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‘‘(B) combusts materials of which more 
than 95 percent is municipal solid waste on a 
heat input basis. 
‘‘(51) VINTAGE YEAR.—The term ‘vintage year’ 
means the calendar year for which an emission al-
lowance is established under section 721(a) or which 
is assigned to an emission allowance under section 
726(g)(3)(A), except that the vintage year for a 
strategic reserve allowance shall be the year in which 
such allowance is purchased at auction.’’. 
Subtitle B—Disposition of 
Allowances 
SEC. 321. DISPOSITION OF ALLOWANCES FOR GLOBAL 
WARMING 
POLLUTION 
REDUCTION 
PRO-
GRAM. 
Title VII of the Clean Air Act, as added by section 
311 of this Act, is amended by adding at the end the fol-
lowing part: 
‘‘PART H—DISPOSITION OF ALLOWANCES 
‘‘SEC. 781. ALLOCATION OF ALLOWANCES FOR SUPPLE-
MENTAL REDUCTIONS. 
‘‘(a) IN GENERAL.—The Administrator shall allocate 
for each vintage year the following percentage of the emis-
sion allowances established under section 721(a), for dis-
tribution in accordance with part E: 
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‘‘(1) For vintage years 2012 through 2025, 5 
percent. 
‘‘(2) For vintage years 2026 through 2030, 3 
percent. 
‘‘(3) For vintage years 2031 through 2050, 2 
percent. 
‘‘(b) ADJUSTMENT.—The Administrator shall modify 
the percentages set forth in subsection (a) as necessary 
to ensure the achievement of the annual supplemental 
emission reduction objective for 2020, and the cumulative 
reduction objective through 2025, set forth in section 
753(b)(1). 
‘‘(c) CARRYOVER.—If the Administrator has not dis-
tributed all of the allowances allocated pursuant to this 
section for a given vintage year by the end of that year, 
all such undistributed emission allowances shall, in accord-
ance with section 782(s), be exchanged for allowances 
from the following vintage year and treated as part of the 
allocation for supplemental reductions under this section 
for that later vintage year. 
‘‘SEC. 782. ALLOCATION OF EMISSION ALLOWANCES. 
‘‘(a) ELECTRICITY CONSUMERS.—(1) The Adminis-
trator shall allocate emission allowances for the benefit of 
electricity consumers, to be distributed in accordance with 
section 783(b), (c), and (d) in the following amounts: 
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‘‘(A) For vintage years 2012 and 2013: 43.75 
percent of the emission allowances established for 
each year under section 721(a). 
‘‘(B) For vintage years 2014 and 2015: 38.89 
percent of the emission allowances established for 
each year under section 721(a). 
‘‘(C) For vintage years 2016 through 2025: 
35.00 percent of the emission allowances established 
for each year under section 721(a). 
‘‘(D) For vintage year 2026: 28 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(E) For vintage year 2027: 21 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(F) For vintage year 2028: 14 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(G) For vintage year 2029: 7 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(2) The Administrator shall allocate emission allow-
ances for energy efficiency, renewable electricity, and low 
income ratepayer assistance programs administered by 
small electricity local distribution companies, to be distrib-
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uted in accordance with section 783(e) in the following 
amounts: 
‘‘(A) For vintage years 2012 through 2025: 0.5 
percent of the emission allowances established each 
year under section 721(a). 
‘‘(B) For vintage year 2026: 0.4 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(C) For vintage year 2027: 0.3 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(D) For vintage year 2028: 0.2 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(E) For vintage year 2029: 0.1 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(3) For vintage year 2012, the Administrator shall 
allocate 0.35 percent of emission allowances established 
for such year under section 721(a) to avoid disincentives 
to the continued use of existing energy-efficient cogenera-
tion facilities at industrial parks, to be distributed in ac-
cordance with section 783(f). 
‘‘(b) NATURAL GAS CONSUMERS.—The Adminis-
trator shall allocate emission allowances for the benefit of 
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natural gas consumers to be distributed in accordance 
with section 784 in the following amounts: 
‘‘(1) For vintage years 2016 through 2025, 9 
percent of the emission allowances established for 
each year under section 721(a). 
‘‘(2) For vintage year 2026, 7.2 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(3) For vintage year 2027, 5.4 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(4) For vintage year 2028, 3.6 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(5) For vintage year 2029, 1.8 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(c) HOME HEATING OIL
AND PROPANE CON-
SUMERS.—The Administrator shall allocate emission al-
lowances for the benefit of home heating oil and propane 
consumers to be distributed in accordance with section 
785 in the following amounts: 
‘‘(1) For vintage years 2012 and 2013, 1.875 
percent of the emission allowances established for 
each year under section 721(a). 
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‘‘(2) For vintage years 2014 and 2015, 1.67 
percent of the emission allowances established for 
each year under section 721(a). 
‘‘(3) For vintage years 2016 through 2025, 1.5 
percent of the emission allowances established for 
each year under section 721(a). 
‘‘(4) For vintage year 2026, 1.2 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(5) For vintage year 2027, 0.9 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(6) For vintage year 2028, 0.6 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(7) For vintage year 2029, 0.3 percent of the 
emission allowances established for that year under 
section 721(a). 
‘‘(d) LOW INCOME CONSUMERS.—For each vintage 
year starting in 2012, the Administrator shall auction, 
pursuant to section 791, 15 percent of the emission allow-
ances established for each year under section 721(a), with 
the proceeds used for the benefit of low income consumers 
to fund the program set forth in subtitle C of title IV of 
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American Clean Energy and Security Act of 2009 and the 
amendments made thereby. 
‘‘(e) TRADE-VULNERABLE INDUSTRIES.— 
‘‘(1) IN GENERAL.—The Administrator shall al-
locate emission allowances to energy-intensive, trade- 
exposed entities, to be distributed in accordance with 
section 765, in the following amounts: 
‘‘(A) For vintage years 2012 and 2013, up 
to 2.0 percent of the emission allowances estab-
lished for each year under section 721(a). 
‘‘(B) For vintage year 2014, up to 15 per-
cent of the emission allowances established for 
that year under section 721(a). 
‘‘(C) For vintage year 2015, up to the 
product of— 
‘‘(i) the amount specified in para-
graph (2); multiplied by 
‘‘(ii) the quantity of emission allow-
ances established for 2015 under section 
721(a) divided by the quantity of emission 
allowances established for 2014 under sec-
tion 721(a). 
‘‘(D) For vintage year 2016, up to the 
product of— 
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‘‘(i) the amount specified in para-
graph (3); multiplied by 
‘‘(ii) the quantity of emission allow-
ances established for 2015 under section 
721(a) divided by the quantity of emission 
allowances established for 2014 under sec-
tion 721(a). 
‘‘(E) For vintage years 2017 through 
2025, up to the product of— 
‘‘(i) the amount specified in para-
graph (4); multiplied by 
‘‘(ii) the quantity of emission allow-
ances established for that year under sec-
tion 721(a) divided by the quantity of 
emission allowances established for 2016 
under section 721(a). 
‘‘(F) For vintage years 2026 through 
2050, up to the product of the amount specified 
in paragraph (4)— 
‘‘(i) multiplied by the quantity of 
emission allowances established for the ap-
plicable year during 2026 through 2050 
under section 721(a) divided by the quan-
tity of emission allowances established for 
2016 under section 721(a); and 
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‘‘(ii) multiplied by a factor that shall 
equal 90 percent for 2026 and decline 10 
percent for each year thereafter until 
reaching zero, except that, if the President 
modifies a percentage for a year under 
subparagraph (A) of section 767(c)(3), the 
highest percentage the President applies 
for any sector under that subparagraph for 
that year (not exceeding 100 percent) shall 
be used for that year instead of the factor 
otherwise specified in this clause. 
‘‘(2) CARRYOVER.—After the Administrator dis-
tributes emission allowances pursuant to section 765 
for any given vintage year, any emission allowances 
allocated to energy-intensive, trade-exposed entities 
pursuant to this subsection that have not been so 
distributed shall, in accordance with subsection (s), 
be exchanged for allowances from the following vin-
tage year and treated as part of the allocation to 
such entities for that later vintage year. 
‘‘(f) DEPLOYMENT OF CARBON CAPTURE AND SE-
QUESTRATION TECHNOLOGY.— 
‘‘(1) ANNUAL
ALLOCATION.—The Adminis-
trator shall allocate emission allowances for the de-
ployment of carbon capture and sequestration tech-
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nology to be distributed in accordance with section 
786 in the following amounts: 
‘‘(A) For vintage years 2014 through 
2017, 1.75 percent of the emission allowances 
established for each year under section 721(a). 
‘‘(B) For vintage years 2018 and 2019, 
4.75 percent of the emission allowances estab-
lished for each year under section 721(a). 
‘‘(C) For vintage years 2020 through 
2050, 5 percent of the emission allowances es-
tablished for each year under section 721(a). 
‘‘(2) CARRYOVER.—If the Administrator has 
not distributed all of the allowances allocated pursu-
ant to this subsection for a given vintage year by the 
end of that year, all such undistributed emission al-
lowances shall, in accordance with subsection (s), be 
exchanged for allowances from the following vintage 
year and treated as part of the allocation for the de-
ployment of carbon capture and sequestration tech-
nology under this subsection for that later vintage 
year. 
‘‘(g) INVESTMENT IN ENERGY EFFICIENCY AND RE-
NEWABLE ENERGY.—The Administrator shall allocate 
emission allowances to invest in energy efficiency and re-
newable energy as follows: 
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‘‘(1) To be distributed in accordance with sec-
tion 132 of the American Clean Energy and Security 
Act of 2009 in the following amounts: 
‘‘(A) For vintage years 2012 through 
2015, 9.5 percent of the emission allowances es-
tablished for each year under section 721(a). 
‘‘(B) For vintage years 2016 through 
2017, 6.5 percent of the emission allowances es-
tablished for each year under section 721(a). 
‘‘(C) For vintage years 2018 through 
2021, 5.5 percent of the emission allowances es-
tablished for each year under section 721(a). 
‘‘(D) For vintage years 2022 through 
2025, 1.0 percent of the emission allowances es-
tablished for each year under section 721(a). 
‘‘(E) For vintage years 2026 through 
2050, 4.5 percent of the emission allowances es-
tablished for each year under section 721(a). 
‘‘(F) At the same time allowances are dis-
tributed under subparagraph (D) for each of 
the vintage years 2022 through 2025, 3.55 per-
cent of emission allowances established under 
section 721(a) for the vintage year 4 years after 
that vintage year shall also be distributed 
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(which shall be in addition to the emission al-
lowances distributed under subparagraph (E)). 
‘‘(2) To be distributed in accordance with sec-
tion 304 of the Energy Conservation and Production 
Act, as amended by section 201 of the American 
Clean Energy and Security Act of 2009, for each 
vintage year from 2012 through 2050, 0.5 percent 
of emission allowances established for that year 
under section 721(a). 
