I
106TH CONGRESS
1ST SESSION
H. R. 2520
To authorize the President to enter into agreements to provide regulatory
credit for voluntary early action to mitigate potential environmental im-
pacts from greenhouse gas emissions.
IN THE HOUSE OF REPRESENTATIVES
JULY 14, 1999
Mr. LAZIO (for himself, Mr. DOOLEY of California, Mr. BOEHLERT, Mr.
KIND, Mr. CASTLE, Mr. MORAN of Virginia, Mr. SAXTON, Mr. ROEMER,
Mr. GANSKE, Mr. MALONEY of Connecticut, Mr. GILCHREST, Mr. PRICE
of North Carolina, and Mr. SMITH of Washington) introduced the fol-
lowing bill; which was referred to the Committee on Commerce
A BILL
To authorize the President to enter into agreements to pro-
vide regulatory credit for voluntary early action to miti-
gate potential environmental impacts from greenhouse
gas emissions.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Credit for Voluntary Actions Act’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Purpose.
Sec. 3. Definitions.
Sec. 4. Authority for voluntary action agreements.
Sec. 5. Entitlement to greenhouse gas reduction credit for voluntary action.
Sec. 6. Baseline and base period.
Sec. 7. Sources covered by voluntary action agreements.
Sec. 8. Measurement and verification.
Sec. 9. Participation by manufacturers and adopters of end-use, consumer, and
similar technology.
Sec. 10. Increases in domestic carbon stocks.
Sec. 11. Trading and pooling.
Sec. 12. Relationship to future domestic greenhouse gas regulatory statute.
SEC. 2. PURPOSE.
(a) IN GENERAL.—The purpose of this Act is to en-
courage voluntary actions to mitigate potential environ-
mental impacts of greenhouse gas emissions by author-
izing the President to enter into binding agreements under
which entities operating in the United States will receive
credit, usable in any future domestic program that re-
quires mitigation of greenhouse gas emissions, for vol-
untary mitigation actions taken before the end of the cred-
it period and to ensure that their future emission baselines
reflect these actions.
(b) RULES OF CONSTRUCTION REGARDING KYOTO
PROTOCOL AND FEDERAL REGULATORY ACTIONS.—This
Act may not be construed—
(1) as an indication of support for, or an en-
dorsement or ratification of, the Kyoto Protocol; or
(2) as establishing an obligation on the part of
the Congress to enact a domestic greenhouse gas
regulatory statute (as defined in section 3(9)).
SEC. 3. DEFINITIONS.
In this Act:
(1) 
AFFORESTATION.—The 
term
‘‘afforestation’’ means conversion of non-forest to
forest on lands that have, historically, not contained
forests and did not in 1990.
(2) BASELINE
CARBON
STOCKS.—The term
‘‘baseline carbon stocks’’ means the average amount
of carbon stocks (in tons carbon) estimated to be
present on a participant’s land during the partici-
pant’s base period.
(3) BEST MANAGEMENT PRACTICES.—The term
‘‘best management practices’’ means sustainable
land-management practices that conserve resources
while maintaining long-term productivity.
(4) CARBON
RESERVOIR.—The term ‘‘carbon
reservoir’’ means quantifiable nonfossil storage of
carbon in a natural or managed ecosystem or other
reservoir.
(5) CARBON
STOCKS.—The term ‘‘carbon
stocks’’ means living biomass carbon, dead biomass
carbon, and soil carbon (organic and mineral soils).
(6) COMPLIANCE PERIOD.—The term ‘‘compli-
ance period’’ means any period during which a do-
mestic greenhouse gas regulatory statute is in effect.
(7) CREDIT PERIOD.—The term ‘‘credit period’’
means—
(A) the period of January 1, 1999,
through the earlier of—
(i) the day before the beginning of the
compliance period; or
(ii) the end of the ninth calendar year
that begins after the date of enactment of
this Act; or
(B) if a different period is determined for
a participant under section 5(e) or 6(c)(4), the
period so determined.
(8) DOMESTIC.—The term ‘‘domestic’’ means
within the territorial jurisdiction of the United
States.
(9) DOMESTIC GREENHOUSE GAS REGULATORY
STATUTE.—The term ‘‘domestic greenhouse gas reg-
ulatory statute’’ means a Federal statute, enacted
after the date of enactment of this Act, that imposes
a quantitative limitation on domestic greenhouse gas
emissions.
