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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 317 Introduced in Senate (IS)]

110th CONGRESS
  1st Session
                                 S. 317

   To amend the Clean Air Act to establish a program to regulate the 
         emission of greenhouse gases from electric utilities.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            January 17, 2007

 Mrs. Feinstein (for herself and Mr. Carper) introduced the following 
bill; which was read twice and referred to the Committee on Environment 
                            and Public Works

_______________________________________________________________________

                                 A BILL

 
   To amend the Clean Air Act to establish a program to regulate the 
         emission of greenhouse gases from electric utilities.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Electric Utility 
Cap and Trade Act of 2007''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                     TITLE I--GLOBAL CLIMATE CHANGE

Sec. 101. Global climate change.
                   ``TITLE VII--GLOBAL CLIMATE CHANGE

        ``Sec. 701. Definitions.
     ``Subtitle A--Stopping and Reversing Greenhouse Gas Emissions

        ``Sec. 711. Regulations; greenhouse gas tonnage limitation.
        ``Sec. 712. Scientific review of the safe climate level.
        ``Sec. 713. Required review of emission reductions needed to 
                            maintain the safe climate level.
        ``Sec. 714. Distribution of allowances between auctions and 
                            allocations; nature of allowances.
        ``Sec. 715. Auction of allowances.
        ``Sec. 716. Allocation of allowances.
        ``Sec. 717. Climate Action Trust Fund.
        ``Sec. 718. Early reduction credits.
        ``Sec. 719. Recognition and use of international credits.
        ``Sec. 720. Avoiding significant economic harm.
        ``Sec. 721. Use and transfer of credits.
        ``Sec. 722. Compliance and enforcement.
                      ``Subtitle B--Offset Credits

        ``Sec. 731. Outreach initiative on revenue enhancement for 
                            agricultural producers.
        ``Sec. 732. Offset measurement for agricultural, forestry, 
                            wetlands, and other land use-related 
                            sequestration projects.
        ``Sec. 733. Categories of agricultural offset practices.
        ``Sec. 734. Offset credits from forest management, grazing 
                            management, and wetlands management.
        ``Sec. 735. Offset credits from the avoided conversion of 
                            forested land or wetland.
        ``Sec. 736. Offset credits from greenhouse gas emissions 
                            reduction projects.
        ``Sec. 737. Borrowing at program start-up based on contracts to 
                            purchase offset credits.
        ``Sec. 738. Review and correction of accounting for offset 
                            credits.
              ``Subtitle C--National Registry for Credits

        ``Sec. 741. Establishment and operation of national registry.
        ``Sec. 742. Monitoring and reporting.
             TITLE II--CLIMATE CHANGE RESEARCH INITIATIVES

Sec. 201. Research grants through National Science Foundation.
Sec. 202. Abrupt climate change research.
Sec. 203. Development of new measurement technologies.
Sec. 204. Technology development and diffusion.
Sec. 205. Public land.
Sec. 206. Sea level rise from polar ice sheet melting.

                     TITLE I--GLOBAL CLIMATE CHANGE

SEC. 101. GLOBAL CLIMATE CHANGE.

    (a) In General.--The Clean Air Act (42 U.S.C. 7401 et seq.) is 
amended by adding at the end the following:

                   ``TITLE VII--GLOBAL CLIMATE CHANGE

``SEC. 701. DEFINITIONS.

    ``In this title:
            ``(1) Affected unit.--
                    ``(A) In general.--The term `affected unit' means 
                an electric generating facility that--
                            ``(i) has a nameplate capacity greater than 
                        25 megawatts;
                            ``(ii) combusts greenhouse gas-emitting 
                        fuels; and
                            ``(iii) generates electricity for sale.
                    ``(B) Inclusions.--The term `affected unit' 
                includes--
                            ``(i) a cogeneration facility; and
                            ``(ii) a facility owned or operated by any 
                        instrumentality of--
                                    ``(I) the Federal Government; or
                                    ``(II) any State, local, or tribal 
                                government.
            ``(2) Afforestation.--The term `afforestation' means the 
        conversion to a forested condition of land that has been in a 
        nonforested condition for at least 15 years.
            ``(3) Allocation.--The term `allocation', with respect to 
        an allowance, means the issuance of an allowance directly to 
        covered units, at no cost, under this title.
            ``(4) Allowance.--The term `allowance' means an 
        authorization under this title to emit 1 metric ton of carbon 
        dioxide (or a carbon dioxide equivalent), as allocated to a 
        covered unit pursuant to section 716.
            ``(5) Carbon dioxide equivalent.--The term `carbon dioxide 
        equivalent' means, with respect to a greenhouse gas, the 
        quantity of the greenhouse gas that makes the same contribution 
        to global warming as 1 metric ton of carbon dioxide, as 
        determined by the Administrator.
            ``(6) Cogeneration facility.--The term `cogeneration 
        facility' means a facility that--
                    ``(A) cogenerates steam and electricity; and
                    ``(B) supplies, on a net annual basis, to the 
                electric power grid--
                            ``(i) more than \1/3\ of the potential 
                        electric output capacity of the facility; and
                            ``(ii) more than 25 megawatts of electrical 
                        output from the facility.
            ``(7) Covered unit.--The term `covered unit' means--
                    ``(A) an affected unit;
                    ``(B) a nuclear generating unit (including a 
                facility owned or operated by any instrumentality of 
                the Federal Government or of any State, local, or 
                tribal government), but only to the extent of 
                incremental nuclear generation of the unit; and
                    ``(C) a renewable energy unit (including a facility 
                owned or operated by any instrumentality of the Federal 
                Government or of any State, local, or tribal 
                government).
            ``(8) Credit.--
                    ``(A) In general.--The term `credit' means an 
                authorization under this title to emit greenhouse gases 
                equivalent to 1 metric ton of carbon dioxide.
                    ``(B) Inclusions.--The term `credit' includes--
                            ``(i) an allowance;
                            ``(ii) an offset credit;
                            ``(iii) an early reduction credit; or
                            ``(iv) an international credit.
            ``(9) Early reduction credit.--The term `early reduction 
        credit' means a credit issued under section 718 for a reduction 
        in the quantity of emissions or an increase in sequestration 
        equivalent to 1 metric ton of carbon dioxide.
            ``(10) Fund.--The term `Fund' means the Climate Action 
        Trust Fund established by section 717(a)(1).
            ``(11) Greenhouse gas.--The term `greenhouse gas' means--
                    ``(A) carbon dioxide;
                    ``(B) methane;
                    ``(C) nitrous oxide;
                    ``(D) hydrofluorocarbons;
                    ``(E) perfluorocarbons; and
                    ``(F) sulfur hexafluoride.
            ``(12) Greenhouse gas authorized account representative.--
        The term `greenhouse gas authorized account representative' 
        means, for a covered unit, an individual who is authorized by 
        the owner and operator of the covered unit to represent and 
        legally bind the owner and operator in matters pertaining to 
        this title.
            ``(13) Greenhouse gas-emitting fuel.--
                    ``(A) In general.--The term `greenhouse gas-
                emitting fuel' means any fuel that produces a 
                greenhouse gas as a combustion product.
                    ``(B) Inclusions.--The term `greenhouse gas-
                emitting fuel' includes--
                            ``(i) fossil fuels;
                            ``(ii) municipal waste;
                            ``(iii) industrial waste;
                            ``(iv) agricultural waste; and
                            ``(v) biomass that is not grown using 
                        sustainable techniques.
                    ``(C) Exclusion.--The term `greenhouse gas-emitting 
                fuel' does not include biomass that is grown using 
                sustainable techniques.
            ``(14) Incremental nuclear generation.--The term 
        `incremental nuclear generation' means, as determined by the 
        Administrator and measured in megawatt hours, the difference 
        between--
                    ``(A) the quantity of electricity generated by a 
                nuclear generating unit in a calendar year; and
                    ``(B) the quantity of electricity generated by the 
                nuclear generating unit in calendar year 1990.
            ``(15) Industry sector.--The term `industry sector' means 
        any sector of the economy of a country (including, where 
        applicable, the forestry sector) that is responsible for 
        significant quantities of greenhouse gas emissions.
            ``(16) International credit.--The term `international 
        credit' means a credit recognized for a reduction in the 
        quantity of emissions or an increase in sequestration 
        equivalent to 1 metric ton of carbon dioxide that--
                    ``(A) arises from activities outside the United 
                States; and
                    ``(B) is authorized for use under section 719.
            ``(17) Invasive species.--The term `invasive species' means 
        a species (including pathogens, seeds, spores, or any other 
        biological material relating to a species) the introduction of 
        which causes or is likely to cause economic or environmental 
        harm or harm to human health.
            ``(18) Land-grant colleges and universities.--The term 
        `land-grant colleges and universities' has the meaning given 
        the term in section 1404 of the National Agricultural Research, 
        Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3103).
            ``(19) Leakage.--The term `leakage' means an increase in 
        greenhouse gas emissions or a decrease in sequestration of 
        greenhouse gases that is--
                    ``(A) outside the area of a project; and
                    ``(B) attributable to the project.
            ``(20) Native plant.--The term `native plant' means an 
        indigenous, terrestrial, or aquatic plant species that evolved 
        naturally in an ecosystem.
            ``(21) New affected unit.--The term `new affected unit' 
        means an affected unit that has operated for not more than 3 
        years.
            ``(22) New covered unit.--The term `new covered unit' means 
        a covered unit that has operated for not more than 3 years.
            ``(23) Noxious weed.--The term `noxious weed' means a plant 
        species that is--
                    ``(A) characterized by being--
                            ``(i) aggressive and difficult to manage;
                            ``(ii) poisonous, toxic, parasitic, or a 
                        carrier or host of insects or disease 
                        representing a serious threat to native species 
                        or crops; or
                            ``(iii) nonnative to, new to, or not common 
                        to, the United States (or a region of the 
                        United States); or
                    ``(B) otherwise designated as a noxious weed by the 
                Secretary of Agriculture or an appropriate State 
                official.
            ``(24) Nuclear generating unit.--The term `nuclear 
        generating unit' means an electric generating facility that 
        uses nuclear energy to generate electricity for sale.
            ``(25) Offset credit.--The term `offset credit' means a 
        credit issued for an offset project pursuant to subtitle B 
        certifying a reduction in the quantity of emissions or an 
        increase in sequestration equivalent to 1 metric ton of carbon 
        dioxide.
            ``(26) Offset practice.--The term `offset practice' means a 
        practice that--
                    ``(A) reduces greenhouse gas emissions or increases 
                sequestration other than by reducing the combustion of 
                greenhouse gas-emitting fuel at an affected unit; and
                    ``(B) may be eligible to create an offset credit 
                under this title.
            ``(27) Offset project.--The term `offset project' means a 
        project that reduces greenhouse gas emissions or increases 
        sequestration of carbon dioxide or a carbon dioxide equivalent 
        by a method other than reduction of combustion of greenhouse 
        gas-emitting fuel at an affected unit.
            ``(28) Panel.--The term `Panel' means the Climate Science 
        Advisory Panel established by section 712(b)(1).
            ``(29) Plant material.--The term `plant material' means--
                    ``(A) a seed;
                    ``(B) a part of a plant; or
                    ``(C) a whole plant.
            ``(30) Renewable energy.--The term `renewable energy' means 
        electricity generated from--
                    ``(A) wind;
                    ``(B) organic waste (excluding incinerated 
                municipal solid waste);
                    ``(C) biomass (including anaerobic digestion from 
                farm systems and landfill gas recovery); or
                    ``(D) a hydroelectric, geothermal, solar thermal, 
                photovoltaic, tidal, wave, or other nonfossil fuel, 
                nonnuclear source.
            ``(31) Renewable energy unit.--The term `renewable energy 
        unit' means an electric generating unit that exclusively uses 
        renewable energy to generate electricity for sale.
            ``(32) Restoration.--
                    ``(A) In general.--The term `restoration' means 
                assisting the recovery of an ecosystem that has been 
                degraded, damaged, or destroyed.
                    ``(B) Inclusion.--The term `restoration' includes 
                the reestablishment in an ecosystem of preexisting 
                biotic integrity with respect to species composition 
                and community structure.
            ``(33) Sequestration.--The term `sequestration' means the 
        separation, isolation, or removal of greenhouse gases from the 
        atmosphere.
            ``(34) Sequestration flow.--The term `sequestration flow' 
        means the uptake of greenhouse gases each year from 
        sequestration practices, as calculated under section 732.
            ``(35) Sustainable technique.--The term `sustainable 
        technique' means an agricultural, forestry, or animal husbandry 
        technique that does not result in--
                    ``(A) a long-term net depletion of natural 
                resources; or
                    ``(B) a net emission of greenhouse gas during the 
                lifecycle of biomass production, harvest, processing, 
                and consumption.
            ``(36) UNFCCC.--The term `UNFCCC' means the United Nations 
        Framework Convention on Climate Change, done at New York on May 
        9, 1992.

