I 

109TH CONGRESS 

2D SESSION H. R. 5049 

To establish a market-based system to regulate greenhouse gas emissions 

and to promote advanced energy research and technology development 

and deployment, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 29, 2006 

Mr. UDALL of New Mexico (for himself and Mr. PETRI) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Science, International Relations, and Education and the Workforce, 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 establish a market-based system to regulate greenhouse 

gas emissions and to promote advanced energy research 

and technology development and deployment, 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 ‘‘Keep America Com5 petitive Global Warming Policy Act of 2006’’. 


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1 SEC. 2. DEFINITIONS. 

2 For purposes of this Act: 

3 (1) ADMINISTRATOR.—The term ‘‘Adminis4 trator’’ means the Administrator of the Environ5 mental Protection Agency. 

6 (2) ALLOWANCE.—The term ‘‘allowance’’ 

7 means a tradeable allowance issued by the Adminis8 trator pursuant to section 3(b), 5(a), or 7(b). 

9 (3) CARBON EQUIVALENT.—With respect to 

10 each greenhouse gas, the term ‘‘carbon equivalent’’ 

11 means the amount of the greenhouse gas that traps 

12 the same amount of heat as one metric ton of car13 bon, as determined by the Administrator. 

14 (4) COVERED FOSSIL FUEL.—The term ‘‘cov15 ered fossil fuel’’ means coal, crude oil, natural gas, 

16 natural gas liquids, refined petroleum products, and 

17 any other fossil fuel that the Administrator deter18 mines appropriate. 

19 (5) DEVELOPING COUNTRIES.—The term ‘‘de20 veloping countries’’ means the countries that are not 

21 listed in Annex I of the United Nations Framework 

22 Convention on Climate Change. 

23 (6) GREENHOUSE GAS.—The term ‘‘greenhouse 

24 gas’’ means carbon dioxide, hydrofluorocarbons, 

25 methane, nitrous oxide, perfluorocarbons, and sulfur 

26 hexafluoride. 


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1 (7) NATURAL GAS.—The term ‘‘natural gas’’ 

2 does not include natural gas liquids. 

3 (8) SEQUESTRATION.—The term ‘‘sequestra4 tion’’ means the capture, recapture, long-term sepa5 ration, isolation, or removal of greenhouse gases 

6 from the atmosphere, including through reforest7 ation, forest preservation, and geological storage. 

8 SEC. 3. ESTABLISHMENT OF SYSTEM OF ALLOWANCES. 

9 (a) REGULATIONS.—The Administrator shall issue 

10 regulations not later than the second January 1 after the 

11 date of enactment of this Act to establish a system for— 

12 (1) issuing, recording, and tracking allowances; 

13 (2) appropriately measuring for purposes of 

14 section 6 the relative amounts of carbon that will be 

15 emitted or produced by given amounts of covered 

16 fossil fuels; and 

17 (3) appropriately measuring given amounts of 

18 greenhouse gases in units of carbon equivalents. 

19 (b) ISSUANCE OF ALLOWANCES.—On the third Janu20 ary 1 after the date of enactment of this Act, and annually 

21 thereafter, the Administrator shall issue a number of al22 lowances equal to the number of allowances that the Ad23 ministrator estimates will be required to be transferred to 

24 the Administrator pursuant to section 6 during the cal25 endar year beginning with that January 1. The AdminisVerDate Aug 31 2005 22:53 Mar 31, 2006 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5049.IH H5049

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1 trator shall base such estimate on the number of allow2 ances that would have been transferred pursuant to sec3 tion 6 had such transfers been required during each of 

4 the 3 full calendar years immediately preceding that Janu5 ary 1. The Administrator shall publish in the Federal Reg6 ister the number of allowances to be issued pursuant to 

7 this subsection not later than July 1 of the calendar year 

8 immediately preceding that January 1. 

