall be allowed to hold sufficient 

regulated allowances to meet its compliance obligations. 

(g) RELATION TO STATE LAW.—Nothing in this section shall preclude, diminish or qualify any authority of a State or political subdivision thereof to adopt or enforce any unfair competition, antitrust, consumer protection, securities, commodities or any other law 

or regulation, except that no such State law or regulation may relieve any person of any requirement otherwise applicable under this 

section. 

(h) MARKET REPORTS.— 

(1) COLLECTION AND ANALYSIS OF INFORMATION.—The Commission, in conjunction with the Federal agency with jurisdiction over regulated allowance derivatives pursuant to subsection 

(c)(1), shall, on a continuous basis, collect and analyze the following information on the functioning of the markets for regulated instruments established under this part: 


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(A) The status of, and trends in, the markets, including 

prices, trading volumes, transaction types, and trading 

channels and mechanisms. 

(B) Spikes, collapses, and volatility in prices of regulated 

instruments, and the causes therefor. 

(C) The relationship between the market for regulated allowances and allowance derivatives, and the spot and futures markets for energy commodities, including electricity. 

(D) Evidence of fraud or manipulation in any such market, the effects on any such market of any such fraud or 

manipulation (or threat of fraud or manipulation) that the 

Commission, in conjunction with the Federal agency, has 

identified, and the effectiveness of corrective measures undertaken by the Commission, in conjunction with the Federal agency, to address the fraud, manipulation, or threat. 

(E) The economic effects of the markets, including to 

macro- and micro-economic effects of unexpected significant 

increases and decreases in the price of regulated instruments. 

(F) Any changes in the roles, activities, or strategies of 

various market participants. 

(G) Regional, industrial, and consumer responses to the 

markets, and energy investment responses to the markets. 

(H) Any other issue related to the markets that the Commission, in conjunction with the entities, deems appropriate. 

(2) ANNUAL REPORTS TO THE CONGRESS.—Not later than 1 

month after the end of each calendar year, the Commission, in 

conjunction with the Federal agency, shall submit to the President, the Committee on Energy and Commerce of the House of 

Representatives, and the Committee on Energy and Natural Resources of the Senate, and make available to the public, a report 

on the matters described in paragraph (1) with respect to the 

year, including recommendations for any administrative or 

statutory measures the Commission, in conjunction with the 

Federal agency, considers necessary to address any threats to 

the transparency, fairness, or integrity of the markets in regulated instruments. 

SEC. 402. APPLICABILITY OF PART III PROVISIONS. 

(a) SECTIONS 301, 304, AND 306.—Sections 301, 304, and 306 

shall not apply to this part. 

(b) SECTIONS 307, 309, AND 314.—Sections 307, 309, and 314 

shall only apply to section 401(c) to the extent that the Commission 

is delegated authority to promulgate regulations for the establishment, operation, and oversight of markets for regulated allowance 

derivatives (as defined in section 401). If the Commission is not delegated authority to promulgate regulations for the establishment, 

operation, and oversight of markets for regulated allowance derivatives, sections 307, 309, and 314 shall not apply to section 401(f) in 

the case of regulated allowance derivatives. 

(c) SECTION 315.—In applying section 315(a) to this part, the 

words ‘‘person or entity’’ shall be substituted for the words ‘‘licensee 

or public utility’’. In applying section 315(b) to this part, the words 

‘‘an entity’’ shall be substituted for the words ‘‘a licensee or public 


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utility’’ and the words ‘‘such entity’’ shall be substituted for the 

words ‘‘such licensee or public utility.’’ 

(d) SECTION 316.—Section 316(a) shall not apply to section 401(f). 

ENERGY CONSERVATION AND PRODUCTION ACT 

* * * * * * * 

CONTENTS 

TITLE I—FEDERAL ENERGY ADMINISTRATION ACT AMENDMENTS AND 

RELATED MATTERS 

* * * * * * * 

TITLE III—ENERGY CONSERVATION STANDARDS FOR NEW BUILDINGS 

* * * * * * * 

øSec. 304. Updating State building energy efficiency codes.¿ 

Sec. 304. Greater energy efficiency in building codes. 

* * * * * * * 

TITLE III—ENERGY CONSERVATION 

STANDARDS FOR NEW BUILDINGS 

* * * * * * * 

øSEC. 304. UPDATING STATE BUILDING ENERGY EFFICIENCY CODES. 

ø(a) CONSIDERATION AND DETERMINATION RESPECTING RESIDEN- TIAL BUILDING ENERGY CODES.—(1) Not later than 2 years after 

the date of the enactment of the Energy Policy Act of 1992, each 

State shall certify to the Secretary that it has reviewed the provisions of its residential building code regarding energy efficiency 

and made a determination as to whether it is appropriate for such 

State to revise such residential building code provisions to meet or 

exceed CABO Model Energy Code, 1992. 

ø(2) The determination referred to in paragraph (1) shall be— 

ø(A) made after public notice and hearing; 

ø(B) in writing; 

ø(C) based upon findings included in such determination and 

upon the evidence presented at the hearing; and 

ø(D) available to the public. 

ø(3) Each State may, to the extent consistent with otherwise applicable State law, revise the provisions of its residential building 

code regarding energy efficiency to meet or exceed CABO Model 

Energy Code, 1992, or may decline to make such revisions. 

ø(4) If a State makes a determination under paragraph (1) that 

it is not appropriate for such State to revise its residential building 

code, such State shall submit to the Secretary, in writing, the reasons for such determination, and such statement shall be available 

to the public. 

ø(5)(A) Whenever CABO Model Energy Code, 1992, (or any successor of such code) is revised, the Secretary shall, not later than 

12 months after such revision, determine whether such revision 

would improve energy efficiency in residential buildings. The Secretary shall publish notice of such determination in the Federal 

Register. 


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ø(B) If the Secretary makes an affirmative determination under 

subparagraph (A), each State shall, not later than 2 years after the 

date of the publication of such determination, certify that it has reviewed the provisions of its residential building code regarding energy efficiency and made a determination as to whether it is appropriate for such State to revise such residential building code provisions to meet or exceed the revised code for which the Secretary 

made such determination. 

ø(C) Paragraphs (2), (3), and (4) shall apply to any determination 

made under subparagraph (B). 

ø(b) CERTIFICATION OF COMMERCIAL BUILDING ENERGY CODE UP- DATES.—(1) Not later than 2 years after the date of the enactment 

of the Energy Policy Act of 1992, each State shall certify to the Secretary that it has reviewed and updated the provisions of its commercial building code regarding energy efficiency. Such certification 

shall include a demonstration that such State’s code provisions 

meet or exceed the requirements of ASHRAE Standard 90.1–1989. 

ø(2)(A) Whenever the provisions of ASHRAE Standard 90.1–1989 

(or any successor standard) regarding energy efficiency in commercial buildings are revised, the Secretary shall, not later than 12 

months after the date of such revision, determine whether such revision will improve energy efficiency in commercial buildings. The 

Secretary shall publish a notice of such determination in the Federal Register. 

ø(B)(i) If the Secretary makes an affirmative determination 

under subparagraph (A), each State shall, not later than 2 years 

after the date of the publication of such determination, certify that 

it has reviewed and updated the provisions of its commercial building code regarding energy efficiency in accordance with the revised 

standard for which such determination was made. Such certification shall include a demonstration that the provisions of such 

State’s commercial building code regarding energy efficiency meet 

or exceed such revised standard. 

ø(ii) If the Secretary makes a determination under subparagraph 

(A) that such revised standard will not improve energy efficiency 

in commercial buildings, State commercial building code provisions 

regarding energy efficiency shall meet or exceed ASHRAE Standard 90.1–1989, or if such standard has been revised, the last revised standard for which the Secretary has made an affirmative determination under subparagraph (A). 

ø(c) EXTENSIONS.—The Secretary shall permit extensions of the 

deadlines for the certification requirements under subsections (a) 

and (b) if a State can demonstrate that it has made a good faith 

effort to comply with such requirements and that it has made significant progress in doing so. 

ø(d) TECHNICAL ASSISTANCE.—The Secretary shall provide technical assistance to States to implement the requirements of this 

section, and to improve and implement State residential and commercial building energy efficiency codes or to otherwise promote 

the design and construction of energy efficient buildings. 

ø(e) AVAILABILITY OF INCENTIVE FUNDING.—(1) The Secretary 

shall provide incentive funding to States to implement the requirements of this section, and to improve and implement State residential and commercial building energy efficiency codes, including increasing and verifying compliance with such codes. In determining 


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whether, and in what amount, to provide incentive funding under 

this subsection, the Secretary shall consider the actions proposed 

by the State to implement the requirements of this section, to improve and implement residential and commercial building energy 

efficiency codes, and to promote building energy efficiency through 

the use of such codes. 

ø(2) Additional funding shall be provided under this subsection 

for implementation of a plan to achieve and document at least a 

90 percent rate of compliance with residential and commercial 

building energy efficiency codes, based on energy performance— 

ø(A) to a State that has adopted and is implementing, on a 

statewide basis— 

ø(i) a residential building energy efficiency code that 

meets or exceeds the requirements of the 2004 International Energy Conservation Code, or any succeeding 

version of that code that has received an affirmative determination from the Secretary under subsection (a)(5)(A); 

and 

ø(ii) a commercial building energy efficiency code that 

meets or exceeds the requirements of the ASHRAE Standard 90.1–2004, or any succeeding version of that standard 

that has received an affirmative determination from the 

Secretary under subsection (b)(2)(A); or 

ø(B) in a State in which there is no statewide energy code 

either for residential buildings or for commercial buildings, to 

a local government that has adopted and is implementing residential and commercial building energy efficiency codes, as described in subparagraph (A). 

ø(3) Of the amounts made available under this subsection, the 

Secretary may use $500,000 for each fiscal year to train State and 

local officials to implement codes described in paragraph (2). 

ø(4)(A) There are authorized to be appropriated to carry out this 

subsection— 

ø(i) $25,000,000 for each of fiscal years 2006 through 2010; 

and 

ø(ii) such sums as are necessary for fiscal year 2011 and 

each fiscal year thereafter. 

ø(B) Funding provided to States under paragraph (2) for each fiscal year shall not exceed one-half of the excess of funding under 

this subsection over $5,000,000 for the fiscal year.¿ 

SEC. 304. GREATER ENERGY EFFICIENCY IN BUILDING CODES. 

(a) ENERGY EFFICIENCY TARGETS.— 

(1) IN GENERAL.—Except as provided in paragraph (2) or (3), 

the national building code energy efficiency target for the national average percentage improvement of a building’s energy 

performance when built to a code meeting the target shall be— 

(A) effective on the date of enactment of the American 

Clean Energy and Security Act of 2009, 30 percent reduction in energy use relative to a comparable building constructed in compliance with the baseline code; 

(B) effective January 1, 2014, for residential buildings, 

and January 1, 2015, for commercial buildings, 50 percent 

reduction in energy use relative to the baseline code; and 

(C) effective January 1, 2017, for residential buildings, 

and January 1, 2018, for commercial buildings, and every 


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3 years thereafter, respectively, through January 1, 2029, 

and January 1, 2030, 5 percent additional reduction in energy use relative to the baseline code. 

(2) CONSENSUS-BASED CODES.—If on any effective date specified in paragraph (1)(A), (B), or (C) a successor code to the baseline codes provides for greater reduction in energy use than is 

required under paragraph (1), the overall percentage reduction 

in energy use provided by that successor code shall be the national building code energy efficiency target. 

(3) TARGETS ESTABLISHED BY SECRETARY.—The Secretary 

may by rule establish a national building code energy efficiency 

target for residential or commercial buildings achieving greater 

reductions in energy use than the targets prescribed in paragraph (1) or (2) if the Secretary determines that such greater reductions in energy use can be achieved with a code that is life 

cycle cost-justified and technically feasible. The Secretary may 

by rule establish a national building code energy efficiency target for residential or commercial buildings achieving a reduction in energy use that is greater than zero but less than the 

targets prescribed in paragraph (1) or (2) if the Secretary determines that such lesser target is the maximum reduction in energy use that can be achieved through a code that is life cycle 

cost-justified and technically feasible. 

(4) ADDITIONAL REDUCTIONS IN ENERGY USE.—Effective on 

January 1, 2033, and once every 3 years thereafter, the Secretary shall determine, after notice and opportunity for comment, whether further energy efficiency building code improvements for residential or commercial buildings, respectively, are 

life cycle cost-justified and technically feasible, and shall establish updated national building code energy efficiency targets 

that meet such criteria. 

(5) ZERO-NET-ENERGY BUILDINGS.—In setting targets under 

this subsection, the Secretary shall consider ways to support the 

deployment of distributed renewable energy technology, and 

shall seek to achieve the goal of zero-net-energy commercial 

buildings established in section 422 of the Energy Independence 

and Security Act of 2007 (42 U.S.C. 17082). 

(6) BASELINE CODE.—For purposes of this section, the term 

‘‘baseline code’’ means— 

(A) for residential buildings, the 2006 International Energy Conservation Code (IECC) published by the International Code Council; and 

(B) for commercial buildings, the code published in 

ASHRAE Standard 90.1-2004. 

(7) CONSULTATION.—In establishing the targets required by 

this section, the Secretary shall consult with the Director of the 

National Institute of Standards and Technology. 

(b) NATIONAL ENERGY EFFICIENCY BUILDING CODES.— 

(1) REQUIREMENT.— 

(A) IN GENERAL.—There shall be established national energy efficiency building codes under this subsection, for residential and commercial buildings, sufficient to meet each 

of the national building code energy efficiency targets established under subsection (a), not later than the date that is 


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one year after the deadline for establishment of each such 

target. 

(B) EXISTING CODE.—If the Secretary finds prior to the 

date one year after the deadline for establishing a target 

that one or more energy efficiency building codes published 

by a recognized consensus-based code development organization meet or exceed the established target, the Secretary 

shall select the code that meets the target with the highest 

efficiency in the most cost-effective manner, and such code 

shall be the national energy efficiency building code. 

(C) REQUIREMENT TO ESTABLISH CODE.—If the Secretary 

does not make a finding under subparagraph (B), the national energy efficiency building code shall be established 

by rule by the Secretary under paragraph (2). 

(2) ESTABLISHMENT BY SECRETARY.— 

(A) PROCEDURE.—In order to establish a national energy 

efficiency building code as required under paragraph 

(1)(C), the Secretary shall— 

(i) not later than six months prior to the effective 

date for each target, review existing and proposed codes 

published or under review by recognized consensusbased code development organizations; 

(ii) determine the percentage of energy efficiency improvements that are or would be achieved in such published or proposed code versions relative to the target; 

(iii) propose improvements to such published or proposed code versions sufficient to meet or exceed the target; and 

(iv) unless a finding is made under paragraph (1)(B) 

with respect to a code published by a recognized consensus-based code development organization, adopt a 

code that meets or exceeds the relevant national building code energy efficiency target by not later than one 

year after the effective date of such target. 

(B) CALCULATIONS.—Each code established by the Secretary under this paragraph shall be set at the maximum 

level the Secretary determines is life cycle cost-justified and 

technically feasible, in accordance with the following: 

(i) SAVINGS CALCULATIONS.—Calculations of energy 

savings shall take into account the typical lifetimes of 

different products, measures, and system configurations. 

(ii) COST-EFFECTIVENESS CALCULATIONS.—Calculations of life cycle cost-effectiveness shall be based on life 

cycle cost methods and procedures under section 544 of 

the National Energy Conservation Policy Act (42 

U.S.C. 8254), but shall incorporate to the extent feasible externalities such as impacts on climate change 

and on peak energy demand that are not already incorporated in assumed energy costs. 

(C) CONSIDERATIONS.—In developing a national energy 

efficiency building code under this paragraph, the Secretary shall consider— 

(i) for residential codes— 


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(I) residential building standards published or 

proposed by ASHRAE; 

(II) residential building codes published or proposed in the International Energy Conservation 

Code (IECC); 

(III) data from the Residential Energy Services 

Network (RESNET) on compliance measures utilized by consumers to qualify for the residential energy efficiency tax credits established under the 

Energy Policy Act of 2005; 

(IV) data and information from the Department 

of Energy’s Building America Program; 

(V) data and information from the Energy Star 

New Homes program; 

(VI) data and information from the New Building Institute and similar organizations; and 

(VII) standards for practices and materials to 

achieve cool roofs in residential buildings, taking 

into consideration reduced air conditioning energy 

use as a function of cool roofs, the potential reduction in global warming from increased solar reflectance from buildings, and cool roofs criteria in 

State and local building codes and in national and 

local voluntary programs; and 

(ii) for commercial codes— 

(I) commercial building standards proposed by 

ASHRAE; 

(II) commercial building codes proposed in the 

International Energy Conservation Code (IECC); 

(III) the Core Performance Criteria published by 

the New Buildings Institute; 

(IV) data and information developed by the Director of the Commercial High-Performance Green 

Building Office of the Department of Energy and 

any public-private partnerships established under 

that Office; 

(V) data and information from the Energy Star 

for Buildings program; 

(VI) data and information from the New Building Institute, RESNET, and similar organizations; 

and 

(VII) standards for practices and materials to 

achieve cool roofs in commercial buildings, taking 

into consideration reduced air conditioning energy 

use as a function of cool roofs, the potential reduction in global warming from increased solar reflectance from buildings, and cool roofs criteria in 

State and local building codes and in national and 

local voluntary programs. 

(D) CONSULTATION.—In establishing any national energy 

efficiency building code required by this section, the Secretary shall consult with the Director of the National Institute of Standards and Technology. 

(3) CONSENSUS STANDARD ASSISTANCE.—(A) To support the 

development of consensus standards that may provide the basis 


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for national energy efficiency building codes, minimize duplication of effort, encourage progress through consensus, and facilitate the development of greater building efficiency, the Secretary 

shall provide assistance to recognized consensus-based code development organizations to develop, and where the relevant code 

has been adopted as the national code, disseminate consensus 

based energy efficiency building codes as provided in this paragraph. 

(B) Upon a finding by the Secretary that a code developed by 

such an organization meets a target established under subsection (a), the Secretary shall— 

(i) send notice of the Secretary’s finding to all duly authorized or appointed State and local code agencies; and 

(ii) provide sufficient support to such an organization to 

make the code available on the Internet, or to accomplish 

distribution of such code to all such State and local code 

agencies at no cost to the State and local code agencies. 

(C) The Secretary may contract with such an organization 

and with other organizations with expertise on codes to provide 

training for State and local code officials and building inspectors in the implementation and enforcement of such code. 

(D) The Secretary may provide grants and other support to 

such an organization to— 

(i) develop appropriate refinements to such code; and 

(ii) support analysis of options for improvements in the 

code to meet the next scheduled target. 

(4) CODE DEVELOPED BY SECRETARY.—If the Secretary establishes a national energy efficiency building code under paragraph (2), the Secretary shall— 

(A) to the extent that such code is based on a prior code 

developed by a recognized consensus-based code development organization, negotiate and provide appropriate compensation to such organization for the use of the code materials that remain in the code established by the Secretary; 

and 

(B) disseminate the national energy efficiency building 

codes to State and local code officials, and support training 

and provide guidance and technical assistance to such officials as appropriate. 

(c) STATE ADOPTION OF ENERGY EFFICIENCY BUILDING CODES.— 

(1) REQUIREMENT.—Not later than 1 year after a national energy efficiency building code for residential or commercial 

buildings is established or revised under subsection (b), each 

State— 

(A) shall— 

(i) review and update the provisions of its building 

code regarding energy efficiency to meet or exceed the 

target met in the new national code, to achieve equivalent or greater energy savings; 

(ii) document, where local governments establish 

building codes, that local governments representing not 

less than 80 percent of the State’s urban population 

have adopted the new national code, or have adopted 

local codes that meet or exceed the target met in the 


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new national code to achieve equivalent or greater energy savings; or 

(iii) adopt the new national code; and 

(B) shall provide a certification to the Secretary demonstrating that energy efficiency building code provisions 

that apply throughout the State meet or exceed the target 

met by the new national code, to achieve equivalent or 

greater energy savings. 

(2) CONFIRMATION.— 

(A) REQUIREMENT.—Not later than 90 days after a State 

certification is provided under paragraph (1)(B), the Secretary shall determine whether the State’s energy efficiency 

building code provisions meet the requirements of this subsection. 

(B) ACCEPTANCE BY SECRETARY.—If the Secretary determines under subparagraph (A) that the State’s energy efficiency building code or codes meet the requirements of this 

subsection, the Secretary shall accept the certification. 

(C) DEFICIENCY NOTICE.—If the Secretary determines 

under subparagraph (A) that the State’s building code or 

codes do not meet the requirements of this subsection, the 

Secretary shall identify the deficiency in meeting the national building code energy efficiency target, and, to the extent possible, indicate areas where further improvement in 

the State’s code provisions would allow the deficiency to be 

eliminated. 