     ``Subtitle A--Stopping and Reversing Greenhouse Gas Emissions

``SEC. 711. REGULATIONS; GREENHOUSE GAS TONNAGE LIMITATION.

    ``(a) Regulations.--Not later than 18 months after the date of 
enactment of this title, the Administrator shall promulgate regulations 
to establish an allowance trading program to address emissions of 
greenhouse gases from affected units in the United States.
    ``(b) Greenhouse Gas Tonnage Limitation.--Beginning in calendar 
year 2011, the annual tonnage limitation for the aggregate quantity of 
emissions of greenhouse gases from affected units in the United States 
shall be equal to--
            ``(1) for each of calendar years 2011 through 2014, the 
        aggregate quantity of emissions emitted from affected units in 
        calendar year 2006, as determined by the Administrator based on 
        certified and quality-assured continuous emissions monitoring 
        data for greenhouse gases, or data that the Administrator 
        determines to be of similar reliability for affected units 
        without continuous monitoring systems, reported to the 
        Administrator by affected units in accordance with this 
        subtitle;
            ``(2) for calendar year 2015, the aggregate quantity of 
        emissions emitted from affected units in calendar year 2001, as 
        determined by the Administrator based on certified and quality-
        assured continuous emissions monitoring data for greenhouse 
        gases, or data that the Administrator determines to be of 
        similar reliability for affected units without continuous 
        monitoring systems, reported to the Administrator by affected 
        units in accordance with this subtitle;
            ``(3) for each of calendar years 2016 through 2019, the 
        aggregate quantity of emissions emitted from affected units 
        during the calendar year that is 1 percent less than the 
        aggregate quantity of emissions from affected units allowed 
        pursuant to this section during the preceding calendar year; 
        and
            ``(4) for calendar year 2020 and each calendar year 
        thereafter, the aggregate quantity of emissions emitted during 
        the calendar year that is 1.5 percent less than the aggregate 
        quantity of emissions from affected units allowed pursuant to 
        this section during the preceding calendar year, except as 
        modified by the Administrator pursuant to section 713.

``SEC. 712. SCIENTIFIC REVIEW OF THE SAFE CLIMATE LEVEL.

    ``(a) Definition and Objective of Maintaining the Safe Climate 
Level.--
            ``(1) Finding.--Congress finds that ratification by the 
        Senate in 1992 of the UNFCCC, commitments which were affirmed 
        by the President in 2002, established for the United States an 
        objective of `stabilization of greenhouse gas concentrations in 
        the atmosphere at a level that would prevent dangerous 
        anthropogenic interference with the climate system'.
            ``(2) Definition of safe climate level.--In this section, 
        the term `safe climate level' means the climate level referred 
        to in paragraph (1).
    ``(b) Climate Science Advisory Panel.--
            ``(1) Establishment.--Not later than 270 days after the 
        date of enactment of this title, the Administrator shall 
        establish an advisory panel, to be known as the `Climate 
        Science Advisory Panel'.
            ``(2) Duties.--The Panel shall--
                    ``(A) inform Congress and the Administrator of the 
                state of climate science;
                    ``(B) not later than December 31, 2011, and not 
                less frequently than every 4 years thereafter, issue a 
                report that is endorsed by at least 7 members of the 
                Panel that describes recommendations for the 
                Administrator, based on the best available information 
                in the fields of climate science, including reports 
                from the Intergovernmental Panel on Climate Change, 
                relating to--
                            ``(i) the specific concentration, in parts 
                        per million, of all greenhouse gases in carbon 
                        dioxide equivalents at or below which 
                        constitutes the safe climate level; and
                            ``(ii) the projected timeframe for 
                        achieving the safe climate level.
            ``(3) Composition.--
                    ``(A) In general.--The Panel shall be composed of 8 
                climate scientists and 3 former Federal officials, as 
                described in subparagraphs (B) through (D).
                    ``(B) Climate scientists.--Not later than 270 days 
                after the date of enactment of this title, the 
                President of the National Academy of Sciences shall 
                appoint to serve on the Panel 8 climate scientists from 
                among individuals who--
                            ``(i) have earned doctorate degrees;
                            ``(ii) have performed research in physical, 
                        biological, or social sciences, mathematics, 
                        economics, or related fields, with a particular 
                        focus on or link to 1 or more aspects of 
                        climate science;
                            ``(iii) have records of peer-reviewed 
                        publications that include--
                                    ``(I) publications in main-stream, 
                                high-quality scientific journals (such 
                                as journals associated with respected 
                                scientific societies or those with a 
                                high impact factor, as determined by 
                                the Institute for Scientific 
                                Information);
                                    ``(II) recent publications relating 
                                to earth systems, and particularly 
                                relating to the climate system; and
                                    ``(III) a high publication rate, 
                                typically at least 2 or 3 papers per 
                                year; and
                            ``(iv) have participated in high-level 
                        committees, such as those formed by the 
                        National Academy of Sciences or by leading 
                        scientific societies.
                    ``(C) Restriction.--A majority of climate 
                scientists appointed to the Panel under subparagraph 
                (B) shall be participating, as of the date of 
                appointment to the Panel, in active research in the 
                physical or biological sciences, with a particular 
                focus on or link to 1 or more aspects of climate 
                science.
                    ``(D) Federal officials.--
                            ``(i) In general.--Subject to clause (ii), 
                        the Administrator shall appoint as members of 
                        the Panel, the longest-serving former 
                        Administrators of the Environmental Protection 
                        Agency for each of the 3 most recent former 
                        Presidents.
                            ``(ii) Timing.--The 3 most recent former 
                        Presidents described in clause (i) shall be 
                        identified as of the deadline for appointments 
                        to the Panel under subparagraph (B) or (E)(ii), 
                        whichever is applicable.
                            ``(iii) Substitutes.--If a former 
                        Administrator described in clause (i) declines 
                        appointment, or is unable to serve, as a member 
                        of the Panel, the Administrator shall appoint 
                        in place of the former Administrator--
                                    ``(I) the longest-serving former 
                                Administrator for the applicable 
                                President who agrees to serve; or
                                    ``(II) if no individual described 
                                in subclause (I) accepts appointment as 
                                a member of the Panel, the longest-
                                serving Assistant Administrator for Air 
                                and Radiation for the applicable 
                                President who agrees to serve.
                    ``(E) Terms of service and vacancies.--
                            ``(i) Terms.--The initial term of a member 
                        of the Panel shall be--
                                    ``(I) to the maximum extent 
                                practicable, the period covered by, and 
                                extending through the date of issuance 
                                of, each report under paragraph (2)(B); 
                                but
                                    ``(II) not longer than 4 years.
                            ``(ii) Subsequent panels and reports.--On 
                        the issuance of each report under paragraph 
                        (2)(B)--
                                    ``(I) the Panel that submitted the 
                                report shall terminate; and
                                    ``(II)(aa) pursuant to 
                                subparagraphs (B) and (C), the 
                                President of the National Academy of 
                                Sciences shall appoint climate 
                                scientists (including at least 3 
                                climate scientists who served as 
                                members of the preceding Panel) to 
                                serve as members of a new Panel by not 
                                later than 15 months after the deadline 
                                for issuance of the report under 
                                paragraph (2)(B); and
                                    ``(bb) pursuant to subparagraph 
                                (D), the Administrator shall appoint 3 
                                Federal officials as members of the new 
                                Panel by the deadline described in item 
                                (aa).
                            ``(iii) Vacancies.--Vacancies in the 
                        membership of the Panel--
                                    ``(I) shall not affect the power of 
                                the remaining members to execute the 
                                functions of the Panel; and
                                    ``(II) shall be filled in the same 
                                manner in which the original 
                                appointment was made.
                    ``(F) Chairperson and vice chairperson.--The Panel 
                shall elect a Chairperson and Vice Chairperson as soon 
                as practicable.
                    ``(G) Compensation of members.--A member of the 
                Panel 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 Panel.
                    ``(H) Travel expenses.--A member of the Panel shall 
                be allowed travel expenses, including per diem in lieu 
                of subsistence, at rates authorized for an employee of 
                an agency under subchapter I of chapter 57 of title 5, 
                United States Code, while away from the home or regular 
                place of business of the member in the performance of 
                the duties of the Panel.
            ``(4) Staff.--
                    ``(A) In general.--The Chairperson of the Panel 
                may, without regard to the civil service laws 
                (including regulations), appoint and terminate an 
                executive director and such other additional personnel 
                as are necessary to enable the Panel to perform the 
                duties of the Panel.
                    ``(B) Confirmation of executive director.--The 
                employment of an executive director shall be subject to 
                confirmation by the Panel.
                    ``(C) Compensation.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the Chairperson of the Panel may 
                        fix the compensation of the executive director 
                        and other personnel without regard to the 
                        provisions of chapter 51 and subchapter III of 
                        chapter 53 of title 5, United States Code, 
                        relating to classification of positions and 
                        General Schedule pay rates.
                            ``(ii) Exception.--The rate of pay for the 
                        executive director and other personnel shall 
                        not exceed the rate payable for level V of the 
                        Executive Schedule under section 5316 of title 
                        5, United States Code.
                    ``(D) Detail of federal government employees.--
                            ``(i) In general.--An employee of the 
                        Federal Government may be detailed to the staff 
                        of the Panel without reimbursement.
                            ``(ii) Treatment of detailees.--The detail 
                        of the employee shall be without interruption 
                        or loss of civil service status or privilege.
                    ``(E) Procurement of temporary and intermittent 
                services.--The Chairperson or executive director of the 
                Panel may procure temporary and intermittent services 
                in accordance with section 3109(b) of title 5, United 
                States Code, at rates for individuals that do not 
                exceed the daily equivalent of the annual rate of basic 
                pay prescribed for level V of the Executive Schedule 
                under section 5316 of that title.
            ``(5) Hearings.--The Panel may hold such hearings, meet and 
        act at such times and places, take such testimony, and receive 
        such evidence as the Panel considers advisable to carry out 
        this section.
            ``(6) Information from federal agencies.--
                    ``(A) In general.--The Panel may secure directly 
                from a Federal agency such information as the Panel 
                considers necessary to carry out this section.
                    ``(B) Provision of information.--On request of the 
                Chairperson of the Panel, the head of the agency shall 
                provide the information to the Panel.
            ``(7) Postal services.--The Panel may use the United States 
        mail in the same manner and under the same conditions as other 
        agencies of the Federal Government.