9 (c) SALE OR EXCHANGE OF ALLOWANCES.—Any per10 son holding an allowance issued, sold, or exchanged under 

11 this Act may sell or exchange such allowance to any other 

12 person. The sale or exchange of such allowance shall be 

13 recorded in accordance with regulations issued by the Ad14 ministrator. An allowance issued pursuant to subsection 

15 (b), section 5(a), or section 7(b) shall not be sold, ex16 changed, or used to meet the requirements of section 6 

17 after the expiration of the 2-year period beginning on the 

18 date that the allowance is issued. The Administrator shall 

19 maintain a registry of all allowances issued, sold, or ex20 changed under this Act. 

21 (d) SERIAL NUMBERS.—The Administrator shall as22 sign a unique serial number to each allowance issued pur23 suant to subsection (b), section 5(a), and section 7(b), and 

24 shall take such action as may be necessary to prevent the 

25 counterfeiting of allowances. The Administrator shall reVerDate Aug 31 2005 22:53 Mar 31, 2006 Jkt 049200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5049.IH H5049

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1 tire the serial number assigned to an allowance pursuant 

2 to this subsection on the date that the allowance is used 

3 to meet the requirements of section 6. 

4 SEC. 4. ALLOCATION OF ALLOWANCES. 

5 (a) SECRETARY OF ENERGY.—In each year that al6 lowances are issued by the Administrator pursuant to sec7 tion 3(b), the Administrator shall allocate 25 percent of 

8 such allowances to the Secretary of Energy, for use in car9 rying out section 8. 

10 (b) SECRETARY OF STATE.—In each year that allow11 ances are issued by the Administrator pursuant to section 

12 3(b), the Administrator shall allocate 10 percent of such 

13 allowances to the Secretary of State. After consultation 

14 with such agencies as the Secretary of State determines, 

15 the Secretary of State shall use the allowances to— 

16 (1) invest in low-emission and emission-free 

17 policies, technologies, and projects in developing 

18 countries; and 

19 (2) assist developing countries in adopting the 

20 emission reducing policies and programs described in 

21 section 5(b). 

22 (c) ADMINISTRATOR.— 

23 (1) IN GENERAL.—In each year that allowances 

24 are issued by the Administrator pursuant to section 

25 3(b), the Administrator shall retain 35 percent of 


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1 such allowances for distribution under this sub2 section. 

3 (2) RULEMAKING.—The Administrator shall es4 tablish, by rule, a procedure to distribute allowances 

5 without charge to the industry sectors listed in para6 graph (3) in a sufficient amount to offset, but no 

7 more than offset, any expected loss of profits by that 

8 industry sector as a whole, directly attributable to 

9 the enactment of this Act. Within each of the indus10 try sectors listed in paragraph (3), the allowances 

11 shall be distributed without charge to companies 

12 within the respective industry sector based on their 

13 relative historic share of greenhouse gas emissions, 

14 as determined by the Administrator. 

15 (3) INDUSTRY.—Consistent with paragraph (2), 

16 the Administrator shall distribute without charge 

17 not more than 5 percent of the allowances issued by 

18 the Administrator pursuant to section 3(b) each cal19 endar year to each of— 

20 (A) the fossil fuel-fired electric generating 

21 industry; 

22 (B) the petroleum and natural gas indus23 try; 

24 (C) the coal industry; and 


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1 (D) energy-intensive industries, as deter2 mined by the Administrator, and industries that 

3 are required to transfer allowances to the Ad4 ministrator under section 6(b) or (c). 

