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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 2877 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                S. 2877

   To direct the Secretary of the Treasury to establish a program to 
regulate the entry of fossil carbon into commerce in the United States 
 to promote clean energy jobs and economic growth and avoid dangerous 
  interference with the climate of the Earth, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           December 11, 2009

  Ms. Cantwell (for herself and Ms. Collins) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
   To direct the Secretary of the Treasury to establish a program to 
regulate the entry of fossil carbon into commerce in the United States 
 to promote clean energy jobs and economic growth and avoid dangerous 
  interference with the climate of the Earth, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Carbon Limits and Energy for 
America's Renewal (CLEAR) Act''.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
            (2) Carbon dioxide equivalent.--The term ``carbon dioxide 
        equivalent'' means the equivalent weight of carbon dioxide 
        obtained by multiplying--
                    (A) the weight of fossil carbon; and
                    (B) the quotient obtained by dividing--
                            (i) the molecular weight of carbon dioxide; 
                        by
                            (ii) the molecular weight of carbon.
            (3) Carbon refund trust fund.--The term ``Carbon Refund 
        Trust Fund'' means the Carbon Refund Trust Fund established by 
        section 4(f).
            (4) Carbon share.--The term ``carbon share'' means the 
        right to sell or otherwise place into commerce in the United 
        States 1 ton of fossil carbon.
            (5) Carbon share derivative.--The term ``carbon share 
        derivative'' means any transaction or contract that derives the 
        value of the transaction or contract in part or in whole from 
        the value of a carbon share.
            (6) CERT fund.--The term ``CERT Fund'' means the Clean 
        Energy Reinvestment Trust Fund established by section 6(a).
            (7) Clean energy technology.--The term ``clean energy 
        technology'' means a technology relating to the production, 
        use, transmission, storage, control, or conservation of energy 
        that would--
                    (A) reduce the need for additional energy supplies 
                by--
                            (i) using energy sources in existence as of 
                        the date of enactment of this Act with greater 
                        efficiency; or
                            (ii) transmitting, distributing, or 
                        transporting energy with greater effectiveness 
                        through the infrastructure of the United 
                        States;
                    (B) diversify the sources of energy supply of the 
                United States and reduce the dependence of the United 
                States on imported energy; or
                    (C) contribute to the reduction, avoidance, or 
                sequestration of energy-related greenhouse gas 
                emissions.
            (8) Covered fossil carbon.--The term ``covered fossil 
        carbon'' means fossil carbon that is--
                    (A) introduced into domestic commerce;
                    (B) combusted or released into the atmosphere by a 
                first seller; or
                    (C) transferred as a royalty-in-kind.
            (9) Energy security dividend.--The term ``energy security 
        dividend'' means, with respect to any month, a payment in an 
        amount that is equal to the quotient obtained by dividing--
                    (A) the amount of auction proceeds transferred into 
                the Carbon Refund Trust Fund for the month preceding 
                such month; by
                    (B) the number of qualified individuals for the 
                preceding month.
            (10) First seller.--The term ``first seller'' means an 
        entity in the business of producing or importing fossil carbon 
        or production process carbon, as determined by the Secretary.
            (11) Fossil carbon.--The term ``fossil carbon'' means--
                    (A) carbon in the form of a fossil fuel (such as 
                coal, natural gas, and crude oil) in the raw state in 
                which the fossil fuel exists at the time the fossil 
                fuel is removed from the Earth; and
                    (B) the carbon content of imported refined fuel 
                products (such as gasoline, diesel, and jet fuels) 
                derived from a fossil fuel.
            (12) Greenhouse gas.--The term ``greenhouse gas'' means--
                    (A) carbon dioxide;
                    (B) methane;
                    (C) nitrous oxide;
                    (D) a hydrofluorocarbon;
                    (E) a perfluorocarbon;
                    (F) sulfur hexafluoride; and
                    (G) any other anthropogenically emitted gas that 
                the Administrator, after notice and comment, determines 
                to contribute to climate change.
            (13) Point-of-entry.--
                    (A) In general.--The term ``point-of-entry'' means, 
                with respect to the economy of the United States, the 
                point at which fossil carbon is introduced into 
                commerce.
                    (B) Inclusions.--The term ``point-of-entry'' 
                includes--
                            (i) a wellhead;
                            (ii) a mine entrance; and
                            (iii) any port-of-entry, as determined by 
                        the Secretary.
            (14) Production process carbon.--The term ``production 
        process carbon'' means the quantity of fossil carbon used to 
        manufacture an energy-intensive commodity.
