(C) the economic adjustment ratio for the 
WTO participant, as determined by the Com-
mission under paragraph (5). 
(3) NATIONAL
GREENHOUSE
GAS
INTENSITY 
RATE.—The national greenhouse gas intensity rate 
for a particular WTO participant under paragraph 
(2)(A), on a per unit basis, shall be equal to the 
quotient obtained by dividing— 
(A) the total amount of direct greenhouse 
gas emissions and indirect greenhouse gas emis-
sions that are attributable to a category of cov-
ered goods of a covered WTO participant dur-
ing the most recent calendar year (as adjusted 
to exclude those emissions that would not be 
subject to the allowance submission require-
ments of section 9913 of the Internal Revenue 
Code of 1986 or the category of covered goods 
if manufactured in the United States), by 
(B) the total number of units of the par-
ticular covered good that are produced in the 
covered WTO participant during the same cal-
endar year. 
(4) ALLOWANCE ADJUSTMENT FACTOR.— 
(A) GENERAL
FORMULA.—The allowance 
adjustment factor for a particular WTO partici-
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pant under paragraph (2)(B) for a compliance 
year shall be equal to 1 minus the ratio that— 
(i) the number of allowances, as deter-
mined by the Secretary under subpara-
graph (B), that the entire industry sector 
in the WTO participant would have re-
ceived for that compliance year at no cost 
if such allowances were allocated in the 
same manner that allowances are allocated 
at no cost under subtitle L of the Internal 
Revenue Code of 1986 to the same indus-
try sector in the United States, bears to 
(ii) the total amount of direct green-
house gas emissions and indirect green-
house gas emissions that are attributable 
to a category of covered goods of the cov-
ered WTO participant during that compli-
ance year. 
(B) ALLOWANCES
ALLOCATED
AT
NO 
COST..—The number of allowances allocated at 
no cost under subparagraph (A)(i) shall be 
equal to the product obtained by multiplying— 
(i) the baseline emissions level that 
the Commission has attributed to a cat-
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egory of covered goods of the WTO partici-
pant, by 
(ii) the ratio that— 
(I) the quantity of allowances 
that are allocated at no cost under 
subtitle L of the Internal Revenue 
Code of 1986 to entities within the in-
dustry sector that manufactures the 
covered goods for the compliance year 
during which the covered goods were 
entered into the United States, bears 
to 
(II) the total amount of direct 
greenhouse gas emissions and indirect 
greenhouse gas emissions of that sec-
tor during a particular compliance 
year. 
(5) ECONOMIC ADJUSTMENT RATIO.—The eco-
nomic adjustment ratio for a particular WTO partic-
ipant under paragraph (2)(C) shall be 1 unless the 
Commission makes an affirmative decision to lower 
the ratio in order to take into account the extent to 
which the WTO participant has fully implemented, 
verified, and enforced the following: 
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(A) The deployment and use of state-of- 
the-art technologies in industrial processes, 
equipment manufacturing facilities, power gen-
eration and other energy facilities, and con-
sumer goods (such as automobiles and appli-
ances), and implementation of other techniques 
or actions that have the effect of limiting green-
house gas emissions in the WTO participant 
during the relevant period. 
(B) Any regulatory programs, require-
ments, and other measures that the WTO par-
ticipant has implemented to limit greenhouse 
emissions during the relevant period. 
(6) ANNUAL
CALCULATION.—The Secretary 
shall calculate the international reserve allowance re-
quirements for each compliance year based on the 
best available information and annually revise the 
applicable international reserve allowance require-
ments to reflect changes in the variables of the for-
mula described in this subsection. 
(7) PUBLICATION.—Not later than 90 days be-
fore the beginning of each compliance year, the Sec-
retary shall publish in the Federal Register a sched-
ule describing the required number of international 
reserve allowances for each category of imported cov-
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ered goods of each covered WTO participant, as cal-
culated under this subsection. 
(8) COVERED GOODS FROM MULTIPLE COUN-
TRIES.— 
(A) IN GENERAL.—The Secretary shall es-
tablish, by rule, procedures for determining the 
number of the international reserve allowances 
that a United States importer must submit 
under this subsection for a category of covered 
goods that are primary products and manufac-
tured or processed in more than one WTO par-
ticipant. Subject to subparagraph (B), such 
procedures shall require the importer— 
(i) to determine for each covered 
WTO participant listed in the written dec-
laration, as required by subsection (d), the 
number of international reserve allowances 
that apply under paragraph (2) of this 
subsection to the category of covered goods 
that are manufactured and processed en-
tirely in that covered WTO participant for 
the particular compliance year; and 
(ii) of the international reserve allow-
ance requirements identified under clause 
(i) for particular covered WTO partici-
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pants, to apply the requirement that im-
poses the highest number of international 
reserve allowances for the category of cov-
ered goods. 
(B) EXCEPTION.—The procedures for set-
ting the international reserve allowance require-
ment under subparagraph (A) shall not apply if 
the Secretary grants a request by the importer 
to apply an alternate method for establishing 
such requirement. The Secretary shall grant 
such a request only if the importer dem-
onstrates in an administrative hearing by a pre-
ponderance of evidence that the alternate meth-
od will establish an international reserve allow-
ance requirement that is more representative 
than the requirement applicable under subpara-
graph (A). 
(C) ADMINISTRATIVE HEARING.—The Sec-
retary shall establish procedures for administra-
tive hearings under subparagraph (B) to ensure 
that— 
(i) all evidence submitted by an im-
porter will be subject to verification by the 
Secretary; 
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(ii) domestic manufacturers of the 
category of covered goods subject to the 
administrative hearing under this para-
graph will have an opportunity to review 
and comment on evidence submitted by the 
importer; and 
(iii) appropriate penalties will be as-
sessed in cases where the importer has 
submitted information that is false or mis-
leading. 
(f) FOREIGN ALLOWANCES.— 
(1) FOREIGN
ALLOWANCES
UNDER
CAP
AND 
TRADE PROGRAM.— 
(A) IN
GENERAL.—A United States im-
porter may submit, in lieu of an international 
reserve allowance issued under this section, a 
foreign allowance distributed by a WTO partici-
pant pursuant to a commensurate cap and 
trade program. 
(B) COMMENSURATE CAP AND TRADE PRO-
GRAM.—For purposes of subparagraph (A), a 
commensurate cap and trade program shall in-
clude any greenhouse gas regulatory program 
adopted by a covered WTO participant to limit 
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the greenhouse gas emissions of the covered 
WTO participant, if— 
(i) the Secretary certifies that the 
program— 
(I)(aa) places a quantitative limi-
tation on the total quantity of green-
house gas emissions of the covered 
WTO participant (expressed in terms 
of tons emitted per calendar year); 
and 
(bb) 
achieves 
that 
limitation 
through an allowance trading system; 
(II) satisfies such criteria as the 
Secretary may establish for require-
ments relating to the enforceability of 
the cap and trade program, including 
requirements for monitoring, report-
ing, verification procedures, allowance 
tracking, and offsets; and 
(III) is a comparable action, as 
determined by the Commission; or 
(ii) the program is the result of an 
agreement under section 115(b). 
(2) INTERNATIONAL FOREST ALLOWANCES.—A 
United States importer may submit, in lieu of an 
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international reserve allowance issued under this sec-
tion, an international forest allowance generated 
under an agreement to undertake international for-
est carbon activities under section 115(c). 
(3) TRADING OF FOREIGN ALLOWANCES.—For-
eign allowances described in paragraphs (1) and (2) 
may be traded on the carbon market established 
under subtitle L of the Internal Revenue Code of 
1986. 
(g) RETIREMENT OF ALLOWANCES.—The Secretary 
shall retire each international reserve allowance and for-
eign allowance submitted to achieve compliance with this 
section. 
(h) CONSISTENCY WITH TRADE AND OTHER INTER-
NATIONAL AGREEMENTS.—The Secretary, in consultation 
with the Secretary of State, shall adjust the international 
reserve allowance requirements established under this sec-
tion (including the quantity of international reserve allow-
ances required for each category of covered goods of a cov-
ered WTO participant) as the Secretary determines to be 
necessary to ensure that the United States complies with 
all applicable trade agreements and other international 
agreements to which the United States is a party. 
(i) FINAL REGULATIONS.—Not later than January 1, 
2014, the Secretary shall promulgate such regulations as 
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the Secretary determines to be necessary to carry out this 
section. 
SEC. 112. ADJUSTMENT OF INTERNATIONAL RESERVE AL-
LOWANCE REQUIREMENTS. 
(a) IN GENERAL.—Not later than January 1, 2018, 
and annually thereafter, the Commission shall prepare and 
submit to Congress a report that assesses the effectiveness 
of the applicable international reserve allowance require-
ments under section 111 with respect to— 
(1) covered goods that are entered into the 
United States from each covered WTO participant; 
and 
(2) the production of covered goods in covered 
WTO participants that are incorporated into manu-
factured goods that subsequently are entered into 
the United States. 
(b) INADEQUATE REQUIREMENTS.—If the Commis-
sion determines that an applicable international reserve al-
lowance requirement is not adequate to achieve the pur-
poses of this title, the Commission, simultaneously with 
the submission of the report under subsection (a), shall 
make recommendations to— 
(1) increase the stringency or otherwise improve 
the effectiveness of the applicable requirements in a 
manner that ensures compliance with all applicable 
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trade agreements and other international agree-
ments; 
(2) take action to address greenhouse gas emis-
sions that are attributable to the production of man-
ufactured items for consumption that are not subject 
to the international reserve allowance requirements 
under section 111; or 
(3) take such other action as the Commission 
determines to be necessary to address greenhouse 
gas emissions that are attributable to the production 
of covered goods in covered WTO participants, in 
compliance with all applicable trade agreements and 
other international agreements. 
(c) REVISED REGULATIONS.—The Secretary, in con-
sultation with the Commission, shall promulgate revised 
regulations to implement the recommended changes under 
subsection (b) to improve the effectiveness of the inter-
national reserve allowance requirements. 
(d) EFFECTIVE DATE.—Any revision made under 
subsection (c) shall take effect on January 1 of the first 
compliance year beginning after the date on which the re-
vision is made. 
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SEC. 113. INTERNATIONAL CLIMATE CHANGE COMMISSION. 
(a) ESTABLISHMENT.—There is established a com-
mission that shall be known as the ‘‘International Climate 
Change Commission’’. 
(b) ORGANIZATION.— 
(1) MEMBERSHIP.—The Commission shall be 
composed of 6 commissioners who shall be appointed 
by the President, by and with the advice and consent 
of the Senate. A person shall not be eligible for ap-
pointment as a commissioner unless that person— 
(A) is a citizen of the United States; and 
(B) has, in the judgment of the President, 
the requisite qualifications for developing the 
knowledge and expertise on international cli-
mate change matters that are necessary for per-
forming the duties and functions of the Com-
mission under this title. 