``SEC. 713. REQUIRED REVIEW OF EMISSION REDUCTIONS NEEDED TO MAINTAIN 
              THE SAFE CLIMATE LEVEL.

    ``(a) Review and Determination Regarding Reduction Rate.--Not later 
than December 31, 2015, the Administrator, after providing public 
notice and opportunity to comment, shall promulgate a final rule 
pursuant to which the Administrator shall review the reduction rate for 
greenhouse gas emissions required under section 711(b)(4) and 
determine--
            ``(1) whether to--
                    ``(A) accept the recommendations of the Panel under 
                section 712(b)(2)(B) regarding the safe climate level 
                and the timeframe for achieving the safe climate level; 
                or
                    ``(B) establish a different safe climate level or 
                timeframe, together with a detailed explanation of the 
                justification of the Administrator for rejection of the 
                recommendations of the Panel; and
            ``(2) whether, in order to achieve the safe climate level 
        within the timeframe described in paragraph (1), the reduction 
        rate under section 711(b)(4) is most accurately characterized 
        as requiring--
                    ``(A) the appropriate level of emission reductions;
                    ``(B) lesser emission reductions than are 
                necessary; or
                    ``(C) greater emission reductions than are 
                necessary.
    ``(b) Modification of Reduction Rate.--
            ``(1) In general.--If the Administrator makes a 
        determination described in subparagraph (B) or (C) of 
        subsection (a)(2), the final rule promulgated pursuant to 
        subsection (a) shall establish a required level of emissions 
        reductions for each calendar year, beginning with calendar year 
        2020, based on the considerations described in paragraph (2).
            ``(2) Considerations.--
                    ``(A) Primary consideration.--In establishing the 
                required level of emission reductions pursuant to 
                paragraph (1), the Administrator shall take into 
                consideration primarily the emission reductions 
                necessary to stabilize atmospheric greenhouse gas 
                concentrations at the safe climate level within the 
                timeframe specified under section 712(b)(2)(B).
                    ``(B) Secondary considerations.--In establishing 
                the required level of emission reductions pursuant to 
                paragraph (1), in addition to the primary consideration 
                described in paragraph (1), the Administrator shall 
                take into consideration--
                            ``(i) technological capability to reduce 
                        greenhouse gas emissions;
                            ``(ii) the progress that foreign countries 
                        have made toward reducing their greenhouse gas 
                        emissions;
                            ``(iii) the economic impacts within the 
                        United States of implementing this subtitle, 
                        including impacts on the major emitting 
                        sectors; and
                            ``(iv) the economic impacts within the 
                        United States of inadequate action.
    ``(c) Enforcement Provision.--
            ``(1) In general.--If the Administrator fails to meet a 
        deadline for promulgation of any regulation under subsection 
        (a), the Administrator shall withhold from allocation to 
        covered units that would otherwise be entitled to an allocation 
        of allowances under this subtitle a total of 10 percent of the 
        allowances for each covered unit for each year after the 
        deadline until the Administrator promulgates the applicable 
        regulation.
            ``(2) Return of allowances.--On promulgation of a delayed 
        regulation described in paragraph (1), the Administrator shall 
        distribute any allowances withheld under that paragraph--
                    ``(A) among the covered units from which the 
                allowances were withheld; and
                    ``(B) in accordance with the applicable formula 
                under section 716.
    ``(d) Subsequent Rulemakings.--
            ``(1) In general.--Not later than December 31, 2019, and 
        every 4 years thereafter, the Administrator shall promulgate a 
        new final rule described in subsection (a) in accordance with 
        this section.
            ``(2) Effective date.--If a new final rule promulgated 
        pursuant to paragraph (1) changes a level of emission 
        reductions required under the preceding final rule, the 
        effective date of the new final rule shall be January 1 of the 
        calendar year that is 5 years after the deadline for 
        promulgation of the new final rule under paragraph (1).

``SEC. 714. DISTRIBUTION OF ALLOWANCES BETWEEN AUCTIONS AND 
              ALLOCATIONS; NATURE OF ALLOWANCES.

    ``(a) Distribution of Allowances Between Auctions and 
Allocations.--
            ``(1) In general.--For each calendar year, the total 
        quantity of allowances to be auctioned and allocated under this 
        subtitle shall be equal to the annual tonnage limitation for 
        emissions of greenhouse gases from affected units specified in 
        section 711 for the calendar year.
            ``(2) Distribution.--The proportion of allowances to be 
        auctioned pursuant to section 715 and allocated pursuant to 
        section 716 for each calendar year beginning in calendar year 
        2011 shall be as follows:

        ``Percentages of Allowances To Be Auctioned and Allocated
------------------------------------------------------------------------
                                     Percentage to be     Percentage to
          Calendar year                  auctioned         be allocated
------------------------------------------------------------------------
2011.............................  15..................  85
2012.............................  18..................  82
2013.............................  21..................  79
2014.............................  24..................  76
2015.............................  27..................  73
2016.............................  30..................  70
2017.............................  33..................  67
2018.............................  36..................  64
2019.............................  39..................  61
2020.............................  42..................  58
2021.............................  45..................  55
2022.............................  48..................  52
2023.............................  51..................  49
2024.............................  54..................  46
2025.............................  57..................  43
2026.............................  60..................  40
2027.............................  63..................  37
2028.............................  66..................  34
2029.............................  69..................  41
2030.............................  72..................  28
2031.............................  75..................  25
2032.............................  80..................  20
2033.............................  85..................  15
2034.............................  90..................  10
2035.............................  95..................  5
2036 and thereafter..............  100.................  0
------------------------------------------------------------------------

    ``(b) Nature of Allowances.--An allowance--
            ``(1) shall not be considered to be a property right; and
            ``(2) may be terminated or limited by the Administrator.
    ``(c) No Judicial Review.--An auction or allocation of an allowance 
by the Administrator shall not be subject to judicial review.

``SEC. 715. AUCTION OF ALLOWANCES.

    ``(a) In General.--Not later than 2 years after the date of 
enactment of this title, the Administrator shall promulgate regulations 
establishing a procedure for the auction of the quantity of allowances 
specified in section 714(a) for each calendar year.
    ``(b) Deposit of Proceeds.--The Administrator shall deposit all 
proceeds from auctions conducted under this section in the Fund for use 
in accordance with section 717.

``SEC. 716. ALLOCATION OF ALLOWANCES.

    ``(a) Allocation to New Covered Units.--
            ``(1) Establishment.--For each calendar year, the 
        Administrator, in consultation with the Secretary of Energy, 
        shall, based on projections of electricity output for new 
        covered units, promulgate regulations establishing--
                    ``(A) a reserve of allowances to be allocated among 
                new covered units for the calendar year; and
                    ``(B) the methodology for allocating those 
                allowances among new covered units.
            ``(2) Limitation.--The number of allowances allocated under 
        paragraph (1) during a calendar year shall be not more than 3 
        percent of the total number of allowances allocated among 
        covered units for the calendar year.
            ``(3) Unused allowances.--For each calendar year, the 
        Administrator shall reallocate to each covered unit any unused 
        allowances from the new unit reserve established under 
        paragraph (1) in the proportion that--
                    ``(A) the number of allowances allocated to each 
                covered unit for the calendar year; bears to
                    ``(B) the number of allowances allocated to all 
                covered units for the calendar year.
    ``(b) Allocation to Covered Units That Are Not New Covered Units.--
            ``(1) Timing of allocations.--Subject to subsection (c), 
        the Administrator shall allocate allowances among covered units 
        that are not new covered units--
                    ``(A) not later than December 31, 2007, for 
                calendar year 2011; and
                    ``(B) not later than December 31 of calendar year 
                2008 and of each calendar year thereafter, for each 
                fourth calendar year that begins after that December 
                31.
            ``(2) Allocations.--
                    ``(A) In general.--Subject to subsection (c), the 
                Administrator shall allocate to each covered unit that 
                is not a new covered unit a quantity of allowances that 
                is equal to the product obtained by multiplying--
                            ``(i) the quantity of allowances available 
                        for allocation under this subsection; and
                            ``(ii) the quotient obtained by dividing--
                                    ``(I) the annual average quantity 
                                of electricity generated by the unit 
                                (including only incremental nuclear 
                                generation for nuclear generating 
                                units) during the most recent 3-
                                calendar year period for which data is 
                                available, updated each calendar year 
                                and measured in megawatt hours; by
                                    ``(II) the difference between--
                                            ``(aa) the total of the 
                                        average quantities calculated 
                                        under subclause (I) for all 
                                        covered units; and
                                            ``(bb) the quantity of 
                                        electricity generated by all 
                                        affected units and new affected 
                                        units that, pursuant to 
                                        subsection (c), do not receive 
                                        any allowances.
                    ``(B) Quantity to be allocated.--For each calendar 
                year, the quantity of allowances allocated under 
                subparagraph (A) to covered units that are not new 
                covered units shall be equal to the difference 
                between--
                            ``(i) the annual tonnage limitation for 
                        emissions of greenhouse gases from affected 
                        units specified in section 711 for the calendar 
                        year, as modified, if applicable, under section 
                        713; and
                            ``(ii) the quantity of allowances reserved 
                        under subsection (a) for the calendar year.
    ``(c) Coal-Fired Affected Units and New Affected Units.--
            ``(1) In general.--Notwithstanding any other provision of 
        this subtitle, no allowance shall be allocated under this 
        subtitle to a coal-fired affected unit or a coal-fired new 
        affected unit unless the affected unit or new affected unit--
                    ``(A) is powered by qualifying advanced clean coal 
                technology, as defined pursuant to paragraph (2); or
                    ``(B) entered operation before January 1, 2007.
            ``(2) Definition of qualifying advanced clean coal 
        technology.--
                    ``(A) In general.--Not later than 18 months after 
                the date of enactment of this title, the Administrator, 
                by regulation, shall define the term `qualifying 
                advanced clean coal technology' with respect to 
                electric power generation.
                    ``(B) Requirement.--In promulgating a definition 
                pursuant to subparagraph (A), the Administrator shall 
                ensure that the term `qualifying advanced clean coal 
                technology' reflects advances in available technology, 
                taking into consideration--
                            ``(i) net thermal efficiency;
                            ``(ii) measures to capture and sequester 
                        carbon dioxide; and
                            ``(iii) output-based emission rates for--
                                    ``(I) carbon dioxide;
                                    ``(II) sulfur dioxide;
                                    ``(III) oxides of nitrogen;
                                    ``(IV) filterable and condensable 
                                particulate matter; and
                                    ``(V) mercury.
                    ``(C) Review and revision.--
                            ``(i) In general.--Not later than July 1, 
                        2009, and each July 1 of every second year 
                        thereafter, the Administrator shall review and, 
                        if appropriate, revise the definition under 
                        subparagraph (A) based on technological 
                        advances during the preceding 2 calendar years.
                            ``(ii) Notice and comment required.--
                        Subject to clause (iii), after the initial 
                        definition is established under subparagraph 
                        (A), no subsequent review or revision under 
                        this subparagraph shall be subject to the 
                        notice and comment provisions of section 307 of 
                        this Act or of section 553 of title 5, United 
                        States Code.
                            ``(iii) Effect.--Nothing in clause (ii) 
                        precludes the application of the notice and 
                        comment provisions of section 307 of this Act 
                        or of section 553 of title 5, United States 
                        Code, as the Administrator determines to be 
                        practicable.