5 (4) TRANSITION ASSISTANCE.— 

6 (A) IN GENERAL.—The Administrator, in 

7 consultation with the Secretary of Labor, shall 

8 distribute the percentage of allowances de9 scribed in subparagraph (B) each calendar year 

10 to the States. Each State shall receive allow11 ances under this paragraph according to the 

12 proportion of individuals who have lost jobs in 

13 that State in the previous year as a result of 

14 the enactment of this Act as compared to all 

15 the individuals who have lost jobs in all States 

16 the previous year as a result of the enactment 

17 of this Act. Each State shall use the allowances 

18 to make— 

19 (i) grants to individuals who have lost 

20 their jobs as a result of the enactment of 

21 this Act for the purpose of— 

22 (I) providing training, adjust23 ment assistance, and employment 

24 services to such individuals; and 


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1 (II) making income-maintenance 

2 and needs-related payments to such 

3 individuals; and 

4 (ii) grants to local governments that 

5 represent communities that demonstrate 

6 economic losses that are directly attrib7 utable to the enactment of this Act for the 

8 purpose of assisting the communities in at9 tracting new employers or providing essen10 tial local government services. 

11 (B) PERCENTAGE OF ALLOWANCES USED

12 FOR TRANSITION ASSISTANCE.—With respect to 

13 allowances issued in the third full calendar year 

14 beginning after the date of enactment of this 

15 Act, the percentage referred to in subparagraph 

16 (A) shall be 15 percent of the allowances issued 

17 by the Administrator pursuant to section 3(b) 

18 for that year. The percentage shall be reduced 

19 by 1.5 percentage points each calendar year 

20 thereafter. 

21 (5) LOW-INCOME HOME ENERGY ASSISTANCE.— 

22 The Administrator shall distribute 5 percent of the 

23 allowances issued by the Administrator pursuant to 

24 section 3(b) each calendar year to the States. Each 

25 State shall receive allowances under this paragraph 


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1 equal to its share of the total of all individuals re2 ceiving home energy assistance pursuant to the Low3 Income Home Energy Assistance Act of 1981 (42 

4 U.S.C. 8621 et seq.) in the previous year. Each 

5 State shall use the allowances to provide home en6 ergy assistance to such individuals. 

7 (d) SECRETARY OF THE TREASURY.—In each year 

8 that allowances are issued by the Administrator pursuant 

9 to section 3(b), the Administrator shall allocate 25 percent 

10 of such allowances to the Secretary of the Treasury, plus 

11 the percentage not distributed under subparagraph (B) of 

12 subsection (c)(4) pursuant to the percentage reduction de13 scribed in the last sentence of that subparagraph. The 

14 Secretary of the Treasury shall deposit the cash proceeds 

15 from selling the allowances pursuant to section 3(c) in the 

16 Treasury. Allowances that have been allocated or retained 

17 under subsection (a), (b), or (c) but have not been distrib18 uted pursuant to such subsections at the end of the cal19 endar year in which they were issued by the Administrator 

20 shall be transferred, without charge, to the Secretary of 

21 the Treasury for sale pursuant to section 3(c). 

22 SEC. 5. SAFETY VALVE ALLOWANCES. 

23 (a) SAFETY VALVE PRICE.—Beginning on the third 

24 January 1 after the date of enactment of this Act, the 

25 Secretary of the Treasury shall offer for sale an unlimited 


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1 number of allowances at the safety valve price. The allow2 ances sold under this subsection shall be in addition to 

3 the allowances issued pursuant to section 3(b). In the 

4 third full calendar year beginning after the date of enact5 ment of this Act, the safety valve price shall be $25 per 

6 allowance. On January 1 of each calendar year thereafter, 

7 the Secretary of the Treasury shall adjust the safety valve 

8 price by the percentage increase in the Consumer Price 

9 Index for All Urban Consumers (United States city aver10 age) during the 1-year period ending 2 months before the 

11 date of the adjustment plus one percent. 

