SWAP Act

To amend the Internal Revenue Code of 1986 to impose a tax on greenhouse gas emissions, accordingly reduce tax rates on payroll, and for other purposes. 1. Short title; table of contents (a) Short title This Act may be cited as the Stemming Warming and Augmenting Pay Act of 2019 SWAP Act (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Findings. Title I—Greenhouse Gas Emissions Sec. 101. Treatment of greenhouse gas emissions. Title II—Carbon Reduced Payroll Tax Sec. 201. Carbon reduced payroll tax. Title III—Distribution of Revenues From Taxation of Greenhouse Gas Emissions Sec. 301. Establishment of the Carbon Trust Fund. Sec. 302. Appropriations from the Carbon Trust Fund. Title IV—Amendments to Federal Environmental Statutes Sec. 401. Amendments to the Clean Air Act. 2. Findings The Congress finds the following: (1) Climate change threatens global stability and our national economy. (2) Carbon emissions are a significant contributor to these threats and must be addressed. (3) The United States private sector can face these challenges and be a global leader in technology, innovation, and efficiency. (4) A price on carbon levels the economic playing field and spurs adoption of less carbon-intensive practices and technologies. (5) Recycling revenues back to employers and employees will neutralize the potential impacts of a tax. I Greenhouse Gas Emissions 101. Treatment of greenhouse gas emissions (a) In general The Internal Revenue Code of 1986 is amended by adding at the end the following: L Greenhouse Gas Emissions Part 1. Taxation of Greenhouse Gas Emissions Part 2. Tax Adjustments for Imports and Exports of Greenhouse Gas Intensive Products 1 Taxation of Greenhouse Gas Emissions Sec. 9901. Imposition of tax on combusted fossil fuel greenhouse gas emissions. Sec. 9902. Imposition of tax on greenhouse gas emissions from certain industrial processes. Sec. 9903. Imposition of tax on greenhouse gas emissions from certain product uses. Sec. 9904. Calculation of taxable emissions. Sec. 9905. Credit for State payments. Sec. 9906. Penalties for nonpayment. Sec. 9907. Definitions. 9901. Imposition of tax on combusted fossil fuel greenhouse gas emissions (a) In general There is hereby imposed a tax on fossil fuels produced within, or imported into, the United States. (b) Rate of tax (1) Greenhouse gases that would be released if the fossil fuel were combusted The tax imposed by subsection (a) shall be the applicable amount per ton of carbon dioxide equivalent of all greenhouse gases that would be released if the fossil fuel were combusted. (2) Applicable amount of carbon dioxide equivalent emissions For purposes of paragraph (1)— (A) For calendar year 2021, the term applicable amount (B) For each calendar year after 2021, the term applicable amount (i) the applicable amount for the previous calendar, (ii) the sum of— (I) 5 percentage points, plus (II) a percentage increase in the previous year’s tax rate equal to the increase in the Consumer Price Index for the previous calendar year, plus (iii) the increase, if any, required by paragraph (3). (C) Consumer Price Index for any calendar year For purposes of subparagraph (B), the Consumer Price Index for the previous calendar year is the average of the Consumer Price Index for all-urban consumers published by the Department of Labor as of the close of the 12-month period ending on August 31 of such calendar year. For purposes of the preceding sentence, the revision of the Consumer Price Index which is most consistent with the Consumer Price Index for calendar year 1986 shall be used. (3) Adjustment based on emission levels (A) In general If, for calendar year 2023 and every second calendar year thereafter through calendar year 2031, the cumulative amount of emissions with respect to the calendar year reported under subparagraph (B) exceeds the cumulative amount of emissions specified for such calendar year in subparagraph (C), then the increase required by this paragraph for the calendar year beginning on the next January 1 following the determination in subparagraph (B) shall be $3 per metric ton. (B) Annual report Not later than March 30, 2021, and annually thereafter, the Secretary and the Administrator shall jointly determine and report the emissions during the calendar year ending on the preceding December 31 from sources subject to taxation under this part. The report shall specify whether the cumulative amount of annual emissions reported for the period beginning in calendar year 2021 and ending at the end of the preceding calendar year exceeds the emission levels specified in subparagraph (C). (C) Emission schedule The emission schedule specified in this subparagraph is as follows: (i) The total emissions through calendar year 2021 are 5,000 million metric tons of carbon dioxide equivalent. (ii) The total emissions through calendar year 2022 are 9,800 million metric tons of carbon dioxide equivalent. (iii) The total emissions through calendar year 2023 are 14,600 million metric tons of carbon dioxide equivalent. (iv) The total emissions through calendar year 2024 are 19,200 million metric tons of carbon dioxide equivalent. (v) The total emissions through calendar year 2025 are 23,800 million metric tons of carbon dioxide equivalent. (vi) The total emissions through calendar year 2026 are 28,300 million metric tons of carbon dioxide equivalent. (vii) The total emissions through calendar year 2027 are 32,700 million metric tons of carbon dioxide equivalent. (viii) The total emissions through calendar year 2028 are 37,000 million metric tons of carbon dioxide equivalent. (ix) The total emissions through calendar year 2029 are 41,300 million metric tons of carbon dioxide equivalent. (x) The total emissions