``SEC. 717. CLIMATE ACTION TRUST FUND.

    ``(a) Establishment and Administration.--
            ``(1) In general.--There is established in the general fund 
        of the Treasury a fund, to be known as the `Climate Action 
        Trust Fund', consisting of--
                    ``(A) such amounts as are deposited in the Fund 
                under paragraph (2); and
                    ``(B) any interest earned on investment of amounts 
                in the Fund under paragraph (4).
            ``(2) Transfers to fund.--The Secretary of the Treasury 
        shall deposit in the Fund amounts equivalent to the proceeds 
        received by the Administrator as a result of the conduct of 
        auctions of allowances under section 715.
            ``(3) Expenditures from fund.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), the Administrator shall use amounts in the Fund to 
                carry out the programs described in this section.
                    ``(B) Administrative expenses.--Of amounts in the 
                Fund, there shall be made available to pay the 
                administrative expenses necessary to carry out this 
                title, as adjusted for changes beginning on January 1, 
                2007, in accordance with the Consumer Price Index for 
                All-Urban Consumers published by the Department of 
                Labor--
                            ``(i) $90,000,000 for each fiscal year, to 
                        the Administrator; and
                            ``(ii) $30,000,000 for each fiscal year, to 
                        the Secretary of Agriculture.
                    ``(C) Panel.--Of amounts in the Fund, there shall 
                be made available to pay the expenses of the Panel 
                under section 712 $7,000,000 for each fiscal year, as 
                adjusted for changes beginning on January 1, 2007, in 
                accordance with the Consumer Price Index for All-Urban 
                Consumers published by the Department of Labor.
            ``(4) Investment of amounts.--
                    ``(A) In general.--The Secretary of Treasury shall 
                invest such portion of the Fund as is not, in the 
                judgment of the Administrator, required to meet current 
                withdrawals.
                    ``(B) Interest-bearing obligations.--Investments 
                may be made only in interest-bearing obligations of the 
                United States.
                    ``(C) Acquisition of obligations.--For the purpose 
                of investments under paragraph (1), obligations may be 
                acquired--
                            ``(i) on original issue at the issue price; 
                        or
                            ``(ii) by purchase of outstanding 
                        obligations at the market price.
                    ``(D) Sale of obligations.--Any obligation acquired 
                by the Fund may be sold by the Administrator at the 
                market price.
                    ``(E) Return of proceeds to fund.--The interest on, 
                and the proceeds from the sale or redemption of, any 
                obligations held in the Fund shall be credited to, and 
                form a part of, the Fund.
            ``(5) Regulations.--Not later than 2 years after the date 
        of enactment of this title, the Administrator, in consultation 
        with the Secretary of Energy, shall promulgate such regulations 
        as are necessary to administer the Fund in accordance with this 
        section.
    ``(b) Uses of Fund.--
            ``(1) No further appropriation.--The Administrator shall 
        distribute amounts in the Fund for use in accordance with this 
        section, without further appropriation.
            ``(2) Regulations.--
                    ``(A) In general.--Not later than 3 years after the 
                date of enactment of this title, the Administrator, in 
                consultation with the Secretary of Energy, shall 
                promulgate regulations establishing an innovative low- 
                and zero-emitting carbon technologies program, a clean 
                coal technologies program, and an energy efficiency 
                technology program that include--
                            ``(i) the funding mechanisms that will be 
                        available to support the development and 
                        deployment of the technologies addressed by 
                        each program, including low-interest loans, 
                        loan guarantees, grants, and financial awards; 
                        and
                            ``(ii) the criteria for the methods by 
                        which proposals will be funded to develop and 
                        deploy the technologies.
                    ``(B) Revision of criteria.--Not later than January 
                1, 2014, and every 3 years thereafter, the 
                Administrator shall review and, if appropriate, revise, 
                based on technological advances, the criteria referred 
                to in subparagraph (A)(ii).
                    ``(C) Adaptation assistance for workers and 
                communities.--Not later than 3 years after the date of 
                enactment of this title, the Administrator, in 
                consultation with the Secretary of Energy, shall 
                promulgate regulations governing the distribution of 
                funds pursuant to subsection (g).
    ``(c) Innovative Low- and Zero-Emitting Carbon Electricity 
Generation Technologies Program.--
            ``(1) In general.--For each calendar year, of amounts 
        remaining in the Fund after making the expenditures described 
        in subparagraphs (B) and (C) of subsection (a)(3), the 
        Administrator shall use not more than 35 percent to support the 
        development and deployment of low- and zero-emitting carbon 
        electricity generation technologies.
            ``(2) Regulations.--The regulations establishing the 
        innovative low- and zero-emitting carbon electricity generation 
        technologies program referred to in subsection (b)(2)(A) shall 
        establish the areas of technology development that will qualify 
        for funding under that program, including technologies for the 
        generation of electricity from renewable energy sources.
    ``(d) Clean Coal Technologies Program.--
            ``(1) In general.--For each calendar year, of amounts 
        remaining in the Fund after making the expenditures described 
        in subparagraphs (B) and (C) of subsection (a)(3), the 
        Administrator shall use not more than 20 percent to support the 
        development and deployment of clean coal technologies.
            ``(2) Regulations.--The regulations establishing the clean 
        coal technologies program referred to in subsection (b)(2)(A) 
        shall establish the criteria for use in defining qualifying 
        clean coal technologies for electric power generation, while 
        ensuring that those technologies represent an advance in 
        available technology, taking into consideration net thermal 
        efficiency and measures to capture and sequester carbon 
        dioxide.
    ``(e) Energy Efficiency Technology Program.--
            ``(1) In general.--For each calendar year, of amounts 
        remaining in the Fund after making the expenditures described 
        in subparagraphs (B) and (C) of subsection (a)(3), the 
        Administrator shall use not more than 15 percent to support the 
        development and deployment of technologies for increasing the 
        efficiency of energy end use in buildings and industry.
            ``(2) Regulations.--The regulations establishing the energy 
        efficiency program referred to in subsection (b)(2)(A) shall 
        establish the areas of technology development that will qualify 
        for funding under the energy efficiency program.
    ``(f) Federal Funding of Research Into and Development of Energy 
and Efficiency Technologies.--For each calendar year, the Administrator 
shall use not more than 10 percent of the amounts in the Fund to 
support research into and development of energy and efficiency 
technologies.
    ``(g) Adaptation Assistance for Workers and Communities Negatively 
Affected by Climate Change and Greenhouse Gas Regulation.--For each 
calendar year, of amounts remaining in the Fund after making the 
expenditures described in subparagraphs (B) and (C) of subsection 
(a)(3), the Administrator shall use at least 10 percent to provide 
adaptation assistance for workers and communities--
            ``(1) to address local or regional impacts of climate 
        change and the impacts, if any, from greenhouse gas regulation, 
        including by providing assistance to displaced workers and 
        disproportionately affected communities; and
            ``(2) to mitigate impacts of climate change and the 
        impacts, in any, from greenhouse gas regulation on low-income 
        energy consumers.
    ``(h) Fish and Wildlife Habitat.--
            ``(1) In general.--For each calendar year, of amounts 
        remaining in the Fund after making the expenditures described 
        in subparagraphs (B) and (C) of subsection (a)(3), the 
        Administrator shall use at least 10 percent to mitigate the 
        impacts of climate change on fish and wildlife habitat in 
        accordance with this subsection.
            ``(2) Wildlife restoration fund.--
                    ``(A) In general.--For each calendar year, the 
                Administrator shall transfer not less than 70 percent 
                of the amounts made available under paragraph (1) to 
                the Federal aid to wildlife restoration fund 
                established under section 3(a)(1) of the Pittman-
                Robertson Wildlife Restoration Act (16 U.S.C. 
                669b(a)(1))--
                            ``(i) to carry out climate change impact 
                        mitigation actions pursuant to comprehensive 
                        wildlife conservation strategies; and
                            ``(ii) to provide relevant information, 
                        training, monitoring, and other assistance to 
                        develop climate change impact mitigation and 
                        adaptation plans and integrate the plans into 
                        State comprehensive wildlife conservation 
                        strategies.
                    ``(B) Availability.--Amounts transferred to the 
                Federal aid to wildlife restoration fund under this 
                paragraph shall--
                            ``(i) be available, without further 
                        appropriation, for obligation and expenditure; 
                        and
                            ``(ii) remain available until expended.
            ``(3) Protection of natural resources.--
                    ``(A) In general.--For each calendar year, the 
                Administrator, in consultation with the Secretary of 
                Agriculture, the Secretary of Commerce, the Chief of 
                Engineers, and State and national wildlife conservation 
                organizations, shall transfer not more than 30 percent 
                of the funds made available under paragraph (1) to the 
                Secretary of the Interior for use in carrying out 
                Federal and State programs and projects--
                            ``(i) to protect natural communities that 
                        are most vulnerable to climate change;
                            ``(ii) to restore and protect natural 
                        resources that directly guard against damages 
                        from climate change events; and
                            ``(iii) to restore and protect ecosystem 
                        services that are most vulnerable to climate 
                        change.
                    ``(B) Administration.--Amounts transferred to the 
                Secretary of the Interior under this paragraph shall--
                            ``(i) be available, without further 
                        appropriation, for obligation and expenditure;
                            ``(ii) remain available until expended;
                            ``(iii)(I) be obligated not later than 2 
                        years after the date of transfer; or
                            ``(II) if the amounts are not obligated in 
                        accordance with subclause (I), be transferred 
                        to the Federal aid to wildlife restoration fund 
                        for use in accordance with paragraph (2); and
                            ``(iv) supplement, and not supplant, the 
                        amount of Federal, State, and local funds 
                        otherwise expended to carry out programs and 
                        projects described in subparagraph (A).
                    ``(C) Programs and projects.--Programs and projects 
                for which funds may be used under this paragraph 
                include--
                            ``(i) Federal programs and projects--
                                    ``(I) to identify Federal land and 
                                water at greatest risk of being damaged 
                                or depleted by climate change;
                                    ``(II) to monitor Federal land and 
                                water to allow for early detection of 
                                impacts;
                                    ``(III) to develop adaptation 
                                strategies to minimize the damage; and
                                    ``(IV) to restore and protect 
                                Federal land and water at the greatest 
                                risk of being damaged or depleted by 
                                climate change;
                            ``(ii) Federal programs and projects to 
                        identify climate change risks and develop 
                        adaptation strategies for natural grassland, 
                        wetlands, migratory corridors, and other 
                        habitats vulnerable to climate change on 
                        private land enrolled in--
                                    ``(I) the wetlands reserve program 
                                established under subchapter C of 
                                chapter 1 of subtitle D of title XII of 
                                the Food Security Act of 1985 (16 
                                U.S.C. 3837 et seq.);
                                    ``(II) the grassland reserve 
                                program established under subchapter C 
                                of chapter 2 of subtitle D of title XII 
                                of that Act (16 U.S.C. 3838n et seq.); 
                                and
                                    ``(III) the wildlife habitat 
                                incentive program established under 
                                section 1240N of that Act (16 U.S.C. 
                                3839bb-1);
                            ``(iii) programs and projects under the 
                        North American Wetlands Conservation Act (16 
                        U.S.C. 4401 et seq.), the North American Bird 
                        Conservation Initiative, and the Neotropical 
                        Migratory Bird Conservation Act (16 U.S.C. 6101 
                        et seq.) to protect habitat for migratory birds 
                        that are vulnerable to climate change impacts;
                            ``(iv) programs and projects--
                                    ``(I) to identify coastal and 
                                marine resources (such as coastal 
                                wetlands, coral reefs, submerged 
                                aquatic vegetation, shellfish beds, and 
                                other coastal or marine ecosystems) at 
                                the greatest risk of being damaged by 
                                climate change;
                                    ``(II) to monitor those resources 
                                to allow for early detection of 
                                impacts;
                                    ``(III) to develop adaptation 
                                strategies;
                                    ``(IV) to protect and restore those 
                                resources; and
                                    ``(V) to integrate climate change 
                                adaptation requirements into State 
                                plans developed under the coastal zone 
                                management program established under 
                                the Coastal Zone Management Act of 1972 
                                (16 U.S.C. 1451 et seq.), the national 
                                estuary program established under 
                                section 320 of the Federal Water 
                                Pollution Control Act (33 U.S.C. 1330), 
                                the Coastal and Estuarine Land 
                                Conservation Program established under 
                                the fourth proviso of the matter under 
                                the heading `procurement, acquisition, 
                                and construction (including transfers 
                                of funds)' of title II of the 
                                Departments of Commerce, Justice, and 
                                State, the Judiciary, and Related 
                                Agencies Appropriations Act, 2002 (16 
                                U.S.C. 1456d), or other comparable 
                                State programs;
                            ``(v) programs and projects to conserve 
                        habitat for endangered species and species of 
                        conservation concern that are vulnerable to the 
                        impact of climate change;
                            ``(vi) programs and projects under the 
                        Forest Legacy Program established under section 
                        7 of the Cooperative Forestry Assistance Act 
                        (16 U.S.C. 2103c), to support State efforts to 
                        protect environmentally sensitive forest land 
                        through conservation easements to provide 
                        refuges for wildlife;
                            ``(vii) other Federal or State programs and 
                        projects identified by the heads of agencies 
                        described in subparagraph (A) as high 
                        priorities--
                                    ``(I) to protect natural 
                                communities that are most vulnerable to 
                                climate change;
                                    ``(II) to restore and protect 
                                natural resources that directly guard 
                                against damages from climate change 
                                events; and
                                    ``(III) to restore and protect 
                                ecosystem services that are most 
                                vulnerable to climate change;
                            ``(viii) to address climate change in 
                        Federal land use planning and plan 
                        implementation and to integrate climate change 
                        adaptation strategies into--
                                    ``(I) comprehensive conservation 
                                plans prepared under section 4(e) of 
                                the National Wildlife Refuge System 
                                Administration Act of 1966 (16 U.S.C. 
                                668dd(e));
                                    ``(II) general management plans for 
                                units of the National Park System;
                                    ``(III) resource management plans 
                                of the Bureau of Land Management; and
                                    ``(IV) land and resource management 
                                plans under the Forest and Rangeland 
                                Renewable Resources Planning Act of 
                                1974 (16 U.S.C. 1600 et seq.) and the 
                                National Forest Management Act of 1976 
                                (16 U.S.C. 1600 et seq.); and
                            ``(ix) projects to promote sharing of 
                        information on climate change wildlife impacts 
                        and mitigation strategies across agencies, 
                        including funding efforts to strengthen and 
                        restore habitat that improves the ability of 
                        fish and wildlife to adapt successfully to 
                        climate change through the Wildlife 
                        Conservation and Restoration Account 
                        established by section 3(a)(2) of the Pittman-
                        Robertson Wildlife Restoration Act (16 U.S.C. 
                        669b(a)(2)).

