327 
Subtitle C—Transportation 
Efficiency 
SEC. 221. EMISSIONS STANDARDS. 
(a) MOTOR VEHICLE STANDARDS.—The President 
shall use statutory authorities in effect on the day before 
the date of enactment of this section to set motor vehicle 
standards that— 
(1) are achievable by the automobile manufac-
turing companies; 
(2) to the extent practicable, harmonize stand-
ards that may be set by the National Highway Traf-
fic Safety Administration pursuant to the authority 
in chapter 329 of title 49, United States Code, 
standards that may be set by the Administrator of 
the Environmental Protection Agency pursuant to 
the authority in the Clean Air Act, and standards 
that have or may be set by the State of California; 
(3) achieve at least as much emissions reduc-
tions as would be achieved by implementation of the 
California law AB 1493 if enforced in the State of 
California and the other States that have adopted 
the standard; and 
(4) do not preempt California’s legal authority 
to adopt and enforce its own mobile source emissions 
standards. 
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(b) GREENHOUSE GAS EMISSION STANDARDS FOR 
MOBILE SOURCES.—Title VIII of the Clean Air Act, as 
added by section 331 of this Act, is amended by inserting 
after part A the following new part: 
‘‘PART B—MOBILE SOURCES 
‘‘SEC. 821. GREENHOUSE GAS EMISSION STANDARDS FOR 
MOBILE SOURCES. 
‘‘(a) MOTOR VEHICLES AND ENGINES.— 
‘‘(1) Pursuant to section 202(a)(1), by Decem-
ber 31, 2010, the Administrator shall promulgate 
standards applicable to emissions of greenhouse 
gases from new heavy-duty vehicles and engines, ex-
cluding such vehicles covered by the Tier II stand-
ards (as established by the Administrator as of the 
date of enactment of this section). The Adminis-
trator may revise these standards from time to time. 
‘‘(2) Regulations issued under section 202(a)(1) 
applicable to emissions of greenhouse gases from 
new heavy-duty vehicles and engines, excluding such 
vehicles covered by the Tier II standards (as estab-
lished by the Administrator as of the date of enact-
ment of this section), shall contain standards that 
achieve the greatest degree of emissions reduction 
achievable based on the application of technology 
which the Administrator determines will be available 
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at the time such standards take effect, taking into 
consideration cost, energy, and safety factors associ-
ated with the application of such technology. Any 
such regulations shall take effect after such period 
as the Administrator finds necessary to permit the 
development and application of the requisite tech-
nology. 
‘‘(b) NONROAD VEHICLES AND ENGINES.— 
‘‘(1) Pursuant to section 213(a)(4), the Admin-
istrator shall promulgate standards applicable to 
emissions of greenhouse gases from new marine ves-
sels and locomotives, and from new engines used in 
marine vessels and locomotives, by December 31, 
2012. The Administrator shall also promulgate 
standards applicable to emissions of greenhouse 
gases for such other classes and categories of 
nonroad vehicles and engines as the Administrator 
determines appropriate and in the timeframe the 
Administrator determines appropriate. The Adminis-
trator shall base such determination, among other 
factors, on the relative contribution of greenhouse 
gas emissions, and the costs for achieving reduc-
tions, from such classes or categories of new 
nonroad engines and vehicles. The Administrator 
may revise these standards from time to time. 
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‘‘(2) Standards under section 213(a)(4) applica-
ble to emissions of greenhouse gases from new ma-
rine vessels and locomotives, and from new engines 
used in marine vessels and locomotives, shall achieve 
the greatest degree of emissions reduction achievable 
based on the application of technology which the Ad-
ministrator determines will be available at the time 
such standards take effect, taking into consideration 
cost, energy, and safety factors associated with the 
application of such technology. Any such regulations 
shall take effect after such period as the Adminis-
trator finds necessary to permit the development and 
application of the requisite technology. 
‘‘(3) For purposes of this section and standards 
under section 213(a)(4) applicable to emissions of 
greenhouse gases, the term ‘nonroad engines and ve-
hicles’ shall include non-internal combustion engines 
and the vehicles these engines power (such as elec-
tric engines and electric vehicles), for those non-in-
ternal combustion engines and vehicles which would 
be in the same category and have the same uses as 
nonroad engines and vehicles that are powered by in-
ternal combustion engines. 
‘‘(c) AIRCRAFT AND AIRCRAFT ENGINES.— 
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‘‘(1) Pursuant to section 231(a), the Adminis-
trator shall promulgate standards applicable to emis-
sions of greenhouse gases from new aircraft and new 
engines used in aircraft by December 31, 2012. Not-
withstanding any requirement in section 231(a), the 
Administrator shall also promulgate standards appli-
cable to emissions of greenhouse gases from other 
classes and categories of aircraft and aircraft en-
gines for such classes and categories as the Adminis-
trator determines appropriate and in the timeframe 
the Administrator determines appropriate. The Ad-
ministrator may revise these standards from time to 
time. 
‘‘(2) Standards under section 231(a) applicable 
to emissions of greenhouse gases from new aircraft 
and new engines used in aircraft, and any later revi-
sions or additional standards, shall achieve the 
greatest degree of emissions reduction achievable 
based on the application of technology which the Ad-
ministrator determines will be available at the time 
such standards take effect, taking into consideration 
cost, energy, and safety factors associated with the 
application of such technology. Any such standards 
shall take effect after such period as the Adminis-
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trator finds necessary to permit the development and 
application of the requisite technology. 
‘‘(d) AVERAGING, BANKING, AND TRADING OF EMIS-
SIONS CREDITS.—In establishing standards applicable to 
emissions of greenhouse gases pursuant to this section and 
sections 202(a), 213(a)(4), and 231(a), the Administrator 
may establish provisions for averaging, banking, and trad-
ing of greenhouse gas emissions credits within or across 
classes or categories of motor vehicles and motor vehicle 
engines, nonroad vehicles and engines (including marine 
vessels), and aircraft and aircraft engines, to the extent 
the Administrator determines appropriate and considering 
the factors appropriate in setting standards under those 
sections. Such provisions may include reasonable and ap-
propriate provisions concerning generation, banking, trad-
ing, duration, and use of credits. 
‘‘(e) REPORTS.—The Administrator shall, from time 
to time, submit a report to Congress that projects the 
amount of greenhouse gas emissions from the transpor-
tation sector, including transportation fuels, for the years 
2030 and 2050, based on the standards adopted under 
this section.’’. 
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SEC. 222. GREENHOUSE GAS EMISSIONS REDUCTIONS 
THROUGH TRANSPORTATION EFFICIENCY. 
Title VIII of the Clean Air Act, as added by section 
331 of this Act, is further amended by inserting after part 
C the following new part: 
‘‘PART D—PLANNING REQUIREMENTS 
‘‘SEC. 841. GREENHOUSE GAS EMISSIONS REDUCTIONS 
THROUGH TRANSPORTATION EFFICIENCY. 
‘‘(a) IN GENERAL.—Each State shall— 
‘‘(1) not later than 3 years after the date of en-
actment of this section, submit to the Administrator 
goals for transportation-related greenhouse gas 
emissions reductions; and 
‘‘(2) as part of each transportation plan or 
transportation 
improvement 
program 
developed 
under title 23 or title 49, United States Code, en-
sure that a plan to achieve such goals, or an up-
dated version of such a plan, is submitted to the Ad-
ministrator and to the Secretary of Transportation 
(in this section referred to as the ‘Secretary’) by 
each metropolitan planning organization in the State 
for an area with a population exceeding 200,000. 
‘‘(b) MODELS AND METHODOLOGIES.— 
‘‘(1) IN
GENERAL.—The Administrator shall 
promulgate regulations to establish standards for 
use in developing goals, plans, and strategies under 
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this section and for monitoring progress toward such 
goals. Such standards shall include— 
‘‘(A) data collection techniques for assess-
ing State and regional transportation-related 
greenhouse gas emissions; 
‘‘(B) methodologies for determining trans-
portation-related 
greenhouse 
gas 
emissions 
baselines; 
‘‘(C) models and methodologies for sce-
nario analysis; and 
‘‘(D) models and methodologies for esti-
mating transportation-related greenhouse gas 
emissions reductions from the strategies consid-
ered under this section. 
Such regulations may approve or improve existing 
models and methodologies. 
‘‘(2) TIMING.—The Administrator shall— 
‘‘(A) publish proposed regulations under 
paragraph (1) not later than 1 year after the 
date of enactment of this section; and 
‘‘(B) promulgate final regulations under 
paragraph (1) not later than 2 years after such 
date of enactment. 