through calendar year 2030 are 45,500 million metric tons of carbon dioxide equivalent. (xi) The total emissions through calendar year 2031 are 49,700 million metric tons of carbon dioxide equivalent. (c) By Whom Paid The tax imposed by subsection (a) shall be paid by the owner of the fossil fuel at the point of taxation. (d) Point of Taxation (1) For fossil fuels produced within the United States, the point of taxation shall be— (A) for coal, the mine mouth or, for washed coal, the exit from the coal preparation and processing plant, (B) for petroleum products, the exit point from the refinery, and (C) for natural gas, the exit from the gas processing plant or, for natural gas that is not treated at a gas processing plant, the point of sale to the person who combusts the gas or incorporates it into a product that is not intended for combustion. (2) For any fossil fuel imported into the United States, the point of taxation shall be the point at which it first enters the United States. (e) Exemptions (1) Exemption for Noncombustive uses (A) Refund for reduction or elimination of emissions Any manufacturer of a product that incorporates a fossil fuel that has been taxed under this section who can demonstrate to the Secretary that the fossil fuel has been transformed via the manufacture of the product so that the fossil fuel’s emissions will be reduced or eliminated over the product’s lifetime shall be entitled to a refund of the tax paid under this section on the proportion of the emissions reduced thereby, as determined by the Secretary. (B) Rule The Secretary, in consultation with the Administrator, shall establish by rule the criteria and process by which product manufacturers can demonstrate that the conditions in subparagraph (A) have been satisfied. (C) Publication of regulations The Secretary shall publish the regulations required by this subsection no later than one year prior to the start of the calendar year referred to in section 9901(b)(2)(A). The Secretary may not collect the tax imposed by this section for any calendar year that begins less than one year after the regulations are published. (2) Exemption for Carbon Capture and Storage (A) Refund for sequesters Any person who sequesters greenhouse gas emissions resulting from the combustion of fossil fuel that has passed through a point of taxation shall be entitled to a refund of the tax imposed by this section. Emissions that are used for enhanced oil recovery shall be entitled for such refund provided that these emissions meet all of the criteria applicable to other emissions that qualify for such refund. No refund shall be recognized for any amount of greenhouse gas which has been credited under section 45Q. (B) Rule The Secretary shall establish by rule the procedures by which to apply for such refunds and such refunds shall be paid within six months of the Secretary receiving an approvable application. (C) Time of refund The Secretary may not refund any amounts under this paragraph until such time as the Secretary has published the regulations described in section 45Q(d)(2). (3) Report to congress The Secretary shall, by January 1st of each calendar year, report the total amount of refunds awarded in the previous fiscal year under this subsection and shall include, as appropriate, the amounts refunded under paragraphs (1) and (2). 9902. Imposition of tax on greenhouse gas emissions from certain industrial processes (a) In general There is hereby imposed a tax on industrial process greenhouse gas emissions by certain source categories. (b) List of source categories (1) Initial list The Congress establishes for purposes of this section a list of source categories subject to this section as follows: (A) Iron and steel production and metallurgical coke production. (B) Underground coal mining. (C) Coal preparation and processing plants. (D) Refineries. (E) Cement production. (F) Petrochemical production. (G) Lime production. (H) Ammonia production. (I) Aluminum production. (J) Soda ash production. (K) Ferroalloy production. (L) Phosphoric acid production. (M) Glass production. (N) Zinc production. (O) Lead production. (P) Magnesium production and processing. (Q) Nitric acid production. (R) Adipic acid production. (S) Semiconductor manufacture. (T) Electrical transmission and distribution. (2) Revision of the List The Administrator shall review the list of source categories established by this subsection not less than once every five years to determine if they should continue to be listed and publish the results of that review. The Administrator may, if appropriate, add any source categories to this list by rule. (3) Removal of a Source Category from the List The Administrator may remove a source category from this list only if— (A) the total emissions from the entire source category which are taxable under this section have been less than 250,000 metric tons of carbon dioxide equivalent per year for each of three consecutive years, (B) the average emissions from facilities in the source category which are taxable under this section have been less than 25,000 metric tons of carbon dioxide equivalent per year for each of the years referred in subparagraph (A), and (C) the Administrator determines that there is no reasonable possibility that the total emissions from the entire source category which are taxable under this section will exceed 250,000 metric tons per year of carbon dioxide equivalent within any of the five years following such determination. (4) Addition of a Source Category to the List The Administrator may add a source category to this list only if the Administrator determines that— (A) the total emissions from the entire source category which are taxable under this section have been greater