(A) ECONOMIC
CHANGE
FACTOR.—For
purposes of paragraph (1)(B), the economic
change factor represents the ratio, expressed in
percentage terms, of the products of the same
type sold by the participant during the year and
the average annual number of such products
sold by the participant during the base period.
(B) GDP 
ADJUSTMENT
FACTOR.—For
purposes of paragraph (1)(C), the GDP adjust-
ment factor, expressed in percentage terms,
represents the difference between 100 and the
percentage by which the Gross Domestic Prod-
uct of the United States has increased since the
base period.
(d) CALCULATION OF CREDITS.—Each participant
shall be entitled to receive greenhouse gas emissions re-
duction credits in an amount equal to the difference
between—
(1) the sum of its annual emissions baselines
for the program period, as calculated pursuant to
subsections (b) and (c); and
(2) the product of—
(A) the number of products sold by the
participant in the United States;
(B) the expected useful life of each prod-
uct; and
(C) the numerical factor used to determine
the greenhouse gas emissions resulting from the
electricity generated, or fossil fuel consumed, in
connection with the operation of the product.
(e) AUTOMOTIVE VEHICLES.—
(1) IN GENERAL.—Participants that manufac-
ture automobiles, including both passenger vehicles
and light-duty trucks, may enter into agreements
authorized by this section.
(2) CALCULATION
OF
EMISSIONS
BASELINE,
ANNUAL BASELINE, AND REDUCTION CREDITS.—For
purposes of this section, the calculation of each par-
ticipant’s emissions baseline, annual baseline, and
reduction credits shall be based on the methods and
factors used in subsections (b), (c), and (d), which
shall be used to determine the greenhouse gas emis-
sions reductions achieved, and credits awarded, as a
result of improvements made by the participant in
the actual fuel economy of its passenger vehicles and
light duty trucks.
(f) PREVENTION
OF DOUBLE-COUNTING.—In the
event the President determines that the adjustments to
participants’ baselines made pursuant to section 7(a)(2)
are not adequate to effect the purposes of this subsection,
the regulations promulgated under section 4(c) shall in-
clude provisions to ensure that, notwithstanding any other
provision of this Act, no more than one credit shall be
awarded for each ton of emissions of greenhouse gas emis-
sions reduced pursuant to the agreements entered into
pursuant to this Act.
SEC. 10. INCREASES IN DOMESTIC CARBON STOCKS.
(a) PURPOSE.—The purpose of this section is to en-
sure that voluntary action credits earned for approved ac-
tions leading to increases in domestic carbon stocks are
of a sufficient quality to allow comparable and tradable
with other credits authorized by this Act.
(b) IN GENERAL.—A voluntary action agreement
shall provide that a participant may be entitled to receive
greenhouse gas reduction credit for permanent protection
of carbon stocks in mature primary forests, reforestation
and afforestation, and improved forest carbon stock man-
agement in forests that have merchantable timber.
(c) CALCULATIONS.—Credits shall be subject to po-
tential debiting pursuant to section 10(c)(2)(A), or shall
be counted in ton-year credits pursuant to section
10(c)(2)(B).
(1) PERMANENT PROTECTION.—In the case of
permanent protection of mature primary forests
where protection is initiated during the credit period,
credits shall be equal to 50 percent of the carbon
stock in above and belowground live biomass, meas-
ured by the end of the credit period.
(2) REFORESTATION
AND
AFFORESTATION.—
For reforestation and afforestation initiated during
the credit period, credits will be equal to the full net
increases in carbon stocks generated by project ac-
tivities during the credit period.
(3) IMPROVED
FOREST
CARBON
STOCK
MAN-
AGEMENT.—In forests that are not being perma-
nently protected and have merchantable timber,
creditable net increases in carbon stocks must be ad-
ditional to those which would have occurred in the
absence of this legislation. These net increases are
subject to adjustments for leakage.