(2) APPOINTMENTS OF COMMISSIONERS.—Not 
later than 3 months after date of the enactment of 
this Act, the President shall appoint the commis-
sioners in accordance with this subsection. If the 
President fails to appoint one or more of the com-
missioners under this paragraph by the end of that 
3-month period, then— 
(A) the United States International Trade 
Commission shall, within the succeeding 3- 
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month period, appoint the remaining commis-
sioners; and 
(B) the authority of the President to ap-
point the remaining commissioners terminates. 
(3) POLITICAL AFFILIATION.—Not more than 3 
of the commissioners serving at any time shall be af-
filiated with the same political party. In making the 
appointments, members of different parties shall be 
appointed alternatively as nearly as may be prac-
ticable. 
(4) TERM
OF
COMMISSIONERS; REAPPOINT-
MENT.— 
(A) IN GENERAL.—The term of a commis-
sioner shall be 12 years, except that commis-
sioners first taking office under paragraph (2) 
shall be appointed to the Commission in a man-
ner that ensures that— 
(i) the term of not more than 1 mem-
ber shall expire during any 2-year period; 
and 
(ii) no commissioner serves a term of 
more than 12 years. 
(B) SERVICE UNTIL NEW APPOINTMENT.— 
The term of a commissioner shall continue after 
the expiration of that commissioner’s term until 
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the date on which a replacement is appointed 
by the President and confirmed by the Senate, 
except that the successor’s term begins upon 
the original expiration of the predecessor’s 
term. 
(C) VACANCY.—Any commissioner ap-
pointed to fill a vacancy occurring before the 
expiration of the term for which the predecessor 
was appointed shall be appointed for the re-
mainder of the term. 
(D) REAPPOINTMENT.—A person who has 
served as commissioner for more than 7 years 
shall not be eligible for reappointment. 
(5) CHAIRPERSON AND VICE-CHAIRPERSON.— 
(A) IN
GENERAL.—The President shall 
designate a Chairperson and Vice Chairperson 
of the Commission from the commissioners that 
are eligible for designation under subparagraph 
(B). The Chairperson and Vice-Chairperson 
shall each serve for a term of 4 years. If the 
President fails to designate the Chairperson for 
any term, the commissioner with the longest pe-
riod of continuous service shall serve as Chair-
person for that term. 
(B) ELIGIBILITY REQUIREMENTS.— 
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(i) 
CHAIRPERSON.—The 
President 
may designate as the Chairperson of the 
Commission for any term any commis-
sioner who is not affiliated with the polit-
ical party with which the Chairperson of 
the Commission for the immediately pre-
ceding year is affiliated, and who (except 
in the case of the first commissioners) has 
at least 1 year of continuous service as a 
commissioner. 
(ii) VICE-CHAIRPERSON.—The Presi-
dent may designate as the Vice Chair-
person of the Commission for any term 
any commissioner who is not affiliated with 
the political party with which the Chair-
person is affiliated. 
(6) VOTING.— 
(A) IN GENERAL.—The Commission shall 
vote on the adoption of each action that is iden-
tified in subparagraph (D). Such a vote on a 
Commission action shall occur at a public meet-
ing of the Commission for which a quorum is 
present. A majority of commissioners that are 
in office shall constitute a quorum for a meet-
ing of the Commission. 
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(B) ADOPTION.—A Commission action 
identified in subparagraph (D) shall take effect 
upon adoption by the Commission in accordance 
with the requirements of this paragraph. Sub-
ject to subparagraph (C), the adoption of a 
Commission action shall occur if a majority of 
the commissioners in attendance at the meeting 
(as well as any commissioners voting by proxy) 
vote in favor of such action. 
(C) EQUALLY DIVIDED VOTES.—In cases 
when the commissioners voting are equally di-
vided on whether or not a WTO participant has 
taken comparable action under section 114, the 
Commission shall be deemed to have made an 
affirmative determination that the WTO partic-
ipant has not taken comparable action. 
(D) COMMISSION
ACTIONS.—A Commis-
sion action for purposes of this paragraph shall 
include the performance of the duties specified 
under subsection (c) and the exercise of the en-
forcement powers authorized under subsection 
(d). 
(c) DUTIES.—The duties of the Commission shall in-
clude— 
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(1) determinations on whether a WTO partici-
pant is taking comparable action under section 114; 
(2) establishment of WTO participant lists 
under section 111(b); 
(3) classification of a category of goods or prod-
ucts as a manufactured item for consumption under 
section 101(16)(C); 
(4) adjustment of the international reserve al-
lowance requirements pursuant to section 112; and 
(5) performance of other actions that are nec-
essary for the implementation of the provisions of 
this title. 
(d) ENFORCEMENT POWERS.— 
(1) 
PENALTY
FOR
NONCOMPLIANCE.—The 
Commission may impose an excess emissions penalty 
on a United States importer of covered goods if that 
importer fails to submit the required number of 
international reserve allowances under section 111. 
Such penalty for noncompliance shall be equal to the 
amount of an excess emissions penalty that an 
owner or operator of a covered facility is required to 
submit for noncompliance under section 9901 of the 
Internal Revenue Code of 1986. 
(2) PROHIBITION ON IMPORTERS.—The Com-
mission may prohibit a United States importer from 
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entering covered goods into the United States for a 
period not to exceed 5 years if that importer— 
(A) fails to pay a penalty for noncompli-
ance imposed under paragraph (1); or 
(B) submits a written declaration under 
section 111(d) that provides false or misleading 
information for the purpose of circumventing 
the international reserve requirements of this 
title. 
(3) DELEGATION.—The Commission, as appro-
priate, may delegate to U.S. Customs and Border 
Protection the enforcement powers that are author-
ized under this subsection. U.S. Customs and Bor-
der Protection shall exercise such enforcement pow-
ers in accordance with procedures and requirements 
that the Commission may establish. 
SEC. 114. DETERMINATIONS OF COMPARABLE ACTION. 
(a) DETERMINATIONS.— 
(1) ANNUAL DETERMINATIONS.—Not later than 
January 1, 2014, and annually thereafter, the Com-
mission shall determine whether, and the extent to 
which, each WTO participant that is not exempted 
under subsection (b) has taken comparable action 
during the preceding 1-year period to limit the 
greenhouse gas emissions of the WTO participant, 
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(i) The deployment and use of state- 
of-the-art technologies in industrial proc-
esses, equipment manufacturing facilities, 
power generation and other energy facili-
ties, and consumer goods (such as auto-
mobiles and appliances), and implementa-
tion of other techniques or actions that 
have the effect of limiting greenhouse gas 
emissions in the WTO participant during 
the relevant period. 
(ii) Any regulatory programs, require-
ments, and other measures that the WTO 
participant has implemented to limit 
greenhouse emissions during the relevant 
period. 
(C) If a WTO participant is a party to an 
international climate change agreement that im-
poses binding greenhouse gas emissions limita-
tions on the WTO participant, the Commission 
shall give appropriate credit for net transfers to 
the WTO participant of greenhouse gas emis-
sions allowances or other units issued with re-
spect to emissions reductions or sequestrations 
in other WTO participants pursuant to such 
international agreement. 
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(D) The Commission shall ensure that any 
determination on comparable action that the 
Commission makes under this paragraph com-
plies with applicable trade agreements and 
other international agreements. 
(b) EXEMPTIONS.—The Commission shall exempt 
from a determination under subsection (a) in a calendar 
year any WTO participant that is placed on the excluded 
list pursuant to clause (ii), (iii), or (iv) of section 
111(b)(2)(A) for that calendar year. 
(c) REPORTS.—The Commission shall, as expedi-
tiously as practicable— 
(1) submit to the President and Congress an 
annual report describing the determinations of the 
Commission under subsection (a) for the most recent 
calendar year; and 
(2) publish the determinations in the Federal 
Register. 
(d) REPORTS.—The President shall— 
(1) submit to Congress an annual report de-
scribing the determinations of the President under 
subsection (a) for the most recent calendar year; and 
(2) publish the determinations in the Federal 
Register. 
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SEC. 115. INTERNATIONAL AGREEMENTS. 
(a) NEGOTIATING OBJECTIVE.— 
(1) STATEMENT OF POLICY.—Consistent with 
the obligations of the United States under the World 
Trade Organization, it is the policy of the United 
States to work proactively under the United Nations 
Framework Convention on Climate Change and in 
other appropriate forums to establish binding agree-
ments representing comparable action and commit-
ting all major greenhouse gas-emitting WTO partici-
pants to contribute equitably to the reduction of 
global greenhouse gas emissions. Any such agree-
ment shall be considered comparable action only if 
it includes a maximum level on net greenhouse gas 
emissions into the atmosphere. 
(2) INTENT OF CONGRESS REGARDING OBJEC-
TIVE.—To the extent that the agreements described 
in paragraph (1) involve measures that will affect 
international trade in any good or service, it is the 
intent of the Congress that the negotiating objective 
of the United States shall be to focus multilateral 
and bilateral international agreements on the reduc-
tion of greenhouse gas emissions. 
(3) ROLE OF THE PRESIDENT.—The President 
shall be responsible for negotiating agreements 
under this subsection. 
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(b) PREMIUM CARBON MARKET ACCESS AGREE-
MENTS.— 
(1) AVAILABILITY.—In negotiations described 
in subsection (a), the President shall place a high 
priority on securing agreements that ensure com-
parable action on the part of WTO participants. In 
support of this goal, the President shall offer, on a 
limited basis, WTO participants that are developing 
countries Premium Carbon Market Access Agree-
ments extending to such a WTO participant access 
to the carbon market established under subtitle L of 
the Internal Revenue Code of 1986. Such agree-
ments may also include additional incentives such as 
the ability to choose the base year or maximum level 
of allowable greenhouse gas emissions for its emis-
sions trading system, rather than requiring it to 
match the system as in effect in the United States. 
(2) CONDITIONS.—The President shall deter-
mine a global greenhouse gas emissions budget that 
protects the climate, and the President shall offer 
Premium Carbon Market Access Agreements under 
this subsection on a first-come, first-served basis, 
only to the extent that they, in total, do not allow 
that global budget to be exceeded. An emissions cap 
and trading system established in conformance with 
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an agreement entered into under this subsection 
shall be considered a comparable action for purposes 
of this Act only if it includes a maximum level on 
net greenhouse gas emissions into the atmosphere. 
(c) AGREEMENTS TO UNDERTAKE INTERNATIONAL 
FOREST CARBON ACTIVITIES.— 
(1) IN GENERAL.—In the case of a WTO par-
ticipant that is a developing country and is not yet 
ready to enter a comprehensive agreement under 
subsection (a) or (b), the President shall attempt to 
secure an agreement with such WTO participant 
pursuant to which— 
(A) the WTO participant agrees to under-
take international forest carbon activities, in-
cluding reducing its rate of deforestation, under 
the conditions specified in paragraphs (2) and 
(3); and 
(B) such international forest carbon activi-
ties may qualify for international forest allow-
ances that may be traded on the carbon market 
established under subtitle L of the Internal 
Revenue Code of 1986. 