than 250,000 metric tons per year of carbon dioxide equivalent in any two years out of the preceding five years, (B) the average emissions from facilities in the source category which are taxable under this section have been greater than 25,000 metric tons per year of carbon dioxide equivalent in the years in which emissions from the entire source category have been greater than 250,000 tons per year, and (C) there is a reasonable possibility that the total emissions from the entire source category which are taxable under this section will be greater than 250,000 metric tons per year of carbon dioxide equivalent in any year within the next five years following such determination. (5) The Administrator may add a source category to the list that has previously been removed pursuant to paragraph (3) if the addition of the source category otherwise meets the requirements per paragraph (4). (c) Rate of Tax The rate of tax shall be the same as the rate given in section 9901(b)(2). (d) By Whom Paid The tax imposed by subsection (a) shall be paid by the owner or operator of the point of taxation. (e) Point of Taxation The point of taxation shall be any facility in a source category which emits more than 25,000 metric tons of carbon dioxide equivalent subject to taxation under this section in any calendar year. 9903. Imposition of tax on greenhouse gas emissions from certain product uses (a) In general There is hereby imposed a tax on non-fossil-fuel-greenhouse-gas emissions by certain manufactured products when used for their intended purposes that are manufactured within or imported into, the United States. (b) List of Products (1) Initial list The Congress establishes for purposes of this section a list of products subject to this section as follows: (A) Fuel ethanol. (B) Industrial carbonates. (C) Carbon dioxide urea. (D) Soda ash. (E) Nitrous oxide. (F) Ozone depleting substances, but not if the United States has ratified the Kigali Amendment to the Montreal Protocol and is subject to Article 2J, paragraph 1 of the Amended Montreal Protocol. (G) Biodiesel. (H) Solid biomass fuels. (2) Revision of the List The Administrator shall review the list of products established by this subsection not less than once every five years to determine if they should continue to be listed and publish the results of that review. The Administrator may, if appropriate, add any product to this list by rule. (3) Removal of a Product from the List The Administrator may remove a product from this list only if— (A) the total emissions from all of the product used within the United States has been less than 250,000 metric tons per year of carbon dioxide equivalent for each of three consecutive years, and (B) the Administrator determines that there is no reasonable possibility that the total emissions from all of the product used in the United States will exceed 250,000 metric tons per year of carbon dioxide equivalent within any of the five years following such determination. (4) Addition of a Product to the List The Administrator may add a product to this list only if the Administrator determines that— (A) the total emissions from all of the product used within the United States has been greater than 250,000 metric tons per year of carbon dioxide equivalent in any two years out of the preceding five years, and (B) there is a reasonable possibility that the total emissions from all of the product used within the United States will be greater than 250,000 metric tons per year of carbon dioxide equivalent in any year within the next five years following such determination. (5) The Secretary may add a product to the list that has previously been removed pursuant to paragraph (3) if the addition of the product otherwise meets the requirements of paragraph (4). (c) Rate of Tax The rate of tax shall be the same as the rate given in section 9901(b)(2). (d) By Whom Paid The tax imposed by subsection (a) shall be paid— (1) for products manufactured in the United States, by the owner or operator of the point of taxation, and (2) for products imported into the United States, by the owner of the product when it enters the United States. (e) Point of Taxation The point of taxation shall be— (1) for products manufactured in the United States, the manufacturing facility, (2) for products imported into the United States, the point at which it first enters the United States, and (3) for domestically produced biomass fuel, any facility that emits from combusted biomass fuel more than 25,000 metric tons of carbon dioxide equivalent greenhouse gases in a year. 9904. Calculation of taxable emissions (a) How To calculate taxable emissions In consultation with the Department of Energy, the Administrator shall establish by rule (and may, from time to time, revise) the method by which taxable emissions under this part shall be calculated. (b) Categories and subcategories considered For purposes of calculating emissions taxable under— (1) section 9901, the Administrator shall determine by rule the amount of carbon dioxide equivalent that would be emitted if each fossil fuel were combusted, and the Administrator may establish by rule such subcategories of each fuel and the means by which it is combusted as the Administrator deems appropriate, (2) section 9902, the Administrator may determine by rule such subcategories of any industrial process category listed in subsection 9902(b) as the Administrator deems appropriate, and (3) section 9903, for fuel ethanol, biodiesel, and solid biomass fuels the Administrator shall determine by rule the amount of carbon dioxide equivalent that would be emitted based on the lifecycle greenhouse gas emissions of the product, and the Administrator may determine by rule such subcategories