‘‘(3) ASSESSMENT.—At least every 6 years 
after promulgating final regulations under para-
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graph (1), the Administrator, in coordination with 
the Secretary, shall assess current and projected 
progress in reducing transportation-related green-
house gas emissions. The assessment shall examine 
the contributions to emissions reductions attrib-
utable to improvements in vehicle efficiency, green-
house gas performance of transportation fuels, and 
increased efficiency in utilizing transportation sys-
tems. 
‘‘(c) GREENHOUSE GAS REDUCTION GOALS.— 
‘‘(1) CONSULTATION.—Each State shall develop 
the goals referred to in subsection (a)(1)— 
‘‘(A) in concurrence with State agencies re-
sponsible for air quality and transportation; 
‘‘(B) in consultation with each metropoli-
tan planning organization for an area in the 
State with a population exceeding 200,000 and 
applicable local air quality and transportation 
agencies; and 
‘‘(C) with public involvement, including 
public comment periods and meetings. 
‘‘(2) PERIOD.—The goals referred to in sub-
section (a)(1) shall be for 4-, 10-, and 20-year peri-
ods. 
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‘‘(3) TARGETS; DESIGNATED YEAR.—The goals 
referred to in subsection (a)(1) shall establish tar-
gets to reduce transportation-related greenhouse gas 
emissions in the covered area. The targets shall be 
designed to ensure that the levels of such emissions 
stabilize and decrease after a designated year. The 
State shall consider designating 2010 as such des-
ignated year. 
‘‘(4) COVERED AREA.—The goals referred to in 
subsection (a)(1)— 
‘‘(A) shall be established on a statewide 
basis; 
‘‘(B) shall be established for each metro-
politan planning organization in the State for 
an area with a population exceeding 200,000; 
and 
‘‘(C) may be established on a voluntary 
basis, in accordance with the provisions of this 
section, for any metropolitan planning organiza-
tion not described in subparagraph (B). 
‘‘(5) REVISED
GOALS.—Every 4 years, each 
State shall update and revise, as appropriate, the 
goals referred to in subsection (a)(1). 
‘‘(d) PLANNING.—A plan submitted under subsection 
(a)(2) shall— 
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‘‘(1) be based upon the models and methodolo-
gies established by the Administrator under sub-
section (b); 
‘‘(2) use transportation and land use scenario 
analysis to address transportation-related green-
house gas emissions and economic development im-
pacts; and 
‘‘(3) be developed— 
‘‘(A) with public involvement, including 
public comment periods and meetings which 
provide opportunities for comment from a vari-
ety of stakeholders based on age, race, income, 
and disability; 
‘‘(B) with regional coordination, including 
with respect to— 
‘‘(i) metropolitan planning organiza-
tions; 
‘‘(ii) the localities comprising the met-
ropolitan planning organization; 
‘‘(iii) the State in which the metro-
politan planning organization is located; 
and 
‘‘(iv) 
air 
quality, 
environmental 
health, and transportation agencies for the 
State and region involved; and 
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‘‘(C) in consultation with the State and 
local housing, public health, economic develop-
ment, land use, environment, and public trans-
portation agencies. 
‘‘(e) STRATEGIES.—In developing goals under sub-
section (a)(1) and a plan under subsection (a)(2), the 
State or metropolitan planning organization, as applicable, 
shall consider transportation and land use planning strate-
gies to reduce transportation-related greenhouse gas emis-
sions, including the following: 
‘‘(1) Efforts to increase or improve public 
transportation, including— 
‘‘(A) new public transportation systems, 
including new commuter rail systems; 
‘‘(B) expansion of existing public transpor-
tation systems; 
‘‘(C) employer-based subsidies; 
‘‘(D) cleaner locomotive technologies; and 
‘‘(E) quality of service improvements, in-
cluding improved frequency of service. 
‘‘(2) Updates to zoning and other land use reg-
ulations and plans to support development that— 
‘‘(A) coordinates transportation and land 
use planning; 
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‘‘(B) focuses future growth close to exist-
ing and planned job centers and public facili-
ties; 
‘‘(C) uses existing infrastructure; 
‘‘(D) promotes walking, bicycling, and pub-
lic transportation use; and 
‘‘(E) mixes land uses such as housing, re-
tail, and schools. 
‘‘(3) Implementation of a policy (referred to as 
a ‘complete streets policy’) that— 
‘‘(A) ensures adequate accommodation of 
all users of transportation systems, including 
pedestrians, bicyclists, public transportation 
users, motorists, children, the elderly, and indi-
viduals with disabilities; and 
‘‘(B) adequately addresses the safety and 
convenience of all users of the transportation 
system. 
‘‘(4) Construction of bicycle and pedestrian in-
frastructure facilities, including facilities that im-
prove the connections with networks that provide ac-
cess to human services, employment, schools, and re-
tail. 
‘‘(5) Projects to promote telecommuting, flexi-
ble work schedules, or satellite work centers. 
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‘‘(6) Pricing measures, including tolling, con-
gestion pricing, and pay-as-you-drive insurance. 
‘‘(7) Intermodal freight system strategies, in-
cluding enhanced rail services, short sea shipping, 
and other strategies. 
‘‘(8) Parking policies. 
‘‘(9) Intercity rail service, including high speed 
rail. 
‘‘(10) Travel demand management projects. 
‘‘(11) Restriction of the use of certain roads, or 
lanes, by vehicles other than passenger buses and 
high-occupancy vehicles. 
‘‘(12) Reduction of vehicle idling, including 
idling associated with freight management, construc-
tion, transportation, and commuter operations. 
‘‘(13) Policies to encourage the use of retrofit 
technologies and early replacement of vehicles, en-
gines and equipment to reduce transportation-re-
lated greenhouse gas emissions from existing mobile 
sources. 
‘‘(14) Other projects that the Administrator 
finds reduce transportation-related greenhouse gas 
emissions. 
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‘‘(f) PUBLIC
AVAILABILITY.—The Administrator 
shall publish, including by posting on the Environmental 
Protection Agency’s website— 
‘‘(1) the goals and plans submitted under sub-
section (a); and 
‘‘(2) for each plan submitted under subsection 
(a)(2), an analysis of the anticipated effects of the 
plan on greenhouse gas emissions and oil consump-
tion. 
‘‘(g) CERTIFICATION.—The Administrator, in con-
sultation with the Secretary, shall certify a State or metro-
politan planning organization greenhouse gas reduction 
plan submitted under subsection (a)(2) if the plan’s imple-
mentation is likely to meet the corresponding greenhouse 
gas reduction goal referred to in subsection (a)(1). If the 
Administrator, in consultation with the Secretary, deter-
mines that a submitted plan cannot be certified, the State 
or metropolitan planning organization shall revise and re-
submit the plan within 1 year. 
‘‘(h) ENFORCEMENT.—If the Administrator finds 
that a State has failed to submit goals under subsection 
(a)(1), has failed to ensure the submission of a plan under 
subsection (a)(2), or has failed to submit a revised plan 
under subsection (g), for any area in the State (irrespec-
tive of whether the area is a nonattainment area), the Ad-
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ministrator shall impose a prohibition in accordance with 
section 179(b)(1) applicable to the area within 2 years of 
such a finding. The Administrator may not impose a pro-
hibition under the preceding sentence, and no action may 
be brought by the Administrator or any other entity alleg-
ing a violation of this section, based on the content or ade-
quacy of a goal or plan submitted under subsection (a)(1) 
or (a)(2) or failure to achieve the goal submitted under 
subsection (a)(1). 
‘‘(i) COMPETITIVE GRANTS.— 
‘‘(1) GRANTS.—The Administrator, in consulta-
tion with the Secretary, may— 
‘‘(A) award grants to support activities re-
lated to improving data collection, modeling, 
and monitoring systems to assess transpor-
tation-related greenhouse gas emissions and the 
effects of plans, policies, and strategies ref-
erenced in this section; 
‘‘(B) award grants to States and metro-
politan planning organizations for the develop-
ment of goals and plans to be submitted under 
sections (a)(1) or (a)(2); and 
‘‘(C) award grants, on a competitive basis, 
to implement plans certified under subsection 
(g) or elements thereof, provided that each 
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project thus funded includes a measurement 
and evaluation component that meets the regu-
lations promulgated under subsection (b). 