(2) QUALITY REQUIREMENTS.—The President 
shall establish requirements for international forest 
carbon activities that qualify for the creation of 
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international forest allowances under paragraph (1), 
including— 
(A) ensuring that qualifying international 
forest carbon activities are designed, carried 
out, and managed— 
(i) in accordance with widely-accepted 
environmentally sustainable forestry prac-
tices; 
(ii) to promote native species and con-
servation and/or restoration of native for-
ests, where practicable and to avoid the in-
troduction of invasive nonnative species; 
and 
(iii) to promote fair compensation, 
public participation, and the informed con-
sent of affected local communities and for-
est dependent populations; and 
(B) ensuring that the emission reductions 
or sequestrations are real, permanent, addi-
tional, verifiable, and enforceable, with reliable 
measuring and monitoring and appropriate ac-
counting for leakage. 
(3) ELIGIBILITY
CRITERIA.—The President 
shall establish eligibility criteria for any WTO par-
ticipant to enter into negotiations for an agreement 
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to undertake international forest carbon activities, 
including a requirement that such WTO participant 
has— 
(A) demonstrated the capacity to partici-
pate in international forest carbon activities, 
based on sufficient accurate and verifiable data 
on changes in national forest carbon stocks; 
(B) capped greenhouse gas emissions from 
deforestation or other land use change or other-
wise established a credible national emission 
reference scenario; 
(C) commenced an emission reduction pro-
gram for the forest sector; 
(D) achieved national-level reductions of 
deforestation and degradation below a credible 
reference scenario that are consistent with na-
tionally appropriate mitigation commitments or 
actions, taking into account the average annual 
deforestation and degradation rates of the 
WTO participant during a period of at least 5 
consecutive years; and 
(E) demonstrated those reductions using 
remote sensing technology, taking into account 
relevant international standards. 
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(4) DEFINITION.—In this subsection, the term 
‘‘international forest carbon activities’’ means activi-
ties in developing countries that are conducted at 
the national level and are directed at— 
(A) reducing greenhouse gas emissions 
produced from deforestation and forest deg-
radation; and 
(B) increasing sequestration of carbon 
through restoration of forests, restoration of de-
graded land that has not been forested prior to 
restoration, aforestation, using native species 
where practicable, and improved forest manage-
ment. 
TITLE II—REVENUE PROVISIONS 
SEC. 201. ISSUING, AUCTIONING, AND ADMINISTERING 
EMISSIONS ALLOWANCES. 
(a) IN GENERAL.—The Internal Revenue Code of 
1986 is amended by adding at the end the following new 
subtitle: 
‘‘Subtitle L—Auction Based Carbon 
Market 
‘‘CHAPTER 101—EMISSION ALLOWANCES 
‘‘CHAPTER 101—EMISSION ALLOWANCES 
‘‘Subchapter A—Excess Emissions Penalty 
‘‘Sec. 9901. Excess emissions penalty. 
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‘‘SEC. 9901. EXCESS EMISSIONS PENALTY. 
‘‘(a) IMPOSITION OF PENALTY.—The owner or oper-
ator of any covered facility that fails for any year to sub-
mit to the Secretary, by the deadline described in section 
9913(a), 1 or more of the emission allowances due pursu-
ant to such section shall be liable for the payment to the 
Secretary of an excess emissions penalty on the date of 
such failure. 
‘‘(b) AMOUNT.—The amount of an excess emissions 
penalty required to be paid under paragraph (1) shall be 
an amount equal to the product obtained by multiplying— 
‘‘(1) the number of excess emission allowances 
that the owner or operator failed to submit; and 
‘‘(2) the greater of— 
‘‘(A) $200; or 
‘‘(B) 3 times the mean market value (as 
determined by the Secretary) of an emission al-
lowance during the calendar year for which the 
emission allowances were due. 
‘‘(c) DEFICIENCY PROCEDURES NOT TO APPLY.— 
Subchapter B of chapter 63 (relating to deficiency proce-
dure for income, estate, gift, and certain excise taxes) shall 
not apply in respect of the assessment or collection of any 
penalty imposed by subsection (a). 
‘‘(d) COORDINATION WITH OTHER PENALTIES.— 
The penalty imposed by this section shall be in addition 
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to any other penalty imposed under any other provision 
of law. 
‘‘(e) CONTINUING REQUIREMENT TO SUBMIT AL-
LOWANCES.—The owner or operator of a covered facility 
that fails for any year to submit to the Secretary, by the 
deadline described in section 9913(a), 1 or more of the 
emission allowances due pursuant to that section shall be 
liable to compensate for the shortfall with a submission 
of excess allowances during the following calendar year (or 
such longer period as the Secretary may prescribe). 
‘‘(f) JOINT AND SEVERAL LIABILITY.—All owners 
and operators of a covered facility shall be jointly and sev-
erally liable for the compliance obligation under section 
9913 with respect to such facility and for any penalty im-
posed under subsection (a) with respect to any failure to 
comply with such obligation. 
‘‘Subchapter B—Issuance of Allowances 
‘‘Sec. 9911. Emission allowance account. 
‘‘Sec. 9912. Auction. 
‘‘Sec. 9913. Compliance obligation. 
‘‘Sec. 9914. Use of foreign allowances. 
‘‘Sec. 9915. Domestic offsets. 
‘‘Sec. 9916. Overall limitation on use of offsets. 
‘‘Sec. 9917. Authority to modify limitations. 
‘‘SEC. 9911. EMISSION ALLOWANCE ACCOUNT. 
‘‘(a) IN GENERAL.—There are hereby established a 
separate quantity of emission allowances for each of cal-
endar years 2012 through 2050 as determined in accord-
ance with the following table: 
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‘‘Calendar Year 
Number of Emission Allowances (in 
Millions) 
2012 
6,351 
2013 
6,193 
2014 
6.035 
2015 
5,877 
2016 
5,719 
2017 
5,561 
2018 
5,403 
2019 
5,245 
2020 
5,087 
2021 
4,929 
2022 
4,771 
2023 
4,613 
2024 
4,455 
2025 
4,297 
2026 
4,139 
2027 
3,981 
2028 
3,823 
2029 
3,666 
2030 
3,508 
2031 
3,350 
2032 
3,192 
2033 
3,034 
2034 
2,876 
2035 
2,718 
2036 
2,560 
2037 
2,402 
2038 
2,244 
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‘‘Calendar Year 
Number of Emission Allowances (in 
Millions) 
2039 
2,086 
2040 
1,928 
2041 
1,770 
2042 
1,612 
2043 
1,454 
2044 
1,296 
2045 
1,138 
2046 
980 
2047 
822 
2048 
664 
2049 
506 
2050 
348 
‘‘(b) BORROWING.—If authorized by the Carbon Mar-
ket Efficiency Board, the Secretary may increase the num-
ber of emission allowances established for any year by 
making a corresponding reduction in the number of emis-
sion allowance available in one or more subsequent years. 
Any increase in the number of allowance established for 
any year under this subsection shall not exceed the 
amount of the increase authorized by the Carbon Market 
Efficiency Board for such year and the corresponding re-
duction with respect to such increase shall be made in ac-
cordance with such authorization but shall in no event be 
less than such increase. 
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‘‘(c) SERIAL NUMBERS.—The Secretary shall assign 
to each emission allowance established under subsection 
(a) a unique serial number that includes the calendar year 
for which that emission allowance was established (after 
taking into account any borrowing under subsection (b)). 
‘‘(d) LEGAL STATUS OF EMISSION ALLOWANCES.— 
‘‘(1) IN GENERAL.—An emission allowance shall 
not be a property right. 
‘‘(2) TERMINATION OR LIMITATION.—Nothing 
in this subtitle or any other provision of law limits 
the authority of the United States to terminate or 
limit an emission allowance. 
‘‘(3) OTHER PROVISIONS UNAFFECTED.—Noth-
ing in this subtitle relating to emission allowances 
shall affect the application of, or compliance with, 
any other provision of law to or by a covered facility. 
‘‘SEC. 9912. AUCTION. 
‘‘(a) IN GENERAL.—Except as otherwise provided in 
this subtitle, the Secretary shall conduct auctions of the 
allowances established under section 9911 not later than 
the close of the calendar year preceding the calendar year 
for which such allowance was established. 
‘‘(b) AUCTIONS NOT LESS FREQUENTLY THAN AN-
NUALLY.—The Secretary shall conduct at least one auc-
tion under subsection (a) during every 12 month period. 
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‘‘(c) ALLOWANCES AUCTIONED NOT MORE THAN 5 
YEARS IN ADVANCE.—The Secretary shall not auction an 
allowance established for any calendar year if such cal-
endar year begins more than 5 years after the date of the 
auction. 
‘‘SEC. 9913. COMPLIANCE OBLIGATION. 
‘‘(a) IN GENERAL.—Not later than 90 days after the 
end of a calendar year, the owner or operator of a covered 
facility shall submit to the Secretary an emission allow-
ance, a foreign allowance, or domestic offset allowance for 
each carbon dioxide equivalent attributable to such facility 
as calculated by the Administrator of the Environmental 
Protection Agency under section 402 of the Climate MAT-
TERS Act of 2008. 
‘‘(b) RETIREMENT OF ALLOWANCES.—Immediately 
upon receipt of an emission allowance under subsection 
(a), the Secretary shall retire the allowance. 
‘‘(c) DETERMINATION OF COMPLIANCE.—Not later 
than July 1 of each year, the Secretary shall determine 
whether the owners and operators of all covered facilities 
are in full compliance with subsection (a) for the preceding 
year. 
‘‘(d) REDUCTIONS IN COMPLIANCE OBLIGATIONS.— 
If the Administrator of the Environmental Protection 
Agency identifies any additional reductions in carbon diox-
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ide equivalents by the owner or operator of a covered facil-
ity under section 402 of the Climate MATTERS Act of 
2008, the reductions shall reduce the owner or operator’s 
compliance obligation under subsection (a). 
‘‘SEC. 9914. USE OF FOREIGN ALLOWANCES. 
‘‘(a) FOREIGN
ALLOWANCES
UNDER
CAP
AND 
TRADE PROGRAM.—The owner or operator of a covered 
facility may satisfy not more than 15 percent of its compli-
ance obligation under section 9913(a) by submitting for-
eign allowances distributed by a WTO participant pursu-
ant to a commensurate cap and trade program (as defined 
in section 111(f)(1)(B) of the Climate MATTERS Act of 
2008). 
‘‘(b) INTERNATIONAL FOREST ALLOWANCES.—The 
owner or operator of a covered facility may satisfy not 
more than 15 percent of the allowance submission require-
ment of the covered facility under section 9913(a) by sub-
mitting an allowance generated under an agreement to un-
dertake international forest carbon activities entered into 
under section 115(c) of the Climate MATTERS Act of 
2008. 
‘‘(c) REGULATIONS.—Not later than 2 years after the 
date of enactment of this subtitle, the Secretary shall pro-
mulgate regulations based upon recommendations from 
the Administrator of the Environmental Protection Agen-
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cy, taking into consideration protocols adopted in accord-
ance with the United Nations Framework Convention on 
Climate Change, done at New York on May 9, 1992, ap-
proving the use under this subtitle of foreign allowances. 