of manufactured products listed in subsection 9903(b) as the Administrator deems appropriate. (c) Methods Where greenhouse gas emissions subject to taxation under any section of this part are combined with greenhouse gas emissions subject to taxation under any other section of this part, the Administrator shall ensure, to the greatest degree possible, that the methods required to determine the emissions taxable under any section of this part do not include any emissions taxable under any other section of this part. (d) Method cost differences The Administrator shall not require the use of any method to calculate taxable emissions whereby the difference in cost of the method compared to the next cheapest alternative method is greater than the amount of the tax that would be paid on the additional emissions determined by the more expensive method. (e) Publication of regulations The Administrator shall publish the regulations required by this section no later than January 1, 2020. The Secretary may not collect the tax imposed by any section in this part for any calendar year that begins less than one year after the regulations applicable to each such section are published. 9905. Credit for State payments (a) Credit for payments The Secretary shall allow any person who is required to make payment for greenhouse gas emissions under this part a credit for payments made on those emissions required under any State law in the following manner: (1) For the year given in section 9901(b)(2)(A), a credit equal to 100 percent of the amount paid pursuant to requirements of State law. (2) For the first year following the year used in paragraph (1), a credit equal to 80 percent of the amount paid pursuant to requirements of State law. (3) For the second year following the year used in paragraph (1), a credit equal to 60 percent of the amount paid pursuant to requirements of State law. (4) For the third year following the year used in paragraph (1), a credit equal to 40 percent of the amount paid pursuant to requirements of State law. (5) For the fourth year following the year used in paragraph (1), a credit equal to 20 percent of the amount paid pursuant to requirements of State law. (b) No credit For all years following the year used in paragraph (5), no credit shall be allowed. 9906. Penalties for nonpayment Any person who fails to comply with the requirements of section 9901, 9902, or 9903 shall be liable for payment to the Secretary, without demand, of a penalty in the amount equal to 3 times the applicable amount specified by those sections for the same tax year as the year in which the person failed to comply with such requirements. 9907. Definitions Unless otherwise provided, the definitions provided herein are applicable to all provisions of this subtitle. (1) Administrator The term Administrator (2) Carbon dioxide equivalent The term carbon dioxide equivalent (3) Coal The term coal (4) Coal preparation and processing plant The term coal preparation and processing plant (5) Enhanced Oil Recovery The term enhanced oil recovery (6) Facility The term facility (7) Fossil fuel The term fossil fuel (8) Greenhouse gas The term greenhouse gas (9) Greenhouse gas effects The term greenhouse gas effects (10) Lifecycle greenhouse gas emissions The term lifecycle greenhouse gas emissions 42 U.S.C. 7545(o)(1)(H) (11) Natural gas The term natural gas (12) Petroleum products The term petroleum products (13) Publish The term publish (14) Refinery The term refinery (15) Owner The term owner (16) Owner or operator The term owner or operator (17) Sequesters The term sequesters (18) Solid biomass The term solid biomass (19) Source category The term source category 2 Tax Adjustments for Imports and exports of Greenhouse Gas Intensive Products Sec. 9911. Purposes. Sec. 9912. Definitions. Sec. 9913. Notification of foreign countries. Sec. 9914. Border tax adjustment rate. 9911. Purposes (a) Purposes of part The purposes of this part are— (1) to promote a strong global effort to significantly reduce greenhouse gas emissions, and (2) to prevent carbon leakage. (b) Additional purposes of part The purposes of this part are additionally— (1) to provide a rebate to exporters in domestic eligible industrial sectors for the greenhouse gas emission costs of the owners and operators incurred under this title, but not for costs associated with other related or unrelated market dynamics, (2) to ensure that imports from other countries, and, in particular, fast-growing developing countries, do not enjoy competitive advantages because of the carbon tax liability of domestic manufacturers, and therefore increase their emissions, (3) to encourage foreign countries to take substantial action with respect to their greenhouse gas emissions, and (4) to ensure that the measures described in this subpart are designed and implemented in a manner consistent with applicable international agreements to which the United States is a party. 