530 
greenhouse gas emissions from natural sources, 
including permafrost, forests, or oceans; 
‘‘(C) global atmospheric concentrations of 
greenhouse gases, expressed in annual con-
centration units as well as carbon dioxide 
equivalents based on 100-year global warming 
potentials; 
‘‘(D) major climate forcing factors, such as 
aerosols; 
‘‘(E) global average temperature, expressed 
as seasonal and annual averages in land, ocean, 
and land-plus-ocean averages; and 
‘‘(F) sea level rise; 
‘‘(3) assess the current and potential impacts of 
global climate change on— 
‘‘(A) human populations, including impacts 
on public health, economic livelihoods, subsist-
ence, human infrastructure, and displacement 
or permanent relocation due to flooding, severe 
weather, extended drought, erosion, or other 
ecosystem changes; 
‘‘(B) freshwater systems, including water 
resources for human consumption and agri-
culture and natural and managed ecosystems, 
flood and drought risks, and relative humidity; 
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‘‘(C) the carbon cycle, including impacts 
related to the thawing of permafrost, the fre-
quency and intensity of wildfire, and terrestrial 
and ocean carbon sinks; 
‘‘(D) ecosystems and animal and plant 
populations, including impacts on species abun-
dance, phenology, and distribution; 
‘‘(E) oceans and ocean ecosystems, includ-
ing effects on sea level, ocean acidity, ocean 
temperatures, coral reefs, ocean circulation, 
fisheries, and other indicators of ocean eco-
system health; 
‘‘(F) the cryosphere, including effects on 
ice sheet mass balance, mountain glacier mass 
balance, and sea-ice extent and volume; 
‘‘(G) changes in the intensity, frequency, 
or distribution of severe weather events, includ-
ing precipitation, tropical cyclones, tornadoes, 
and severe heat waves; 
‘‘(H) agriculture and forest systems; and 
‘‘(I) any other indicators the Administrator 
deems appropriate; 
‘‘(4) summarize any significant socio-economic 
impacts of climate change in the United States, in-
cluding the territories of the United States, drawing 
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on work by Federal agencies and the academic lit-
erature, including impacts on— 
‘‘(A) public health; 
‘‘(B) economic livelihoods and subsistence; 
‘‘(C) displacement or permanent relocation 
due to flooding, severe weather, extended 
drought, erosion, or other ecosystem changes; 
‘‘(D) 
human 
infrastructure, 
including 
coastal infrastructure vulnerability to extreme 
events and sea level rise, river floodplain infra-
structure, and sewer and water management 
systems; 
‘‘(E) agriculture and forests, including ef-
fects on potential growing season, distribution, 
and yield; 
‘‘(F) water resources for human consump-
tion, agriculture and natural and managed eco-
systems, flood and drought risks, and relative 
humidity; 
‘‘(G) energy supply and use; and 
‘‘(H) transportation; 
‘‘(5) in assessing risks and impacts, use a risk 
management framework, including both qualitative 
and quantitative measures, to assess the observed 
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and projected impacts of current and future climate 
change, accounting for— 
‘‘(A) both monetized and non-monetized 
losses; 
‘‘(B) potential nonlinear, abrupt, or essen-
tially irreversible changes in the climate system; 
‘‘(C) potential nonlinear increases in the 
cost of impacts; 
‘‘(D) potential low-probability, high impact 
events; and 
‘‘(E) whether impacts are transitory or es-
sentially permanent; and 
‘‘(6) based on the findings of the Administrator 
under this section, as well as assessments produced 
by the Intergovernmental Panel on Climate Change, 
the United States Global Change Research program, 
and other relevant scientific entities— 
‘‘(A) describe increased risks to natural 
systems and society that would result from an 
increase in global average temperature 3.6 de-
grees Fahrenheit (2 degrees Celsius) above the 
pre-industrial average or an increase in atmos-
pheric greenhouse gas concentrations above 450 
parts per million carbon dioxide equivalent; and 
‘‘(B) identify and assess— 
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‘‘(i) significant residual risks not 
avoided by the thresholds described in sub-
paragraph (A); 
‘‘(ii) alternative thresholds or targets 
that may more effectively limit the risks 
identified pursuant to clause (i); and 
‘‘(iii) thresholds above those described 
in subparagraph (A) which significantly in-
crease the risk of certain impacts or render 
them essentially permanent. 
‘‘(d) STATUS OF MONITORING AND VERIFICATION 
CAPABILITIES TO EVALUATE GREENHOUSE GAS REDUC-
TION EFFORTS.—The analysis required under subsection 
(a)(2) shall evaluate the capabilities of the monitoring, re-
porting, and verification systems used to quantify progress 
in achieving reductions in greenhouse gas emissions both 
globally and in the United States (as described in section 
702), including— 
‘‘(1) quantification of emissions and emission 
reductions by entities participating in the cap and 
trade program under this title; 
‘‘(2) quantification of emissions and emission 
reductions by entities participating in the offset pro-
gram under this title; 
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‘‘(3) quantification of emission and emissions 
reductions by entities regulated by performance 
standards; 
‘‘(4) quantification of aggregate net emissions 
and emissions reductions by the United States; and 
‘‘(5) quantification of global changes in net 
emissions and in sources and sinks of greenhouse 
gases. 
‘‘(e) STATUS OF GREENHOUSE GAS REDUCTION EF-
FORTS.—The analysis required under subsection (a)(3) 
shall address— 
‘‘(1) whether the programs under Safe Climate 
Act and other Federal statutes are resulting in suffi-
cient United States greenhouse gas emissions reduc-
tions to meet the emissions reduction goals described 
in section 702, taking into account the use of off-
sets; and 
‘‘(2) whether United States actions, taking into 
account international actions, commitments, and 
trends, and considering the range of plausible emis-
sions scenarios, are sufficient to avoid— 
‘‘(A) atmospheric greenhouse gas con-
centrations above 450 parts per million carbon 
dioxide equivalent; 
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‘‘(B) global average surface temperature 
3.6 degrees Fahrenheit (2 degrees Celsius) 
above the pre-industrial average, or such other 
temperature thresholds as the Administrator 
deems appropriate; and 
‘‘(C) other temperature or greenhouse gas 
thresholds identified pursuant to subsection 
(c)(6)(B). 
‘‘(f) RECOMMENDATIONS.— 
‘‘(1) 
LATEST
SCIENTIFIC
INFORMATION.— 
Based on the analysis described in subsection (a)(1), 
each report under subsection (a) shall identify ac-
tions that could be taken to— 
‘‘(A) improve the characterization of 
changes in the earth-climate system and im-
pacts of global climate change; 
‘‘(B) better inform decision making and 
actions related to global climate change; 
‘‘(C) mitigate risks to natural and social 
systems; and 
‘‘(D) design policies to better account for 
climate risks. 
‘‘(2) 
MONITORING, 
REPORTING
AND 
VERIFICATION.—Based on the analysis described in 
subsection (a)(2), each report under subsection (a) 
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shall identify key gaps in measurement, reporting, 
and verification capabilities and make recommenda-
tions to improve the accuracy and reliability of those 
capabilities. 
‘‘(3) STATUS OF GREENHOUSE GAS REDUCTION 
EFFORTS.—Based on the analysis described in sub-
section (a)(3), taking into account international ac-
tions, commitments, and trends, and considering the 
range of plausible emissions scenarios, each report 
under subsection (a) shall identify— 
‘‘(A) the quantity of additional reductions 
required to meet the emissions reduction goals 
in section 702; 
‘‘(B) the quantity of additional reductions 
in global greenhouse gas emissions needed to 
avoid 
the 
concentration 
and 
temperature 
thresholds identified in subsection (e); and 
‘‘(C) possible strategies and approaches for 
achieving additional reductions. 
‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
such sums as may be necessary. 
‘‘SEC. 706. NATIONAL ACADEMY REVIEW. 
‘‘(a) IN GENERAL.—Not later than 1 year after the 
date of enactment of this title, the Administrator shall 
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offer to enter into a contract with the National Academy 
of Sciences (in this section referred to as the ‘Academy’) 
under which the Academy shall, not later than July 1, 
2014, and every 4 years thereafter, submit to Congress 
and the Administrator a report that includes— 
‘‘(1) a review of the most recent report and rec-
ommendations issued under section 705; and 
‘‘(2) an analysis of technologies to achieve re-
ductions in greenhouse gas emissions. 
‘‘(b) FAILURE TO ISSUE A REPORT.—In the event 
that the Administrator has not issued all or part of the 
most recent report required under section 705, the Acad-
emy shall conduct its own review and analysis of the re-
quired information. 