‘‘(d) FACILITY CERTIFICATION.—The owner or oper-
ator of a covered facility who submits a foreign allowance 
under this subtitle shall certify that the allowance has not 
been retired from use in the registry of the applicable for-
eign country. 
‘‘(e) DEFINITIONS.—Any term used in this section 
which is also used in title I of the Climate MATTERS 
Act of 2008 shall have the same meaning as when used 
in such title. 
‘‘SEC. 9915. DOMESTIC OFFSETS. 
‘‘(a) IN GENERAL.—In addition to any allowances es-
tablished under section 9911, the Secretary shall establish 
domestic offset allowances which, except as otherwise pro-
vided in this section, shall be treated for purposes of this 
subtitle in the same manner as emission allowances estab-
lished under section 9911. 
‘‘(b) ISSUANCE.—The Secretary shall issue domestic 
offset allowances corresponding to the reduction in carbon 
dioxide equivalents created by offset projects described in 
this subsection as determined by the Administrator of the 
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Environmental Protection Agency and reported to the Sec-
retary. 
‘‘(c) REGULATIONS.—Not later than 18 months after 
the date of enactment of this title, the Administrator of 
the Environmental Protection Agency, in consultation 
with the Secretary of Agriculture, shall promulgate regula-
tions establishing the criteria for offset projects that qual-
ify for domestic offset allowances in accordance with the 
requirements of this section. 
‘‘(d) REQUIREMENTS.—The regulations described in 
subsection (a) shall, at minimum— 
‘‘(1) authorize the issuance of domestic offset 
allowances generated through qualifying offset 
projects within the United States that achieve green-
house gas emission reductions below, or increases in 
biological sequestration above, the project baseline; 
‘‘(2) ensure that such offset credits represent 
real, verifiable, additional, permanent, and enforce-
able reductions in greenhouse gas emissions or in-
creases in biological sequestration; 
‘‘(3) establish procedures for project initiation 
and approval; 
‘‘(4) 
establish 
procedures 
for 
third-party 
verification of offset allowances; and 
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‘‘(5) provide for the implementation of the re-
quirements of this section. 
‘‘(e) PERIODIC REVIEW.—Not later than 5 years 
after the date of enactment of this section, and periodi-
cally thereafter, the Administrator of the Environmental 
Protection Agency shall review and revise, as necessary, 
the regulations promulgated under this section. 
‘‘(f) ELIGIBLE PROJECT TYPES.— 
‘‘(1) IN GENERAL.—The types of projects eligi-
ble to generate domestic offset allowances under this 
subtitle shall be limited to projects that— 
‘‘(A) reduce greenhouse gas emissions, 
from agricultural facilities in the United States, 
resulting from enteric fermentation or manure 
management and disposal; 
‘‘(B) increase biological sequestration of 
carbon through afforestation or reforestation of 
acreage in the United States that was not for-
ested as of June 17, 2008; 
‘‘(C) reduce fugitive greenhouse gas emis-
sions from petroleum and natural gas systems 
in the United States; 
‘‘(D) reduce greenhouse gas emissions 
from coal mines in the United States; or 
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‘‘(E) reduce greenhouse gas emissions 
from the agricultural sector other than those 
projects specified in subparagraph (A), provided 
any such offset project types are approved 
under the National Academy of Sciences review 
described in subsection (h). 
‘‘(2) EXCLUSIONS.—No domestic offset allow-
ances shall be generated under this section by— 
‘‘(A) any reduction of greenhouse gas 
emissions that are covered by the compliance 
obligations set forth in section 9913; or 
‘‘(B) any activity receiving support under 
part 4 of subtitle B of title II of the Climate 
MATTERS Act of 2008. 
‘‘(g) LIMITATION ON USE.—The owner or operator 
of a covered facility may satisfy not more than 10 percent 
if its compliance obligation under section 9913(a) by sub-
mitting domestic offset allowances. Initially, agricultural 
offset projects subject to National Academy of Sciences 
review under subsection (h) shall be limited to no more 
than 4 percent of this compliance obligation. This amount 
shall be increased or decreased as a result of the National 
Academy of Sciences review, but in no event, shall the 
owner or operator of a covered facility be entitled to sat-
isfy greater than 5 percent of its compliance obligation 
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through agricultural offset projects subject to National 
Academy of Sciences review. 
‘‘(h) NATIONAL ACADEMY REVIEW
OF AGRICUL-
TURAL PROJECTS.— 
‘‘(1) IN GENERAL.—The Secretary shall enter 
into a contract with the National Academy of 
Sciences no later than 6 months after the date of 
the enactment of this subsection under which the 
Academy shall submit to Congress, the Secretary, 
the Secretary of Agriculture, and the Administrator 
of the Environmental Protection Agency a report 
which includes recommendations as to— 
‘‘(A) whether certain agricultural projects 
would, with a high degree of confidence, result 
in real, verifiable, additional, permanent, and 
enforceable reductions in greenhouse gas emis-
sions or increases in biological sequestration, 
‘‘(B) the specific types of such projects 
and the specific protocols for ensuring the long- 
term environmental integrity of reductions in 
greenhouse gas emissions from such projects 
‘‘(C) whether the limitations on use of ag-
ricultural projects subject to National Academy 
of Sciences review should be increased or de-
creased based on the determinations in (A) and 
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(B), in no event to exceed 5 percent of an 
owner or operator of a covered facility’s total 
compliance obligation. 
‘‘(2) RULEMAKING ON POSITIVE RECOMMENDA-
TIONS.—If the report required under paragraph (1) 
finds with a high degree of confidence that certain 
agricultural projects would result in real, verifiable, 
additional, permanent, and enforceable reductions in 
greenhouse gas emissions or increases in biological 
sequestration, then the Secretary of Agriculture, in 
collaboration with the Administrator of the Environ-
mental Protection Agency, shall promulgate regula-
tions, based on the specific recommendations of the 
report, allowing those project types to be eligible to 
generate offset credits. 
‘‘SEC. 9916. OVERALL LIMITATION ON USE OF OFFSETS. 
‘‘The owner or operator of a covered facility may sat-
isfy not more than a total of 25 percent of its compliance 
obligation under section 9913(a) by submitting a combina-
tion of foreign allowances under section 9914(a), inter-
national forest allowances under section 9914(b), and do-
mestic offset allowances under section 9915. 
‘‘SEC. 9917. AUTHORITY TO MODIFY LIMITATIONS. 
‘‘The Secretary may increase or decrease the number 
of emission allowance established for each calendar year 
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under section 9911 and the percentages in effect under 
section 9914(a) and section 9915(c) only to the extent au-
thorized by the Carbon Market Efficiency Board consist 
with the requirements of subchapter D and section 
9911(b), or as recommended by the Administrator of the 
Environmental Protection Agency pursuant to the Na-
tional Academy of Sciences report consistent with the re-
quirements of subchapter E. 
‘‘Subchapter C—Trading 
‘‘Sec. 9921. Allowance transfer system. 
‘‘Sec. 9922. No termination of emission allowances. 
‘‘SEC. 9921. ALLOWANCE TRANSFER SYSTEM. 
‘‘(a) ESTABLISHMENT.—The Secretary shall estab-
lish a system for issuing, recording, and tracking emission 
allowances, including the use of foreign allowances and do-
mestic offset allowances. 
‘‘(b) RECORDING REQUIREMENT.—The transfer of 
an emission allowance shall not be effective until such date 
as a written certification of the transfer, signed by a re-
sponsible official of each party to the transfer, is received 
and recorded by the Secretary. An emission allowance 
shall not be taken into account under this subtitle with 
respect to any owner or operator of a covered facility un-
less such owner or operator is the recorded holder of such 
allowance. 
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‘‘(c) HOLDERS NOT RESTRICTED.—The privilege of 
purchasing, holding, and transferring emission allowances 
shall not be restricted to the owners and operators of cov-
ered facilities. 
‘‘SEC. 9922. NO TERMINATION OF EMISSION ALLOWANCES. 
‘‘An emission allowance may be submitted under sec-
tion 9913 for the year for which it was established or any 
year thereafter. The passage of time shall not, by itself, 
diminish the compliance value of the emission allowance. 
‘‘Subchapter D—Carbon Market Efficiency 
Board 
‘‘Sec. 9931 Establishment of Carbon Market Efficiency Board. 
‘‘Sec. 9932. Duties. 
‘‘Sec. 9933. Powers. 
‘‘SEC. 9931 ESTABLISHMENT OF CARBON MARKET EFFI-
CIENCY BOARD. 
‘‘(a) ESTABLISHMENT.—There is established a 
board, to be known as the ‘Carbon Market Efficiency 
Board’ (referred to in this subtitle as the ‘Board’). 
‘‘(b) PURPOSES.—The purposes of the Board are— 
‘‘(1) to promote the achievement of the pur-
poses of the Climate MATTERS Act of 2008; 
‘‘(2) to observe the national greenhouse gas 
emission market and evaluate periods during which 
the cost of emission allowances provided under Fed-
eral law might pose substantial harm to the econ-
omy; and 
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‘‘(3) to submit to the President and Congress, 
and publish on the Internet, the reports required 
under section 9933(c). 
‘‘(c) MEMBERSHIP.— 
‘‘(1) COMPOSITION.—The Board shall be com-
posed of 7 members who are citizens of the United 
States, to be appointed by the President, by and 
with the advice and consent of the Senate. 
‘‘(2) REQUIREMENTS.—In appointing members 
of the Board under paragraph (1), the President 
shall— 
‘‘(A) ensure fair representation of the fi-
nancial, agricultural, industrial, and commercial 
sectors, and the geographical regions, of the 
United States, and include a representative of 
consumer interests; 
‘‘(B) appoint not more than 1 member 
from each such geographical region; 
‘‘(C) ensure that not more than 4 members 
of the Board serving at any time are affiliated 
with the same political party; and 
‘‘(D) ensure that at least 1 member is a 
scientist with expertise in climate change and 
the effects of climate change on the environ-
ment. 
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‘‘(3) COMPENSATION.— 
‘‘(A) IN
GENERAL.—A member of the 
Board shall be compensated at a rate equal to 
the daily equivalent of the annual rate of basic 
pay prescribed for level II of the Executive 
Schedule under section 5313 of title 5, United 
States Code, for each day (including travel 
time) during which the member is engaged in 
the performance of the duties of the Board. 
‘‘(B) CHAIRPERSON.—The Chairperson of 
the Board shall be compensated at a rate equal 
to the daily equivalent of the annual rate of 
basic pay prescribed for level I of the Executive 
Schedule under section 5312 of title 5, United 
States Code, for each day (including travel 
time) during which the member is engaged in 
the performance of the duties of the Board. 
‘‘(4) PROHIBITIONS.— 
‘‘(A) CONFLICTS OF INTEREST.—An indi-
vidual employed by, or holding any official rela-
tionship (including any shareholder) with, any 
entity engaged in the generation, transmission, 
distribution, or sale of energy, an individual 
who has any pecuniary interest in the genera-
tion, transmission, distribution, or sale of en-
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ergy, or an individual who has a pecuniary in-
terest in the implementation of Climate MAT-
TERS Act of 2008, shall not be appointed to 
the Board under this subsection. 