9912. Definitions In this part: (1) Carbon leakage The term carbon leakage (2) Border tax adjustment The term border tax adjustment (3) Border tax adjustment rate The term border tax adjustment rate (4) Commissioner The term Commissioner (5) Covered good The term covered good (A) entered under a heading or subheading of the Harmonized Tariff Schedule of the United States that corresponds to the NAICS code for an eligible industrial sector, as established in the concordance between NAICS codes and the Harmonized Tariff Schedule of the United States prepared by the United States Census Bureau, or (B) a manufactured item for consumption. (6) Eligible industrial sector The term eligible industrial sector (7) Industrial sector The term industrial sector (A) is in the manufacturing sector (as defined in NAICS codes 31, 32, and 33), or (B) is part of, or an entire sector that beneficiates or otherwise processes (including agglomeration) metal ores, including iron and copper ores, soda ash, and phosphate. The term industrial sector (8) Manufactured item for consumption The term manufactured item for consumption (A) that includes in substantial quantities one or more goods like the goods produced by an eligible industrial sector, and (B) for which the Secretary has determined, with the concurrence of the Commissioner, that the application of the border tax adjustment program pursuant to this part is technically and administratively feasible and appropriate to achieve the purposes of this part, taking into account the greenhouse gas intensity, and where appropriate the trade intensity, of the industrial sector that produces the good, as measured consistent with section 9913 and the ability of the producers to recover cost increases in the marketplace and other appropriate factors. (9) NAICS The term NAICS (10) Output The term output 9913. Notification of foreign countries (a) In general As soon as practicable after the date of the enactment of the Stemming Warming and Augmenting Pay Act of 2019 (1) requesting the foreign country to take appropriate measures to limit the greenhouse gas emissions of the foreign country, and (2) indicating that a border tax adjustment may apply to covered goods imported into and exported from the United States. (b) Lists (1) In general Not later than 1 year after the date of the enactment of the Stemming Warming and Augmenting Pay Act of 2019 (2) Content The list shall include the amount of the border tax adjustment rate for each covered good in the following calendar year pursuant to section 9914. (3) Subsequent lists Not later than January 31 of each calendar year after the calendar year in which the Stemming Warming and Augmenting Pay Act of 2019 (c) Eligible industrial sectors (1) Presumptively eligible industrial sectors (A) Eligibility criteria (i) In general (I) Imported covered goods are liable under this part if they are produced in the United States in an industrial sector that is included in a 6-digit classification of the NAICS that meets the criteria in both clauses (ii) and (iii). (II) Exported covered goods are eligible under this part if they are produced in the United States in an industrial sector that is included in a 6-digit classification of the NAICS that meets the criteria in clause (ii). (ii) Greenhouse gas intensity As determined by the Secretary, an industrial sector meets the criteria of this clause if the United States industrial sector has a greenhouse gas intensity of at least 5 percent, calculated by dividing— (I) the number of metric tons of carbon dioxide equivalent greenhouse gas emissions (including direct emissions from fuel combustion, process emissions, and indirect emissions from the generation of electricity used to produce the output of the sector) of the sector based on data described in subparagraph (C), multiplied by the applicable rate in section 9901(b)(2), by (II) the value of the shipments of the sector, based on data described in subparagraph (C). (iii) Trade intensity As determined by the Secretary, an industrial sector meets the criteria of this clause if the industrial sector has a trade intensity of at least 15 percent, calculated by dividing— (I) the value of the total imports and exports of the sector, by (II) the value of the shipments plus the value of imports of the sector, based on data described in subparagraph (C). (B) Metal and phosphate production classified under more than one naics code For purposes of this section, the Secretary shall— (i) aggregate data for the beneficiation or other processing (including agglomeration) of metal ores, including iron and copper ores, soda ash, or phosphate with subsequent steps in the process of metal and phosphate manufacturing, regardless of the NAICS code under which the activity is classified, and (ii) aggregate data for the manufacturing of steel with the manufacturing of steel pipe and tube made from purchased steel in a nonintegrated process. (C) Data sources (i) Value of shipments (I) In general The Secretary shall determine the value of shipments under this subsection from data from the United States Census Annual Survey of Manufacturers. (II) Average data available The Secretary shall use the average of data from the most recent 3 years for which the data are available. (III) Average data not available If data described in subclause (II) are unavailable, the Secretary shall make a determination based on— (aa) data from the most detailed industrial classification level of the Manufacturing Energy Consumption Survey of the Energy Information Administration, and (bb) data from the most recent Economic Census of the United States. (IV) Data not available for sector If data from the Manufacturing Energy Consumption Survey or Economic Census are unavailable for any sector at the 6-digit classification level in the NAICS, the Secretary may use available Manufacturing Energy Consumption Survey or Economic Census data pertaining to a broader industrial category classified in the NAICS. (V) Data not available for processing If data relating to the beneficiation or other processing (including agglomeration) of metal ores (including iron and copper ores, soda ash, or phosphate) are not available from the specified data sources, the Secretary— (aa) shall use the best available Federal or State government data, and (bb) may use, to the extent necessary, representative data submitted by entities that perform the beneficiation or other processing (including agglomeration), in making a determination. (ii) Imports and exports (I) In