‘‘(3) To be distributed among the States in ac-
cordance with the formula in section 132(b) of the 
American Clean Energy and Security Act of 2009 
and to be used exclusively for the purposes of section 
202 of the American Clean Energy and Security Act 
of 2009 in the following amounts: 
‘‘(A) For vintage years 2012 through 
2017, 0.05 percent of the emission allowances 
established for each year under section 721(a). 
‘‘(B) For vintage years 2018 through 
2050, 0.03 percent of the emission allowances 
established for each year under section 721(a). 
‘‘(h) ENERGY RESEARCH AND DEVELOPMENT.— 
‘‘(1) ENERGY INNOVATION HUBS.—For vintage 
years 2012 through 2050, the Administrator shall 
allocate 0.45 percent of the emission allowances es-
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tablished under section 721(a) to be distributed to 
Energy Innovation Hubs in accordance with section 
171 of the American Clean Energy and Security Act 
of 2009. 
‘‘(2) ADVANCED ENERGY RESEARCH.—For vin-
tage years 2012 through 2050, the Administrator 
shall allocate 1.05 percent of the emission allowances 
established under section 721(a) for the Advanced 
Research Project Agency-Energy to be distributed in 
accordance with section 172 of the American Clean 
Energy and Security Act of 2009. 
‘‘(i) INVESTMENT
IN
CLEAN
VEHICLE
TECH-
NOLOGY.—The Administrator shall allocate emission al-
lowances to invest in the development and deployment of 
clean vehicles, to be distributed in accordance with section 
124 of the American Clean Energy and Security Act of 
2009 in the following amounts: 
‘‘(1) For vintage years 2012 through 2017, 3 
percent of the emission allowances established for 
each year under section 721(a). 
‘‘(2) For vintage years 2018 through 2025, 1 
percent of the emission allowances established for 
each year under section 721(a). 
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‘‘(j) DOMESTIC FUEL PRODUCTION.—For vintage 
years 2014 through 2026, the Administrator shall allocate 
and distribute according to section 787— 
‘‘(1) 2 percent of the emission allowances estab-
lished for each year under section 721(a) to domes-
tic petroleum refineries that are covered entities pur-
suant to section 700(13)(F)(viii), including small 
business refiners; and 
‘‘(2) an additional 0.25 percent of the emissions 
allowances established for each year under section 
721(a) to small business refiners that are covered 
entities pursuant to section 700(13)(F)(viii). 
‘‘(k) INVESTMENT IN WORKERS.—(1) The Adminis-
trator shall auction pursuant to section 791 emission al-
lowances for the benefit of workers pursuant to part 2 of 
subtitle B of the American Clean Energy and Security Act 
of 2009 in the following amounts, and shall deposit into 
the Climate Change Worker Adjustment Assistance Fund 
established pursuant to section 793, and report to the Sec-
retary of Labor on, the proceeds from the sale of these 
allowances: 
‘‘(A) For vintage years 2012 through 2021, 0.5 per-
cent of the emission allowances established for each year 
under section 721(a). 
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subsections (a) through (p) of this section, or 
disbursed pursuant to section 790. 
‘‘(B) Unless otherwise specified, any allow-
ances allocated pursuant to subsections (a) 
through (o) and not distributed by March 31 of 
the calendar year following the allowance’s vin-
tage year. 
‘‘(2) For auctions conducted pursuant to sub-
section (p) in calendar years 2021 and thereafter, 
the Administrator shall place the proceeds from the 
sales of the these allowances into the Climate 
Change Consumer Refund Account. 
‘‘(3) Funds deposited into the Climate Change 
Consumer Refund Account shall be used as specified 
in section 789 and shall be available for expenditure, 
without further appropriation or fiscal year limita-
tion. 
‘‘(s) TREATMENT OF CARRYOVER ALLOWANCES.— 
‘‘(1) IN GENERAL.—If there are undistributed 
allowances from a vintage year for supplemental re-
ductions pursuant to section 781(c), energy-inten-
sive, trade-exposed industries pursuant to subsection 
(e)(2) of this section, deployment of carbon capture 
and sequestration technology pursuant to subsection 
(f)(2) of this section, or supplemental agriculture 
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‘‘(i) the number of undistributed allow-
ances for that purpose, times 
‘‘(ii) the quantity described in subpara-
graph (A)(ii) divided by the quantity described 
in subparagraph (A)(i). 
‘‘(t) COMPENSATION FOR EARLY ACTORS.—For vin-
tage year 2012, the Administrator shall allocate for com-
pensation for early actors 1 percent of emission allowances 
established under section 721(a), to be distributed in ac-
cordance with section 795 of the American Clean Energy 
and Security Act of 2009. 
‘‘(u) SUPPLEMENTAL AGRICULTURE AND RENEW-
ABLE ENERGY.— 
‘‘(1) IN
GENERAL.—For vintage years 2012 
through 2016, the Administrator shall allocate 0.28 
percent of emission allowances established under sec-
tion 721(a), to be distributed in accordance with sec-
tion 788 of the American Clean Energy and Security 
Act of 2009. 
‘‘(2) CARRYOVER.—After the Administrator dis-
tributes emission allowances pursuant to section 788 
for any given vintage year, any emission allowances 
allocated to supplemental agriculture and renewable 
energy pursuant to this subsection that have not 
been so distributed shall, in accordance with sub-
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section (s), be exchanged for allowances from the 
following vintage year and treated as part of the al-
location to such entities for that later vintage year. 
‘‘SEC. 783. ELECTRICITY CONSUMERS. 
‘‘(a) DEFINITIONS.—For purposes of this section: 
‘‘(1) COAL-FUELED
UNIT.—The term ‘coal- 
fueled unit’ means a utility unit that derives at least 
85 percent of its heat input from coal, petroleum 
coke, or any combination of these 2 fuels. 
‘‘(2) ELECTRICITY LOCAL DISTRIBUTION COM-
PANY.—The term ‘electricity local distribution com-
pany’ means an electric utility— 
‘‘(A) that has a legal, regulatory, or con-
tractual obligation to deliver electricity directly 
to retail consumers in the United States, re-
gardless of whether that entity or another enti-
ty sells the electricity as a commodity to those 
retail consumers; and 
‘‘(B) the retail rates of which, except in 
the case of an electric cooperative, are regulated 
or set by— 
‘‘(i) a State regulatory authority; 
‘‘(ii) a State or political subdivision 
thereof (or an agency or instrumentality 
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of, or corporation wholly owned by, either 
of the foregoing); or 
‘‘(iii) an Indian tribe pursuant to trib-
al law. 
‘‘(3) ELECTRICITY SAVINGS; RENEWABLE EN-
ERGY
RESOURCE.—The terms ‘electricity savings’ 
and ‘renewable energy resource’ shall have the 
meaning given those terms in section 610 of the 
Public Utility Regulatory Policies Act of 1978 (as 
added by section 101 of the American Clean Energy 
and Security Act of 2009). 
‘‘(4) INDEPENDENT
POWER
PRODUCTION
FA-
CILITY.—The term ‘independent power production 
facility’ means a facility— 
‘‘(A) that is used for the generation of 
electric energy, at least 80 percent of which is 
sold at wholesale; and 
‘‘(B) the sales of the output of which are 
not subject to retail rate regulation or setting 
of retail rates by— 
‘‘(i) a State regulatory authority; 
‘‘(ii) a State or political subdivision 
thereof (or an agency or instrumentality 
of, or corporation wholly owned by, either 
of the foregoing); 
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‘‘(iii) an electric cooperative; or 
‘‘(iv) an Indian tribe pursuant to trib-
al law. 
‘‘(5) LONG-TERM CONTRACT GENERATOR.—The 
term ‘long-term contract generator’ means a quali-
fying small power production facility, a qualifying 
cogeneration facility ), an independent power pro-
duction facility, or a facility for the production of 
electric energy for sale to others that is owned and 
operated by an electric cooperative that is— 
‘‘(A) a covered entity; and 
‘‘(B) as of the date of enactment of this 
title— 
‘‘(i) a facility with 1 or more sales or 
tolling agreements executed before March 
1, 2007, that govern the facility’s elec-
tricity sales and provide for sales at a price 
(whether a fixed price or a price formula) 
for electricity that does not allow for recov-
ery of the costs of compliance with the lim-
itation on greenhouse gas emissions under 
this title, provided that such agreements 
are not between entities that are affiliates 
of one another; or 
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‘‘(ii) a facility consisting of 1 or more 
cogeneration units that makes useful ther-
mal energy available to an industrial or 
commercial process with 1 or more sales 
agreements executed before March 1, 
2007, that govern the facility’s useful ther-
mal energy sales and provide for sales at 
a price (whether a fixed price or price for-
mula) for useful thermal energy that does 
not allow for recovery of the costs of com-
pliance with the limitation on greenhouse 
gas emissions under this title, provided 
that such agreements are not between enti-
ties that are affiliates of one another. 
‘‘(6) MERCHANT COAL UNIT.—The term ‘mer-
chant coal unit’ means a coal-fueled unit that— 
‘‘(A) is or is part of a covered entity; 
‘‘(B) is not owned by a Federal, State, or 
regional agency or power authority; and 
‘‘(C) generates electricity solely for sale to 
others, provided that all or a portion of such 
sales are made by a separate legal entity that— 
‘‘(i) has a full or partial ownership or 
leasehold interest in the unit, as certified 
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HR 2454 PCS
in accordance with such requirements as 
the Administrator shall prescribe; and 
‘‘(ii) is not subject to retail rate regu-
lation or setting of retail rates by— 
‘‘(I) a State regulatory authority; 
‘‘(II) a State or political subdivi-
sion thereof (or an agency or instru-
mentality of, or corporation wholly 
owned by, either of the foregoing); 
‘‘(III) an electric cooperative; or 
‘‘(IV) an Indian tribe pursuant 
to tribal law. 
‘‘(7) MERCHANT COAL UNIT SALES.—The term 
‘merchant coal unit sales’ means sales to others of 
electricity generated by a merchant coal unit that 
are made by the owner or leaseholder described in 
paragraph (6)(C). 
‘‘(8) NEW COAL-FUELED UNIT.—The term ‘new 
coal-fueled unit’ means a coal-fueled unit that com-
menced operation on or after January 1, 2009 and 
before January 1, 2013. 
‘‘(9) NEW MERCHANT COAL UNIT.—The term 
‘new merchant coal unit’ means a merchant coal 
unit— 
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‘‘(A) that commenced operation on or after 
January 1, 2009 and before January 1, 2013; 
and 
‘‘(B) the actual, on-site construction of 
which commenced prior to January 1, 2009. 
‘‘(10) QUALIFYING SMALL POWER PRODUCTION 
FACILITY; QUALIFYING COGENERATION FACILITY.— 
The terms ‘qualifying small power production facil-
ity’ and ‘qualifying cogeneration facility’ have the 
meanings given those terms in section 3(17)(C) and 
3(18)(B) of the Federal Power Act (16 U.S.C. 