            (15) Program.--The term ``program'' means the fossil carbon 
        limitation program established under section 4(a)(1).
            (16) Qualified individual.--The term ``qualified 
        individual'' means any individual who lawfully resides in the 
        United States.
            (17) Rate of capital investment return.--The term ``rate of 
        capital investment return'' means an annual real rate of return 
        on capital investment of 6 percent.
            (18) Rate of inflation.--The term ``rate of inflation'' 
        means the annual rate increase of the price of goods and 
        services, as measured by the Consumer Price Index for All Urban 
        Consumers published by the Bureau of Labor Statistics of the 
        Department of Labor.
            (19) Safety valve price.--The term ``safety valve price'' 
        means the maximum price per ton of carbon dioxide equivalent 
        for any 1 calendar year established under section 4(a)(4).
            (20) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.
            (21) Voluntary carbon reduction purchase.--The term 
        ``voluntary carbon reduction purchase'' means the voluntary 
        purchase of credits that--
                    (A) are not used to meet any regulatory mandate 
                (including any renewable energy standard required by 
                the Federal Government or any State);
                    (B) include Federal or State renewable energy 
                certificates, energy efficiency certificates, and other 
                eligible purchases as determined by the Secretary; and
                    (C) are solely responsible for the reduction of 
                domestic fossil carbon emissions.

SEC. 3. GLOBAL WARMING EMISSIONS REDUCTION STANDARDS.

    (a) In General.--The President shall, through the program and the 
CERT Fund and in accordance with this Act, reduce steadily the quantity 
of United States greenhouse gas emissions to achieve the emissions 
reduction standards described in subsection (b).
    (b) Periodic Emissions Reduction Standards.--
            (1) Calendar year 2020.--During calendar year 2020, the 
        quantity of United States greenhouse gas emissions shall not 
        exceed 80 percent of the quantity of United States greenhouse 
        gas emissions during calendar year 2005.
            (2) Calendar year 2025.--During calendar year 2025, the 
        quantity of United States greenhouse gas emissions shall not 
        exceed 70 percent of the quantity of United States greenhouse 
        gas emissions during calendar year 2005.
            (3) Calendar year 2030.--During calendar year 2030, the 
        quantity of United States greenhouse gas emissions shall not 
        exceed 58 percent of the quantity of United States greenhouse 
        gas emissions during calendar year 2005.
            (4) Calendar year 2050.--During calendar year 2050, the 
        quantity of United States greenhouse gas emissions shall not 
        exceed 17 percent of the quantity of United States greenhouse 
        gas emissions during calendar year 2005.

SEC. 4. FOSSIL CARBON LIMITATION PROGRAM.

    (a) Establishment.--
            (1) In general.--The Secretary shall by regulation 
        establish within the Department of the Treasury a program to 
        reduce the emission of greenhouse gases--
                    (A) by placing a gradually declining limitation on 
                the quantity of fossil carbon permitted to be sold into 
                commerce in the United States; and
                    (B) by requiring each first seller to surrender 
                periodically to the Secretary a number of carbon shares 
                equal to the quantity of covered fossil carbon produced 
                or imported by the first seller by not later than 2 
                years after the date on which the fossil carbon becomes 
                covered fossil carbon.
            (2) Annual quantity of carbon shares.--
                    (A) Initial quantity.--
                            (i) In general.--Not later than January 1, 
                        2011, to carry out the program, in accordance 
                        with clause (ii), the President, in 
                        consultation with the Secretary, the 
                        Administrator, and the Secretary of Energy, 
                        shall establish and announce a maximum 
                        aggregate quantity of fossil carbon, and a 
                        corresponding number of carbon shares, 
                        permitted to be introduced through points-of-
                        entry for calendar year 2012.
                            (ii) Requirement.--The maximum aggregate 
                        quantity of carbon shares for calendar year 
                        2012 under clause (i) shall equal the 
                        approximate level of fossil carbon likely to be 
                        required by the economy of the United States 
                        during calendar year 2012.
                    (B) Subsequent quantities.--
                            (i) Calendar years 2013 and 2014.--For each 
                        of calendar years 2013 and 2014, the maximum 
                        aggregate quantity of carbon shares permitted 
                        to be introduced through points-of-entry shall 
                        be equal to the maximum aggregate quantity 
                        established under subparagraph (A)(i).