(D) REVISION OF CODE AND RECERTIFICATION.—A State 

may revise its code or codes and submit a recertification 

under paragraph (1)(B) to the Secretary at any time. 

(3) COMPLIANT CODE.—For the purposes of meeting the target 

described in subsection (a)(1)(A) for residential buildings, a 

State that adopts the code represented in California’s Title 24- 

2009 by the date two years after the date of enactment of the 

American Clean Energy and Security Act of 2009 shall be considered to have met the requirements of this subsection for the 

applicable period. 

(d) APPLICATION OF NATIONAL CODE TO STATE AND LOCAL JURISDICTIONS.— 

(1) IN GENERAL.—Upon the expiration of 1 year after a national energy efficiency building code is established under subsection (b), in any jurisdiction where the State has not had a 

certification relating to that code accepted by the Secretary 

under subsection (c)(2)(B), and the local government has not 

had a certification relating to that code accepted by the Secretary under subsection (e)(6)(B), the national code shall become 

the applicable energy efficiency building code for such jurisdiction. 

(2) STATE LEGISLATIVE ADOPTION.—In a State in which the 

relevant building energy code is adopted legislatively, the deadline in paragraph (1) shall not be earlier than 1 year after the 

first day that the legislature meets following establishment of a 

national energy efficiency building code. 

(3) VIOLATIONS.—Violations of this section shall be defined as 

follows: 


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(A) If the building is subject to the requirements of a 

State energy efficiency building code with respect to which 

a certification has been accepted by the Secretary under 

subsection (c)(2)(B) or a local energy efficiency building 

code with respect to which a certification has been accepted 

by the Secretary pursuant to subsection (e)(6)(B), a violation shall be determined pursuant to the relevant provisions of the State or local code. 

(B) If the building is subject to the requirements of a national energy efficiency building code adopted under subsection (c)(1)(A)(i) or made applicable under paragraph (1) 

of this subsection, a violation shall be defined by the Secretary pursuant to subsection (g). 

(e) STATE ENFORCEMENT OF ENERGY EFFICIENCY BUILDING

CODES.— 

(1) IN GENERAL.—Each State, or where applicable under 

State law each local government, shall implement and enforce 

applicable State or local codes with respect to which a certification was accepted by the Secretary under subsection (c)(2)(B) 

or paragraph (6)(B) of this subsection, or the national energy efficiency building codes, as provided in this subsection. 

(2) STATE CERTIFICATION.—Not later than 2 years after the 

date of a certification under subsection (c)(1) or the establishment of a national energy efficiency building code under subsection (b), each State shall certify that it has— 

(A) achieved compliance with— 

(i) State codes, or, as provided under State law, local 

codes, with respect to which a certification was accepted by the Secretary under subsection (c)(2)(B); or 

(ii) the national energy efficiency building code, as 

applicable; or 

(B) for any certification submitted within 7 years after 

the date of enactment of the American Clean Energy and 

Security Act of 2009, made significant progress toward 

achieving such compliance. 

(3) ACHIEVING COMPLIANCE.—A State shall be considered to 

achieve compliance with a code described in paragraph (2)(A) 

if at least 90 percent of new and substantially renovated building space in that State in the preceding year upon inspection 

meets the requirements of the code. A certification under paragraph (2) shall include documentation of the rate of compliance 

based on— 

(A) independent inspections of a random sample of the 

new and substantially renovated buildings covered by the 

code in the preceding year; or 

(B) an alternative method that yields an accurate measure of compliance as determined by the Secretary. 

(4) SIGNIFICANT PROGRESS.—A State shall be considered to 

have made significant progress toward achieving compliance 

with a code described in paragraph (2)(A) if— 

(A) the State has developed a plan, including for hiring 

enforcement staff, providing training, providing manuals 

and checklists, and instituting enforcement programs, designed to achieve full compliance within 5 years after the 

date of the adoption of the code; 


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(B) the State is taking significant, timely, and measurable action to implement that plan; 

(C) the State has not reduced its expenditures for code enforcement; and 

(D) at least 50 percent of new and substantially renovated building space in the State in the preceding year 

upon inspection meets the requirements of the code. 

(5) SECRETARY’S DETERMINATION.—Not later than 90 days 

after a State certification under paragraph (2), the Secretary 

shall determine whether the State has demonstrated that it has 

complied with the requirements of this subsection, including accurate measurement of compliance, or that it has made significant progress toward compliance. If such determination is positive, the Secretary shall accept the certification. If the determination is negative, the Secretary shall identify the areas of 

deficiency. 

(6) OUT OF COMPLIANCE.— 

(A) IN GENERAL.—Any State for which the Secretary has 

not accepted a certification under paragraph (5) by a deadline established under this subsection is out of compliance 

with this section. 

(B) LOCAL COMPLIANCE.—In any State that is out of compliance with this section as provided in subparagraph (A), 

a local government may be in compliance with this section 

by meeting all certification requirements applicable to the 

State. 

(C) NONCOMPLIANCE.—Any State that is not in compliance with this section, as provided in subparagraph (A), 

shall, until the State regains such compliance, be ineligible 

to receive— 

(i) emission allowances pursuant to subsection (h)(1); 

(ii) Federal funding in excess of that State’s share 

(calculated according to the allocation formula in section 363 of the Energy Policy and Conservation Act (42 

U.S.C. 6323)) of $125,000,000 each year; and 

(iii) for— 

(I) the first year for which the State is out of 

compliance, 25 percent of any additional funding 

or other items of monetary value otherwise provided under the American Clean Energy and Security Act of 2009; 

(II) the second year for which the State is out of 

compliance, 50 percent of any additional funding 

or other items of monetary value otherwise provided under the American Clean Energy and Security Act of 2009; 

(III) the third year for which the State is out of 

compliance, 75 percent of any additional funding 

or other items of monetary value otherwise provided under the American Clean Energy and Security Act of 2009; and 

(IV) the fourth and subsequent years for which 

the State is out of compliance, 100 percent of any 

additional funding or other items of monetary 


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value otherwise provided under the American 

Clean Energy and Security Act of 2009. 

(f) FEDERAL ENFORCEMENT.—Where a State fails and local governments in that State also fail to enforce the applicable State or 

national energy efficiency building codes, the Secretary shall enforce 

such codes, as follows: 

(1) The Secretary shall establish, by rule, within 2 years after 

the date of enactment of the American Clean Energy and Security Act of 2009, an energy efficiency building code enforcement 

capability. 

(2) Such enforcement capability shall be designed to achieve 

90 percent compliance with such code in any State within 1 

year after the date of the Secretary’s determination that such 

State is out of compliance with this section. 

(3) The Secretary may set and collect reasonable inspection 

fees to cover the costs of inspections required for such enforcement. Revenue from fees collected shall be available to the Secretary to carry out the requirements of this section upon appropriation. 

(g) ENFORCEMENT PROCEDURES.—The Secretary shall propose 

and, not later than three years after the date of enactment of the 

American Clean Energy and Security Act of 2009, shall determine 

and adopt by rule what shall constitute violations of the energy efficiency building codes to be enforced pursuant to this section, and 

the penalties that shall apply to violators. To the extent that the 

Secretary determines that the authority to adopt and impose such 

violations and penalties by rule requires further statutory authority, 

the Secretary shall report such determination to Congress as soon 

as such determination is made, but not later than one year after the 

enactment of the American Clean Energy and Security Act of 2009. 

(h) FEDERAL SUPPORT.— (1) ALLOWANCE ALLOCATION FOR STATE COMPLIANCE.—For 

each vintage year from 2012 through 2050, the Administrator 

shall distribute allowances allocated pursuant to section 

782(g)(2) of the Clean Air Act to the SEED Account for each 

State that the Secretary identifies as a State from which he has 

accepted the State’s certification under subsection (e)(5) for compliance with the then current national energy efficiency building codes. Such allowances shall be distributed according to a 

formula established by the Secretary as follows: 

(A) One-fifth in an equal amount to each of the 50 States 

and United States territories. 

(B) Two-fifths as a function of the relative energy use in 

all buildings in each State in the most recent year for 

which data is available. 

(C) Two-fifths based on the number of building construction starts recorded in each State, the number of new building permits applied for in each State, or other relevant 

available data indicating building activity in each State, in 

the judgment of the Secretary, for the year prior to the year 

of the distribution. 

(2) ALLOWANCE ALLOCATION TO LOCAL GOVERNMENTS.—In the 

instance that the Secretary certifies that one or more local governments are in compliance with this section pursuant to subsection (e)(6)(B), the Administrator shall provide to each such 


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local government the portion of the emission allowances that 

would have been provided to that State as a function of the population of that locality as a proportion of the population of that 

State as a whole. 

(3) UNALLOCATED ALLOWANCES.—To the extent that allowances are not provided to State or local governments for lack of 

certification in any year, those allowances shall be added to the 

amount provided to those States and local governments that are 

certified as eligible in that year. 

(4) USE OF ALLOWANCES.—Each State or each local government shall use such emission allowances as it receives pursuant 

to this section exclusively for the purposes of this section, including covering a reasonable portion of the costs of the development, adoption, implementation, and enforcement of a State 

or local energy efficiency building code with respect to which a 

certification is accepted by the Secretary under subsection 

(c)(2)(B) or subsection (e)(6)(B), or the national energy efficiency 

building code. In a State where local governments provide 

building code enforcement, a minimum of 50 percent of the allowance value received pursuant to this section shall be distributed to local governments as a function of the relative populations of such localities. 

(i) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 

be appropriated to the Secretary of Energy $100,000,000 for each of 

fiscal years 2010 through 2020 and such sums thereafter as may be 

necessary to support the purposes of this section. 

(j) ANNUAL REPORTS BY SECRETARY.—The Secretary shall annually submit to Congress, and publish in the Federal Register, a report on— 

(1) the status of national building energy efficiency codes; 

(2) the status of energy efficiency building code adoption and 

compliance in the States; 

(3) the implementation of this section; and 

(4) impacts of past action under this section, and potential 

impacts of further action, on lifetime energy use by buildings, 

including resulting energy and cost savings. 

SEC. 305. FEDERAL BUILDING ENERGY EFFICIENCY STANDARDS. 

(a)(1) * * * 

* * * * * * * 

(3)(A) * * * 

* * * * * * * 

(D) Not later than 1 year after the date of enactment of the Energy Independence and Security Act of 2007, the Secretary shall establish, by rule, revised Federal building energy efficiency performance standards that require that: 

(i) For new Federal buildings and Federal buildings undergoing major renovations, with respect to which the Administrator of General Services is required to transmit a prospectus 

to Congress under section 3307 of title 40, United States Code, 

in the case of public buildings (as defined in section 3301 of 

title 40, United States Code), or of at least $2,500,000 in costs 

adjusted annually for inflation for other buildings: 

(I) The buildings shall be designed so that the fossil fuelgenerated energy consumption of the buildings is reduced, 


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as compared with such energy consumption by a similar 

building øin fiscal year 2003 (as measured by Commercial 

Buildings Energy Consumption Survey or Residential Energy Consumption Survey data from the Energy Information Agency)¿ as measured by the calendar year 2003 Commercial Buildings Energy Consumption Survey or the calendar year 2005 Residential Energy Consumption Survey 

data from the Energy Information Administration, by the 

percentage specified in the following table: 

øFiscal Year¿ Calendar Year Percentage Reduction

2010 .............................................................................. 55

2015 .............................................................................. 65

2020 .............................................................................. 80

2025 .............................................................................. 90

2030 .............................................................................. 100. 

ø(II) Upon petition¿ 

(II) DOWNWARD ADJUSTMENT OF NUMERIC REQUIREMENT.— 

(aa) IN GENERAL.—On petition by an agency subject 

to this subparagraph, the Secretary may adjust the 

applicable numeric requirement under subclause (I) 

downward with respect to a specific building, if the 

head of the agency designing the building certifies in 

writing that meeting such requirement would be technically impracticable in light of the agency’s specified 

functional needs for that building and the Secretary 

concurs with the agency’s conclusion. øThis subclause 

shall not apply to the General Services Administration.¿ 

(bb) EXCEPTIONS TO REQUIREMENT FOR CONCURRENCE OF SECRETARY.— 

(AA) IN GENERAL.—The requirement to petition 

and obtain the concurrence of the Secretary under 

this subclause shall not apply to any Federal 

building with respect to which the Administrator 

of General Services is required to transmit a prospectus to Congress under section 3307 of title 40, 

United States Code, or to any other Federal building designed, constructed, or renovated by the Administrator if the Administrator certifies, in writing, that meeting the applicable numeric requirement under subclause (I) with respect to the Federal building would be technically impracticable in 

light of the specific functional needs for the building. 

(BB) ADJUSTMENT.—In the case of a building 

described in subitem (AA), the Administrator may 

adjust the applicable numeric requirement of subclause (I) downward with respect to the building. 

* * * * * * * 


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TITLE IV—ENERGY CONSERVATION AND RENEWABLERESOURCE ASSISTANCE FOR EXISTING BUILDINGS 

* * * * * * * 

PART A—WEATHERIZATION ASSISTANCE FOR LOW-INCOME PERSONS

* * * * * * * 

AUTHORIZATION OF APPROPRIATIONS

SEC. 422. For the purpose of carrying out the weatherization program under this part, there are authorized to be appropriated— 

(1) * * * 

* * * * * * * 

(5) $1,400,000,000 for fiscal year 2012.ø.¿ 

* * * * * * * 

INSPECTOR GENERAL ACT OF 1978 

* * * * * * * 

REQUIREMENTS FOR FEDERAL ENTITIES AND DESIGNATED FEDERAL

ENTITIES

SEC. 8G. (a) Notwithstanding section 12 of this Act, as used in 

this section— 

(1) * * * 

(2) the term ‘‘designated Federal entity’’ means Amtrak, the 

Appalachian Regional Commission, the Board of Governors of 

the Federal Reserve System, the Board for International 

Broadcasting, øthe Commodity Futures Trading Commission,¿ 

the Consumer Product Safety Commission, the Corporation for 

Public Broadcasting, the Equal Employment Opportunity Commission, the Farm Credit Administration, the Federal Communications Commission, the Federal Deposit Insurance Corporation , the Federal Election Commission, the Election Assistance 

Commission, the Federal Housing Finance Board, the Federal 

Labor Relations Authority, the Federal Maritime Commission, 

the Federal Trade Commission, the Legal Services Corporation, 

the National Archives and Records Administration, the National Credit Union Administration, the National Endowment 

for the Arts, the National Endowment for the Humanities, the 

National Labor Relations Board, the National Science Foundation, the Panama Canal Commission, the Peace Corps, the 

Pension Benefit Guaranty Corporation, the Securities and Exchange Commission, the Smithsonian Institution, the United 

States International Trade Commission, the Postal Regulatory 

Commission, and the United States Postal Service; 

* * * * * * * 

DEFINITIONS

SEC. 12. As used in this Act— 

(1) the term ‘‘head of the establishment’’ means the Secretary of Agriculture, Commerce, Defense, Education, Energy, 

Health and Human Services, Housing and Urban DevelopVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00688 Fmt 6659 Sfmt 6601 E:\HR\OC\HR137.XXX HR137

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ment, the Interior, Labor, State, Transportation, Homeland Security, or the Treasury; the Attorney General; the Administrator of the Agency for International Development, Environmental Protection, General Services, National Aeronautics and 

Space, or Small Business, or Veterans’ Affairs; the Director of 

the Federal Emergency Management Agency, or the Office of 

Personnel Management; the Chairman of the Nuclear Regulatory Commission or the Railroad Retirement Board; the 

Chairperson of the Thrift Depositor Protection Oversight 

Board; the Chief Executive Officer of the Corporation for National and Community Service; the Administrator of the Community Development Financial Institutions Fund; the chief executive officer of the Resolution Trust Corporation; the Chairperson of the Federal Deposit Insurance Corporation; the Commissioner of Social Security, Social Security Administration; 

the Director of the Federal Housing Finance Agency; the Board 

of Directors of the Tennessee Valley Authority; the President 

of the Export-Import Bank; øor the Federal Cochairpersons of 

the Commissions established under section 15301 of title 40, 

United States Code;¿ the Administrator of the Clean Energy 

Deployment Administration; the Federal Cochairpersons of the 

Commissions established under section 15301 of title 40, United 

States Code; or the Chairman of the Commodity Futures Trading Commission; as the case may be; 

(2) the term ‘‘establishment’’ means the Department of Agriculture, Commerce, Defense, Education, Energy, Health and 

Human Services, Housing and Urban Development, the Interior, Justice, Labor, State, Transportation, Homeland Security, 

or the Treasury; the Agency for International Development, the 

Community Development Financial Institutions Fund, the Environmental Protection Agency, the Federal Emergency Management Agency, the General Services Administration, the National Aeronautics and Space Administration, the Nuclear Regulatory Commission, the Office of Personnel Management, the 

Railroad Retirement Board, the Resolution Trust Corporation, 

the Federal Deposit Insurance Corporation, the Small Business 

Administration, the Corporation for National and Community 

Service, or the Veterans’ Administration, the Social Security 

Administration, the Federal Housing Finance Agency, the Tennessee Valley Authority, the Export-Import Bank, øor the 

Commissions established under section 15301 of title 40, 

United States Code,¿ the Clean Energy Deployment Administration, the Commissions established under section 15301 of 

title 40, United States Code, or the Commodity Futures Trading 

Commission, as the case may be; 

* * * * * * * 

SECTION 507 OF THE ENERGY POLICY ACT OF 1992 

SEC. 507. FLEET REQUIREMENT PROGRAM. 

(a) * * * 

* * * * * * * 


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(o) MANDATORY STATE FLEET PROGRAMS.—(1) * * * 

* * * * * * * 

(3) The Secretary shall revise the rules under this subsection with 

respect to the types of alternative fueled vehicles required for compliance with this subsection to ensure those rules are consistent with 

any guidance issued pursuant to section 303 of this Act. 

* * * * * * * 

NATIONAL ENERGY CONSERVATION POLICY ACT 

* * * * * * * 

TITLE I—GENERAL PROVISIONS 

SEC. 101. SHORT TITLE AND TABLE OF CONTENTS. 

(a) * * * 

(b) TABLE OF CONTENTS.— 

TITLE I—GENERAL PROVISIONS 

* * * * * * * 

TITLE V—FEDERAL ENERGY INITIATIVES 

* * * * * * * 

øSec. 543. Energy management requirements.¿ 

Sec. 543. Energy efficient information and communications technologies. 

* * * * * * * 

TITLE V—FEDERAL ENERGY INITIATIVE 

* * * * * * * 

PART 3—FEDERAL ENERGY MANAGEMENT 

* * * * * * * 

øSEC. 543. ENERGY MANAGEMENT REQUIREMENTS. 

ø(a) ENERGY PERFORMANCE REQUIREMENT FOR FEDERAL BUILD- INGS.—(1) Subject to paragraph (2), each agency shall apply energy 

conservation measures to, and shall improve the design for the construction of, the Federal buildings of the agency (including each industrial or laboratory facility) so that the energy consumption per 

gross square foot of the Federal buildings of the agency in fiscal 

years 2006 through 2015 is reduced, as compared with the energy 

consumption per gross square foot of the Federal buildings of the 

agency in fiscal year 2003, by the percentage specified in the following table: 

øFiscal Year Percentage Reduction 

2006 ................................................................................................... 2 

2007 ................................................................................................... 4 

2008 ................................................................................................... 9 

2009 ................................................................................................... 12 

2010 ................................................................................................... 15 

2011 ................................................................................................... 18 

2012 ................................................................................................... 21 

2013 ................................................................................................... 24 


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øFiscal Year Percentage Reduction 

2014 ................................................................................................... 27 

2015 ................................................................................................... 30. 

ø(2) An agency may exclude from the requirements of paragraph 

(1) any building, and the associated energy consumption and gross 

square footage, in which energy intensive activities are carried out. 

Each agency shall identify and list in each report made under section 548(a) the buildings designated by it for such exclusion. 

ø(3) Not later than December 31, 2014, the Secretary shall review the results of the implementation of the energy performance 

requirement established under paragraph (1) and submit to Congress recommendations concerning energy performance requirements for fiscal years 2016 through 2025. 

ø(b) ENERGY MANAGEMENT REQUIREMENT FOR FEDERAL AGEN- CIES.—(1) Not later than January 1, 2005, each agency shall, to the 

maximum extent practicable, install in Federal buildings owned by 

the United States all energy and water conservation measures with 

payback periods of less than 10 years, as determined by using the 

methods and procedures developed pursuant to section 544. 

ø(2) The Secretary may waive the requirements of this subsection for any agency for such periods as the Secretary may determine if the Secretary finds that the agency is taking all practicable 

steps to meet the requirements and that the requirements of this 

subsection will pose an unacceptable burden upon the agency. If 

the Secretary waives the requirements of this subsection, the Secretary shall, as part of the report required under section 548(b), notify the Congress in writing with an explanation and a justification 

of the reasons for such waiver. 