796(17)(C) and 796(18)(B)). 
‘‘(11) SMALL
LDC.—The term ‘small LDC’ 
means, for any given year, an electricity local dis-
tribution company that delivered less than 4,000,000 
megawatt hours of electric energy directly to retail 
consumers in the preceding year. 
‘‘(12) STATE
REGULATORY
AUTHORITY.—The 
term ‘State regulatory authority’ has the meaning 
given that term in section 3(17) of the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 
2602(17)). 
‘‘(13) USEFUL THERMAL ENERGY.—The term 
‘useful thermal energy’has the meaning given that 
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term in section 371(7) of the Energy Policy and 
Conservation Act (42 U.S.C. 6341(7)). 
‘‘(b) ELECTRICITY LOCAL DISTRIBUTION COMPA-
NIES.— 
‘‘(1) DISTRIBUTION
OF
ALLOWANCES.—Not 
later than September 30, 2011, and each calendar 
year thereafter through 2028, the Administrator 
shall distribute to electricity local distribution com-
panies for the benefit of retail ratepayers the quan-
tity of emission allowances allocated for the fol-
lowing vintage year pursuant to section 782(a)(1). 
Notwithstanding the preceding sentence, the Admin-
istrator shall withhold from distribution under this 
subsection a quantity of emission allowances equal to 
the lesser of 14.3 percent of the quantity of emission 
allowances allocated under section 782(a)(1) for the 
relevant vintage year, or 105 percent of the emission 
allowances for the relevant vintage year that the Ad-
ministrator anticipates will be distributed to mer-
chant coal units and to long-term contract genera-
tors, respectively, under subsections (c) and (d). If 
not required by subsections (c) and (d) to distribute 
all of these reserved allowances, the Administrator 
shall distribute any remaining emission allowances 
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to electricity local distribution companies in accord-
ance with this subsection. 
‘‘(2) DISTRIBUTION BASED ON EMISSIONS.— 
‘‘(A) IN GENERAL.—For each vintage year, 
50 percent of the emission allowances available 
for distribution under paragraph (1), after re-
serving allowances for distribution under sub-
sections (c) and (d), shall be distributed by the 
Administrator among individual electricity local 
distribution companies ratably based on the an-
nual average carbon dioxide emissions attrib-
utable to generation of electricity delivered at 
retail by each such company during the base 
period determined under subparagraph (B). 
‘‘(B) BASE PERIOD.— 
‘‘(i) VINTAGE YEARS 2012 AND 2013.— 
For vintage years 2012 and 2013, an elec-
tricity local distribution company’s base 
period shall be— 
‘‘(I) calendar years 2006 through 
2008; or 
‘‘(II) any 3 consecutive calendar 
years between 1999 and 2008, inclu-
sive, that such company selects, pro-
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vided that the company timely informs 
the Administrator of such selection. 
‘‘(ii) 
VINTAGE
YEARS
2014
AND 
THEREAFTER.—For vintage years 2014 
and thereafter, the base period shall be— 
‘‘(I) the base period selected 
under clause (i); or 
‘‘(II) calendar year 2012, in the 
case of an electricity local distribution 
company that owns, co-owns, or pur-
chases through a power purchase 
agreement 
(whether 
directly 
or 
through a cooperative arrangement) a 
substantial portion of the electricity 
generated by a new coal-fueled unit, 
provided that such company timely in-
forms the Administrator of its election 
to use 2012 as its base period. 
‘‘(C) DETERMINATION OF EMISSIONS.— 
‘‘(i) 
DETERMINATION
FOR
1999– 
2008.—As part of the regulations promul-
gated pursuant to subsection (g), the Ad-
ministrator, after consultation with the 
Energy Information Administration, shall 
determine the average amount of carbon 
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dioxide emissions attributable to genera-
tion of electricity delivered at retail by 
each electricity local distribution company 
for each of the years 1999 through 2008, 
taking into account entities’ electricity gen-
eration, electricity purchases, and elec-
tricity sales. In the case of any electricity 
local distribution company that owns, co- 
owns, or purchases through a power pur-
chase agreement (whether directly or 
through a cooperative arrangement) a sub-
stantial portion of the electricity generated 
by, a coal-fueled unit that commenced op-
eration after January 1, 2006, and before 
December 31, 2008, the Administrator 
shall adjust the emissions attributable to 
such company’s retail deliveries in calendar 
years 2006 through 2008 to reflect the 
emissions that would have occurred if the 
relevant unit were in operation during the 
entirety of such 3-year period. 
‘‘(ii) ADJUSTMENTS FOR NEW COAL- 
FUELED UNITS.— 
‘‘(I) VINTAGE
YEARS
2012
AND 
2013.—For purposes of emission al-
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lowance distributions for vintage years 
2012 and 2013, in the case of any 
electricity local distribution company 
that owns, co-owns, or purchases 
through a power purchase agreement 
(whether directly or through a cooper-
ative arrangement) a substantial por-
tion of the electricity generated by, a 
new coal-fueled unit, the Adminis-
trator shall adjust the emissions at-
tributable to such company’s retail de-
liveries in the applicable base period 
to reflect the emissions that would 
have occurred if the new coal-fueled 
unit were in operation during such pe-
riod. 
‘‘(II) VINTAGE
YEAR
2014
AND 
THEREAFTER.—Not later than nec-
essary for use in making emission al-
lowance distributions under this sub-
section for vintage year 2014, the Ad-
ministrator shall, for any electricity 
local distribution company that owns, 
co-owns, or purchases through a 
power purchase agreement (whether 
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directly or through a cooperative ar-
rangement) a substantial portion of 
the electricity generated by a new 
coal-fueled unit and has selected cal-
endar year 2012 as its base period 
pursuant to subparagraph (B)(ii)(II), 
determine the amount of carbon diox-
ide emissions attributable to genera-
tion of electricity delivered at retail by 
such company in calendar year 2012. 
If the relevant new coal-fueled unit 
was not yet operational by January 1, 
2012, the Administrator shall adjust 
such determination to reflect the 
emissions that would have occurred if 
such unit were in operation for all of 
calendar year 2012. 
‘‘(iii) 
REQUIREMENTS.—Determina-
tions under this paragraph shall be as pre-
cise as practicable, taking into account the 
nature of data currently available and the 
nature of markets and regulation in effect 
in various regions of the country. The fol-
lowing requirements shall apply to such de-
terminations: 
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‘‘(I) The Administrator shall de-
termine the amount of fossil fuel- 
based electricity delivered at retail by 
each electricity local distribution com-
pany, and shall use appropriate emis-
sion factors to calculate carbon diox-
ide emissions associated with the gen-
eration of such electricity. 
‘‘(II) Where it is not practical to 
determine the precise fuel mix for the 
electricity delivered at retail by an in-
dividual electricity local distribution 
company, the Administrator may use 
the best available data, including aver-
age data on a regional basis with ref-
erence to Regional Transmission Or-
ganizations or regional entities (as 
that term is defined in section 
215(a)(7) of the Federal Power Act 
(16 U.S.C. 824o(a)(7)), to estimate 
fuel mix and emissions. Different 
methodologies may be applied in dif-
ferent regions if appropriate to obtain 
the most accurate estimate. 
‘‘(3) DISTRIBUTION BASED ON DELIVERIES.— 
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‘‘(A) INITIAL FORMULA.—Except as pro-
vided in subparagraph (B), for each vintage 
year, the Administrator shall distribute 50 per-
cent of the emission allowances available for 
distribution under paragraph (1), after reserv-
ing allowances for distribution under sub-
sections (c) and (d), among individual elec-
tricity local distribution companies ratably 
based on each electricity local distribution com-
pany’s annual average retail electricity deliv-
eries for calendar years 2006 through 2008, un-
less the owner or operator of the company se-
lects 3 other consecutive years between 1999 
and 2008, inclusive, and timely notifies the Ad-
ministrator of its selection. 
‘‘(B) UPDATING.—Prior to distributing 
2015 vintage year emission allowances under 
this paragraph and at 3-year intervals there-
after, the Administrator shall update the dis-
tribution formula under this paragraph to re-
flect changes in each electricity local distribu-
tion company’s service territory since the most 
recent formula was established. For each suc-
cessive 3-year period, the Administrator shall 
distribute allowances ratably among individual 
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electricity local distribution companies based on 
the product of— 
‘‘(i) each electricity local distribution 
company’s average annual deliveries per 
customer during calendar years 2006 
through 2008, or during the 3 alternative 
consecutive years selected by such company 
under subparagraph (A); and 
‘‘(ii) the number of customers of such 
electricity local distribution company in the 
most recent year in which the formula is 
updated under this subparagraph. 
‘‘(4) PROHIBITION AGAINST EXCESS DISTRIBU-
TIONS.—The regulations promulgated under sub-
section (g) shall ensure that, notwithstanding para-
graphs (2) and (3), no electricity local distribution 
company shall receive a greater quantity of allow-
ances under this subsection than is necessary to off-
set any increased electricity costs to such company’s 
retail ratepayers, including increased costs attrib-
utable to purchased power costs, due to enactment 
of this title. Any emission allowances withheld from 
distribution to an electricity local distribution com-
pany pursuant to this paragraph shall be distributed 
among all remaining electricity local distribution 
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companies ratably based on emissions pursuant to 
paragraph (2). 
‘‘(5) USE OF ALLOWANCES.— 
‘‘(A) RATEPAYER BENEFIT.—Emission al-
lowances distributed to an electricity local dis-
tribution company under this subsection shall 
be used exclusively for the benefit of retail rate-
payers of such electricity local distribution com-
pany and may not be used to support electricity 
sales or deliveries to entities or persons other 
than such ratepayers. 
‘‘(B) 
RATEPAYER
CLASSES.—In 
using 
emission allowances distributed under this sub-
section for the benefit of ratepayers, an elec-
tricity local distribution company shall ensure 
that ratepayer benefits are distributed— 
‘‘(i) among ratepayer classes ratably 
based on electricity deliveries to each class; 
and 
‘‘(ii) equitably among individual rate-
payers within each ratepayer class, includ-
ing entities that receive emission allow-
ances pursuant to part F. 
‘‘(C) LIMITATION.—In general, an elec-
tricity local distribution company shall not use 
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the value of emission allowances distributed 
under this subsection to provide to any rate-
payer a rebate that is based solely on the quan-
tity of electricity delivered to such ratepayer. 
To the extent an electricity local distribution 
company uses the value of emission allowances 
distributed under this subsection to provide re-
bates, it shall, to the maximum extent prac-
ticable, provide such rebates with regard to the 
fixed portion of ratepayers’ bills or as a fixed 
credit or rebate on electricity bills. 