‘‘(2) PRIORITY.—In making grants under para-
graph (1)(C), the Administrator shall give priority to 
applicants based upon— 
‘‘(A) the amount of total greenhouse gas 
emissions to be reduced as a result of imple-
mentation of a certified plan, within the covered 
area, as determined by methods established 
under subsection (b); 
‘‘(B) the amount of per capita greenhouse 
gas emissions to be reduced as a result of im-
plementation of a certified plan, within the cov-
ered area, as determined by methods estab-
lished under subsection (b); 
‘‘(C) the cost effectiveness, in terms of dol-
lars per tons of greenhouse gas reductions, to 
be achieved as a result of the implementation of 
a certified plan; 
‘‘(D) the potential for both short- and 
long-term reductions; and 
‘‘(E) such other factors as the Adminis-
trator determines appropriate. 
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‘‘(3) AUTHORIZATION
OF
APPROPRIATIONS.— 
To carry out this subsection, there are authorized to 
be appropriated such sums as may be necessary. 
‘‘(j) DEFINITIONS.—In this section: 
‘‘(1) The term ‘metropolitan planning organiza-
tion’ means a metropolitan planning organization, as 
such term is used in section 176. 
‘‘(2) The term ‘scenario analysis’ means an 
analysis that is conducted by identifying different 
trends and making projections based on those trends 
to develop a range of scenarios and estimates of how 
each scenario could improve access to goods and 
services, including access to employment, education, 
and health care (especially for elderly and economi-
cally disadvantaged communities), and could affect 
rates of— 
‘‘(A) vehicle miles traveled; 
‘‘(B) vehicle hours traveled; 
‘‘(C) use of mobile source fuel by type, in-
cluding electricity; and 
‘‘(D) transportation-related greenhouse gas 
emissions. 
‘‘(k) LAND USE AUTHORITY.—Nothing in this sec-
tion may be construed to— 
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‘‘(1) infringe upon the existing authority of 
State or local governments to plan or control land 
use; or 
‘‘(2) provide or transfer authority over land use 
to any other entity.’’. 
SEC. 223. SMARTWAY TRANSPORTATION EFFICIENCY PRO-
GRAM. 
Part B of title VIII of the Clean Air Act, as added 
by section 221 of this Act is amended by adding after sec-
tion 821 the following section: 
‘‘SEC. 822. SMARTWAY TRANSPORTATION EFFICIENCY PRO-
GRAM. 
‘‘(a) IN GENERAL.—There is established within the 
Environmental Protection Agency a SmartWay Transport 
Program to quantify, demonstrate, and promote the bene-
fits of technologies, products, fuels, and operational strate-
gies that reduce petroleum consumption, air pollution, and 
greenhouse gas emissions from the mobile source sector. 
‘‘(b) GENERAL DUTIES.—Under the program estab-
lished under this section, the Administrator shall carry out 
each of the following: 
‘‘(1) Development of measurement protocols to 
evaluate the energy consumption and greenhouse gas 
impacts from technologies and strategies in the mo-
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bile source sector, including those for passenger 
transport and goods movement. 
‘‘(2) Development of qualifying thresholds for 
certifying, verifying, or designating energy-efficient, 
low-greenhouse gas SmartWay technologies and 
strategies for each mode of passenger transportation 
and goods movement. 
‘‘(3) Development of partnership and recogni-
tion programs to promote best practices and drive 
demand for energy-efficient, low-greenhouse gas 
transportation performance. 
‘‘(4) Promotion of the availability of, and en-
couragement of the adoption of, SmartWay certified 
or verified technologies and strategies, and publica-
tion of the availability of financial incentives, such 
as assistance from loan programs and other Federal 
and State incentives. 
‘‘(c) SMARTWAY TRANSPORT FREIGHT PARTNER-
SHIP.—The Administrator shall establish a SmartWay 
Transport Partnership program with shippers and carriers 
of goods to promote energy-efficient, low-greenhouse gas 
transportation. In carrying out such partnership, the Ad-
ministrator shall undertake each of the following: 
‘‘(1) Certification of the energy and greenhouse 
gas performance of participating freight carriers, in-
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cluding those operating rail, trucking, marine, and 
other goods movement operations. 
‘‘(2) Publication of a comprehensive energy and 
greenhouse gas performance index of freight modes 
(including rail, trucking, marine, and other modes of 
transporting goods) and individual freight companies 
so that shippers can choose to deliver their goods 
more efficiently. 
‘‘(3) Development of tools for— 
‘‘(A) carriers to calculate their energy and 
greenhouse gas performance; and 
‘‘(B) shippers to calculate the energy and 
greenhouse gas impacts of moving their prod-
ucts and to evaluate the relative impacts from 
transporting their goods by different modes and 
corporate carriers. 
‘‘(4) Provision of recognition opportunities for 
participating shipper and carrier companies dem-
onstrating advanced practices and achieving superior 
levels of greenhouse gas performance. 
‘‘(d) IMPROVING FREIGHT GREENHOUSE GAS PER-
FORMANCE DATABASES.—The Administrator shall, in co-
ordination with other appropriate agencies, define and col-
lect data on the physical and operational characteristics 
of the Nation’s truck population, with special emphasis on 
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data related to energy efficiency and greenhouse gas per-
formance to inform the performance index published 
under subsection (c)(2) of this section, and other means 
of goods transport as necessary, at least every 5 years. 
‘‘(e) ESTABLISHMENT OF FINANCING PROGRAM.— 
The Administrator shall establish a SmartWay Financing 
Program to competitively award funding to eligible entities 
identified by the Administrator in accordance with the 
program requirements in subsection (g). 
‘‘(f) PURPOSE.—Under the SmartWay Financing 
Program, eligible entities shall— 
‘‘(1) use funds awarded by the Administrator to 
provide flexible loan and lease terms that increase 
approval rates or lower the costs of loans and leases 
in accordance with guidance developed by the Ad-
ministrator; and 
‘‘(2) make such loans and leases available to 
public and private entities for the purpose of adopt-
ing low-greenhouse gas technologies or strategies for 
the mobile source sector that are designated by the 
Administrator. 
‘‘(g) PROGRAM REQUIREMENTS.—The Administrator 
shall determine program design elements and require-
ments, including— 
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‘‘(1) the type of financial mechanism with 
which to award funding, in the form of grants or 
contracts; 
‘‘(2) the designation of eligible entities to re-
ceive funding, including State, tribal, and local gov-
ernments, regional organizations comprised of gov-
ernmental units, nonprofit organizations, or for-prof-
it companies; 
‘‘(3) criteria for evaluating applications from el-
igible entities, including anticipated— 
‘‘(A) cost-effectiveness of loan or lease pro-
gram on a metric-ton-of-greenhouse gas-saved- 
per-dollar basis; 
‘‘(B) ability to promote the loan or lease 
program and associated technologies and strate-
gies to the target audience; and 
‘‘(4) reporting requirements for entities that re-
ceive awards, including— 
‘‘(A) actual cost-effectiveness and green-
house gas savings from the loan or lease pro-
gram based on a methodology designated by the 
Administrator; 
‘‘(B) the total number of applications and 
number of approved applications; and 
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‘‘(C) terms granted to loan and lease re-
cipients compared to prevailing market prac-
tices. 
‘‘(h) AUTHORIZATION
OF APPROPRIATIONS.—Such 
sums as necessary are authorized to be appropriated to 
the Administrator to carry out this section.’’. 
SEC. 224. STATE VEHICLE FLEETS. 
Section 507(o) of the Energy Policy Act of 1992 (42 
U.S.C. 13257) is amended by adding the following new 
paragraph at the end thereof: 
‘‘(3) The Secretary shall revise the rules under this 
subsection with respect to the types of alternative fueled 
vehicles required for compliance with this subsection to en-
sure those rules are consistent with any guidance issued 
pursuant to section 303 of this Act.’’. 
Subtitle D—Industrial Energy 
Efficiency Programs 
SEC. 241. INDUSTRIAL PLANT ENERGY EFFICIENCY STAND-
ARDS. 
The Secretary of Energy shall continue to support 
the development of the American National Standards In-
stitute (ANSI) voluntary industrial plant energy efficiency 
certification program, pending International Standards 
Organization (ISO) consensus standard 50001, and other 
related ANSI/ISO standards. In addition, the Department 
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shall undertake complementary activities through the De-
partment of Energy’s Industry Technologies Program that 
support the voluntary implementation of such standards 
by manufacturing firms. There are authorized to be appro-
priated to the Secretary such sums as are necessary to 
carry out these activities. The Secretary shall report to 
Congress on the status of standards development and 
plans for further standards development pursuant to this 
Section by not later than 18 months after the date of en-
actment of this Act, and shall prepare a second such re-
port 18 months thereafter. 