``SEC. 718. EARLY REDUCTION CREDITS.

    ``(a) Regulations.--Not later than 2 years after the date of 
enactment of this title, the Administrator shall promulgate regulations 
that provide for the issuance on a 1-time basis, certification, and use 
of early reduction credits for greenhouse gas reduction or 
sequestration projects carried out during any of calendar years 2000 
through 2010.
    ``(b) Eligible Projects.--A greenhouse gas reduction or 
sequestration project shall be eligible for early reduction credits if 
the project--
            ``(1) is carried out in the United States;
            ``(2) meets the standards contained in regulations 
        promulgated by the Administrator under subsection (a) that the 
        Administrator determines to be applicable to the project, 
        including consistency with the requirements of--
                    ``(A) paragraphs (2) through (5) of section 736(a), 
                with respect to greenhouse gas reduction projects; and
                    ``(B) section 732(a), with respect to sequestration 
                projects; and
            ``(3) was reported--
                    ``(A) under section 1605(b) of the Energy Policy 
                Act of 1992 (42 U.S.C. 13385(b)); or
                    ``(B) to a State or regional greenhouse gas 
                registry.
    ``(c) Limitation.--
            ``(1) In general.--The aggregate quantity of early 
        reduction credits available for greenhouse gas reduction or 
        sequestration projects for the period of calendar years 2000 
        through 2010 shall not exceed 10 percent of the tonnage 
        limitation for calendar year 2011 for emissions of greenhouse 
        gases from affected units under section 711.
            ``(2) No other exceedance of tonnage limitation.--No 
        provision of this subtitle (other than paragraph (1)) or any 
        regulation promulgated under this subtitle authorizes the 
        issuance or use of a quantity of credits greater than the 
        annual tonnage limitation for emissions of greenhouse gases 
        from affected units for a calendar year.

``SEC. 719. RECOGNITION AND USE OF INTERNATIONAL CREDITS.

    ``(a) Use of International Credits.--
            ``(1) In general.--Except as provided in this section and 
        section 720, the owner of each affected unit may satisfy the 
        obligation of the affected unit under section 722 to surrender 
        a quantity of credits associated with the greenhouse gas 
        emissions of the affected unit by submitting international 
        credits representing up to 25 percent of the total annual 
        submission requirements of the affected unit.
            ``(2) New affected units.--The owner of a new affected unit 
        may satisfy up to 50 percent of the obligation of the new 
        affected unit under section 722 to surrender a quantity of 
        credits associated with the greenhouse gas emissions of the new 
        affected unit by submitting international credits.
    ``(b) Facility Certification.--The owner of an affected unit who 
submits an international credit under this section shall certify that 
the international credit--
            ``(1) has not been retired from use in the registry of the 
        applicable foreign country; and
            ``(2) satisfies the requirements of subsection (c) or (d).
    ``(c) International Credits From Countries With Mandatory 
Greenhouse Gas Limits.--The owner of an affected unit may submit an 
international credit under this subsection if--
            ``(1) the international credit is issued by a foreign 
        country pursuant to a governmental program that imposes 
        mandatory absolute tonnage limits on greenhouse gas emissions 
        from the country or 1 or more industry sectors pursuant to 
        protocols adopted through the UNFCCC process; and
            ``(2) the Administrator has promulgated regulations, taking 
        into consideration applicable UNFCCC protocols, approving for 
        use under this subsection international credits from such 
        categories of countries as the regulations establish, and the 
        regulations permit the use of international credits from the 
        foreign country that issued the credit.
    ``(d) International Credits From Countries Without Mandatory 
Greenhouse Gas Limits.--
            ``(1) In general.--Subject to paragraph (2), the owner of 
        an affected unit may submit an international credit under this 
        subsection if--
                    ``(A) the international credit is issued by a 
                foreign country that has not imposed mandatory absolute 
                tonnage limits on greenhouse gas emissions from the 
                country or 1 or more industry sectors pursuant to 
                protocols adopted through the UNFCCC process;
                    ``(B) the international credit is issued pursuant 
                to protocols adopted through the UNFCCC process; and
                    ``(C) the Administrator has promulgated 
                regulations, taking into consideration applicable 
                UNFCCC protocols, approving for use under this 
                subsection international credits from such categories 
                of countries as the regulations establish, and the 
                regulations permit the use of international credits 
                from the foreign country that issued the credit.
            ``(2) Decision on continued approval.--Not later than 
        December 31, 2015, the Administrator shall determine, pursuant 
        to the regulations promulgated under paragraph (1)(C), whether 
        to continue to approve for use under this subsection 
        international credits from any country that--
                    ``(A) has not imposed mandatory absolute tonnage 
                limits on greenhouse gas emissions from the country or 
                1 or more industry sectors pursuant to protocols 
                adopted through the UNFCCC process; and
                    ``(B) generates more than 0.5 percent of global 
                greenhouse gas emissions as of 2010 or as of the most 
                recent year for which data are available.

``SEC. 720. AVOIDING SIGNIFICANT ECONOMIC HARM.

    ``(a) In General.--Pursuant to the regulations promulgated under 
this section, the Administrator may permit affected units--
            ``(1) to use allowances in a calendar year before the 
        calendar year for which the allowances were allocated; and
            ``(2) to increase the use by the affected units of 
        international credits up to 50 percent of the total annual 
        submission requirements of the affected units under section 
        722.
    ``(b) Regulations.--
            ``(1) In general.--Not later than 3 years after the date of 
        enactment of this title, the Administrator, in coordination 
        with the Secretary of the Treasury, shall promulgate 
        regulations requiring the continuous monitoring of the 
        operation of the carbon market and the effect of that market on 
        the economy of the United States.
            ``(2) Requirements.--The regulations shall--
                    ``(A) establish the criteria for determining 
                whether allowance prices have reached and sustained a 
                level that is causing or will cause significant harm to 
                the economy of the United States; and
                    ``(B) take into consideration--
                            ``(i) the obligation of the United States 
                        under this subtitle to stabilize greenhouse gas 
                        concentrations in the atmosphere at the safe 
                        climate level; and
                            ``(ii) the costs of the anticipated impacts 
                        of climate change in the United States.
            ``(3) Prevention of economic harm.--If the Administrator 
        determines that allowance prices have reached and sustained a 
        level that is causing or will cause significant harm to the 
        economy of the United States, the regulations shall establish--
                    ``(A) a program under which an affected unit may 
                use allowances in a calendar year before the calendar 
                year for which the allowances were allocated, 
                including--
                            ``(i) a requirement that allowances 
                        borrowed from the allocation of a future year 
                        reduce the allocation of allowances to the 
                        affected unit for the future year on a 1-to-1 
                        basis;
                            ``(ii) a requirement for payment of 
                        interest on borrowed allowances requiring the 
                        submission of additional credits upon repayment 
                        of the allowances equal to the product obtained 
                        by multiplying--
                                    ``(I) the number of years between 
                                the advance use of allowances by an 
                                affected unit under clause (i) and the 
                                submission of additional credits under 
                                this clause; and
                                    ``(II) the sum obtained by adding--
                                            ``(aa) the Federal short-
                                        term rate, as defined pursuant 
                                        to section 1274(d)(1)(C)(i) of 
                                        the Internal Revenue Code of 
                                        1986; and
                                            ``(bb) 2 percent; and
                            ``(iii) a limitation that in no event may 
                        an affected unit--
                                    ``(I) satisfy more than 10 percent 
                                of the obligation of the affected unit 
                                under section 722 to surrender 
                                allowances by submitting allowances in 
                                a calendar year before the calendar 
                                year for which the allowances were 
                                allocated; and
                                    ``(II) use allowances in a calendar 
                                year that is more than 5 years before 
                                the calendar year for which the 
                                allowances were allocated; and
                    ``(B) a program under which the owner of an 
                affected unit may satisfy the obligation of the 
                affected unit under section 722 to surrender allowances 
                for the calendar year in which the determination is 
                made by submitting international credits representing 
                up to 50 percent of the total annual submission 
                requirements of the affected unit.