‘‘(B) NO OTHER EMPLOYMENT.—A mem-
ber of the Board shall not hold any other em-
ployment during the term of service of the 
member. 
‘‘(d) TERM; VACANCIES.— 
‘‘(1) TERM.— 
‘‘(A) IN GENERAL.—The term of a mem-
ber of the Board shall be 14 years, except that 
the members first appointed to the Board shall 
be appointed for terms in a manner that en-
sures that— 
‘‘(i) the term of not more than 1 
member shall expire during any 2-year pe-
riod; and 
‘‘(ii) no member serves a term of more 
than 14 years. 
‘‘(B) OATH OF OFFICE.—A member shall 
take the oath of office of the Board by not later 
than 15 days after the date on which the mem-
ber is appointed under subsection (c)(1). 
‘‘(C) REMOVAL.— 
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‘‘(i) IN GENERAL.—A member may be 
removed from the Board on determination 
of the President for cause. 
‘‘(ii) NOTIFICATION.—Not later than 
30 days before removing a member from 
the Board for cause under clause (i), the 
President shall provide to Congress an ad-
vance notification of the determination by 
the President to remove the member. 
‘‘(2) VACANCIES.— 
‘‘(A) IN
GENERAL.—A vacancy on the 
Board— 
‘‘(i) shall not affect the powers of the 
Board; and 
‘‘(ii) shall be filled in the same man-
ner as the original appointment was made. 
‘‘(B) SERVICE
UNTIL
NEW
APPOINT-
MENT.—A member of the Board the term of 
whom has expired or otherwise been terminated 
shall continue to serve until the date on which 
a replacement is appointed under subparagraph 
(A)(ii), if the President determines that service 
to be appropriate. 
‘‘(e) CHAIRPERSON
AND VICE-CHAIRPERSON.—Of 
members of the Board, the President shall appoint— 
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‘‘(1) 1 member to serve as Chairperson of the 
Board for a term of 4 years; and 
‘‘(2) 1 member to serve as Vice-Chairperson of 
the Board for a term of 4 years. 
‘‘(f) MEETINGS.— 
‘‘(1) INITIAL MEETING.—The Board shall hold 
the initial meeting of the Board as soon as prac-
ticable after the date on which all members have 
been appointed to the Board under subsection 
(c)(1). 
‘‘(2) PRESIDING OFFICER.—A meeting of the 
Board shall be presided over by— 
‘‘(A) the Chairperson; 
‘‘(B) in any case in which the Chairperson 
is absent, the Vice-Chairperson; or 
‘‘(C) in any case in which the Chairperson 
and Vice-Chairperson are absent, a chairperson 
pro tempore, to be elected by the members of 
the Board. 
‘‘(3) QUORUM.—Four members of the Board 
shall constitute a quorum for a meeting of the 
Board. 
‘‘(4) OPEN
MEETINGS.—The Board shall be 
subject to section 552b of title 5, United States 
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Code (commonly known as the ‘Government in the 
Sunshine Act’). 
‘‘(g) RECORDS.—The Board shall be subject to sec-
tion 552 of title 5, United States Code (commonly known 
as the ‘Freedom of Information Act’). 
‘‘(h) REVIEW
BY GOVERNMENT ACCOUNTABILITY 
OFFICE.—Not later than January 1, 2013, and annually 
thereafter, the Comptroller General of the United States 
shall conduct a review of the efficacy of the Board in ful-
filling the purposes and duties of the Board under this 
subchapter. 
‘‘SEC. 9932. DUTIES. 
‘‘(a) INFORMATION GATHERING.— 
‘‘(1) AUTHORITY.—The Board shall collect and 
analyze relevant market information to promote a 
full understanding of the dynamics of the emission 
allowance market established under this subtitle. 
‘‘(2) INFORMATION.—The Board shall gather 
such information as the Board determines to be ap-
propriate regarding the status of the market, includ-
ing information relating to— 
‘‘(A) emission allowance allocation and 
availability; 
‘‘(B) the price of emission allowances; 
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‘‘(C) macro- and micro-economic effects of 
unexpected substantial increases and decreases 
in emission allowance prices, or shifts in the 
emission allowance market, should those in-
creases, decreases, or shifts occur; 
‘‘(D) economic effect thresholds that could 
warrant implementation of cost relief measures 
described in section 9933; 
‘‘(E) in the event any cost relief measures 
described in section 9933(a) are taken, the ef-
fects of those measures on the market; 
‘‘(F) maximum levels of cost relief meas-
ures that are necessary to achieve avoidance of 
economic harm and preserve achievement of the 
purposes of the Climate MATTERS Act of 
2008; and 
‘‘(G) the success of the market in pro-
moting achievement of the purposes of the Cli-
mate MATTERS Act of 2008. 
‘‘(b) STUDY.— 
‘‘(1) IN GENERAL.—During the 2-year period 
beginning on the date on which the emission allow-
ance market established under this subtitle begins 
operation, the Board shall conduct a study of other 
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markets for tradeable permits to emit covered green-
house gases. 
‘‘(2) REPORT.—Not later than 180 days after 
the beginning of the period described in paragraph 
(1), the Board shall submit to Congress, and publish 
on the Internet, a report describing the status of the 
market, specifically with respect to volatility within 
the market and the average price of emission allow-
ances during that 180-day period. 
‘‘(c) REPORTS.—The Board shall submit to the Sec-
retary and Congress quarterly reports— 
‘‘(1) describing the status of the emission allow-
ance market established under this subtitle, the eco-
nomic effects of the market, regional, industrial, and 
consumer responses to the market, energy invest-
ment responses to the market, the effects on the 
market of any fraud on, or manipulation of, the 
market that the Board has identified, any corrective 
measures that should be carried out to alleviate 
identified problems including excessive costs of the 
market, and plans to compensate for those meas-
ures; 
‘‘(2) including a description of— 
‘‘(A) any cost relief measures authorized 
by the Board under section 9933, 
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‘‘(B) the actions taken by the Secretary 
pursuant to such authorizations, and 
‘‘(C) the effect of such actions on the long- 
term functioning of the emission allowance mar-
ket taking into account any reductions in allow-
ance established for future years as a result of 
such actions, and 
‘‘(3) that are prepared independently by the 
Board, and not in partnership with Federal agen-
cies. 
‘‘SEC. 9933. POWERS. 
‘‘(a) COST RELIEF MEASURES.— 
‘‘(1) IN
GENERAL.—If the Board determines 
that the emission allowance market established 
under this subtitle poses a substantial harm to the 
economy of the United States, the Board may, in 
order to ensure functioning, stable, and efficient 
markets for emission allowances, authorize the Sec-
retary to carry out one or more of the following cost 
relief measures: 
‘‘(A) Increase the percentage limitation ap-
plicable under either or both section 9914(a)(1) 
or (b) on the foreign allowances that the owner 
or operator of any covered facility may use for 
any calendar year to satisfy the allowance sub-
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mission requirement of the covered facility 
under section 9913(a). 
‘‘(B) Increase the percentage limitation ap-
plicable under section 9915(c) on the domestic 
offset allowances that the owner or operator of 
any covered facility may use for any calendar 
year to satisfy the allowance submission re-
quirement of the covered facility under section 
9913(a). 
‘‘(C) Increase the quantity of emission al-
lowances established for any calendar year and 
make corresponding reductions in the emission 
allowances established for any subsequent cal-
endar years. 
‘‘(2) GENERAL REQUIREMENTS OF AUTHORIZA-
TION.—On determination by the Board to authorize 
a cost relief measure pursuant to paragraph (1), the 
Board shall— 
‘‘(A) authorize the cost relief measure to 
be used only during the applicable allocation 
year; and 
‘‘(B) authorize the measure only as needed 
to avoid substantial economic harm during the 
applicable allocation year. 
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‘‘(3) LIMITATION ON AUTHORIZATION TO IN-
CREASE
PERCENTAGE
OF
PERMISSIBLE
ALLOW-
ANCES.—Any authorization under subparagraph (A), 
(B), or (C) of paragraph (1) shall specify the max-
imum number of percentage points that the Sec-
retary is authorized to increase the percentage in ef-
fect under section 9914(a)(1) or (b) or 9915(c), re-
spectively. 
‘‘(4) LIMITATIONS ON AUTHORIZATION TO IN-
CREASE CURRENT YEAR EMISSION ALLOWANCES.— 
‘‘(A) IN
GENERAL.—Any authorization 
under paragraph (1)(D) shall specify the max-
imum increase in emission allowances that the 
Secretary is authorized to make for the speci-
fied calendar year and the subsequent calendar 
years in which the Secretary is authorized to 
make corresponding reductions. 
‘‘(B) MAXIMUM
INCREASE.—The max-
imum authorized increase in emission allow-
ances under subparagraph (A) for any calendar 
year shall not exceed 5 percent of the quantity 
of emission allowances established for such cal-
endar year without regard to such increase. 
‘‘(C) MAXIMUM TERM FOR REDUCTIONS.— 
The corresponding reductions authorized under 
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subparagraph (A) shall not take into account 
any calendar years other than the 20 calendar 
years immediately following the calendar year of 
the authorized increase. 
‘‘(c) LIMITATIONS.—Nothing in this section gives the 
Board the authority— 
‘‘(1) to consider or prescribe entity-level peti-
tions for relief from the costs of an emission allow-
ance allocation or trading program established under 
Federal law; 
‘‘(2) to carry out any investigative or punitive 
process under the jurisdiction of any Federal or 
State court; or 
‘‘(3) to increase the total quantity of emission 
allowances issued under this subtitle for the period 
of calendar years 2012 through 2050. 
‘‘Subchapter E—National Academy of 
Sciences Review 
‘‘Sec. 9941. National Academy of Sciences review. 
‘‘SEC. 9941. NATIONAL ACADEMY OF SCIENCES REVIEW. 
‘‘(a) IN GENERAL.—Not later than 1 year after the 
date of enactment of this Act, the Secretary shall offer 
to enter into a contract with the National Academy of 
Sciences under which the Academy shall, not later than 
January 1, 2012, and every 3 years thereafter, submit to 
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Congress, the Carbon Market Efficiency Board, the Sec-
retary, and the Administrator of the Environmental Pro-
tection Agency a report that includes an analysis of— 
‘‘(1) the latest scientific information and data 
relevant to global climate change; and 
‘‘(2) the performance of Climate MATTERS 
Act of 2008 and the amendments made by such Act 
and other policies in reducing greenhouse gas emis-
sions and mitigating the adverse impacts of global 
climate change. 