‘‘(D) INDUSTRIAL RATEPAYERS.—Notwith-
standing subparagraph (C), if compliance with 
the requirements of this title results (or would 
otherwise result) in an increase in electricity 
costs for industrial retail ratepayers of any 
given electricity local distribution company (in-
cluding entities that receive emission allowances 
pursuant to part F), such electricity local dis-
tribution company— 
‘‘(i) shall pass through to industrial 
retail ratepayers their ratable share (based 
on deliveries to each ratepayer class) of the 
value of the emission allowances distrib-
uted to such company under this sub-
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section, to reduce electricity cost impacts 
on such ratepayers; and 
‘‘(ii) may do so based on the quantity 
of electricity delivered to individual indus-
trial retail ratepayers. 
‘‘(E) GUIDELINES.—As part of the regula-
tions promulgated under subsection (g), the Ad-
ministrator shall, after consultation with State 
regulatory authorities, prescribe guidelines for 
the implementation of the requirements of this 
paragraph. Such guidelines shall include re-
quirements to ensure that industrial retail rate-
payers (including entities that receive emission 
allowances under part F) receive their ratable 
share of the value of the allowances distributed 
to each electricity local distribution company 
pursuant to this subsection. 
‘‘(6) REGULATORY PROCEEDINGS.— 
‘‘(A) REQUIREMENT.—No electricity local 
distribution company shall be eligible to receive 
emission allowances under this subsection or 
subsection (e) unless the State regulatory au-
thority with authority over such company’s re-
tail rates, or the entity with authority to regu-
late or set retail electricity rates of an elec-
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public, pursuant to subparagraph (A), not less 
frequently than every 5 years. 
‘‘(7) PLANS AND REPORTING.— 
‘‘(A) REGULATIONS.—As part of the regu-
lations promulgated under subsection (g), the 
Administrator shall prescribe requirements gov-
erning plans and reports to be submitted in ac-
cordance with this paragraph. 
‘‘(B) PLANS.—Not later than April 30 of 
2011 and every 5 years thereafter through 
2026, each electricity local distribution com-
pany shall submit to the Administrator a plan, 
approved by the State regulatory authority or 
other entity charged with regulating tor setting 
the retail rates of such company, describing 
such company’s plans for the disposition of the 
value of emission allowances to be received pur-
suant to this subsection and subsection (e), in 
accordance with the requirements of this sub-
section and subsection (e). Such plan shall in-
clude a description of the manner in which the 
company will provide to industrial retail rate-
payers (including entities that receive emission 
allowances under part F) their ratable share of 
the value of such allowances. 
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‘‘(C) REPORTS.—Not later than June 30, 
2013, and each calendar year thereafter 
through 2031, each electricity local distribution 
company shall submit a report to the Adminis-
trator, and to the relevant State regulatory au-
thority or other entity charged with regulating 
or setting the retail electricity rates of such 
company, describing the disposition of the value 
of any emission allowances received by such 
company in the prior calendar year pursuant to 
this subsection and subsection (e), including— 
‘‘(i) a description of sales, transfer, 
exchange, or use by the company for com-
pliance with obligations under this title, of 
any such emission allowances; 
‘‘(ii) the monetary value received by 
the company, whether in money or in some 
other form, from the sale, transfer, or ex-
change of any such emission allowances; 
‘‘(iii) the manner in which the com-
pany’s disposition of any such emission al-
lowances complies with the requirements of 
this subsection and of subsection (e), in-
cluding each of the requirements of para-
graph (5) of this subsection, including the 
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requirement that industrial retail rate-
payers (including entities that receive 
emission allowances under part F) receive 
their ratable share of the value of such al-
lowances; and 
‘‘(iv) such other information as the 
Administrator may require pursuant to 
subparagraph (A). 
‘‘(D) PUBLICATION.—The Administrator 
shall make available to the public all plans and 
reports submitted under this subsection, includ-
ing by publishing such plans and reports on the 
Internet. 
‘‘(8) AUDITS.—Each year, the Administrator 
shall audit a representative sample of electricity local 
distribution companies to ensure that emission al-
lowances distributed under this subsection have been 
used exclusively for the benefit of retail ratepayers 
and that such companies are complying with the re-
quirements of this subsection and of subsection (e), 
including the requirement that industrial retail rate-
payers (including entities that receive emission al-
lowances under part F) receive their ratable share of 
the value of such allowances. In selecting companies 
for audit, the Administrator shall take into account 
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any credible evidence of noncompliance with such re-
quirements. The Administrator shall make available 
to the public a report describing the results of each 
such audit, including by publishing such report on 
the Internet. 
‘‘(9) ENFORCEMENT.—A violation of any re-
quirement of this subsection or of subsection (e) 
shall be a violation of this Act. Each emission allow-
ance the value of which is used in violation of the 
requirements of this subsection or of subsection (e) 
shall be a separate violation. 
‘‘(c) MERCHANT COAL UNITS.— 
‘‘(1) QUALIFYING EMISSIONS.—The qualifying 
emissions for a merchant coal unit for a given cal-
endar year shall be the product of the number of 
megawatt hours of merchant coal unit sales gen-
erated by such unit in such calendar year and the 
average carbon dioxide emissions per megawatt hour 
generated by such unit during the base period under 
paragraph (2), provided that the number of mega-
watt hours in a given calendar year for purposes of 
such calculation shall be reduced in proportion to 
the portion of such unit’s carbon dioxide emissions 
that are either— 
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‘‘(A) captured and sequestered in such cal-
endar year; or 
‘‘(B) attributable to the combustion or gas-
ification of biomass, to the extent that the 
owner or operator of the unit is not required to 
hold emission allowances for such emissions. 
‘‘(2) BASE PERIOD.—For purposes of this sub-
section, the base period for a merchant coal unit 
shall be— 
‘‘(A) calendar years 2006 through 2008; or 
‘‘(B) in the case of a new merchant coal 
unit— 
‘‘(i) the first full calendar year of op-
eration of such unit, if such unit com-
mences operation before January 1, 2012; 
‘‘(ii) calendar year 2012, if such unit 
commences operation on or after January 
1, 2012, and before October 1, 2012; or 
‘‘(iii) calendar year 2013, if such unit 
commences operation on or after October 
1, 2012, and before January 1, 2013. 
‘‘(3) PHASE-DOWN SCHEDULE.—The Adminis-
trator shall identify an annual phase-down factor, 
applicable to distributions to merchant coal units for 
each of vintage years 2012 through 2029, that cor-
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responds to the overall decline in the amount of 
emission allowances allocated to the electricity sector 
in such years pursuant to section 782(a)(1). Such 
factor shall— 
‘‘(A) for vintage year 2012, be equal to 
1.0; 
‘‘(B) for each of vintage years 2013 
through 2029, correspond to the quotient of— 
‘‘(i) the quantity of emission allow-
ances allocated under section 782(a)(1) for 
such vintage year; divided by 
‘‘(ii) the quantity of emission allow-
ances allocated under section 782(a)(1) for 
vintage year 2012. 
‘‘(4) DISTRIBUTION
OF
EMISSION
ALLOW-
ANCES.—Not later than March 1 of 2013 and each 
calendar year through 2030, the Administrator shall 
distribute emission allowances of the preceding vin-
tage year to the owner or operator of each merchant 
coal unit described in subsection (a)(6)(C) in an 
amount equal to the product of— 
‘‘(A) 0.5; 
‘‘(B) the qualifying emissions for such 
merchant coal unit for the preceding year, as 
determined under paragraph (1); and 
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‘‘(C) the phase-down factor for the pre-
ceding calendar year, as identified under para-
graph (3). 
‘‘(5) ADJUSTMENT.— 
‘‘(A) STUDY.—Not later than July 1, 
2014, the Administrator, in consultation with 
the Federal Energy Regulatory Commission, 
shall complete a study to determine whether the 
allocation formula under paragraph (3) is re-
sulting in, or is likely to result in, windfall prof-
its to merchant coal generators or substantially 
disparate treatment of merchant coal genera-
tors operating in different markets or regions. 
‘‘(B) REGULATION.—If the Administrator, 
in consultation with the Federal Energy Regu-
latory Commission, makes an affirmative find-
ing of windfall profits or disparate treatment 
under subparagraph (A), the Administrator 
shall, not later than 18 months after the com-
pletion of the study described in subparagraph 
(A), promulgate regulations providing for the 
adjustment of the allocation formula under 
paragraph (3) to mitigate, to the extent prac-
ticable, such windfall profits, if any, and such 
disparate treatment, if any. 
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‘‘(6) LIMITATION ON ALLOWANCES.—Notwith-
standing paragraph (4) or (5), for each vintage year 
the Administrator shall distribute under this sub-
section no more than 10 percent of the total quan-
tity of emission allowances available for such vintage 
year for distribution to the electricity sector under 
section 782(a)(1). If the quantity of emission allow-
ances that would otherwise be distributed pursuant 
to paragraph (4) or (5) for any vintage year would 
exceed such limit, the Administrator shall distribute 
10 percent of the total emission allowances available 
for distribution under section 782(a)(1) for such vin-
tage year ratably among merchant coal generators 
based on the applicable formula under paragraph (4) 
or (5). 
‘‘(7) ELIGIBILITY.—The owner or operator of a 
merchant coal unit shall not be eligible to receive 
emission allowances under this subsection for any 
vintage year for which such owner or operator has 
elected to receive emission allowances for the same 
unit under subsection (d). 
‘‘(d) LONG-TERM CONTRACT GENERATORS.— 
‘‘(1) DISTRIBUTION.—Not later than March 1, 
2013, and each calendar year through 2030, the Ad-
ministrator shall distribute to the owner or operator 
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of each long-term contract generator a quantity of 
emission allowances of the preceding vintage year 
that is equal to the sum of— 
‘‘(A) the number of tons of carbon dioxide 
emitted as a result of a qualifying electricity 
sales agreement referred to in subsection 
(a)(5)(B)(i); and 
‘‘(B) the incremental number of tons of 
carbon dioxide emitted solely as a result of a 
qualifying thermal sales agreement referred to 
in subsection (a)(5)(B)(ii), provided that in no 
event shall the Administrator distribute more 
than 1 emission allowance for the same ton of 
emissions. 
‘‘(2) LIMITATION ON ALLOWANCES.—Notwith-
standing paragraph (1), for each vintage year the 
Administrator shall distribute under this subsection 
no more than 4.3 percent of the total quantity of 
emission allowances available for such vintage year 
for distribution to the electricity sector under section 
782(a)(1). If the quantity of emission allowances 
that would otherwise be distributed pursuant to 
paragraph (1) for any vintage year would exceed 
such limit, the Administrator shall distribute 4.3 
percent of the total emission allowances available for 
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distribution under section 782(a)(1) for such vintage 
year ratably among long-term contract generators 
based on paragraph (1). 