ø(3) This subsection shall not apply to an agency’s facilities that 

generate or transmit electric energy or to the uranium enrichment 

facilities operated by the Department of Energy. 

ø(4) An agency may participate in the Environmental Protection 

Agency’s ‘‘Green Lights’’ program for purposes of receiving technical assistance in complying with the requirements of this section. 

ø(c) EXCLUSIONS.—(1)(A) An agency may exclude, from the energy performance requirement for a fiscal year established under 

subsection (a) and the energy management requirement established 

under subsection (b), any Federal building or collection of Federal 

buildings, if the head of the agency finds that— 

ø(i) compliance with those requirements would be impracticable; 

ø(ii) the agency has completed and submitted all federally required energy management reports; 

ø(iii) the agency has achieved compliance with the energy efficiency requirements of this Act, the Energy Policy Act of 

1992, Executive orders, and other Federal law; and 

ø(iv) the agency has implemented all practicable, life cycle 

cost-effective projects with respect to the Federal building or 

collection of Federal buildings to be excluded. 

ø(B) A finding of impracticability under subparagraph (A)(i) shall 

be based on— 

ø(i) the energy intensiveness of activities carried out in the 

Federal building or collection of Federal buildings; or 

ø(ii) the fact that the Federal building or collection of Federal buildings is used in the performance of a national security 

function. 


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ø(2) Each agency shall identify and list, in each report made 

under section 548(a), the Federal buildings designated by it for 

such exclusion. The Secretary shall review such findings for consistency with the standards for exclusion set forth in paragraph (1), 

and may within 90 days after receipt of the findings, reverse the 

exclusion. In the case of any such reversal, the agency shall comply 

with the requirements of subsections (a) and (b)(1) for the building 

concerned. 

ø(3) Not later than 180 days after the date of enactment of this 

paragraph, the Secretary shall issue guidelines that establish criteria for exclusions under paragraph (1). 

ø(d) IMPLEMENTATION STEPS.—The Secretary shall consult with 

the Secretary of Defense and the Administrator of General Services 

in developing guidelines for the implementation of this part. To 

meet the requirements of this section, each agency shall— 

ø(1) prepare and submit to the Secretary, not later than December 31, 1993, a plan describing how the agency intends to 

meet such requirements, including how it will— 

ø(A) designate personnel primarily responsible for 

achieving such requirements; 

ø(B) identify high priority projects through calculation of 

payback periods; 

ø(C) take maximum advantage of contracts authorized 

under title VIII of this Act, of financial incentives and 

other services provided by utilities for efficiency investment, and of other forms of financing to reduce the direct 

costs to the Government; and 

ø(D) otherwise implement this part; 

ø(2) perform energy surveys of its Federal buildings to the 

extent necessary and update such surveys as needed, incorporating any relevant information obtained from the survey 

conducted pursuant to section 550; 

ø(3) using such surveys, determine the cost and payback period of energy and water conservation measures likely to 

achieve the requirements of this section; 

ø(4) install energy and water conservation measures that 

will achieve the requirements of this section through the methods and procedures established pursuant to section 544; and 

ø(5) ensure that the operation and maintenance procedures 

applied under this section are continued. 

ø(e) METERING OF ENERGY USE.— 

ø(1) DEADLINE.—By October 1, 2012, in accordance with 

guidelines established by the Secretary under paragraph (2), 

all Federal buildings shall, for the purposes of efficient use of 

energy and reduction in the cost of electricity used in such 

buildings, be metered. Each agency shall use, to the maximum 

extent practicable, advanced meters or advanced metering devices that provide data at least daily and that measure at least 

hourly consumption of electricity in the Federal buildings of 

the agency. Not later than October 1, 2016, each agency shall 

provide for equivalent metering of natural gas and steam, in 

accordance with guidelines established by the Secretary under 

paragraph (2). Such data shall be incorporated into existing 

Federal energy tracking systems and made available to Federal facility managers. 


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ø(2) GUIDELINES.— ø(A) IN GENERAL.—Not later than 180 days after the 

date of enactment of this subsection, the Secretary, in consultation with the Department of Defense, the General 

Services Administration, representatives from the metering industry, utility industry, energy services industry, energy efficiency industry, energy efficiency advocacy organizations, national laboratories, universities, and Federal facility managers, shall establish guidelines for agencies to 

carry out paragraph (1). 

ø(B) REQUIREMENTS FOR GUIDELINES.—The guidelines 

shall— 

ø(i) take into consideration— 

ø(I) the cost of metering and the reduced cost of 

operation and maintenance expected to result 

from metering; 

ø(II) the extent to which metering is expected to 

result in increased potential for energy management, increased potential for energy savings and 

energy efficiency improvement, and cost and energy savings due to utility contract aggregation; 

and 

ø(III) the measurement and verification protocols of the Department of Energy; 

ø(ii) include recommendations concerning the 

amount of funds and the number of trained personnel 

necessary to gather and use the metering information 

to track and reduce energy use; 

ø(iii) establish priorities for types and locations of 

buildings to be metered based on cost-effectiveness 

and a schedule of one or more dates, not later than 1 

year after the date of issuance of the guidelines, on 

which the requirements specified in paragraph (1) 

shall take effect; and 

ø(iv) establish exclusions from the requirements 

specified in paragraph (1) based on the de minimis 

quantity of energy use of a Federal building, industrial 

process, or structure. 

ø(3) PLAN.—Not later than 6 months after the date guidelines are established under paragraph (2), in a report submitted by the agency under section 548(a), each agency shall 

submit to the Secretary a plan describing how the agency will 

implement the requirements of paragraph (1), including (A) 

how the agency will designate personnel primarily responsible 

for achieving the requirements and (B) demonstration by the 

agency, complete with documentation, of any finding that advanced meters or advanced metering devices, as defined in 

paragraph (1), are not practicable. 

ø(f) USE OF ENERGY AND WATER EFFICIENCY MEASURES IN FED- ERAL BUILDINGS.— ø(1) DEFINITIONS.—In this subsection: 

ø(A) COMMISSIONING.—The term ‘‘commissioning’’, with 

respect to a facility, means a systematic process— 

ø(i) of ensuring, using appropriate verification and 

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tial day of the design phase of the facility and ending 

not earlier than 1 year after the date of completion of 

construction of the facility, that all facility systems 

perform interactively in accordance with— 

ø(I) the design documentation and intent of the 

facility; and 

ø(II) the operational needs of the owner of the 

facility, including preparation of operation personnel; and 

ø(ii) the primary goal of which is to ensure fully 

functional systems that can be properly operated and 

maintained during the useful life of the facility. 

ø(B) ENERGY MANAGER.— ø(i) IN GENERAL.—The term ‘‘energy manager’’, with 

respect to a facility, means the individual who is responsible for— 

ø(I) ensuring compliance with this subsection by 

the facility; and 

ø(II) reducing energy use at the facility. 

ø(ii) INCLUSIONS.—The term ‘‘energy manager’’ may 

include— 

ø(I) a contractor of a facility; 

ø(II) a part-time employee of a facility; and 

ø(III) an individual who is responsible for multiple facilities. 

ø(C) FACILITY.— ø(i) IN GENERAL.—The term ‘‘facility’’ means any 

building, installation, structure, or other property (including any applicable fixtures) owned or operated by, 

or constructed or manufactured and leased to, the 

Federal Government. 

ø(ii) INCLUSIONS.—The term ‘‘facility’’ includes— 

ø(I) a group of facilities at a single location or 

multiple locations managed as an integrated operation; and 

ø(II) contractor-operated facilities owned by the 

Federal Government. 

ø(iii) EXCLUSIONS.—The term ‘‘facility’’ does not include any land or site for which the cost of utilities is 

not paid by the Federal Government. 

ø(D) LIFE CYCLE COST-EFFECTIVE.—The term ‘‘life cycle 

cost-effective’’, with respect to a measure, means a measure, the estimated savings of which exceed the estimated 

costs over the lifespan of the measure, as determined in 

accordance with section 544. 

ø(E) PAYBACK PERIOD.— 

ø(i) IN GENERAL.—Subject to clause (ii), the term 

‘‘payback period’’, with respect to a measure, means a 

value equal to the quotient obtained by dividing— 

ø(I) the estimated initial implementation cost of 

the measure (other than financing costs); by 

ø(II) the annual cost savings resulting from the 

measure, including— 

ø(aa) net savings in estimated energy and 

water costs; and 


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ø(bb) operations, maintenance, repair, replacement, and other direct costs. 

ø(ii) MODIFICATIONS AND EXCEPTIONS.—The Secretary, in guidelines issued pursuant to paragraph (6), 

may make such modifications and provide such exceptions to the calculation of the payback period of a 

measure as the Secretary determines to be appropriate 

to achieve the purposes of this Act. 

ø(F) RECOMMISSIONING.—The term ‘‘recommissioning’’ 

means a process— 

ø(i) of commissioning a facility or system beyond the 

project development and warranty phases of the facility or system; and 

ø(ii) the primary goal of which is to ensure optimum 

performance of a facility, in accordance with design or 

current operating needs, over the useful life of the facility, while meeting building occupancy requirements. 

ø(G) RETROCOMMISSIONING.—The term ‘‘retrocommissioning’’ means a process of commissioning a facility or 

system that was not commissioned at the time of construction of the facility or system. 

ø(2) FACILITY ENERGY MANAGERS.— ø(A) IN GENERAL.—Each Federal agency shall designate 

an energy manager responsible for implementing this subsection and reducing energy use at each facility that meets 

criteria under subparagraph (B). 

ø(B) COVERED FACILITIES.—The Secretary shall develop 

criteria, after consultation with affected agencies, energy 

efficiency advocates, and energy and utility service providers, that cover, at a minimum, Federal facilities, including central utility plants and distribution systems and 

other energy intensive operations, that constitute at least 

75 percent of facility energy use at each agency. 

ø(3) ENERGY AND WATER EVALUATIONS.— 

ø(A) EVALUATIONS.—Effective beginning on the date that 

is 180 days after the date of enactment of this subsection 

and annually thereafter, energy managers shall complete, 

for each calendar year, a comprehensive energy and water 

evaluation for approximately 25 percent of the facilities of 

each agency that meet the criteria under paragraph (2)(B) 

in a manner that ensures that an evaluation of each such 

facility is completed at least once every 4 years. 

ø(B) RECOMMISSIONING AND RETROCOMMISSIONING.—As 

part of the evaluation under subparagraph (A), the energy 

manager shall identify and assess recommissioning measures (or, if the facility has never been commissioned, 

retrocommissioning measures) for each such facility. 

ø(4) IMPLEMENTATION OF IDENTIFIED ENERGY AND WATER EFFICIENCY MEASURES.—Not later than 2 years after the completion of each evaluation under paragraph (3), each energy manager may— 

ø(A) implement any energy- or water-saving measure 

that the Federal agency identified in the evaluation conducted under paragraph (3) that is life cycle cost-effective; 

and 


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ø(B) bundle individual measures of varying paybacks together into combined projects. 

ø(5) FOLLOW-UP ON IMPLEMENTED MEASURES.—For each 

measure implemented under paragraph (4), each energy manager shall ensure that— 

ø(A) equipment, including building and equipment controls, is fully commissioned at acceptance to be operating 

at design specifications; 

ø(B) a plan for appropriate operations, maintenance, and 

repair of the equipment is in place at acceptance and is followed; 

ø(C) equipment and system performance is measured 

during its entire life to ensure proper operations, maintenance, and repair; and 

ø(D) energy and water savings are measured and 

verified. 

ø(6) GUIDELINES.— 

ø(A) IN GENERAL.—The Secretary shall issue guidelines 

and necessary criteria that each Federal agency shall follow for implementation of— 

ø(i) paragraphs (2) and (3) not later than 180 days 

after the date of enactment of this subsection; and 

ø(ii) paragraphs (4) and (5) not later than 1 year 

after the date of enactment of this subsection. 

ø(B) RELATIONSHIP TO FUNDING SOURCE.—The guidelines 

issued by the Secretary under subparagraph (A) shall be 

appropriate and uniform for measures funded with each 

type of funding made available under paragraph (10), but 

may distinguish between different types of measures 

project size, and other criteria the Secretary determines 

are relevant. 

ø(7) WEB-BASED CERTIFICATION.— 

ø(A) IN GENERAL.—For each facility that meets the criteria established by the Secretary under paragraph (2)(B), 

the energy manager shall use the web-based tracking system under subparagraph (B) to certify compliance with the 

requirements for— 

ø(i) energy and water evaluations under paragraph 

(3); 

ø(ii) implementation of identified energy and water 

measures under paragraph (4); and 

ø(iii) follow-up on implemented measures under 

paragraph (5). 

ø(B) DEPLOYMENT.— 

ø(i) IN GENERAL.—Not later than 1 year after the 

date of enactment of this subsection, the Secretary 

shall develop and deploy a web-based tracking system 

required under this paragraph in a manner that 

tracks, at a minimum— 

ø(I) the covered facilities; 

ø(II) the status of meeting the requirements 

specified in subparagraph (A); 

ø(III) the estimated cost and savings for measures required to be implemented in a facility; 


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ø(IV) the measured savings and persistence of 

savings for implemented measures; and 

ø(V) the benchmarking information disclosed 

under paragraph (8)(C). 

ø(ii) EASE OF COMPLIANCE.—The Secretary shall ensure that energy manager compliance with the requirements in this paragraph, to the maximum extent 

practicable— 

ø(I) can be accomplished with the use of streamlined procedures and templates that minimize the 

time demands on Federal employees; and 

ø(II) is coordinated with other applicable energy 

reporting requirements. 

ø(C) AVAILABILITY.— ø(i) IN GENERAL.—Subject to clause (ii), the Secretary shall make the web-based tracking system required under this paragraph available to Congress, 

other Federal agencies, and the public through the 

Internet. 

ø(ii) EXEMPTIONS.—At the request of a Federal agency, the Secretary may exempt specific data for specific 

facilities from disclosure under clause (i) for national 

security purposes. 

ø(8) BENCHMARKING OF FEDERAL FACILITIES.— ø(A) IN GENERAL.—The energy manager shall enter energy use data for each metered building that is (or is a 

part of) a facility that meets the criteria established by the 

Secretary under paragraph (2)(B) into a building energy 

use benchmarking system, such as the Energy Star Portfolio Manager. 

ø(B) SYSTEM AND GUIDANCE.—Not later than 1 year after 

the date of enactment of this subsection, the Secretary 

shall— 

ø(i) select or develop the building energy use 

benchmarking system required under this paragraph 

for each type of building; and 

ø(ii) issue guidance for use of the system. 

ø(C) PUBLIC DISCLOSURE.—Each energy manager shall 

post the information entered into, or generated by, a 

benchmarking system under this subsection, on the webbased tracking system under paragraph (7)(B). The energy 

manager shall update such information each year, and 

shall include in such reporting previous years’ information 

to allow changes in building performance to be tracked 

over time. 

ø(9) FEDERAL AGENCY SCORECARDS.— 

ø(A) IN GENERAL.—The Director of the Office of Management and Budget shall issue semiannual scorecards for energy management activities carried out by each Federal 

agency that includes— 

ø(i) summaries of the status of implementing the 

various requirements of the agency and its energy 

managers under this subsection; and 

ø(ii) any other means of measuring performance 

that the Director considers appropriate. 


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ø(B) AVAILABILITY.—The Director shall make the scorecards required under this paragraph available to Congress, 

other Federal agencies, and the public through the Internet. 

ø(10) FUNDING AND IMPLEMENTATION.— ø(A) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated such sums as are necessary to 

carry out this subsection. 

ø(B) FUNDING OPTIONS.— ø(i) IN GENERAL.—To carry out this subsection, a 

Federal agency may use any combination of— 

ø(I) appropriated funds made available under 

subparagraph (A); and 

ø(II) private financing otherwise authorized 

under Federal law, including financing available 

through energy savings performance contracts or 

utility energy service contracts. 

ø(ii) COMBINED FUNDING FOR SAME MEASURE.—A 

Federal agency may use any combination of appropriated funds and private financing described in 

clause (i) to carry out the same measure under this 

subsection. 

ø(C) IMPLEMENTATION.—Each Federal agency may implement the requirements under this subsection itself or 

may contract out performance of some or all of the requirements. 

ø(11) RULE OF CONSTRUCTION.—This subsection shall not be 

construed to require or to obviate any contractor savings guarantees. 

ø(f) LARGE CAPITAL ENERGY INVESTMENTS.— 

ø(1) IN GENERAL.—Each Federal agency shall ensure that 

any large capital energy investment in an existing building 

that is not a major renovation but involves replacement of installed equipment (such as heating and cooling systems), or involves renovation, rehabilitation, expansion, or remodeling of 

existing space, employs the most energy efficient designs, systems, equipment, and controls that are life-cycle cost effective. 

ø(2) PROCESS FOR REVIEW OF INVESTMENT DECISIONS.—Not 

later than 180 days after the date of enactment of this subsection, each Federal agency shall— 

ø(A) develop a process for reviewing each decision made 

on a large capital energy investment described in paragraph (1) to ensure that the requirements of this subsection are met; and 

ø(B) report to the Director of the Office of Management 

and Budget on the process established. 

ø(3) COMPLIANCE REPORT.—Not later than 1 year after the 

date of enactment of this subsection, the Director of the Office 

of Management and Budget shall evaluate and report to Congress on the compliance of each agency with this subsection.¿ 

SEC. 543. ENERGY EFFICIENT INFORMATION AND COMMUNICATIONS 

TECHNOLOGIES. 

(a) IN GENERAL.—Not later than 1 year after the date of enactment of the American Clean Energy and Security Act of 2009, each 

Federal agency shall collaborate with the Director of the Office of 


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Management and Budget (referred to in this section as the ‘‘Director’’) to create an implementation strategy, including best practices 

and measurement and verification techniques, for the purchase and 

use of energy efficient information and communications technologies 

and practices. Wherever possible, existing standards, specifications, 

performance metrics, and best management practices that have been 

or are being developed in open collaboration and with broad stakeholder input and review should be incorporated. In addition, agency 

strategies shall be flexible, cost-effective, and based on the specific 

operating requirements and statutory mission of each agency. 

(b) ENERGY EFFICIENT INFORMATION AND COMMUNICATIONS

TECHNOLOGIES.—In developing an implementation strategy, each 

agency shall— 

(1) consider information and communications technologies 

and infrastructure, including, but not limited to, advanced metering infrastructure, information and communications technology services and products, efficient data center strategies, applications modernization and rationalization, building systems 

energy efficiency, and telework; and 

(2) ensure that agencies are eligible to realize the savings and 

rewards brought about through increased efficiencies. 

(c) PERFORMANCE GOALS.—Not later than 6 months after the date 

of enactment of the American Clean Energy and Security Act of 

2009, the Director shall establish performance goals for evaluating 

the efforts of the agencies in improving the maintenance, purchase 

and use of energy efficiency of information and communications 

technology systems. These performance goals should measure information technology costs over a specific time horizon (3 to 5 years), 

providing a complete picture of all costs, including energy. 

(d) REPORT.—Not later than 18 months after the date of enactment of the American Clean Energy and Security Act of 2009, and 

annually thereafter, the Director shall submit a report to Congress 

on— 

(1) the progress of each agency in reducing energy use 

through its implementation strategy; and 

(2) new and emerging technologies that would help achieve 

increased energy efficiency. 

* * * * * * * 

TITLE VIII—ENERGY SAVINGS 

PERFORMANCE CONTRACTS 

SEC. 801. AUTHORITY TO ENTER INTO CONTRACTS. 

(a) IN GENERAL.—(1) * * * 

(2)(A) * * * 

* * * * * * * 

(E) FUNDING OPTIONS.—øIn¿ Notwithstanding any other provision of law, in carrying out a contract under this title, a Federal 

agency may use any combination of— 

(i) * * * 

* * * * * * * 


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(3)(A) The head of a Federal agency may issue a task or delivery 

order under an energy savings performance contract by— 

(i) notifying all contractors that have received an award 

under such contract that the agency proposes to discuss energy 

savings performance services for some or all of its facilities, soliciting an expression of interest in performing site surveys or 

investigations and feasibility designs and studies and the submission of qualifications from such contractors, and including 

in such notice summary information concerning energy use for 

any facilities that the agency has specific interest in including 

in such contract; 

(ii) reviewing all expressions of interest and qualifications 

submitted pursuant to the notice under clause (i); 

(iii) selecting two or more contractors (from among those reviewed under clause (ii)) to conduct discussions concerning the 

contractors’ respective qualifications to implement potential energy conservation measures, including requesting references 

demonstrating experience on similar efforts and the resulting 

energy savings of such similar efforts; 

(iv) selecting and authorizing— 

(I) more than one contractor (from among those selected 

under clause (iii)) to conduct site surveys, investigations, 

feasibility designs and studies or similar assessments for 

the energy savings performance contract services (or for discrete portions of such services), for the purpose of allowing 

each such contractor to submit a firm, fixed-price proposal 

to implement specific energy conservation measures; or 

(II) one contractor (from among those selected under 

clause (iii)) to conduct a site survey, investigation, a feasibility design and study or similar for the purpose of allowing the contractor to submit a firm, fixed-price proposal to 

implement specific energy conservation measures; 

(v) negotiating a task or delivery order for energy savings performance contracting services with the contractor or contractors 

selected under clause (iv) based on the energy conservation 

measures identified; and 

(vi) issuing a task or delivery order for energy savings performance contracting services to such contractor or contractors. 