‘‘(b) LATEST SCIENTIFIC INFORMATION.—The anal-
ysis required under subsection (a)(1) shall— 
‘‘(1) address existing reports, including the 
most recent assessment report of the Intergovern-
mental Panel on Climate Change; and 
‘‘(2) include a description of— 
‘‘(A) trends in and projections for total 
United States greenhouse gas emissions; 
‘‘(B) trends in and projections for total 
worldwide greenhouse gas emissions; 
‘‘(C) current and projected future atmos-
pheric concentrations of greenhouse gases; 
‘‘(D) current and projected future global 
average temperature, including an analysis of 
whether an increase of global average tempera-
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ture in excess of 3.6 degrees Fahrenheit (2 de-
grees Celsius) above the preindustrial average 
has occurred or is more likely than not to occur 
in the foreseeable future as a result of anthro-
pogenic climate change; 
‘‘(E) current and projected future adverse 
impacts of global climate change on human 
populations, wildlife, and natural resources; and 
‘‘(F) trends in and projections for the 
health of the oceans and ocean ecosystems, in-
cluding predicted changes in ocean acidity, tem-
peratures, the extent of coral reefs, and other 
indicators of ocean ecosystem health, resulting 
from anthropogenic carbon dioxide and climate 
change. 
‘‘(c) RULEMAKING ON RECOMMENDATIONS.—Based 
on the report under subsection (a), the Administrator of 
the Environmental Protection Agency shall submit a rec-
ommendation to the Secretary for regulatory action, and 
if such regulatory action is within the authority of such 
Secretary, the Secretary shall, not later than 2 years after 
the submission of such recommendation, finalize a rule-
making (after notice and comment)— 
‘‘(1) to carry out such regulatory action; or 
‘‘(2) to explain the reasons for declining to act. 
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‘‘Subchapter F—Industry Transition 
Assistance 
‘‘Sec. 9951. General allocation and distribution. 
‘‘Sec. 9952. Distributing emission allowances to owners and operators of fossil 
fuel-fired electric power generating facilities. 
‘‘Sec. 9953. Distributing emission allowances to owners and operators of energy 
intensive manufacturing facilities. 
‘‘SEC. 9951. GENERAL ALLOCATION AND DISTRIBUTION. 
‘‘(a) GENERAL ALLOCATION.—Not later than April 
1, 2011, and annually thereafter through December 31, 
2019, the Secretary shall allocate percentages of the emis-
sion allowance account established for the following cal-
endar year as follows: 
‘‘Calendar year 
Owners and operators of 
fossil fuel-fired electric 
power generating facili-
ties 
Owners and operators of 
energy intensive manu-
facturing facilities 
2012 thru 2015 ..............
5 percent ........................
10 percent 
2016 ................................
4 percent ........................
8 percent 
2017 ................................
3 percent ........................
6 percent 
2018 ................................
2 percent ........................
4 percent 
2019 ................................
1 percent ........................
2 percent 
‘‘(b) GENERAL DISTRIBUTION.—Not later than 1 
year after the date of enactment of this subtitle, the Sec-
retary shall establish a system for distributing to entities 
identified under subsection (a) the emission allowances al-
located under that subsection. 
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‘‘SEC. 9952. DISTRIBUTING EMISSION ALLOWANCES TO 
OWNERS AND OPERATORS OF FOSSIL FUEL- 
FIRED ELECTRIC POWER GENERATING FA-
CILITIES. 
‘‘(a) IN GENERAL.—As part of the system established 
under section 9951(b), the Secretary shall, for each cal-
endar year, distribute to fossil fuel-fired electric power 
generating facilities (including such facilities owned or op-
erated by rural electric cooperatives) that were operating 
during the calendar year preceding the year in which this 
subtitle was enacted the emission allowances represented 
by the percentages described in the table contained in sec-
tion 9951(a) for owners and operators of fossil fuel-fired 
electric power generating facilities. 
‘‘(b) CALCULATION OF ALLOWANCES.—The quantity 
of emission allowances distributed to a fossil fuel-fired 
electric power generating facility under subsection (a) 
shall be equal to the product obtained by multiplying— 
‘‘(1) the quantity of emission allowances avail-
able for distribution under subsection (a); and 
‘‘(2) the quotient obtained by dividing— 
‘‘(A) the annual average quantity of car-
bon dioxide equivalents emitted by the facility 
during the 3 calendar years preceding the date 
of enactment of this subtitle; by 
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‘‘(B) the annual average of the aggregate 
quantity of carbon dioxide equivalents emitted 
by all fossil fuel-fired electric power generating 
facilities during those 3 calendar years. 
‘‘SEC. 9953. DISTRIBUTING EMISSION ALLOWANCES TO 
OWNERS AND OPERATORS OF ENERGY IN-
TENSIVE MANUFACTURING FACILITIES. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) CURRENTLY OPERATING FACILITY.—The 
term ‘currently operating facility’ means an eligible 
manufacturing facility that had significant oper-
ations during the calendar year preceding the cal-
endar year for which emission allowances are being 
distributed under this section. 
‘‘(2) ELIGIBLE MANUFACTURING FACILITY.— 
‘‘(A) IN
GENERAL.—The term ‘eligible 
manufacturing facility’ means a manufacturing 
facility located in the United States that prin-
cipally manufactures iron, steel, aluminum, 
pulp, paper, cement, chemicals, or such other 
products as the Secretary, after consultation 
with the Administrator of the Environmental 
Protection Agency, may determine are likely to 
be significantly disadvantaged in competitive 
international markets as a result of indirect 
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costs of the program established under this sub-
title. 
‘‘(B) 
EXCLUSION.—The 
term 
‘eligible 
manufacturing facility’ does not include a facil-
ity eligible to receive emission allowances under 
section 9952. 
‘‘(3) INDIRECT CARBON DIOXIDE EMISSIONS.— 
The term ‘indirect carbon dioxide emissions’ means 
the product obtained by multiplying (as determined 
by the Administrator of the Environmental Protec-
tion Agency)— 
‘‘(A) the quantity of electricity consump-
tion at an eligible manufacturing facility; and 
‘‘(B) the rate of carbon dioxide emission 
per kilowatt-hour output for the region in which 
the manufacturer is located. 
‘‘(4) NEW
ENTRANT
MANUFACTURING
FACIL-
ITY.—The term ‘new entrant manufacturing facil-
ity’, with respect to a calendar year, means an eligi-
ble manufacturing facility that began operation dur-
ing or after the calendar year for which emission al-
lowances are being distributed under this section. 
‘‘(b) TOTAL ALLOCATION FOR CURRENTLY OPER-
ATING FACILITIES.—As part of the system established 
under section 9951(b), the Secretary shall, for each cal-
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endar year, distribute 96 percent of the total quantity of 
emission allowances available for allocation to energy-in-
tensive manufacturing under section 9951(a) to currently 
operating facilities. 
‘‘(c) TOTAL ALLOCATION FOR CURRENTLY OPER-
ATING FACILITIES IN EACH CATEGORY OF MANUFAC-
TURING FACILITIES.—The quantity of emission allow-
ances distributed by the Secretary for a calendar year to 
facilities in each category of currently operating facilities 
shall be equal to the product obtained by multiplying— 
‘‘(1) the total quantity of emission allowances 
available for allocation under subsection (b); and 
‘‘(2) the ratio that (during the calendar year 
preceding the calendar year for which emission al-
lowances are being distributed under this section)— 
‘‘(A) the sum of the direct and indirect 
carbon dioxide emissions by currently operating 
facilities in the category; bears to 
‘‘(B) the sum of the direct and indirect 
carbon dioxide emissions by all currently oper-
ating facilities. 
‘‘(d) INDIVIDUAL ALLOCATIONS TO CURRENTLY OP-
ERATING FACILITIES.—The quantity of emission allow-
ances distributed by the Secretary for a calendar year to 
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a currently operating facility shall be a quantity equal to 
the product obtained by multiplying— 
‘‘(1) the total quantity of emission allowances 
available for allocation to currently-operating facili-
ties in the appropriate category, as determined 
under subsection (c); and 
‘‘(2) the ratio that (during the 3 calendar years 
preceding the year for which the allocation rule is 
promulgated for the allocation period)— 
‘‘(A) the average number of production 
employees employed at the facility; bears to 
‘‘(B) the average number of production 
employees employed at all existing eligible man-
ufacturing facilities in the appropriate category. 
‘‘(e) NEW
ENTRANT
MANUFACTURING
FACILI-
TIES.— 
‘‘(1) IN GENERAL.—As part of the system es-
tablished under section 9951(b), the Secretary shall, 
for each calendar year, distribute 4 percent of the 
total quantity of emission allowances available for al-
location to carbon intensive manufacturing under 
section 9951(a) to new entrant manufacturing facili-
ties. 
‘‘(2) INDIVIDUAL ALLOCATIONS.—The quantity 
of emission allowances distributed by the Secretary 
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for a calendar year to a new entrant manufacturing 
facility shall be proportional to the product obtained 
by multiplying— 
‘‘(A) the average number of production 
employees employed at the new entrant manu-
facturing facility during the prior calendar year; 
and 
‘‘(B) the rate (in emission allowances per 
production employee) at which emission allow-
ances were allocated to currently operating fa-
cilities in the appropriate category for the cal-
endar year, as determined under subsection (d). 
‘‘Subchapter G—Definitions 
‘‘Sec. 9961. Definitions. 
‘‘SEC. 9961. DEFINITIONS. 
‘‘For purposes of this subtitle— 
‘‘(1) 
CARBON
DIOXIDE
EQUIVALENT.—The 
term ‘carbon dioxide equivalent’ means, for each 
greenhouse gas, the quantity of the greenhouse gas 
that the Administrator of the Environmental Protec-
tion Agency, determines makes the same contribu-
tion to global warming as 1 metric ton of carbon di-
oxide. 
‘‘(2) COVERED FACILITY.—The term ‘covered 
facility’ means— 
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‘‘(A) any facility that uses more than 
5,000 tons of coal in a calendar year; 
‘‘(B) any facility that is a natural gas 
processing plant or that produces natural gas in 
the State of Alaska, or any entity that imports 
natural gas (including liquefied natural gas); 
‘‘(C) any facility that in any year produces, 
or any entity that in any year imports, 
petroleum- or coal-based liquid or gaseous fuel, 
the combustion of which will emit a greenhouse 
gas, assuming no capture and sequestration of 
that gas; 
‘‘(D) any facility that in any year produces 
for sale or distribution, or any entity that in 
any year imports, more than 10,000 carbon di-
oxide equivalents of chemicals that are green-
house gas, assuming no capture and destruction 
or sequestration of that gas; or 
‘‘(E) any facility that in any year emits as 
a 
byproduct 
of 
the 
production 
of 
hydrochlorofluorocarbons more than 10,000 
carbon 
dioxide 
equivalents 
of 
hydrofluorocarbons. 
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‘‘(3) DESTRUCTION.—The term ‘destruction’ 
means the conversion of a greenhouse gas by ther-
mal, chemical, or other means— 
‘‘(A) to another gas with a low- or zero- 
global warming potential; and 
‘‘(B) for which credit given reflects the ex-
tent of reduction in global warming potential 
actually achieved. 
‘‘(4) EMISSION ALLOWANCE.—The term ‘emis-
sion allowance’ means an authorization to emit 1 
carbon dioxide equivalent. 
‘‘(5) EMISSION
ALLOWANCE
ACCOUNT.—The 
term ‘Emission Allowance Account’ means the ag-
gregate of emission allowances established under sec-
tion 9911 for the calendar year. 
