I 

111TH CONGRESS 

1ST SESSION H. R. 1683 

To amend the Internal Revenue Code of 1986 to reduce greenhouse gas 

emissions by requiring a Federal emission permit for the sale or use 

of greenhouse gas emission substances, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 24, 2009 

Mr. MCDERMOTT (for himself, Mr. BLUMENAUER, Mr. LARSON of Connecticut, and Mr. STARK) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the 

Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to reduce 

greenhouse gas emissions by requiring a Federal emission permit for the sale or use of greenhouse gas emission substances, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Clean Environment 

5 and Stable Energy Market Act of 2009’’. 


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1 SEC. 2. GREENHOUSE GAS EMISSION SUBSTANCES. 

2 (a) IN GENERAL.—The Internal Revenue Code of 

3 1986 is amended by adding at the end the following: 

4 ‘‘Subtitle L—Greenhouse Gas 

5 Emission Substances 

‘‘Sec. 9901. Condition precedent to sale or use of greenhouse gas emission substance. 

‘‘Sec. 9902. Federal emission permit. 

‘‘Sec. 9903. Definitions. 

‘‘Sec. 9904. Regulations. 

6 ‘‘SEC. 9901. CONDITION PRECEDENT TO SALE OR USE OF 

7 GREENHOUSE GAS EMISSION SUBSTANCE. 

8 ‘‘(a) IN GENERAL.—No covered person may sell any 

9 greenhouse gas emission substance except pursuant to a 

10 Federal emission permit for each carbon dioxide equiva11 lent that the Administrator of the Environmental Protec12 tion Agency determines would be emitted from the com13 bustion or other greenhouse gas emitting use of such sub14 stance. 

15 ‘‘(b) COVERED PERSON.—For purposes of this sub16 title, the term ‘covered person’ means— 

17 ‘‘(1) in the case of coal (including lignite and 

18 peat) produced from a mine in the United States, 

19 the producer of such coal, 

20 ‘‘(2) in the case of crude oil or petroleum prod21 ucts received at a United States refinery, the oper22 ator of the United States refinery, 


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1 ‘‘(3) in the case of any greenhouse gas emission 

2 substance not described in paragraph (1) or (2) pro3 duced in the United States, the producer of such 

4 substance, and 

5 ‘‘(4) in the case of any greenhouse gas emission 

6 substance entered into the United States for con7 sumption, use, or warehousing, the person entering 

8 such substance for consumption, use, or 

9 warehousing. 

10 ‘‘(c) USE TREATED AS SALE.— 

11 ‘‘(1) IN GENERAL.—If any person uses a green12 house gas emission substance before the first retail 

13 sale of such substance, then such person shall be lia14 ble for the purchase of a Federal emission permit 

15 under section 9902 in the same manner as if such 

16 substance were sold at retail on the date of such use 

17 by such person pursuant to a Federal emission per18 mit. 

19 ‘‘(2) EXEMPTION FOR USE IN FURTHER MANU20 FACTURE.—Paragraph (1) shall not apply to use of 

21 a greenhouse gas emission substance as material in 

22 the manufacture or production of, or as a component 

23 part of, another article to be manufactured or pro24 duced by such person. 


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1 ‘‘(d) EXCEPTIONS.—Subsection (a) shall not apply 

2 to— 

3 ‘‘(1) a greenhouse gas emission substance to be 

4 used for noncombustion agricultural purposes, or 

5 ‘‘(2) a greenhouse gas emission substance with 

6 respect to which a Federal emission permit has pre7 viously been purchased. 

8 ‘‘(e) IMPORTATION OF CARBON-INTENSIVE GOODS.— 

9 ‘‘(1) GREENHOUSE GAS EMISSION PERMIT

10 EQUIVALENCY FEES.—The Secretary shall impose a 

11 greenhouse gas emission permit equivalency fee on 

12 imports of carbon intensive goods that shall be 

13 equivalent to the cost that domestic producers of 

14 comparable carbon intensive goods incur as a result 

15 of— 

16 ‘‘(A) permit fees paid by covered persons 

17 for greenhouse gas emission substances under 

18 this section, and 

19 ‘‘(B) greenhouse gas emission permit 

20 equivalency fees paid by importers of carbon in21 tensive goods used in the production of the 

22 comparable carbon intensive goods in question. 

23 ‘‘(2) EXPIRATION.—Paragraph (1) and 6633(b) 

24 shall cease to have effect at such time as and to the 

25 extent that— 


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1 ‘‘(A) an international agreement requiring 

2 countries that emit greenhouse gases and 

3 produce carbon-intensive goods for international 

4 markets to adopt equivalent measures comes 

5 into effect, and 

6 ‘‘(B) the country of export has imple7 mented equivalent measures, and the actions 

8 provided for by paragraph (1) and 6633(b) are 

9 no longer appropriate. 