(B) The issuance of a task or delivery order for energy savings 

performance contracting services pursuant to subparagraph (A) is 

deemed to satisfy the task and delivery order competition requirements in section 2304c(d) of title 10, United States Code, and section 303J(d) of the Federal Property and Administrative Services 

Act of 1949 (41 U.S.C. 253j(d)). 

(C) The Secretary may issue guidance as necessary to agencies 

issuing task or delivery orders pursuant to subparagraph (A). 

* * * * * * * 

COMMODITY EXCHANGE ACT 

* * * * * * * 

SEC. 1a. DEFINITIONS. 

As used in this Act: 


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(1) * * * 

* * * * * * * 

(13) ENERGY COMMODITY.—The term ‘‘energy commodity’’ 

means— 

(A) coal; 

(B) crude oil, gasoline, diesel fuel, jet fuel, heating oil, 

and propane; 

(C) electricity (excluding financial transmission rights 

which are subject to regulation and oversight by the Federal Energy Regulatory Commission); 

(D) natural gas; and 

(E) any other substance (other than an excluded commodity, a metal, or an agricultural commodity) that is used 

as a source of energy, as the Commission, in its discretion, 

deems appropriate. 

ø(13)¿ (14) EXCLUDED COMMODITY.—The term ‘‘excluded commodity’’ means— 

(i) * * * 

* * * * * * * 

ø(14)¿ (15) EXEMPT COMMODITY.—The term ‘‘exempt commodity’’ means a commodity that is not an excluded commodity, an energy commodity, or an agricultural commodity. 

ø(15)¿ (16) FINANCIAL INSTITUTION.—The term ‘‘financial institution’’ means— 

(A) * * * 

* * * * * * * 

ø(16)¿ (17) FLOOR BROKER.—The term ‘‘floor broker’’ means 

any person who, in or surrounding any pit, ring, post, or other 

place provided by a contract market or derivatives transaction 

execution facility for the meeting of persons similarly engaged, 

shall purchase or sell for any other person any commodity for 

future delivery on or subject to the rules of any contract market or derivatives transaction execution facility. 

ø(17)¿ (18) FLOOR TRADER.—The term ‘‘floor trader’’ means 

any person who, in or surrounding any pit, ring, post, or other 

place provided by a contract market or derivatives transaction 

execution facility for the meeting of persons similarly engaged, 

purchases, or sells solely for such person’s own account, any 

commodity for future delivery on or subject to the rules of any 

contract market or derivatives transaction execution facility. 

ø(18)¿ (19) FOREIGN FUTURES AUTHORITY.—The term ‘‘foreign 

futures authority’’ means any foreign government, or any department, agency, governmental body, or regulatory organization empowered by a foreign government to administer or enforce a law, rule, or regulation as it relates to a futures or options matter, or any department or agency of a political subdivision of a foreign government empowered to administer or 

enforce a law, rule, or regulation as it relates to a futures or 

options matter. 

ø(19)¿ (20) FUTURE DELIVERY.—The term ‘‘future delivery’’ 

does not include any sale of any cash commodity for deferred 

shipment or delivery. 


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ø(20)¿ (21) FUTURES COMMISSION MERCHANT.—The term ‘‘futures commission merchant’’ means an individual, association, 

partnership, corporation, or trust that— 

(A) * * * 

* * * * * * * 

ø(21)¿ (22) HYBRID INSTRUMENT.—The term ‘‘hybrid instrument’’ means a security having one or more payments indexed 

to the value, level, or rate of, or providing for the delivery of, 

one or more commodities. 

(23) INCLUDED ENERGY TRANSACTION.—The term ‘‘included 

energy transaction’’ means a contract, agreement, or transaction 

in an energy commodity for future delivery that provides for a 

delivery point of the energy commodity in the United States or 

a territory or possession of the United States, or that is offered 

or transacted on or through a computer terminal located in the 

United States. 

ø(22)¿ (24) INTERSTATE COMMERCE.—The term ‘‘interstate 

commerce’’ means commerce— 

(A) * * * 

* * * * * * * 

ø(23)¿ (25) INTRODUCING BROKER.—The term ‘‘introducing 

broker’’ means any person (except an individual who elects to 

be and is registered as an associated person of a futures commission merchant) engaged in soliciting or in accepting orders 

for the purchase or sale of any commodity for future delivery 

on or subject to the rules of any contract market or derivatives 

transaction execution facility who does not accept any money, 

securities, or property (or extend credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result or 

may result therefrom. 

ø(24)¿ (26) MEMBER OF A REGISTERED ENTITY; MEMBER OF A

DERIVATIVES TRANSACTION EXECUTION FACILITY.—The term 

‘‘member’’ means, with respect to a registered entity or derivatives transaction execution facility, an individual, association, 

partnership, corporation, or trust— 

(A) * * * 

* * * * * * * 

ø(25)¿ (27) NARROW-BASED SECURITY INDEX.— 

(A) The term ‘‘narrow-based security index’’ means an 

index— 

(i) * * * 

* * * * * * * 

ø(26)¿ (28) OPTION.—The term ‘‘option’’ means an agreement, 

contract, or transaction that is of the character of, or is commonly known to the trade as, an ‘‘option’’, ‘‘privilege’’, ‘‘indemnity’’, ‘‘bid’’, ‘‘offer’’, ‘‘put’’, ‘‘call’’, ‘‘advance guaranty’’, or ‘‘decline guaranty’’. 

ø(27)¿ (29) ORGANIZED EXCHANGE.—The term ‘‘organized exchange’’ means a trading facility that— 

(A) * * * 

* * * * * * * 


hsrobinson on PROD1PC76 with HEARING
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ø(28)¿ (30) PERSON.—The term ‘‘person’’ imports the plural 

or singular, and includes individuals, associations, partnerships, corporations, and trusts. 

ø(29)¿ (31) REGISTERED ENTITY.—The term ‘‘registered entity’’ means— 

(A) * * * 

* * * * * * * 

ø(30)¿ (32) SECURITY.—The term ‘‘security’’ means a security 

as defined in section 2(a)(1) of the Securities Act of 1933 (15 

U.S.C. 77b(a)(1)) or section 3(a)(10) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78c(a)(10)). 

ø(31)¿ (33) SECURITY FUTURE.—The term ‘‘security future’’ 

means a contract of sale for future delivery of a single security 

or of a narrow-based security index, including any interest 

therein or based on the value thereof, except an exempted security under section 3(a)(12) of the Securities Exchange Act of 

1934 as in effect on the date of the enactment of the Futures 

Trading Act of 1982 (other than any municipal security as defined in section 3(a)(29) of the Securities Exchange Act of 1934 

as in effect on the date of the enactment of the Futures Trading Act of 1982). The term ‘‘security future’’ does not include 

any agreement, contract, or transaction excluded from this Act 

under section 2(c), 2(d), 2(f ), or 2(g) of this Act (as in effect on 

the date of the enactment of the Commodity Futures Modernization Act of 2000) or title IV of the Commodity Futures 

Modernization Act of 2000. 

ø(32)¿ (34) SECURITY FUTURES PRODUCT.—The term ‘‘security 

futures product’’ means a security future or any put, call, 

straddle, option, or privilege on any security future. 

ø(33)¿ (35) SIGNIFICANT PRICE DISCOVERY CONTRACT.—The 

term ‘‘significant price discovery contract’’ means an agreement, contract, or transaction subject to section 2(h)(7). 

ø(34)¿ (36) TRADING FACILITY.— 

(A) * * * 

* * * * * * * 

(37) CREDIT DEFAULT SWAP.—The term ‘‘credit default swap’’ 

means a contract which insures a party to the contract against 

the risk that an entity may experience a loss of value as a result 

of an event specified in the contract, such as a default or credit 

downgrade. A credit default swap that is traded on or cleared 

by a registered entity shall be excluded from the definition of 

a security as defined in this Act and in section 2(a)(1) of the Securities Act of 1933 or section 3(a)(10) of the Securities Exchange Act of 1934, except it shall be deemed a security solely 

for purpose of enforcing prohibitions against insider trading in 

sections 10 and 16 of the Securities Exchange Act of 1934. 

SEC. 2. JURISDICTION OF COMMISSION; LIABILITY OF PRINCIPAL FOR 

ACT OF AGENT; COMMODITY FUTURES TRADING COMMISSION; TRANSACTION IN INTERSTATE COMMERCE. 

(a) * * * 

* * * * * * * 

(d) EXCLUDED DERIVATIVE TRANSACTIONS.— 


hsrobinson on PROD1PC76 with HEARING
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(1) IN GENERAL.—Nothing in this Act (other than section 5b 

or 12(e)(2)(B) governs or applies to an agreement, contract, or 

transaction in an excluded commodity if— 

(A) the agreement, contract, or transaction is entered 

into only between persons that are eligible contract participants at the time at which the persons enter into the 

agreement, contract, or transaction; øand¿ 

(B) the agreement, contract, or transaction is not executed or traded on a trading facilityø.¿; and 

(C) except as provided in section 4(f), the agreement, contract, or transaction is settled and cleared through a derivatives clearing organization registered with the Commission. 

(2) ELECTRONIC TRADING FACILITY EXCLUSION.—Nothing in 

this Act (other than section 5a (to the extent provided in section 5a(g)), 5b, 5d, or 12(e)(2)(B)) governs or applies to an 

agreement, contract, or transaction in an excluded commodity 

if— 

(A) * * * 

(B) the agreement, contract, or transaction is entered 

into only between persons that are eligible contract participants described in subparagraph (A), (B)(ii), or (C) of section 1a(12)) at the time at which the persons enter into the 

agreement, contract, or transaction; øand¿ 

(C) the agreement, contract, or transaction is executed or 

traded on an electronic trading facilityø.¿; and 

(D) except as provided in section 4(f), the agreement, contract, or transaction is settled and cleared through a derivatives clearing organization registered with the Commission. 

* * * * * * * 

(g) EXCLUDED SWAP TRANSACTIONS.—No provision of this Act 

(other than section 5a (to the extent provided in section 5a(g)), 5b, 

5d, or 12(e)(2)) shall apply to or govern any agreement, contract, 

or transaction in a commodity other than an agricultural commodity or an energy commodity if the agreement, contract, or transaction is— 

(1) * * * 

(2) subject to individual negotiation by the parties; øand¿ 

(3) not executed or traded on a trading facilityø.¿; and 

(4) except as provided in section 4(f), settled and cleared 

through a derivatives clearing organization registered with the 

Commission. 

(h) LEGAL CERTAINTY FOR CERTAIN TRANSACTIONS IN EXEMPT

COMMODITIES.— 

(1) Except as provided in paragraph (2), nothing in this Act 

shall apply to a contract, agreement, or transaction in an exempt commodity (other than an energy commodity) which— 

(A) is entered into solely between persons that are eligible contract participants at the time the persons enter into 

the agreement, contract, or transaction; øand¿ 

(B) is not entered into on a trading facilityø.¿; and 


hsrobinson on PROD1PC76 with HEARING
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(C) except as provided in section 4(f), is settled and 

cleared through a derivatives clearing organization registered with the Commission. 

* * * * * * * 

(3) Except as provided in paragraphs (4) and (7), nothing in 

this Act shall apply to an agreement, contract, or transaction 

in an exempt commodity which is— 

(A) entered into on a principal-to-principal basis solely 

between persons that are eligible commercial entities at 

the time the persons enter into the agreement, contract, or 

transaction; øand¿ 

(B) executed or traded on an electronic trading 

facilityø.¿; and 

(C) except as provided in section 4(f), settled and cleared 

through a derivatives clearing organization registered with 

the Commission. 

* * * * * * * 

(7) SIGNIFICANT PRICE DISCOVERY CONTRACTS.— 

(A) IN GENERAL.—An agreement, contract, or transaction 

conducted in reliance on the exemption in paragraph (3) 

shall be subject to the provisions of subparagraphs (B) 

through (D) of this paragraph and section 4a(a), under 

such rules and regulations as the Commission shall promulgate, provided that the Commission determines, in its 

discretion, that the agreement, contract, or transaction 

performs a significant price discovery function as described 

in subparagraph (B) of this paragraph. 

* * * * * * * 

(C) CORE PRINCIPLES APPLICABLE TO SIGNIFICANT PRICE

DISCOVERY CONTRACTS.— 

(i) * * * 

(ii) CORE PRINCIPLES.—The electronic trading facility 

shall have reasonable discretion (including discretion 

to account for differences between cleared and 

uncleared significant price discovery contracts) in establishing the manner in which it complies with the 

following core principles: 

(I) * * * 

* * * * * * * 

(IV) POSITION øLIMITATIONS OR¿ ACCOUNTABILITY.—The electronic trading facility shall 

adopt, where necessary and appropriate, øposition 

limitations or¿ position accountability for speculators in significant price discovery contracts, taking into account positions in other agreements, 

contracts, and transactions that are treated by a 

derivatives clearing organization, whether registered or not registered, as fungible with such 

significant price discovery contracts to reduce the 

potential threat of market manipulation or congesVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00705 Fmt 6659 Sfmt 6601 E:\HR\OC\HR137.XXX HR137

hsrobinson on PROD1PC76 with HEARING
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tion, especially during trading in the delivery 

month. 

* * * * * * * 

ø(D) IMPLEMENTATION.— ø(i) CLEARING.—The Commission shall take into 

consideration differences between cleared and 

uncleared significant price discovery contracts when 

reviewing the implementation of the core principles by 

an electronic trading facility. 

ø(ii) REVIEW.—As part of¿ 

(D) REVIEW OF IMPLEMENTATION.—As part of the Commission’s continual monitoring and surveillance activities, 

the Commission shall, not less frequently than annually, 

evaluate, as appropriate, all the agreements, contracts, or 

transactions conducted on an electronic trading facility in 

reliance on the exemption provided in paragraph (3) to determine whether they serve a significant price discovery 

function as described in subparagraph (B) of this paragraph. 

* * * * * * * 

(j) This Act shall not be interpreted to affect the jurisdiction of the 

Federal Energy Regulatory Commission with respect to the authority of the Federal Energy Regulatory Commission under the Federal 

Power Act (16 U.S.C. 791a et seq.), the Natural Gas Act (15 U.S.C. 

717 et seq.), or other law to obtain information, carry out enforcement actions, or otherwise carry out the responsibilities of the Federal Energy Regulatory Commission. 

(k) The Commission shall have jurisdiction over the establishment, operations, and oversight of markets for regulated allowance 

derivatives (as defined in section 401 of the Federal Power Act (16 

U.S.C. 791a and following)), and shall provide for the establishment, operation, and oversight of the markets in accordance with 

the same regulations that apply under this Act to included energy 

transactions. 

* * * * * * * 

SEC. 4. (a) Unless exempted by the Commission pursuant to subsection (c), it shall be unlawful for any person to offer to enter into, 

to enter into, to execute, to confirm the execution of, or to conduct 

any office or business anywhere in the United States, its territories 

or possessions, for the purpose of soliciting, or accepting any order 

for, or otherwise dealing in, any transaction in, or in connection 

with, a contract for the purchase or sale of a commodity for future 

delivery (other than a contract which is made on or subject to the 

rules of a board of trade, exchange, or market located outside the 

United States, its territories or possessions, and which is not an included energy transaction) unless— 

(1) * * * 

* * * * * * * 

(b) The Commission may adopt rules and regulations proscribing 

fraud and requiring minimum financial standards, the disclosure of 

risk, the filing of reports, the keeping of books and records, the 

safeguarding of customers’ funds, and registration with the Commission by any person located in the United States, its territories 


hsrobinson on PROD1PC76 with HEARING
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or possessions, who engages in the offer or sale of any contract of 

sale of a commodity for future delivery that is made or to be made 

on or subject to the rules of a board of trade, exchange, or market 

located outside the United States, its territories or possessions. 

Such rules and regulations may impose different requirements for 

such persons depending upon the particular foreign board of trade, 

exchange, or market involved. No rule or regulation may be adopted by the Commission under this subsection that (1) requires Commission approval of any contract, rule, regulation, or action of any 

foreign board of trade, exchange, or market, or clearinghouse for 

such board of trade, exchange, or market, or (2) governs in any way 

any rule or contract term or action of any foreign board of trade, 

exchange, or market, or clearinghouse for such board of trade, exchange, or market. The preceding sentence shall not apply with respect to included energy transactions. 

(c)(1) In order to promote responsible economic or financial innovation and fair competition, the Commission by rule, regulation, or 

order, after notice and opportunity for hearing, may (on its own initiative or on application of any person, including any board of trade 

designated or registered as a contract market or derivatives transaction execution facility for transactions for future delivery in any 

commodity under section 5 of this Act) exempt any agreement, contract, or transaction (or class thereof) that is otherwise subject to 

subsection (a) (including any person or class of persons offering, entering into, rendering advice or rendering other services with respect to, the agreement, contract, or transaction), either unconditionally or on stated terms or conditions or for stated periods and 

either retroactively or prospectively, or both, from any of the requirements of subsection (a), or from any other provision of this Act 

(except subparagraphs (C)(ii) and (D) of section 2(a)(1), except that 

the Commission and the Securities and Exchange Commission may 

by rule, regulation, or order jointly exclude any agreement, contract, or transaction from section 2(a)(1)(D)), if the agreement, contract, or transaction, except as provided in section 4(h), will be settled and cleared through a derivatives clearing organization registered with the Commission and the Commission determines that 

the exemption would be consistent with the public interest. 

* * * * * * * 

(6) The Commission may not exempt any included energy transaction from the requirements of subsection (a), unless the Commission provides 60 days advance notice to the Congress and the Position Limit Energy Advisory Group and solicits public comment 

about the exemption request and any proposed Commission action. 

* * * * * * * 

(e) DETAILED REPORTING AND DISAGGREGATION OF MARKET

DATA.— 

(1) INDEX TRADERS AND SWAP DEALERS REPORTING.—The 

Commission shall issue a proposed rule defining and 

classifying index traders and swap dealers (as those terms are 

defined by the Commission) for purposes of data reporting requirements and setting routine detailed reporting requirements 

for any positions of such entities in contracts traded on designated contract markets, over-the-counter markets, derivatives 

transaction execution facilities, foreign boards of trade subject 


hsrobinson on PROD1PC76 with HEARING
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to section 4(f), and electronic trading facilities with respect to 

significant price discovery contracts not later than 120 days 

after the date of the enactment of this subsection, and issue a 

final rule within 180 days after such date of enactment. 

(2) DISAGGREGATION OF INDEX FUNDS AND OTHER DATA IN

MARKETS.—Subject to section 8 and beginning within 60 days 

of the issuance of the final rule required by paragraph (1), the 

Commission shall disaggregate and make public weekly— 

(A) the number of positions and total notional value of 

index funds and other passive, long-only and short-only positions (as defined by the Commission) in all markets to the 

extent such information is available; and 

(B) data on speculative positions relative to bona fide 

physical hedgers in those markets to the extent such information is available. 

(3) DISCLOSURE OF IDENTITY OF HOLDERS OF POSITIONS IN INDEXES IN EXCESS OF POSITION LIMITS.—The Commission shall 

include in its weekly Commitment of Trader reports the identity 

of each person who holds a position in an index in excess of a 

limit imposed under section 4i. 

(f) ALTERNATIVES TO CLEARING THROUGH DESIGNATED CLEARING

ORGANIZATIONS.— 

(1) SETTLEMENT AND CLEARING THROUGH CERTAIN OTHER

REGULATED ENTITIES.—An agreement, contract, or transaction, 

or class thereof, relating to an excluded commodity, that would 

otherwise be required to be settled and cleared by section 

2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), or 2(h)(3)(C) of this 

Act, or subsection (c)(1) of this section may be settled and 

cleared through an entity listed in subsections (a) or (b) of section 409 of the Federal Deposit Insurance Corporation Improvement Act of 1991. 

(2) WAIVER OF CLEARING REQUIREMENT.— 

(A) The Commission, in its discretion, may exempt an 

agreement, contract, or transaction, or class thereof, that 

would otherwise be required by section 2(d)(1)(C), 

2(d)(2)(D), 2(g)(4), 2(h)(1)(C), or 2(h)(3)(C) of this Act, or 

subsection (c)(1) of this section to be settled and cleared 

through a derivatives clearing organization registered with 

the Commission from such requirement. 