                            (ii) Calendar year 2015 and subsequent 
                        calendar years.--For calendar year 2015 and 
                        each calendar year thereafter, the maximum 
                        aggregate quantity of carbon shares shall be 
                        reduced from the quantity of the previous 
                        calendar year at a rate that--
                                    (I) for calendar year 2015, is 
                                equal to 0.25 percent; and
                                    (II) for each subsequent calendar 
                                year, increases by an additional 0.25 
                                percent.
                    (C) Modification of quantity of carbon shares 
                available.--Subject to paragraph (3), the President, in 
                consultation with the Secretary, the Administrator, and 
                the Secretary of Energy, may increase or decrease the 
                number of carbon shares available for an auction to 
                respond to--
                            (i) changes in the scientific understanding 
                        of climate change;
                            (ii) the need to stabilize atmospheric 
                        greenhouse gas concentrations to avoid 
                        dangerous interference with the climate of the 
                        Earth;
                            (iii) any international obligations of the 
                        United States, including any commitment of the 
                        United States under the United Nations 
                        Framework Convention on Climate Change;
                            (iv) the need to maintain the international 
                        competitiveness of the United States;
                            (v) the quantity of carbon that has, or is 
                        likely, to be permanently sequestered from 
                        release into the atmosphere or ocean;
                            (vi) the need to provide a sufficient price 
                        signal to ensure private sector investment in 
                        clean energy technology research, development, 
                        and deployment; and
                            (vii) appropriations for the programs and 
                        initiatives described in section 6(c) that are 
                        insufficient to permit the President to meet 
                        the standards established by section 3(b).
            (3) Expedited congressional review.--
                    (A) Definition of joint resolution.--In this 
                paragraph, the term ``joint resolution'' means only a 
                joint resolution introduced during the 30-day period 
                beginning on the date on which the report referred to 
                in subparagraph (B) is received by Congress (excluding 
                days either House of Congress is adjourned for more 
                than 3 days during a session of Congress), the matter 
                after the resolving clause of which is as follows: 
                ``That Congress approves the modification of the number 
                of shares available for auction described in the report 
                required under section 4(a)(3)(B) of the CLEAR Act 
                submitted by the President to Congress on ____, and the 
                modification shall take effect.'' (The blank space 
                being appropriately filled in).
                    (B) Report.--Before any modification of the number 
                of shares available for auction take effect under 
                paragraph (2)(C), the President shall submit to each 
                House of Congress a report that provides a notice of 
                the modification.
                    (C) Approval.--The modification of the number of 
                shares available for auction under paragraph (2)(C) 
                shall take effect if Congress enacts a joint resolution 
                of approval of the modification.
                    (D) Procedure.--
                            (i) In general.--Subject to clause (ii), 
                        the procedures described in subsections (b) 
                        through (g) of section 802 of title 5, United 
                        States Code, shall apply to the consideration 
                        of a joint resolution under this paragraph.
                            (ii) Terms.--For purposes of this 
                        subparagraph--
                                    (I) the reference to ``section 
                                801(a)(1)'' in section 802(b)(2)(A) of 
                                that title shall be considered to refer 
                                to subparagraph (B); and
                                    (II) the reference to ``section 
                                801(a)(1)(A)'' in section 802(e)(2) of 
                                that title shall be considered to refer 
                                to subparagraph (B).
            (4) Auction price safeguards.--
                    (A) Calendar year 2012.--The carbon share price 
                shall be limited in a manner to ensure that the 
                corresponding price per ton of carbon dioxide 
                equivalent for calendar year 2012 is--
                            (i) not less than $7; and
                            (ii) not more than $21.
                    (B) Subsequent calendar years.--For calendar year 
                2013 and each calendar year thereafter--
                            (i) subject to clause (ii), the minimum 
                        allowable carbon share price shall increase by 
                        the aggregate rate obtained by adding--
                                    (I) the rate of inflation; and
                                    (II) the rate of capital investment 
                                return plus 0.5 percent; and
                            (ii) the maximum allowable carbon share 
                        price shall increase by the aggregate rate 
                        obtained by adding--
                                    (I) the rate of inflation; and
                                    (II) the rate of capital investment 
                                return minus 0.5 percent.
            (5) Penalty for noncompliance.--
                    (A) In general.--Any first seller that fails to 
                surrender a sufficient number of carbon shares for the 
                fossil carbon that the first seller introduced to the 
                United States market by not later than 2 years after 
                the date on which the fossil carbon becomes covered 
                fossil carbon shall be liable for payment to the 
                Secretary of a penalty in the amount described in 
                subparagraph (B).