``SEC. 721. USE AND TRANSFER OF CREDITS.

    ``(a) Use in Other Greenhouse Gas Allowance Trading Programs.--
            ``(1) In general.--A credit obtained under this subtitle 
        may be used in any other greenhouse gas allowance trading 
        program, including a program of 1 or more States or 
        subdivisions of States, that is approved by the Administrator 
        and an authorized official for the other program for use of the 
        allowance.
            ``(2) Reciprocity.--A credit obtained from another 
        greenhouse gas trading program, including a program of 1 or 
        more States or subdivisions of States, that is approved by the 
        Administrator and an authorized official for the other program 
        may be used in the trading program under this title.
    ``(b) Allowance Use Before Applicable Calendar Year.--Except as 
provided in section 720, an allowance auctioned or allocated under this 
subtitle may not be used before the calendar year for which the 
allowance was auctioned or allocated.
    ``(c) Transfer.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        transfer of a credit shall not take effect until receipt and 
        recording by the Administrator of a written certification of 
        the transfer that is executed by an authorized official of the 
        person making the transfer.
            ``(2) Special rule for allowances.--Notwithstanding 
        paragraph (1), the transfer of an allowance auctioned or 
        allocated under this subtitle may take effect before the 
        calendar year for which the allowance was auctioned or 
        allocated.
    ``(d) Banking of Credits.--Any affected unit may use a credit 
obtained under this subtitle in the calendar year for which the credit 
was auctioned or allocated, or in a subsequent calendar year, to 
demonstrate compliance with section 722.

``SEC. 722. COMPLIANCE AND ENFORCEMENT.

    ``(a) In General.--For calendar year 2011 and each calendar year 
thereafter, the owner of each affected unit shall surrender to the 
Administrator a quantity of credits that is equal to the total tons of 
carbon dioxide or, with respect to other greenhouse gases, tons in 
carbon dioxide equivalent, associated with the combustion by the 
affected unit of greenhouse gas-emitting fuels during the calendar 
year.
    ``(b) Regulations.--Not later than 2 years after the date of 
enactment of this title, the Administrator shall promulgate regulations 
establishing the procedures for the surrender of credits.
    ``(c) Penalty.--The owner of an affected unit that emits greenhouse 
gases associated with the combustion by the affected unit of a 
greenhouse gas-emitting fuel in excess of the number of credits that 
the owner of the affected unit holds for use of the affected unit for 
the calendar year shall--
            ``(1) submit to the Administrator 1.3 credits for each 
        metric ton of excess greenhouse gas emissions of the affected 
        unit; and
            ``(2) pay an excess emissions penalty equal to the product 
        obtained by multiplying--
                    ``(A) the number of tons of carbon dioxide, or the 
                carbon dioxide equivalent of other greenhouse gases, 
                emitted in excess of the total quantity of credits held 
                by the affected unit; and
                    ``(B)(i) except as provided in clause (ii), $100, 
                as adjusted for changes beginning on January 1, 2007, 
                in accordance with the Consumer Price Index for All-
                Urban Consumers published by the Department of Labor; 
                or
                    ``(ii) if the average market price for a metric ton 
                of carbon dioxide equivalent during a calendar year 
                exceeds $60, $200, as adjusted for changes beginning on 
                January 1, 2007, in accordance with the Consumer Price 
                Index for All-Urban Consumers published by the 
                Department of Labor.

                      ``Subtitle B--Offset Credits

``SEC. 731. OUTREACH INITIATIVE ON REVENUE ENHANCEMENT FOR AGRICULTURAL 
              PRODUCERS.

    ``(a) Purposes.--The purposes of this subtitle are to achieve 
climate benefits, reduce overall costs to the United States economy, 
and enhance revenue for domestic agricultural producers, foresters, and 
other landowners by--
            ``(1) establishing procedures by which domestic 
        agricultural producers, foresters, and other landowners can 
        measure and report reductions in greenhouse gas emissions and 
        increases in sequestration; and
            ``(2) publishing a handbook of guidance for domestic 
        agricultural producers, foresters, and other landowners to 
        market emission reductions to companies.
    ``(b) Establishment.--The Secretary of Agriculture, acting through 
the Chief of the Natural Resources Conservation Service, the Chief of 
the Forest Service, the Administrator of the Cooperative State 
Research, Education, and Extension Service, and land-grant colleges and 
universities, in consultation with the Administrator and the heads of 
other appropriate departments and agencies, shall establish an outreach 
initiative to provide information to agricultural producers, 
agricultural organizations, foresters, and other landowners about 
opportunities under this subtitle to earn new revenue.
    ``(c) Components.--The initiative under this section--
            ``(1) shall be designed to ensure that, to the maximum 
        extent practicable, agricultural organizations and individual 
        agricultural producers, foresters, and other landowners receive 
        detailed practical information about--
                    ``(A) opportunities to earn new revenue under this 
                subtitle;
                    ``(B) measurement protocols, monitoring, verifying, 
                inventorying, registering, insuring, and marketing 
                offsets under this title;
                    ``(C) emerging domestic and international markets 
                for energy crops, allowances, and offsets; and
                    ``(D) local, regional, and national databases and 
                aggregation networks to facilitate achievement, 
                measurement, registration, and sales of offsets;
            ``(2) shall provide--
                    ``(A) outreach materials, including the handbook 
                published under subsection (d)(1), to interested 
                parties;
                    ``(B) workshops; and
                    ``(C) technical assistance; and
            ``(3) may include the creation and development of regional 
        marketing centers or coordination with existing centers 
        (including centers within the Natural Resources Conservation 
        Service or the Cooperative State Research, Education, and 
        Extension Service or at land-grant colleges and universities).
    ``(d) Handbook.--
            ``(1) In general.--Not later than 2 years after the date of 
        enactment of this title, the Secretary of Agriculture, in 
        consultation with the Administrator and after public input, 
        shall publish a handbook for use by agricultural producers, 
        agricultural cooperatives, foresters, other landowners, offset 
        buyers, and other stakeholders that provides easy-to-use 
        guidance on achieving, reporting, registering, and marketing 
        offsets.
            ``(2) Distribution.--The Secretary of Agriculture shall 
        ensure, to the maximum extent practicable, that the handbook is 
        distributed widely through land-grant colleges and universities 
        and other appropriate institutions.

``SEC. 732. OFFSET MEASUREMENT FOR AGRICULTURAL, FORESTRY, WETLANDS, 
              AND OTHER LAND USE-RELATED SEQUESTRATION PROJECTS.

    ``(a) In General.--Not later than 2 years after the date of 
enactment of this title, the Secretary of Agriculture, in consultation 
with the Administrator, shall promulgate regulations establishing the 
requirements regarding the issuance, certification, and use of offset 
credits for greenhouse gas reductions from agricultural, forestry, 
wetlands, and other land use-related sequestration projects, including 
requirements--
            ``(1) for a region-specific discount factor for business-
        as-usual practices for specific types of sequestration 
        projects, in accordance with subsection (c);
            ``(2) that ensure that the reductions are real, additional, 
        verifiable, and enforceable;
            ``(3) that address leakage;
            ``(4) that the reductions are not otherwise required by any 
        law (including a regulation) or other legally binding 
        requirement;
            ``(5) for the quantification, monitoring, reporting, and 
        verification of the reductions;
            ``(6) that ensure that offset credits are limited in 
        duration to the period of sequestration of greenhouse gases, 
        and rectify any loss of sequestration other than a loss caused 
        by an error in calculation identified under this subtitle, by 
        requiring the submission of additional credits of an equivalent 
        quantity to the lost sequestration; and
            ``(7) that quantify sequestration flow.
    ``(b) Eligibility To Create Offset Credits.--
            ``(1) In general.--A sequestration project that commences 
        operation on or after January 1, 2011, is eligible to create 
        offset credits under this subtitle if the sequestration project 
        satisfies the other applicable requirements of this subtitle.
            ``(2) Exception for agricultural projects.--Notwithstanding 
        paragraph (1), sequestration flow from an agricultural project 
        that occurs on or after January 1, 2011, may provide the basis 
        for offset credits under this subtitle regardless of the date 
        on which the agricultural sequestration project to which the 
        sequestration flow is attributable commenced, if the project 
        satisfies the other applicable requirements of this subtitle.
    ``(c) Discounting for Business-as-Usual Practices.--
            ``(1) In general.--In order to streamline the availability 
        of offset credits for agricultural and other land use-related 
        sequestration projects, the regulations promulgated under 
        subsection (a) shall provide for the calculation and reporting 
        of region-specific discount factors by the Secretary of 
        Agriculture--
                    ``(A) to be used by developers of agricultural 
                projects and other land use-related sequestration 
                projects; and
                    ``(B) to account for business-as-usual practices 
                for specific types of sequestration projects.
            ``(2) Calculation.--Unless otherwise provided in this 
        subtitle, the region-specific discount factor for business-as-
        usual practices for sequestration projects shall be calculated 
        by dividing--
                    ``(A) the difference between--
                            ``(i) the quantity of greenhouse gases 
                        sequestered in the region as a result of the 
                        offset practice under this subtitle; and
                            ``(ii) the quantity of greenhouse gases 
                        sequestered in the region as a result of the 
                        projected business-as-usual implementation of 
                        the applicable offset practice; by
                    ``(B) the quantity of greenhouse gases sequestered 
                in the region as a result of the offset practice under 
                this subtitle.
            ``(3) Requirements.--
                    ``(A) In general.--The regulations promulgated 
                under this section shall, to the maximum extent 
                practicable--
                            ``(i) define geographic regions with 
                        reference to land that has similar agricultural 
                        characteristics; and
                            ``(ii) subject to subparagraph (B), define 
                        baseline historical reference periods for each 
                        category of sequestration practice, using the 
                        most recent period of sufficient length for 
                        which there are reasonably comprehensive data 
                        available.
                    ``(B) Exception.--If the Secretary of Agriculture 
                determines that entities have increased implementation 
                of the relevant offset practice during the most recent 
                period in anticipation of legislation granting credit 
                for the offsets, the regulations described in 
                subparagraph (A)(ii) may define baseline historical 
                reference periods for each category of sequestration 
                practice using an earlier period.
    ``(d) Quantifying Sequestration Flow.--The regulations that 
quantify sequestration flow shall include--
            ``(1) a default rate of sequestration flow, regionally 
        specific to the maximum extent practicable, for each offset 
        practice or combination of offset practices, that is estimated 
        conservatively to allow for site-specific variations and data 
        uncertainties;
            ``(2) a downward adjustment factor for any offset practice 
        or combination of practices for which, in the judgment of the 
        Secretary of Agriculture, there are substantial uncertainties 
        in the sequestration flows estimated in paragraph (1), but 
        still reasonably sufficient data to calculate a default rate of 
        flow; and
            ``(3) offset practice- or project-specific measurement, 
        monitoring, and verification requirements for--
                    ``(A) offset practices or projects for which there 
                are insufficiently reliable data to calculate a default 
                rate of sequestration flow; or
                    ``(B) projects for which the project proponent 
                chooses to use project-specific requirements.
    ``(e) Use of Native Plant Species in Offset Projects.--
            ``(1) Regulations.--Not later than 18 months after the date 
        of enactment of this title, the Administrator, in consultation 
        with the Secretary of Agriculture, shall promulgate regulations 
        for selection, use, and storage of native and nonnative plant 
        materials in the offset projects described in paragraph (2)--
                    ``(A) to ensure native plant materials are given 
                primary consideration, in accordance with applicable 
                Department of Agriculture guidance for use of native 
                plant materials;
                    ``(B) to prohibit the use of Federal- or State-
                designated noxious weeds; and
                    ``(C) to prohibit the use of a species listed by a 
                regional or State invasive plant council within the 
                applicable region or State.
            ``(2) Applicability.--The regulations under paragraph (1) 
        shall apply to qualifying offset projects described in sections 
        733(b)(2), 734(a)(2), and 734(b)(1).