‘‘(c) TECHNOLOGICAL INFORMATION.—The analysis 
required under subsection (a)(2) shall— 
‘‘(1) review existing technological information 
and reports, including the most recent reports by the 
Department of Energy, the United States Global 
Change Research Program, the Intergovernmental 
Panel on Climate Change, and the International En-
ergy Agency and any other relevant information on 
technologies or practices that reduce or limit green-
house gas emissions; 
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‘‘(2) include the participation of technical ex-
perts from relevant private industry sectors; 
‘‘(3) review the current and future projected de-
ployment of technologies and practices in the United 
States that reduce or limit greenhouse gas emis-
sions, including— 
‘‘(A) technologies for capture and seques-
tration of greenhouse gases; 
‘‘(B) technologies to improve energy effi-
ciency; 
‘‘(C) low- or zero-greenhouse gas emitting 
energy technologies; 
‘‘(D) low- or zero-greenhouse gas emitting 
fuels; 
‘‘(E) biological sequestration practices and 
technologies; and 
‘‘(F) any other technologies the Academy 
deems relevant; and 
‘‘(4) review and compare the emissions reduc-
tion potential, commercial viability, market penetra-
tion, investment trends, and deployment of the tech-
nologies described in paragraph (3), including— 
‘‘(A) the need for additional research and 
development, including publicly funded research 
and development; 
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‘‘(B) the extent of commercial deployment, 
including, where appropriate, a comparison to 
the cost and level of deployment of conventional 
fossil fuel-fired energy technologies and devices; 
and 
‘‘(C) an evaluation of any substantial tech-
nological, legal, or market-based barriers to 
commercial deployment. 
‘‘(d) RECOMMENDATIONS.— 
‘‘(1) 
LATEST
SCIENTIFIC
INFORMATION.— 
Based on the review described in subsection (a)(1), 
the Academy shall identify actions that could be 
taken to— 
‘‘(A) improve the characterization of 
changes in the earth-climate system and im-
pacts of global climate change; 
‘‘(B) better inform decision making and 
actions related to global climate change; 
‘‘(C) mitigate risks to natural and social 
systems; 
‘‘(D) design policies to better account for 
climate risks; and 
‘‘(E) improve the accuracy and reliability 
of capabilities to monitor, report, and verify 
greenhouse gas emissions reduction efforts. 
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542 
‘‘SEC. 707. PRESIDENTIAL RESPONSE AND RECOMMENDA-
TIONS. 
‘‘(a) AGENCY ACTIONS.—The President shall direct 
relevant Federal agencies to use existing statutory author-
ity to take appropriate actions identified in the reports 
submitted under sections 705 and 706, and to address any 
shortfalls identified in such reports, not later than July 
1, 2015, and every 4 years thereafter. 
‘‘(b) PLAN.—In the event that the Administrator or 
the National Academy of Sciences has concluded, in the 
most recent report submitted under section 705 or 706 
respectively, that the United States will not achieve the 
necessary domestic greenhouse gas emissions reductions, 
or that global actions will not maintain safe global average 
surface temperature and atmospheric greenhouse gas con-
centration thresholds, the President shall, not later than 
July 1, 2015, and every 4 years thereafter, submit to Con-
gress a plan identifying domestic and international actions 
that will achieve necessary additional greenhouse gas re-
ductions, including any recommendations for legislative 
action. 
‘‘PART B—DESIGNATION AND REGISTRATION OF 
GREENHOUSE GASES 
‘‘SEC. 711. DESIGNATION OF GREENHOUSE GASES. 
‘‘(a) GREENHOUSE GASES.—For purposes of this 
title, the following are greenhouse gases: 
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‘‘(1) Carbon dioxide. 
‘‘(2) Methane. 
‘‘(3) Nitrous oxide. 
‘‘(4) Sulfur hexafluoride. 
‘‘(5) Hydrofluorocarbons emitted from a chem-
ical manufacturing process at an industrial sta-
tionary source. 
‘‘(6) Any perfluorocarbon. 
‘‘(7) Nitrogen trifluoride. 
‘‘(8) Any other anthropogenic gas designated as 
a greenhouse gas by the Administrator under this 
section. 
‘‘(b) DETERMINATION ON ADMINISTRATOR’S INITIA-
TIVE.—The Administrator shall, by rule— 
‘‘(1) determine whether 1 metric ton of another 
anthropogenic gas makes the same or greater con-
tribution to global warming over 100 years as 1 met-
ric ton of carbon dioxide; 
‘‘(2) determine the carbon dioxide equivalent 
value for each gas with respect to which the Admin-
istrator makes an affirmative determination under 
paragraph (1); 
‘‘(3) for each gas with respect to which the Ad-
ministrator makes an affirmative determination 
under paragraph (1) and that is used as a substitute 
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for a class I or class II substance under title VI, de-
termine the extent to which to regulate that gas 
under section 619 and specify appropriate compli-
ance obligations under section 619; 
‘‘(4) designate as a greenhouse gas for purposes 
of this title each gas for which the Administrator 
makes an affirmative determination under para-
graph (1), to the extent that it is not regulated 
under section 619; and 
‘‘(5) specify the appropriate compliance obliga-
tions under this title for each gas designated as a 
greenhouse gas under paragraph (4). 
‘‘(c) PETITIONS
TO DESIGNATE
A GREENHOUSE 
GAS.— 
‘‘(1) IN GENERAL.—Any person may petition 
the Administrator to designate as a greenhouse gas 
any anthropogenic gas 1 metric ton of which makes 
the same or greater contribution to global warming 
over 100 years as 1 metric ton of carbon dioxide. 
‘‘(2) CONTENTS OF PETITION.—The petitioner 
shall provide sufficient data, as specified by rule by 
the Administrator, to demonstrate that the gas is 
likely to be designated as a greenhouse gas and is 
likely to be produced, imported, used, or emitted in 
the United States. To the extent practicable, the pe-
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titioner shall also identify producers, importers, dis-
tributors, users, and emitters of the gas in the 
United States. 
‘‘(3) REVIEW AND ACTION BY THE ADMINIS-
TRATOR.—Not later than 90 days after receipt of a 
petition under paragraph (2), the Administrator 
shall determine whether the petition is complete and 
notify the petitioner and the public of the decision. 
‘‘(4) ADDITIONAL INFORMATION.—The Admin-
istrator may require producers, importers, distribu-
tors, users, or emitters of the gas to provide infor-
mation on the contribution of the gas to global 
warming over 100 years compared to carbon dioxide. 
‘‘(5) TREATMENT OF PETITION.—For any sub-
stance used as a substitute for a class I or class II 
substance under title VI, the Administrator may 
elect to treat a petition under this subsection as a 
petition to list the substance as a class II, group II 
substance under section 619, and may require the 
petition to be amended to address listing criteria 
promulgated under that section. 
‘‘(6) DETERMINATION.—Not later than 2 years 
after receipt of a complete petition, the Adminis-
trator shall, after notice and an opportunity for com-
ment— 
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‘‘(A) issue and publish in the Federal Reg-
ister— 
‘‘(i) a determination that 1 metric ton 
of the gas does not make a contribution to 
global warming over 100 years that is 
equal to or greater than that made by 1 
metric ton of carbon dioxide; and 
‘‘(ii) an explanation of the decision; or 
‘‘(B) determine that 1 metric ton of the 
gas makes a contribution to global warming 
over 100 years that is equal to or greater than 
that made by 1 metric ton of carbon dioxide, 
and take the actions described in subsection (b) 
with respect to such gas. 
‘‘(7) GROUNDS
FOR
DENIAL.—The Adminis-
trator may not deny a petition under this subsection 
solely on the basis of inadequate Environmental Pro-
tection Agency resources or time for review. 
‘‘(d) SCIENCE ADVISORY BOARD CONSULTATION.— 
‘‘(1) 
CONSULTATION.—The 
Administrator 
shall— 
‘‘(A) give notice to the Science Advisory 
Board prior to making a determination under 
subsection (b)(1), (c)(6), or (e)(2)(B); 
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‘‘(B) consider the written recommendations 
of the Science Advisory Board under paragraph 
(2) regarding the determination; and 
‘‘(C) consult with the Science Advisory 
Board regarding such determination, including 
consultation subsequent to receipt of such writ-
ten recommendations. 
‘‘(2) FORMULATION OF RECOMMENDATIONS.— 
Upon receipt of notice under paragraph (1)(A) re-
garding a pending determination under subsection 
(b)(1), (c)(6), or (e)(2)(B), the Science Advisory 
Board shall— 
‘‘(A) formulate recommendations regarding 
such determination, subject to a peer review 
process; and 
‘‘(B) submit such recommendations in 
writing to the Administrator. 