                    (B) Amount.--The amount of a penalty required to be 
                paid under subparagraph (A) shall be equal to the 
                product obtained by multiplying--
                            (i) the number of carbon shares that the 
                        owner failed to surrender by the deadline; by
                            (ii) 5 times the carbon share price set at 
                        an auction described in subsection (b), the 
                        date of which is closest to that of the sale of 
                        the fossil carbon subject to a noncompliance 
                        penalty.
                    (C) Timing.--A penalty required under this 
                paragraph shall be immediately due and payable to the 
                Secretary.
                    (D) No effect on liability.--A penalty due and 
                payable by the owner of a covered entity under this 
                paragraph shall not diminish the liability of the owner 
                for any fine, penalty, or assessment against the owner 
                for the same violation under any other provision of 
                law.
                    (E) Use of penalties.--Any penalties collected by 
                the Secretary under this paragraph shall be transferred 
                to the CERT Fund.
            (6) Production process carbon adjustment.--
                    (A) In general.--Not later than January 1, 2013, 
                the Secretary, in consultation with the Secretary of 
                Commerce, the Secretary of Energy, and the United 
                States Trade Representative, shall impose fees on 
                individuals and entities for the production process 
                carbon associated with commodities imported for sale in 
                the United States.
                    (B) Amount of fee.--To the maximum extent 
                practicable, a fee described in subparagraph (A) shall 
                be an amount commensurate with the carbon share value 
                of the production process carbon that is the subject of 
                the fee.
                    (C) Applicability.--A fee described in subparagraph 
                (A) shall only apply to imported commodities if--
                            (i) the fee is compatible with the 
                        obligations of the United States with respect 
                        to any applicable international trade agreement 
                        or treaty to which the United States is a 
                        party;
                            (ii) the country in which the commodity was 
                        produced does not impose comparable limits or 
                        fees on the use of fossil carbon; and
                            (iii) domestic producers of comparable 
                        commodities would be demonstrably disadvantaged 
                        economically by the Program in the absence of 
                        the fees.
                    (D) Use of fees.--Any fees collected by the 
                Secretary under this paragraph shall be transferred to 
                the CERT Fund.
                    (E) Adjustment methodology.--Not later than 180 
                days after the date of enactment of this Act and 
                periodically thereafter, the Secretary, in consultation 
                with the Secretary of Commerce, the Secretary of 
                Energy, and the United States Trade Representative, 
                shall propose specific data sources and methodologies 
                for measuring and determining which sectors and 
                commodities should be covered by production process 
                carbon adjustments.
            (7) Targeted relief funds.--
                    (A) In general.--Not later than January 1, 2013, 
                the Secretary, in consultation with the Secretary of 
                Commerce, the Secretary of Energy, and the United 
                States Trade Representative, shall distribute funds 
                that are appropriated from the CERT Fund to individuals 
                and entities that are unable to compete due to unfair 
                market prices arising from disparate fossil carbon 
                limits or fees among countries.
                    (B) Amount of fee.--To the maximum extent 
                practicable, the funds described in subparagraph (A) 
                shall be an amount commensurate with the product 
                obtained by multiplying--
                            (i) the average additional cost per unit 
                        output for the industry or economic sector due 
                        to disparate carbon limits among countries; and
                            (ii) the number of output units.
                    (C) Applicability.--The funds described in 
                subparagraph (A) shall only apply to an industry or 
                economic sector if--
                            (i) the funds are compatible with the 
                        obligations of the United States with respect 
                        to any applicable international trade agreement 
                        or treaty to which the United States is a 
                        party;
                            (ii) the destination country for United 
                        States exports does not impose comparable 
                        limits or fees on--
                                    (I) the use of fossil carbon within 
                                the territories of that country; or
                                    (II) the importation of production 
                                process carbon; and
                            (iii) domestic producers would be 
                        demonstrably disadvantaged economically and 
                        competitively by the program in the absence of 
                        the funds.
                    (D) Transfer of funds.--Any funds distributed by 
                the Secretary under this paragraph shall be transferred 
                from the CERT Fund, as authorized under section 6(c).
                    (E) Adjustment methodology.--
                            (i) In general.--Not later than 180 days 
                        after the date of enactment of this Act and 
                        periodically thereafter, in accordance with 
                        clause (ii), the Secretary, in consultation 
                        with the Secretary of Commerce, the Secretary 
                        of Energy, and the United States Trade 
                        Representative, shall propose specific data 
                        sources and methodologies for measuring and 
                        determining which sectors and industries should 
                        be considered to be eligible for targeted 
                        relief funds.