12 (b) POLICY COMPARABILITY CERTIFICATION.—Be13 ginning in the sixth full calendar year beginning after the 

14 date of enactment of this Act and in subsequent years 

15 thereafter, the Secretary of State shall evaluate whether 

16 the 5 developing countries with the most greenhouse gas 

17 emissions, as determined by the Secretary of State in con18 sultation with the Administrator, have adopted and are 

19 enforcing policies and programs to reduce greenhouse gas 

20 emissions that are comparable to the policies and pro21 grams established pursuant to this Act. Based on the eval22 uation completed during the previous calendar year, the 

23 Secretary of State shall provide certification to the Presi24 dent on the seventh January 1 after the date of enactment 

25 of this Act and annually thereafter if the Secretary finds 


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1 that the 5 developing countries with the most greenhouse 

2 gas emissions have adopted and are enforcing comparable 

3 policies and programs. Not later than 30 days after the 

4 Secretary of State provides such certification, the Presi5 dent shall transmit to Congress an acceptance or rejection 

6 of the Secretary of State’s certification along with a report 

7 documenting substantial evidence that supports the Presi8 dent’s decision. If the Secretary of State provides certifi9 cation pursuant to this subsection and the President ac10 cepts such certification, the Secretary of the Treasury 

11 shall adjust the safety valve price, in addition to the per12 centage increase due to the Consumer Price Index under 

13 subsection (a), by 2 percent, not later than 30 days after 

14 the President accepts such certification. The Secretary of 

15 the Treasury shall not increase the safety valve price 

16 under this subsection during any calendar year in which 

17 the Secretary of State has not provided certification pur18 suant to this subsection or the President has not accepted 

19 such certification. 

20 SEC. 6. ALLOWANCES REQUIRED. 

21 (a) FOSSIL FUELS.— 

22 (1) IMPORTED PETROLEUM FUEL PRODUCTS.— 

23 Except as provided in paragraph (6) and consistent 

24 with regulations issued by the Administrator pursu25 ant to section 3(a), a person shall not import into 


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1 the United States any refined petroleum product 

2 without transferring to the Administrator a number 

3 of allowances equal to the number of metric tons of 

4 carbon that will be emitted or produced from the 

5 amount of refined petroleum product that is im6 ported into the United States by such person. 

7 (2) NATURAL GAS.— 

8 (A) PIPELINES.— 

9 (i) PROHIBITION.—Except as provided 

10 in paragraph (6) and consistent with regu11 lations issued by the Administrator pursu12 ant to section 3(a), an owner or operator 

13 of a natural gas pipeline shall not accept 

14 for transportation in such pipeline any nat15 ural gas without transferring to the Ad16 ministrator a number of allowances equal 

17 to the number of metric tons of carbon 

18 that will be emitted or produced from the 

19 amount of natural gas accepted for trans20 portation by the owner or operator. 

21 (ii) EXCEPTION.—With respect to an 

22 amount of natural gas for which an owner 

23 or operator of a natural gas pipeline or a 

24 natural gas processing plant has trans25 ferred allowances to the Administrator 


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1 pursuant to this paragraph before a subse2 quent owner or operator of a natural gas 

3 pipeline accepts the natural gas for trans4 portation, the subsequent owner or oper5 ator shall not be required to transfer addi6 tional allowances to the Administrator. 

7 (B) PROCESSING PLANTS.— 

8 (i) PROHIBITION.—Except as provided 

9 in paragraph (6) and consistent with regu10 lations issued by the Administrator pursu11 ant to section 3(a), an owner or operator 

12 of a natural gas processing plant shall not 

13 sell or dispose of natural gas or natural 

14 gas liquids without transferring to the Ad15 ministrator a number of allowances equal 

16 to the number of metric tons of carbon 

17 that will be emitted or produced from the 

18 amount of natural gas or natural gas liq19 uids sold or disposed of by the owner or 

20 operator. 