SEC. 242. ELECTRIC AND THERMAL WASTE ENERGY RECOV-
ERY AWARD PROGRAM. 
(a) ELECTRIC AND THERMAL WASTE ENERGY RE-
COVERY AWARDS.—The Secretary of Energy shall estab-
lish a program to make monetary awards to the owners 
and operators of new and existing electric energy genera-
tion facilities or thermal energy production facilities using 
fossil or nuclear fuel, to encourage them to use innovative 
means of recovering any thermal energy that is a poten-
tially useful byproduct of electric power generation or 
other processes to— 
(1) generate additional electric energy; or 
(2) make sales of thermal energy not used for 
electric generation, in the form of steam, hot water, 
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chilled water, or desiccant regeneration, or for other 
commercially valid purposes. 
(b) AMOUNT OF AWARDS.— 
(1) ELIGIBILITY.—Awards shall be made under 
subsection (a) only for the use of innovative means 
that achieve net energy efficiency at the facility con-
cerned significantly greater than the current stand-
ard technology in use at similar facilities. 
(2) AMOUNT.—The amount of an award made 
under subsection (a) shall equal an amount up to 
the value of 25 percent of the energy projected to be 
recovered or generated during the first 5 years of 
operation of the facility using the innovative energy 
recovery method, or such lesser amount that the 
Secretary determines to be the minimum amount 
that can cost-effectively stimulate such innovation. 
(3) LIMITATION.—No person may receive an 
award under this section if a grant under the waste 
energy incentive grant program under section 373 of 
the Energy Policy and Conservation Act (42 U.S.C. 
6343) is made for the same energy savings resulting 
from the same innovative method. 
(c) REGULATORY STATUS.—The Secretary of Energy 
shall— 
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(1) assist State regulatory commissions to iden-
tify and make changes in State regulatory programs 
for electric utilities to provide appropriate regulatory 
status for thermal energy byproduct businesses of 
regulated electric utilities to encourage those utilities 
to enter businesses making the sales referred to in 
subsection (a)(2); and 
(2) encourage self-regulated utilities to enter 
businesses making the sales referred to in subsection 
(a)(2). 
(d) ELIGIBILITY FOR SEED LOANS.—Owners and op-
erators of electric energy generation and thermal energy 
production facilities shall be eligible for SEED Fund loans 
under subtitle D of title I to provide initial capital for en-
tering into businesses involving sales referred to in sub-
section (a)(2). 
(e) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to the Secretary of En-
ergy such sums as are necessary for the purposes of this 
section. 
SEC. 243. CLARIFYING ELECTION OF WASTE HEAT RECOV-
ERY FINANCIAL INCENTIVES. 
Section 373(e) of the Energy Policy and Conservation 
Act (42 U.S.C. 6343(e)) is amended— 
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(1) by striking ‘‘that qualifies for’’ and insert-
ing ‘‘who elects to claim’’; and 
(2) by inserting ‘‘from that project’’ after ‘‘for 
waste heat recovery’’. 
Subtitle E—Improvements in En-
ergy Savings Performance Con-
tracting 
SEC. 251. ENERGY SAVINGS PERFORMANCE CONTRACTS. 
(a) COMPETITION REQUIREMENTS FOR TASK OR DE-
LIVERY ORDERS UNDER ENERGY SAVINGS PERFORM-
ANCE CONTRACTS.— 
(1) COMPETITION REQUIREMENTS.—Subsection 
(a) of section 801 of the National Energy Conserva-
tion Policy Act (42 U.S.C. 8287(a)) is amended by 
adding at the end the following paragraph: 
‘‘(3)(A) The head of a Federal agency may 
issue a task or delivery order under an energy sav-
ings performance contract by— 
‘‘(i) notifying all contractors that have re-
ceived an award under such contract that the 
agency proposes to discuss energy savings per-
formance services for some or all of its facili-
ties, soliciting an expression of interest in per-
forming site surveys or investigations and feasi-
bility designs and studies and the submission of 
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qualifications from such contractors, and in-
cluding in such notice summary information 
concerning energy use for any facilities that the 
agency has specific interest in including in such 
contract; 
‘‘(ii) reviewing all expressions of interest 
and qualifications submitted pursuant to the 
notice under clause (i); 
‘‘(iii) selecting two or more contractors 
(from among those reviewed under clause (ii)) 
to conduct discussions concerning the contrac-
tors’ respective qualifications to implement po-
tential energy conservation measures, including 
requesting references demonstrating experience 
on similar efforts and the resulting energy sav-
ings of such similar efforts; 
‘‘(iv) selecting and authorizing— 
‘‘(I) more than one contractor (from 
among those selected under clause (iii)) to 
conduct site surveys, investigations, feasi-
bility designs and studies or similar assess-
ments for the energy savings performance 
contract services (or for discrete portions 
of such services), for the purpose of allow-
ing each such contractor to submit a firm, 
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fixed-price proposal to implement specific 
energy conservation measures; or 
‘‘(II) one contractor (from among 
those selected under clause (iii)) to conduct 
a site survey, investigation, a feasibility de-
sign and study or similar for the purpose 
of allowing the contractor to submit a 
firm, fixed-price proposal to implement 
specific energy conservation measures; 
‘‘(v) negotiating a task or delivery order 
for energy savings performance contracting 
services with the contractor or contractors se-
lected under clause (iv) based on the energy 
conservation measures identified.; and 
‘‘(vi) issuing a task or delivery order for 
energy savings performance contracting services 
to such contractor or contractors. 
‘‘(B) The issuance of a task or delivery order 
for energy savings performance contracting services 
pursuant to subparagraph (A) is deemed to satisfy 
the task and delivery order competition requirements 
in section 2304c(d) of title 10, United States Code, 
and section 303J(d) of the Federal Property and 
Administrative Services Act of 1949 (41 U.S.C. 
253j(d)). 
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‘‘(C) The Secretary may issue guidance as nec-
essary to agencies issuing task or delivery orders 
pursuant to subparagraph (A).’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) is inapplicable to task or delivery 
orders issued before the date of enactment of this 
section. 
(b) INCLUSION
OF
THERMAL
RENEWABLE
EN-
ERGY.—Section 203 of the Energy Policy Act of 2005 (42 
U.S.C. 15852) is amended— 
(1) in subsection (a), by striking ‘‘electric’’; and 
(2) in subsection (b)(2), by inserting ‘‘or ther-
mal’’ after ‘‘means electric’’. 
(c) CREDIT FOR RENEWABLE ENERGY PRODUCED 
AND USED ON SITE.—Subsection (c) of section 203 of the 
Energy Policy Act of 2005 (42 U.S.C. 15852) is amended 
to read as follows: 
‘‘(c) CALCULATION.—Renewable energy produced at 
a Federal facility, on Federal lands, or on Indian lands 
(as defined in title XXVI of the Energy Policy Act of 1992 
(25 U.S.C. 3501 et seq.)), shall be calculated separately 
from renewable energy consumed at a Federal facility, and 
each may be used to comply with the consumption require-
ment under subsection (a).’’. 
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358 
(d) FINANCING FLEXIBILITY.—Section 801(a)(2)(F) 
of the National Energy Conservation Policy Act (42 
U.S.C. 8287(a)(2)(F)), as so redesignated by subsection 
(b)(1) of this section, is amended by striking ‘‘In’’ and 
inserting ‘‘Notwithstanding any other provision of law, 
in’’. 
Subtitle F—Public Institutions 
SEC. 261. PUBLIC INSTITUTIONS. 
Section 399A of the Energy Policy and Conservation 
Act (42 U.S.C. 6371h–1) is amended— 
(1) in subsection (a)(5), by striking ‘‘or a des-
ignee’’ and inserting ‘‘a not-for-profit hospital or 
not-for-profit inpatient health care facility, or a des-
ignated agent’’; 
(2) in subsection (c)(1), by striking subpara-
graph (C); 
(3) 
in 
subsection 
(f)(3)(A), 
by 
striking 
‘‘$1,000,000’’ and inserting ‘‘$2,500,000’’; and 
(4) 
in 
subsection 
(i)(1), 
by 
striking 
‘‘$250,000,000 for each of fiscal years 2009 through 
2013’’ and inserting ‘‘such sums as may be nec-
essary for each of fiscal years 2010 through 2015’’. 