                            (ii) Priority.--In carrying out clause (i), 
                        to maximize the effectiveness of available 
                        funds, the Secretary shall give priority to the 
                        most economically and competitively 
                        disadvantaged industries and economic sectors.
    (b) Auctions.--
            (1) In general.--Subject to paragraph (9), in carrying out 
        the program, during each calendar year, the Secretary shall 
        conduct monthly uniform price auctions of a portion of the 
        carbon shares made available for the calendar year under 
        subsection (a)(2).
            (2) Eligible participants.--First sellers shall be the only 
        entities eligible to participate in an auction conducted under 
        paragraph (1).
            (3) Reserve price.--The minimum price of any carbon share 
        purchased under an auction conducted under paragraph (1) shall 
        be the minimum price for the corresponding calendar year 
        specified in subsection (a)(4).
            (4) Safety valve price.--
                    (A) In general.--Subject to subparagraph (B), the 
                maximum price of any carbon share purchased under an 
                auction conducted under paragraph (1) shall be the 
                maximum price for the corresponding calendar year 
                specified in subsection (a)(4).
                    (B) Safety valve shares.--If the safety valve price 
                is reached in any 1 auction conducted under paragraph 
                (1), the number of available carbon shares may be 
                increased to exceed the aggregate quantity described in 
                subsection (a)(2) to ensure that all legal bids at the 
                safety valve price can be accommodated for the 1 
                auction.
                    (C) Safety valve revenues.--Any revenue generated 
                by the sale of a carbon share at the safety valve price 
                that is in excess of the aggregate quantity described 
                in subsection (a)(2) shall be--
                            (i) deposited in the CERT Fund; and
                            (ii) used only for the conduct of a program 
                        or initiative within the United States 
                        described in subparagraph (F) or (G) of section 
                        6(c)(1).
                    (D) Use of safety valve carbon shares.--A carbon 
                share purchased at the safety valve price shall be 
                redeemed by not later than 90 days after the date on 
                which the original purchaser purchased the carbon 
                share.
            (5) Use of carbon shares.--A carbon share purchased under 
        an auction conducted under paragraph (1), or on an exchange 
        described in paragraph (7)(A), may only be redeemed by a first 
        seller during the 10-year period commencing on the date of 
        issuance to the original carbon share holder.
            (6) Limitation of carbon share purchases and 
        accumulation.--
                    (A) Purchase limitation.--During any calendar year, 
                a first seller may not purchase a quantity of carbon 
                shares that significantly exceeds the anticipated 
                volume of covered fossil carbon of the first seller for 
                the calendar year, as determined by the Secretary.
                    (B) Accumulation limitation.--A first seller may 
                not accumulate a quantity of carbon shares that, as 
                determined by the Secretary--
                            (i) exceeds the anticipated volume of 
                        covered fossil carbon of the first seller for 
                        the duration of the period during which the 
                        carbon shares held by the first seller may be 
                        redeemed;
                            (ii) allows for speculation or 
                        manipulation; or
                            (iii) interferes with normal market 
                        competition.
            (7) Purchase or sale of carbon shares.--
                    (A) In general.--A transaction other than an 
                auction described in paragraph (1) that involves the 
                purchase or sale of a carbon share may be carried out 
                only if--
                            (i) the carbon share is offered for sale to 
                        any eligible first seller on a dedicated public 
                        carbon share exchange established and 
                        administered by the Secretary for that purpose; 
                        and
                            (ii) all relevant transaction dates, carbon 
                        share quantities, and prices are made publicly 
                        available on a real-time basis.
                    (B) Certain recipients of carbon shares.--
                Recipients of carbon shares under subsection (c) shall 
                be granted access to an exchange described in 
                subparagraph (A) solely for the purpose of selling 
                carbon shares to eligible first sellers.
            (8) Carbon share derivatives market.--
                    (A) Prohibition.--A first seller may not directly 
                or indirectly create, purchase, sell, or trade carbon 
                share derivatives.
                    (B) Regulations.--Not later than 1 year after the 
                date of enactment of this Act, the Secretary, in 
                consultation with the Commodity Futures Trading 
                Commission, the Federal Energy Regulatory Commission, 
                and the Federal Trade Commission, shall promulgate 
                regulations for the establishment, operation, and 
                oversight of markets for all carbon share derivatives--
                            (i) to provide for effective and 
                        comprehensive market oversight;
                            (ii) to prohibit fraud, market manipulation 
                        (in accordance with section 222 of the Federal 
                        Power Act (16 U.S.C. 824v)), and excessive 
                        speculation; and
                            (iii) to limit unreasonable or excessive 
                        fluctuations in the price of carbon share 
                        derivatives and carbon shares.
