```

[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1862 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 1862

   To cap the emissions of greenhouse gases through a requirement to 
 purchase carbon permits, to distribute the proceeds of such purchases 
            to eligible individuals, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             April 1, 2009

     Mr. Van Hollen (for himself, Mr. Thompson of California, Mr. 
 Blumenauer, and Mr. Doggett) 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 cap the emissions of greenhouse gases through a requirement to 
 purchase carbon permits, to distribute the proceeds of such purchases 
            to eligible individuals, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Cap and Dividend Act of 2009''.

SEC. 2. AUCTION OF CARBON PERMITS AND DISTRIBUTION OF CONSUMER 
              DIVIDENDS.

    (a) In General.--The Internal Revenue Code of 1986 is amended by 
adding at the end the following new subtitle:

 ``Subtitle L--Auction of Carbon Permits and Distribution of Consumer 
                               Dividends

``Chapter 101. Cap and Dividend Program Rules.
``Chapter 102. Consumer Dividends.
``Chapter 103. Border Adjustments.

             ``CHAPTER 101--CAP AND DIVIDEND PROGRAM RULES

``Sec. 9901. Definitions.
``Sec. 9902. Carbon permits.
``Sec. 9903. Auctions.
``Sec. 9904. Compliance obligation.
``Sec. 9905. Penalty for noncompliance.
``Sec. 9906. Carbon capture and sequestration.
``Sec. 9907. Trading.
``Sec. 9908. Banking and borrowing.

``SEC. 9901. DEFINITIONS.

    ``For purposes of this subtitle:
            ``(1) Administrator.--The term `Administrator' means the 
        Administrator of the Environmental Protection Agency.
            ``(2) Carbon permit.--The term `carbon permit' means a 
        carbon permit established by the Secretary under section 
        9902(a).
            ``(3) Covered entity.--The term `covered entity' means a 
        person who makes the first sale in United States markets of a 
        covered fuel, as determined by the Secretary, in consultation 
        with the Administrator.
            ``(4) Covered fuel.--The term `covered fuel' means oil, 
        natural gas, coal, or any other product derived therefrom for 
        use as a combustible fuel offered for sale in United States 
        markets.
            ``(5) Fair market value.--The term `fair market value' 
        means the average auction price for carbon permits during the 4 
        quarters immediately preceding a failure to surrender, when 
        required under section 9904, the required number of carbon 
        permits under such section.
            ``(6) State.--The term `State' means the several States, 
        the District of Columbia, the Commonwealth of Puerto Rico, the 
        United States Virgin Islands, Guam, American Samoa, the 
        Commonwealth of the Northern Mariana Islands, and any other 
        commonwealth, territory, or possession of the United States.
            ``(7) Vintage year.--The term `vintage year' means the 
        calendar year for which a carbon permit is established under 
        section 9902.

``SEC. 9902. CARBON PERMITS.

    ``(a) In General.--The Secretary, in consultation with the 
Administrator, shall establish a separate quantity of carbon permits 
for calendar year 2012 and each calendar year thereafter, as set forth 
under subsection (b).
    ``(b) Emissions Reduction Schedule.--
            ``(1) In general.--The quantity of carbon permits 
        established by the Secretary, in consultation with the 
        Administrator, under subsection (a) shall represent equal, pro 
        rata increments that meet the targets described in paragraph 
        (2).
            ``(2) Targets.--
                    ``(A) Initial target.--The quantity of carbon 
                permits established for 2012 shall be equal to the 
                number of metric tons of carbon dioxide emitted in the 
                United States in 2005.
                    ``(B) Decadal targets.--The quantity of carbon 
                permits established for--
                            ``(i) 2020 shall be equal to 25 percent 
                        less than the number of metric tons of carbon 
                        dioxide emitted in the United States in 2005;
                            ``(ii) 2030 shall be equal to 45 percent 
                        less than the number of metric tons of carbon 
                        dioxide emitted in the United States in 2005;
                            ``(iii) 2040 shall be equal to 65 percent 
                        less than the number of metric tons of carbon 
                        dioxide emitted in the United States in 2005; 
                        and
                            ``(iv) 2050 shall be equal to 85 percent 
                        less than the number of metric tons of carbon 
                        dioxide emitted in the United States in 2005.