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359 
SEC. 262. COMMUNITY ENERGY EFFICIENCY FLEXIBILITY. 
Section 545(b)(3) of the Energy Independence and 
Security Act of 2007 (42 U.S.C. 17155(b)(3)) is amend-
ed— 
(1) by striking ‘‘Indian tribe may use’’ and all 
that follows through ‘‘for administrative expenses’’ 
and inserting ‘‘Indian tribe may use for administra-
tive expenses’’; 
(2) by striking subparagraphs (B) and (C); 
(3) by redesignating the remaining clauses (i) 
and (ii) as subparagraphs (A) and (B), respectively 
and adjusting the margin of those subparagraphs ac-
cordingly; and 
(4) by striking the semicolon at the end and in-
serting a period. 
SEC. 263. SMALL COMMUNITY JOINT PARTICIPATION. 
(a) Section 541(3)(A) of the Energy Independence 
and Security Act of 2007 is amended in clause (i) by 
changing the word ‘‘and’’ to ‘‘or’’ at the end of subclause 
(II), in subclause (ii)(II) by striking the period at the end 
of and inserting a semicolon and the word ‘‘or’’, and by 
inserting the following new clause (iii): 
‘‘(iii) a group of adjacent, contiguous, 
or geographically proximate units of local 
government that reach agreement to act 
jointly for purposes of this section and that 
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represent a combined population of not 
less than 35,000.’’. 
(b) Section 541(3)(B) of the Energy Independence 
and Security Act of 2007 is amended in subclause (ii)(II) 
by striking the period at the end of and inserting a semi-
colon and the word ‘‘or’’, and by inserting the following 
new clause (iii): 
‘‘(iii) a group of adjacent, contiguous, 
or geographically proximate units of local 
government that reach agreement to act 
jointly for purposes of this section and that 
represent a combined population of not 
less than 50,000.’’. 
SEC. 264. LOW INCOME COMMUNITY ENERGY EFFICIENCY 
PROGRAM. 
(a) IN GENERAL.—The Secretary of Energy is au-
thorized to make grants to private, non-profit, mission- 
driven community development organizations including 
community development corporations and community de-
velopment financial institutions to provide financing to 
businesses and projects that improve energy efficiency; 
identify and develop alternative, renewable, and distrib-
uted energy supplies; provide technical assistance and pro-
mote job and business opportunities for low-income resi-
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dents; and increase energy conservation in low income 
rural and urban communities. 
(b) GRANTS.—The purpose of such grants is to in-
crease the flow of capital and benefits to low income com-
munities, minority-owned and woman-owned businesses 
and entrepreneurs and other projects and activities located 
in low income communities in order to reduce environ-
mental degradation, foster energy conservation and effi-
ciency and create job and business opportunities for local 
residents. The Secretary may make grants on a competi-
tive basis for— 
(1) investments that develop alternative, renew-
able, and distributed energy supplies; 
(2) capitalizing loan funds that lend to energy 
efficiency projects and energy conservation pro-
grams; 
(3) technical assistance to plan, develop and 
manage an energy efficiency financing program; and 
(4) technical and financial assistance to assist 
small-scale businesses and private entities develop 
new renewable and distributed sources of power or 
combined heat and power generation. 
(c) AUTHORIZATION OF APPROPRIATIONS.—For the 
purposes of this section there is authorized to be appro-
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priated $50,000,000 for each of the fiscal years 2010 
through 2015. 
TITLE III—REDUCING GLOBAL 
WARMING POLLUTION 
SEC. 301. SHORT TITLE. 
This title, and sections 112, 116, 121, 221, 222, and 
223 of this Act, may be cited as the ‘‘Safe Climate Act’’. 
Subtitle A—Reducing Global 
Warming Pollution 
SEC. 311. REDUCING GLOBAL WARMING POLLUTION. 
The Clean Air Act (42 U.S.C. and following) is 
amended by adding after title VI the following new title: 
‘‘TITLE VII—GLOBAL WARMING 
POLLUTION REDUCTION PRO-
GRAM 
‘‘PART A—GLOBAL WARMING POLLUTION 
REDUCTION GOALS AND TARGETS 
‘‘SEC. 701. FINDINGS AND PURPOSE. 
‘‘(a) FINDINGS.—The Congress finds as follows: 
‘‘(1) Global warming poses a significant threat 
to the national security, economy, public health and 
welfare, and environment of the United States, as 
well as of other nations. 
‘‘(2) Reviews of scientific studies, including by 
the Intergovernmental Panel on Climate Change and 
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the National Academy of Sciences, demonstrate that 
global warming is the result of the combined anthro-
pogenic greenhouse gas emissions from numerous 
sources of all types and sizes. Each increment of 
emission, when combined with other emissions, 
causes or contributes materially to the acceleration 
and extent of global warming and its adverse effects 
for the lifetime of such gas in the atmosphere. Ac-
cordingly, controlling emissions in small as well as 
large amounts is essential to prevent, slow the pace 
of, reduce the threats from, and mitigate global 
warming and its adverse effects. 
‘‘(3) Because they induce global warming, 
greenhouse gas emissions cause or contribute to in-
juries to persons in the United States, including— 
‘‘(A) adverse health effects such as disease 
and loss of life; 
‘‘(B) displacement of human populations; 
‘‘(C) damage to property and other inter-
ests related to ocean levels, acidification, and 
ice changes; 
‘‘(D) severe weather and seasonal changes; 
‘‘(E) disruption, costs, and losses to busi-
ness, trade, employment, farms, subsistence, 
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aesthetic enjoyment of the environment, recre-
ation, culture, and tourism; 
‘‘(F) damage to plants, forests, lands, and 
waters; 
‘‘(G) harm to wildlife and habitat; 
‘‘(H) scarcity of water and the decreased 
abundance of other natural resources; 
‘‘(I) worsening of tropospheric air pollu-
tion; 
‘‘(J) substantial threats of similar damage; 
and 
‘‘(K) other harm. 
‘‘(4) That many of these effects and risks of fu-
ture effects of global warming are widely shared 
does not minimize the adverse effects individual per-
sons have suffered, will suffer, and are at risk of 
suffering because of global warming. 
‘‘(5) That some of the adverse and potentially 
catastrophic effects of global warming are at risk of 
occurring and not a certainty does not negate the 
harm persons suffer from actions that increase the 
likelihood, extent, and severity of such future im-
pacts. 
‘‘(6) Nations of the world look to the United 
States for leadership in addressing the threat of and 
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harm from global warming. Full implementation of 
the Safe Climate Act is critical to engage other na-
tions in an international effort to mitigate the threat 
of and harm from global warming. 
‘‘(7) Global warming and its adverse effects are 
occurring and are likely to continue and increase in 
magnitude, and to do so at a greater and more 
harmful rate, unless the Safe Climate Act is fully 
implemented and enforced in an expeditious manner. 
‘‘(b) PURPOSE.—It is the general purpose of the Safe 
Climate Act to help prevent, reduce the pace of, mitigate, 
and remedy global warming and its adverse effects. To ful-
fill such purpose, it is necessary to— 
‘‘(1) require the timely fulfillment of all govern-
mental acts and duties, both substantive and proce-
dural, and the prompt compliance of covered entities 
with the requirements of the Safe Climate Act; 
‘‘(2) establish and maintain an effective, trans-
parent, and fair market for emission allowances and 
preserve the integrity of the cap on emissions and of 
offset credits; 
‘‘(3) advance the production and deployment of 
clean energy and energy efficiency technologies; and 
‘‘(4) ensure effective enforcement of the Safe 
Climate Act by citizens, States, Indian tribes, and 
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all levels of government because each violation of the 
Safe Climate Act is likely to result in an additional 
increment of greenhouse gas emission and will slow 
the pace of implementation of the Safe Climate Act 
and delay the achievement of the goals set forth in 
section 702, and cause or contribute to global warm-
ing and its adverse effects. 
‘‘SEC. 702. ECONOMY-WIDE REDUCTION GOALS. 
‘‘The goals of the Safe Climate Act are to reduce 
steadily the quantity of United States greenhouse gas 
emissions such that— 
‘‘(1) in 2012, the quantity of United States 
greenhouse gas emissions does not exceed 97 percent 
of the quantity of United States greenhouse gas 
emissions in 2005; 
‘‘(2) in 2020, the quantity of United States 
greenhouse gas emissions does not exceed 80 percent 
of the quantity of United States greenhouse gas 
emissions in 2005; 
‘‘(3) in 2030, the quantity of United States 
greenhouse gas emissions does not exceed 58 percent 
of the quantity of United States greenhouse gas 
emissions in 2005; and 
‘‘(4) in 2050, the quantity of United States 
greenhouse gas emissions does not exceed 17 percent 
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2005’ means emissions to which section 722 would have 
applied if the requirements of this title for the specified 
year had been in effect for 2005. 