‘‘(3) ELIGIBILITY.— 
‘‘(A) FACILITY
ELIGIBILITY.—The owner 
or operator of a facility shall cease to be eligible 
to receive emission allowances under this sub-
section upon the earliest date on which the fa-
cility no longer meets each and every element of 
the definition of a long-term contract generator 
under subsection (a)(5). 
‘‘(B) CONTRACT ELIGIBILITY.—The owner 
or operator of a facility shall cease to be eligible 
to receive emission allowances under this sub-
section based on an electricity or thermal sales 
agreement referred to in subsection (a)(5)(B) 
upon the earliest date that such agreement— 
‘‘(i) expires; 
‘‘(ii) is terminated; or 
‘‘(iii) is amended in any way that 
changes the location of the facility, the 
price (whether a fixed price or price for-
mula) for electricity or thermal energy sold 
under such agreement, the quantity of 
electricity or thermal energy sold under the 
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agreement, or the expiration or termi-
nation date of the agreement. 
‘‘(4) DEMONSTRATION OF ELIGIBILITY.—To be 
eligible to receive allowance distributions under this 
subsection, the owner or operator of a long-term 
contract generator shall submit each of the following 
in writing to the Administrator within 180 days 
after the date of enactment of this title, and not 
later than September 30 of each vintage year for 
which such generator wishes to receive emission al-
lowances: 
‘‘(A) A certificate of representation de-
scribed in section 700(15). 
‘‘(B) An identification of each owner and 
each operator of the facility. 
‘‘(C) An identification of the units at the 
facility and the location of the facility. 
‘‘(D) A written certification by the des-
ignated representative that the facility meets all 
the requirements of the definition of a long- 
term contract generator. 
‘‘(E) The expiration date of each quali-
fying electricity or thermal sales agreement re-
ferred to in subsection (a)(5)(B). 
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‘‘(F) A copy of each qualifying electricity 
or thermal sales agreement referred to in sub-
section (a)(5)(B). 
‘‘(5) NOTIFICATION.—Not later than 30 days 
after, in accordance with paragraph (3), a facility or 
an agreement ceases to meet the eligibility require-
ments for distribution of emission allowances pursu-
ant to this subsection, the designated representative 
of such facility shall notify the Administrator in 
writing when, and on what basis, such facility or 
agreement ceased to meet such requirements. 
‘‘(e) SMALL LDCS.— 
‘‘(1) DISTRIBUTION.—Not later than Sep-
tember 30 of each calendar year from 2011 through 
2028, the Administrator shall, in accordance with 
this subsection, distribute emission allowances allo-
cated pursuant to section 782(a)(2) for the following 
vintage year. Such allowances shall be distributed 
ratably among small LDCs based on historic emis-
sions in accordance with the same measure of such 
emissions applied to each such small LDC for the 
relevant vintage year under subsection (b)(2) of this 
section. 
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‘‘(2) USES.—A small LDC receiving allowances 
under this section shall use such allowances exclu-
sively for the following purposes: 
‘‘(A) Cost-effective programs to achieve 
electricity savings, provided that such savings 
shall not be transferred or used for compliance 
with section 610 of the Public Utility Regu-
latory Policies Act of 1978. 
‘‘(B) Deployment of technologies to gen-
erate electricity from renewable energy re-
sources, provided that any Federal renewable 
electricity credits issued based on generation 
supported under this section shall be submitted 
to the Federal Energy Regulatory Commission 
for voluntary retirement and shall not be used 
for compliance with section 610 of the Public 
Utility Regulatory Policies Act of 1978. 
‘‘(C) Assistance programs to reduce elec-
tricity costs for low-income residential rate-
payers of such small LDC, provided that such 
assistance is made available equitably to all res-
idential ratepayers below a certain income level, 
which shall not be higher than 200 percent of 
the poverty line (as that term is defined in sec-
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tion 673(2) of the Community Services Block 
Grant Act (42 U.S.C. 9902(2)). 
‘‘(3) REQUIREMENTS.—As part of the regula-
tions promulgated under subsection (g), the Admin-
istrator shall prescribe— 
‘‘(A) after consultation with the Federal 
Energy Regulatory Commission, requirements 
to ensure that programs and projects under 
paragraph (2)(A) and (B) are consistent with 
the standards established by, and effectively 
supplement electricity savings and generation of 
electricity from renewable energy resources 
achieved by, the Combined Efficiency and Re-
newable Electricity Standard established under 
section 610 of the Public Utility Regulatory 
Policies Act of 1978; 
‘‘(B) eligibility criteria and guidelines for 
consumer assistance programs for low-income 
residential ratepayers under paragraph (2)(C); 
and 
‘‘(C) such other requirements as the Ad-
ministrator determines appropriate to ensure 
compliance with the requirements of this sub-
section. 
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‘‘(4) REPORTING.—Reports submitted under 
subsection (b)(7) shall include, in accordance with 
such requirements as the Administrator may pre-
scribe— 
‘‘(A) a description of any facilities de-
ployed under paragraph (2)(A), the quantity of 
resulting electricity generation from renewable 
energy resources; 
‘‘(B) an assessment demonstrating the 
cost-effectiveness of, and electricity savings 
achieved by, programs supported under para-
graph (2)(B); and 
‘‘(C) a description of assistance provided to 
low-income retail ratepayers under paragraph 
(2)(C). 
‘‘(f) CERTAIN COGENERATION FACILITIES.— 
‘‘(1) ELIGIBLE
COGENERATION
FACILITIES.— 
For purposes of this subsection, an ‘eligible cogen-
eration facility’ is a facility that— 
‘‘(A) is a qualifying co-generation facility 
(as that term is defined in section 3(18)(B) of 
the Federal Power Act (16 U.S.C. 796(18)(B)); 
‘‘(B) derives 80 percent or more of its heat 
input from coal, petroleum coke, or any com-
bination of these 2 fuels; 
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‘‘(C) has a nameplate capacity of 100 
megawatts or greater; 
‘‘(D) was in operation as of January 1, 
2009, and remains in operation as of the date 
of any distribution of emission allowances under 
this subsection; 
‘‘(E) in calendar years 2006 through 2008 
sold, and as of the date of any distribution of 
emission allowances under this section sells, 
steam or electricity directly and solely to mul-
tiple, separately-owned industrial or commercial 
facilities co-located at the same site with the co-
generation facility; and 
‘‘(F) is not eligible to receive allowances 
under any other subsection of this section or 
under part F of this title. 
‘‘(2) DISTRIBUTION.—The Administrator shall 
distribute the emission allowances allocated pursuant 
to section 782(a)(3) to owners or operators of eligi-
ble cogeneration facilities ratably based on the car-
bon dioxide emissions of each such facility in cal-
endar years 2006 through 2008. The Adminis-
trator— 
‘‘(A) shall not, in any year, distribute 
emission allowances under this subsection to the 
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owner or operator of any eligible cogeneration 
facility in excess of the amount necessary to 
offset such facility’s cost of compliance with the 
requirements of this title in that year; and 
‘‘(B) may distribute such allowances over a 
period of years if annual distributions under 
this subsection would otherwise exceed the limi-
tation in subparagraph (A), provided that in no 
event shall distributions be made under this 
subsection after calendar year 2025. 
‘‘(3) 
REQUIREMENTS.—The 
Administrator 
shall, by regulation, establish requirements to ensure 
that the value of any emission allowances distributed 
pursuant to this subsection are passed through, on 
an equitable basis, to the facilities to which the rel-
evant cogeneration facility provides electricity or 
steam deliveries, including any facility owned or op-
erated by the owner or operator of the cogeneration 
facility. 
‘‘(g) REGULATIONS.—Not later than 2 years after 
the date of enactment of this title, the Administrator, in 
consultation with the Federal Energy Regulatory Commis-
sion, shall promulgate regulations to implement the re-
quirements of this section. 
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‘‘SEC. 784. NATURAL GAS CONSUMERS. 
‘‘(a) DEFINITIONS.—For purposes of this section: 
‘‘(1) COST-EFFECTIVE.—The term ‘cost-effec-
tive’, with respect to an energy efficiency program, 
means that the program meets the Total Resource 
Cost Test, which requires that the net present value 
of economic benefits over the life of the program, in-
cluding avoided supply and delivery costs and de-
ferred or avoided investments, is greater than the 
net present value of the economic costs over the life 
of the program, including program costs and incre-
mental costs borne by the energy consumer. 
‘‘(2) NATURAL GAS LOCAL DISTRIBUTION COM-
PANY.—The term ‘natural gas local distribution 
company’ means a natural gas local distribution 
company that is a covered entity. 
‘‘(3) NON-COVERED ENTITY.—The term ‘non- 
covered entity’ means, when used in reference to a 
date or period prior to the enactment of this title, 
an entity that would not have been a covered entity 
if this title had been in effect during such date or 
period. 
‘‘(4) STATE
REGULATORY
AUTHORITY.—The 
term ‘State regulatory authority’ has the meaning 
given the term ‘State commission’ in section 2(8) of 
the Natural Gas Act (15 U.S.C. 717a(8)). 
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‘‘(b) DISTRIBUTION.—Not later than June 30 of 
2015 and each calendar year thereafter through 2028, the 
Administrator shall distribute to natural gas local dis-
tribution companies for the benefit of retail ratepayers the 
quantity of emission allowances allocated for the following 
vintage year pursuant to section 782(b). Such allowances 
shall be distributed among local natural gas distribution 
companies based on the following formula: 
‘‘(1) INITIAL FORMULA.—Except as provided in 
paragraph (2), for each vintage year, the Adminis-
trator shall distribute emission allowances among 
natural gas local distribution companies ratably 
based on each such company’s annual average retail 
natural gas deliveries for 2006 through 2008 to cus-
tomers that were non-covered entities, unless the 
owner or operator of the company selects 3 other 
consecutive years between 1999 and 2008, inclusive, 
and timely notifies the Administrator of its selection. 
‘‘(2) UPDATING.—Prior to distributing 2019 
vintage year emission allowances and at 3-year inter-
vals thereafter, the Administrator shall update the 
distribution formula under this subsection to reflect 
changes in each natural gas local distribution com-
pany’s service territory since the most recent for-
mula was established. For each successive 3-year pe-
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riod, the Administrator shall distribute allowances 
ratably among natural gas local distribution compa-
nies based on the product of— 
‘‘(A) each natural gas local distribution 
company’s average annual natural gas deliveries 
per customer to customers that were non-cov-
ered entities during calendar years 2006 
through 2008, or during the 3 alternative con-
secutive years selected by such company under 
paragraph (1); and 
‘‘(B) the number of customers of such nat-
ural gas local distribution company that are not 
covered entities in the most recent year in 
which the formula is updated under this para-
graph. 
‘‘(c) USE OF ALLOWANCES.— 
‘‘(1) RATEPAYER
BENEFIT.—Emission allow-
ances distributed to a natural gas local distribution 
company under this section shall be used exclusively 
for the benefit of retail ratepayers of such natural 
gas local distribution company other than covered 
entities and may not be used to support natural gas 
sales or deliveries to entities or persons other than 
such ratepayers. 
