II 

110TH CONGRESS 

1ST SESSION S. 1874 

To provide for efficient containment and management of climate change 

costs. 

IN THE SENATE OF THE UNITED STATES 

JULY 25, 2007 

Ms. LANDRIEU (for herself, Mr. GRAHAM, Mrs. LINCOLN, and Mr. WARNER) 

introduced the following bill; which was read twice and referred to the 

Committee on Environment and Public Works 

A BILL 

To provide for efficient containment and management of 

climate change costs. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Containing and Man5 aging Climate Change Costs Efficiently Act’’. 

6 SEC. 2. PURPOSES. 

7 The purposes of this Act are— 

8 (1) to ensure that the imposition of limits on 

9 greenhouse gas emissions will not significantly harm 

10 the economy of the United States; and 


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1 (2) to establish a Carbon Market Efficiency 

2 Board to ensure the implementation and mainte3 nance of a stable, functioning, and efficient market 

4 in tradeable permits to emit greenhouse gases. 

5 SEC. 3. ESTABLISHMENT OF CARBON MARKET EFFICIENCY 

6 BOARD. 

7 (a) ESTABLISHMENT.—There is established a board, 

8 to be known as the ‘‘Carbon Market Efficiency Board’’ 

9 (referred to in this Act as the ‘‘Board’’). 

10 (b) PURPOSES.—The purposes of the Board are— 

11 (1) to promote the achievement of the environ12 mental objectives (including any national mandatory 

13 greenhouse gas emissions cap and reduction targets) 

14 of the United States; 

15 (2) to observe the national greenhouse gas 

16 emission market and evaluate periods during which 

17 the cost of permits provided under Federal law 

18 might pose significant harm to the economy; 

19 (3) to conduct observation during the 2-year pe20 riod following the establishment of a market pro21 gram for permits under Federal law, and to provide 

22 temporary, short-term relief at any time at which 

23 the program is determined to pose a significant 

24 harm to the economy using the cost relief measures 

25 prescribed under section 5; and 


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1 (4) to submit to the President and Congress 

2 quarterly reports— 

3 (A) describing the status of each green4 house gas emission market established under 

5 Federal law, the economic effects of the mar6 kets, regional, industrial, and consumer re7 sponses to the markets, any corrective measures 

8 that should be carried out to relieve excessive 

9 costs of the markets, and plans to compensate 

10 for those measures; 

11 (B) that are timely and succinct to ensure 

12 regular monitoring of market trends; and 

13 (C) that are prepared independently by the 

14 Board. 

15 (c) MEMBERSHIP.— 

16 (1) COMPOSITION.—The Board shall be com17 posed of 7 members, to be appointed by the Presi18 dent, by and with the advice and consent of the Sen19 ate. 

20 (2) REQUIREMENTS.—In appointing members 

21 of the Board under paragraph (1), the President 

22 shall— 

23 (A) ensure fair representation of the finan24 cial, agricultural, industrial, and commercial 


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1 sectors, and the geographical regions, of the 

2 United States; and 

3 (B) appoint not more than 1 member from 

4 each such geographical region. 

5 (3) COMPENSATION.— 

6 (A) IN GENERAL.—A member of the Board 

7 shall be compensated at a rate equal to the 

8 daily equivalent of the annual rate of basic pay 

9 prescribed for level II of the Executive Schedule 

10 under section 5313 of title 5, United States 

11 Code, for each day (including travel time) dur12 ing which the member is engaged in the per13 formance of the duties of the Board. 

14 (B) CHAIRPERSON.—The Chairperson of 

15 the Board shall be compensated at a rate equal 

16 to the daily equivalent of the annual rate of 

17 basic pay prescribed for level I of the Executive 

18 Schedule under section 5312 of title 5, United 

19 States Code, for each day (including travel 

20 time) during which the member is engaged in 

21 the performance of the duties of the Board. 

22 (4) PROHIBITIONS.— 

23 (A) CONFLICTS OF INTEREST.—An indi24 vidual employed by, or holding any official rela25 tionship (including any shareholder) with, any 


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1 entity engaged in the generation, transmission, 

2 distribution, or sale of energy, or an individual 

3 who has any pecuniary interest in the genera4 tion, transmission, distribution, or sale of en5 ergy, shall not be appointed to the Board under 

6 this subsection. 

7 (B) NO OTHER EMPLOYMENT.—A member 

8 of the Board shall not hold any other employ9 ment during the term of service of the member. 

10 (d) TERM; VACANCIES.— 

11 (1) TERM.— 

12 (A) IN GENERAL.—The term of a member 

13 of the Board shall be 14 years, except that the 

14 members first appointed to the Board shall be 

15 appointed for terms in a manner that ensures 

16 that— 

17 (i) the term of not more than 1 mem18 ber shall expire during any 2-year period; 

19 and 

20 (ii) no member serves a term of more 

21 than 14 years. 

22 (B) OATH OF OFFICE.—A member shall 

23 take the oath of office of the Board by not later 

24 than 15 days after the date on which the mem25 ber is appointed under subsection (c)(1). 


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1 (C) REMOVAL.— 

2 (i) IN GENERAL.—A member may be 

3 removed from the Board on determination 

4 of the President for cause. 