(10) ECOSYSTEMS.—The term ‘‘ecosystems’’ in-
clude above- and below-ground living biomass, soils
(organic and mineral), and necromass.
(11) EXISTING
SOURCE.—The term ‘‘existing
source’’ means a source that emitted greenhouse
gases during the participant’s base period deter-
mined under section 6.
(12) FOREST.—The term ‘‘forest’’ means land
at least 10 percent occupied by forest trees of any
size or formerly having had such tree cover and not
currently developed for non-forest use. Lands devel-
oped for non-forest use include areas for crops, im-
proved pasture, residential, or administrative areas,
improved roads of any width, and adjoining road
clearing and powerline clearing of any width. The
land must be a minimum of one acre in area. Road-
side, streamside, and shelterbelt strips of timber
must have a crown width of at least 120 feet to
qualify as forest land; and unimproved roads, trails,
streams, and clearings within forest areas are classi-
fied as forest land if they are less than 120 feet wide
(USDA Forest Service 1972).
(13) GREENHOUSE
GAS.—The term ‘‘green-
house gas’’ means—
(A) carbon dioxide;
(B) methane;
(C) nitrous oxide;
(D) hydrofluorocarbons;
(E) perfluorocarbons; and
(F) sulfur hexafluoride.
(14) GREENHOUSE GAS REDUCTION CREDIT.—
The term ‘‘greenhouse gas reduction credit’’ means
an authorization under a domestic greenhouse gas
regulatory statute to emit 1 metric ton of green-
house gas (expressed in terms of carbon dioxide
equivalent) that is provided because of greenhouse
gas emission reductions or carbon sequestration car-
ried out before the compliance period.
(15) MATURE
PRIMARY
FOREST.—The term
‘‘mature primary forest’’ means forests where the
majority of dominant and codominant trees are
greater than 100 years of age and where there is no
history of significant direct human disturbance, with
the exception of prescribed fire, over the last 100
years.
(16) NEW SOURCE.—The term ‘‘new source’’
means—
(A) a source other than an existing source;
and
(B) a facility that would be a source but
for the facility’s use of renewable energy.
(17) OWN.—The term ‘‘own’’ means to have di-
rect or indirect ownership of an undivided interest in
an asset.
(18) PARTICIPANT.—The term ‘‘participant’’
means a person that enters into a voluntary action
agreement with the United States under this Act.
(19) PERSON.—The term ‘‘person’’ includes a
governmental entity.
(20) REFORESTATION.—The term ‘‘reforest-
ation’’ means conversion of non-forest to forest on
lands which had, historically, contained forests but
which had been converted to some other use as of
1990.
(21) REGION.—The term ‘‘region’’ has the
meaning applicable pursuant to the inventory and
analysis survey unit or units of the United States
Forest Service in which the participant’s lands are
located.
(22) SOURCE.—The term ‘‘source’’ means a
source of greenhouse gas emissions.
(23) TON-YEAR.—The term ‘‘ton year’’ means
the maintenance of a carbon stock of one ton for one
year.
(24) VOLUNTARY
ACTION
AGREEMENT.—The
term ‘‘voluntary action agreement’’ means an agree-
ment with the United States entered into under sec-
tion 4(a).
SEC. 4. AUTHORITY FOR VOLUNTARY ACTION AGREE-
MENTS.
(a) AUTHORITY.—
(1) IN
GENERAL.—The President may enter
into a legally binding voluntary action agreement
with any person under which the United States
agrees to provide greenhouse gas reduction credit
usable beginning in the compliance period, if the
person takes an action described in section 5 that
reduces greenhouse gas emissions or section 10 that
sequesters carbon before the end of the credit pe-
riod.
(2) REQUIREMENTS.—A voluntary action agree-
ment entered into under paragraph (1) shall meet
either—
(A) the requirements for voluntary action
agreements under sections 5 through 8;
(B) in the case of a participant described
in section 9, the requirements of that section;
or
(C) in the case of carbon sequestration, the
requirements of section 10.
(b) DELEGATION.—The President may delegate any
authority under this Act to any Federal department or
agency.