10 ‘‘SEC. 9902. FEDERAL EMISSION PERMIT. 

11 ‘‘(a) IN GENERAL.—The Secretary shall, subject to 

12 subsection (d), issue Federal emission permits, as provided 

13 for in this subtitle. A Federal emission permit may only 

14 be obtained upon making payment to the Secretary. 

15 ‘‘(b) RULES RELATING TO PERMITS.—For purposes 

16 of this subtitle— 

17 ‘‘(1) Each Federal emission permit shall be de18 nominated in carbon dioxide equivalents. 

19 ‘‘(2) A Federal emission permit may only be 

20 purchased at the time a greenhouse gas emission 

21 substance is produced or entered into the United 

22 States, as the case may be. 

23 ‘‘(3) A Federal emission permit may not be 

24 sold, exchanged, or otherwise transferred. 

25 ‘‘(c) PERMIT PRICE.— 


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1 ‘‘(1) IN GENERAL.—The Secretary, after con2 sultation with the Administrator of the Environ3 mental Protection Agency and the Secretary of En4 ergy, shall establish the price of obtaining a Federal 

5 emission permit for a calendar year based on a de6 termination of the dollar amount necessary to ensure 

7 that the demand for permits does not exceed the 

8 greenhouse gas emission allocations for such cal9 endar year. 

10 ‘‘(2) 5-YEAR PRICE SCHEDULE.— 

11 ‘‘(A) IN GENERAL.—Not later than Janu12 ary 1, 2010, and once every 5 years thereafter, 

13 the Secretary shall publish a schedule of the 

14 prices determined under paragraph (1) for ob15 taining a Federal emission permit during any 

16 calendar year in the 5-calendar-year period be17 ginning 1 year after any such date. 

18 ‘‘(B) MODIFICATIONS.—If in a given 5- 

19 year period— 

20 ‘‘(i) the Secretary reasonably expects 

21 to issue Federal emission permits that (in 

22 the aggregate) significantly exceed or fall 

23 short of the national limitation because of 

24 the price set by the Secretary (and not beVerDate Nov 24 2008 05:14 Mar 25, 2009 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1683.IH H1683

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1 cause of temporary fluctuations in the en2 ergy markets or the weather), and 

3 ‘‘(ii) sufficient time remains in such 

4 period, 

5 the Secretary shall establish a new schedule of 

6 prices for the remaining years in such 5-year 

7 period. Such schedule may not take effect until 

8 after 12 months after the establishment of such 

9 schedule. 

10 ‘‘(C) NUMBER OF MODIFICATIONS PER11 MITTED.—In the first 5-year period, the Sec12 retary may change the schedule of prices under 

13 subparagraph (B) a maximum to two times. In 

14 any ensuing 5-year period, the Secretary may 

15 change the schedule of prices under subpara16 graph (B) a maximum of once. 

17 ‘‘(d) NATIONAL LIMITATION.— 

18 ‘‘(1) IN GENERAL.—There is a national green19 house gas emission allocation limitation for any cal20 endar year. Such limitation for a calendar year shall 

21 be the sum of— 

22 ‘‘(A) the greenhouse gas emission alloca23 tions specified in the table in paragraph (3) for 

24 such calendar year reduced pursuant to para25 graph (2) for such calendar year, plus 


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1 ‘‘(B) the additional allocation of Federal 

2 emission permits issued by the Secretary for 

3 such calendar year to the extent that applica4 tions for Federal emission permits exceed the 

5 greenhouse gas emission allocations specified in 

6 the table in paragraph (3) for such calendar 

7 year. 

8 ‘‘(2) REDUCTION REQUIRED OVER REMAINING

9 YEARS.—After issuing additional allocations under 

10 paragraph (1)(B) during any 5-calendar-year period, 

11 the number of the greenhouse gas emission alloca12 tions specified in the table in paragraph (3) shall be 

13 reduced ratably the aggregate number of such addi14 tional allocations over the years specified in such 

15 table remaining after such period. 

16 ‘‘(3) ANNUAL ECONOMY-WIDE GREENHOUSE

17 GAS EMISSION ALLOCATIONS.—The greenhouse gas 

18 emission allocations for a calendar year are those 

19 specified in the following table: 

‘‘Calendar Year 

United States Economy-Wide Greenhouse Gas Emission Allocations (in 

Millions of Carbon Dioxide Equivalents) 

2011 6835.29

2012 6670.58

2013 6505.87

2014 6341.16


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‘‘Calendar Year 

United States Economy-Wide Greenhouse Gas Emission Allocations (in 

Millions of Carbon Dioxide Equivalents) 