general The Secretary shall base the value of imports and exports under this subsection on United States International Trade Commission data. (II) Average data available The Secretary shall use the average of data from the three most recent years for which the data are available. (III) Average data not available If data from the United States International Trade Commission are unavailable for any sector at the 6-digit classification level in the NAICS, the Secretary may use United States International Trade Commission data pertaining to a broader industrial category classified in the NAICS. (iii) Percentages The Secretary shall round the greenhouse gas intensity and trade intensity percentages under subparagraph (A) to the nearest whole number. (iv) Greenhouse gas emission calculations When calculating the metric tons of carbon dioxide equivalent greenhouse gas emissions for each sector under subparagraph (A)(ii)(I), the Secretary— (I) shall use the best available data from the three most recent years for which the data are available, and (II) may, to the extent necessary with respect to a sector, use economic and engineering models and the best available information on technology performance levels for the sector. (2) Administrative determination of additional eligible industrial sectors (A) Updated trade intensity data The Secretary shall designate as liable for border tax adjustment rate on imported products under this part an industrial sector that— (i) met the greenhouse gas intensity criteria in paragraph (1)(A)(ii) as of the date of promulgation of the rule under paragraph (1), and (ii) meets the trade intensity criteria established under paragraph (1)(A)(iii), using data sources described in paragraph (1)(C) from any year after the passage of this Act. (B) Individual showing petition (i) Petition In addition to designation under subparagraph (A), the owner or operator of an entity or a group of entities that collectively produce not less than 80 percent of the average annual value of shipments from within the sector of the group consistent with subclause (I), that manufacture similar products in an industrial sector may petition the Secretary to designate as eligible industrial sectors under this part an entity or a group of entities that— (I) represent a sector using a standard product classification, and (II) meet the respective import and/or export eligibility criteria in paragraph (1)(A)(i). (ii) Data In making a determination under this subparagraph, the Secretary shall consider— (I) data submitted by the petitioner, (II) data solicited by the Secretary from other entities in the sector, and (III) data specified in paragraph (1)(C). (iii) Basis of subsector determination (I) In general Except as provided in subclause (II), the Secretary shall determine an entity or group of entities to be a subsector of a 6-digit section of the NAICS code based only on the products manufactured and not the industrial process by which the products are manufactured. (II) Type of material The Secretary may determine an entity or group of entities that manufacture a product from primarily virgin material to be a separate subsector from another entity or group of entities that manufacture the same product primarily from recycled material. (iv) Use of most recent data In determining whether to designate a sector or subsector as an eligible industrial sector under this subparagraph, the Secretary shall use the most recent data available from the sources described in paragraph (1)(C), rather than the data from the years specified in paragraph (1)(C), to determine the trade intensity of the sector or subsector, but only for determining the trade intensity. (v) Final action The Secretary shall take final action on a petition described in this subparagraph not later than 180 days after the date the completed petition is received by the Secretary. (3) Cessation of qualifying activities If, as determined by the Secretary, an industrial sector or a covered good within the sector is no longer liable to be designated under this section, the Commissioner shall cease to apply the border tax adjustment on the relevant covered goods with effect from January 1 of the following year. 9914. Border tax adjustment rate (a) Establishment Not later than January 1, 2020, the Secretary, with the concurrence of the Commissioner, shall promulgate regulations— (1) establishing the products which are liable for, and requiring payment of, the border tax adjustment rate, (2) establishing a general methodology for calculating the level of the border tax adjustment rate that a domestic importer of any covered good must submit and the rebate that an exporter will receive, (3) establishing an administrative process whereby any determination by the Secretary under this subsection may be appealed, (4) exempting from this section products that originate from— (A) any country that the United Nations has identified as among the least developed of developing countries, or (B) any country that the President has determined to be responsible for less than 0.5 percent of total global greenhouse gas emissions and less than 5 percent of global production in the eligible industrial sector, (5) specifying the procedures that the Commissioner will apply for the declaration and entry of covered goods with respect to the eligible industrial sector into the customs territory of the United States, and (6) establishing procedures that prevent circumvention of the carbon tax liability for covered goods that are manufactured or processed in more than one foreign country. (b) Presidential discretion The President may elect not to levy the border tax adjustment for an eligible industrial sector or for specific products within that