            (9) Modification of auction frequency.--The Secretary may 
        modify the frequency of the uniform price auctions under 
        paragraph (1) if the Secretary determines that the modification 
        will significantly--
                    (A) improve the accuracy, predictability, and 
                stability of the market-clearing auction price; or
                    (B) facilitate greater program efficiency.
    (c) Reimbursement for Embedded, Reinjected, and Sequestered 
Carbon.--The Secretary shall provide carbon shares that are in excess 
of the aggregate quantity established under subsection (a)(2) to each--
            (1) operator of a carbon capture and storage facility, in a 
        quantity that corresponds to the quantity of fossil carbon 
        verifiably sequestered by the carbon capture and storage 
        facility in compliance with each appropriate law (including 
        regulations);
            (2) operator of an oil or gas reinjection project, in a 
        quantity that corresponds to the quantity of reinjected covered 
        fossil carbon; and
            (3) manufacturer that embeds fossil carbon in the products 
        produced by the manufacturer in--
                    (A) a manner that prevents the emission of the 
                fossil carbon into the atmosphere for a period of time 
                that is sufficient to prevent any negative impact on 
                the climate; and
                    (B) a quantity that corresponds to the aggregate 
                quantity of covered fossil carbon embedded in the 
                products.
    (d) Adjustment for Voluntary Carbon Reduction Market.--
            (1) In general.--The Secretary shall reduce the aggregate 
        quantity of carbon shares established under subsection (a)(2) 
        for all verifiable reductions of fossil carbon emissions 
        attributable solely to voluntary carbon reduction purchases.
            (2) Quantity.--The aggregate quantity of carbon shares 
        established under subsection (a)(2) shall be reduced by an 
        amount equal to the product obtained by multiplying--
                    (A) the corresponding quantity of fossil carbon 
                emission reductions that are attributable solely to 
                voluntary carbon reduction purchases; and
                    (B)(i) if the market price of the voluntary carbon 
                reduction purchases is not less than the market price 
                of the corresponding carbon shares (as determined by 
                the most recent auction described in subsection (b)), 
                1; or
                    (ii) if clause (i) does not apply, the quotient of 
                the market price of the voluntary carbon reduction 
                purchases and the market price of the corresponding 
                carbon shares (as determined by the most recent auction 
                described in subsection (b)).
            (3) Verification.--The quantity of carbon shares determined 
        under paragraph (2) shall be verified by the Federal Energy 
        Regulatory Commission.
    (e) Contractual Treatment of Carbon Shares.--
            (1) Litigation reduction.--A carbon share surrendered for 
        fossil carbon produced by an oil or natural gas well shall be 
        considered to be a lifting expense.
            (2) Cost allocation.--With respect to any long-term, fixed-
        price delivery contract entered into before the date of 
        enactment of this Act, the duration of which is longer than 1 
        year, there shall be a rebuttable presumption that--
                    (A) this Act makes performance of the contract 
                impracticable; and
                    (B) each party that entered into the contract 
                assumed at the time of bargaining that the effects of 
                this Act would not occur.
    (f) Carbon Refund Trust Fund.--
            (1) In general.--There is established in the Treasury of 
        the United States a trust fund to be known as the ``Carbon 
        Refund Trust Fund'', consisting of such amounts as may be 
        appropriated to the trust fund under this subsection.
            (2) Transfer of auction proceeds.--There are appropriated 
        to the Carbon Refund Trust Fund, out of funds in the Treasury 
        not otherwise appropriated, an amount equal to \3/4\ of the 
        proceeds from auctions conducted under subsection (b).
            (3) Expenditures from fund.--Amounts in the Carbon Refund 
        Trust Fund shall be available for the purpose of making energy 
        security dividends as provided in section 5.

SEC. 5. PER CAPITA DISTRIBUTION OF AUCTION PROCEEDS.

    (a) In General.--Every qualified individual is eligible to receive 
an energy security dividend for each month beginning with the first 
month after such individual becomes a qualified individual and ending 
with the last full month prior to an individual ceasing to be a 
qualified individual.
    (b) Administration.--
            (1) Energy security dividends.--To provide an energy 
        security dividend to each qualifying individual, the Secretary 
        shall coordinate with--
                    (A) the Commissioner of Social Security;
                    (B) the Secretary of Energy;
                    (C) the Secretary of Agriculture;
                    (D) the Secretary of Health and Human Services;
                    (E) the head of any other appropriate Federal 
                agency, as determined by the Secretary; and
                    (F) the Governor or appropriate official of--
                            (i) each State;
                            (ii) the District of Columbia; and
                            (iii) each territory and possession of the 
                        United States.