(c) REGULATIONS.—The President may promulgate
such regulations (including guidelines) as are appropriate
to carry out this Act.
SEC. 5. ENTITLEMENT TO GREENHOUSE GAS REDUCTION
CREDIT FOR VOLUNTARY ACTION.
(a) CREDITABLE ACTIONS WHICH RESULT IN IN-
CREASES TO UNITED STATES LIMITATIONS.—A partici-
pant shall receive greenhouse gas reduction credit under
a voluntary action agreement if the participant takes an
action that—
(1) reduces greenhouse gas emissions or seques-
ters carbon before the end of the credit period; and
(2) will result in an addition to the United
States quantified emission limitation during the
credit period.
(b) UNITED STATES INITIATIVE FOR JOINT IMPLE-
MENTATION.—
(1) IN GENERAL.—Subject to paragraph (2), a
voluntary action agreement may provide that a par-
ticipant shall be entitled to receive greenhouse gas
reduction credit for a greenhouse gas emission re-
duction or carbon sequestration that—
(A) is not creditable under subsection (a);
and
(B) is for a project—
(i) accepted before December 31,
2000, under the United States Initiative
for Joint Implementation; and
(ii) financing for which was provided
or construction of which was commenced
before that date.
(2) LIMITATION
ON
PERIOD
DURING
WHICH
CREDIT MAY BE EARNED.—No greenhouse gas re-
duction credit may be earned under this subsection
after the earlier of—
(A) the earliest date on which credit may
be earned for a greenhouse gas emission reduc-
tion, carbon sequestration, or comparable
project under a Congressionally authorized do-
mestic greenhouse gas regulatory statute; or
(B) the end of the credit period.
(c) PROSPECTIVE DOMESTIC ACTIONS.—
(1) EMISSION
REDUCTIONS.—A participant
shall receive greenhouse gas reduction credit under
a voluntary action agreement if during the entire
credit period the participant’s aggregate greenhouse
gas emissions from domestic sources that are cov-
(B) carried out and reported before Janu-
ary 1, 1999, under a Federal agency program
to implement other recognized greenhouse gas
reductions efforts.
(2) VERIFICATION.—The participant shall pro-
vide information sufficient to verify to the satisfac-
tion of the President (in accordance with section 8
and the regulations promulgated under section 4(c))
that actions reported under paragraph (1)—
(A) have been accurately reported;
(B) are not double-counted; and
(C) represent actual reductions in green-
house gas emissions or actual increases in net
carbon sequestration.
(3) THIRD-PARTY CERTIFICATION.—All submis-
sions made pursuant to paragraph (2) shall be cer-
tified by qualified third-party auditors.
(e) EXTENSION.—The parties to a voluntary action
agreement may extend the credit period during which
greenhouse gas reduction credit may be earned under the
voluntary action agreement, if Congress permits such an
extension by law enacted after the date of enactment of
this Act.
(f) AWARD OF GREENHOUSE GAS REDUCTION CRED-
IT.—
(1) ANNUAL
NOTIFICATION
OF
CUMULATIVE
BALANCES.—After the end of each calendar year,
the President shall notify each participant of the cu-
mulative balance (if any) of greenhouse gas reduc-
tion credit earned under a voluntary action agree-
ment as of the end of the calendar year.
(2) ANNUAL REPORT TO CONGRESS.—After the
end of each calendar year, the President shall notify
Congress of the cumulative balance of greenhouse
gas emissions credits potentially earned under all
voluntary action agreements as of the end of that
calendar year, and shall notify Congress within 30
days of a determination that the cumulative balance
of greenhouse gas emission credits potentially earned
under all voluntary action agreements as of that
time has reached, or exceeded, 365,000,000.
(3) AWARD OF FINAL CREDIT.—Effective at the
end of the credit period, a participant shall have a
contractual entitlement, to the extent provided in the
participant’s voluntary action agreement, to receive
1 ton of greenhouse gas reduction credit for each 1
ton that is creditable under subsections (a) through
(d).
(g) AUTOMATIC FIRE SUPPRESSION SYSTEMS.—
Credits shall not be issued under this Act for the reduction
of greenhouse gases used in automatic fire suppression
systems provided that such greenhouse gases—
(1) remain in an approved fire suppression sys-
tem maintained strictly according to NFPA 2001 to
ensure against accidental or unnecessary discharges;
and
(2) upon decommissioning, the greenhouse
gases in the system are chemically transformed to
eliminate any and all global warming potential.