‘‘(e) MANUFACTURING AND EMISSION NOTICES.— 
‘‘(1) NOTICE REQUIREMENT.— 
‘‘(A) IN GENERAL.—Effective 24 months 
after the date of enactment of this title, no per-
son may manufacture or introduce into inter-
state commerce a fluorinated gas, or emit a sig-
nificant quantity, as determined by the Admin-
istrator, of any fluorinated gas that is gen-
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‘‘(B) ALTERNATIVE COMPLIANCE.—For a 
gas that is a substitute for a class I or class II 
substance under title VI and either has been 
listed as acceptable for use under section 612 
or is currently subject to evaluation under sec-
tion 612, the Administrator may accept the no-
tice and information provided pursuant to that 
section as fulfilling the obligation under clause 
(iii) of subparagraph (A). 
‘‘(2) REVIEW AND ACTION BY THE ADMINIS-
TRATOR.— 
‘‘(A) COMPLETENESS.—Not later than 90 
days after receipt of notice under paragraph 
(1)(A)(iii) or (B), the Administrator shall deter-
mine whether the notice is complete. 
‘‘(B) DETERMINATION.— If the Adminis-
trator determines that the notice is complete, 
the Administrator shall, after notice and an op-
portunity for comment, not later than 12 
months after receipt of the notice— 
‘‘(i) issue and publish in the Federal 
Register— 
‘‘(I) a determination that 1 met-
ric ton of the gas does not make a 
contribution to global warming over 
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100 years that is equal to or greater 
than that made by 1 metric ton of 
carbon dioxide; and 
‘‘(II) an explanation of the deci-
sion; or 
‘‘(ii) determine that 1 metric ton of 
the gas makes a contribution to global 
warming over 100 years that is equal to or 
greater than that made by 1 metric ton of 
carbon dioxide, and take the actions de-
scribed in subsection (b) with respect to 
such gas. 
‘‘(f) REGULATIONS.—Not later than one year after 
the date of enactment of this title, the Administrator shall 
promulgate regulations to carry out this section. Such reg-
ulations shall include— 
‘‘(1) requirements for the contents of a petition 
submitted under subsection (c); 
‘‘(2) requirements for the contents of a notice 
required under subsection (e); and 
‘‘(3) methods and standards for evaluating the 
carbon dioxide equivalent value of a gas. 
‘‘(g) GASES REGULATED UNDER TITLE VI.—The 
Administrator shall not designate a gas as a greenhouse 
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gas under this section to the extent that the gas is regu-
lated under title VI. 
‘‘(h) SAVINGS CLAUSE.—Nothing in this section shall 
be interpreted to relieve any person from complying with 
the requirements of section 612. 
‘‘SEC. 712. CARBON DIOXIDE EQUIVALENT VALUE OF 
GREENHOUSE GASES. 
‘‘(a) MEASURE
OF QUANTITY
OF GREENHOUSE 
GASES.—Any provision of this title or title VIII that refers 
to a quantity or percentage of a quantity of greenhouse 
gases shall mean the quantity or percentage of the green-
house gases expressed in carbon dioxide equivalents. 
‘‘(b) INITIAL VALUE.—Except as provided by the Ad-
ministrator under this section or section 711— 
‘‘(1) the carbon dioxide equivalent value of 
greenhouse gases for purposes of this Act shall be as 
follows: 
‘‘CARBON DIOXIDE EQUIVALENT OF 1 TON OF LISTED 
GREENHOUSE GASES 
Greenhouse gas (1 metric ton) 
Carbon dioxide equivalent 
(metric tons) 
Carbon dioxide 
Methane 
Nitrous oxide 
298 
HFC-23 
14,800 
HFC-125 
3,500 
HFC-134a 
1,430 
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‘‘CARBON DIOXIDE EQUIVALENT OF 1 TON OF LISTED 
GREENHOUSE GASES—Continued 
Greenhouse gas (1 metric ton) 
Carbon dioxide equivalent 
(metric tons) 
HFC-143a 
4,470 
HFC-152a 
124 
HFC-227ea 
3,220 
HFC-236fa 
9,810 
HFC-4310mee 
1,640 
CF4 
7,390 
C2F6 
12,200 
C4F10 
8,860 
C6F14 
9,300 
SF6 
22,800 
NF3 
17,200 
; and 
‘‘(2) the carbon dioxide equivalent value for 
purposes of this Act for any greenhouse gas not list-
ed in the table under paragraph (1) shall be the 
100-year Global Warming Potentials provided in the 
Intergovernmental Panel on Climate Change Fourth 
Assessment Report. 
‘‘(c) PERIODIC REVIEW.— 
‘‘(1) Not later than February 1, 2017, and (ex-
cept as provided in paragraph (3)) not less than 
every 5 years thereafter, the Administrator shall— 
‘‘(A) review and, if appropriate, revise the 
carbon dioxide equivalent values established 
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under this section or section 711(b)(2), based 
on a determination of the number of metric 
tons of carbon dioxide that makes the same 
contribution to global warming over 100 years 
as 1 metric ton of each greenhouse gas; and 
‘‘(B) publish in the Federal Register the 
results of that review and any revisions. 
‘‘(2) A revised determination published in the 
Federal Register under paragraph (1)(B) shall take 
effect for greenhouse gas emissions starting on Jan-
uary 1 of the first calendar year starting at least 9 
months after the date on which the revised deter-
mination was published. 
‘‘(3) The Administrator may decrease the fre-
quency of review and revision under paragraph (1) 
if the Administrator determines that such decrease 
is appropriate in order to synchronize such review 
and revision with any similar review process carried 
out pursuant to the United Nations Framework 
Convention on Climate Change, done at New York 
on May 9, 1992, or to an agreement negotiated 
under that convention, except that in no event shall 
the Administrator carry out such review and revision 
any less frequently than every 10 years. 
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‘‘(d) METHODOLOGY.—In setting carbon dioxide 
equivalent values, for purposes of this section or section 
711, the Administrator shall take into account publica-
tions by the Intergovernmental Panel on Climate Change 
or a successor organization under the auspices of the 
United Nations Environmental Programme and the World 
Meteorological Organization. 
‘‘SEC. 713. GREENHOUSE GAS REGISTRY. 
‘‘(a) DEFINITIONS.—For purposes of this section: 
‘‘(1) CLIMATE REGISTRY.—The term ‘Climate 
Registry’ means the greenhouse gas emissions reg-
istry jointly established and managed by more than 
40 States and Indian tribes in 2007 to collect high- 
quality greenhouse gas emission data from facilities, 
corporations, and other organizations to support var-
ious greenhouse gas emission reporting and reduc-
tion policies for the member States and Indian 
tribes. 
‘‘(2) REPORTING ENTITY.—The term ‘reporting 
entity’ means— 
‘‘(A) a covered entity; 
‘‘(B) an entity that— 
‘‘(i) would be a covered entity if it had 
emitted, produced, imported, manufac-
tured, or delivered in 2008 or any subse-
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help achieve the purposes of this title or title 
VIII; or 
‘‘(E) any entity that delivers electricity to 
a facility in an energy-intensive industrial sec-
tor that meets the energy or greenhouse gas in-
tensity criteria in section 764(b)(2)(A)(i). 