(A) ADDITIONALLY.—For improved forest
carbon stock management, the annual amount
of carbon stock increase that is considered addi-
tional to that which would have occurred in the
absence of this legislation shall be the difference
between the net rate of increase in carbon
stocks during the credit period on all land
owned by the participant within the region, and
the average net rate of increase in carbon
stocks on the same area of land in similar pri-
vately owned forest lands within the region. For
the purpose of this analysis, regulations pro-
mulgated under section 4(c) shall establish av-
erage rates of change of carbon stocks for for-
est type, productivity class, age, and region,
taking into account the most recent forest in-
ventory and analysis data. All analyses of rates
of change in carbon stocks shall exclude all sub-
merchantable timber. If the average per acre
rate of change in carbon stocks in similar for-
ests within the region is less than zero, net
changes in those carbon stocks shall be re-
garded as zero for the purpose of comparison
with the rates of change on an individual land-
owner’s property.
(B) LEAKAGE.—If improved forest carbon
stock management results in a reduction in tim-
ber supply from the participant’s lands, there
will be a deduction in claimed credits equal to
the product of the amount of reduction in tim-
ber supply and the average direct and indirect
carbon emissions associated with supplying
similar timber. These emissions shall include
those identified in tables developed pursuant to
section 10(d). No deduction for leakage will be
required if it can be demonstrated that the net
rate of carbon stock increase in the region has
risen for the last period for which such data is
available, and the aggregate output of all tim-
ber, fiber, and fuel producing mills and facilities
in the region has not declined, subtracting any
production which relied on imports of timber or
fiber from outside the region.
(d) LIMITATIONS.—
(1) COVERAGE.—The following applies under
this section:
(A) Only private lands, and such lands
that are transferred into permanent protection
under State or Federal jurisdiction during the
credit period, are eligible to participate in the
program established by this section.
(B) Mature primary forests, and lands on
which reforestation and afforestation is initiated
during the credit period, are eligible for cred-
iting under the provisions of this legislation.
Where increases in carbon stocks are achieved
through improved forest carbon stock manage-
ment, forests must be, at a minimum, old
enough to have merchantable timber to be eligi-
ble. To determine the minimum age needed for
these lands to be eligible, rules issued under
this Act shall describe methods for determining
forest age, and define the age at which different
forest types produce merchantable pulpwood,
sawtimber, or other timber products commonly
sold by landowners in the applicable region. For
the purposes of this Act, the age of the forest
management unit (each not to exceed 100
acres) is the oldest age class that represents at
least 20 percent of the standing timber.
(C) A participant must enroll all the forest
land it owns to participate in the program es-
tablished by this section, except those lands
used only for ecosystem preservation during the
entire early action period, and small or diverse
land holdings that represent a de minimis per-
centage of the participant’s total carbon stocks.
For the purposes of this Act, a participant
owns forest land if it owns a controlling interest
in the timber on the land. To reduce trans-
action costs, landowners may pool their lands
for enrollment and act as a single participant.
Changes in carbon stocks, on all lands enrolled
need to be included, and for those lands with
a net loss in carbon stocks the loss needs to
be subtracted from the creditable gain in car-
bon stocks calculated under this section.
(2) DURABILITY.—The following applies under
this section:
(A) The participant may elect to receive
credit equal to the net increase in carbon stocks
during the credit period, as calculated under
section 10(b). Under this election, if at any
time before 50 years have passed since specific
tracts were enrolled in the program, the stock
of carbon on those tracts covered by the agree-
ment is less than the stock of carbon at the end
of the credit period, the participant shall retire
a number of greenhouse gas reduction credits
equal to the difference between the 2 amounts.
(B) If the participant elects not to count
the greenhouse gas reductions accruing from
their activities as described above, the partici-
pant will be awarded a fraction of 1 ton of
credit (a ton-year credit) for each year that the
carbon stock is maintained. This fraction shall
be defined by the Government agency respon-
sible for the implementation of this Act.
(3) LAND
STEWARDSHIP.—The following ap-
plies under this section:
(A) To prevent the establishment of forests
in areas that currently support natural vegeta-
tive communities other than forests, no credits
will be granted for afforestation of areas his-
torically not forested unless those areas have
been supporting systems other than natural
vegetative communities (e.g. cropland, non-na-
tive grasslands, abandoned mine lands, parking
lots) since 1990.
(B) Credits for carbon stock increases
from land use activities should encourage wise
land stewardship. All lands enrolled in a pro-
gram for voluntary action carbon credits must
adhere to best management practices as speci-
fied on a regional or State basis by the appro-
priate Federal or State agency.