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‘‘(2) RATEPAYER CLASSES.—In using emission 
allowances distributed under this section for the ben-
efit of ratepayers, a natural gas local distribution 
company shall ensure that ratepayer benefits are 
distributed— 
‘‘(A) among ratepayer classes ratably 
based on natural gas deliveries to each class, 
excluding deliveries to covered entities; and 
‘‘(B) equitably among individual ratepayers 
other than covered entities within each rate-
payer class. 
‘‘(3) LIMITATION.—In general, a natural gas 
local distribution company shall not use the value of 
emission allowances distributed under this section to 
provide to any ratepayer a rebate that is based solely 
on the quantity of natural gas delivered to such 
ratepayer. To the extent a natural gas local distribu-
tion company uses the value of emission allowances 
distributed under this section to provide rebates, it 
shall, to the maximum extent practicable, provide 
such rebates with regard to the fixed portion of rate-
payers’ bills or as a fixed creditor rebate on natural 
gas bills. 
‘‘(4) 
INDUSTRIAL
RATEPAYERS.—Notwith-
standing paragraph (3), if compliance with the re-
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quirements of this title results (or would otherwise 
result) in an increase in natural gas costs for indus-
trial retail ratepayers of any given natural gas local 
distribution company that are not covered entities 
(including entities that receive emission allowances 
pursuant to part F), such natural gas local distribu-
tion company— 
‘‘(A) shall pass through to industrial retail 
ratepayers that are not covered entities their 
ratable share (based on deliveries to each rate-
payer class) of the value of the emission allow-
ances distributed to such company under this 
subsection, to reduce natural gas cost impacts 
on such ratepayers; and 
‘‘(B) may do so based on the quantity of 
natural gas delivered to individual industrial re-
tail ratepayers. 
‘‘(5) ENERGY
EFFICIENCY
PROGRAMS.—The 
value of no less than one third of the emission allow-
ances distributed to natural gas local distribution 
companies pursuant to this section in any calendar 
year shall be used for cost-effective energy efficiency 
programs for natural gas consumers. Such programs 
must be authorized and overseen by the State regu-
latory authority, or by the entity with authority to 
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regulate or set retail natural gas rates in the case 
of a natural gas local distribution company that is 
not regulated by a State regulatory authority. 
‘‘(6) CERTAIN INTRACOMPANY DELIVERIES.—If 
a natural gas local distribution company makes an 
intracompany delivery of natural gas to a customer 
that is not a covered entity, for which such company 
is required to hold emission allowances under section 
722, such customer shall, for purposes of this sec-
tion, be considered a retail ratepayer and a member 
of a ratepayer class to be determined by the relevant 
State regulatory authority, or other entity with au-
thority to regulate or set natural gas rates in the 
case of a company not regulated by a State regu-
latory authority. 
‘‘(7) GUIDELINES.—As part of the regulations 
promulgated under subsection (h), the Administrator 
shall, after consultation with State regulatory au-
thorities, prescribe guidelines for the implementation 
of the requirements of this subsection. Such guide-
lines shall include requirements to ensure that in-
dustrial retail ratepayers that are not covered enti-
ties (including entities that receive emission allow-
ances under part F) receive their ratable share of 
the value of the allowances distributed to each nat-
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ural gas local distribution company pursuant to this 
section. 
‘‘(d) REGULATORY PROCEEDINGS.— 
‘‘(1) REQUIREMENT.—No natural gas local dis-
tribution company shall be eligible to receive emis-
sion allowances under this section unless the State 
regulatory authority with authority over the retail 
rates of such company, or the entity with authority 
to regulate or set retail rates of a natural gas local 
distribution company not regulated by a State regu-
latory authority, has— 
‘‘(A) after public notice and an opportunity 
for comment, promulgated a regulation or com-
pleted a public rate proceeding (or the equiva-
lent, in the case of a ratemaking entity other 
than a State regulatory authority) that provides 
for the full implementation of the requirements 
of subsection (c); and 
‘‘(B) made available to the Administrator 
and the public a report describing, in adequate 
detail, the manner in which the requirements of 
subsection (c) will be implemented. 
‘‘(2) UPDATING.—The Administrator shall re-
quire, as a condition of continued receipt of emission 
allowances under this section, that a new regulation 
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be promulgated or rate proceeding be completed, 
after public notice and an opportunity for comment, 
and a new report be made available to the Adminis-
trator and the public, pursuant to paragraph (1), 
not less frequently than every 5 years. 
‘‘(e) PLANS AND REPORTING.— 
‘‘(1) REGULATIONS.—As part of the regulations 
promulgated under subsection (h), the Administrator 
shall prescribe requirements governing plans and re-
ports to be submitted in accordance with this sub-
section. 
‘‘(2) PLANS.—Not later than April 30, 2015, 
and every 5 years thereafter through 2025, each 
natural gas local distribution company shall submit 
to the Administrator a plan, approved by the State 
regulatory authority or other entity charged with 
regulating or setting the retail rates of such com-
pany, describing such company’s plans for the dis-
position of the value of emission allowances to be re-
ceived pursuant to this section, in accordance with 
the requirements of this section. 
‘‘(3) REPORTS.—Not later than June 30, 2017, 
and each calendar year thereafter through 2031, 
each natural gas local distribution company shall 
submit a report to the Administrator, approved by 
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the relevant State regulatory authority or other enti-
ty charged with regulating or setting the retail nat-
ural gas rates of such company, describing the dis-
position of the value of any emission allowances re-
ceived by such company in the prior calendar year 
pursuant to this section, including— 
‘‘(A) a description of sales, transfer, ex-
change, or use by the company for compliance 
with obligations under this title, of any such 
emission allowances; 
‘‘(B) the monetary value received by the 
company, whether in money or in some other 
form, from the sale, transfer, or exchange of 
emission allowances received by the company 
under this section; 
‘‘(C) the manner in which the company’s 
disposition of emission allowances received 
under this section complies with the require-
ments of this section, including each of the re-
quirements of subsection (c); 
‘‘(D) the cost-effectiveness of, and energy 
savings achieved by, energy efficiency programs 
supported through such emission allowances; 
and 
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‘‘(E) such other information as the Admin-
istrator may require pursuant to paragraph (1). 
‘‘(4) PUBLICATION.—The Administrator shall 
make available to the public all plans and reports 
submitted by natural gas local distribution compa-
nies under this subsection, including by publishing 
such plans and reports on the Internet. 
‘‘(f) AUDITS.—Each year, the Administrator shall 
audit a representative sample of natural gas local distribu-
tion companies to ensure that emission allowances distrib-
uted under this section have been used exclusively for the 
benefit of retail ratepayers and that such companies are 
complying with the requirements of this section. In select-
ing companies for audit, the Administrator shall take into 
account any credible evidence of noncompliance with such 
requirements. The Administrator shall make available to 
the public a report describing the results of each such 
audit, including by publishing such report on the Internet. 
‘‘(g) ENFORCEMENT.—A violation of any require-
ment of this section shall be a violation of this Act. Each 
emission allowance the value of which is used in violation 
of the requirements of this section shall be a separate vio-
lation. 
‘‘(h) REGULATIONS.—Not later than January 1, 
2014, the Administrator, in consultation with the Federal 
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Energy Regulatory Commission, shall promulgate regula-
tions to implement the requirements of this section. 
‘‘SEC. 785. HOME HEATING OIL, PROPANE, AND KEROSENE 
CONSUMERS. 
‘‘(a) DEFINITIONS.—For purposes of this section: 
‘‘(1) CARBON
CONTENT.—The term ‘carbon 
content’ means the amount of carbon dioxide that 
would be emitted as a result of the combustion of a 
fuel. 
‘‘(2) COST-EFFECTIVE.—The term ‘cost-effec-
tive’ has the meaning given that term in section 
784(a)(1). 
‘‘(3) OILHEAT FUEL.—The term ‘oilheat fuel’ 
means fuel that— 
‘‘(A) is— 
‘‘(i) No. 1 distillate; 
‘‘(ii) No. 2 dyed distillate; 
‘‘(iii) a liquid blended with No. 1 dis-
tillate or No. 2 dyed distillate; or 
‘‘(iv) a biobased liquid; and 
‘‘(B) is used as a fuel for nonindustrial 
commercial or residential space or hot water 
heating. 
‘‘(b) DISTRIBUTION AMONG STATES.—Not later than 
September 30 of each of calendar years 2011 through 
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2028, the Administrator shall distribute among the States, 
in accordance with this section, the quantity of emission 
allowances allocated for the following vintage year pursu-
ant to section 782(c). The Administrator shall distribute 
emission allowances among the States under this section 
each year ratably based on the ratio of— 
‘‘(1) the carbon content of oilheat fuel, propane, 
and kerosene sold to consumers within each State in 
the preceding year for residential or commercial 
uses; to 
‘‘(2) the carbon content of oilheat fuel, propane, 
and kerosene sold to consumers within the United 
States in the preceding year for residential or com-
mercial uses. 
‘‘(c) USE OF ALLOWANCES.— 
‘‘(1) IN GENERAL.—States shall use emission 
allowances distributed under this section exclusively 
for the benefit of consumers of oilheat fuel, propane, 
or kerosene for residential or commercial purposes. 
Such proceeds shall be used exclusively for— 
‘‘(A) cost-effective energy efficiency pro-
grams for consumers that use oilheat fuel, pro-
pane, or kerosene for residential or commercial 
purposes; or 
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‘‘(B) rebates or other direct financial as-
sistance programs for consumers of oilheat fuel, 
propane, or kerosene used for residential or 
commercial purposes. 
‘‘(2) ADMINISTRATION AND DELIVERY MECHA-
NISMS.—In administering programs supported by 
this section, States shall— 
‘‘(A) use no less than 50 percent of the 
value of emission allowances received under this 
section for cost-effective energy efficiency pro-
grams to reduce consumers’ overall fuel costs; 
‘‘(B) to the extent practicable, deliver con-
sumer support under this section through exist-
ing energy efficiency and consumer energy as-
sistance programs or delivery mechanisms, in-
cluding, where appropriate, programs or mecha-
nisms administered by parties other than the 
State; and 
‘‘(C) seek to coordinate the administration 
and delivery of energy efficiency and consumer 
energy assistance programs supported under 
this section, with one another and with existing 
programs for various fuel types, so as to deliver 
comprehensive, fuel-blind, coordinated programs 
to consumers. 