21 (ii) EXCEPTIONS.—With respect to an 

22 amount of natural gas or natural gas liq23 uids for which an owner or operator of a 

24 natural gas processing plant has trans25 ferred allowances to the Administrator 


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1 pursuant to clause (i) before a subsequent 

2 owner or operator of a natural gas proc3 essing plant sells or disposes of the natural 

4 gas or natural gas liquids, the subsequent 

5 owner or operator shall not be required to 

6 transfer additional allowances to the Ad7 ministrator. With respect to an amount of 

8 natural gas for which an owner or operator 

9 of a natural gas pipeline has transferred 

10 allowances to the Administrator pursuant 

11 to subparagraph (A)(i) before an owner of 

12 a natural gas processing plant sells or dis13 poses of the natural gas (including in liq14 uid form), the owner or operator of the 

15 natural gas processing plant shall not be 

16 required to transfer additional allowances 

17 to the Administrator pursuant to this sub18 paragraph. 

19 (3) CRUDE OIL.— 

20 (A) PROHIBITION.—Except as provided in 

21 paragraph (6) and consistent with regulations 

22 issued by the Administrator pursuant to section 

23 3(a), an owner or operator of a refinery shall 

24 not receive crude oil without transferring to the 

25 Administrator a number of allowances equal to 


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1 the number of metric tons of carbon that will 

2 be emitted or produced from the amount of 

3 crude oil that is received by the owner or oper4 ator. 

5 (B) EXCEPTION.—With respect to an 

6 amount of crude oil for which an owner or oper7 ator of a refinery has transferred allowances to 

8 the Administrator pursuant to subparagraph 

9 (A) before a subsequent owner or operator of a 

10 refinery receives the crude oil, the subsequent 

11 owner or operator shall not be required to 

12 transfer additional allowances to the Adminis13 trator. 

14 (4) COAL.— 

15 (A) PREPARATION PLANTS.— 

16 (i) PROHIBITION.—Except as provided 

17 in paragraph (6) and consistent with regu18 lations issued by the Administrator pursu19 ant to section 3(a), an owner or operator 

20 of a coal preparation plant shall not sell or 

21 dispose of coal prepared at such plant 

22 without transferring to the Administrator 

23 a number of allowances equal to the num24 ber of metric tons of carbon that will be 

25 emitted or produced from the amount of 


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1 coal sold or disposed of by the owner or 

2 operator. 

3 (ii) EXCEPTION.—With respect to an 

4 amount of coal for which a person has 

5 transferred allowances to the Adminis6 trator pursuant to this paragraph before a 

7 subsequent owner or operator of a coal 

8 preparation plant sells or disposes of the 

9 coal, the subsequent owner or operator 

10 shall not be required to transfer additional 

11 allowances to the Administrator. 

12 (B) COAL PRODUCERS.— 

13 (i) PROHIBITION.—Except as provided 

14 in paragraph (6) and consistent with regu15 lations issued by the Administrator pursu16 ant to section 3(a), an owner or operator 

17 of a coal mine shall not sell or dispose of 

18 coal without transferring to the Adminis19 trator a number of allowances equal to the 

20 number of metric tons of carbon that will 

21 be emitted or produced from the amount of 

22 coal sold or disposed of by the owner or 

23 operator. 

24 (ii) EXCEPTIONS.—With respect to 

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1 ator of a coal preparation plant who is 

2 subject to the allowance requirement de3 scribed in subparagraph (A)(i), the owner 

4 or operator of a coal mine shall not be re5 quired to transfer allowances to the Ad6 ministrator. With respect to an amount of 

7 coal for which an owner or operator of a 

8 coal mine has transferred allowances to the 

9 Administrator pursuant to this paragraph 

10 before a subsequent owner or operator of 

11 the coal mine sells or disposes of the coal, 

12 the subsequent owner or operator shall not 

13 be required to transfer additional allow14 ances to the Administrator. 

15 (C) IMPORTED COAL.—Except as provided 

16 in paragraph (6) and consistent with regula17 tions issued by the Administrator pursuant to 

18 section 3(a), a person shall not import into the 

19 United States any coal without transferring to 

20 the Administrator a number of allowances equal 

21 to the number of metric tons of carbon that will 

22 be emitted or produced from the amount of coal 

23 that is imported into the United States by such 

24 person. 