‘‘(b) REGULATIONS.— 
‘‘(1) IN GENERAL.—Not later than 6 months 
after the date of enactment of this title, the Admin-
istrator shall issue regulations establishing a Federal 
greenhouse gas registry. Such regulations shall— 
‘‘(A) require reporting entities to submit to 
the Administrator data on— 
‘‘(i) greenhouse gas emissions in the 
United States; 
‘‘(ii) the production and manufacture 
in the United States, importation into the 
United States, and, at the discretion of the 
Administrator, 
exportation 
from 
the 
United States, of fuels and industrial gases 
the uses of which result or may result in 
greenhouse gas emissions; 
‘‘(iii) deliveries in the United States of 
natural gas, and any other gas meeting the 
specifications for commingling with natural 
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gas for purposes of delivery, the combus-
tion of which result or may result in green-
house gas emissions; and 
‘‘(iv) the capture and sequestration of 
greenhouse gases; 
‘‘(B) require covered entities and, where 
appropriate, other reporting entities to submit 
to the Administrator data sufficient to ensure 
compliance with or implementation of the re-
quirements of this title; 
‘‘(C) require reporting of electricity deliv-
ered to facilities in an energy-intensive indus-
trial sector that meets the energy or greenhouse 
gas intensity criteria in section 764(b)(2)(A)(i); 
‘‘(D) ensure the completeness, consistency, 
transparency, accuracy, precision, and reliability 
of such data; 
‘‘(E) take into account the best practices 
from the most recent Federal, State, tribal, and 
international protocols for the measurement, ac-
counting, reporting, and verification of green-
house gas emissions, including protocols from 
the Climate Registry and other mandatory 
State or multistate authorized programs; 
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‘‘(F) take into account the latest scientific 
research; 
‘‘(G) require that, for covered entities with 
respect to greenhouse gases to which section 
722 applies, and, to the extent determined to be 
appropriate by the Administrator, for covered 
entities with respect to other greenhouse gases 
and for other reporting entities, submitted data 
are based on— 
‘‘(i) continuous monitoring systems 
for fuel flow or emissions, such as contin-
uous emission monitoring systems; 
‘‘(ii) alternative systems that are dem-
onstrated as providing data with the same 
precision, 
reliability, 
accessibility, 
and 
timeliness, or, to the extent the Adminis-
trator determines is appropriate for report-
ing small amounts of emissions, the same 
precision, reliability, and accessibility and 
similar timeliness, as data provided by con-
tinuous monitoring systems for fuel flow or 
emissions; or 
‘‘(iii) alternative methodologies that 
are demonstrated to provide data with pre-
cision, reliability, accessibility, and timeli-
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ness, or, to the extent the Administrator 
determines is appropriate for reporting 
small amounts of emissions, precision, reli-
ability, and accessibility, as similar as is 
technically feasible to that of data gen-
erally provided by continuous monitoring 
systems for fuel flow or emissions, if the 
Administrator determines that, with re-
spect to a reporting entity, there is no con-
tinuous monitoring system or alternative 
system described in clause (i) or (ii) that 
is technically feasible; 
‘‘(H) require that the Administrator, in de-
termining the extent to which the requirement 
to use systems or methodologies in accordance 
with subparagraph (G) is appropriate for re-
porting entities other than covered entities or 
for greenhouse gases to which section 722 does 
not apply, consider the cost of using such sys-
tems and methodologies, and of using other sys-
tems and methodologies that are available and 
suitable, for quantifying the emissions involved 
in light of the purposes of this title, including 
the goal of collecting consistent entity-wide 
data; 
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‘‘(I) include methods for minimizing double 
reporting and avoiding irreconcilable double re-
porting of greenhouse gas emissions; 
‘‘(J) establish measurement protocols for 
carbon capture and sequestration systems, tak-
ing into consideration the regulations promul-
gated under section 813; 
‘‘(K) require that reporting entities provide 
the data required under this paragraph in re-
ports submitted electronically to the Adminis-
trator, in such form and containing such infor-
mation as may be required by the Adminis-
trator; 
‘‘(L) include requirements for keeping 
records supporting or related to, and protocols 
for auditing, submitted data; 
‘‘(M) establish consistent policies for calcu-
lating carbon content and greenhouse gas emis-
sions for each type of fossil fuel with respect to 
which reporting is required; 
‘‘(N) subsequent to implementation of poli-
cies developed under subparagraph (M), provide 
for immediate dissemination, to States, Indian 
tribes, and on the Internet, of all data reported 
under this section as soon as practicable after 
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electronic audit by the Administrator and any 
resulting correction of data, except that data 
shall not be disseminated under this subpara-
graph if— 
‘‘(i) its nondissemination is vital to 
the national security of the United States, 
as determined by the President; or 
‘‘(ii) it is confidential business infor-
mation that cannot be derived from infor-
mation that is otherwise publicly available 
and that would cause significant calculable 
competitive harm if published, except 
that— 
‘‘(I) data relating to greenhouse 
gas emissions, including any upstream 
or verification data from reporting en-
tities, shall not be considered to be 
confidential business information; and 
‘‘(II) data that is confidential 
business information shall be provided 
to a State or Indian tribe within 
whose jurisdiction the reporting entity 
is located, if the Administrator deter-
mines that such State or Indian tribe 
has in effect protections for confiden-
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tial business information that are at 
least as protective as protections ap-
plicable to the Federal Government; 
‘‘(O) prescribe methods by which the Ad-
ministrator shall, in cases in which satisfactory 
data are not submitted to the Administrator for 
any period of time, estimate emission, produc-
tion, importation, manufacture, or delivery lev-
els— 
‘‘(i) for covered entities with respect 
to greenhouse gas emissions, production, 
importation, manufacture, or delivery regu-
lated under this title to ensure that emis-
sions, production, importation, manufac-
ture, or deliveries are not underreported, 
and to create a strong incentive for meet-
ing data monitoring and reporting require-
ments— 
‘‘(I) with a conservative estimate 
of the highest emission, production, 
importation, manufacture, or delivery 
levels that may have occurred during 
the period for which data are missing; 
or 
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‘‘(II) to the extent the Adminis-
trator considers appropriate, with an 
estimate of such levels assuming the 
unit is emitting, producing, importing, 
manufacturing, or delivering at a 
maximum potential level during the 
period, in order to ensure that such 
levels are not underreported and to 
create a strong incentive for meeting 
data monitoring and reporting re-
quirements; and 
‘‘(ii) for covered entities with respect 
to greenhouse gas emissions to which sec-
tion 722 does not apply and for other re-
porting entities, with a reasonable estimate 
of the emission, production, importation, 
manufacture, or delivery levels that may 
have occurred during the period for which 
data are missing; 
‘‘(P) require the designation of a des-
ignated representative for each reporting entity; 
‘‘(Q) require an appropriate certification, 
by the designated representative for the report-
ing entity, of accurate and complete accounting 
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of greenhouse gas emissions, as determined by 
the Administrator; and 
‘‘(R) include requirements for other data 
necessary for accurate and complete accounting 
of greenhouse gas emissions, as determined by 
the Administrator, including data for quality 
assurance of monitoring systems, monitors and 
other measurement devices, and other data 
needed to verify reported emissions, production, 
importation, manufacture, or delivery. 
‘‘(2) TIMING.— 
‘‘(A) CALENDAR
YEARS
2007
THROUGH 
2010.—For a base period of calendar years 
2007 through 2010, each reporting entity shall 
submit annual data required under this section 
to the Administrator not later than March 31, 
2011. The Administrator may waive or modify 
reporting requirements for calendar years 2007 
through 2010 for categories of reporting enti-
ties to the extent that the Administrator deter-
mines that the reporting entities did not keep 
data or records necessary to meet reporting re-
quirements. The Administrator may, in addition 
to or in lieu of such requirements, collect infor-
mation on energy consumption and production. 
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‘‘(B) SUBSEQUENT
CALENDAR
YEARS.— 
For calendar year 2011 and each subsequent 
calendar year, each reporting entity shall sub-
mit quarterly data required under this section 
to the Administrator not later than 60 days 
after the end of the applicable quarter, except 
when the data is already being reported to the 
Administrator on an earlier timeframe for an-
other program. 
‘‘(3) WAIVER OF REPORTING REQUIREMENTS.— 
The Administrator may waive reporting require-
ments under this section for specific entities to the 
extent that the Administrator determines that suffi-
cient and equally or more reliable verified and timely 
data are available to the Administrator and the pub-
lic on the Internet under other mandatory statutory 
requirements. 
‘‘(4) ALTERNATIVE THRESHOLD.—The Admin-
istrator may, by rule, establish applicability thresh-
olds for reporting under this section using alter-
native metrics and levels, provided that such metrics 
and levels are easier to administer and cover the 
same size and type of sources as the threshold de-
fined in this section. 
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‘‘(c) INTERRELATIONSHIP WITH OTHER SYSTEMS.— 
In developing the regulations issued under subsection (b), 
the Administrator shall take into account the work done 
by the Climate Registry and other mandatory State or 
multistate programs. Such regulations shall include an ex-
planation of any major differences in approach between 
the system established under the regulations and such reg-
istries and programs. 
‘‘PART C—PROGRAM RULES 
‘‘SEC. 721. EMISSION ALLOWANCES. 
‘‘(a) IN GENERAL.—The Administrator shall estab-
lish a separate quantity of emission allowances for each 
calendar year starting in 2012, in the amounts prescribed 
under subsection (e). 
‘‘(b) IDENTIFICATION
NUMBERS.—The Adminis-
trator shall assign to each emission allowance established 
under subsection (a) a unique identification number that 
includes the vintage year for that emission allowance. 
‘‘(c) LEGAL STATUS OF EMISSION ALLOWANCES.— 
‘‘(1) IN
GENERAL.—An allowance established 
by the Administrator under this title does not con-
stitute a property right, nor does any credit or other 
instrument established or issued under the American 
Clean Energy and Security Act of 2009, and the 
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amendments made thereby, for the purpose of dem-
onstrating compliance with this title. 
‘‘(2) TERMINATION OR LIMITATION.—Nothing 
in this Act or any other provision of law shall be 
construed to limit or alter the authority of the 
United States, including the Administrator acting 
pursuant to statutory authority, to terminate or 
limit allowances or offset credits. 
‘‘(3) OTHER
PROVISIONS
UNAFFECTED.—Ex-
cept as otherwise specified in this Act, nothing in 
this Act relating to allowances or offset credits es-
tablished or issued under this title shall affect the 
application of any other provision of law to a covered 
entity, or the responsibility for a covered entity to 
comply with any such provision of law. 