(B) In granting exemptions pursuant to subparagraph 

(A), the Commission shall consult with the Securities and 

Exchange Commission and the Board of Governors of the 

Federal Reserve System regarding exemptions that relate to 

excluded commodities or entities for which the Securities 

Exchange Commission or the Board of Governors of the 

Federal Reserve System serve as the primary regulator. 

(C) Before granting an exemption pursuant to subparagraph (A), the Commission shall find that the agreement, 

contract, or transaction, or class thereof— 

(i) is highly customized as to its material terms and 

conditions; 

(ii) is transacted infrequently; 

(iii) does not serve a significant price-discovery function in the marketplace; and 


hsrobinson on PROD1PC76 with HEARING
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(iv) is being entered into by parties who can demonstrate the financial integrity of the agreement, contract, or transaction and their own financial integrity, 

as such terms and standards are determined by the 

Commission. The standards may include, with respect 

to any federally regulated financial entity for which net 

capital requirements are imposed, a net capital requirement associated with any agreement, contract, or 

transaction subject to an exemption from the clearing 

requirement that is higher than the net capital requirement that would be associated with such a transaction 

were it cleared 

(D) Any agreement, contract, or transaction, or class 

thereof, which is exempted pursuant to subparagraph (A) 

shall be reported to the Commission in a manner designated by the Commission, or to such other entity the 

Commission deems appropriate. 

(E) The Commission, the Securities and Exchange Commission and the Board of Governors of the Federal Reserve 

System shall enter into a memorandum of understanding 

by which the information reported to the Commission pursuant to subparagraph (D) with regard to excluded commodities or entities for which the Securities Exchange Commission or the Board of Governors of the Federal Reserve 

System serve as the primary regulator may be provided to 

the other agencies. 

(g) SPOT AND FORWARD EXCLUSION.—The settlement and clearing 

requirements of section 2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 

2(h)(3)(C), or 4(c)(1) shall not apply to an agreement, contract, or 

transaction of any cash commodity for immediate or deferred shipment or delivery, as defined by the Commission. 

SEC. 4a. (a)(1) Excessive speculation in any commodity under 

contracts of sale of such commodity for future delivery made on or 

subject to the rules of contract markets or derivatives transaction 

execution facilities, or on electronic trading facilities with respect 

to a significant price discovery contract causing sudden or unreasonable fluctuations or unwarranted changes in the price of such 

commodity, is an undue and unnecessary burden on interstate commerce in such commodity. For the purpose of diminishing, eliminating, or preventing such burden, the Commission shall, from 

time to time, after due notice and opportunity for hearing, by rule, 

regulation, or order, proclaim and fix such limits on the amounts 

of trading which may be done or positions which may be held by 

any person under contracts of sale of such commodity for future delivery on or subject to the rules of any contract market or derivatives transaction execution facility, or on an electronic trading facility with respect to a significant price discovery contract, as the 

Commission finds are necessary to diminish, eliminate, or prevent 

such burden. With respect to energy transactions, the Commission 

shall fix limits on the aggregate number of positions which may be 

held by any person for each month across all markets subject to the 

jurisdiction of the Commission. In determining whether any person 

has exceeded such limits, the positions held and trading done by 

any persons directly or indirectly controlled by such person shall be 

included with the positions held and trading done by such person; 


hsrobinson on PROD1PC76 with HEARING
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and further, such limits upon positions and trading shall apply to 

positions held by, and trading done by, two or more persons acting 

pursuant to an expressed or implied agreement or understanding, 

the same as if the positions were held by, or the trading were done 

by, a single person. Nothing in this section shall be construed to 

prohibit the Commission, consistent with the 3rd sentence, from fixing different trading or position limits for different commodities, 

markets, futures, or delivery months, or for different number of 

days remaining until the last day of trading in a contract, or different trading limits for buying and selling operations, or different 

limits for the purposes of paragraphs (1) and (2) of subsection (b) 

of this section, or from exempting transactions normally known to 

the trade as ‘‘spreads’’ or ‘‘straddles’’ or ‘‘arbitrage’’ or from fixing 

limits applying to such transactions or positions different from limits fixed for other transactions or positions. The word ‘‘arbitrage’’ 

in domestic markets shall be defined to mean the same as a 

‘‘spread’’ or ‘‘straddle’’. The Commission is authorized to define the 

term ‘‘international arbitrage’’. 

(2)(A) Not later than 60 days after the date of the enactment of 

this paragraph, the Commission shall convene a Position Limit Energy Advisory Group consisting of representatives from— 

(i) 7 predominantly commercial short hedgers of the actual 

energy commodity for future delivery; 

(ii) 7 predominantly commercial long hedgers of the actual 

energy commodity for future delivery; 

(iii) 4 non-commercial participants in markets for energy 

commodities for future delivery; and 

(iv) each designated contract market or derivatives transaction execution facility upon which a contract in the energy 

commodity for future delivery is traded, and each electronic 

trading facility that has a significant price discovery contract 

in the energy commodity. 

(B) Not later than 60 days after the date on which the advisory 

group is convened under subparagraph (A), and annually thereafter, the advisory group shall submit to the Commission advisory 

recommendations regarding the position limits to be established in 

paragraph (1). 

(C) The Commission shall have exclusive authority to grant exemptions for bona fide hedging transactions and positions from position limits imposed under this Act on energy transactions. 

* * * * * * * 

(c)(1) No rule, regulation, or order issued under subsection (a) of 

this section shall apply to transactions or positions which are 

shown to be bona fide hedging transactions or positions, as such 

terms shall be defined by the Commission by rule, regulation, or 

order consistent with the purposes of this Act. Such terms may be 

defined to permit producers, purchasers, sellers, middlemen, and 

users of a commodity or a product derived therefrom to hedge their 

legitimate anticipated business needs for that period of time into 

the future for which an appropriate futures contract is open and 

available on an exchange. To determine the adequacy of this Act 

and the powers of the Commission acting thereunder to prevent 

unwarranted price pressures by large hedgers, the Commission 

shall monitor and analyze the trading activities of the largest hedgers, as determined by the Commission, operating in the cattle, hog, 


hsrobinson on PROD1PC76 with HEARING
711 

or pork belly markets and shall report its findings and recommendations to the Senate Committee on Agriculture, Nutrition, 

and Forestry and the House Committee on Agriculture in its annual reports for at least two years following the date of enactment 

of the Futures Trading Act of 1982. 

(2) For the purposes of contracts of sale for future delivery and 

options on such contracts or commodities, the Commission shall define what constitutes a bona fide hedging transaction or position as 

a transaction or position that— 

(A)(i) represents a substitute for transactions made or to be 

made or positions taken or to be taken at a later time in a physical marketing channel; 

(ii) is economically appropriate to the reduction of risks in the 

conduct and management of a commercial enterprise; and 

(iii) arises from the potential change in the value of— 

(I) assets that a person owns, produces, manufactures, 

processes, or merchandises or anticipates owning, producing, manufacturing, processing, or merchandising; 

(II) liabilities that a person owns or anticipates incurring; or 

(III) services that a person provides, purchases, or anticipates providing or purchasing; or 

(B) reduces risks attendant to a position resulting from a 

transaction that— 

(i) was executed pursuant to subsection (d), (g), (h)(1), or 

(h)(2) of section 2, or an exemption issued by the Commission by rule, regulation or order; and 

(ii) was executed opposite a counterparty for which the 

transaction would qualify as a bona fide hedging transaction pursuant to paragraph (2)(A) of this subsection. 

* * * * * * * 

(f) The provisions of this section shall apply to the amounts of 

trading which may be done or positions which may be held by any 

person under contracts of sale of an index for future delivery on or 

subject to the rules of any contract market, derivatives transaction 

execution facility, or over-the-counter market, or on an electronic 

trading facility with respect to a significant price discovery contract, 

in the same manner in which this section applies to contracts of sale 

of a commodity for future delivery. 

* * * * * * * 

SEC. 4c. PROHIBITED TRANSACTIONS. 

(a) * * * 

* * * * * * * 

(h) LIMITATION ON ELIGIBILITY TO PURCHASE A CREDIT DEFAULT

SWAP.—It shall be unlawful for any person to enter into a credit default swap unless the person— 

(1) owns a credit instrument which is insured by the credit 

default swap; 

(2) would experience financial loss if an event that is the subject of the credit default swap occurs with respect to the credit 

instrument; and 

(3) meets such minimum capital adequacy standards as may 

be established by the Commission, in consultation with the 


hsrobinson on PROD1PC76 with HEARING
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Board of Governors of the Federal Reserve System, or such 

more stringent minimum capital adequacy standards as may be 

established by or under the law of any State in which the swap 

is originated or entered into, or in which possession of the contract involved takes place. 

* * * * * * * 

SEC. 5. DESIGNATION OF BOARDS OF TRADE AS CONTRACT MARKETS. 

(a) * * * 

* * * * * * * 

(d) CORE PRINCIPLES FOR CONTRACT MARKETS.— 

(1) * * * 

* * * * * * * 

(5) POSITION øLIMITATIONS OR¿ ACCOUNTABILITY.—To reduce 

the potential threat of market manipulation or congestion, especially during trading in the delivery month, the board of 

trade shall adopt øposition limitations or¿ position accountability for speculators, where necessary and appropriate. 

* * * * * * * 

SEC. 5a. DERIVATIVES TRANSACTION EXECUTION FACILITIES. 

(a) * * * 

* * * * * * * 

(d) CORE PRINCIPLES FOR REGISTERED DERIVATIVES TRANSACTION

EXECUTION FACILITIES.— 

(1) * * * 

* * * * * * * 

(4) POSITION øLIMITATIONS OR¿ ACCOUNTABILITY.—To reduce 

the potential threat of market manipulation or congestion, especially during trading in the delivery month, the derivatives 

transaction execution facility shall adopt øposition limits or¿ 

position accountability for speculators, where necessary and 

appropriate for a contract, agreement or transaction with an 

underlying commodity that has a physically deliverable supply. 

* * * * * * * 

SEC. 5b. DERIVATIVES CLEARING ORGANIZATIONS. 

(a) * * * 

* * * * * * * 

(c) REGISTRATION OF DERIVATIVES CLEARING ORGANIZATIONS.— 

(1) * * * 

(2) CORE PRINCIPLES.— 

(A) * * * 

* * * * * * * 

(O) DISCLOSURE OF GENERAL INFORMATION.—The applicant shall disclose publicly and to the Commission information concerning— 

(i) the terms and conditions of contracts, agreements, 

and transactions cleared and settled by the applicant; 

(ii) the conventions, mechanisms, and practices applicable to the contracts, agreements, and transactions; 


hsrobinson on PROD1PC76 with HEARING
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(iii) the margin-setting methodology and the size and 

composition of the financial resource package of the applicant; and 

(iv) other information relevant to participation in the 

settlement and clearing activities of the applicant. 

(P) DAILY PUBLICATION OF TRADING INFORMATION.—The 

applicant shall make public daily information on settlement prices, volume, and open interest for contracts settled 

or cleared pursuant to the requirements of section 

2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 2(h)(3)(C) or 4(c)(1) 

of this Act by the applicant if the Commission determines 

that the contracts perform a significant price discovery 

function for transactions in the cash market for the commodity underlying the contracts. 

(Q) FITNESS STANDARDS.—The applicant shall establish 

and enforce appropriate fitness standards for directors, 

members of any disciplinary committee, and members of 

the applicant, and any other persons with direct access to 

the settlement or clearing activities of the applicant, including any parties affiliated with any of the persons described 

in this subparagraph. 

* * * * * * * 

SEC. 12. (a) * * * 

* * * * * * * 

(e) CLEARING FEES.— 

(1) IN GENERAL.—The Commission shall, in accordance with 

this subsection, charge and collect from each registered clearing 

organization, and each such organization shall pay to the Commission, transaction fees at a rate calculated to recover the costs 

to the Federal Government of the supervision and regulation of 

futures markets, except those directly related to enforcement. 

(2) FEES ASSESSED PER SIDE OF CLEARED CONTRACTS.— 

(A) IN GENERAL.—The Commission shall determine the 

fee rate referred to in paragraph (1), and shall apply the 

fee rate per side of any transaction cleared. 

(B) AUTHORITY TO DELEGATE.—The Commission may determine the procedures by which the fee rate is to be applied on the transactions subject to the fee, or delegate the 

authority to make the determination to any appropriate derivatives clearing organization. 

(3) EXEMPTIONS.—The Commission may not impose a fee 

under paragraph (1) on— 

(A) a class of contracts or transactions if the Commission 

finds that it is in the public interest to exempt the class 

from the fee; or 

(B) a contract or transaction cleared by a registered derivatives clearing organization that is— 

(i) subject to fees under section 31 of the Securities 

Exchange Act of 1934; or 

(ii) a security as defined in the Securities Act of 1933 

or the Securities Exchange Act of 1934. 

(4) DATES FOR PAYMENT OF FEES.—The fees imposed under 

paragraph (1) shall be paid on or before— 


hsrobinson on PROD1PC76 with HEARING
714 

(A) March 15 of each year, with respect to transactions 

occurring on or after the preceding September 1 and on or 

before the preceding December 31; and 

(B) September 15 of each year, with respect to transactions occurring on or after the preceding January 1 and 

on or before the preceding August 31. 

(5) ANNUAL ADJUSTMENT OF FEE RATES.— 

(A) IN GENERAL.—Not later than April 30 of each fiscal 

year , the Commission shall, by order, adjust each fee rate 

determined under paragraph (2) for the fiscal year to a uniform adjusted rate that, when applied to the estimated aggregate number of cleared sides of transactions for the fiscal year, is reasonably likely to produce aggregate fee receipts under this subsection for the fiscal year equal to the 

target offsetting receipt amount for the fiscal year. 

(B) DEFINITIONS.—In subparagraph (A): 

(i) ESTIMATED AGGREGATE NUMBER OF CLEARED

SIDES OF TRANSACTIONS.—The term ‘‘estimated aggregate number of cleared sides of transactions’’ means, 

with respect to a fiscal year, the aggregate number of 

cleared sides of transactions to be cleared by registered 

derivatives clearing organizations during the fiscal 

year, as estimated by the Commission, after consultation with the Office of Management and Budget, using 

the methodology required for making projections pursuant to section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985. 

(ii) TARGET OFFSETTING RECEIPT AMOUNT.—The term 

‘‘target offsetting receipt amount’’ means, with respect 

to a fiscal year, the total level of Commission budget 

authority for all non-enforcement activities of the Commission, as contained in the regular appropriations 

Acts for the fiscal year. 

(C) NO JUDICIAL REVIEW.—An adjusted fee rate prescribed under subparagraph (A) shall not be subject to judicial review. 

(6) PUBLICATION.—Not later than April 30 of each fiscal year, 

the Commission shall cause to be published in the Federal Register notices of the fee rates applicable under this subsection for 

the succeeding fiscal year, and any estimate or projection on 

which the fee rates are based. 

(7) INAPPLICABILITY OF CERTAIN PROCEDURAL RULES.—Section 553 of title 5, United States Code, shall not apply with respect to any exercise of authority under this subsection. 

(8) ESTABLISHMENT OF FUTURES AND OPTIONS TRANSACTION

FEE ACCOUNT; DEPOSIT OF FEES.—There is established in the 

Treasury of the United States an account which shall be known 

as the ‘‘Futures and Options Transaction Fee Account’’. All fees 

collected under this subsection for a fiscal year shall be deposited in the account. Amounts in the account are authorized to 

be appropriated to fund the expenditures of the Commission. 

ø(e)¿ (f) RELATION TO OTHER LAW, DEPARTMENTS, OR AGENCIES.— 

(1) * * * 


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(2) This Act shall supersede and preempt the application of 

any State or local law that prohibits or regulates gaming or the 

operation of bucket shops (other than antifraud provisions of 

general applicability) in the case of— 

(A) * * * 

(B) an agreement, contract, or transaction (other than a 

credit default swap in which the purchaser of the swap 

would not experience financial loss if an event that is the 

subject of the swap occurred) that is excluded from this Act 

under section 2(c), 2(d), 2(f ), or 2(g) of this Act or title IV 

of the Commodity Futures Modernization Act of 2000, or 

exempted under section 2(h) or 4(c) of this Act (regardless 

of whether any such agreement, contract, or transaction is 

otherwise subject to this Act). 

ø(f)¿ (g)(1) * * * 

* * * * * * * 

ø(g)¿ (h) Consistent with its responsibilities under section 18, the 

Commission is directed to facilitate the development and operation 

of computerized trading as an adjunct to the open outcry auction 

system. The Commission is further directed to cooperate with the 

Office of the United States Trade Representative, the Department 

of the Treasury, the Department of Commerce, and the Department 

of State in order to remove any trade barriers that may be imposed 

by a foreign nation on the international use of electronic trading 

systems. 

* * * * * * * 

SECTION 409 OF THE FEDERAL DEPOSIT INSURANCE 

CORPORATION IMPROVEMENT ACT OF 1991 

SEC. 409. MULTILATERAL CLEARING ORGANIZATIONS. 

(a) * * * 

* * * * * * * 

(c) CLEARING REQUIREMENT.—A multilateral clearing organization described in subsections (a) or (b) of this section shall comply 

with requirements similar to the requirements of sections 5b and 5c 

of the Commodity Exchange Act. 

* * * * * * * 

SECTION 407 OF THE LEGAL CERTAINTY FOR BANK 

PRODUCTS ACT OF 2000 

SEC. 407. EXCLUSION OF COVERED SWAP AGREEMENTS. 

No provision of the Commodity Exchange Act (other than section 

5b of such Act with respect to the clearing of covered swap agreements and the settlement and clearing requirements of sections 

2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 2(h)(3)(C), and 4(c)(1) of 

such Act) shall apply to, and the Commodity Futures Trading Commission shall not exercise regulatory authority with respect to, a 


hsrobinson on PROD1PC76 with HEARING
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covered swap agreement offered, entered into, or provided by a 

bank. 

* * * * * * * 

NATURAL GAS ACT 

* * * * * * * 

ENFORCEMENT OF ACT; REGULATIONS AND ORDERS

SEC. 20. (a) * * * 

* * * * * * * 

(e) CEASE-AND-DESIST PROCEEDINGS; TEMPORARY ORDERS; AU- THORITY OF THE COMMISSION.— (1) IN GENERAL.—If the Commission finds, after notice and 

opportunity for hearing, that any entity may be violating, may 

have violated, or may be about to violate any provision of this 

Act, or any rule, regulation, restriction, condition, or order 

made or imposed by the Commission under the authority of this 

Act, the Commission may publish its findings and issue an 

order requiring such entity, and any other entity that is, was, 

or would be a cause of the violation, due to an act or omission 

the entity knew or should have known would contribute to such 

violation, to cease and desist from committing or causing such 

violation and any future violation of the same provision, rule, 

or regulation. Such order may, in addition to requiring an entity to cease and desist from committing or causing a violation, 

require such entity to comply, to provide an accounting and 

disgorgement, or to take steps to effect compliance, with such 

provision, rule, or regulation, upon such terms and conditions 

and within such time as the Commission may specify in such 

order. Any such order may, as the Commission deems appropriate, require future compliance or steps to effect future compliance, either permanently or for such period of time as the Commission may specify. 

(2) TIMING OF ENTRY.—An order issued under this subsection 

shall be entered only after notice and opportunity for a hearing, 

unless the Commission determines that notice and hearing 

prior to entry would be impracticable or contrary to the public 

interest. 

(f) HEARING.—The notice instituting proceedings pursuant to subsection (e) shall fix a hearing date not earlier than 30 days nor later 

than 60 days after service of the notice unless an earlier or a later 

date is set by the Commission with the consent of any respondent 

so served. 

(g) TEMPORARY ORDER.—Whenever the Commission determines 

that— 

(1) a respondent may take actions to dissipate or convert assets prior to the completion of the proceedings referred to in 

subsection (e), and such assets would be necessary to comply 

with or otherwise satisfy a final enforcement order of the Commission pursuant to alleged violations or threatened violations 

specified in the notice instituting proceedings; or 


hsrobinson on PROD1PC76 with HEARING
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(2) a respondent is engaged in actual or threatened violations 

of this Act or a Commission rule, regulation, restriction or order 

referred to in subsection (e), 

the Commission may issue a temporary order requiring the respondent to take such action to prevent dissipation or conversion of assets, 

significant harm to energy consumers, or substantial harm to the 

public interest, frustration of the Commission’s ability to conduct 

the proceedings, or frustration of the Commission’s ability to redress 

said violation at the conclusion of the proceedings, as the Commission deems appropriate pending completion of such proceedings. 