‘‘SEC. 704. SUPPLEMENTAL POLLUTION REDUCTIONS. 
‘‘For the purposes of decreasing the likelihood of cat-
astrophic climate change, preserving tropical forests, 
building capacity to generate offset credits, and facili-
tating international action on global warming, the Admin-
istrator shall set aside the percentage specified in section 
781 of the quantity of emission allowances established 
under section 721(a) for each year, to be used to achieve 
a reduction of greenhouse gas emissions from deforest-
ation in developing countries in accordance with part E. 
In 2020, activities supported under part E shall provide 
greenhouse gas reductions in an amount equal to an addi-
tional 10 percentage points of reductions from United 
States greenhouse gas emissions in 2005. The Adminis-
trator shall transfer these allowances with respect to ac-
tivities in countries that enter into and implement agree-
ments or arrangements relating to reduced deforestation 
as described in section 754(a)(2). 
‘‘SEC. 705. REVIEW AND PROGRAM RECOMMENDATIONS. 
‘‘(a) IN GENERAL.—The Administrator shall, in con-
sultation with appropriate Federal agencies, submit to 
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Congress a report not later than July 1, 2013, and every 
4 years thereafter, that includes— 
‘‘(1) an analysis of key findings based on the 
latest scientific information and data relevant to 
global climate change; 
‘‘(2) an analysis of capabilities to monitor and 
verify greenhouse gas reductions on a worldwide 
basis, including for the United States, as required 
under the Safe Climate Act; and 
‘‘(3) an analysis of the status of worldwide 
greenhouse gas reduction efforts, including imple-
mentation of the Safe Climate Act and other poli-
cies, both domestic and international, for reducing 
greenhouse gas emissions, preventing dangerous at-
mospheric concentrations of greenhouse gases, pre-
venting significant irreversible consequences of cli-
mate change, and reducing vulnerability to the im-
pacts of climate change. 
‘‘(b) EXCEPTION.—Paragraph (3) of subsection (a) 
shall not apply to the first report submitted under such 
subsection. 
‘‘(c) LATEST SCIENTIFIC INFORMATION.—The anal-
ysis required under subsection (a)(1) shall— 
‘‘(1) address existing scientific information and 
reports, considering, to the greatest extent possible, 
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the most recent assessment report of the Intergov-
ernmental Panel on Climate Change, reports by the 
United States Global Change Research Program and 
Federal agencies, and the European Union’s global 
temperature data assessment; and 
‘‘(2) review trends and projections for— 
‘‘(A) global and country-specific annual 
emissions of greenhouse gases, and cumulative 
emissions produced between 1850 and the 
present, including— 
‘‘(i) global cumulative emissions of an-
thropogenic greenhouse gases; 
‘‘(ii) global annual emissions of an-
thropogenic greenhouse gases; and 
‘‘(iii) by country, annual total, annual 
per capita, and cumulative anthropogenic 
emissions of greenhouse gases for the top 
50 emitting nations; 
‘‘(B) significant changes, both globally and 
by region, in annual net non-anthropogenic 
greenhouse gas from natural sources, including 
permafrost, forests, or oceans; 
‘‘(C) global atmospheric concentrations of 
greenhouse gases, expressed in annual con-
centration units as well as carbon dioxide 
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equivalents based on 100-year global warming 
potentials; 
‘‘(D) major climate forcing factors, such as 
aerosols; 
‘‘(E) global average temperature, expressed 
as seasonal and annual averages in land, ocean, 
and land-plus-ocean averages; and 
‘‘(F) sea level rise; 
‘‘(3) assess the current and potential impacts of 
global climate change on— 
‘‘(A) human populations, including impacts 
on public health, economic livelihoods, subsist-
ence, human infrastructure, and displacement 
or permanent relocation due to flooding, severe 
weather, extended drought, erosion, or other 
ecosystem changes; 
‘‘(B) freshwater systems, including water 
resources for human consumption and agri-
culture and natural and managed ecosystems, 
flood and drought risks, and relative humidity; 
‘‘(C) the carbon cycle, including impacts 
related to the thawing of permafrost, the fre-
quency and intensity of wildfire, and terrestrial 
and ocean carbon sinks; 
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‘‘(D) ecosystems and animal and plant 
populations, including impacts on species abun-
dance, phenology, and distribution; 
‘‘(E) oceans and ocean ecosystems, includ-
ing effects on sea level, ocean acidity, ocean 
temperatures, coral reefs, ocean circulation, 
fisheries, and other indicators of ocean eco-
system health; 
‘‘(F) the cryosphere, including effects on 
ice sheet mass balance, mountain glacier mass 
balance, and sea-ice extent and volume; 
‘‘(G) changes in the intensity, frequency, 
or distribution of severe weather events, includ-
ing precipitation, tropical cyclones, tornadoes 
and severe heat waves; 
‘‘(H) agriculture and forest systems, in-
cluding effects on growing season, distribution, 
and yield; and 
‘‘(I) any other indicators the Administrator 
deems appropriate; 
‘‘(4) summarize any significant socio-economic 
impacts of climate change in the United States, in-
cluding the territories of the United States, drawing 
on work by Federal agencies and the academic lit-
erature, including impacts on— 
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‘‘(A) public health; 
‘‘(B) 
human 
infrastructure, 
including 
coastal infrastructure vulnerability to extreme 
events and sea level rise, river floodplain infra-
structure, and sewer and water management 
systems; 
‘‘(C) agriculture and forests, including ef-
fects on potential growing season, distribution, 
and yield; 
‘‘(D) water resources for human consump-
tion, agriculture and natural and managed eco-
systems, flood and drought risks and relative 
humidity; 
‘‘(E) energy supply and use; and 
‘‘(F) transportation; 
‘‘(5) in assessing risks and impacts, use a risk 
management framework, including both qualitative 
and quantitative measures, to assess the observed 
and projected impacts of current and future climate 
change, accounting for— 
‘‘(A) both monetized and non-monetized 
losses; 
‘‘(B) potential nonlinear, abrupt, or essen-
tially irreversible changes in the climate system; 
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‘‘(C) potential nonlinear increases in the 
cost of impacts; 
‘‘(D) potential low-probability, high impact 
events; and 
‘‘(E) whether impacts are transitory or es-
sentially permanent; 
‘‘(6) based on the findings of the Administrator 
under this section, as well as assessments produced 
by the Intergovernmental Panel on Climate Change, 
the United States Global Change Research program, 
and other relevant scientific entities— 
‘‘(A) describe increased risks to natural 
systems and society that would result from an 
increase in global average temperature 3.6 de-
grees Fahrenheit (2 degrees Celsius) above the 
pre-industrial average or an increase in atmos-
pheric greenhouse gas concentrations above 450 
parts per million carbon dioxide equivalent; and 
‘‘(B) identify and assess— 
‘‘(i) significant residual risks not 
avoided by the thresholds described in sub-
paragraph (A); 
‘‘(ii) alternative thresholds or targets 
that may more effectively limit the risks 
identified pursuant to clause (i); and 
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‘‘(iii) thresholds in addition to those 
described in subparagraph (A) which sig-
nificantly increase the risk of certain im-
pacts or render them essentially perma-
nent. 
‘‘(d) STATUS OF MONITORING AND VERIFICATION 
CAPABILITIES TO EVALUATE GREENHOUSE GAS REDUC-
TION EFFORTS.—The analysis required under subsection 
(a)(2) shall evaluate the capabilities of the monitoring, re-
porting, and verification systems used to quantify progress 
in achieving reductions in greenhouse gas emissions by the 
United States as described in section 702, including— 
‘‘(1) quantification of emissions and emission 
reductions by entities participating in the cap and 
trade program under this title; 
‘‘(2) quantification of emissions and emission 
reductions by entities participating in the offset pro-
gram under this title; 
‘‘(3) quantification of emission and emissions 
reductions by entities regulated by performance 
standards; 
‘‘(4) quantification of aggregate net emissions 
and emissions reductions by the United States; and 
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‘‘(5) quantification of global changes in net 
emissions and in sources and sinks of greenhouse 
gases. 