            (2) Cost-effective mechanism requirement.--To distribute 
        energy security dividends, the Secretary shall use the most 
        cost-effective mechanism, including any public benefit program 
        or electronic delivery mechanism administered by--
                    (A) the Federal Government; or
                    (B) any State.
            (3) Privacy guarantee requirement.--The Secretary shall 
        guarantee--
                    (A) the protection of the privacy of every 
                qualified individual; and
                    (B) that any personal information of a qualified 
                individual shall be used by the Secretary only to 
                ensure the accurate distribution of energy security 
                dividends.
            (4) Dividend taxation.--Any amount received from the 
        receipt of an energy security dividend shall be excluded from 
        gross income under the Internal Revenue Code of 1986.
    (c) Frequency and Mode of Allocation of Energy Security 
Dividends.--The Secretary may modify the frequency or mode of 
allocation of energy security dividends--
            (1) to minimize administrative costs associated with the 
        program; or
            (2) to increase the value of energy security dividends.
    (d) Monitoring; Annual Reports.--
            (1) Monitoring.--Effective beginning January 1, 2012, the 
        Administrator of the Energy Information Administration shall, 
        on a monthly basis, calculate and record the incremental 
        contribution of carbon share prices to wholesale and retail 
        fossil fuel prices.
            (2) Annual reports.--Not later than June 1, 2013, and 
        annually thereafter, the Administrator of the Energy 
        Information Administration shall prepare and post on the 
        website of the Energy Information Administration a report that 
        contains, for the period covered by the report, the results of 
        the monitoring carried out by the Administrator of the Energy 
        Information Administration under paragraph (1).
    (e) Energy Efficiency Consumer Loan Program.--As soon as 
practicable after the date of enactment of this Act, the Secretary 
shall establish a program that enables a qualifying individual to 
borrow against any future energy security dividend to the qualifying 
individual to enable the qualifying individual to make investments in 
approved energy efficiency or clean energy technologies and services 
that would, within a reasonable time period--
            (1) result in a reduced energy bill for the qualifying 
        individual; and
            (2) reduce greenhouse gas emissions.
    (f) Office of Consumer Advocacy.--
            (1) Establishment.--As soon as practicable after the date 
        of enactment of this Act, the Secretary shall establish in the 
        Department of the Treasury an Office of Consumer Advocacy to 
        serve as an advocate for the public interest of energy 
        consumers.
            (2) Duties.--The Office of Consumer Advocacy may--
                    (A) represent (and appeal on behalf of) residential 
                and small commercial customers of energy;
                    (B) monitor and review energy customer complaints 
                and grievances; and
                    (C) investigate, collect data, and report on 
                matters relating to the manner by which this Act 
                impacts rates charged or services provided by public 
                utilities and natural gas companies.

SEC. 6. CLEAN ENERGY REINVESTMENT TRUST FUND.

    (a) Establishment.--There is established in the Treasury of the 
United States a revolving fund, to be known as the ``Clean Energy 
Reinvestment Trust Fund'' or the ``CERT Fund'', consisting of such 
amounts as are appropriated to the Fund under subsection (b).
    (b) Transfers to Fund.--
            (1) In general.--There are appropriated to the CERT Fund, 
        out of funds in the Treasury not otherwise appropriated, 
        amounts equivalent to--
                    (A) \1/4\ of the proceeds from auctions conducted 
                under section 4(b)(1) and all of the proceeds under 
                section 4(b)(4)(C);
                    (B) the amount of penalties transferred to the CERT 
                Fund under section 4(a)(5)(E); and
                    (C) the amount of fees transferred to the CERT Fund 
                under section 4(a)(6)(D).
            (2) Investment of corpus.--Rules similar to the rules of 
        section 9602(b) of the Internal Revenue Code of 1986 shall 
        apply for purposes of this section.