‘‘(d) SAVINGS PROVISION.—Nothing in this part shall 
be construed as requiring a change of any kind in any 
State law regulating electric utility rates and charges, or 
as affecting any State law regarding such State regula-
tion, or as limiting State regulation (including any 
prudency review) under such a State law. Nothing in this 
part shall be construed as modifying the Federal Power 
Act or as affecting the authority of the Federal Energy 
Regulatory Commission under that Act. Nothing in this 
part shall be construed to interfere with or impair any pro-
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gram for competitive bidding for power supply in a State 
in which such program is established. 
‘‘(e) ALLOWANCES FOR EACH CALENDAR YEAR.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the number of emission allowances estab-
lished by the Administrator under subsection (a) for 
each calendar year shall be as provided in the fol-
lowing table: 
‘‘Calendar year 
Emission allowances (in mil-
lions) 
2012 
4,627 
2013 
4,544 
2014 
5,099 
2015 
5,003 
2016 
5,482 
2017 
5,375 
2018 
5,269 
2019 
5,162 
2020 
5,056 
2021 
4,903 
2022 
4,751 
2023 
4,599 
2024 
4,446 
2025 
4,294 
2026 
4,142 
2027 
3,990 
2028 
3,837 
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‘‘Calendar year 
Emission allowances (in mil-
lions) 
2029 
3,685 
2030 
3,533 
2031 
3,408 
2032 
3,283 
2033 
3,158 
2034 
3,033 
2035 
2,908 
2036 
2,784 
2037 
2,659 
2038 
2,534 
2039 
2,409 
2040 
2,284 
2041 
2,159 
2042 
2,034 
2043 
1,910 
2044 
1,785 
2045 
1,660 
2046 
1,535 
2047 
1,410 
2048 
1,285 
2049 
1,160 
2050 and each year thereafter 
1,035 
‘‘(2) REVISION.— 
‘‘(A) IN
GENERAL.—The Administrator 
may adjust, in accordance with subparagraph 
(B), the number of emission allowances estab-
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lished pursuant to paragraph (1) if, after notice 
and an opportunity for public comment, the Ad-
ministrator determines that— 
‘‘(i) United States greenhouse gas 
emissions in 2005 were other than 7,206 
million metric tons carbon dioxide equiva-
lent; 
‘‘(ii) if the requirements of this title 
for 2012 had been in effect in 2005, sec-
tion 722 would have required emission al-
lowances to be held for other than 66.2 
percent of United States greenhouse gas 
emissions in 2005; 
‘‘(iii) if the requirements of this title 
for 2014 had been in effect in 2005, sec-
tion 722 would have required emission al-
lowances to be held for other than 75.7 
percent of United States greenhouse gas 
emissions in 2005; or 
‘‘(iv) if the requirements of this title 
for 2016 had been in effect in 2005, sec-
tion 722 would have required emission al-
lowances to be held for other than 84.5 
percent United States greenhouse gas 
emissions in 2005. 
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‘‘(B) ADJUSTMENT FORMULA.— 
‘‘(i) IN
GENERAL.—If the Adminis-
trator adjusts under this paragraph the 
number of emission allowances established 
pursuant to paragraph (1), the number of 
emission allowances the Administrator es-
tablishes for any given calendar year shall 
equal the product of— 
‘‘(I) United States greenhouse 
gas emissions in 2005, expressed in 
tons of carbon dioxide equivalent; 
‘‘(II) the percent of United 
States greenhouse gas emissions in 
2005, expressed in tons of carbon di-
oxide equivalent, that would have been 
subject to section 722 if the require-
ments of this title for the given cal-
endar year had been in effect in 2005; 
and 
‘‘(III) the percentage set forth 
for that calendar year in section 
703(a), or determined under clause 
(ii) of this subparagraph. 
‘‘(ii) TARGETS.—In applying the por-
tion of the formula in clause (i)(III) of this 
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subparagraph, for calendar years for which 
a percentage is not listed in section 703(a), 
the Administrator shall use a uniform an-
nual decline in the amount of emissions be-
tween the years that are specified. 
‘‘(iii) CARBON DIOXIDE EQUIVALENT 
VALUE.—If 
the 
Administrator 
adjusts 
under this paragraph the number of emis-
sion allowances established pursuant to 
paragraph (1), the Administrator shall use 
the carbon dioxide equivalent values estab-
lished pursuant to section 712. 
‘‘(iv) LIMITATION
ON
ADJUSTMENT 
TIMING.—Once a calendar year has start-
ed, the Administrator may not adjust the 
number of emission allowances to be estab-
lished for that calendar year. 
‘‘(C) LIMITATION
ON
ADJUSTMENT
AU-
THORITY.—The 
Administrator 
may 
adjust 
under this paragraph the number of emission 
allowances to be established pursuant to para-
graph (1) only once. 
‘‘(f) COMPENSATORY ALLOWANCE.— 
‘‘(1) IN
GENERAL.—The regulations promul-
gated under subsection (h) shall provide for the es-
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tablishment and distribution of compensatory allow-
ances for— 
‘‘(A) the destruction, in 2012 or later, of 
fluorinated gases that are greenhouse gases if— 
‘‘(i) allowances or offset credits were 
retired for their production or importation; 
and 
‘‘(ii) such gases are not required to be 
destroyed under any other provision of law; 
‘‘(B) the nonemissive use, in 2012 or later, 
of petroleum-based or coal-based liquid or gas-
eous fuel, petroleum coke, natural gas liquid, or 
natural gas as a feedstock, if allowances or off-
set credits were retired for the greenhouse 
gases that would have been emitted from their 
combustion; and 
‘‘(C) the conversionary use, in 2012 or 
later, of fluorinated gases in a manufacturing 
process, including semiconductor research or 
manufacturing, if allowances or offset credits 
were retired for the production or importation 
of such gas. 
‘‘(2) ESTABLISHMENT AND DISTRIBUTION.— 
‘‘(A) IN
GENERAL.—Not later than 90 
days after the end of each calendar year, the 
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Administrator shall establish and distribute to 
the entity taking the actions described in sub-
paragraph (A), (B), or (C) of paragraph (1) a 
quantity of compensatory allowances equivalent 
to the number of tons of carbon dioxide equiva-
lent of avoided emissions achieved through such 
actions. In establishing the quantity of compen-
satory allowances, the Administrator shall take 
into account the carbon dioxide equivalent value 
of any greenhouse gas resulting from such ac-
tion. 
‘‘(B) SOURCE OF ALLOWANCES.—Compen-
satory allowances established under this sub-
section shall not be emission allowances estab-
lished under subsection (a). 
‘‘(C) 
IDENTIFICATION
NUMBERS.—The 
Administrator shall assign to each compen-
satory allowance established under subpara-
graph (A) a unique identification number. 
‘‘(3) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) the term ‘destruction’ means the con-
version of a greenhouse gas by thermal, chem-
ical, or other means to another gas or set of 
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gases with little or no carbon dioxide equivalent 
value; 
‘‘(B) the term ‘nonemissive use’ means the 
use of fossil fuel as a feedstock in an industrial 
or manufacturing process to the extent that 
greenhouse gases are not emitted from such 
process, and to the extent that the products of 
such process are not intended for use as, or to 
be contained in, a fuel; and 
‘‘(C) the term ‘conversionary use’ means 
the conversion during research or manufac-
turing of a fluorinated gas into another green-
house gas or set of gases with a lower carbon 
dioxide equivalent value. 
‘‘(4) FEEDSTOCK EMISSIONS STUDY.— 
‘‘(A) The Administrator may conduct a 
study to determine the extent to which petro-
leum-based or coal-based liquid or gaseous fuel, 
petroleum coke, natural gas liquid, or natural 
gas are used as feedstocks in manufacturing 
processes to produce products and the green-
house gas emissions resulting from such uses. 
‘‘(B) If as a result of such a study, the Ad-
ministrator determines that the use of such 
products by noncovered sources results in sub-
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stantial emissions of greenhouse gases and that 
such emissions have not been adequately ad-
dressed under other requirements of this Act, 
the Administrator may, after notice and com-
ment rulemaking, promulgate a regulation re-
ducing 
compensatory 
allowances 
commen-
surately if doing so will not result in shifting 
such emissions to noncovered sources. 
‘‘(g) FLUORINATED GASES ASSESSMENT.—No later 
than March 31, 2014, the Administrator shall complete 
an assessment of the regulation of non-HFC fluorinated 
gases under this title to determine whether the most ap-
propriate point of regulation is at the gas manufacturer 
or importer level, or at the source of emissions down-
stream. If the Administrator determines, based on consid-
eration of environmental effectiveness, cost effectiveness, 
administrative feasibility, extent of coverage of emissions, 
competitiveness and other relevant considerations con-
sistent with the purposes of this title, that emissions of 
non-HFC fluorinated gases can best be regulated by desig-
nating downstream emission sources as covered entities 
with compliance obligations under section 722, the Admin-
istrator shall, after notice and comment rulemaking, 
change the definition of covered entity and the compliance 
obligations under section 722 with respect to non-HFC 
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fluorinated gases accordingly, consistent with the purposes 
of this title, and establish such other requirements as are 
necessary to ensure compliance for such entities with the 
requirements of this title. 