``SEC. 733. CATEGORIES OF AGRICULTURAL OFFSET PRACTICES.

    ``(a) Regulations.--Not later than 2 years after the date of 
enactment of this title, the Secretary of Agriculture, in consultation 
with the Administrator, shall promulgate regulations establishing the 
categories of offset practices that--
            ``(1) reduce greenhouse gases as a result of agricultural 
        sequestration projects; and
            ``(2) are eligible to receive offset credits under this 
        subtitle.
    ``(b) Offset Practices.--Offset practices described in subsection 
(a) shall include--
            ``(1) agricultural sequestration practices, including--
                    ``(A) no-till agriculture;
                    ``(B) conservation tillage (ridge till or minimum 
                till);
                    ``(C) winter cover cropping;
                    ``(D) switching from a cycle of--
                            ``(i) planting wheat or other crops and 
                        then fallowing land; to
                            ``(ii) continuous cropping;
                    ``(E) any other offset practices identified by the 
                Administrator, in consultation with the Secretary of 
                Agriculture; and
                    ``(F) combinations of any of the offset practices 
                described in subparagraphs (A) through (E); and
            ``(2) conversion of cropland to rangeland or grassland.

``SEC. 734. OFFSET CREDITS FROM FOREST MANAGEMENT, GRAZING MANAGEMENT, 
              AND WETLANDS MANAGEMENT.

    ``(a) Forest Management Offsets.--
            ``(1) In general.--Not later than 3 years after the date of 
        enactment of this title, the Secretary of Agriculture, in 
        consultation with the Administrator, shall promulgate 
        regulations providing for the issuance of offset credits for 
        forest management projects that provide durable, long-term 
        reductions in greenhouse gases as a result of sequestration.
            ``(2) Forest management offsets.--Forest management offset 
        projects under this section may include activities that reduce 
        greenhouse gases as a result of forest management sequestration 
        projects (including afforestation), other than avoided forest 
        land conversion as described in section 735.
            ``(3) Prohibitions.--
                    ``(A) In general.--In accordance with section 
                732(e), no afforestation project may involve the 
                planting of invasive species or noxious weeds.
                    ``(B) Existing native grassland and ecosystems.--No 
                afforestation project may involve planting trees on 
                existing native grassland or other existing native non-
                forested ecosystems that the Secretary of Agriculture 
                determines should be protected in their existing native 
                condition.
    ``(b) Wetlands Management Offsets.--
            ``(1) In general.--Not later than 3 years after the date of 
        enactment of this title, the Administrator, in consultation 
        with the Chief of Engineers, shall promulgate regulations 
        providing for the issuance of offset credits for wetlands 
        management projects that provide durable, long-term reductions 
        in greenhouse gases as a result of sequestration.
            ``(2) Prohibitions.--
                    ``(A) In general.--In accordance with section 
                732(e), no wetlands restoration project may involve the 
                planting of invasive species or noxious weeds.
                    ``(B) No new wetlands.--No wetlands offset project 
                may be carried out in an area in which underlying local 
                hydrologic processes will not support a wetland.
    ``(c) Grazing Management Offsets.--
            ``(1) In general.--Not later than 3 years after the date of 
        enactment of this title, the Secretary of Agriculture, in 
        consultation with the Administrator, shall promulgate 
        regulations providing for the issuance of offset credits for 
        grazing management projects that provide durable, long-term 
        reductions in greenhouse gases as a result of sequestration.
            ``(2) Grazing management offsets.--Grazing management 
        offset projects under this section may include activities that 
        reduce greenhouse gases as a result of grazing management 
        sequestration projects other than conversion of cropland to 
        grassland or rangeland under section 733.
    ``(d) Use of Offsets.--
            ``(1) In general.--For each calendar year, an affected unit 
        may satisfy not more than 5 percent of the total allowance 
        submission requirements of the affected unit under section 722 
        by using forest management offset credits under this section.
            ``(2) Exceptions.--The limitation in paragraph (1) does not 
        apply to grazing management, afforestation, or wetland offset 
        projects.

``SEC. 735. OFFSET CREDITS FROM THE AVOIDED CONVERSION OF FORESTED LAND 
              OR WETLAND.

    ``(a) In General.--Offset credits for avoided conversion of 
forested land or wetland shall be awarded to any State that reduces the 
conversion below expected levels for all or a significant portion of 
the State.
    ``(b) Regulations.--Not later than 3 years after the date of 
enactment of this title, the Administrator, in conjunction with the 
Secretary of Agriculture, shall promulgate regulations that address the 
eligibility of offset practices that avoid the conversion of forested 
land or wetland to nonforested land uses or drained or converted 
wetland to receive offset credits under this subtitle, including 
requirements that address--
            ``(1) the methodology for measuring the avoided conversion 
        of forest land or wetland, including--
                    ``(A) measurement of presently on-going rates of 
                forest land conversion or wetland conversion;
                    ``(B) calculation of business-as-usual rates of 
                forest land conversion or wetland conversion by 
                reference to the historical rate of conversion of 
                forested land or wetland; and
                    ``(C) comparison of the rates in subparagraph (A) 
                and subparagraph (B); and
            ``(2) leakage, including--
                    ``(A) adjustments for leakage using standardized 
                regional leakage factors for afforestation and wetland 
                restoration; and
                    ``(B) the magnitude of the forested region or 
                wetlands region in a State in which the rate of 
                conversion of forest land or wetland must be reduced to 
                ensure that leakage of forest land or wetlands 
                conversion is minimized.
    ``(c) Precondition.--For an offset to be creditable under this 
section, the State must certify that the State has reduced its rate of 
conversion of forest land or wetland over a period of 5 or more 
consecutive years for the entire State or a significant forested or 
wetland region in the State.
    ``(d) Award by States of Offset Credits.--States that participate 
in the program under this section shall establish transparent and 
equitable rules by which offset credits will be awarded to owners of 
forested land or wetland.
    ``(e) Authorization of Appropriations.--There is authorized to be 
appropriated to the Administrator, in consultation with the Secretary 
of Agriculture, for use in awarding grants to States to carry out this 
section $5,000,000 for each fiscal year.

``SEC. 736. OFFSET CREDITS FROM GREENHOUSE GAS EMISSIONS REDUCTION 
              PROJECTS.

    ``(a) In General.--Not later than 2 years after the date of 
enactment of this title, the Administrator shall promulgate regulations 
establishing the requirements regarding the issuance, certification, 
and use of offset credits for greenhouse gas emissions reduction offset 
projects, including requirements--
            ``(1) for performance standards for specific types of 
        offset projects, which represent significant improvements 
        compared to recent practices in the geographic area, to be 
        reviewed, and updated if the Administrator determines updating 
        is appropriate, every 5 years;
            ``(2) that ensure that the reductions are real, additional, 
        verifiable, enforceable, and permanent;
            ``(3) that address leakage;
            ``(4) that the reductions are not otherwise required by any 
        law (including a regulation) or other legally binding 
        requirement;
            ``(5) for the quantification, monitoring, reporting, and 
        verification of the reductions; and
            ``(6) that specify the duration of offset credits for 
        greenhouse gas emissions reduction projects under this section.
    ``(b) Eligibility To Create Offset Credits.--Greenhouse gas 
emissions reduction offset projects that commence operation on or after 
January 1, 2007, are eligible to create offset credits under this 
subtitle if the projects satisfy the other applicable requirements of 
this subtitle.
    ``(c) Approved Categories of Greenhouse Gas Emissions Reduction 
Offset Projects.--Greenhouse gas emission reductions from the following 
types of operations shall be eligible to create offsets for use under 
this section:
            ``(1) Landfill operations.
            ``(2) Agricultural manure management projects.
            ``(3) Wastewater treatment facilities.
            ``(4) Coal mining operations.
            ``(5) Natural gas transmission and distribution systems.
            ``(6) Electrical transmission and distribution systems.
            ``(7) Elimination or reduction in use of chemicals that 
        substitute for ozone-depleting substances.
            ``(8) Cement manufacturing.
            ``(9) Lime manufacturing.
            ``(10) Iron and steel production.
            ``(11) Aluminum production.
            ``(12) Adipic acid production.
            ``(13) Nitric acid production.
            ``(14) Semiconductor manufacturing.
            ``(15) Magnesium production and processing.
            ``(16) Fossil fuel combustion at commercial and residential 
        buildings.
    ``(d) Creation of Additional Categories of Greenhouse Gas Emissions 
Reduction Offset Projects.--The Administrator may, by regulation, 
create additional categories of greenhouse gas emissions reduction 
offset projects for types of projects for which the Administrator 
determines that compliance with the regulations promulgated under 
subsection (a) is feasible.
    ``(e) Prohibition on Use.--Notwithstanding the eligibility of 
greenhouse gas emission reduction projects to create offset credits in 
accordance with subsection (c) or (d), greenhouse gas emissions 
reduction offset projects shall not be eligible to create offset 
credits for use under this section beginning on the date on which the 
reductions are required by law (including regulations) or other legally 
binding requirement.

``SEC. 737. BORROWING AT PROGRAM START-UP BASED ON CONTRACTS TO 
              PURCHASE OFFSET CREDITS.

    ``(a) In General.--During calendar years 2011, 2012, and 2013, an 
affected unit may satisfy not more than 5 percent of the allowance 
submission requirements of section 722 by submitting to the 
Administrator contractual commitments to purchase offset credits that 
will implement an equivalent quantity of emission reductions or 
sequestration not later than December 31, 2015.
    ``(b) Approval of Qualifying Offset Projects.--Offset projects that 
may be appropriately carried out under this section shall be approved 
by the Administrator in accordance with this subtitle.
    ``(c) Repayment by 2015.--
            ``(1) In general.--If an affected unit uses subsection (a) 
        to comply with section 722, not later than the deadline in that 
        section for allowance submissions for calendar year 2015, the 
        affected unit shall submit additional credits of a quantity 
        equivalent to the sum obtained by adding--
                    ``(A) the value of credits submitted to comply with 
                credit submission requirements described in subsection 
                (a); and
                    ``(B) interest calculated in accordance with 
                paragraph (2).
            ``(2) Interest.--Interest referred to in paragraph (1)(B) 
        shall be equal to the product obtained by multiplying--
                    ``(A) the number of years between--
                            ``(i) the use by an affected unit of the 
                        method of compliance described in subsection 
                        (a); and
                            ``(ii) the submission by the affected unit 
                        of additional credits under this subsection; 
                        and
                    ``(B) the sum obtained by adding--
                            ``(i) the Federal short-term rate, as 
                        defined pursuant to section 1274(d)(1)(C)(i) of 
                        the Internal Revenue Code of 1986; and
                            ``(ii) 2 percent.

``SEC. 738. REVIEW AND CORRECTION OF ACCOUNTING FOR OFFSET CREDITS.