2015 6176.45

2016 6011.74

2017 5847.03

2018 5682.32

2019 5517.61

2020 5352.9

2021 5110.99

2022 4880

2023 4659.5

2024 4448.93

2025 4247.89

2026 4055.93

2027 3872.64

2028 3697.63

2029 3530.54

2030 3370.99

2031 3218.66

2032 3073.2

2033 2934.33

2034 2801.72

2035 2675.11

2036 2554.23

2037 2438.8

2038 2328.59

2039 2223.36

2040 2122.89


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‘‘Calendar Year 

United States Economy-Wide Greenhouse Gas Emission Allocations (in 

Millions of Carbon Dioxide Equivalents) 

2041 2026.95

2042 1935.36

2043 1847.9

2044 1764.39

2045 1684.66

2046 1608.53

2047 1535.84

2048 1466.43

2049 1400.16

2050 1336.89. 

1 ‘‘(e) REPORT.—Not later than January 1, 2012, and 

2 annually thereafter, the Secretary shall publish a report 

3 describing the extent to which the United States green4 house gas emission allocations specified under subsection 

5 (d) are being achieved. Such report shall include— 

6 ‘‘(1) an explanation of the methodology and as7 sumptions the Secretary has used in establishing 

8 prices under this section, and 

9 ‘‘(2) an estimation, or range of estimations, of 

10 the price of permits for the 10-year period following 

11 the current 5-year period. 

12 ‘‘SEC. 9903. DEFINITIONS. 

13 ‘‘(a) IN GENERAL.—For purposes of this subtitle— 


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1 ‘‘(1) ADMINISTRATOR.—The term ‘Adminis2 trator’ means the Administrator of the Environ3 mental Protection Agency. 

4 ‘‘(2) CARBON DIOXIDE EQUIVALENT.—The 

5 term ‘carbon dioxide equivalent’ means, for each 

6 greenhouse gas emission substance, the quantity of 

7 the greenhouse gas emission substance that the Ad8 ministrator determines makes the same contribution 

9 to global warming as 1 metric ton of carbon dioxide. 

10 ‘‘(3) GREENHOUSE GAS EMISSION SUB11 STANCE.—The term ‘greenhouse gas emission sub12 stance’ means— 

13 ‘‘(A) coal (including lignite, peat, and de14 rivatives of coal), to be used as a combustion 

15 fuel, 

16 ‘‘(B) petroleum and any petroleum prod17 uct, to be used as a combustion fuel, 

18 ‘‘(C) natural gas, 

19 ‘‘(D) methane, 

20 ‘‘(E) nitrous oxide, 

21 ‘‘(F) sulfur hexafluoride, 

22 ‘‘(G) a perfluorocarbon, 

23 ‘‘(H) a hydrofluorocarbon, and 


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1 ‘‘(I) any other substance that is deter2 mined by the Administrator to contribute to 

3 global warming to a nonnegligible degree. 

4 ‘‘(4) FEDERAL EMISSION PERMIT.—The term 

5 ‘Federal emission permit’ means a permit required 

6 under section 9901. 

7 ‘‘(5) CARBON-INTENSIVE GOOD.—The term 

8 ‘carbon-intensive good’ means— 

9 ‘‘(A)(i) iron, steel, any steel mill product 

10 (including pipe and tube), aluminum, cement, 

11 glass (including flat, container, and specialty 

12 glass and fiberglass), pulp, paper, chemicals, 

13 and industrial ceramics, and 

14 ‘‘(ii) any other manufactured product that 

15 the Secretary determines— 

16 ‘‘(I) is sold for purposes of further 

17 manufacture, and 

18 ‘‘(II) generates, in the course of the 

19 manufacture of the product, direct and in20 direct greenhouse gas emissions that are 

21 comparable (on an emissions per dollar of 

22 output basis) to emissions generated in the 

23 manufacture or production of a good iden24 tified in clause (i), and 


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1 ‘‘(B) a manufactured item in which one or 

2 more goods identified under subparagraph (A) 

3 are inputs and the cost of production of which 

4 in the United States the Secretary determines 

5 is significantly increased by this subtitle. 

6 ‘‘(6) PETROLEUM PRODUCT.—The term ‘petro7 leum product’ has the meaning given such term in 

8 section 4612(a)(3). 

9 ‘‘(b) IDENTIFICATION OF CARBON-INTENSIVE

10 GOODS.—The determinations by the Secretary required by 

11 subsection (a)(5) shall be by rule. 

12 ‘‘SEC. 9904. REGULATIONS. 

13 ‘‘The Secretary shall issue such regulations as may 

14 be necessary or appropriate to carry out this subtitle, in15 cluding regulations relating to the timely and efficient 

16 issuance of permits and collection of payments for such 

17 permits.’’. 