‘‘(h) REGULATIONS.—Not later than 24 months after 
the date of enactment of this title, the Administrator shall 
promulgate regulations to carry out the provisions of this 
title. 
‘‘SEC. 722. PROHIBITION OF EXCESS EMISSIONS. 
‘‘(a) PROHIBITION.—Except as provided in sub-
section (c), effective January 1, 2012, each covered entity 
is prohibited from emitting greenhouse gases and having 
attributable greenhouse gas emissions, in combination, in 
excess of its allowable emissions level. A covered entity’s 
allowable emissions level for each calendar year is the 
number of emission allowances (or credits or other allow-
ances as provided in subsection (d)) it holds as of 12:01 
a.m. on April 1 (or a later date established by the Admin-
istrator under subsection (j)) of the following calendar 
year. 
‘‘(b) METHODS OF DEMONSTRATING COMPLIANCE.— 
Except as otherwise provided in this section, the owner 
or operator of a covered entity shall not be considered to 
be in compliance with the prohibition in subsection (a) un-
less, as of 12:01 a.m. on April 1 (or a later date estab-
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lished by the Administrator under subsection (j)) of each 
calendar year starting in 2013, the owner or operator 
holds a quantity of emission allowances (or credits or other 
allowances as provided in subsection (d)) at least as great 
as the quantity calculated as follows: 
‘‘(1) ELECTRICITY
SOURCES.—For a covered 
entity described in section 700(13)(A), 1 emission 
allowance for each ton of carbon dioxide equivalent 
of greenhouse gas that such covered entity emitted 
in the previous calendar year, excluding emissions 
resulting from the combustion of— 
‘‘(A) petroleum-based or coal-based liquid 
fuel; 
‘‘(B) natural gas liquid; 
‘‘(C) renewable biomass or gas derived 
from renewable biomass; or 
‘‘(D) petroleum coke or gas derived from 
petroleum coke. 
‘‘(2) FUEL PRODUCERS AND IMPORTERS.—For 
a covered entity described in section 700(13)(B), 1 
emission allowance for each ton of carbon dioxide 
equivalent of greenhouse gas that would be emitted 
from the combustion of any petroleum-based or coal- 
based liquid fuel, petroleum coke, or natural gas liq-
uid, produced or imported by such covered entity 
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during the previous calendar year for sale or dis-
tribution in interstate commerce, assuming no cap-
ture and sequestration of any greenhouse gas emis-
sions. 
‘‘(3) INDUSTRIAL
GAS
PRODUCERS
AND
IM-
PORTERS.—For a covered entity described in section 
700(13)(C), 1 emission allowance for each ton of 
carbon dioxide equivalent of fossil fuel-based carbon 
dioxide, nitrous oxide, or any other fluorinated gas 
that is a greenhouse gas (except for nitrogen 
trifluoride), or any combination thereof, produced or 
imported by such covered entity during the previous 
calendar year for sale or distribution in interstate 
commerce. 
‘‘(4) NITROGEN TRIFLUORIDE SOURCES.—For 
a covered entity described in section 700(13)(D), 1 
emission allowance for each ton of carbon dioxide 
equivalent of nitrogen trifluoride that such covered 
entity emitted in the previous calendar year. 
‘‘(5) GEOLOGICAL SEQUESTRATION SITES.—For 
a covered entity described in section 700(13)(E), 1 
emission allowance for each ton of carbon dioxide 
equivalent of greenhouse gas that such covered enti-
ty emitted in the previous calendar year. 
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‘‘(6) INDUSTRIAL STATIONARY SOURCES.—For 
a covered entity described in section 700(13)(F), 
(G), or (H), 1 emission allowance for each ton of 
carbon dioxide equivalent of greenhouse gas that 
such covered entity emitted in the previous calendar 
year, excluding emissions resulting from— 
‘‘(A) the combustion of petroleum-based or 
coal-based liquid fuel; 
‘‘(B) the combustion of natural gas liquid; 
‘‘(C) the combustion of renewable biomass 
or gas derived from renewable biomass; 
‘‘(D) the combustion of petroleum coke or 
gas derived from petroleum coke; or 
‘‘(E) the use of any fluorinated gas that is 
a greenhouse gas purchased for use at that cov-
ered entity, except for nitrogen trifluoride. 
‘‘(7) INDUSTRIAL FOSSIL FUEL-FIRED COMBUS-
TION DEVICES.—For a covered entity described in 
section 700(13)(I), 1 emission allowance for each 
ton of carbon dioxide equivalent of greenhouse gas 
that the devices emitted in the previous calendar 
year, excluding emissions resulting from the combus-
tion of— 
‘‘(A) petroleum-based or coal-based liquid 
fuel; 
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‘‘(B) natural gas liquid; 
‘‘(C) renewable biomass or gas derived 
from renewable biomass; or 
‘‘(D) petroleum coke or gas derived from 
petroleum coke. 
‘‘(8) NATURAL GAS LOCAL DISTRIBUTION COM-
PANIES.—For a covered entity described in section 
700(13)(J), 1 emission allowance for each ton of 
carbon dioxide equivalent of greenhouse gas that 
would be emitted from the combustion of the natural 
gas, and any other gas meeting the specifications for 
commingling with natural gas for purposes of deliv-
ery, that such entity delivered during the previous 
calendar year to customers that are not covered enti-
ties, assuming no capture and sequestration of that 
greenhouse gas. 
‘‘(9) ALGAE-BASED FUELS.—Where carbon di-
oxide (or another greenhouse gas) generated by a 
covered entity is used as an input in the production 
of algae-based fuels, the Administrator shall ensure 
that emission allowances are required to be held ei-
ther for the carbon dioxide generated by a covered 
entity that is used to grow the algae or for the por-
tion of the carbon dioxide emitted from combustion 
of the fuel produced from such algae that is attrib-
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utable to carbon dioxide generated by a covered enti-
ty, but not for both. 
‘‘(10) FUGITIVE
EMISSIONS.—The greenhouse 
gas emissions to which paragraphs (1), (4), (6), and 
(7) apply shall not include fugitive emissions of 
greenhouse gas, except to the extent the Adminis-
trator determines that data on the carbon dioxide 
equivalent value of greenhouse gas in the fugitive 
emissions can be provided with sufficient precision, 
reliability, accessibility, and timeliness to ensure the 
integrity of emission allowances, the allowance track-
ing system, and the cap on emissions. 
‘‘(11) EXPORT EXEMPTION.—This section shall 
not apply to any petroleum-based or coal-based liq-
uid fuel, petroleum coke, natural gas liquid, fossil 
fuel-based 
carbon 
dioxide, 
nitrous 
oxide, 
or 
fluorinated gas that is exported for sale or use. 
‘‘(12) NATURAL GAS LIQUIDS.—For natural gas 
liquids, the covered entity subject to the requirement 
stated in paragraph (2) shall be the owner of the 
natural gas liquids at the point the natural gas liq-
uids are separated into merchantable products. 
‘‘(13) 
APPLICATION
OF
MULTIPLE
PARA-
GRAPHS.—For a covered entity to which more than 
1 of paragraphs (1) through (8) apply, all applicable 
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paragraphs shall apply, except that not more than 1 
emission allowance shall be required for the same 
emission. 
‘‘(14) APPLICATION TO FRACTIONS OF TONS.— 
In applying paragraphs (1) through (8), any amount 
less than 1 ton of carbon dioxide equivalent of emis-
sions or attributable greenhouse gas emissions shall 
be treated as 1 ton of such carbon dioxide equiva-
lent. 
‘‘(c) PHASE-IN OF PROHIBITION.— 
‘‘(1) INDUSTRIAL STATIONARY SOURCES.—The 
prohibition under subsection (a) shall first apply to 
a covered entity described in section 700(13)(D), 
(F), (G), (H), or (I), with respect to emissions oc-
curring during calendar year 2014. 
‘‘(2) NATURAL GAS LOCAL DISTRIBUTION COM-
PANIES.—The prohibition under subsection (a) shall 
first apply to a covered entity described in section 
700(13)(J) with respect to deliveries occurring dur-
ing calendar year 2016. 