25 (5) OTHER FOSSIL FUELS.— 


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1 (A) PROHIBITION.—Except as provided in 

2 paragraph (6) and consistent with regulations 

3 issued by the Administrator pursuant to section 

4 3(a), a person shall not sell or dispose of a cov5 ered fossil fuel that is not referred to in para6 graph (1), (2), (3), or (4) without transferring 

7 to the Administrator a number of allowances 

8 equal to the number of metric tons of carbon 

9 that will be emitted or produced from the 

10 amount of covered fossil fuel sold or disposed of 

11 by such person. 

12 (B) EXCEPTION.—With respect to an 

13 amount of covered fossil fuel for which a person 

14 has transferred allowances to the Administrator 

15 pursuant to subparagraph (A) before a subse16 quent person sells or disposes of the covered 

17 fossil fuel, the subsequent person shall not be 

18 required to transfer additional allowances to the 

19 Administrator. 

20 (6) EXPORT AND NONFUEL USE.—Pursuant to 

21 regulations issued by the Administrator, a person 

22 who— 

23 (A) exports an amount of covered fossil 

24 fuel; or 


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1 (B) sells, disposes of, or otherwise handles 

2 an amount of covered fossil fuel for a nonfuel 

3 purpose that does not result in the emission of 

4 more than a trace amount of a greenhouse gas, 

5 shall not be required to transfer allowances to the 

6 Administrator pursuant to this subsection with re7 spect to that amount of covered fossil fuel. 

8 (b) GREENHOUSE GASES.— 

9 (1) PROHIBITION.—Pursuant to regulations 

10 issued by the Administrator, a person shall not sell 

11 or dispose of an amount of greenhouse gas other 

12 than carbon dioxide in a manner that may result in 

13 the release of such greenhouse gas in the atmos14 phere without transferring to the Administrator a 

15 number of allowances equal to the amount of green16 house gas sold or disposed of by such person, meas17 ured in units of carbon equivalents. 

18 (2) EXCEPTION.—With respect to an amount of 

19 greenhouse gas for which a person has transferred 

20 allowances to the Administrator pursuant to para21 graph (1) before a subsequent person sells or dis22 poses of the greenhouse gas, the subsequent person 

23 shall not be required to transfer additional allow24 ances to the Administrator. 


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1 (c) AGRICULTURAL, INDUSTRIAL, AND MANUFAC2 TURING PROCESSES.— 

3 (1) PROHIBITION.—A person shall not sell or 

4 dispose of any product processed through an agricul5 tural, industrial, or manufacturing process that 

6 emits a greenhouse gas without transferring to the 

7 Administrator a number of allowances equal to the 

8 amount of greenhouse gas emitted in the processing 

9 of the amount of such product sold or disposed of 

10 by such person, measured in units of carbon equiva11 lents. 

12 (2) EXCEPTIONS.—With respect to an amount 

13 of greenhouse gas emitted in the agricultural, indus14 trial, or manufacturing processing of a product for 

15 which a person has transferred allowances to the 

16 Administrator pursuant to paragraph (1) or sub17 section (b)(1) before a subsequent person sells or 

18 disposes of the product processed through the agri19 cultural, industrial, or manufacturing process, the 

20 subsequent person shall not be required to transfer 

21 additional allowances to the Administrator. With re22 spect to an amount of greenhouse gas emitted for 

23 which a person has transferred allowances to the 

24 Administrator pursuant to subsection (a) before a 

25 subsequent person sells or disposes of a product 


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1 processed through the agricultural, industrial, or 

2 manufacturing process that emitted such amount of 

3 greenhouse gas, the subsequent person shall not be 

4 required to transfer additional allowances to the Ad5 ministrator. 