            ``(3) Report.--The Secretary shall report to Congress if 
        the Secretary, after consultation with the Administrator, 
        determines the emissions reductions targets under this 
        subsection should be revised in order to avert catastrophic 
        climate impacts. Such report shall include recommended 
        revisions to the existing emissions reduction schedule and the 
        basis for those recommendations.
    ``(c) Identification Numbers.--The Secretary shall assign to each 
carbon permit established under subsection (a) a unique identification 
number that includes the vintage year for that carbon permit.
    ``(d) Legal Status of Carbon Permits.--
            ``(1) In general.--A carbon permit does not constitute a 
        property right.
            ``(2) Termination or limitation.--Nothing in this subtitle 
        or any other provision of law shall be construed to limit or 
        alter the authority of the United States, including the 
        Secretary acting pursuant to statutory authority, to terminate 
        or limit a carbon permit.
            ``(3) Other provisions unaffected.--Nothing in this 
        subtitle relating to carbon permits issued under this section 
        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. Regional and State 
        greenhouse gas initiatives are not preempted by this subtitle.
    ``(e) Regulations.--Not later than 24 months after the date of 
enactment of this subtitle, the Secretary shall promulgate regulations 
to carry out the provisions of this subtitle.

``SEC. 9903. AUCTIONS.

    ``(a) Periodic Auctions.--The Secretary shall conduct periodic 
public auctions of carbon permits established under section 9902(a). 
The Secretary shall conduct at least 4 such auctions in each year for 
which carbon permits are established.
    ``(b) Auction Rules.--The Secretary shall--
            ``(1) limit auction participation only to owners of covered 
        entities;
            ``(2) establish a limit on the amount of carbon permits 
        that can be purchased by the owner of a single entity at each 
        auction and an aggregate limit on the total amount of permits 
        that can be held by the owner of a single entity at any one 
        time that--
                    ``(A) reflects anticipated sector and participant 
                demand;
                    ``(B) prevents speculation, manipulation, or 
                hoarding of permits; and
                    ``(C) does not interfere with normal market 
                competition; and
            ``(3) have the authority to set a minimum permit price at 
        auction.

``SEC. 9904. COMPLIANCE OBLIGATION.

    ``(a) In General.--Not later than April 1, 2013, and April 1 of 
each year thereafter, the owner of a covered entity shall surrender to 
the Secretary a quantity of carbon permits at least as great as the 
number of metric tons of carbon dioxide that the Secretary, in 
consultation with the Administrator, determines would be emitted by the 
combustion of covered fuels with respect to which the covered entity 
made the first sale in United States markets during the previous 
calendar year.
    ``(b) Exemption.--The owner of a covered entity shall not have to 
surrender a carbon permit for the sale of a covered fuel consumed for a 
non-emitting use, as defined and verified by the Secretary in 
consultation with the Administrator, unless such covered fuel is sold 
to a person issued carbon permits under section 9906.

``SEC. 9905. PENALTY FOR NONCOMPLIANCE.

    ``(a) In General.--The owner of any covered entity that fails for 
any year to surrender, by the deadline described in section 9904, one 
or more of the carbon permits due pursuant to such section shall be 
liable for payment to the Secretary of a penalty in the amount 
described in subsection (b).
    ``(b) Amount.--The amount of a penalty required to be paid under 
subsection (a) shall be equal to the product obtained by multiplying--
            ``(1) the number of carbon permits that the owner failed to 
        surrender by the deadline; by
            ``(2) 3 times the fair market value of carbon permits 
        issued for emissions occurring in the calendar year for which 
        the carbon permits were due.