(4) CREDIT LIMIT.—No more than 20 percent
of the greenhouse reduction credits allocated under
this Act shall be awarded for carbon stock increases
under this section.
(e) MONITORING, REPORTING, AND VERIFICATION.—
(1) 
MONITORING
GUIDELINES.—The 
rules
issued pursuant to section 4(c) shall include moni-
toring guidelines that, at a minimum, provide:
(A) Accurate and transparent carbon stock
monitoring protocols based on statistically ro-
bust inventory, soil sampling, ecological survey,
and other applicable scientific techniques.
(B) Requirements for periodic monitoring
of creditable activities. All enrolled carbon
stocks that may be decreasing, and significant
indirect increases in greenhouse gas emissions
caused by project activities, must be monitored
and subtracted from credits. Monitoring of en-
rolled carbon stocks that are increasing is at
the discretion of the participant. Only mon-
itored stocks may be included in calculations
under sections 10(a) and 10(b).
(C) Tables of estimated greenhouse gas
emissions associated with land management ac-
tivities that result in significant indirect in-
creases in greenhouse gas emissions (such as
fertilizer production and application, herbicide
production, and fossil fuel consumption).
(D) Procedures for delineating which car-
bon stocks on a participant’s lands that may be
decreasing during the credit period due to
project activities need to be monitored.
(E) Procedures for estimating baseline car-
bon stocks on each participant’s lands.
(F) Procedures to allow for appropriate es-
timation of carbon stocks using tables and mod-
els derived from forest inventory and analysis
data of the United States Forest Service or
other credible sources for the appropriate re-
gion, forest type, age, stand management his-
tory, and site productivity.
(2) REPORTING GUIDELINES.—The rules issued
pursuant to section 4(c) shall include reporting
guidelines that, at a minimum, provide as follows:
(A) Participants shall report claimed net
increases in carbon stocks during the credit pe-
riod to the Government agency responsible for
implementation of this Act, which will then
evaluate the participant’s compliance with the
guidelines. If not in compliance, the participant
will be notified and advised what remedial ac-
tions are needed. Participants may not receive
greenhouse gas reduction credits until they are
in compliance with the guidelines issued under
this Act.
(B) Each participant’s report must be sup-
ported by a report from a recognized third
party auditor. The auditor must verify the car-
bon credits using a statistically robust evalua-
tion of a valid subsample of the participant’s
lands.
(3) ELIGIBILITY
FOR
ASSISTANCE.—Partici-
pants who own less than 50,000 acres will be eligible
for monitoring and verification assistance.
SEC. 11. TRADING AND POOLING.
(a) TRADING.—A participant may—
(1) purchase earned greenhouse gas reduction
credit from and sell the credit to any other partici-
pant; and
(2) sell the credit to any person that is not a
participant.
(b) POOLING.—The regulations promulgated under
section 4(c) may permit pooling arrangements under
which a group of participants agrees to act as a single
participant for the purpose of entering into a voluntary
action agreement.
SEC. 12. RELATIONSHIP TO FUTURE DOMESTIC GREEN-
HOUSE GAS REGULATORY STATUTE.
A voluntary action agreement shall not bind the
United States to adopt (or not to adopt) any particular
form of domestic greenhouse gas regulatory statute, ex-
cept that a voluntary action agreement shall provide
that—
(1) greenhouse gas reduction credit earned by a
participant under a voluntary action agreement shall
be provided to the participant in addition to any oth-
erwise available authorizations of the participant to
emit greenhouse gases during the compliance period
under a domestic greenhouse gas regulatory statute;
and
(2) if the allocation of authorizations under a
domestic greenhouse gas regulatory statute to emit
greenhouse gases during the compliance period is
based on the level of a participant’s emissions during
a historic period that is later than the participant’s
base period under the participant’s voluntary action
agreement, any greenhouse gas reduction credit to
which the participant was entitled under the vol-
untary action agreement for domestic greenhouse
gas reductions during that historic period shall, for
the purpose of that allocation, be added back to the
participant’s greenhouse gas emissions level for the
historic period.
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