SEC. 6. BASELINE AND BASE PERIOD.
(a) SOURCE
BASELINE.—A participant’s annual
source baseline for each of the calendar years in the credit
period shall be equal to the participant’s average annual
greenhouse gas emissions from domestic sources covered
by the participant’s voluntary action agreement during the
participant’s base period, adjusted for the calendar year
as provided in subsections (a)(2), (c)(1), and (c)(2) of sec-
tion 7, or subsections (c) and (d) of section 9, or sub-
section (e) of section 9. A participant’s annual source
baseline shall not include emissions that resulted from fail-
ure to comply with applicable requirements in force during
the base period.
(b) RESERVOIR BASELINE.—A participant’s annual
reservoir baseline for each of the calendar years in the
credit period shall be equal to the average level of carbon
stocks in carbon reservoirs covered by the participant’s
voluntary action agreement for the participant’s base pe-
riod, adjusted for the calendar year as provided in section
7(c)(1).
(c) BASE PERIOD.—
(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), a participant’s base period shall
be an average of the 3-year period ending with the
year of enactment of this Act.
(2) DATA
UNAVAILABLE
OR
UNREPRESENTA-
TIVE.—The regulations promulgated under section
4(c) may specify a base period other than the period
described in section 6(c)(1) that will be applicable if
adequate data are not available to determine a base-
line for those years or if such data are unrepresenta-
tive.
(3) ELECTIONS.—The regulations promulgated
under section 4(c) may permit a participant to elect
a base period earlier than the period described in
section 6(c)(1) (not to include any year earlier than
1990) to reflect voluntary reductions made before
that period.
(4) ADJUSTMENT OF PERIOD DURING WHICH
CREDIT
MAY
BE
EARNED.—Notwithstanding sub-
sections (c) and (d) of section 5, except as otherwise
provided by the regulations promulgated under sec-
tion 4(c), if an election is made for a base period
earlier than 1996—
(A) greenhouse gas reduction credit shall
be available under section 5(c) for the calendar
year that begins after the end of the base pe-
riod and any calendar year thereafter through
the end of the credit period; and
(B) greenhouse gas reduction credit shall
be available under section 5(d) only through the
end of the base period.
SEC. 7. SOURCES COVERED BY VOLUNTARY ACTION
AGREEMENTS.
(a) SOURCES.—
(1) IN GENERAL.—
(A) COVERED SOURCES.—Except as other-
wise provided in this subsection, a participant’s
voluntary action agreement shall cover all do-
mestic greenhouse gas sources that the partici-
pant owns as of the date on which the voluntary
action agreement is entered into.
(B) EXCLUSIONS.—The regulations pro-
mulgated under section 4(c) (or the terms of an
early action agreement) may exclude from cov-
erage under a voluntary action agreement small
or diverse sources owned by the participant
where the emissions represent a de minimis per-
centage of the participant’s total emissions.
(2) ECONOMIC CHANGE.—
(A) IN
GENERAL.—The regulations pro-
mulgated under section 4(c) shall provide that
a voluntary action agreement shall provide for
annual addition to, or deduction from, a partici-
pant’s emissions baseline to account for eco-
nomic change.
(B) CALCULATIONS.—Each participant’s
annual baseline shall be the product of—
(i) its baseline emissions;
(ii) the participant’s economic change
factor; and
(iii) the GDP adjustment factor.
(C) TERMS.—
(i) ECONOMIC CHANGE FACTOR.—For
purposes of subparagraph (B)(ii), the eco-
nomic change factor represents the ratio,
expressed in percentage terms, of the prod-
uct output of the participant during the
year and the average annual product out-
put of the participant during the base pe-
riod.
(ii) GDP ADJUSTMENT FACTOR.—For
purposes of subparagraph (B)(iii), the
GDP adjustment factor, expressed in per-
centage terms, represents the difference
between 100 and the percentage by which
the Gross Domestic Product of the United
States has increased since the base period.
(iii) DEMAND-SIDE
MANAGEMENT.—
For purposes of clause (i), in the case of
electricity generators, the calculations of
product output shall take into account re-
ductions in output due to demand-side
management investments.