    (c) Expenditures From Fund.--
            (1) In general.--To the extent that budget authority and 
        appropriations are made available in advance and subject to 
        paragraph (2), amounts in the CERT Fund shall be used to carry 
        out programs and initiatives (including allocation to the CERT 
        Fund to support financing programs designed or administered by 
        the Clean Energy Deployment Administration), provide 
        incentives, and make loans and grants--
                    (A) to provide targeted and region-specific 
                transition assistance to workers, communities, 
                industries, and small businesses of the United States 
                experiencing the greatest economic dislocations due to 
                efforts to reduce carbon emissions and address climate 
                change and ocean acidification;
                    (B) to provide targeted and region-specific 
                compensation for early retirement of carbon-intensive 
                facilities, machinery, or related assets in the United 
                States that are stranded by new market dynamics;
                    (C) to provide targeted and region-specific 
                mitigation and adaptation assistance to residents, 
                communities, industries, and small businesses of the 
                United States that experience the greatest demonstrable 
                negative impacts from climate change;
                    (D) subject to the criteria described in section 
                4(a)(7)(C), to provide targeted relief to energy-
                intensive industries (including agriculture and 
                forestry industries) that export goods or products to 
                countries that do not have similar restrictions on 
                fossil carbon;
                    (E) to support training and development programs to 
                prepare United States workers for careers in energy 
                efficiency, renewable energy, and other emerging clean 
                technology industries;
                    (F) to curtail the emission of--
                            (i) greenhouse gases other than carbon 
                        dioxide from fossil carbon; and
                            (ii) nongreenhouse gas substances that 
                        exacerbate or accelerate climate change 
                        (including black carbon);
                    (G) to fund cost-effective domestic and 
                international projects that verifiably reduce, avoid, 
                or sequester greenhouse gas emissions through the 
                modification of agriculture, forestry, or other land 
                use practices;
                    (H) to ensure sustained and robust investments in 
                clean energy and fuels research, development, and 
                deployment activities;
                    (I) to fund projects or initiatives that verifiably 
                increase energy efficiency or energy productivity;
                    (J) to fund programs that provide financial support 
                for low-income families that experience difficulty 
                paying high seasonal utility bills;
                    (K) to fund projects or initiatives that support 
                residential fuel switching (with priority given to 
                projects or initiatives relating to home heating oil);
                    (L) to provide matching grants to low-income energy 
                efficiency consumer loan recipients;
                    (M) to carry out weatherization and improve energy 
                efficiency of low-income and public buildings;
                    (N) to provide funding for climate change or ocean 
                acidification mitigation and adaptation projects, 
                activities, and research to increase the resilience of 
                human populations and communities, fish and wildlife, 
                and managed and unmanaged terrestrial, aquatic, and 
                marine ecosystems in areas at which impacts are likely 
                to be most severe;
                    (O) to provide funding for programs that protect or 
                advocate for energy consumers (including the Office of 
                Consumer Advocacy established under section 5(f)); and
                    (P) to ensure that the program does not contribute 
                to the budget deficit of the Federal Government.
            (2) Use.--Amounts in the CERT Fund shall--
                    (A) only be used for the purposes described in 
                paragraph (1);
                    (B) be allocated to ensure compliance with the 
                standards established by section 3(b), including 
                meeting reasonable interyear emissions reduction 
                standards;
                    (C) to the extent practicable, be awarded--
                            (i) on a competitive-bid basis; and
                            (ii) in accordance with applicable laws 
                        (including regulations) and procedures of 
                        existing Federal programs; and
                    (D) to the extent practicable, complement and 
                leverage existing Federal programs, the scope and 
                mission of which complement the purposes described in 
                paragraph (1).
    (d) Transfers of Amounts.--
            (1) In general.--The amounts required to be transferred to 
        the CERT Fund under this section shall be transferred at least 
        monthly from the general fund of the Treasury to the CERT Fund 
        on the basis of estimates made by the Secretary.
            (2) Adjustments.--Proper adjustment shall be made in 
        amounts subsequently transferred to the extent prior estimates 
        were in excess of or less than the amounts required to be 
        transferred.

SEC. 7. SENSE OF THE SENATE.

    It is the sense of the Senate that--
            (1) the goals of this Act are complemented and supported by 
        policies and incentives, appropriated programs, and pending 
        legislative proposals, including--
                    (A) Federal and State renewable energy standards;
                    (B) energy tax credits;
                    (C) energy efficiency standards for buildings and 
                household appliances; and
                    (D) vehicle fuel economy standards;
            (2) the Federal Government should take further action to 
        reduce the risks associated with greenhouse gas emissions, 
        especially greenhouse gas emissions not derived from fossil 
        carbon;
            (3) climate change is a global problem that requires a 
        global solution, and action by the United States alone or by a 
        coalition of developed nations will not--
                    (A) adequately address the risks associated with 
                greenhouse gas emissions; or
                    (B) solve the global energy problem; and
            (4) international trade and climate policy agreements are 
        the most effective instruments by which to address concerns 
        about carbon leakage and international trade competitiveness.
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