sector if the President determines and certifies to Congress that the program would not be in the national interest, economic interest or environmental interest of the United States. (c) Limitation on imposition of tax A border tax adjustment pursuant to this subpart may not be imposed with respect to any calendar year that begins less than one year after regulations are published under subsection (a). . (b) Clerical amendment The table of subtitles for the Internal Revenue Code of 1986 is amended by adding at the end the following new item: Subtitle L. Greenhouse Gas Emissions . (c) Effective date The amendments made by this section shall apply to emissions after December 31, 2019. II Carbon Reduced Payroll Tax 201. Carbon reduced payroll tax (a) In general Notwithstanding any other provision of law— (1) with respect to any taxable year which begins after December 31, 2020, the rate of tax under section 1401(a) (2) with respect to remuneration received after December 31, 2020— (A) the rate of tax under 3101(a) of such Code shall be 6.2 percent minus one-half of the reduced carbon rate (including for purposes of determining the applicable percentage under sections 3201(a) and 3211(a)(1) of such Code), and (B) the rate of tax under subsection (a) of section 3111 of such Code shall be 6.2 percent minus one-half of the reduced carbon rate (including for purposes of subsections (e) and (f) of such section and determining the applicable percentage under section 3221(a) of such Code). (b) Coordination With Deductions for Employment Taxes (1) Deduction in computing net earnings from self-employment For purposes of applying section 1402(a)(12) (2) Individual deduction In the case of the taxes imposed by section 1401 of such Code for any taxable year which begins in the payroll tax carbon period, the deduction under section 164(f) with respect to such taxes shall be equal to the sum of— (A) one-half of the portion of such taxes attributable to the tax imposed by section 1401(a) (determined after the application of this section), plus (B) one-half of the portion of such taxes attributable to the tax imposed by section 1401(b). (c) Reduced carbon rate For purposes of this section— (1) In general The term reduced carbon rate (A) 1 percentage point in the case of any taxable year which begins during calendar year 2021, and (B) in the case of any taxable year beginning in a calendar year beginning after calendar year 2021, the number of percentage points determined by the Secretary to be, for the calendar year the product of— (i) 12.4, and (ii) 52.5 percent of amounts of estimated taxes received in the Treasury under subtitle L of the Internal Revenue Code of 1986 (relating to greenhouse gas emissions), divided by estimated taxes that would have been received in the Treasury with respect to a calendar year under sections 1401(a), 3101(a), 3111(a), and the applicable percentage of such taxes under 3201(a), 3211(a)(1), and 3221(a), were this section not in effect. (2) Estimates For purposes of paragraph (1), the determination of amounts received in the Treasury shall be made on the basis of estimates by the Secretary of the Treasury (or the Secretary’s delegate), and proper adjustments shall be made in the amounts subsequently estimated to the extent prior estimates were in excess of or less than actual receipts. (3) Publication of reduced carbon rate Not later than October 31 of each calendar year, the Secretary shall publish the reduced carbon rate determined under this subsection for the succeeding calendar year. (d) Employer Notification The Secretary of the Treasury shall notify employers of the payroll tax holiday period in any manner the Secretary deems appropriate. (e) Transfers of Funds (1) Transfers to federal old-age and survivors insurance trust fund There are hereby appropriated to the Federal Old-Age and Survivors Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Security Act ( 42 U.S.C. 401 (2) Transfers to social security equivalent benefit account There are hereby appropriated to the Social Security Equivalent Benefit Account established under section 15A(a) of the Railroad Retirement Act of 1974 ( 45 U.S.C. 231n–1(a) (3) Coordination with other Federal laws For purposes of applying any provision of Federal law other than the provisions of the Internal Revenue Code of 1986, the rate of tax in effect under section 3101(a) of such Code shall be determined without regard to the reduction in such rate under this section. (f) Special rule Not later than October 1 of each fiscal year beginning after fiscal year 2021 (January 1, 2021 in the case of fiscal year 2021), from amounts in the general fund of the Treasury not otherwise appropriated, the Commissioner of Social Security shall pay an amount, equal to 7.5 percent of amounts of taxes received in the Treasury under subtitle L of the Internal Revenue Code of 1986 (relating greenhouse gas emissions), to be distributed equally among each individual entitled to monthly insurance benefits under title II of the Social Security Act, or to an annuity under section 2 of the Railroad Retirement Act of 1974 for the first month of each year. III Distribution of Revenues From Taxation of Greenhouse Gas Emissions 301. Establishment of the Carbon Trust Fund (a) Creation of Trust Fund There is hereby created in the Treasury of the United States a trust fund to be known as the CARBON Trust Fund (b) Transfers to Trust Fund There are hereby appropriated to the CARBON Trust Fund amounts equivalent to 15 percent of the taxes received in the Treasury under subtitle L of the Internal Revenue Code of 1986 (as added by title I of this Act). 