‘‘(e) STATUS OF GREENHOUSE GAS REDUCTION EF-
FORTS.—The analysis required under subsection (a)(3) 
shall address— 
‘‘(1) whether the programs under Safe Climate 
Act and other Federal statutes are resulting in suffi-
cient United States greenhouse gas emissions reduc-
tions to meet the emissions reduction targets de-
scribed in section 702, taking into account the use 
of offsets; and 
‘‘(2) whether United States actions, taking into 
account international actions, commitments, and 
trends, and considering the range of plausible emis-
sions scenarios, are sufficient to avoid— 
‘‘(A) atmospheric greenhouse gas con-
centrations above 450 parts per million carbon 
dioxide equivalent; 
‘‘(B) global average surface temperature 
3.6 degrees Fahrenheit (2 degrees Celsius) 
above the pre-industrial average, or such other 
temperature thresholds as the Administrator 
deems appropriate; and 
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‘‘(C) other temperature or greenhouse gas 
thresholds identified pursuant to subsection 
(c)(6)(B). 
‘‘(f) RECOMMENDATIONS.— 
‘‘(1) 
LATEST
SCIENTIFIC
INFORMATION.— 
Based on the analysis described in subsection (a)(1), 
each report under subsection (a) shall identify ac-
tions that could be taken to— 
‘‘(A) improve the characterization of 
changes in the earth-climate system and im-
pacts of global climate change; 
‘‘(B) better inform decision making and 
actions related to global climate change; 
‘‘(C) mitigate risks to natural and social 
systems; and 
‘‘(D) design policies to better account for 
climate risks. 
‘‘(2) 
MONITORING, 
REPORTING
AND 
VERIFICATION.—Based on the analysis described in 
subsection (a)(2), each report under subsection (a) 
shall identify key gaps in measurement, reporting, 
and verification capabilities and make recommenda-
tions to improve the accuracy and reliability of those 
capabilities. 
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‘‘(3) STATUS OF GREENHOUSE GAS REDUCTION 
EFFORTS.—Based on the analysis described in sub-
section (a)(3), taking into account international ac-
tions, commitments, and trends, and considering the 
range of plausible emissions scenarios, each report 
under subsection (a) shall identify— 
‘‘(A) the quantity of additional reductions 
required to meet the emissions reduction tar-
gets in section 702; 
‘‘(B) the quantity of additional reductions 
in global greenhouse gas emissions needed to 
avoid the identified concentration and tempera-
ture thresholds described in subsection (e); and 
‘‘(C) possible strategies and approaches for 
achieving additional reductions. 
‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
such sums as may be necessary. 
‘‘SEC. 706. NATIONAL ACADEMY REVIEW. 
‘‘(a) IN GENERAL.—Not later than 1 year after the 
date of enactment of this title, the Administrator shall 
offer to enter into a contract with the National Academy 
of Sciences (in this section referred to as the ‘Academy’) 
under which the Academy shall, not later than July 1, 
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2014, and every 4 years thereafter, submit to Congress 
and the Administrator a report that includes— 
‘‘(1) a review of the most recent report and rec-
ommendations issued under section 705; and 
‘‘(2) an analysis of technologies to achieve re-
ductions in greenhouse gas emissions. 
‘‘(b) FAILURE TO ISSUE A REPORT.—In the event 
that the Administrator has not issued all or part of the 
most recent report required under section 705, the Acad-
emy shall conduct its own review and analysis of the re-
quired information. 
‘‘(c) TECHNOLOGICAL INFORMATION.—The analysis 
required under subsection (a)(2) shall— 
‘‘(1) review existing technological information 
and reports, including the most recent reports by the 
Department of Energy, the United States Global 
Change Research Program, the Intergovernmental 
Panel on Climate Change, and the International En-
ergy Agency and any other relevant information on 
technologies or practices that reduce or limit green-
house gas emissions; 
‘‘(2) include the participation of technical ex-
perts from relevant private industry sectors; 
‘‘(3) review the current and future projected de-
ployment of technologies and practices in the United 
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fossil fuel-fired energy technologies and devices; 
and 
‘‘(C) an evaluation of any substantial tech-
nological, legal, or market-based barriers to 
commercial deployment. 
‘‘(d) RECOMMENDATIONS.— 
‘‘(1) 
LATEST
SCIENTIFIC
INFORMATION.— 
Based on the review described in subsection (a)(1), 
the Academy shall identify actions that could be 
taken to— 
‘‘(A) improve the characterization of 
changes in the earth-climate system and im-
pacts of global climate change; 
‘‘(B) better inform decision making and 
actions related to global climate change; 
‘‘(C) mitigate risks to natural and social 
systems; 
‘‘(D) design policies to better account for 
climate risks; and 
‘‘(E) improve the accuracy and reliability 
of capabilities to monitor, report and verify 
greenhouse gas emissions reduction efforts. 
‘‘(2) TECHNOLOGICAL
INFORMATION.—Based 
on the analysis described in subsection (a)(2), the 
Academy shall identify— 
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‘‘(A) additional emissions reductions that 
may be possible as a result of technologies de-
scribed in the analysis; 
‘‘(B) barriers to the deployment of such 
technologies; and 
‘‘(C) actions that could be taken to speed 
deployment of such technologies. 
‘‘(3) STATUS OF GREENHOUSE GAS REDUCTION 
EFFORTS.—Based on the review described in sub-
section (a)(1), the Academy shall identify— 
‘‘(A) the quantity of additional reductions 
required to meet the emissions reduction tar-
gets described in section 702; and 
‘‘(B) the quantity of additional reductions 
in global greenhouse gas emissions needed to 
avoid 
the 
concentration 
and 
temperature 
thresholds described in section 705(c)(6)(A) or 
identified pursuant to section 705(c)(6)(B). 
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
such sums as may be necessary. 
‘‘SEC. 707. PRESIDENTIAL RESPONSE AND RECOMMENDA-
TIONS. 
‘‘Not later than July 1, 2017, and every 4 years 
thereafter— 
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‘‘(1) the President shall direct relevant Federal 
agencies to use existing statutory authority to take 
appropriate actions identified in the report sub-
mitted under section 705 by the National Academy 
of Sciences in the previous year and to address any 
shortfalls identified in such report; and 
‘‘(2) in the event that the National Academy of 
Sciences has concluded, in the most recent report 
submitted under section 705, that the United States 
will not achieve the necessary domestic greenhouse 
gas emissions reductions, or that global actions will 
not maintain safe global average surface tempera-
ture and atmospheric greenhouse gas concentration 
thresholds, the President shall submit to Congress a 
plan identifying domestic and international actions 
that will achieve necessary additional greenhouse gas 
reductions, including any recommendations for legis-
lative action. 
‘‘PART B—DESIGNATION AND REGISTRATION OF 
GREENHOUSE GASES 
‘‘SEC. 711. DESIGNATION OF GREENHOUSE GASES. 
‘‘(a) GREENHOUSE GASES.—For purposes of this 
title, the following are greenhouse gases: 
‘‘(1) Carbon dioxide. 
‘‘(2) Methane. 
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‘‘(3) Nitrous oxide. 
‘‘(4) Sulfur hexafluoride. 
‘‘(5) Hydrofluorocarbons from a chemical man-
ufacturing process at an industrial stationary 
source. 
‘‘(6) Any perfluorocarbon. 
‘‘(7) Nitrogen trifluoride. 
‘‘(8) Any other anthropogenic gas designated as 
a greenhouse gas by the Administrator under this 
section. 
‘‘(b) DETERMINATION ON ADMINISTRATOR’S INITIA-
TIVE.—The Administrator shall, by rule— 
‘‘(1) determine whether 1 metric ton of another 
anthropogenic gas makes the same or greater con-
tribution to global warming over 100 years as 1 met-
ric ton of carbon dioxide; 
‘‘(2) determine the carbon dioxide equivalent 
value for each gas with respect to which the Admin-
istrator makes an affirmative determination under 
paragraph (1); 
‘‘(3) for each gas with respect to which the Ad-
ministrator makes an affirmative determination 
under paragraph (1) and that is used as a substitute 
for a class I or class II substance under title VI, de-
termine the extent to which to regulate that gas 
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under section 619 and specify appropriate compli-
ance obligations under section 619; 
‘‘(4) designate as a greenhouse gas for purposes 
of this title each gas for which the Administrator 
makes an affirmative determination under para-
graph (1), to the extent that it is not regulated 
under section 619; and 
‘‘(5) specify the appropriate compliance obliga-
tions under this title for each gas designated as a 
greenhouse gas under paragraph (4). 