(h) REVIEW OF TEMPORARY ORDERS.— 

(1) COMMISSION REVIEW.—At any time after the respondent 

has been served with a temporary cease-and-desist order pursuant to subsection (g), the respondent may apply to the Commission to have the order set aside, limited, or suspended. If the 

respondent has been served with a temporary cease-and-desist 

order entered without a prior Commission hearing, the respondent may, within 10 days after the date on which the order was 

served, request a hearing on such application and the Commission shall hold a hearing and render a decision on such application at the earliest possible time. 

(2) JUDICIAL REVIEW.—Within— 

(A) 10 days after the date the respondent was served with 

a temporary cease-and-desist order entered with a prior 

Commission hearing; or 

(B) 10 days after the Commission renders a decision on 

an application and hearing under paragraph (1), 

with respect to any temporary cease-and-desist order entered 

without a prior Commission hearing, the respondent may apply 

to the United States district court for the district in which the 

respondent resides or has its principal place of business, or for 

the District of Columbia, for an order setting aside, limiting, or 

suspending the effectiveness or enforcement of the order, and 

the court shall have jurisdiction to enter such an order. A respondent served with a temporary cease-and-desist order entered without a prior Commission hearing may not apply to the 

court except after hearing and decision by the Commission on 

the respondent’s application under paragraph (1) of this subsection. 

(3) NO AUTOMATIC STAY OF TEMPORARY ORDER.—The commencement of proceedings under paragraph (2) of this subsection shall not, unless specifically ordered by the court, operate as a stay of the Commission’s order. 

(4) EXCLUSIVE REVIEW.—Sections 19(d) and 24 shall not 

apply to a temporary order entered pursuant to this section. 

(i) IMPLEMENTATION.—The Commission is authorized to adopt 

rules, regulations, and orders as it deems appropriate to implement 

this section. 

* * * * * * * 


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SECTION 504 OF THE NATURAL GAS POLICY ACT OF 1978 

SEC. 504. ENFORCEMENT. 

(a) * * * 

* * * * * * * 

(d) CEASE-AND-DESIST PROCEEDINGS; TEMPORARY ORDERS; AU- THORITY OF THE COMMISSION.— (1) IN GENERAL.—If the Commission finds, after notice and 

opportunity for hearing, that any entity may be violating, may 

have violated, or may be about to violate any provision of this 

Act, or any rule, regulation, restriction, condition, or order 

made or imposed by the Commission under the authority of this 

Act, the Commission may publish its findings and issue an 

order requiring such entity, and any other entity that is, was, 

or would be a cause of the violation, due to an act or omission 

the entity knew or should have known would contribute to such 

violation, to cease and desist from committing or causing such 

violation and any future violation of the same provision, rule, 

or regulation. Such order may, in addition to requiring an entity to cease and desist from committing or causing a violation, 

require such entity to comply, to provide an accounting and 

disgorgement, or to take steps to effect compliance, with such 

provision, rule, or regulation, upon such terms and conditions 

and within such time as the Commission may specify in such 

order. Any such order may, as the Commission deems appropriate, require future compliance or steps to effect future compliance, either permanently or for such period of time as the Commission may specify. 

(2) TIMING OF ENTRY.—An order issued under this subsection 

shall be entered only after notice and opportunity for a hearing, 

unless the Commission determines that notice and hearing 

prior to entry would be impracticable or contrary to the public 

interest. 

(3) HEARING.—The notice instituting proceedings pursuant to 

paragraph (1) shall fix a hearing date not earlier than 30 days 

nor later than 60 days after service of the notice unless an earlier or a later date is set by the Commission with the consent 

of any respondent so served. 

(4) TEMPORARY ORDER.—Whenever the Commission determines that— 

(A) a respondent may take actions to dissipate or convert 

assets prior to the completion of the proceedings referred to 

in paragraph (1) and such assets would be necessary to 

comply with or otherwise satisfy a final enforcement order 

of the Commission pursuant to alleged violations or threatened violations specified in the notice instituting proceedings; or 

(B) a respondent is engaged in actual or threatened violations of this Act or a Commission rule, regulation, restriction or order referred to in paragraph (1), 

the Commission may issue a temporary order requiring the respondent to take such action to prevent dissipation or conversion of assets, significant harm to energy consumers, or substantial harm to the public interest, frustration of the Commission’s ability to conduct the proceedings, or frustration of the 


hsrobinson on PROD1PC76 with HEARING
719 

Commission’s ability to redress said violation at the conclusion 

of the proceedings, as the Commission deems appropriate pending completion of such proceedings. 

(5) REVIEW OF TEMPORARY ORDERS.— (A) COMMISSION REVIEW.—At any time after the respondent has been served with a temporary cease-and-desist 

order pursuant to paragraph (4), the respondent may apply 

to the Commission to have the order set aside, limited, or 

suspended. If the respondent has been served with a temporary cease-and-desist order entered without a prior Commission hearing, the respondent may, within 10 days after 

the date on which the order was served, request a hearing 

on such application and the Commission shall hold a hearing and render a decision on such application at the earliest possible time. 

(B) JUDICIAL REVIEW.—Within— 

(i) 10 days after the date the respondent was served 

with a temporary cease-and-desist order entered with a 

prior Commission hearing; or 

(ii) 10 days after the Commission renders a decision 

on an application and hearing under subparagraph 

(A), with respect to any temporary cease-and-desist 

order entered without a prior Commission hearing, the 

respondent may apply to the United States district 

court for the district in which the respondent resides or 

has its principal place of business, or for the District 

of Columbia, for an order setting aside, limiting, or 

suspending the effectiveness or enforcement of the 

order, and the court shall have jurisdiction to enter 

such an order. A respondent served with a temporary 

cease-and-desist order entered without a prior Commission hearing may not apply to the court except after 

hearing and decision by the Commission on the respondent’s application under paragraph (1) of this subsection. 

(C) NO AUTOMATIC STAY OF TEMPORARY ORDER.—The 

commencement of proceedings under subparagraph (B) of 

this paragraph shall not, unless specifically ordered by the 

court, operate as a stay of the Commission’s order. 

(6) IMPLEMENTATION.—The Commission is authorized to 

adopt rules, regulations, and orders as it deems appropriate to 

implement this subsection. 

SECTION 171 OF THE WORKFORCE INVESTMENT ACT OF 

1998 

SEC. 171. DEMONSTRATION, PILOT, MULTISERVICE, RESEARCH, AND 

MULTISTATE PROJECTS. 

(a) * * * 

* * * * * * * 

(e) ENERGY EFFICIENCY AND RENEWABLE ENERGY WORKER

TRAINING PROGRAM.— 

(1) * * * 

* * * * * * * 


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(8) AUTHORIZATION OF APPROPRIATIONS.—There is authorized 

to be appropriated to carry out this subsection, ø$125,000,000¿ 

$150,000,000 for each fiscal year, of which— 

(A) * * * 

* * * * * * * 

INTERNAL REVENUE CODE OF 1986 

* * * * * * * 

Subtitle A—Income Taxes 

CHAPTER 1—NORMAL TAXES AND SURTAXES 

Subchapter A—Determination of Tax Liability 

* * * * * * * 

PART IV—CREDITS AGAINST TAX 

* * * * * * * 

Subpart C—Refundable Credits 

* * * * * * * 

SEC. 36B. ENERGY TAX CREDIT. 

(a) ALLOWANCE OF CREDIT.—In the case of an eligible individual, 

there shall be allowed as a credit against the tax imposed by this 

subtitle for the taxable year an amount equal to— 

(1) for an eligible individual with applicable income of less than $6,000, the phase in rate times the applicable income; 

(2) for an eligible individual with applicable income that is 

greater than or equal to $6,000 and is less than or equal to the 

phase down amount, the maximum energy tax credit; and 

(3) for an individual with applicable income that exceeds the 

phase down amount, an amount equal to— 

(A) the maximum energy tax credit minus; or 

(B) the difference between the individual’s applicable income and the phase down amount multiplied by .2. 

(b) COORDINATION WITH ENERGY REFUND RECEIVED THROUGH

STATE HUMAN SERVICE AGENCIES.—The amount described in subsection (a) shall be reduced by 1⁄12 for each month in which the individual or his or her spouse received a refund under section 432 of 

the American Clean Energy and Security Act of 2009. 

(1) The Secretary of the Treasury shall promulgate regulations that instruct States on how to inform adult individuals 

who receive a refund under section 432 of the American Clean 

Energy and Security Act of 2009 of the number of months he 

or she received a refund and how such information shall be provided to the Internal Revenue Service. 

(2) The Secretary of the Treasury shall establish a telephone 

and online system that allows an individual to inquire about 

the number of months she or he received such a refund. 


hsrobinson on PROD1PC76 with HEARING
721 

(3) In the case of an individual that does not report the number of months a refund was provided under section 432 of the 

American Clean Energy and Security Act of 2009 or recorded 

an incorrect number of months, the Secretary of the Treasury 

shall adjust the energy tax credit based on the information received from States, provided that the Secretary of the Treasury 

has made a determination that the information meets a sufficient standard for accuracy. 

(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this section: 

(1) ELIGIBLE INDIVIDUAL.— 

(A) IN GENERAL.—The term ‘‘eligible individual’’ means 

any individual other than— 

(i) any nonresident alien individual; 

(ii) any individual with respect to whom a deduction 

under section 151 is allowable to another taxpayer for 

a taxable year beginning in the calendar year in which 

the individual’s taxable year begins; and 

(iii) an estate or trust. 

(B) IDENTIFICATION NUMBER REQUIREMENT.—Such term 

shall not include any individual who— 

(i) in the case of a return that is not a joint return, 

does not include the social security number of the individual; and 

(ii) in the case of joint return, does not include the 

social security number of at least one of the taxpayers 

on such return. 

For purposes of the preceding sentence, the social security 

number shall not include a TIN issued by the Internal Revenue Service. 

(2) APPLICABLE INCOME.—Applicable income means the larger 

of— 

(A) earned income as defined in section 32(c)(2), except 

that such term shall not include net earnings from self-employment which are not taken into account in computing 

taxable income; and 

(B) adjusted gross income. 

(3) PHASE IN RATE.—The Secretary of the Treasury shall compute the phase in rates each year for the energy credit for joint 

returns and for returns that are not filed jointly with respect to 

each relevant number of qualifying individuals such that the 

phase in rate equals the maximum energy tax credit divided by 

$6,000. 

(4) MAXIMUM ENERGY TAX CREDIT.— 

(A) IN GENERAL.— 

(i) The maximum energy tax credit shall vary based 

on the number of individuals in the tax filing unit. 

(ii) The maximum energy tax credit for a filing unit 

of a particular size shall be equal to the average annual reduction in purchasing power for low-income 

households of that household size, as calculated by the 

Environmental Protection Agency, that results from the 

regulation of greenhouse gas emissions under title VII 

of the Clean Air Act. 


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(iii) The Environmental Protection Agency, in consultation with other appropriate Federal agencies, 

shall calculate the maximum energy tax credit by August 31 of each year for the following calendar year 

using the most recent, reliable data available. 

(B) ENERGY TAX CREDIT CALCULATION.— 

(i) DISTRIBUTION.—For each calendar year, the Environmental Protection Agency shall determine pursuant 

to subparagraph (B)(iii) the aggregate reduction in 

purchasing power among all United States households 

that results from the regulation of greenhouse gas 

emissions under title VII of the Clean Air Act and distribute that aggregate reduction in purchasing power 

among all United States households based on— 

(I) households’ share of total consumption by all 

households; 

(II) the carbon intensity and covered-emissions 

intensity of households’ consumption; and 

(III) the share of households’ carbon and covered-emissions consumption that is not financed by 

Federal benefits subject to a cost of living adjustment that offsets increased carbon costs. 

(ii) MAXIMUM ENERGY TAX CREDIT.—The maximum 

energy tax credit shall be equal to the arithmetic mean 

value of the amount allocated under clause (i) to households of a specified household size in the lowest income 

quintile. Tax filing units that include 5 or more individuals shall be eligible for the arithmetic mean value 

of the amount allocated under clause (i) to households 

that includes 5 or more individuals. 

(iii) AGGREGATE REDUCTION IN PURCHASING

POWER.—For purposes of this section, the aggregate reduction in purchasing power shall be based on the projected total market value of the emissions allowances 

used to demonstrate compliance with title VII of the 

Clean Air Act in that year, adjusted to reflect costs that 

were not incurred by households as a result of allowances freely allocated pursuant to section 782 of the 

Clean Air Act, as estimated by the Environmental Protection Agency, and calculated in a way generally recognized as suitable by experts in evaluating such purchasing power impacts. 

(iv) INCOME QUINTILES.—Income quintiles shall be 

determined by ranking households according to income 

adjusted for household size, and shall be constructed so 

that each quintile contains an equal number of people. 

(5) PHASE DOWN AMOUNT.— 

(A) In the case of an eligible individual who has no 

qualifying individuals, the phase down amount shall be— 

(i) $20,000 in the case of an individual who does not 

file a joint return; and 

(ii) $25,000 in the case of a joint return. 

(B) In the case of an eligible individual who files a joint 

return and has at least one qualifying individual— 


hsrobinson on PROD1PC76 with HEARING
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(i) If the eligible individual has one qualifying individual, the lowest income level that exceeds the phaseout amount as defined in section 32(b)(2) at which a 

married couple with one qualifying child is ineligible 

for the earned income credit for the taxable year. 

(ii) If the eligible individual has two qualifying individuals, the lowest income level that exceeds the phaseout amount as defined in section 32(b)(2) at which a 

married couple with two qualifying children is ineligible for the earned income credit for the taxable year. 

(iii) If the eligible individual claims three or more 

qualifying individuals, the lowest income level that exceeds the phaseout amount as defined in section 

32(b)(2) at which a married couple with three or more 

qualifying children is ineligible for the earned income 

credit for the taxable year. 

(C) In the case of an eligible individual who does not file 

a joint return and has at least one individual qualifying 

individual— 

(i) If the eligible individual has one qualifying individual, the lowest income level that exceeds the phaseout amount as defined in section 32(b)(2) at which a 

single individual with one qualifying child is ineligible 

for the earned income credit for the taxable year. 

(ii) If the eligible individual has two qualifying individuals, the lowest income level that exceeds the phaseout amount as defined in section 32(b)(2) at which a 

single individual with two qualifying children is ineligible for the earned income credit for the taxable year. 

(iii) If the eligible individual has three or more 

qualifying individuals, the lowest income level that exceeds the phaseout amount as defined in section 

32(b)(2) at which a single individual with three or 

more qualifying children is ineligible for the earned income credit for the taxable year. 

(6) QUALIFYING INDIVIDUAL.—A qualifying individual is an 

individual whom the eligible individual claims as a dependent 

under section 151, or as a qualifying child for the earned income credit under section 32(c)(3) or the child tax credit under 

section 24, or both. The term qualifying individual does not include— 

(A) someone claimed as a dependent under section 151 if 

that dependent is claimed as a qualifying child for the 

earned income tax credit or the child tax credit on a tax 

form by someone other than the eligible individual; and 

(B) the eligible individual and, if a joint return, his or 

her spouse. 

(7) NUMBER OF PEOPLE IN THE TAX FILING UNIT.—The number of people in the tax filing unit shall equal the sum of the 

number of qualifying individuals plus— 

(A) in the case of a joint return, 2; and 

(B) in the case of a return that is not filed jointly, 1. 

(d) TREATMENT OF POSSESSIONS.— 

(1) PAYMENTS TO POSSESSIONS.— 


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(A) MIRROR CODE POSSESSION.—The Secretary of the 

Treasury shall pay to each possession of the United States 

with a mirror code tax system amounts equal to the loss to 

that possession by reason of the amendments made by this 

section. Such amounts shall be determined by the Secretary 

of the Treasury based on information provided by the Government of the respective possession. 

(B) OTHER POSSESSIONS.—The Secretary of the Treasury 

shall pay to each possession of the United States which 

does not have a mirror code tax system amounts estimated 

by the Secretary of the Treasury as being equal to the aggregate benefits that would have been provided to residents 

of such possession by reason of the amendments made by 

this section if a mirror code tax system had been in effect 

in such possession. The preceding sentence shall not apply 

for a given taxable year with respect to any possession of 

the United States unless such possession has a plan, which 

has been approved by the Secretary of the Treasury, under 

which such possession will promptly distribute such payments to residents of such possession. 

(2) COORDINATION WITH CREDIT ALLOWED AGAINST UNITED

STATES INCOME TAXES.—No credit shall be allowed against 

United States income taxes for any taxable year under this section to any person— 

(A) to whom a credit is allowed against taxes imposed by 

the possession by reason of the amendments made by this 

section for such taxable year; or 

(B) who is eligible for a payment under a plan described 

in paragraph (1)(B) with respect to such taxable year. 

(e) AMOUNT OF CREDIT TO BE DETERMINED UNDER TABLES.—The 

amount of the credit allowed by this section shall be determined 

under tables prescribed by the Secretary. 

(f) INFLATION ADJUSTMENTS.— In the case of any taxable year beginning after 2009, dollar amounts in subsection (c)(4)(A) shall be 

increased by an amount equal to such dollar amount, multiplied by 

the cost-of-living adjustment determined under section 1(f)(3) of the 

Internal Revenue Code of 1986. 

(g) TREATMENT IN OTHER PROGRAMS.—The energy tax credit provided under this section shall not be considered income or resources 

for any purpose under any Federal, State, or local laws, including, 

but not limited to, laws relating to an income tax or public assistance program (including, but not limited to, health care, cash aid, 

child care, nutrition programs, and housing assistance), and no 

participating State or political subdivision thereof shall decrease 

any assistance otherwise provided an individual or individuals because of the receipt of an energy tax credit under this Act. 

* * * * * * * 


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(725) 

MINORITY AND ADDITIONAL VIEWS

MINORITY VIEWS ON H.R. 2454 

SUMMARY

H.R. 2454 is proposed legislation that if enacted would impose 

major new costs and expansive regulatory controls over a weak and 

struggling U.S. economy. If implemented, this legislation threatens 

to lock the United States into an era of economic stagnation and 

global decline. 

The bill would impose new greenhouse gas emissions standards 

and efficiency standards across the U.S. economy, create an untested and complex multi-trillion dollar cap-and-trade program, direct 

the Environmental Protection Agency (EPA), the Department of 

Energy (DOE) and other agencies to promulgate a host of new regulations on American businesses and enterprise, and authorize 

more than a trillion dollars of taxpayer outlays. This bill if enacted 

would result in a massive expansion of the EPA and other federal 

regulatory control over virtually all major sectors of the U.S. economy. 

If enacted, the bill would impose enormous new direct and indirect costs on U.S. consumers and would have major implications for 

financial markets and international trade and commerce. The full 

costs of implementing the bill are not known and the bill was considered and reported by the Committee before cost estimates of all 

the titles were prepared or made available. While prices for energy 

and goods and services would rise for virtually all Americans, certain regions of the country will be particularly adversely affected 

by the legislation. All amendments offered by the Minority to suspend the bill in the event of significantly increased energy prices, 

including amendments offered by Representative Lee Terry (R– 

NE), Representative Roy Blunt (R–MO), and Representative 

George Radanovich (R–CA), were defeated. An amendment offered 

by Representative Marsha Blackburn (R–TN) that would have required that the costs of compliance be reflected in utility bills, fuel 

pump bills, and manufactured products and food labels, was also 

defeated. 

Enactment of this legislation will unquestionably cause job losses 

in the U.S. in the manufacturing, industrial and other energy-intensive sectors, including in those industries that produce globallytraded commodities. The bill would dramatically increase energy 

costs for energy-intensive industries and put U.S. companies at a 

competitive disadvantage with foreign competitors in China, India, 

and other developing countries. While the proponents of the bill 

contend that an unspecified number of clean energy jobs will be 

created in the coming years, modeling done to date concludes that 

the number of jobs lost would far exceed any jobs created. All 

amendments offered by the Minority, including amendments ofVerDate Nov 24 2008 19:57 Jun 07, 2009 Jkt 050105 PO 00000 Frm 00725 Fmt 6604 Sfmt 6604 E:\HR\OC\HR137.XXX HR137

hsrobinson on PROD1PC76 with HEARING
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fered by Representative Fred Upton (R–MI), Representative Tim 

Murphy (R–PA), Representative Mike Rogers (R–MI), Representative John Shimkus (R–IL), and Representative George Radanovich 

(R–CA) to protect against high national unemployment or job losses 

in specific industries resulting from implementation of the bill, 

such as job losses in the steel, coal, automotive and agriculture industries, were all defeated along partisan lines. 

While imposing a massive new energy tax on American consumers and businesses, as a practical matter the bill will not be 

effective in reducing overall global greenhouse gas emissions. Global climate change is an international issue and the U.S. unilateral 

efforts will be ineffective in reducing global emissions as long as 

the world’s major emitters refuse to undertake similar emissions 

reduction programs. An amendment offered by Representative 

Mike Rogers (R–MI) that would suspend the bill if China and India 

do not adopt emissions programs as stringent as those in the U.S. 

was also defeated in a straight party-line vote. 