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‘‘(d) REPORTING.—Each State receiving emission al-
lowances under this section shall submit to the Adminis-
trator, within 12 months of each receipt of such allow-
ances, a report, in accordance with such requirements as 
the Administrator may prescribe, that— 
‘‘(1) describes the State’s use of emission allow-
ances distributed under this section, including a de-
scription of the energy efficiency and consumer as-
sistance programs supported with such allowances; 
‘‘(2) demonstrates the cost-effectiveness of, and 
the energy savings and greenhouse gas emissions re-
ductions achieved by, energy efficiency programs 
supported under this section; and 
‘‘(3) includes a report prepared by an inde-
pendent third party, in accordance with such regula-
tions as the Administrator may promulgate, evalu-
ating the performance of the energy efficiency and 
consumer assistance programs supported under this 
section. 
‘‘(e) ENFORCEMENT.—If the Administrator deter-
mines that a State is not in compliance with this section, 
the Administrator may withhold a portion of the emission 
allowances, the quantity of which is equal to up to twice 
the quantity of the allowances that the State failed to use 
in accordance with the requirements of this section, that 
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such State would otherwise be eligible to receive under this 
section in later years. Allowances withheld pursuant to 
this subsection shall be distributed among the remaining 
States ratably in accordance with the formula in sub-
section (b). 
‘‘SEC. 787. ALLOCATIONS TO REFINERIES. 
‘‘(a) PURPOSE.—The purpose of this section is to 
provide emission allowance rebates to petroleum refineries 
in the United States in a manner that promotes energy 
efficiency and a reduction in greenhouse gas emissions at 
such facilities. 
‘‘(b) DEFINITIONS.—In this section: 
‘‘(1) EMISSIONS.—The term ‘emissions’ in-
cludes direct emissions from fuel combustion, proc-
ess emissions, and indirect emissions from the gen-
eration of electricity, steam, and hydrogen used to 
produce the output of a petroleum refinery or the 
petroleum refinery sector. 
‘‘(2) PETROLEUM REFINERY.—The term ‘petro-
leum refinery’ means a facility classified under code 
324110 of the North American Industrial Classifica-
tion System of 2002. 
‘‘(3) SMALL
BUSINESS
REFINER.—The term 
‘small business refiner’ means a refiner that meets 
the applicable Federal refinery capacity and em-
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ployee limitations criteria described in section 
45H(c)(1) of the Internal Revenue Code of 1986 (as 
in effect on the date of enactment of this section and 
without regard to section 45H(d)). Eligibility of a 
small business refiner under this paragraph shall not 
be recalculated or disallowed on account of (i) its 
merger with another small business refiner or refin-
ers after December 31, 2002 or (ii) its acquisition 
of another small business refiner (or refinery of such 
refiner) after December 31, 2002. 
‘‘(c) IN GENERAL.—For each vintage year between 
2014 and 2026, the Administrator shall distribute allow-
ances pursuant to this section to owners and operators of 
petroleum refineries, including small business refiners, in 
the United States. 
‘‘(d) DISTRIBUTION SCHEDULE.—The Administrator 
shall distribute emission allowances pursuant to the regu-
lations issued under subsection (e) for each vintage year 
no later than October 31 of the preceding calendar year. 
‘‘(e) REGULATIONS.—Not later than 3 years after the 
date of enactment of this title, the Administrator, in con-
sultation with the Administrator of the Energy Informa-
tion Administration, shall promulgate regulations that es-
tablish a formula for distributing emission allowances con-
sistent with the purpose of this section. In establishing 
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such formula, the Administrator shall consider the relative 
complexity of refinery processes and appropriate mecha-
nisms to take energy efficiency and greenhouse gas reduc-
tions into account. If a petroleum refinery’s electricity pro-
vider received a free allocation of emission allowances pur-
suant to section 782(a), the Administrator shall take this 
free allocation into account when establishing such for-
mula to avoid rebates to a petroleum refinery for costs 
that the Administrator determines were not incurred by 
the petroleum refinery because the allowances were freely 
allocated to the petroleum refinery’s electricity provider 
and used for the benefit of the petroleum refinery. This 
formula shall apply separately to the distribution of allow-
ances allocated pursuant to section 782(j)(1) and to those 
allocated under section 782(j)(2). 
‘‘SEC. 788. SUPPLEMENTAL AGRICULTURE AND RENEW-
ABLE ENERGY INCENTIVES PROGRAMS. 
‘‘(a) IN GENERAL.—Emission allowances allocated 
pursuant to section 782(u) shall be distributed by the Ad-
ministrator at the direction of the Secretary of Energy 
and the Secretary of Agriculture in accordance with this 
section. Not less than 50 percent of the allowances shall 
be available for the program established pursuant to sub-
section (b). 
‘‘(b) AGRICULTURE INCENTIVES PROGRAM.— 
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‘‘(1) ESTABLISHMENT.—The Secretary of Agri-
culture shall establish by rule a program to provide 
incentives in the form of emission allowances for ac-
tivities undertaken in the agriculture sector that re-
duce greenhouse gas emissions or sequester carbon. 
Under this program, the Secretary of Agriculture 
shall provide incentives for projects and activities 
that— 
‘‘(A) reduce or avoid greenhouse gas emis-
sions, or sequester greenhouse gases, but do not 
meet the criteria for offset credits established 
under the American Clean Energy and Security 
Act of 2009; 
‘‘(B) support actions to adapt to climate 
change; or 
‘‘(C) prevent conversion of land that would 
increase greenhouse gas emissions (including 
projects and activities that complement or sup-
plement conservation programs administered by 
the Secretary). 
‘‘(2) CONSIDERATIONS.—In designing this pro-
gram, the Secretary shall ensure that it provides 
support for— 
‘‘(A) development and demonstration of 
practices to reduce greenhouse gas emissions or 
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sequester carbon in agricultural operations 
where there are limited recognized opportunities 
to achieve such emissions reductions or seques-
tration; and 
‘‘(B) projects that reduce greenhouse gas 
emissions or increase sequestration of green-
house gases and also achieve other significant 
environmental benefits, such as the improve-
ment of water or air quality. 
‘‘(3) RESEARCH.—The Secretary shall establish 
by rule a program to conduct research to develop ad-
ditional projects and activities for crops to find addi-
tional techniques and methods to reduce greenhouse 
gas emissions or sequester greenhouse gases that 
may or may not meet the criteria for offset credits 
established under the American Clean Energy and 
Security Act of 2009. 
‘‘(4) USE OF INFORMATION.—Information and 
data generated by this program should, where rel-
evant, be used to inform the development of addi-
tional offset practices and methodologies. 
‘‘(c) RENEWABLE ENERGY INCENTIVES PROGRAM.— 
The Secretary of Energy and the Administrator shall es-
tablish by rule a program to provide allowances to State 
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and local governments to support the deployment of re-
newable energy infrastructure. 
‘‘SEC. 789. CLIMATE CHANGE CONSUMER REFUNDS. 
‘‘(a) REFUND.—In each year after deposits are made 
to the Climate Change Consumer Refund Account, the 
Secretary of the Treasury shall provide tax refunds on a 
per capita basis to each household in the United States 
that shall collectively equal the amount deposited into the 
Climate Change Consumer Refund Account. 
‘‘(b) LIMITATIONS.—The Secretary of the Treasury 
shall establish procedures to ensure that individuals who 
are not— 
‘‘(1) citizens or nationals of the United States; 
or 
‘‘(2) immigrants lawfully residing in the United 
States, 
are excluded for the purpose of calculating and distrib-
uting refunds under this section. 
‘‘SEC. 790. EXCHANGE FOR STATE-ISSUED ALLOWANCES. 
‘‘(a) IN GENERAL.—Not later than 1 year after the 
date of enactment of this title, the Administrator shall 
issue regulations allowing any person in the United States 
to exchange greenhouse gas emission allowances issued be-
fore December 31, 2011, by the State of California or for 
the Regional Greenhouse Gas Initiative, or the Western 
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Climate Initiative (in this section referred to as ‘State al-
lowances’) for emission allowances established by the Ad-
ministrator under section 721(a). 
‘‘(b) REGULATIONS.—Regulations issued under sub-
section (a) shall— 
‘‘(1) provide that a person exchanging State al-
lowances under this section receive emission allow-
ances established under section 721(a) in the 
amount that is sufficient to compensate for the cost 
of obtaining and holding such State allowances; 
‘‘(2) establish a deadline by which persons must 
exchange the State allowances; 
‘‘(3) provide that the Federal emission allow-
ances disbursed pursuant to this section shall be de-
ducted from the allowances to be auctioned pursuant 
to section 782(d); and 
‘‘(4) require that, once exchanged, the credit or 
other instrument be retired for purposes of use 
under the program by or for which it was originally 
issued. 
‘‘(c) COST OF OBTAINING STATE ALLOWANCE.—For 
purposes of this section, the cost of obtaining a State al-
lowance shall be the average auction price, for emission 
allowances issued in the year in which the State allowance 
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was issued, under the program under which the State al-
lowance was issued. 
‘‘SEC. 791. AUCTION PROCEDURES. 
‘‘(a) IN GENERAL.—To the extent that auctions of 
emission allowances by the Administrator are authorized 
by this part, such auctions shall be carried out pursuant 
to this section and the regulations established hereunder. 
‘‘(b) INITIAL REGULATIONS.—Not later than 12 
months after the date of enactment of this title, the Ad-
ministrator, in consultation with other agencies, as appro-
priate, shall promulgate regulations governing the auction 
of allowances under this section. Such regulations shall in-
clude the following requirements: 
‘‘(1) FREQUENCY; FIRST
AUCTION.—Auctions 
shall be held four times per year at regular intervals, 
with the first auction to be held no later than March 
31, 2011. 
‘‘(2) AUCTION SCHEDULE; CURRENT AND FU-
TURE VINTAGES.—The Administrator shall, at each 
quarterly auction under this section, offer for sale 
both a portion of the allowances with the same vin-
tage year as the year in which the auction is being 
conducted and a portion of the allowances with vin-
tage years from future years. The preceding sen-
tence shall not apply to auctions held before 2012, 
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during which period, by necessity, the Administrator 
shall auction only allowances with a vintage year 
that is later than the year in which the auction is 
held. Beginning with the first auction and at each 
quarterly auction held thereafter, the Administrator 
may offer for sale allowances with vintage years of 
up to 4 years after the year in which the auction is 
being conducted, except as provided in section 
782(p). 
‘‘(3) AUCTION FORMAT.—Auctions shall follow 
a single-round, sealed-bid, uniform price format. 
‘‘(4) PARTICIPATION; FINANCIAL ASSURANCE.— 
Auctions shall be open to any person, except that 
the Administrator may establish financial assurance 
requirements to ensure that auction participants can 
and will perform on their bids. 
‘‘(5) DISCLOSURE
OF
BENEFICIAL
OWNER-
SHIP.—Each bidder in the auction shall be required 
to disclose the person or entity sponsoring or bene-
fitting from the bidder’s participation in the auction 
if such person or entity is, in whole or in part, other 
than the bidder. 
‘‘(6) PURCHASE LIMITS.—No person may, di-
rectly or in concert with another participant, pur-
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chase more than 5 percent of the allowances offered 
for sale at any quarterly auction. 