6 (d) EXEMPTION.— 

7 (1) IN GENERAL.—If the Administrator deter8 mines, after public notice and comment, that it is 

9 not feasible to measure or estimate the number of 

10 allowances that a person is required to transfer to 

11 the Administrator pursuant to subsection (b) or (c), 

12 the Administrator may grant an exemption only with 

13 respect to the greenhouse gas or product processed 

14 through an agricultural, industrial, or manufac15 turing process that emits greenhouse gases for which 

16 it is not feasible to measure or estimate the number 

17 of allowances required. The Administrator shall re18 voke such exemption at any time if the Adminis19 trator determines that it is feasible to measure or 

20 estimate the number of allowances required. 

21 (2) METHANE FROM ANIMALS.—The Adminis22 trator shall grant an exemption under this sub23 section for the sale or disposal of methane from ani24 mals until such time that the Administrator deter25 mines, after notice and opportunity to be heard, that 


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1 it is feasible to measure or estimate the number of 

2 allowances that a person is required to transfer to 

3 the Administrator pursuant to subsection (b) with 

4 respect to the amount of methane from animals sold 

5 or disposed of by such person. 

6 (3) REDUCTION IN NUMBER OF ALLOW7 ANCES.—In accordance with regulations issued by 

8 the Administrator, the Administrator shall reduce 

9 the total number of allowances issued pursuant to 

10 section 3(b) by an amount that is proportional to 

11 the number of exemptions granted under paragraphs 

12 (1) and (2) of this subsection. If the Administrator 

13 revokes an exemption granted under paragraph (1) 

14 or (2), the Administrator shall readjust the total 

15 number of allowances issued pursuant to section 

16 3(b) for the calendar year following the year that 

17 the exemption is revoked. 

18 (4) REDUCTION OF GREENHOUSE GAS EMIS19 SIONS.—If the Administrator grants an exemption 

20 under paragraph (1) to a person otherwise required 

21 to transfer allowances to the Administrator pursuant 

22 to subsection (c), the Administrator shall encourage 

23 the reduction of greenhouse gas emissions from the 

24 agricultural, industrial, or manufacturing process for 


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1 which the exemption was granted on a best practices 

2 basis until the exemption is revoked. 

3 (e) PENALTIES.— A person who does not transfer the 

4 required number of allowances to the Administrator pur5 suant to this Act shall be liable to the Administrator a 

6 civil penalty. The civil penalty assessed by the Adminis7 trator shall be equal to three times the market value of 

8 the number of allowances that the person failed to transfer 

9 to the Administrator for each day the person has so failed 

10 to transfer. 

11 (f) PASS THROUGH OF COSTS.—Any Federal, State, 

12 or local authority with ratemaking regulatory authority 

13 over any entity required to submit an allowance under this 

14 Act, or any entity that the cost of that allowance is passed 

15 on to, shall allow such entity to recover the full market 

16 value of such allowances for ratemaking purposes. 

17 (g) EFFECTIVE DATE.—This section shall take effect 

18 on the third January 1 after the date of enactment of this 

19 Act. 

20 SEC. 7. SEQUESTRATION. 

21 (a) SEQUESTRATION PROJECTS.—The Adminis22 trator, in coordination with the Secretary of Agriculture 

23 and the Secretary of Energy, shall review proposals for 

24 domestic sequestration projects and provide approval, for 

25 purposes of subsection (b), to projects that— 


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1 (1) will result in greenhouse gas emission re2 ductions that would not occur in the absence of the 

3 project; and 

4 (2) provide for the sequestration of greenhouse 

5 gases in a manner that can be accurately and peri6 odically measured, monitored, and reported in a 

7 cost-effective manner. 

8 (b) ALLOWANCES.—The Administrator shall issue to 

9 the person responsible for submitting a proposal that is 

10 approved by the Administrator under subsection (a) a 

11 number of allowances equal to the amount of greenhouse 

12 gas, measured in units of carbon equivalents, that the per13 son has sequestered. The allowances issued pursuant to 

14 this subsection shall be in addition to the allowances 

15 issued by the Administrator pursuant to section 3(b). 