TITLE I

Sec. 101—Combined efficiency and renewable electricity 

standard 

Section 101 is a combined efficiency and renewable electricity 

mandate which will penalize consumers in areas of the country 

without ample wind resources. This one-size-fits-all federal mandate requires utilities to purchase renewable electricity, even if it 

is considerably more expensive than the conventional sources of 

electricity that are currently generated. The definition of ‘‘renewable’’ in the base text is incredibly limited—it picks and chooses favored types of electricity even among renewable sources, declaring 

that all hydroelectric electricity does not qualify, and that only a 

limited selection of biomass would be eligible. Democrats rejected, 

on a 26 to 32 vote, an amendment offered by Representative Greg 

Walden (R–OR), which would have replaced the flawed definition 

of ‘‘renewable biomass,’’ ensuring biomass from both public and private lands would be treated equally under the act. 

This section also raises the question of why there are so many 

different ways to try to address the same concern in the bill—if the 

goal of the legislation is to reduce greenhouse gas emissions, then 

why are we mandating certain types of electricity be purchased, instead of simply requiring that low-emitting electricity be generated? At a February 26, 2009 hearing the Energy and Environment Subcommittee held on renewable electricity mandates, a state 

public utility commissioner testified that ‘‘establishing a uniform 

national RPS focused exclusively on a limited number of sources 

like wind, solar, biomass or geothermal, without regard to crucial 

regional differences, will unnecessarily drive up electricity costs, 

jeopardize reliability, and divert capital that will be needed to 

achieve other objectives like meeting aggressive carbon targets.’’ 

Republicans offered a number of amendments to remedy this narrow standard. An amendment by Representative Greg Walden (R– 

OR) would have added language to the bill allowing nuclear energy, biomass, new hydroelectric power, and any other comparable 

low-emission source of energy to qualify for the same provisions 


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provided under this act’s renewable energy standard. If America is 

to reduce carbon dioxide emissions and increase energy independence, we should encourage all sources of clean, domestic energy. 

This amendment was rejected as part of an en bloc vote of 22 to 

36. In a similar vein, Representative Cliff Stearns (R–FL) offered 

an amendment to afford existing nuclear power plants the same 

benefits provided to new nuclear power plants under the bill. 

Inexplicably, Section 101 effectively gives new nuclear plants partial credit as renewable energy but does not give any credit to existing plants. Nuclear energy plants, whether they are already operating or constructed years from now, all provide the dual benefit 

of reducing national carbon emissions while promoting energy independence. Unfortunately, this amendment was also rejected, by a 

vote of 26 to 30. 

Secs. 111–116—Carbon capture and sequestration 

Sections 111–116 (Subtitle B of Title I) of the bill seek to facilitate the commercial-scale deployment of carbon capture and sequestration (CCS) technologies and set performance standards for 

new coal plants. As currently drafted, however, the timeframes for 

widespread deployment of CCS technologies, as well as for meeting 

the new performance standards, are not 2 achievable. Notwithstanding the fact that coal currently represents approximately 50% 

of our national electricity, and is a domestic, low-cost and reliable 

source of electricity, the Minority believes that this bill is unfortunately unlikely to result in any new coal plants being built in the 

United States. 

As an initial matter, Sections 111 and 113 would require the 

EPA to issue a national strategy for CCS deployment and to commission various studies and reports by academics, including reports 

on existing environmental federal and state laws that may apply 

to geologic sequestration sites for carbon dioxide, regulatory barriers to CCS deployment, and how and under what circumstances 

the environmental statutes for which EPA has responsibility would 

apply to carbon dioxide injection and geologic sequestration activities. These provisions serve to highlight the fact that currently 

there is not a comprehensive statutory and regulatory framework 

in place for carbon capture and sequestration sites and facilities, 

and that significant legal and regulatory uncertainty surrounds the 

deployment of CCS technologies. Yet, the legislation does nothing 

to eliminate barriers or solve problems identified by these studies 

and reports. We believe that if the authors want a future with coal, 

the bill should be strengthened in these sections to require EPA to 

explicitly address legal obligations and potential liabilities associated with the capture, storage and sequestration of carbon and carbon dioxide. 

Section 112 would require EPA to, within two years, issue new 

regulations to minimize the risk of escape to the atmosphere of carbon dioxide injected for purposes of geologic sequestration. Given 

the significant technical and other issues involved, not the least of 

which is the lack of an understanding of sequestration, two years 

is not likely to be adequate time to complete such a rulemaking. 

Nor is it clear what would happen to CCS development if these 

new rules were not issued timely by EPA or if they were subject 


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to prolonged legal challenges. Section 112 would also require EPA 

to issue, within one year of enactment, new regulations under the 

Safe Drinking Water Act (SWDA) for permitting carbon dioxide 

geologic sequestration wells and to address financial responsibilities. It is not clear whether or how such regulations would affect 

proposed rules already issued by EPA on July 25, 2008, under the 

SDWA relating to underground injection of carbon dioxide for the 

purpose geologic sequestration. It is also not clear whether the bill 

intends that the new regulations impose financial responsibility requirements to cover risks to air, ecosystems or public health associated with CCS technology deployment, which are areas for which 

financial responsibility mechanisms may not be available. Further 

consideration should be given to whether the timelines under this 

section for issuing the regulations are realistic, and the section 

should be amended to more fully address the scope of the regulations to be issued by EPA relating to financial responsibility. Further, we believe this section creates overlapping and potentially 

conflicting regimes under the Clean Air Act and the SDWA. 

Section 114 seeks to facilitate CCS technology development by 

authorizing formation of an industry ‘‘Carbon Storage Research 

Corporation.’’ As currently drafted, the corporation would operate 

as an affiliate of the Electric Power Research Institute and would 

be authorized to make financial assessments on deliveries of fossil 

fuel-fired electricity to retail consumers in the amount of between 

$1 billion and $1.1 billion annually for 10 years. The corporation 

would be authorized to use those funds for competitively awarded 

grants, contracts and financial assistance to eligible entities to accelerate commercial deployment of CCS technologies. While the legislation seeks to support at least 5 commercial-scale demonstration 

projects, it is not clear that the projects to be funded would in fact 

advance the type of large-scale, integrated projects for capture and 

sequestration that would be needed for full-scale commercial deployment of CCS technologies necessary to meet the performance 

standards for new coal plants. The bill also does not address 

whether the corporation would be subject to any prior federal or 

state approvals before funds could be distributed and used. If the 

purpose was only to do demonstration projects, that is one matter, 

but we believe that Section 114 seeks to be the jumping off point 

for the future of coal. That being the case, its provisions assure 

that coal has a very bleak future. 

Section 115 would require EPA to establish a program to distribute emission allowances to support commercial deployment of 

CCS in electric generation and industrial operations. The Majority’s June 2, 2009, bill summary indicates that the estimated value 

of the allowances allocated for investment in CCS technologies is 

$60 billion through 2025. While this section of the bill has been 

amended to provide certain eligibility criteria, this section is highly 

complex and would benefit from clarification and greater direction 

to EPA about how it should be implemented. As currently drafted 

this section contains a lengthy and complex set of provisions authorizing reverse auctions and/or the award of bonus allowances to 

the owners or operators of eligible projects, and delegates broad 

rulemaking and decision-making authority to EPA to administer 

the program. Given the complexity and importance of this section 


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and the very significant amount of funds at issue, additional review 

and revision of these provisions is warranted. We are concerned 

that without these changes, potential fraud, mismanagement and 

arbitrary application will result. 

Finally, Section 116 would establish performance standards for 

new coal-fired power plants that would require a 50% reduction for 

units permitted between January 1, 2009, and January 1, 2020, 

and a 65% reduction for units permitted after January 1, 2020. The 

compliance date for plants permitted between 2009 and 2020 for 

meeting these standards would be not later than January 1, 2025, 

and potentially earlier in the event the EPA Administrator were to 

make certain determinations relating to CCS technology availability. The compliance date for new plants permitted after 2020 

would be upon commencement of operations. As currently drafted, 

the 2025 compliance date for any plants that would be constructed 

during the next decade does not appear to be achievable given that 

the development, demonstration and deployment of such technologies present significant technical, regulatory, legal and other 

challenges. To the contrary, the Department of Energy (DOE) has 

advised that larger-scale (near commercial scale) CCS projects take 

upwards of 10+ years to complete, and may require more time because they are complex in terms of site selection, characterization, 

carbon dioxide injection and post-injection monitoring. This section 

needs to be written in a less aspirational and more realistic fashion. 

Given the many challenges associated with CCS technology deployment, including the technical and siting issues, the time required for necessary environmental reviews, the current lack of a 

comprehensive regulatory and statutory framework for CCS deployment, and the need to address with certainty both near- and longterm liability issues associated with stored carbon dioxide, the CCS 

provisions of the bill as currently drafted call into question whether 

under this legislation there is a serious desire to have any new coal 

plants built in the United States. If not, this would result in increased energy costs to American consumers and businesses, and 

significant adverse consequences for regions of the country that 

rely primarily on coal-based electricity. 

Sec. 141–143—Smart Grid Advancement 

Subtitle E on Smart Grid Advancement establishes numerous 

new rulemakings and bureaucratic processes, some of which are 

only tangentially related to smart grid advancement. In particular, 

Section 144 is unclear—it establishes a new process requiring unspecified reductions in peak electricity usage. It also refers to a 

‘‘National Electric Reliability Corporation’’ which is undefined in 

the bill and does not exist; perhaps this is meant to reference the 

North American Electric Reliability Corporation, an organization 

whose purview extends beyond U.S. borders and is therefore not 

purely a national organization. 

Sec. 151–153—Transmission planning 

Section 151, the transmission planning section, sets up a threeyear regional and national planning process. This provision may actually slow transmission development; existing transmission plans 


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could be delayed in favor of waiting for the results of this new national plan. When the new plan is developed, there is no direction 

that anything be done with the plan other than a report to Congress. Given the massive redesign of the national electric system 

which this bill’s carbon cap and renewable mandate would require, 

this bill should have included a transmission planning and siting 

proposal which would actually result in a more reliable electric system. Representative Joe Barton (R–TX) offered a substitute amendment which would have given the Federal Energy Regulatory Commission authority to site electric transmission comparable to the 

authority it now has over the natural gas pipeline network. This 

amendment was rejected by a vote of 19 to 35. 

At the conclusion of Title I consideration, Rep. Roy Blunt (R–MO) 

offered an amendment to suspend the Waxman-Markey bill in the 

event of a 10 percent or greater increase above 2009 electric rates 

in retail residential electricity prices in one or more Census Divisions in the United States, but that amendment was defeated by 

a partisan vote. Rep. Fred Upton (R–MI) also offered four amendments to protect against residential electricity account arrearages 

but those amendments were also defeated along partisan lines. 

TITLE II

Sec. 201—Greater energy efficiency in building codes 

Upon the date of enactment of this bill, a 30 percent increase in 

building efficiency is required. Effective January 1, 2014, for residential buildings and January 1, 2015, for commercial buildings, an 

additional 50 percent increased efficiency is required. Subsequent 

three-year targets of additional five percent increases in efficiency 

are mandated through January 2030. These targets and deadlines 

were established with no concern for cost and with no assessment 

of feasibility. Moreover, section 201 requires each state to adopt the 

national energy efficiency building code. Failure by the states to 

adopt the code results in the federal government taking over code 

enforcement, effectively enforcing legislation never enacted by the 

state. In addition, the federal government would be empowered to 

assess civil penalties for failure to adopt and enforce the national 

code. This mandate raises potential constitutional questions under 

the Tenth Amendment, where powers not expressly granted to the 

federal government in the Constitution—like zoning and building 

codes—are reserved to the states and local governments. 

Furthermore, Congress’s traditional constitutional authority to 

regulate industry under the Commerce Clause does not extend to 

housing, raising additional questions about the constitutionality of 

provisions of this section. Section 201 is fraught with Constitutional implications, and this section 201 was preserved by the Majority who almost unanimously voted against the amendment offered by Representative Steve Scalise (R–LA) to strike this troubling section. 

Sec. 204—Building energy performance labeling program 

Real property, by legal designation, is unique. A labeling system 

of homes and buildings could never begin to incorporate all of the 

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mercial buildings distinct and attractive to potential purchasers. 

The energy profile of a home varies dramatically from one to the 

next depending on a range of variables for which a government 

agency cannot account to any degree of scientific precision when 

formulating the labeling system. For example, orientation of the 

home on its lot, number of shade trees surrounding the home, local 

climate, number of occupants in the home, decision of residents to 

use or not use the air conditioning and heat. Moreover, the other 

values of the home cannot be quantified in a labeling system. For 

example, historical character, safety features, and original fixtures. 

A ‘‘one-size-fits-all’’ numerical rating for something as diverse as 

housing could only serve to mislead consumers and distort the 

housing market. 

By supporting a labeling system—and voting against the amendment offered by Mr. Cliff Stearns (R–FL) to remove Section 204 of 

the bill—the majority stigmatizes existing housing stock while providing no guidance and no incentives for upgrading the home. 

Sec. 211—Lighting efficiency standards 

Section 211 adopts consensus standards for portable lighting fixtures that would take effect in 2012. In particular, this section of 

the bill adopts California’s portable lighting fixture standard as the 

national standard. The rationale is that manufacturers of lamps 

cannot compete with two sets of standards, i.e., California’s and the 

rest of the country. 

This section would also require the Department of Energy (DOE) 

to publish amended standards in 2014 to take effect in 2016, or to 

determine if no new standards are needed. The section also provides that if California adopts any new regulations concerning portable lighting fixtures prior to 2014, federal preemption would not 

apply. As currently drafted, these provisions would create the potential again for two competing standards in 2014. 

Section 211 should be amended to delete the provisions requiring 

DOE to set new standards in 2014 and the provisions exempting 

California from federal preemption. Such an amendment would 

eliminate the possibility of conflicting California and federal standards for portable lighting fixtures, provide certainty for manufacturers and avoid undue additional costs for consumers. 

Sec. 213—Appliance efficiency standards 

The hit-and-miss approach to appliance efficiency standards 

taken when drafting this section is baffling at best. Despite nary 

a hearing to address specific appliance efficiency improvements, the 

majority has decided to hop into American hot tubs, literally. This 

section mandates efficiency improvements in portable electric spas, 

hot food cabinets, and water dispensers to name a few selected 

items. Three amendments were offered en bloc by Representative 

George Radanovich (R–CA) that would have prevented the federal 

government’s intrusion and imposition of regulations on portable 

electric spas, hot food cabinets, and water dispensers. Restricting 

the production of these goods will damage more than just these industries. These regulations will hinder consumer choice, raise 

prices, and expand federal government regulation into more aspects of daily life. 


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TITLE III

Title III of this act seeks to reduce the quantity of United States 

greenhouse gas emissions without regard to costs to households, 

businesses, and industry; without regard to the availability of the 

necessary technology to maintain clean, inexpensive energy; without regard to effectiveness towards reducing global emissions; and 

without regard to whether the provisions will impede the economic 

growth of the United States and the future economic welfare of its 

citizens. 

There is no safety valve or exit ramp. If household energy costs 

increase by hundreds of dollars or regions lose thousands of jobs 

because of this legislation, there are no provisions to rescind the 

scheme. If carbon capture and sequestration technology for the use 

of clean and abundant coal-fired electricity has not become widely 

available and fully deployable, there are no provisions to rescind 

the scheme’s effective ban on new coal generation. There is no way 

out. If enacted into law, this legislation—especially as outlined in 

this title—is designed to raise the price of energy on American consumers, businesses, and industry. Raising energy costs is the only 

way this legislation can force the reduction of greenhouse emissions 

from the inexpensive, abundant, and reliable fossil energy Americans use to live and work. Any provisions to shield consumers from 

costs, merely rearrange the costs among regions or income classes, 

and have no effect on the overall impact on the American economy. 

At the same time, the increased energy costs will place the United 

States at a competitive disadvantage to many developing nations, 

losing jobs and economic opportunity overseas, as has been amply 

discussed before the Committee in expert and industry testimony 

during legislative hearings. 

During the Committee markup, Republicans offered numerous 

amendments to suspend the cap-and-trade provisions of the bill, 

should it increase electricity prices to certain levels or should job 

losses, such as in the steel, coal, or automotive industry, reach certain levels. All such amendments were defeated. 

Sec. 311—Global warming provisions 

Section 311 outlines the schedule for greenhouse emissions cuts, 

and establishes three primary programs for reducing greenhouse 

gases: the cap on large domestic sources, the program to reduce 

tropical deforestation, and the offset program. Despite the substantially higher energy costs, it is highly questionable whether the 

emissions reduction programs will make enough impact on global 

greenhouse emissions to justify the costs. 

First, it is not established that emissions reductions in the 

United States will have any meaningful impact on global emissions. There are no provisions in the legislation to require comparable international participation in an emissions reduction 

scheme. Republicans, led by Representative Mike Rogers (R–MI), 

offered an amendment that would require such action before the 

U.S. scheme took effect. The amendment was defeated by a partyline vote of 23–36. 

International participation is essential if the goals are to reduce 

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ticipation is also essential to ensure the international community 

does not take strategic and competitive advantage of higher U.S. 

energy costs. 

The bill currently does not require binding action from the largest and fastest growing greenhouse gas emitters, such as China 

and India, or the fast growing developing world, which at present 

emit more greenhouse gases than the developed world combined, 

according to the Energy Information Administration’s International 

Energy Outlook (2009). At the current pace, the United States 

could cut its current energy-related emissions to zero, and by 2030 

annual global energy-related carbon emissions are still projected to 

be nearly seven billion metric tons more than 2005—equivalent to 

a doubling of all of North America’s current emissions in 20 years. 

In the meantime, all evidence from the developing world indicates no interest in submitting to equivalent binding emissions reductions to those required in this legislation. In point of fact, India 

and China have repeatedly and publicly stated no interest in binding emissions caps or emissions rationing. 

The United States cannot, moreover, assess with any reliability 

the amount of greenhouse gases these nations emit. The emissions 

data China and India submitted in 2004 to the United Nations, 

pursuant to the 1992 United Nations Framework Convention on 

Climate Change, were estimates for 1994 emissions, and have yet 

to be updated. Indeed, the most recent emissions data reported by 

most large developing countries are now 12 years older than what 

the United States and other developed countries have reported. 

Moreover, as a bloc, the developing countries, including China, 

Brazil, and India, refuse to bring reporting regimes into closer accordance with the developed countries. 

These facts form part of the international backdrop against 

which this legislation should be assessed. Not only would this capand-trade scheme be an ineffective policy if developing nations do 

not reduce emissions, it would weaken U.S. economic competitiveness. During legislative hearings, witnesses could provide no credible evidence that foreign nations would avoid taking economic advantage of reduced U.S. competitiveness. The United States, if this 

legislation is enacted, would unilaterally surrender competitiveness 

with no reliable assurance that it can turn back if the international 

community fails to take comparable action. 

Second, emission reduction goals are not based on any clearly defined, realistic, or evidentiary foundation relating to impacts on 

world global emissions—or temperature. Indeed the only potential 

factual reference we find for the target of an 80% reduction of emissions from 2005 levels is in the Majority’s report on this bill. This 

report references a handful of the most stringent emissions ‘‘stabilization scenarios’’ examined by the Intergovernmental Panel on 

Climate Change (IPCC)—the so-called Category I scenarios, composed of the six most extreme of some 177 model runs organized 

into seven categories (see the Intergovernmental Panel on Climate 

Change, Climate Change 2007: Mitigation of Climate Change, 

Table TS.2). These Category I scenarios require global emissions to 

have peaked and begun declining between the years 2000 and 

2015. The reality that global emissions have been accelerating over 

most of this time period, and are projected to continue to increase 


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for the next 30 years, calls into serious question the validity of 

these targets and their use as a realistic goal in this legislation. 

Taken literally, there are implausibly only a few years for proponents of this legislation to convince China, India and the rest of 

the developing world to adopt binding emissions caps and commence immediate emissions reductions to comport with these targets. The IPCC also reports these scenarios depend on current 

technology ‘‘readiness’’ of carbon capture and sequestration and 

other undeveloped technologies along with ‘‘simultaneous emissions 

mitigation in developing countries’’—factors plainly at odds with 

current reality. We should add that such information about the scenarios or emissions targets was not examined in any hearing relating to this legislation. 

Third, section 311 is premised on some critical findings that minimize the key uncertainties and facts about the Earth’s climate. For 

example, the legislation does not define global warming, although 

the text suggests global warming is solely the result of man-made, 

or anthropogenic, emissions and that any effects of global warming 

on climate therefore must be traced to these man-made emissions. 