    ``(a) Duty To Monitor.--The Secretary of Agriculture and the 
Administrator shall monitor regularly whether offset credits under the 
respective jurisdiction of each agency head under this subtitle are 
being awarded only for real and additional sequestration of greenhouse 
gases and reductions in greenhouse gas emissions, including--
            ``(1) the accuracy of default calculations of sequestration 
        flow and greenhouse gas emission reductions achieved by the use 
        of offset practices;
            ``(2) the calculation of region-specific discount factors; 
        and
            ``(3) the accuracy of leakage calculations.
    ``(b) Periodic Review.--Not later than December 31, 2013, and every 
5 years thereafter, the Secretary of Agriculture and the Administrator 
shall review the issuance of offset credits under the respective 
jurisdiction of each agency head under this subtitle to determine--
            ``(1) whether offset credits are being awarded only for 
        real and additional sequestration of greenhouse gases or 
        reductions in greenhouse gas emissions, as described in 
        subsection (a);
            ``(2) the amount of excessive award of any offset credits;
            ``(3) the volume of offset credits that have been or are 
        expected to be approved;
            ``(4) the impact of the offset credits on market prices; 
        and
            ``(5) the impact of the offset credits on the trajectory of 
        emissions from affected units.
    ``(c) Duty To Correct.--If the Secretary of Agriculture or the 
Administrator determines that offset credits under the respective 
jurisdictions of the agency head have been awarded under this subtitle 
in excess of real and additional sequestration of greenhouse gases or 
reductions in emissions of greenhouse gases, the Secretary of 
Agriculture or the Administrator shall--
            ``(1) promptly correct on a prospective basis the sources 
        of the errors, including correcting leakage factors, region-
        specific discount factors, default rates of sequestration flow, 
        and other relevant information for the offset practices 
        involved; and
            ``(2) quantify and publicly disclose the quantity of offset 
        credits that have been awarded in excess of real and additional 
        sequestration or emissions reductions.

              ``Subtitle C--National Registry for Credits

``SEC. 741. ESTABLISHMENT AND OPERATION OF NATIONAL REGISTRY.

    ``(a) In General.--Except as provided in subsection (b), not later 
than July 1 of the year immediately prior to the first calendar year in 
which an annual tonnage limitation on the emission of greenhouse gases 
applies under section 711(b), the Administrator shall promulgate 
regulations to establish, operate, and maintain a national registry 
through which the Administrator shall--
            ``(1) record allocations of allowances, the issuance of 
        offset credits or early reduction credits, and the recognition 
        of international credits;
            ``(2) track transfers of credits;
            ``(3) retire all credits used for compliance;
            ``(4) subject to subsection (b), maintain transparent 
        availability of registry information to the public, including 
        the quarterly reports submitted under section 742(a);
            ``(5) prepare an annual assessment of the emission data in 
        the quarterly reports submitted under section 742(a); and
            ``(6) take such action as is necessary to maintain the 
        integrity of the registry, including adjustments to correct 
        for--
                    ``(A) errors or omissions in the reporting of data; 
                and
                    ``(B) the prevention of counterfeiting, double-
                counting, multiple registrations, multiple sales, and 
                multiple retirements of credits.
    ``(b) Exception to Public Availability of Data.--
            ``(1) In general.--Subsection (a)(4) shall not apply in any 
        case in which the Administrator, in consultation with the 
        Secretary of Defense, determines that publishing or otherwise 
        making available information in accordance with that paragraph 
        poses a risk to national security.
            ``(2) Statement of reasons.--In a case described in 
        paragraph (1), the Administrator shall publish a description of 
        the determination and the reasons for the determination.

``SEC. 742. MONITORING AND REPORTING.

    ``(a) Requirements.--Each owner or operator of an affected unit, or 
to the extent applicable, the greenhouse gas authorized account 
representative for the affected unit, shall--
            ``(1) comply with the monitoring, recordkeeping, and 
        reporting requirements of part 75 of title 40, Code of Federal 
        Regulations (or successor regulations); and
            ``(2) submit to the Administrator electronic quarterly 
        reports that describe the greenhouse gas mass emission data, 
        fuel input data, and electricity output data for the affected 
        unit.
    ``(b) Biomass Cofiring.--Not later than 18 months after the date of 
enactment of this title, the Administrator shall promulgate regulations 
that provide monitoring, recordkeeping, and reporting requirements for 
biomass cofiring at affected units.''.
    (b) Conforming Amendments.--
            (1) Federal enforcement.--Section 113 of the Clean Air Act 
        (42 U.S.C. 7413) is amended--
                    (A) in subsection (a)(3), by striking ``or title 
                VI,'' and inserting ``title VI, or title VII,'';
                    (B) in subsection (b)--
                            (i) by redesignating paragraphs (1) through 
                        (3) as subparagraphs (A) through (C), 
                        respectively, and indenting the subparagraphs 
                        appropriately;
                            (ii) by striking ``The Administrator 
                        shall'' and inserting the following:
            ``(1) In general.--The Administrator shall'';
                            (iii) in paragraph (1) (as designated by 
                        clause (ii)), in the matter preceding 
                        subparagraph (A) (as redesignated by clause 
                        (i)), by striking ``or a major stationary 
                        source'' and inserting ``a major stationary 
                        source, or an affected unit under title VII''; 
                        and
                            (iv) in subparagraph (B) (as redesignated 
                        by clause (i)), by striking ``or title VI'' and 
                        inserting ``title VI, or title VII'';
                            (v) in the matter following subparagraph 
                        (C) of paragraph (1) (as designated by clauses 
                        (i) and (ii))--
                                    (I) by striking ``Any action'' and 
                                inserting the following:
            ``(2) Judicial enforcement.--
                    ``(A) In general.--Any action'';
                                    (II) by striking ``Notice'' and 
                                inserting the following:
                    ``(B) Notice.--Notice''; and
                                    (III) by striking ``In the case'' 
                                and inserting the following:
                    ``(C) Actions brought by administrator.--In the 
                case'';
                    (C) in subsection (c)--
                            (i) in the first sentence of paragraph (1), 
                        by striking ``or title VI (relating to 
                        stratospheric ozone control),'' and inserting 
                        ``title VI (relating to stratospheric ozone 
                        control), or title VII (relating to global 
                        warming pollution emission reductions),''; and
                            (ii) in the first sentence of paragraph 
                        (3), by striking ``or VI'' and inserting ``VI, 
                        or VII'';
                    (D) in subsection (d)(1)(B), by striking ``or VI'' 
                and inserting ``VI, or VII''; and
                    (E) in subsection (f), in the first sentence, by 
                striking ``or VI'' and inserting ``VI, or VII''.
            (2) 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, any regulation of solid 
        waste combustion under section 129, or any regulation of 
        greenhouse gas emissions under title VII, (ii)''.
            (3) Administrative proceedings and judicial review.--
        Section 307 of the Clean Air Act (42 U.S.C. 7607) is amended--
                    (A) in subsection (a), by striking ``, or section 
                306'' and inserting ``section 306, or title VII'';
                    (B) in subsection (b)(1)--
                            (i) by striking ``section 111,,'' and 
                        inserting ``section 111,'';
                            (ii) by striking ``section 120,'' each 
                        place it appears and inserting ``section 120, 
                        any action under title VII,''; and
                            (iii) by striking ``112,,'' and inserting 
                        ``112,''; and
                    (C) in subsection (d)(1)--
                            (i) by striking subparagraph (S);
                            (ii) by redesignating the second 
                        subparagraph (N) and subparagraphs (O) through 
                        (R) as subparagraphs (O), (P), (Q), (R), and 
                        (S), respectively;
                            (iii) by redesignating subparagraphs (T) 
                        and (U) as subparagraphs (U) and (V), 
                        respectively; and
                            (iv) by inserting after subparagraph (S) 
                        (as redesignated by clause (ii)) the following:
                    ``(T) the promulgation or revision of any 
                regulation under title VII,''.
            (4) Unavailability of emissions data.--Section 412(d) of 
        the Clean Air Act (42 U.S.C. 7651k(d)) is amended in the first 
        sentence--
                    (A) by inserting ``or title VII'' after ``under 
                subsection (a)''; and
                    (B) by inserting ``or title VII'' after ``this 
                title''.

             TITLE II--CLIMATE CHANGE RESEARCH INITIATIVES

SEC. 201. RESEARCH GRANTS THROUGH NATIONAL SCIENCE FOUNDATION.

    Section 105 of the Global Change Research Act of 1990 (15 U.S.C. 
2935) is amended--
            (1) by redesignating subsection (c) as subsection (d); and
            (2) by inserting after subsection (b) the following:
    ``(c) Research Grants.--
            ``(1) List of priority research areas.--The Committee shall 
        develop a list of priority areas for research and development 
        on climate change that are not being adequately addressed by 
        Federal agencies.
            ``(2) Transmission of list.--The Director of the Office of 
        Science and Technology Policy shall submit the list developed 
        under paragraph (1) to the National Science Foundation.
            ``(3) Authorization of appropriations.--There are 
        authorized to be appropriated to the National Science 
        Foundation such sums as are necessary to carry out this 
        subsection, to be made available through the Science and 
        Technology Policy Institute, for research in the priority 
        areas.''.

SEC. 202. ABRUPT CLIMATE CHANGE RESEARCH.

    (a) In General.--The Secretary of Commerce, acting through the 
National Oceanic and Atmospheric Administration, shall carry out a 
program of scientific research on abrupt climate change designed to 
provide timely warnings of the potential likelihood, magnitude, and 
consequences of, and measures to avoid, abrupt human-induced climate 
change.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Commerce such sums as are necessary to 
carry out this section.

SEC. 203. DEVELOPMENT OF NEW MEASUREMENT TECHNOLOGIES.

    (a) In General.--The Administrator of the Environmental Protection 
Agency shall carry out a program to develop, with technical assistance 
from appropriate Federal agencies, innovative standards and measurement 
technologies to calculate greenhouse gas emissions or reductions for 
which no accurate, reliable, low-cost measurement technology exists.
    (b) Administration.--The program shall include technologies 
(including remote sensing technologies) to measure carbon changes and 
other greenhouse gas emissions and reductions from agriculture, 
forestry, wetlands, and other land use practices.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Administrator such sums as are necessary to carry 
out this section.

SEC. 204. TECHNOLOGY DEVELOPMENT AND DIFFUSION.

    (a) In General.--The Director of the National Institute of 
Standards and Technology, acting through the Manufacturing Extension 
Partnership program, may develop a program to promote the use, by small 
manufacturers, of technologies and techniques that result in reduced 
emissions of greenhouse gases or increased sequestration of greenhouse 
gases.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to the Director of the National Institute of Standards and 
Technology such sums as are necessary to carry out this section.

SEC. 205. PUBLIC LAND.

    (a) In General.--Not later than 3 years after the date of enactment 
of this Act, the Secretary of Agriculture and the Secretary of the 
Interior shall prepare a joint assessment or separate assessments 
setting forth recommendations for increased sequestration of greenhouse 
gases and reduction of greenhouse gas emissions on public land that 
is--
            (1) managed forestland;
            (2) managed rangeland or grassland; or
            (3) protected land, including national parks and designated 
        wilderness areas.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Agriculture and the Secretary of the 
Interior such sums as are necessary to carry out this section.

SEC. 206. SEA LEVEL RISE FROM POLAR ICE SHEET MELTING.

    (a) In General.--The Secretary of Commerce, acting through the 
National Oceanic and Atmospheric Administration and in cooperation with 
the Administrator of the National Aeronautics and Space Administration, 
shall carry out a program of scientific research to support modeling 
and observations into the potential role of the Greenland, west 
Antarctic, and east Antarctic ice sheets in any future increase in sea 
levels.
    (b) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Commerce and the Administrator of the 
National Aeronautics and Space Administration such sums as are 
necessary to carry out this section.
                                 <all>
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