18 (b) REFUND OF FEDERAL EMISSION PERMIT FEE.— 

19 Subchapter B of chapter 65 of such Code is amended by 

20 adding at the end the following new section: 

21 ‘‘SEC. 6633. REFUNDS OF FEDERAL EMISSION PERMIT FEE 

22 FOR CERTAIN USES. 

23 ‘‘(a) IN GENERAL.—If a Federal emission permit has 

24 been acquired with respect to a greenhouse gas emission 

25 substance pursuant to section 9902 and the acquirer of 


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1 such permit uses such substance in a manner that will 

2 make a negligible or no contribution to global warming, 

3 as determined by the Secretary in consultation with the 

4 Administrator of the Environmental Protection Agency, 

5 the Secretary shall pay (without interest) to the acquirer 

6 of such substance pursuant to such permit an amount 

7 equal to the amount paid for the applicable Federal emis8 sion permit. 

9 ‘‘(b) PAYMENTS TO EXPORTERS.—The Secretary 

10 shall pay (without interest) to the exporter of a carbon11 intensive good (as defined in section 9903(5)) produced 

12 in the United States an amount equal to the cost that 

13 domestic producers of such carbon-intensive goods incur 

14 as a result of— 

15 ‘‘(1) the dollar amount paid by covered persons 

16 for Federal emission permits for greenhouse gas 

17 emission substances under this section 9902, and 

18 ‘‘(2) greenhouse gas emission permit equiva19 lency fees paid under section 9901(e) by importers 

20 of carbon-intensive goods used in the production of 

21 the comparable carbon-intensive goods in question.’’. 

22 (c) FAILURE TO OBTAIN PERMIT.—Subtitle D of the 

23 Internal Revenue Code of 1986 is amended by adding at 

24 the end the following new chapter: 


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1 ‘‘CHAPTER 48—GREENHOUSE GAS 

2 EMISSION SUBSTANCES 

‘‘Sec. 5000A. Greenhouse gas emission substances. 

3 ‘‘SEC. 5000A. GREENHOUSE GAS EMISSION SUBSTANCES. 

4 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 

5 on any covered person who fails to obtain a Federal emis6 sion permit pursuant to subtitle L a tax equal to 300 per7 cent of the dollar amount of the fee that would have been 

8 charged for such permit but for such failure. 

9 ‘‘(b) COVERED PERSON.—The term ‘covered person’ 

10 has the meaning given such term by section 9901(b). 

11 ‘‘(c) FEDERAL EMISSION PERMIT.—The term ‘Fed12 eral emission permit’ means a permit required under sec13 tion 9901.’’. 

14 (d) ESTABLISHMENT OF CLIMATE PROTECTION AND

15 ECONOMIC SECURITY TRUST FUND.— 

16 (1) FINDING.—The Congress finds that revenue 

17 generated from the sale of Federal emission permits 

18 must be recycled into the American economy— 

19 (A) to facilitate economic growth and clean 

20 energy production, and 

21 (B) to protect the economic security of vul22 nerable families and communities. 

23 (2) ESTABLISHMENT OF TRUST FUND.—Sub24 chapter A of chapter 98 of such Code (relating to 


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1 trust fund code) is amended by adding at the end 

2 the following: 

3 ‘‘SEC. 9511. CLIMATE PROTECTION AND ECONOMIC SECU4 RITY TRUST FUND. 

5 ‘‘(a) CREATION OF TRUST FUND.—There is estab6 lished in the Treasury of the United States a trust fund 

7 to be known as the ‘Climate Protection and Economic Se8 curity Trust Fund’ (referred to in this section as the 

9 ‘Trust Fund’), consisting of such amounts as may be ap10 propriated or credited to the Trust Fund as provided in 

11 this section or section 9602(b). 

12 ‘‘(b) TRANSFERS TO TRUST FUND.—There is hereby 

13 appropriated to the Trust Fund an amount equivalent to 

14 the amounts received in the Treasury pursuant to subtitle 

15 L.’’. 

16 (e) CONFORMING AND CLERICAL AMENDMENTS.— 

17 (1) The table of chapters for subtitle D of such 

18 Code is amended by adding at the end the following 

19 new item: 

‘‘CHAPTER 48—GREENHOUSE GAS EMISSION SUBSTANCES.’’. 

20 (2) The table of subtitles for the Internal Rev21 enue Code of 1986 is amended by adding at the end 

22 the following new item: 

‘‘Subtitle L—Greenhouse Gas Emission Substances.’’. 


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1 (3) The table of sections for subchapter A of 

2 chapter 98 of such Code is amended by adding at 

3 the end the following: 

‘‘Sec. 9511. Climate Protection and Economic Security Trust Fund.’’. 

4 (f) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply with respect to the sale of any 

6 greenhouse gas emission substance after December 31, 

7 2010. 

Æ 


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