‘‘(d) ADDITIONAL METHODS.—In addition to using 
the method of compliance described in subsection (b), a 
covered entity may do the following: 
‘‘(1) OFFSET CREDITS.— 
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‘‘(A) IN GENERAL.—Covered entities col-
lectively may, in accordance with this para-
graph, use offset credits to demonstrate compli-
ance for up to a maximum of 2 billion tons of 
greenhouse gas emissions annually. The ability 
to demonstrate compliance with offset credits 
shall be divided pro rata among covered entities 
by allowing each covered entity to satisfy a per-
centage of the number of allowances required to 
be held under subsection (b) to demonstrate 
compliance by holding 1 domestic offset credit 
or 1.25 international offset credits in lieu of an 
emission allowance, except as provided in sub-
paragraph (D). 
‘‘(B) 
APPLICABLE
PERCENTAGE.—The 
percentage referred to in subparagraph (A) for 
a given calendar year shall be determined by di-
viding 2 billion by the sum of 2 billion plus the 
number of emission allowances established 
under section 721(a) for the previous year, and 
multiplying that number by 100. Not more than 
one half of the applicable percentage under this 
paragraph may be used by holding domestic off-
set credits, and not more than one half of the 
applicable percentage under this paragraph may 
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be used by holding international offset credits, 
except as provided in subparagraph (C). 
‘‘(C) MODIFIED
PERCENTAGES.—If the 
Administrator determines that domestic offset 
credits available for use in demonstrating com-
pliance in any calendar year at domestic offset 
prices generally equal to or less than emission 
allowance prices, are likely to offset less than 
0.9 billion tons of greenhouse gas emissions 
(measured in tons of carbon dioxide equiva-
lents), for purposes of compliance demonstra-
tion in that year the Administrator shall— 
‘‘(i) increase the percentage of emis-
sions that can be offset through the use of 
international offset credits to reflect the 
amount that 1.0 billion exceeds the number 
of domestic offset credits the Adminis-
trator determines is available, at prices 
generally equal to or less than emission al-
lowance prices, for that year, up to a max-
imum of 0.5 billion tons of greenhouse gas 
emissions; and 
‘‘(ii) decrease the percentage of emis-
sions that can be offset through the use of 
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domestic offset credits by the same 
amount. 
‘‘(D) INTERNATIONAL OFFSET CREDITS.— 
Notwithstanding subparagraph (A), to dem-
onstrate compliance prior to calendar year 
2018, a covered entity may use 1 international 
offset credit in lieu of an emission allowance up 
to the amount permitted under this paragraph. 
‘‘(E) PRESIDENT’S
RECOMMENDATION.— 
The President may make a recommendation to 
Congress as to whether the number 2 billion 
specified in subparagraphs (A) and (B) should 
be increased or decreased. 
‘‘(2) 
INTERNATIONAL
EMISSION
ALLOW-
ANCES.—To demonstrate compliance, a covered enti-
ty may hold an international emission allowance in 
lieu of an emission allowance, except as modified 
under section 728(d). 
‘‘(3) COMPENSATORY ALLOWANCES.—To dem-
onstrate compliance, a covered entity may hold a 
compensatory allowance obtained under section 
721(f) in lieu of an emission allowance. 
‘‘(e) RETIREMENT OF ALLOWANCES AND CREDITS.— 
As soon as practicable after a deadline established for cov-
ered entities to demonstrate compliance with this title, the 
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Administrator shall retire the quantity of allowances or 
credits required to be held under this title. 
‘‘(f) ALTERNATIVE METRICS.—For categories of cov-
ered entities described in subparagraph (B), (C), (D), (G), 
(H), or (I) of section 700(13), the Administrator may, by 
rule, establish an applicability threshold for inclusion 
under those subparagraphs using an alternative metric 
and level, provided that such metric and level are easier 
to administer and cover the same size and type of sources 
as the threshold defined in such subparagraphs. 
‘‘(g) THRESHOLD REVIEW.—For each category of 
covered entities described in subparagraph (B), (C), (D), 
(G), (H), or (I) of section 700(13), the Administrator 
shall, in 2020 and once every 8 years thereafter, review 
the carbon dioxide equivalent emission threshold that is 
used to define covered entities in such category. After con-
sideration of— 
‘‘(1) emissions from covered entities in such 
category, and from other entities of the same type 
that emit less than the threshold amount for the cat-
egory (including emission sources that commence op-
eration after the date of enactment of this title that 
are not covered entities); and 
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‘‘(2) whether greater greenhouse gas emission 
reductions can be cost-effectively achieved by low-
ering the applicable threshold, 
the Administrator may by rule lower such threshold to not 
less than 10,000 tons of carbon dioxide equivalent emis-
sions. In determining the cost effectiveness of potential re-
ductions from lowering the threshold for covered entities, 
the Administrator shall consider alternative regulatory 
greenhouse gas programs, including setting standards 
under other titles of this Act. 
‘‘(h) DESIGNATED REPRESENTATIVES.—The regula-
tions promulgated under section 721(h) shall require that 
each covered entity, and each entity holding allowances or 
offset credits or receiving allowances or offset credits from 
the Administrator under this title, submit to the Adminis-
trator a certificate of representation designating a des-
ignated representative. 
‘‘(i) EDUCATION AND OUTREACH.— 
‘‘(1) IN GENERAL.—The Administrator shall es-
tablish and carry out a program of education and 
outreach to assist covered entities, especially entities 
having little experience with environmental regu-
latory requirements similar or comparable to those 
under this title, in preparing to meet the compliance 
obligations of this title. Such program shall include 
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education with respect to using markets to effec-
tively achieve such compliance. 
‘‘(2) FAILURE TO RECEIVE INFORMATION.—A 
failure to receive information or assistance under 
this subsection may not be used as a defense against 
an allegation of any violation of this title. 
‘‘(j) ADJUSTMENT
OF DEADLINE.—The Adminis-
trator may, by rule, establish a deadline for demonstrating 
compliance, for a calendar year, later than the date pro-
vided in subsection (a), as necessary to ensure the avail-
ability of emissions data, but in no event shall the deadline 
be later than June 1. 
‘‘(k) NOTICE REQUIREMENT FOR COVERED ENTI-
TIES RECEIVING NATURAL GAS FROM NATURAL GAS 
LOCAL DISTRIBUTION COMPANIES.—The owner or oper-
ator of a covered entity that takes delivery of natural gas 
from a natural gas local distribution company shall, not 
later than September 1 of each calendar year, notify such 
natural gas local distribution company in writing that 
such entity will qualify as a covered entity under this title 
for that calendar year. 
‘‘(l) COMPLIANCE OBLIGATION.—For purposes of 
this title, the year of a compliance obligation is the year 
in which compliance is determined, not the year in which 
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the greenhouse gas emissions occur or the covered entity 
has attributable greenhouse gas emissions. 
‘‘SEC. 723. PENALTY FOR NONCOMPLIANCE. 
‘‘(a) ENFORCEMENT.—A violation of any prohibition 
of, requirement of, or regulation promulgated pursuant to 
this title shall be a violation of this Act. It shall be a viola-
tion of this Act for a covered entity to emit greenhouse 
gases and have attributable greenhouse gas emissions, in 
combination, in excess of its allowable emissions level as 
provided in section 722(a). Each ton of carbon dioxide 
equivalent for which a covered entity fails to demonstrate 
compliance under section 722 shall be a separate violation. 
‘‘(b) EXCESS EMISSIONS PENALTY.— 
‘‘(1) IN GENERAL.—The owner or operator of 
any covered entity that fails for any year to comply, 
on the deadline described in section 722(a) or (j), 
shall be liable for payment to the Administrator of 
an excess emissions penalty in the amount described 
in paragraph (2). 
‘‘(2) AMOUNT.—The amount of an excess emis-
sions penalty required to be paid under paragraph 
(1) shall be equal to the product obtained by multi-
plying— 
‘‘(A) the tons of carbon dioxide equivalent 
of greenhouse gas emissions or attributable 
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greenhouse gas emissions for which the owner 
or operator of a covered entity failed to dem-
onstrate compliance under section 722 on the 
deadline; by 
‘‘(B) twice the auction clearing price for 
the earliest vintage year emission allowances in 
the last auction carried out pursuant to section 
791 before such deadline. 
‘‘(3) TIMING.—An excess emissions penalty re-
quired under this subsection shall be immediately 
due and payable to the Administrator, without de-
mand, in accordance with regulations promulgated 
by the Administrator, which shall be issued not later 
than 2 years after the date of enactment of this 
title. 
‘‘(4) NO
EFFECT
ON
LIABILITY.—An excess 
emissions penalty due and payable by the owners or 
operators of a covered entity under this subsection 
shall not diminish the liability of the owners or oper-
ators for any fine, penalty, or assessment against 
the owners or operators for the same violation under 
any other provision of this Act or any other law. 