‘‘(6) FACILITY.—The term ‘facility’ means— 
‘‘(A) 1 or more buildings, structures, or in-
stallations located on 1 or more contiguous or 
adjacent properties of an entity in the United 
States; and 
‘‘(B) at the option of the Secretary, after 
consultation with the Administrator of the En-
vironmental Protection Agency, any activity or 
operation that— 
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‘‘(i) emits 10,000 carbon dioxide 
equivalents in any year; and 
‘‘(ii) has a technical connection with 
the activities carried out at a facility, such 
as use of transportation fleets, pipelines, 
transmission lines, and distribution lines, 
but that is not conducted or located on the 
property of the facility. 
‘‘(7) GREENHOUSE GAS.—The term ‘greenhouse 
gas’ means any of— 
‘‘(A) carbon dioxide; 
‘‘(B) methane; 
‘‘(C) nitrous oxide; 
‘‘(D) sulfur hexafluoride; 
‘‘(E) a perfluorocarbon; 
‘‘(F) a hydrofluorocarbon; or 
‘‘(G) any other anthropogenically-emitted 
gas that is determined by the Administrator of 
the Environmental Protection Agency to con-
tribute to global warming to a non-negligible 
degree. 
‘‘(8) RETIRE AN EMISSION ALLOWANCE.—The 
term ‘retire an emission allowance’ means to dis-
qualify an emission allowance for any subsequent 
use, regardless of whether the use is a sale, ex-
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change, or submission of the allowance in satisfying 
a compliance obligation. 
‘‘(9) SEQUESTERED
AND
SEQUESTRATION.— 
The terms ‘sequestered’ and ‘sequestration’ mean 
the capture, permanent separation, isolation, or re-
moval of greenhouse gases from the atmosphere, as 
determined by the Administrator of the Environ-
mental Protection Agency.’’. 
(b) CLERICAL AMENDMENT.—The table of subtitles 
of such Code is amended by adding at the end the fol-
lowing new item: 
Subtitle L. Auction Based Carbon Market. 
TITLE III—CITIZEN PROTECTION 
AND 
DEFICIT 
REDUCTION 
TRUST FUNDS 
Subtitle A—Establishment of Trust 
Funds 
SEC. 301. ESTABLISHMENT OF CITIZEN PROTECTION AND 
DEFICIT REDUCTION TRUST FUNDS. 
(a) IN GENERAL.—Subchapter A of chapter 98 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new sections: 
‘‘SEC. 9511. DEFICIT REDUCTION TRUST FUND. 
‘‘(a) CREATION OF TRUST FUND.—There is estab-
lished in the Treasury of the United States a trust fund 
to be known as the ‘Deficit Reduction Trust Fund’, con-
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sisting of such amounts as may be appropriated or cred-
ited to the Deficit Reduction Trust Fund as provided in 
this section or section 9602(b). 
‘‘(b) TRANSFERS TO DEFICIT REDUCTION TRUST 
FUND.—There are hereby appropriated to the Deficit Re-
duction Trust Fund amounts equivalent to 15 percent 
of— 
‘‘(1) the amounts received pursuant to auction 
of allowances under section 9912, and 
‘‘(2) the amounts received as penalties under 
section 9901. 
‘‘(c) EXPENDITURES.—Amounts in the Deficit Re-
duction Trust Fund shall be available as provided in ap-
propriation Acts only for the purpose of reducing the Fed-
eral debt. 
‘‘SEC. 9512. CITIZEN PROTECTION TRUST FUND. 
‘‘(a) CREATION OF TRUST FUND.—There is estab-
lished in the Treasury of the United States a trust fund 
to be known as the ‘Citizen Protection Trust Fund’, con-
sisting of such amounts as may be appropriated or cred-
ited to the Citizen Protection Trust Fund as provided in 
this section or section 9602(b). 
‘‘(b) TRANSFERS TO CITIZEN PROTECTION TRUST 
FUND.—There are hereby appropriated to the Citizen 
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Protection Trust Fund amounts equivalent to 85 percent 
of— 
‘‘(1) the amounts received pursuant to auction 
of allowances under section 9912, and 
‘‘(2) the amounts received as penalties under 
section 9901. 
‘‘(c) CREATION OF ACCOUNTS.—There is established 
in the Citizen Protection Trust Fund each of the separate 
accounts referred to in the table contained in subsection 
(d)(1). Each such account shall consist of such amounts 
as may be transferred or credited to such account. 
‘‘(d) TRANSFERS TO ACCOUNTS.— 
‘‘(1) IN GENERAL.—Any amount appropriated 
or credited to the Citizen Protection Trust Fund 
shall be transferred by the Secretary to the accounts 
in such fund in accordance with the ratio (expressed 
as percentages) contained in the following table: 
‘‘In the case of the: 
The following percentage 
of such amount: 
Consumer Assistance Account ..................................
54 percent 
Investment in Natural Resource Adaptation Ac-
count.
7 percent 
Early Action Account ................................................
1 percent 
State and Tribal Action Account ..............................
2.7 percent 
International Adaptation Account ............................
3.5 percent 
International Technology Assistance Account ..........
3.5 percent 
Transition Assistance for Workers Account .............
4 percent 
Domestic Agriculture and Forestry Account ............
3 percent 
Education Account ....................................................
0.4 percent 
International Forestry Account ................................
4.4 percent 
Energy Efficiency Account .......................................
7.5 percent 
Transportation Alternatives Account ........................
2 percent 
Green Energy Research Account ..............................
7 percent 
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‘‘(2) PHASEOUT OF TRANSFERS TO EARLY AC-
TION ACCOUNT.— 
‘‘(A) IN
GENERAL.—In the case of any 
amount appropriated or credited after 2012— 
‘‘(i) the percentage specified in the 
table contained in paragraph (1) with re-
spect to the Early Action Account, shall be 
decreased by the applicable number of per-
centage points, and 
‘‘(ii) such percentage of such amount 
shall be transferred to the Consumer As-
sistance Account and shall be available, 
without further appropriation or fiscal year 
limitation, only for the healthy families 
fund described in section 313 of the Cli-
mate MATTERS Act of 2008. 
‘‘(B) APPLICABLE NUMBER OF PERCENT-
AGE POINTS.—With respect to any amount ap-
propriated or credited in any calendar year, the 
applicable number of percentage points is the 
number determined in accordance with the fol-
lowing table: 
‘‘In the case of calendar year: 
The applicable number of percentage 
points is: 
2013 .....................................................
0.33 
2014 .....................................................
0.66 
2015 and thereafter .............................
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‘‘(e) EXPENDITURES FROM CITIZEN PROTECTION 
TRUST FUND.— 
‘‘(1) 
CONSUMER
ASSISTANCE
ACCOUNT.— 
Amounts in the Consumer Assistance Account shall 
be available, without further appropriation or fiscal 
year limitation, only for carrying out the programs 
established under part 1 of subtitle B of title III of 
the Climate MATTERS Act of 2008. 
‘‘(2) INVESTMENT IN NATURAL RESOURCE AD-
APTATION ACCOUNT.—Amounts in the Investment in 
Natural Resource Adaptation Account shall be avail-
able, without further appropriation or fiscal year 
limitation, only for carrying out the program estab-
lished under part 2 of subtitle B of title III of the 
Climate MATTERS Act of 2008. 
‘‘(3) EARLY
ACTION
ACCOUNT.—Amounts in 
the Early Action Account shall be available, without 
further appropriation or fiscal year limitation, only 
for carrying out the program established under part 
3 of subtitle B of title III of the Climate MATTERS 
Act of 2008. 
‘‘(4) STATE AND TRIBAL ACTION ACCOUNT.— 
Amounts in the State and Tribal Action Account 
shall be available, without further appropriation or 
fiscal year limitation, only for carrying out the pro-
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gram established under part 4 of subtitle B of title 
III of the Climate MATTERS Act of 2008. Funds 
received under this section shall supplement existing 
programs and not be in place thereof. 
‘‘(5) INTERNATIONAL ADAPTATION ACCOUNT.— 
Amounts in the International Adaptation Account 
shall be available, without further appropriation or 
fiscal year limitation, only to the Administrator of 
USAID to carry out a Climate Change Adaptation 
and Response Program for the most vulnerable de-
veloping countries to cope with climate change im-
pacts while encouraging engagement of local commu-
nities. 
‘‘(6) INTERNATIONAL
TECHNOLOGY
ASSIST-
ANCE ACCOUNT.— 
‘‘(A) Amounts in the International Tech-
nology Assistance Account shall be available, 
without further appropriation or fiscal year lim-
itation, only to the Secretary of State to provide 
technology assistance to qualified developing na-
tions to provide incremental financial support to 
accelerate the deployment of low carbon tech-
nologies. 
‘‘(B) For purposes of this paragraph— 
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‘‘(i) The term ‘low carbon technology’ 
means technologies to produce energy from 
renewable energy, to reduce energy de-
mand through energy efficiency, or to cap-
ture and store carbon emissions from fossil 
fuels. 
‘‘(ii) Qualified developing countries 
are those the Secretary of State determines 
will take nationally appropriate actions 
that will result in significant, verifiable re-
duction of greenhouse gas emissions. 
‘‘(iii) Incremental financial support 
means providing partial funding for de-
ployment of technologies that would not be 
deployed within a reasonable time without 
the added support. 
‘‘(7) TRANSITION
ASSISTANCE
FOR
WORKERS 
ACCOUNT.—Amounts in the Transition Assistance 
for Workers Account shall be available in equal 
amounts, without further appropriation or fiscal 
year limitation, only— 
‘‘(A) to the Secretary of Labor to provide 
transition assistance to dislocated workers and 
communities, including grants to employers, 
employer associations, and representatives of 
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employees, adjustment assistance, employment 
services to dislocated workers, income-mainte-
nance and needs-related payments to dislocated 
workers, and grants to State and local govern-
ments to assist communities in attracting new 
employers or providing essential local govern-
ment services, and 
‘‘(B) to the Secretary of Labor to supple-
ment existing funding for the Energy Efficiency 
and Renewable Energy Worker Training Pro-
gram established under section 171(e) of the 
Workforce Investment Act of 1998. 
‘‘(8) DOMESTIC AGRICULTURE AND FORESTRY 
ACCOUNT.—Amounts in the Domestic Agriculture 
and Forestry Account shall be available, without fur-
ther appropriation or fiscal year limitation, only for 
carrying out the program established under part 5 
of subtitle B of title III of the Climate MATTERS 
Act of 2008. 
‘‘(9) INTERNATIONAL
FORESTRY
ACCOUNT.— 
Amounts in the International Forestry Account shall 
be available, without further appropriation or fiscal 
year limitation, only for carrying out the program 
established under part 6 of subtitle B of title III of 
the Climate MATTERS Act of 2008. 
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‘‘(10) 
ENERGY
EFFICIENCY
ACCOUNT.— 
Amounts in the Energy Efficiency Account shall be 
available, without further appropriation or fiscal 
year limitation, only for carrying out the program 
established under part 7 of subtitle B of title III of 
the Climate MATTERS Act of 2008. 