302. Appropriations from the CARBON Trust Fund Amounts in the CARBON Trust Fund for a fiscal year shall be available, as provided by appropriation Acts, as follows: (1) Fifty percent of such amounts shall be available for State block grants to be used to offset higher energy costs for low-income households. (2) Fifty percent of such amounts shall be available for climate adaptation, carbon sequestration, energy efficiency, and advanced R&D programs. IV Amendments to Federal Environmental Statutes 401. Amendments to the Clean Air Act (a) In general Title III of the Clean Air Act ( 42 U.S.C. 7601 330. Moratorium against certain regulations based on greenhouse gas effects (a) Fuels Unless specifically authorized in section 202, 211, 213, 231, or this section, after a fossil fuel has passed through a point of taxation as provided in section 9901(d) (b) Emissions Unless specifically authorized in section 202, 211, 213, 231, or this section, if emission of any greenhouse gas is subject to taxation pursuant to any of sections 9902 through 9903 of the Internal Revenue Code of 1986, the Administrator shall not publish or enforce any rule limiting such emission under this Act (or impose any requirement on any State to limit such emission) on the basis of the emission’s greenhouse gas effects. (c) Authorized regulation Notwithstanding subsections (a) and (b), nothing in this section limits the Administrator’s authority pursuant to any other provision of this Act— (1) to limit the emission of any greenhouse gas because of any adverse impact on health or welfare other than its greenhouse gas effects; (2) in limiting emissions as described in paragraph (1), to consider the collateral benefits of limiting the emissions because of greenhouse gas effects; (3) to limit the emission of any other pollutant that is not a greenhouse gas that the Administrator determines by rule has heat-trapping properties; or (4) to take any action with respect to any greenhouse gas other than limiting its emission, including— (A) monitoring, reporting, and record-keeping requirements; (B) conducting or supporting investigations; and (C) information collection. (d) Exception for certain greenhouse gas emissions Notwithstanding subsections (a) and (b), nothing in this section limits the Administrator’s authority to regulate greenhouse gas emissions from— (1) facilities that are subject to— (A) subparts OOOO or OOOOa of part 60 of title 40, Code of Federal Regulations, as in effect on January 1, 2018, or (B) would be subject to either subpart OOOO or subpart OOOOa if those subparts applied to such facilities regardless of the date on which construction, modification, or reconstruction commenced, and (2) POTW Treatment Plants (as defined in section 403.3(r) of title 40, Code of Federal Regulations). (e) Definitions In this section, the terms greenhouse gas greenhouse gas effects section 9907 (f) Moratorium expiration The moratoria on the Administrator publishing or enforcing rules limiting the emission of greenhouse gases in subsections (a) and (b) and section 211(c)(5) of this Act shall expire on January 1, 2034. (g) Exceptions (1) 2024 Notwithstanding subsections (a) and (b) and section 211(c)(5) of this Act, if the Administrator determines by March 30, 2026, pursuant to the report required by section 9901(b)(3)(B) (2) 2028 Notwithstanding subsections (a) and (b) and section 211(c)(5) of this Act, if the Administrator determines by March 30, 2030, pursuant to the report required by section 9901(b)(3)(B) . (b) New motor vehicles and new motor vehicle engines Section 202(b) of the Clean Air Act ( 42 U.S.C. 7521(b) (1) by redesignating the second paragraph (3) (as redesignated by section 230(4)(C) of Public Law 101–549 (2) by adding at the end the following: (5) Notwithstanding section 330(a), the Administrator may— (A) limit the emission of any greenhouse gas (as defined in section 9907 section 9907 (B) grant a waiver under section 209(b)(1) for standards for the control of greenhouse gas emissions. . (c) Fuels Section 211(c) of the Clean Air Act ( 42 U.S.C. 7545(c) (5) Except as required in section 211(o), the Administrator shall not, pursuant to this subsection, impose on any manufacturer, processor, or distributor of fuel any requirement for the purpose of reducing the emission of any greenhouse gas (as defined in section 9907 section 9907 . (d) Nonroad engines and vehicles emissions standards Section 213 of the Clean Air Act ( 42 U.S.C. 7547 (e) Greenhouse gas emissions Notwithstanding subsections (a) and (b) of section 330, the Administrator may limit the emission of any greenhouse gas (as defined in section 9907 section 9907 . (e) Aircraft emission standards Section 231 of the Clean Air Act ( 42 U.S.C. 757 (d) Notwithstanding subsections (a) and (b) of section 330, the Administrator may limit the emission of any greenhouse gas (as defined in section 9907 section 9907 .

Summary: Stemming Warming and Augmenting Pay Act of 2019 or the SWAP Act. This bill imposes a tax on combusted fossil fuel greenhouse gas emissions. The tax is equal to $30 per metric ton of carbon dioxide equivalent emissions beginning in 2021. The tax increases by 5% plus inflation each year and increases by $3 per ton every two years if the previous year's emission goals are not met. The revenue from such tax is divided (1) 70% for the reduction of payroll taxes; (2) 10% for additional payments to Social Security beneficiaries, and (3) 20% to establish a carbon trust fund for block grants to offset higher energy costs for low-income households, climate adaptation, energy efficiency, carbon sequestration, and research and development programs. The bill also amends the Clean Air Act to impose a 12-year moratorium on regulations that limit greenhouse gas emissions. This moratorium may be lifted if certain emission targets are not met.