‘‘(c) EXCESS EMISSIONS ALLOWANCES.—The owner 
or operator of a covered entity that fails for any year to 
comply on the deadline described in section 722(a) or (j) 
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shall be liable to offset the covered entity’s excess com-
bination of greenhouse gases emitted and attributable 
greenhouse gas emissions by an equal quantity of emission 
allowances during the following calendar year, or such 
longer period as the Administrator may prescribe. During 
the year in which the covered entity failed to comply, or 
any year thereafter, the Administrator may deduct the 
emission allowances required under this subsection to off-
set the covered entity’s excess greenhouse gas emissions 
or attributable greenhouse gas emissions. 
‘‘SEC. 724. TRADING. 
‘‘(a) PERMITTED TRANSACTIONS.—Except as other-
wise provided in this title, the lawful holder of an emission 
allowance, compensatory allowance, or offset credit may, 
without restriction, sell, exchange, transfer, hold for com-
pliance in accordance with section 722, or request that the 
Administrator retire the emission allowance, compensatory 
allowance, or offset credit. 
‘‘(b) NO RESTRICTION
ON TRANSACTIONS.—The 
privilege of purchasing, holding, selling, exchanging, 
transferring, and requesting retirement of emission allow-
ances, compensatory allowances, or offset credits shall not 
be restricted to the owners and operators of covered enti-
ties, except as otherwise provided in this title. 
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‘‘(c) EFFECTIVENESS
OF
ALLOWANCE
TRANS-
FERS.—No transfer of an allowance or offset credit shall 
be effective for purposes of this title until a certification 
of the transfer, signed by the designated representative of 
the transferor, is received and recorded by the Adminis-
trator in accordance with regulations promulgated under 
section 721(h). 
‘‘(d) ALLOWANCE TRACKING SYSTEM.—The regula-
tions promulgated under section 721(h) shall include a 
system for issuing, recording, holding, and tracking allow-
ances and offset credits that shall specify all necessary 
procedures and requirements for an orderly and competi-
tive functioning of the allowance and offset credit markets. 
Such regulations shall provide for appropriate publication 
of the information in the system on the Internet. 
‘‘SEC. 725. BANKING AND BORROWING. 
‘‘(a) BANKING.—An emission allowance may be used 
to comply with section 722 or section 723 for emissions 
in— 
‘‘(1) the vintage year for the allowance; or 
‘‘(2) any calendar year subsequent to the vin-
tage year for the allowance. 
‘‘(b) EXPIRATION.— 
‘‘(1) REGULATIONS.—The Administrator may 
establish by regulation criteria and procedures for 
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determining whether, and for implementing a deter-
mination that, the expiration of an allowance or off-
set credit established or issued by the Administrator 
under this title, or expiration of the ability to use an 
international emission allowance to comply with sec-
tion 722, is necessary to ensure the authenticity and 
integrity of allowances or offset credits or the allow-
ance tracking system. 
‘‘(2) GENERAL RULE.—An allowance or offset 
credit established or issued by the Administrator 
under this title shall not expire unless— 
‘‘(A) it is retired by the Administrator pur-
suant to this title; or 
‘‘(B) it is determined to expire or to have 
expired by a specific date by the Administrator 
in accordance with regulations promulgated 
under paragraph (1). 
‘‘(3) 
INTERNATIONAL
EMISSION
ALLOW-
ANCES.—The ability to use an international emission 
allowance to comply with section 722 shall not ex-
pire unless— 
‘‘(A) the allowance is retired by the Ad-
ministrator pursuant to this title; or 
‘‘(B) the ability to use such allowance to 
meet such compliance obligation requirements is 
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determined to expire or to have expired by a 
specific date by the Administrator in accord-
ance with regulations promulgated under para-
graph (1). 
‘‘(c) BORROWING FUTURE VINTAGE YEAR ALLOW-
ANCES.— 
‘‘(1) BORROWING WITHOUT INTEREST.—In ad-
dition to the uses described in subsection (a), an 
emission allowance may be used to demonstrate com-
pliance under section 722 or comply with section 
723 for emissions, production, importation, manu-
facture, or deliveries in the calendar year imme-
diately preceding the vintage year for the allowance. 
‘‘(2) BORROWING WITH INTEREST.— 
‘‘(A) IN GENERAL.—A covered entity may 
demonstrate compliance under section 722 in a 
specific calendar year for up to 15 percent of 
its emissions by holding emission allowances 
with a vintage year 1 to 5 years later than that 
calendar year. 
‘‘(B) LIMITATIONS.—An emission allow-
ance borrowed pursuant to this paragraph shall 
be an emission allowance that is established by 
the Administrator for a specific future calendar 
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year under section 721(a) and that is held by 
the borrower. 
‘‘(C) PREPAYMENT
OF
INTEREST.—For 
each emission allowance that an owner or oper-
ator of a covered entity borrows pursuant to 
this paragraph, such owner or operator shall, at 
the time it borrows the allowance, hold for re-
tirement by the Administrator, and the Admin-
istrator shall retire, a quantity of emission al-
lowances that is equal to the product obtained 
by multiplying— 
‘‘(i) 0.08; by 
‘‘(ii) the number of years between the 
calendar year in which the allowance is 
being used to satisfy a compliance obliga-
tion and the vintage year of the allowance. 
‘‘SEC. 726. STRATEGIC RESERVE. 
‘‘(a) STRATEGIC RESERVE AUCTIONS.— 
‘‘(1) IN GENERAL.—Once each quarter of each 
calendar year for which allowances are established 
under section 721(a), the Administrator shall auc-
tion strategic reserve allowances. 
‘‘(2) RESTRICTION TO COVERED ENTITIES.—In 
each auction conducted under paragraph (1), only 
covered entities that the Administrator expects will 
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be required to comply with section 722 in the fol-
lowing calendar year shall be eligible to make pur-
chases. 
‘‘(b) POOL OF EMISSION ALLOWANCES FOR STRA-
TEGIC RESERVE AUCTIONS.— 
‘‘(1) FILLING
THE
STRATEGIC
RESERVE
INI-
TIALLY.— 
‘‘(A) IN
GENERAL.—The Administrator 
shall, not later than 2 years after the date of 
enactment of this title, establish a strategic re-
serve account, and shall place in that account 
an amount of emission allowances established 
under section 721(a) for each calendar year 
from 2012 through 2050 in the amounts speci-
fied in subparagraph (B) of this paragraph. 
‘‘(B) AMOUNT.—The amount referred to in 
subparagraph (A) shall be— 
‘‘(i) for each of calendar years 2012 
through 2019, 1 percent of the quantity of 
emission allowances established for that 
year pursuant to section 721(e)(1); 
‘‘(ii) for each of calendar years 2020 
through 2029, 2 percent of the quantity of 
emission allowances established for that 
year pursuant to section 721(e)(1); and 
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‘‘(iii) for each of calendar years 2030 
through 2050, 3 percent of the quantity of 
emission allowances established for that 
year pursuant to section 721(e)(1). 
‘‘(C) EFFECT
ON
OTHER
PROVISIONS.— 
Any provision in this title (except for subpara-
graph (B) of this paragraph) that refers to a 
quantity or percentage of the emission allow-
ances established for a calendar year under sec-
tion 721(a) shall be considered to refer to the 
amount of emission allowances as determined 
pursuant to section 721(e), less any emission 
allowances established for that year that are 
placed in the strategic reserve account under 
this paragraph. 
‘‘(2) SUPPLEMENTING
THE
STRATEGIC
RE-
SERVE.—The Administrator shall also— 
‘‘(A) at the end of each calendar year, 
transfer to the strategic reserve account each 
emission allowance that was offered for sale but 
not sold at any auction conducted under section 
791; and 
‘‘(B) deposit emission allowances estab-
lished under subsection (g) from auction pro-
ceeds into the strategic reserve, to the extent 
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necessary to maintain the reserve at its original 
size. 
‘‘(c) MINIMUM
STRATEGIC
RESERVE
AUCTION 
PRICE.— 
‘‘(1) IN GENERAL.—At each strategic reserve 
auction, the Administrator shall offer emission al-
lowances for sale beginning at a minimum price per 
emission allowance, which shall be known as the 
‘minimum strategic reserve auction price’. 
‘‘(2) INITIAL
MINIMUM
STRATEGIC
RESERVE 
AUCTION PRICES.—The minimum strategic reserve 
auction price shall be $28 (in constant 2009 dollars) 
for the strategic reserve auctions held in 2012. For 
the strategic reserve auctions held in 2013 and 
2014, the minimum strategic reserve auction price 
shall be the strategic reserve auction price for the 
previous year increased by 5 percent plus the rate of 
inflation (as measured by the Consumer Price Index 
for All Urban Consumers). 
‘‘(3) MINIMUM STRATEGIC RESERVE AUCTION 
PRICE IN SUBSEQUENT YEARS.—For each strategic 
reserve auction held in 2015 and each year there-
after, the minimum strategic reserve auction price 
shall be 60 percent above a rolling 36-month average 
of the daily closing price for that year’s emission al-
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