‘‘(11) EDUCATION ACCOUNT.—Amounts in the 
Education Account shall be available, without fur-
ther appropriation or fiscal year limitation, only for 
environmental education as follows: 
‘‘(A) 33.3 percent to the Environmental 
Protection Agency; 
‘‘(B) 33.3 percent to the Department of 
Commerce for initiatives under the National 
Oceanic and Atmospheric Administration; and 
‘‘(C) 33.3 percent to the Secretary of Edu-
cation. 
‘‘(12) TRANSPORTATION
ALTERNATIVES
AC-
COUNT.—Amounts in the Transportation Alter-
natives Account shall be available, without further 
appropriation or fiscal year limitation, only for car-
rying out the program established under part 8 of 
subtitle B of title III of the Climate MATTERS Act 
of 2008. 
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‘‘(13) GREEN ENERGY RESEARCH ACCOUNT.— 
Amounts in the Green Energy Research Account 
shall be available, without further appropriation or 
fiscal year limitation, only as follows: 
‘‘(A) 50 percent for tax credits for basic 
renewable energy technology research. 
‘‘(B) 25 percent to the National Science 
Foundation for basic renewable energy tech-
nology research. 
‘‘(C) 25 percent to the Department of En-
ergy for basic renewable energy technology re-
search. 
For purposes of this paragraph, the term ‘basic re-
newable energy technology research’ means any 
original investigation conducted in the United States 
for the advancement of scientific knowledge in re-
newable energy technology not having a specific 
commercial objective. 
‘‘(14) CARBON MARKET EFFICIENCY BOARD.— 
Amounts in the Citizen Protection Trust Fund shall 
be available, as provided by appropriation Acts, to 
the Carbon Market Efficiency Board to pay the ex-
penses of such Board and salaries of members and 
employees of such Board. Any amounts made avail-
able under this paragraph shall be treated for pur-
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100 
poses of paragraph (1) as amounts not appropriated 
or credited to the Citizen Protection Trust Fund. 
‘‘(f) LIMITATION ON TRANSFERS TO THE CITIZEN 
PROTECTION TRUST FUND.—No amount may be appro-
priated to the Citizen Protection Trust Fund on and after 
the date of any expenditure from the Citizen Protection 
Trust Fund which is not permitted by this section. The 
determination of whether an expenditure is so permitted 
shall be made without regard to— 
‘‘(1) any provision of law which is not contained 
or referenced in this title or in a revenue Act, and 
‘‘(2) whether such provision of law is a subse-
quently enacted provision or directly or indirectly 
seeks to waive the application of this paragraph.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subchapter A of chapter 98 of such Code is amended 
by adding at the end the following new items: 
‘‘Sec. 9511. Deficit reduction trust fund. 
‘‘Sec. 9512. Citizen protection trust fund.’’. 
Subtitle B—Citizen Protection 
Programs 
SEC. 310. DEFINITIONS. 
Except as otherwise provided in this subtitle, any 
term used in this subtitle which is also used in subtitle 
L of the Internal Revenue Code of 1986 shall have the 
meaning given such term for purposes of such subtitle L. 
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101 
PART 1—CONSUMER ASSISTANCE 
SEC. 311. ALLOCATION OF ACCOUNT FUNDS. 
The amounts made available annually to carry out 
this part shall be allocated as follows: 
(1) 16 percent to carry out the climate change 
rebate program established under section 312, 
(2) 18 percent for tax relief for low- and mod-
erate-income households to mitigate any increased 
costs due to the regulation of greenhouse gases as 
provided by this Act (and the amendments made by 
this Act), and 
(3) 66 percent for the health families fund de-
scribed in section 313. 
SEC. 312. CLIMATE CHANGE REBATE PROGRAM. 
(a) IN GENERAL.—The Secretary shall formulate and 
administer the Climate Change Rebate Program con-
sistent with the provisions of this section. At the request 
of the State agency, eligible low-income households within 
the State shall be provided an opportunity to receive com-
pensation, through the issuance of a monthly rebate, for 
the loss in purchasing power resulting from this Act. 
(b) ELIGIBILITY.—Participation in the Climate 
Change Rebate Program shall be limited to households 
that— 
(1) the State agency determines to be partici-
pating in the Food Stamp Program (7 U.S.C. 2011 
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102 
et seq.) or the Food Distribution Program on Indian 
Reservations (7 U.S.C. 2013(b)); 
(2) meet the gross income standard described in 
section 5(c)(2) of the Food Stamp Act of 1977 (7 
U.S.C. 2014(c)(2)), including households that in-
clude an elderly or disabled member, and the finan-
cial resources limit in effect in the State for such 
households under the Food Stamp Act of 1977 (7 
U.S.C. 2014(g)); 
(3) consist of a single individual or a married 
couple who receive the subsidy described in section 
1860D–14 of the Social Security Act (42 U.S.C. 
1395w–114); or 
(4) consist of a single individual or a married 
couple who participate in the program under section 
XVIII of the Social Security Act and who meet the 
income requirements described in section 1860D– 
14(a)(1) or (a)(2) and the resource requirements de-
scribed 
in 
Section 
1860D–14(a)(3)(D) 
and 
(a)(3)(E). 
(5) LIMITATION.—The Secretary shall establish 
procedures to ensure that— 
(A) individuals in households that qualify 
for the rebate under paragraph (2) or para-
graph (4) and that do not participate in the 
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103 
Food Stamp Program or Medicare are U.S. citi-
zens, U.S. nationals, or lawfully residing immi-
grants; and 
(B) households do not receive more than 
one rebate per month. 
(c) REBATE CALCULATION.— 
(1) IN GENERAL.—The climate change rebate 
amount shall be the average annual reduction in 
purchasing power for low-income households of a 
given size that results from the regulation of green-
house gas emissions under this Act and any other 
provision of law. The Energy Information Adminis-
tration, in consultation with other appropriate fed-
eral agencies, shall calculate the climate change re-
bate amount by August 31 of each year for the fol-
lowing calendar year using the most recent, reliable 
data available, and report such amount to the Sec-
retary. 
(2) REBATE CALCULATION.— 
(A) DISTRIBUTION.—For each calendar 
year, the Energy Information Administration 
shall determine and the Secretary shall dis-
tribute amounts available under this section 
among U.S. households, based on— 
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104 
(i) households’ share of total con-
sumption by all households; 
(ii) the carbon intensity (and covered- 
emissions intensity) of households’ con-
sumption; and 
(iii) the share of households’ con-
sumption that is not financed by federal 
benefits subject to a cost of living adjust-
ment. 
(B) CLIMATE CHANGE REBATE.—The cli-
mate change rebate amount shall be equal to 
the arithmetic mean value of the amount allo-
cated under paragraph (1) to households of a 
specified household size in the bottom income 
quintile. 
(C) INCOME QUINTILES.—Income quintiles 
shall be determined by ranking households ac-
cording to income adjusted for household size, 
and shall be constructed so that each quintile 
contains an equal number of people. 
(D) 
HOUSEHOLD
SIZE.—The 
climate 
change rebate amount shall be calculated for 
each of the household sizes specified in para-
graph (d)(2). 
(d) MONTHLY REBATE AMOUNT.— 
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105 
(1) MAXIMUM MONTHLY REBATE.—The max-
imum monthly rebate under this subsection for each 
household size shall be equal to the annual climate 
change rebate amount calculated under subsection 
(c) for that household size, divided by 12 and round-
ed to the nearest whole dollar amount. 
(2) HOUSEHOLD SIZES.—Households shall re-
ceive a rebate based on the number of individuals in 
the household, except that households of five or 
more members shall receive the same rebate amount 
based on calculations under subsection (c) for house-
holds with five or more members. 
(3) GROSS INCOME.— 
(A) Eligible households shall receive a 
monthly rebate based on the gross income of 
the household. 
(B) A households with a gross income that 
is less than or equal to 50 percent of the pov-
erty line shall receive the maximum monthly re-
bate. 
(C) A household with a gross income that 
is greater than 50 percent of the poverty line 
and less than or equal to 130 percent of the 
poverty line shall receive monthly rebates in 
amounts established in accordance with such 
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106 
schedule as shall be determined by the Sec-
retary, provided that— 
(i) for each household size, the sched-
ule provides that the amount of the month-
ly rebate shall be reduced for each dollar 
that gross income of a household exceeds 
50 percent of the poverty line (referred to 
in this clause as the ‘‘phase down rate’’); 
(ii) the phase down rate is equal to 
the quotient obtained by dividing— 
(I) the maximum monthly rebate 
amount; by 
(II) the difference between 130 
percent of the poverty line and 50 
percent of the poverty line calculated 
on a monthly basis for each household 
size; 
(iii) the Secretary establishes a meth-
odology for use in establishing the phase 
down rate for households of 5 or more in-
dividuals. 
(D) A household with a gross income that 
is greater than 130 percent of the poverty line 
shall not be eligible for a monthly rebate under 
this paragraph. 
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107 
(4) SPECIAL
RULE
FOR
CERTAIN
HOUSE-
HOLDS.—Notwithstanding paragraph (3), house-
holds with 1 or 2 members that include at least one 
elderly or disabled member shall receive the max-
imum monthly rebate for the size of their household. 
(e) DELIVERY MECHANISM.— 
(1) Subject to standards and an implementation 
schedule set by the Secretary, the state agency shall 
provide the rebate in monthly installments via the 
State’s Electronic Benefit Transfer System or direct 
deposit into the eligible households designated bank 
account. 
(2) Such standards shall include— 
(A) Defining the required level of recipient 
protection regarding privacy, ease of use and 
access to the rebate, including the prohibition of 
fees changed to recipients for withdrawals; and 
(B) Operating standards that provide for 
interoperability between states and law enforce-
ment monitoring. 
(f) ADMINISTRATION.— 
(1) IN GENERAL.—The State agency of each 
participating State shall assume responsibility for 
the certification of applicant households and for the 
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108 
issuance of rebates and the control and account-
ability thereof. 
(2) ADMINISTRATIVE COSTS.— 
(A) Subject to standards established by the 
Secretary, the Secretary is authorized to reim-
burse each State agency for a portion, as de-
scribed in (B) and (C) of the administrative 
costs involved in each agency’s operation of the 
Climate Change Rebate Program. 
(B) For the first three years of the Cli-
mate Change Rebate Program, the State agen-
cy will be reimbursed for: 
(i) 75 percent of the administrative 
costs of determining eligibility for and de-
livering the climate rebate; and 
(ii) 90 percent of any automated data 
processing improvements or Electronic 
Benefit Transfer contract amendments 
necessary to provide the Climate Change 
Rebate. 
(C) Beginning in the fourth year of this 
program, states will be reimbursed for 50 per-
cent of all administrative costs of the rebate. 
(g) TREATMENT.—The value of the rebate provided 
under this Act shall not be considered income or resources 
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175 
SEC. 407. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated such sums 
as are necessary to carry out this Act and the amendments 
made by this Act. 
Æ 
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