    ``(c) Timing.--A penalty required under this section shall be 
immediately due and payable to the Secretary, without demand, in 
accordance with regulations promulgated by the Secretary, which shall 
be issued not later than 2 years after the date of enactment of this 
subtitle.
    ``(d) No Effect on Liability.--A penalty due and payable by the 
owner of a covered entity under this section shall not diminish the 
liability of the owner for any fine, penalty, or assessment against the 
owner for the same violation under any other provision of law.

``SEC. 9906. CARBON CAPTURE AND SEQUESTRATION.

    ``The Secretary shall issue, to any person who the Secretary, in 
consultation with the Administrator, determines has safely and 
verifiably captured and sequestered carbon dioxide from the combustion 
of covered fuels in the United States, carbon permits, in addition to 
the quantity of permits established under section 9902(a), in an amount 
equivalent to the number of metric tons of carbon dioxide so captured 
and sequestered.

``SEC. 9907. TRADING.

    ``(a) Permitted Transactions.--The lawful holder of a carbon permit 
may--
            ``(1) hold the carbon permit, subject to the limits 
        established by the Secretary under section 9903(b)(2);
            ``(2) sell, exchange, or transfer the carbon permit to the 
        owner of a covered entity consistent with the limits 
        established by the Secretary under section 9903(b)(2); or
            ``(3) request that the Secretary retire the carbon permit.
    ``(b) Effectiveness of Carbon Permit Transfers.--No transfer of a 
carbon permit shall be effective until a written certification of the 
transfer, signed by a responsible official of the transferor, is 
received and recorded by the Secretary in accordance with regulations 
promulgated under section 9902(e).
    ``(c) Carbon Permit Tracking System.--The regulations promulgated 
under section 9902(e) shall include a system for issuing, recording, 
holding, and tracking carbon permits that shall specify all necessary 
procedures and requirements for an orderly and competitive functioning 
of the carbon permit system. Such regulations shall provide for 
appropriate publication of the information in the system on the 
Internet.

``SEC. 9908. BANKING AND BORROWING.

    ``(a) Banking.--A carbon permit may be used to meet the compliance 
obligation requirements of section 9904 for emissions in--
            ``(1) the vintage year for the carbon permit; or
            ``(2) any calendar year subsequent to the vintage year for 
        the carbon permit.
    ``(b) Expiration.--A carbon permit shall not expire unless--
            ``(1) it is surrendered to the Secretary under section 9904 
        or section 9907(a)(3); or
            ``(2) the Secretary determines by regulation that 
        expiration is necessary to ensure the authenticity and 
        integrity of carbon permits or the carbon permit tracking 
        system.
    ``(c) Borrowing Future Vintage Year Carbon Permits.--If the auction 
price for carbon permits increases by more than 100 percent above the 
average auction price for carbon permits during the preceding two years 
(or, if before the third year for which auctions are conducted, the 
average auction price for carbon permits during the preceding 
auctions), the Secretary shall auction as many additional carbon 
permits as are necessary to stabilize the auction price, not to exceed 
8 percent of the total amount of carbon permits otherwise available at 
that auction. Any carbon permits made available under this subsection 
shall result in an equivalent reduction in the aggregate amount of 
carbon permits made available in vintage years 2030 through 2050 as set 
forth in section 9902, and the Secretary shall reduce the number of 
carbon permits by an equal percentage in each of those vintage years.

                   ``CHAPTER 102--CONSUMER DIVIDENDS

``Sec. 9911. Healthy Climate Trust Fund.
``Sec. 9912. Consumer Dividend payment.
``Sec. 9913. Transparency.

``SEC. 9911. HEALTHY CLIMATE TRUST FUND.

    ``(a) Establishment.--There is established in the Treasury of the 
United States a trust fund to be known as the `Healthy Climate Trust 
Fund', consisting of such amounts as may be appropriated to such trust 
fund as provided for in this section.