‘‘(7) PUBLICATION
OF
INFORMATION.—After 
the auction, the Administrator shall, in a timely 
fashion, publish the identities of winning bidders, 
the quantity of allowances obtained by each winning 
bidder, and the auction clearing price. 
‘‘(8) OTHER
REQUIREMENTS.—The Adminis-
trator may include in the regulations such other re-
quirements or provisions as the Administrator, in 
consultation with other agencies, as appropriate, 
considers appropriate to promote effective, efficient, 
transparent, and fair administration of auctions 
under this section. 
‘‘(c) REVISION
OF REGULATIONS.—The Adminis-
trator may, in consultation with other agencies, as appro-
priate, at any time, revise the initial regulations promul-
gated under subsection (b) by promulgating new regula-
tions. Such revised regulations need not meet the require-
ments identified in subsection (b) if the Administrator de-
termines that an alternative auction design would be more 
effective, taking into account factors including costs of ad-
ministration, transparency, fairness, and risks of collusion 
or manipulation. In determining whether and how to re-
vise the initial regulations under this subsection, the Ad-
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ministrator shall not consider maximization of revenues to 
the Federal Government. 
‘‘(d) RESERVE AUCTION PRICE.—The minimum re-
serve auction price shall be $10 (in constant 2009 dollars) 
for auctions occurring in 2012. The minimum reserve 
price for auctions occurring in years after 2012 shall be 
the minimum reserve auction price for the previous year 
increased by 5 percent plus the rate of inflation (as meas-
ured by the Consumer Price Index for all urban con-
sumers). 
‘‘(e) DELEGATION OR CONTRACT.—Pursuant to reg-
ulations under this section, the Administrator may by del-
egation or contract provide for the conduct of auctions 
under the Administrator’s supervision by other depart-
ments or agencies of the Federal Government or by non-
governmental agencies, groups, or organizations. 
‘‘(f) SMALL BUSINESS REFINER RESERVE.—The Ad-
ministrator shall, in accordance with this subsection, issue 
regulations setting aside a specified number of allowances 
that small business refiners may purchase at the average 
auction price and may use to demonstrate compliance pur-
suant to section 722. These regulations shall provide the 
following: 
‘‘(1) AMOUNT.—The Administrator shall place 
in the small business refiner reserve account allow-
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ances that are to be sold at auction pursuant to the 
allocations in section 782 in an amount equal to— 
‘‘(A) 6.2 percent of the emission allow-
ances established under section 721(a) for each 
vintage year from 2012 through 2013; 
‘‘(B) 5.4 percent of the emission allow-
ances established under section 721(a) for each 
vintage year from 2014 through 2015; and 
‘‘(C) 4.9 percent of the emission allow-
ances established under section 721(a) for each 
vintage year from 2016 through 2024. 
‘‘(2) ALLOWED PURCHASES.—From January 1 
of the calendar year that matches the vintage year 
for which allowances have been placed in the reserve, 
through January 14 of the following year, small 
business refiners (as defined in section 787(b)) may 
purchase allowances from this reserve at the price 
determined pursuant to paragraph (3). 
‘‘(3) PRICE.—The price for allowances pur-
chased from this reserve shall be the average auction 
price for allowances of the same vintage year pur-
chased at auctions conducted pursuant to this sec-
tion during the 12 months preceding the purchase of 
the allowances. 
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‘‘(4) USE OF ALLOWANCES.—Allowances pur-
chased from this reserve shall only be used by the 
purchaser to demonstrate compliance pursuant to 
section 722 for attributable greenhouse gas emis-
sions in the calendar year that matches the vintage 
year of the purchased allowance. Allowances pur-
chased from this reserve may not be banked, traded 
or borrowed. 
‘‘(5) LIMITATIONS
ON
PURCHASE
AMOUNT.— 
The Administrator, by regulation adopted after pub-
lic notice and an opportunity for comment, shall es-
tablish procedures to distribute the ability to pur-
chase allowances from the reserve fairly among all 
small business refiners interested in purchasing al-
lowances from this reserve so as to address the po-
tential that requests to purchase allowances exceed 
the number of allowances available in the reserve. 
This regulation may place limits on the number of 
allowances a small business refiner may purchase 
from the reserve. 
‘‘(6) UNSOLD ALLOWANCES.—Vintage year al-
lowances not sold from the reserve on or before Jan-
uary 15 of the calendar year following the vintage 
year shall be sold at an auction conducted pursuant 
to this section no later than March 31 of the cal-
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endar year following the vintage year. If significantly 
more allowances are being placed in the reserve than 
are being purchased from the reserve several years 
in a row, the Administrator may adjust either the 
percent of allowances placed in the reserve or the 
date by which allowances may be purchased from the 
reserve. 
‘‘SEC. 792. AUCTIONING ALLOWANCES FOR OTHER ENTI-
TIES. 
‘‘(a) CONSIGNMENT.—Any entity holding emission al-
lowances or compensatory allowances may request that the 
Administrator auction, pursuant to section 791, the allow-
ances on consignment. 
‘‘(b) PRICING.—When the Administrator acts under 
this section as the agent of an entity in possession of emis-
sion allowances or compensatory allowances, the Adminis-
trator is not obligated to obtain the highest price possible 
for the allowances, and instead shall auction consignment 
allowances in the same manner and pursuant to the same 
rules as auctions of other allowances under section 791. 
The Administrator may permit the entity offering the al-
lowance for sale to condition the sale of its allowances pur-
suant to this section on a minimum reserve price that is 
different than the reserve auction price set pursuant to 
section 791(d). 
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‘‘(c) PROCEEDS.—For emission allowances and com-
pensatory allowances auctioned pursuant to this section, 
notwithstanding section 3302 of title 31, United States 
Code, or any other provision of law, within 90 days of re-
ceipt, the United States shall transfer the proceeds from 
the auction to the entity which held the allowances auc-
tioned. No funds transferred from a purchaser to a seller 
of emission allowances or compensatory allowances under 
this subsection shall be held by any officer or employee 
of the United States or treated for any purpose as public 
monies. 
‘‘(d) UNSOLD ALLOWANCES.—Allowances offered for 
sale under this section that are not sold shall be returned 
to the entity in possession of the allowance, notwith-
standing section 726(b)(2)(A). 
‘‘(e) REGULATIONS.—The Administrator shall issue 
regulations within 24 months after the date of enactment 
of this title to implement this section. 
‘‘SEC. 793. ESTABLISHMENT OF FUNDS. 
‘‘There is hereby established in the Treasury of the 
United States the following separate accounts: 
‘‘(1) The Strategic Reserve Fund. 
‘‘(2) The Climate Change Consumer Refund 
Account. 
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‘‘(3) The Climate Change Worker Adjustment 
Assistance Fund. 
‘‘SEC. 794. OVERSIGHT OF ALLOCATIONS. 
‘‘(a) IN GENERAL.—Not later than January 1, 2014, 
and every 2 years thereafter, the Comptroller General of 
the United States shall carry out and report to Congress 
on the results of a review of programs administered by 
the Federal Government that distribute emission allow-
ances or funds from any Federal auction of allowances. 
‘‘(b) CONTENTS.—Each such report shall include a 
comprehensive evaluation of the administration and effec-
tiveness of each program, including— 
‘‘(1) the efficiency, transparency, and sound-
ness of the administration of each program; 
‘‘(2) the performance of activities receiving as-
sistance under each program; 
‘‘(3) the cost-effectiveness of each program in 
achieving the stated purposes of the program; and 
‘‘(4) recommendations, if any, for legislative, 
regulatory, or administrative changes to each pro-
gram to improve its effectiveness. 
‘‘(c) FOCUS.—In evaluating program performance, 
each review under this section review shall address the ef-
fectiveness of such programs in— 
‘‘(1) creating and preserving jobs; 
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‘‘(2) ensuring a manageable transition for 
working families and workers; 
‘‘(3) reducing the emissions, or enhancing se-
questration, of greenhouse gases; 
‘‘(4) developing clean technologies; and 
‘‘(5) building resilience to the impacts of cli-
mate change. 
‘‘SEC. 795. EXCHANGE FOR EARLY ACTION OFFSET CRED-
ITS. 
‘‘(a) IN GENERAL.—Emission allowances allocated 
pursuant to section 782(t) shall be distributed by the Ad-
ministrator in accordance with this section. Not later than 
1 year after the date of enactment of this title, the Admin-
istrator shall issue regulations allowing— 
‘‘(1) any person in the United States to ex-
change instruments in the nature of offset credits 
issued before January 1, 2009, by a State or vol-
untary offset program with respect to which the Ad-
ministrator has made an affirmative determination 
under section 740(a)(2), for emissions allowances es-
tablished by the Administrator under section 721(a); 
and 
‘‘(2) the Administrator to provide compensation 
in the form of emission allowances to entities that 
do not meet the criteria of paragraph (1) and meet 
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the criteria of this paragraph for documented early 
reductions or avoidance of greenhouse gas emissions 
or greenhouse gases sequestered before January 1, 
2009, from projects begun before January 1, 2009, 
where— 
‘‘(A) the entity publicly stated greenhouse 
gas reduction goals and publicly reported 
against those goals; 
‘‘(B) the entity demonstrated entity-wide 
net greenhouse gas reductions; and 
‘‘(C) the entity demonstrates the actual 
projects undertaken to make reductions and 
documents the reductions (e.g., through docu-
mentation of engineering projects). 
‘‘(b) REGULATIONS.—Regulations issued under sub-
section (a) shall— 
‘‘(1) provide that a person exchanging credits 
under subsection (a)(1) receive emission allowances 
established under section 721(a) in an amount for 
which the monetary value is equivalent to the aver-
age monetary value of the credits during the period 
from January 1, 2006, to January 1, 2009, as ad-
justed for inflation to reflect current dollar values at 
the time of the exchange; 
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‘‘(2) provide that a person receiving compensa-
tion for documented early action under subsection 
(a)(2) shall receive emission allowances established 
under section 721(a) in an amount that is approxi-
mately equivalent in value to the carbon dioxide 
equivalent per ton value received by entities in ex-
change for credits under paragraph (1) (as adjusted 
for inflation to reflect current dollar values at the 
time of the exchange), as determined by the Admin-
istrator; 
‘‘(3) provide that only reductions or avoidance 
of greenhouse gas emissions, or sequestration of 
greenhouse gases, achieved by activities in the 
United States between January 1, 2001, and Janu-
ary 1, 2009, may be compensated under this section, 
and only credits issued for such activities may be ex-
changed under this section; 
‘‘(4) provide that only credits that have not 
been retired or otherwise used to meet a voluntary 
or mandatory commitment, and have not expired, 
may be exchanged under subsection (a)(1); 
‘‘(5) require that, once exchanged, the credit be 
retired for purposes of use under the program by or 
for which it was originally issued; and 
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