(b) OPT-IN PROVISIONS.—
(1) OPT-IN FOR OTHER OWNED SOURCES.—Do-
mestic sources owned by a participant that are not
required to be covered under subsection (a) may be
covered under a voluntary action agreement at the
election of the participant.
(2) OPT-IN FOR CARBON RESERVOIRS.—
(A) IN
GENERAL.—A voluntary action
agreement may provide that domestic carbon
reservoirs owned by a participant may be cov-
ered under the voluntary action agreement at
the election of the participant.
(B) COVERAGE.—Except in the case of
small or diverse carbon reservoirs owned by the
participant (as provided in the regulations pro-
mulgated under section 4(c)), if a participant
elects to have domestic carbon reservoirs cov-
ered under the voluntary action agreement, all
of the participant’s domestic carbon reservoirs
shall be covered under the voluntary action
agreement.
(c) ACCOUNTING RULES.—
(1) TRANSFERS.—If ownership of a carbon
stock covered by a voluntary action agreement is
transferred to or from the participant—
(A) the carbon stocks shall be adjusted to
reflect the transfer for the participant’s base
period;
(B) the net carbon sequestration shall be
adjusted to reflect the transfer for each year for
which greenhouse gas reduction credit is
claimed; and
(C) pro rata adjustments shall be made to
reflect transfers that occur during a program
year.
(2) DISPLACEMENT
OF
EMISSIONS.—In addi-
tion to the baseline adjustments made pursuant to
subsection (a)(2), a voluntary action agreement shall
contain effective and workable provisions that ensure
that only net emission reductions will be credited
under section 5 in circumstances in which emissions
are displaced, as a result of outsourcing, from
sources covered by a voluntary action agreement to
other sources.
(3) PERIOD
OF
COVERAGE.—Emissions from
sources and net carbon sequestration in carbon res-
ervoirs shall be covered by a voluntary action agree-
ment for the entire credit period, except as provided
under paragraph (1) or by the regulations promul-
gated under section 4(c).
SEC. 8. MEASUREMENT AND VERIFICATION.
(a) IN GENERAL.—In accordance with the regula-
tions promulgated under section 4(c), a voluntary action
agreement shall—
(1) provide that, for each calendar year during
which the voluntary action agreement is in effect,
the participant shall report to the United States, as
applicable—
(A) the participant’s annual source base-
line and greenhouse gas emissions for the cal-
endar year; and
(B) the requirements of section 10(d) per-
taining to carbon sequestration for the calendar
year.
(2) establish procedures under which the partic-
ipant will measure, track, and report the information
required by paragraph (1);
(3) establish requirements for maintenance of
records by the participant and provisions for inspec-
tion of the records by representatives of the United
States; and
(4) permit qualified independent third party en-
tities to measure, track, and report the information
required by paragraph (1) on behalf of the partici-
pant.
(b) AVAILABILITY OF REPORTS TO THE PUBLIC.—
Reports required to be made under subsection (a)(1) shall
be available to the public.
(c) CONFIDENTIALITY.—The regulations promul-
gated under section 4(c) shall make appropriate provision
for protection of confidential commercial and financial in-
formation.
SEC. 9. PARTICIPATION BY MANUFACTURERS AND ADOPT-
ERS OF END-USE, CONSUMER, AND SIMILAR
TECHNOLOGIES.
(a) IN GENERAL.—In the case of a participant that
manufactures or constructs for sale to end-users equip-
ment or facilities that emit greenhouse gases or which
adopt end use efficiency technologies, the President may
enter into a voluntary action agreement.
(b) EMISSIONS BASELINES.—For each participant
under subsection (a), its emissions baseline shall be estab-
lished by determining the average annual number of prod-
ucts of the same type sold by the participant in the United
States during the base period and multiplying that num-
ber by the expected useful life of the product and a numer-
ical factor to determine the greenhouse gas emissions re-
sulting from the electricity generated, or fossil fuel con-
sumed, in connection with the operation of the product.
(c) ECONOMIC CHANGE.—
(1) CALCULATIONS.—Each participant’s annual
baseline shall be the product of—
(A) its baseline emissions;
(B) the participant’s economic change fac-
tor; and
(C) the GDP adjustment factor.
(2) TERMS.—