5 (ii) NOTIFICATION.—The President 

6 shall submit to Congress a notification of 

7 any determination by the President to re8 move a member of the Board for cause 

9 under clause (i). 

10 (2) VACANCIES.— 

11 (A) IN GENERAL.—A vacancy on the 

12 Board— 

13 (i) shall not affect the powers of the 

14 Board; and 

15 (ii) shall be filled in the same manner 

16 as the original appointment was made. 

17 (B) SERVICE UNTIL NEW APPOINTMENT.— 

18 A member of the Board the term of whom has 

19 expired or otherwise been terminated shall con20 tinue to serve until the date on which a replace21 ment is appointed under subparagraph (A)(ii), 

22 as the President determines to be appropriate. 

23 (e) CHAIRPERSON AND VICE-CHAIRPERSON.—Of 

24 members of the Board, the President shall appoint— 


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1 (1) 1 member to serve as Chairperson of the 

2 Board for a term of 4 years; and 

3 (2) 1 member to serve as Vice-Chairperson of 

4 the Board for a term of 4 years. 

5 (f) MEETINGS.— 

6 (1) INITIAL MEETING.—The Board shall hold 

7 the initial meeting of the Board as soon as prac8 ticable after the date on which all members have 

9 been appointed to the Board under subsection 

10 (c)(1). 

11 (2) PRESIDING OFFICER.—A meeting of the 

12 Board shall be presided over by— 

13 (A) the Chairperson; 

14 (B) in any case in which the Chairperson 

15 is absent, the Vice-Chairperson; or 

16 (C) in any case in which the Chairperson 

17 and Vice-Chairperson are absent, a chairperson 

18 pro tempore, to be elected by the members of 

19 the Board. 

20 SEC. 4. DUTIES. 

21 (a) INFORMATION GATHERING.— 

22 (1) AUTHORITY.—The Board shall collect and 

23 analyze relevant market information to promote a 

24 full understanding of the dynamics of each greenVerDate Aug 31 2005 04:39 Jul 26, 2007 Jkt 059200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1874.IS S1874

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1 house gas emission market established under Fed2 eral law. 

3 (2) INFORMATION.—The Board shall gather 

4 such information as the Board determines to be ap5 propriate regarding the status of the markets, in6 cluding information relating to— 

7 (A) permit allocation and availability; 

8 (B) the price of permits; 

9 (C) macro- and micro- economic effects of 

10 the markets; and 

11 (D) the success of the markets in achieving 

12 the environmental objectives of the markets. 

13 (b) TREATMENT AS PRIMARY ACTIVITY.— 

14 (1) IN GENERAL.—During the initial 2-year pe15 riod of operation of the Board, information gath16 ering under subsection (a) shall be the primary ac17 tivity of the Board. 

18 (2) SUBSEQUENT AUTHORITY.—After the 2- 

19 year period described in paragraph (1), the Board 

20 shall assume authority to implement the cost-relief 

21 measures described in section 5(a). 

22 (c) STUDY.—During the 2-year period beginning on 

23 the date on which the initial greenhouse gas emission mar24 ket established under Federal law begins operation, the 

25 Board shall— 


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1 (1) conduct a study of other markets for 

2 tradeable permits to emit covered greenhouse gases 

3 in the United States; and 

4 (2) not later than 180 days after that date, 

5 submit to Congress a report describing the status of 

6 the initial market, specifically with respect to vola7 tility within the market and the average price of 

8 greenhouse gas permits during that 180-day period. 

9 (d) EMPLOYMENT OF COST RELIEF MEASURES.— 

10 (1) IN GENERAL.—If the Board determines 

11 that a greenhouse gas emission market established 

12 under Federal law poses a significant harm to the 

13 economy of the United States, the Board shall carry 

14 out such cost relief measures relating to that market 

15 as the Board determines to be appropriate under 

16 section 5(a). 

17 (2) INITIAL PERIOD.—During the 2-year period 

18 beginning on the date on which the initial green19 house gas emission market established under Fed20 eral law begins operation, if the Board determines 

21 that the average daily closing price of greenhouse 

22 gas permits during a 180-day period exceeds the 

23 upper range of the estimate provided under section 

24 6, the Board shall— 


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1 (A) increase the quantity of permits that 

2 covered entities may borrow from the prescribed 

3 allocations of the covered entities for future 

4 years; and 

5 (B) take subsequent action as described in 

6 section 5(a)(2). 

7 (3) REQUIREMENTS.—Any action carried out 

8 pursuant to this subsection shall be subject to the 

9 requirements of section 5(a)(3)(B). 