    ``(b) Transfers.--
            ``(1) Proceed amounts.--There are appropriated to the 
        Healthy Climate Trust Fund amounts equivalent to funds received 
        as proceeds under section 9903.
            ``(2) Penalty amounts.--There are appropriated to the 
        Healthy Climate Trust Fund amounts equivalent to funds received 
        as penalties under section 9905.
    ``(c) Expenditures.--
            ``(1) Administrative expenses.--Such amounts as may be 
        necessary from the Healthy Climate Trust Fund shall be 
        available to pay the administrative expenses necessary to carry 
        out this section for each month, but not exceeding 0.50 percent 
        of the amounts appropriated to such trust fund under subsection 
        (b) in such month.
            ``(2) Consumer dividend payments.--Amounts in the Healthy 
        Climate Trust Fund not used under paragraph (1) for any month 
        shall be available for making Consumer Dividend payments under 
        section 9912.

``SEC. 9912. CONSUMER DIVIDEND PAYMENTS.

    ``(a) In General.--For purposes of this section:
            ``(1) Consumer dividend payment.--The term `Consumer 
        Dividend payment' means the individual pro-rata share, as 
        determined by the Secretary, of amounts available for any month 
        in the Healthy Climate Trust Fund under section 9911(c)(2). For 
        purposes of the preceding sentence, the amounts available for 
        any month shall be the fraction of the total amount made 
        available from an auction conducted under section 9903--
                    ``(A) the numerator of which is 1, and
                    ``(B) the denominator of which is the number of 
                months in the period beginning with the month in which 
                such auction is conducted and ending with the month 
                before the month in which the next such auction is 
                scheduled to be conducted.
            ``(2) Eligible individual.--The term `eligible individual' 
        means, with respect to any month, any individual with a valid 
        social security number (other than a nonresident alien 
        individual) who is lawfully present in the United States for 
        such month, as determined and verified by the Secretary in 
        consultation with any other Federal entity the Secretary 
        determines appropriate.
    ``(b) Payment of Consumer Dividend.--From amounts made available 
under section 9911(c)(2), the Secretary shall make a Consumer Dividend 
payment not later than the end of the month after the month in which 
such amounts are appropriated to the Healthy Climate Trust Fund under 
section 9911 to each individual who is an eligible individual for that 
month.
    ``(c) Regulations.--The Secretary shall prescribe such regulations 
and other guidance as may be necessary or appropriate to carry out this 
section.

``SEC. 9913. TRANSPARENCY.

    ``(a) Report to Congress.--Not later than February 1, 2013, and at 
least annually thereafter, the Secretary shall transmit to Congress a 
report accounting for the disposition of amounts in the Healthy Climate 
Trust Fund in the previous calendar year.
    ``(b) Healthy Climate Trust Fund Website.--Not later than 90 days 
after the date of the enactment of this subtitle, the Secretary shall 
establish and maintain a website to provide the public with information 
on the disposition of any amounts in the Healthy Climate Trust Fund.

                   ``CHAPTER 103--BORDER ADJUSTMENTS

``Sec. 9921. Carbon equivalency fee.
``Sec. 9922. Definitions.
``Sec. 9923. Sense of Congress.

``SEC. 9921. CARBON EQUIVALENCY FEE.

    ``(a) Imports.--The Secretary shall impose carbon equivalency fees 
to be collected by the Commissioner responsible for U.S. Customs and 
Border Control on imports of carbon-intensive goods. The amount of the 
carbon equivalency fee shall be equal to the cost that domestic 
producers of a comparable carbon-intensive good incur as a result of--
            ``(1) prices paid in the acquisition of carbon permits by 
        covered entities under this subtitle; and
            ``(2) carbon equivalency fees paid by importers of carbon-
        intensive goods used in the production of the comparable 
        carbon-intensive good.