This construct ignores the scientific consensus understanding that 

global warming is first and foremost a natural phenomenon and 

that climate change is not solely or necessarily the result of manmade emissions. Reports by the National Academies and the IPCC 

make clear that climate change represents the natural long-term 

fluctuation in regional temperature and weather patterns. It is 

equally clear that, over millennia, natural climate change has occurred and has threatened public health and welfare and necessitated constant human innovation and adaptation. Hearings before the Subcommittee on Energy and the Environment in the 

111th and 110th Congresses provided testimony to these facts. 

Reviews of scientific studies, including by the IPCC and the National Academies, and testimony before the Committee suggest that 

combined anthropogenic greenhouse gas emissions may contribute 

to a long-term global warming trend. This has also been reported 

at Committee hearings. However, testimony has indicated that scientists cannot quantify how much anthropogenic greenhouse gases 

may be effecting the natural global temperature change and how 

much that may be effecting climate change impacts, especially in 

the future. The IPCC consensus document states that ‘‘the complexity of the climate system and the multiple interactions that determine its behaviour impose limitations on our ability to understand fully the future course of Earth’s global climate.’’ 

Given this complexity and uncertainty about man’s contribution 

to global warming and climate change, we recognize that prudent 

policy calls for taking cost-effective measures to reduce greenhouse 

gas emissions, but this must be done while ensuring continued 

United States economic growth, innovation, and industrial 

strength. Unfortunately, the provisions setting forth emissions reduction targets fail to acknowledge the scientific uncertainty or the 

economic risks. The schedule of reductions cannot be linked to any 

measure of effectiveness. The related reviews required by EPA and 

the National Academies do not provide any clear mechanisms for 

rescinding the reduction targets if they prove ineffective or too costly to the American public. 


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The costs of this legislation are too high to impose such emissions targets without sufficient factual or practical foundation. 

Sec. 311—Reducing global warming pollution 

With regard to offsets, Section 311 provides for the use of a combination of domestic and international offsets that covered entities 

can purchase to meet emissions obligations. If not enough domestic 

offsets are available, up to three-quarters of offsets used for compliance may come from developing nations. Reliance on international 

offsets is controversial on effectiveness and cost-control grounds. 

There are outstanding and difficult challenges concerning the integrity of offset markets, according to two 2008 evaluations by the 

Government Accountability Office (GAO). There is inherent uncertainty in certifying reductions of emissions that have not occurred. 

There are related challenges in measuring and validating the reductions to some acceptable standard, domestically and, especially, 

internationally. The GAO concluded that ‘‘the use of carbon offsets 

in a cap and trade program can undermine the system’s integrity, 

given that it is not possible to ensure that every credit represents 

real, measurable, and long-term reductions in emissions.’’ (Emphasis added.) 

The larger the number, range, and geographic scope of offset 

projects allowed into the regulatory scheme, the more integrity of 

emissions reductions becomes an issue. Available evidence, as provided by GAO and other witnesses before the Subcommittee on Energy and the Environment, shows offset markets have not worked 

as cost-effectively as promised. The existing international offset 

program administered by the United Nations in particular has 

proved susceptible to abuse. 

Analysis provided during climate policy hearings before the Committee revealed that the existing international system fails as a 

market because it has animated accounting tricks that allow participants to manufacture offset credits at little or no cost. The system has also promoted substantial strategic behavior on the part 

of developing nations aimed at manipulating baselines in order to 

increase the number of offsets created. And, as participation in the 

energy sectors of developing countries has expanded, the regulatory 

challenge to determine whether these projects’ emissions reductions 

are ‘‘additional’’ to what would have happened in the absence of the 

international offsets subsidy has increased. Meanwhile, the program has failed as a subsidy because the developed world has had 

to purchase the offsets emissions reductions at an extremely high 

premium—10 to 100 times the cost of most of the emissions reductions. 

Against this record, there is no assurance international abuse 

can be avoided with additional EPA or other regulatory oversight. 

While provisions provide for EPA determination as to the quality 

and additionality of domestic or international offsets, the bill continues to allow the EPA to modify or omit integrity requirements 

‘‘if not feasible.’’ Further, while the EPA is directed to conduct random audits of offsets projects, it is not evident how the Administrator could successfully conduct random audits of international offsets. What agreements with China and other nations are there to 

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ence and evidence collected by the Committee with regard to international inspections of food and drug products imported into the 

United States, there is little assurance offset audits in China or the 

developing world can be any more frequent or reliable. 

Any such offset subsidies from U.S. covered entities will effectively represent a substantial wealth transfer to the developing 

world. The EPA, in its own analysis, notes that the availability of 

offsets drastically affects the cost of compliance with the cap-andtrade program. In its analysis, EPA wrote that without international offsets the allowance price would increase 96 percent. Absent the availability of international offsets, or severe restriction 

because of strict EPA regulation and international competition for 

the projects, the costs imposed on Americans by the cap-and-trade 

scheme outlined in this legislation will be substantially higher than 

proponents advertise. 

Section 311 also creates a mechanism to use allowances and auction revenues to support a complicated and untested international 

program to prevent tropical deforestation. This untested program 

presents reliability questions similar to those created by reliance 

on international offsets. Integrity issues aside, this provision, if enacted, effectively involves transferring energy tax funds generated 

domestically to developing countries. Whatever the merits or weaknesses of this program, the transfer of funds internationally effectively reduces what is available for domestic relief from higher energy prices. 

Finally, accounting for the risk that offsets or the tropical forest 

program do not effectively reduce international emissions and the 

cost-benefit of these mechanisms for global emissions reduction is 

called further into question. It is upon such questionable foundation that the legislation provides for the transfer of tens of billions 

of dollars to international projects (and jobs) that we believe could 

be more effectively spent providing jobs in the United States. 

Sec. 321—Disposition of allowances 

Section 321 provides details on the distribution of free allowances 

and auction revenues to utilities and other affected sectors. As it 

was with the Emissions Trading Scheme in Europe, special corporate interest support for caps and emissions rationing was not 

possible without ensuring valuable allowances were allotted to 

these groups. The ostensible purpose of distributing free allowances 

is to reduce job losses and prevent increases in consumer (commercial and residential) electricity and heating bills. Despite such 

goals, the funds are not necessarily distributed directly to consumers. For example, with regard to natural gas consumer allowances, the states will actually administer half the funds for natural 

gas energy efficiency programs rather than provide for relief on 

utility bills. The section does not protect consumers from higher energy costs. It is the higher costs that drive the cuts in CO2. 

All of the targeted spending of the allowances induces additional 

inefficiencies to the program that will raise its costs on the economy. Giving allowances to the chosen few just redistributes the economic pain to others. Moreover, every dollar of allowances given to 

one group is a dollar’s worth that cannot be used for cutting taxes 

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fice, under both Directors Orszag and Elmendorf, even if all the allowances are allocations given away to industry and affected sectors, the cap-and-trade scheme will still lead to price increases. 

Sec. 331—Greenhouse gas standards 

Representative Marsha Blackburn (R–TN) offered an amendment 

that would establish that carbon dioxide, water vapor, and other 

greenhouse gases are not air pollutants under the Clean Air Act. 

This amendment would have prevented the Environmental Protection Agency from imposing intrusive regulations into all aspects of 

American lives. Throughout the mark-up and the series of hearings 

preceding the legislation’s passage, Members warned that if Congress does not act on this issue, the EPA would. The Blackburn 

amendment acknowledged this risk and would have prevented EPA 

action without forcing Congress’s hand before the issues were properly explored and consensus was established. The Blackburn 

amendment would have taken the EPA variable out of the equation 

and would have allowed Congress to explore the topic fully, with 

additional hearings and plenty of time for regular order, including 

a Subcommittee mark-up. This amendment failed along strict partisan lines. 

Sec. 335—State programs 

As written, this bill allows states and localities to enforce their 

own regulations of greenhouse gases covered by the cap after 2017. 

Until 2012, and beginning again in 2018, states could enforce their 

own greenhouse gas emissions cap-and-trade programs in addition 

to the federal cap-and-trade program established under the Waxman-Markey bill. One major premise touted by the Majority is that 

the complex cap-and-trade scheme will provide industry and capital 

markets with certainty to invest in the green technologies of the future, the power sector, affected industries, or new clean technologies for coal or the oil industry. This certainty is compromised 

without a permanent preemption of state and local regulation of 

greenhouse gas emissions. This section should be amended to preempt states from implementing or enforcing their own cap-andtrade programs. This would avoid potentially duplicative, conflicting and inconsistent state and federal regulatory regimes that 

would impose additional costs, regulations and burdens on U.S. 

consumers and businesses. 

Sec. 336—Enforcement 

Section 336 addresses enforcement relating to Title III of the bill. 

While the current version of the bill has eliminated the ‘‘Citizens 

Suits’’ provisions that were offered in the original discussion draft 

of the bill, under the current version of the bill, subject to certain 

limitations any person could still seek to bring a civil action 

against any other person for violation of the new greenhouse gas 

emission standards under Title III of the bill. In particular, under 

Section 304 of the Clean Air Act as amended elsewhere by the bill, 

plaintiffs could bring citizen suits to enforce the new greenhouse 

gas emissions standards. 

This section should be amended to add a new paragraph focusing 

any citizen suits to enforce any of the provisions of Title III of the 


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bill only on the EPA Administrator. If citizen suits are allowed to 

go forward against any person, it is likely that there would be a 

substantial amount of new climate change litigation brought 

against companies throughout the United States in all of the sectors of the economy regulated by the bill. While a windfall to lawyers, such litigation would impose significant costs and burdens on 

those companies in addition to the already enormous direct and indirect costs imposed by the bill. An amendment to limit citizen 

suits would prevent excessive or unwarranted litigation and protect 

U.S. companies and ultimately U.S. jobs and consumers. 

Subtitle D—Carbon market assurance 

The bill provides for the establishment of a regulated allowance 

market where market participants will engage in the trading of 

regulated allowances and regulated allowance derivatives. While 

the bill does provide a certain level of market protection comparable to the CFTC regulatory regime in the futures market, the 

bill does not ban speculators from participation in this market. 

Therefore, hedge funds, proprietary trading desks and sovereign 

wealth funds will be able to play the market and thus impact the 

price of carbon. Representative Steve Scalise (R–LA) introduced an 

amendment that would have limited participation in the market to 

covered entities, but the amendment was defeated by a vote of 20– 

32. 

During the summer of 2008, Congress was exploring the link between speculation and the increase in food and gas prices. Speculation can lead to price volatility and ultimately higher prices in the 

traded contract, which will lead to higher energy costs for the average American ratepayer in this new market. 

Sec. 355—Limitation on eligibility to purchase a credit default swap 

In general, it is important to note that this bill delves into the 

derivatives market in a far-reaching way, including by banning 

naked credit default swaps. The derivatives market does need regulatory reform, but such reforms should take place after extensive 

hearings within the Committee. Much of this language was added 

only to the Amendment in the Nature of a Substitute, and therefore there was not sufficient time for review and analysis, not to 

mention no opportunity for a hearing on this topic. 

TITLE IV

By subjecting domestic employers to a costly regulatory system, 

the bill places American jobs at a double disadvantage: competitive 

disadvantage vis-a-vis their foreign competitors and pressure to 

move jobs overseas to countries that do not unilaterally disadvantage manufacturing or other energy intensive activities. 

Section 401 amends section 762 of the Clean Air Act and states: 

‘‘Congress finds that the purposes of this part, as set forth in section 761, can be most effectively addressed and achieved through 

agreements negotiated between the United States and foreign 

countries.’’ Instead of rushing this bill through Committee markup, including by skipping the subcommittee mark-up, international 

negotiations should have taken place prior to this legislation being 


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implemented. This would ensure that unilateral actions taken by 

the United States would not be negated by emissions from India 

and China. 

Section 425 and section 426 of the bill address climate change 

worker adjustment assistance. A far better alternative to addressing the job losses that will inevitably be caused by the enactment 

of this bill was proposed by several Republican amendments. 

Representative Fred Upton (R–MI) introduced an amendment to 

protect domestic employment that would have required the Administrator of the EPA, in consultation with the Secretary of Labor, to 

prepare an annual report to Congress on the average national unemployment rate, and if the unemployment rate for the prior year 

surpassed 15% as a result of implementation of the 13 bill, then 

the bill shall sunset. The amendment was defeated by a vote of 21– 

34. Representative Tim Murphy (R–PA) introduced an amendment 

to protect the U.S. steel industry that would have required the Administrator of the EPA, in consultation with the Secretary of 

Labor, to prepare an annual report to Congress setting forth the 

number of domestic jobs that been lost in the U.S. steel industry 

as a result of implementation of the bill, and the bill shall sunset 

if the total number of job losses in the steel industry exceeded 

10,000. The amendment was defeated by a vote of 20–35. Representative Mike Rogers (R–MI) offered three separate amendments that would have required the Administrator of the EPA, in 

consultation with the Secretary of Labor, to prepare an annual report to Congress on the number of domestic jobs in the auto parts, 

auto and transportation manufacturing industries, and the bill 

shall sunset if there were any job losses in each of these industries 

as a result of the implementation of the bill. This series of amendments offered en bloc was defeated by a vote of 22–32. Representative John Shimkus (R–IL) introduced an amendment that would 

sunset the bill if two or more coal mines were to close as a result 

of this bill. The amendment was defeated by a vote of 22–34. Representative George Radanovich (R–CA) introduced an amendment 

that would sunset the bill if the EPA Administrator determined 

that 43,846 or more jobs were lost in the agriculture industry in 

the United States in the prior year due to implementation of the 

bill. The amendment was defeated by a vote of 22–36. 

JOE BARTON. FRED UPTON. CLIFF STEARNS. 

NATHAN DEAL. 

GEORGE RADANOVICH. 

GREG WALDEN. 

ROY BLUNT. 

RALPH M. HALL. 

ED WHITFIELD. 

JOHN SHIMKUS. 

STEVE BUYER. 

JOSEPH R. PITTS. 

LEE TERRY. 

TIM MURPHY. 

SUE WILKINS MYRICK. 

MICHAEL BURGESS. 


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MARSHA BLACKBURN. PHIL GINGREY. STEVE SCALISE. 


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(741) 

ADDITIONAL VIEWS 

When the Energy and Commerce Committee began crafting a 

comprehensive energy and climate change bill, I expected that it 

would include an Open Fuel Standard. Such a standard would require new cars manufactured or sold in the United States to be flex 

fuel vehicles capable of burning any combination of gasoline, ethanol, or methanol. Although this bill moves a small step in that direction, it does not go nearly far enough. I am appalled by opposition from the auto industry and its allies to any real flex fuel 

standard. I am especially disappointed that while all kinds of compromises were made with anti-environmental energy industries, no 

real compromises on flex fuel cars could be made. I consider this 

a missed opportunity. 

Above all else, I believe that our energy policy must break our 

addiction to foreign oil. Our national security and our economy depend on it, as the world currently runs on a resource controlled by 

our enemies. We exacerbate our nation’s economic woes by exporting hundreds of billions of dollars every year to purchase foreign 

oil. That money in turn finances people who plot ways to cause us 

harm. 

These economic and national security problems are enabled by 

the simple fact that oil provides more than 96% of the fuel for our 

cars and trucks. For nearly every American, there is no substitute 

for oil. 

Unfortunately, unless we act now, the problem will continue to 

worsen. Demand for oil continues to rise across the globe, led by 

the rapid industrialization of China and India, while production 

can not keep up. 

The President announced a new national policy two weeks ago, 

which would increase fuel economy and reduce greenhouse gas pollution for all new cars and trucks sold in the United States. This 

proposal would come with an average additional cost of $1,300 per 

vehicle. The new CAFE standards, which cover model years 2012– 

2016, and ultimately require an average fuel economy standard of 

35.5 mpg in 2016, are projected to save 1.8 billion barrels of oil 

over the life of the program. This would surpass the CAFE law 

passed by Congress in 2007 requiring an average fuel economy of 

35 mpg in 2020. 

This is a step in the right direction. However, as a method of 

achieving energy independence, an increase in CAFE standards is 

only a small step because cars still run on oil. They run on less oil, 

but they still run on oil. 

I believe the solution is to introduce fuel choice and competition 

into the market. We can accomplish this by passing a law making 

new cars manufactured or sold in the United States flex fuel vehicles capable of burning any combination of gasoline, ethanol, or 

methanol. Flex fuel vehicles cost only about $90—$100 more than 


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the same car in a gasoline-only version. It is a simple and inexpensive modification that should be standard in cars, like seatbelts or 

airbags. 

The largest producers of both ethanol and methanol are all in the 

Western Hemisphere, and the United States has by far the greatest 

production potential for both. Ethanol is made from agricultural 

products. Methanol can also be made from biomass, as well as from 

natural gas or coal. 

Brazil has already achieved energy independence. Three decades 

ago, Brazil imported 80 percent of its oil supply. Today, after investments in their sugar-based ethanol industry, and an influx of 

flex-fuel cars that began in 2003, Brazil has achieved energy independence and is largely insulated from fluctuations in global oil 

prices. 

The bipartisan call for implementation of flex fuel technology 

here in the United States is growing. President Obama announced 

during his campaign that he seeks to ensure that ‘‘all new vehicles 

are flexible fuel vehicles . . . by the end of his first term in office.’’ 

The Obama-Biden New Energy for America Plan, at p. 5. Former 

House Speaker Newt Gingrich joined the call in an April 2009 article in Newsweek, writing ‘‘[w]e should . . . pass an open-fuel standard for 95 percent of the new cars sold in the United States, allowing the construction of flex-fuel vehicles that can run on a variety 

of fuels, including ethanol.’’ Newt Gingrich, Our Tanks Are On 

Full, Newsweek (Apr. 13, 2009). Energy Secretary Steven Chu expressed his support for flex fuel vehicles to the New Democratic Coalition on May 16, 2009, and confirmed his support to me in a private conversation later that same day. 

Just six months ago, the CEOs of General Motors, Chrysler, and 

Ford appeared before the Senate Banking Committee and the 

House Financial Services Committee, and each committed to my 

colleagues and to the American people that they would make 50% 

of their cars flex-fuel vehicles by 2012. 

• General Motors Corporation—‘‘In 2012, over 50% of GMs 

new vehicle sales will be flex-fuel capable.’’ General Motors 

Corporation Restructuring Plan for Long-Term Viability, Submitted to Senate Banking Committee & House of Representatives Financial Services Committee, at p. 22 (Dec. 2, 2008). 

• Chrysler LLC—‘‘[Chrysler] is on target to meet our commitment of 50% of our fleet being flex fuel capable by 2012.’’ 

Chrysler’s Plan for Short-Term and Long-Term Viability, Submitted to the United States Senate Committee on Banking, 

Housing, and Urban Affairs, at p. 7 (Dec. 2, 2008). 

• Ford Motor Company—‘‘Ford has committed to doubling 

the production of flexible fuel vehicles by 2010 and to producing 50% of our products capable of running on E85 by 

2012.’’ Ford Motor Company Business Plan, Submitted to the 

Senate Banking Committee, at pp. 14, 29 (Dec. 2, 2008). 

However, the Detroit Three no longer wants to honor their commitment. So, I introduced the Open Fuel Standard Act with three 

of my colleagues—Reps. Bob Inglis (R–SC), Steve Israel (D–NY), 

and Roscoe Bartlett (R–MD)—to require the automakers to honor 

their flex fuel promise to the American people. 


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Instead of supporting our legislation, the auto industry is vigorously opposing it. Instead of choosing to innovate and benefit both 

American consumers and the U.S. auto industry in the long-term, 

the auto industry would rather resist change and continue to follow 

its failed business plan in the short-term. 

This is precisely the type of misguided thinking that led to the 

deterioration of the U.S. auto industry. Chrysler and General Motors have become the first large American car companies to declare 

bankruptcy since Studebaker in 1933. Now the American people 

are picking up the pieces they left behind. 

Despite promises from just six months ago, the automakers now 

argue that they should not be required to produce flex fuel cars because there are not enough advanced fuels available to run them. 

The problem with this argument is that it puts the nation in a 

Catch–22. The automakers will not make the cars until there is 

sufficient alternative fuel available to run them, but industry has 

no incentive to produce the alternative fuel until there are sufficient numbers of cars available to use it. In essence, the automakers are presenting the illusion of choice while preventing any 

real choice at all. 

The Open Fuel Standard would require a simple $90 or $100 modification to vehicles. That’s far less the $1,300 increase in 

CAFE standards that the President just set forth, and could be instrumental in breaking our dependence on foreign oil. 

The world is changing, and it’s time for the auto industry to 

change with it. Now is the time for bold action and the auto industry must not be content by giving us more of the same. Simply 

doing the same thing will yield the same results: increasing prices 

and a greater reliance on OPEC. 

I am disappointed that the opposition to energy independence 

has been so fierce. I believe it is past time to break our addiction 

to foreign oil. The American Clean Energy and Security Act is a 

good start, and I will work every step of the way to strengthen it 

as it moves toward becoming law. 

ELIOT L. ENGEL. 

Æ 


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