10 (e) REPORTS.—The Board shall submit to the Presi11 dent and Congress quarterly reports— 

12 (1) describing the status of each greenhouse 

13 gas emission market established under Federal law, 

14 the economic effects of the markets, regional, indus15 trial, and consumer responses to the markets, any 

16 corrective measures that should be carried out to re17 lieve excessive costs of the markets, and plans to 

18 compensate for those measures; and 

19 (2) that are prepared independently by the 

20 Board, and not in partnership with Federal agen21 cies. 

22 SEC. 5. POWERS. 

23 (a) COST RELIEF MEASURES.— 

24 (1) IN GENERAL.—Beginning on the day after 

25 the date of expiration of the 2-year period described 


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1 in section 4(b), the Board may carry out 1 or more 

2 of the following cost relief measures to ensure func3 tioning, stable, and efficient markets for tradeable 

4 permits to emit greenhouse gases: 

5 (A) Increase the quantity of permits that 

6 covered entities may borrow from the prescribed 

7 allocations of the covered entities for future 

8 years. 

9 (B) Expand the period during which a cov10 ered entity may repay the allocating agency for 

11 a permit borrowed as described in subpara12 graph (A). 

13 (C) Lower the interest rate at which a per14 mit may be borrowed as described in subpara15 graph (A). 

16 (D) Expand the total quantity of permits 

17 made available to all covered entities at any 

18 given time by borrowing against the total allow19 able quantity of permits to be provided for fu20 ture years. 

21 (2) SUBSEQUENT ACTIONS.—On determination 

22 by the Board to carry out a cost relief measure pur23 suant to paragraph (1), the Board shall— 

24 (A) allow the cost relief measure to be 

25 used only during the applicable allocation year; 


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1 (B) exercise the cost relief measure incre2 mentally, and only as needed to avoid signifi3 cant economic harm during the applicable allo4 cation year; 

5 (C) specify the terms of the relief to be 

6 achieved using the cost relief measure, includ7 ing requirements for entity-level or national 

8 market-level compensation to be achieved by a 

9 specific date or within a specific time period; 

10 (D) in accordance with section 4(e), submit 

11 to the President and Congress a report describ12 ing the actions carried out by the Board and 

13 recommendations for the terms under which the 

14 cost relief measure should be authorized by 

15 Congress and carried out by Federal entities; 

16 and 

17 (E) evaluate, at the end of the applicable 

18 allocation year, actions that need to be carried 

19 out during subsequent years to compensate for 

20 any cost relief measure carried out during the 

21 applicable allocation year. 

22 (3) ACTION ON EXPANSION OF BORROWING.— 

23 (A) IN GENERAL.—If the Board carries 

24 out a cost relief measure pursuant to paragraph 

25 (1) that results in the expansion of borrowing 


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1 of permits under Federal law, and if the aver2 age daily closing price of permits for the 180- 

3 day period beginning on the date on which bor4 rowing is so expanded exceeds the upper range 

5 of the estimate provided under section 6, the 

6 Board shall increase the quantity of permits 

7 available for the applicable allocation year in 

8 accordance with this paragraph. 

9 (B) REQUIREMENTS.—An increase in the 

10 quantity of permits under subparagraph (A) 

11 shall— 

12 (i) apply to all covered entities; 

13 (ii) be allocated in accordance with 

14 the applicable formulas and procedures es15 tablished under this Act; 

16 (iii) be equal to not more than 5 per17 cent of the total quantity of permits other18 wise available for the applicable allocation 

19 year under this Act; 

20 (iv) remain in effect only for the ap21 plicable allocation year; 

22 (v) specify the date by which the in23 crease shall be repaid by covered entities 

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1 mits available for subsequent allocation 

2 years; and 

3 (vi) require the repayment under 

4 clause (v) to be made by not later than the 

5 later of— 

6 (I) the date that is 15 years after 

7 the date on which the increase is pro8 vided; and 

9 (II) the date on which the subse10 quent applicable phase of greenhouse 

11 gas reductions takes effect under this 

12 Act. 

13 (b) ASSESSMENTS.—Not more frequently than semi14 annually, the Board may levy on participants in any per15 mit trading system established under Federal law, in pro16 portion to the capital stock and surplus of the partici17 pants, an assessment sufficient to pay the estimated ex18 penses of the Board and the salaries of members of and 

19 employees of the Board during the 180-day period begin20 ning on the date on which the assessment is levied, taking 

21 into account any deficit carried forward from the pre22 ceding 180-day period. 

23 (c) LIMITATIONS.—Nothing in this section gives the 

24 Board the authority— 


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1 (1) to consider or prescribe entity-level petitions 

2 for relief from the costs of a permit allocation or 

3 trading program established under Federal law; 

4 (2) to carry out any investigative or punitive 

5 process under the jurisdiction of any Federal or 

6 State court; 

7 (3) to interfere with, modify, or adjust any per8 mit allocation scheme established under Federal law; 

9 or 

10 (4) to modify the goals of any limit on green11 house gas emissions. 

12 SEC. 6. ESTIMATE OF COSTS TO ECONOMY OF LIMITING 

13 GREENHOUSE GAS EMISSIONS. 

14 The Director of the Congressional Budget Office, 

15 using economic and scientific analyses, shall submit to 

16 Congress a report that describes the projected price range 

17 at which greenhouse gas permits are expected to trade 

18 during the initial 2-year period of the initial greenhouse 

19 gas emission market established under Federal law. 

20 SEC. 7. AUTHORIZATION OF APPROPRIATIONS. 

21 There are authorized to be appropriated such sums 

22 as are necessary to carry out this Act. 

Æ 


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