16 SEC. 8. ADVANCED RESEARCH PROJECTS AGENCY-ENERGY. 

17 (a) ESTABLISHMENT.— 

18 (1) IN GENERAL.—The Secretary of Energy 

19 shall establish in the Department of Energy the Ad20 vanced Research Projects Agency-Energy (referred 

21 to in this section as ‘‘ARPA–E’’), to be headed by 

22 a Director who shall be appointed by, and report to, 

23 the Secretary. 

24 (2) QUALIFICATIONS.—The Director shall be an 

25 individual with— 


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1 (A) an advanced education degree in en2 ergy technology; and 

3 (B) substantial commercial research and 

4 technology development and deployment experi5 ence. 

6 (b) MISSION.—The mission of ARPA–E is to imple7 ment a radically innovative advanced basic and applied en8 ergy research and technology development and deployment 

9 program in order to increase national security, improve 

10 homeland security, reduce greenhouse gas emissions, im11 prove our balance of payments, and develop alternative en12 ergy sources and improve the efficiency of existing energy 

13 sources, by sponsoring a diverse portfolio of cutting-edge, 

14 high-risk, high-payoff research and development and de15 ployment projects. 

16 (c) PERSONNEL.—In hiring personnel for ARPA–E, 

17 the Secretary shall have the hiring and management au18 thorities described in section 1101 of the Strom Thur19 mond National Defense Authorization Act for Fiscal Year 

20 1999 (Public Law 105–261; 5 U.S.C. 3104 note). 

21 (d) TRANSACTIONS OTHER THAN CONTRACTS AND

22 GRANTS.—To carry out projects under this section, the 

23 Director shall have the authority to enter into transactions 

24 provided under section 646(g) of the Department of En25 ergy Organization Act (42 U.S.C. 7256(g)). 


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•HR 5049 IH 

1 (e) PRIZES FOR ADVANCED TECHNOLOGY ACHIEVE2 MENTS.— 

3 (1) IN GENERAL.—The Director may carry out 

4 a program to award cash prizes in recognition of 

5 outstanding achievements to advance the mission de6 scribed in subsection (b). 

7 (2) COMPETITION REQUIREMENTS.—In car8 rying out this subsection, the Director shall— 

9 (A) use a competitive process for the selec10 tion of recipients of cash prizes; and 

11 (B) conduct widely-advertised solicitation 

12 of submissions. 

13 (3) MAXIMUM AMOUNT FOR ALL CASH

14 PRIZES.—The total amount of all cash prizes award15 ed for a fiscal year under this subsection may not 

16 exceed $50,000,000. 

17 (4) MAXIMUM AMOUNT OF INDIVIDUAL CASH

18 PRIZES.—The amount of an individual cash prize 

19 awarded under this subsection may not exceed 

20 $10,000,000 unless the amount of the award is ap21 proved by the Secretary of Energy. 

22 (f) ANNUAL REPORTS.—As soon as practicable after 

23 the end of each fiscal year, the Director shall submit to 

24 the Committee on Energy and Natural Resources of the 

25 Senate and the Committee on Energy and Commerce and 


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27 

•HR 5049 IH 

1 the Committee on Science of the House of Representatives 

2 a report on the progress, challenges, future milestones, 

3 and strategic plan of ARPA–E, including— 

4 (1) a description of, and rationale for, any 

5 changes in the strategic plan; 

6 (2) the adequacy of human and financial re7 sources necessary to achieve the mission described in 

8 subsection (b); and 

9 (3) in the case of cash prizes awarded under 

10 subsection (e), a description of— 

11 (A) the applications of the research, tech12 nology, or prototypes for which prizes were 

13 awarded; 

14 (B) the total amount of the prizes that 

15 were awarded; 

16 (C) the methods used for solicitation and 

17 evaluation of submissions and an assessment of 

18 the effectiveness of those methods; and 

19 (D) recommendations to improve the prize 

20 program. 

Æ 


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