    ``(b) Payments to Exporters.--The Secretary shall pay without 
interest to persons exporting from the United States carbon-intensive 
goods produced in the United States. The amount of the payment shall be 
equal to the cost that domestic producers of the carbon-intensive good 
incur as a result of--
            ``(1) prices paid in the acquisition of carbon permits by 
        covered entities under this subtitle; and
            ``(2) carbon equivalency fees paid by importers of carbon-
        intensive goods used in the production of the comparable 
        carbon-intensive good.
    ``(c) Expiration.--This section shall cease to have effect at such 
time as and to the extent that--
            ``(1) an international agreement requiring countries that 
        emit greenhouse gases and produce carbon-intensive goods for 
        export markets to adopt equivalent measures comes into effect; 
        or
            ``(2) the country of export has implemented equivalent 
        measures, as determined by the Secretary, in consultation with 
        the Secretary of State.

``SEC. 9922. DEFINITIONS.

    ``In this chapter:
            ``(1) Carbon-intensive good.--The term `carbon-intensive 
        good' means a good that, as identified by the Secretary, in 
        consultation with the Administrator, by rule--
                    ``(A) is a primary product; or
                    ``(B) is a manufactured item in which one or more 
                primary products are inputs and the cost of production 
                of which in the United States is significantly 
                increased by reason of the requirements under this 
                subtitle.
            ``(2) Primary product.--The term `primary product' means--
                    ``(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; and
                    ``(B) any other manufactured product that the 
                Secretary, in consultation with the Administrator, 
                determines--
                            ``(i) is sold for purposes of further 
                        manufacture; and
                            ``(ii) generates, in the course of the 
                        manufacture of the product, direct and indirect 
                        greenhouse gas emissions that are comparable 
                        (on an emissions-per-dollar of output basis) to 
                        emissions generated in the manufacture or 
                        production of a primary product identified in 
                        subparagraph (A).
            ``(3) Equivalent measure.--The term `equivalent measure' 
        means a tax, or other regulatory requirement that imposes a 
        cost, on manufacturers of carbon-intensive goods located 
        outside the United States, by reason of greenhouse gas 
        emissions in the production of such goods by such 
        manufacturers, approximately equal to the cost imposed by this 
        subtitle on manufacturers of comparable carbon-intensive goods 
        located in the United States.

``SEC. 9923. SENSE OF CONGRESS.

    ``It is the sense of Congress that the United States should work 
proactively under the United Nations Framework Convention on Climate 
Change and in other appropriate fora, to establish binding agreements 
committing all major greenhouse gas emitting countries and countries 
with globally competitive producers of carbon-intensive goods to 
contribute equitably to the reduction of global greenhouse gas 
emissions.''.
    (b) Clerical Amendment.--The table of subtitles for the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
item:

 ``Subtitle L. Auction of Carbon Permits and Distribution of Consumer 
                             Dividends.''.

SEC. 3. DISCLOSURE OF INFORMATION.

    (a) Limited Disclosure of Identity.--Subsection (l) of section 6103 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new paragraph:
            ``(21) Limited disclosure of identity information relating 
        to consumer dividend payments.--
                    ``(A) Department of the treasury.--Individual 
                identity information shall, without written request, be 
                open to inspection by or disclosure to officers and 
                employees of the Department of the Treasury whose 
                official duties require such inspection or disclosure 
                for purposes of section 9912.
                    ``(B) Commissioner of social security.--The 
                Commissioner of Social Security shall, on written 
                request, disclose to officers and employees of the 
                Department of the Treasury individual identity 
                information which has been disclosed to the Social 
                Security Administration as provided by paragraph (1) or 
                (5).
                    ``(C) Restriction on disclosure.--Information 
                disclosed under this paragraph shall be disclosed only 
                for purposes of, and to the extent necessary in, 
                carrying out section 9912.''.
    (b) Conforming Amendments.--Section 6103(p)(3)(A) of the Internal 
Revenue Code of 1986 is amended by striking ``or (18)'' and inserting 
``, (18), or (21)''.

SEC. 4. EFFECTIVE DATE.

    The amendments made by this Act shall take effect on the date of 
the enactment of this Act.
                                 <all>
```