‘‘(c) PETITIONS
TO DESIGNATE
A GREENHOUSE 
GAS.— 
‘‘(1) IN GENERAL.—Any person may petition 
the Administrator to designate as a greenhouse gas 
any anthropogenic gas 1 metric ton of which makes 
the same or greater contribution to global warming 
over 100 years as 1 metric ton of carbon dioxide. 
‘‘(2) CONTENTS OF PETITION.—The petitioner 
shall provide sufficient data, as specified by rule by 
the Administrator, to demonstrate that the gas is 
likely to be a greenhouse gas and is likely to be pro-
duced, imported, used, or emitted in the United 
States. To the extent practicable, the petitioner shall 
also identify producers, importers, distributors, 
users, and emitters of the gas in the United States. 
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‘‘(3) REVIEW AND ACTION BY THE ADMINIS-
TRATOR.—Not later than 90 days after receipt of a 
petition under paragraph (2), the Administrator 
shall determine whether the petition is complete and 
notify the petitioner and the public of the decision. 
‘‘(4) ADDITIONAL INFORMATION.—The Admin-
istrator may require producers, importers, distribu-
tors, users, or emitters of the gas to provide infor-
mation on the contribution of the gas to global 
warming over 100 years compared to carbon dioxide. 
‘‘(5) TREATMENT OF PETITION.—For any sub-
stance used as a substitute for a class I or class II 
substance under title VI, the Administrator may 
elect to treat a petition under this subsection as a 
petition to list the substance as a class II, group II 
substance under section 619, and may require the 
petition to be amended to address listing criteria 
promulgated under that section. 
‘‘(6) DETERMINATION.—Not later than 2 years 
after receipt of a complete petition, the Adminis-
trator shall, after notice and an opportunity for com-
ment— 
‘‘(A) issue and publish in the Federal Reg-
ister— 
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‘‘(i) a determination that 1 metric ton 
of the gas does not make a contribution to 
global warming over 100 years that is 
equal to or greater than that made by 1 
metric ton of carbon dioxide; and 
‘‘(ii) an explanation of the decision; or 
‘‘(B) determine that 1 metric ton of the 
gas makes a contribution to global warming 
over 100 years that is equal to or greater than 
that made by 1 metric ton of carbon dioxide, 
and take the actions described in subsection (b) 
with respect to such gas. 
‘‘(7) GROUNDS
FOR
DENIAL.—The Adminis-
trator may not deny a petition under this subsection 
solely on the basis of inadequate Environmental Pro-
tection Agency resources or time for review. 
‘‘(d) MANUFACTURING AND EMISSION NOTICES.— 
‘‘(1) NOTICE REQUIREMENT.— 
‘‘(A) IN GENERAL.—Effective 24 months 
after the date of enactment of this title, no per-
son may manufacture or introduce into inter-
state commerce a fluorinated gas, or emit a sig-
nificant quantity, as determined by the Admin-
istrator, of any fluorinated gas that is gen-
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erated as a byproduct during the production or 
use of another fluorinated gas, unless— 
‘‘(i) the gas is designated as a green-
house gas under this section or is an 
ozone-depleting substance listed as a class 
I or class II substance under title VI; 
‘‘(ii) the Administrator has deter-
mined that 1 metric ton of such gas does 
not make a contribution to global warming 
that is equal to or greater than that made 
by 1 metric ton of carbon dioxide; or 
‘‘(iii) the person manufacturing or im-
porting the gas for distribution into inter-
state commerce, or emitting the gas, has 
submitted to the Administrator, at least 90 
days before the start of such manufacture, 
importation, or emission, a notice of such 
person’s 
manufacture, 
importation, 
or 
emission of such gas, and the Adminis-
trator has not determined that notice or a 
substantially similar notice is incomplete. 
‘‘(B) ALTERNATIVE COMPLIANCE.—For a 
gas that is a substitute for a class I or class II 
substance under title VI and either has been 
listed as acceptable for use under section 612 
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or is currently subject to evaluation under sec-
tion 612, the Administrator may accept the no-
tice and information provided pursuant to that 
section as fulfilling the obligation under clause 
(iii) of subparagraph (A). 
‘‘(2) REVIEW AND ACTION BY THE ADMINIS-
TRATOR.— 
‘‘(A) COMPLETENESS.—Not later than 90 
days after receipt of notice under paragraph 
(1)(A)(iii) or (B), the Administrator shall deter-
mine whether the notice is complete. 
‘‘(B) DETERMINATION.—If the Adminis-
trator determines that the notice is complete, 
the Administrator shall, after notice and an op-
portunity for comment, not later than 12 
months after receipt of the notice— 
‘‘(i) issue and publish in the Federal 
Register a determination that 1 metric ton 
of the gas does not make a contribution to 
global warming over 100 years that is 
equal to or greater than that made by 1 
metric ton of carbon dioxide and an expla-
nation of the decision; or 
‘‘(ii) determine that 1 metric ton of 
the gas makes a contribution to global 
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warming over 100 years that is equal to or 
greater than that made by 1 metric ton of 
carbon dioxide, and take the actions de-
scribed in subsection (b) with respect to 
such gas. 
‘‘(e) REGULATIONS.—Not later than one year after 
the date of enactment of this title, the Administrator shall 
promulgate regulations to carry out this section. Such reg-
ulations shall include— 
‘‘(1) requirements for the contents of a petition 
submitted under subsection (c); 
‘‘(2) requirements for the contents of a notice 
required under subsection (d); and 
‘‘(3) methods and standards for evaluating the 
carbon dioxide equivalent value of a gas. 
‘‘(f) GASES REGULATED UNDER TITLE VI.—The 
Administrator shall not designate a gas as a greenhouse 
gas under this section to the extent that the gas is regu-
lated under title VI. 
‘‘(g) SAVINGS CLAUSE.—Nothing in this section shall 
be interpreted to relieve any person from complying with 
the requirements of section 612. 
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391 
‘‘SEC. 712. CARBON DIOXIDE EQUIVALENT VALUE OF 
GREENHOUSE GASES. 
‘‘(a) MEASURE
OF QUANTITY
OF GREENHOUSE 
GASES.—Any provision of this title or title VIII that refers 
to a quantity or percentage of a quantity of greenhouse 
gases shall mean the quantity or percentage of the green-
house gases expressed in carbon dioxide equivalents. 
‘‘(b) INITIAL VALUE.—Except as provided by the Ad-
ministrator under this section or section 711, the carbon 
dioxide equivalent value of greenhouse gases for purposes 
of this Act shall be as follows: 
‘‘CARBON DIOXIDE EQUIVALENT OF 1 TON OF LISTED 
GREENHOUSE GASES 
Greenhouse gas (1 metric ton) 
Carbon dioxide equivalent 
(metric tons) 
Carbon dioxide 
Methane 
Nitrous oxide 
298 
HFC-23 
14,800 
HFC-125 
3,500 
HFC-134a 
1,430 
HFC-143a 
4,470 
HFC-152a 
124 
HFC-227ea 
3,220 
HFC-236fa 
9,810 
HFC-4310mee 
1,640 
CF4 
7,390 
C2F6 
12,200 
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‘‘CARBON DIOXIDE EQUIVALENT OF 1 TON OF LISTED 
GREENHOUSE GASES—Continued 
Greenhouse gas (1 metric ton) 
Carbon dioxide equivalent 
(metric tons) 
C4F10 
8,860 
C6F14 
9,300 
SF6 
22,800 
NF3 
17,200 
‘‘(c) PERIODIC REVIEW.— 
‘‘(1) Not later than February 1, 2017, and (ex-
cept as provided in paragraph (3)) not less than 
every 5 years thereafter, the Administrator shall— 
‘‘(A) review and, if appropriate, revise the 
carbon dioxide equivalent values established 
under this section or section 711(b)(2), based 
on a determination of the number of metric 
tons of carbon dioxide that makes the same 
contribution to global warming over 100 years 
as 1 metric ton of each greenhouse gas; and 
‘‘(B) publish in the Federal Register the 
results of that review and any revisions. 
‘‘(2) A revised determination published in the 
Federal Register under paragraph (1)(B) shall take 
effect for greenhouse gas emissions starting on Jan-
uary 1 of the first calendar year starting at least 9 
months after the date on which the revised deter-
mination was published. 
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‘‘(3) The Administrator may decrease the fre-
quency of review and revision under paragraph (1) 
if the Administrator determines that such decrease 
is appropriate in order to synchronize such review 
and revision with any similar review process carried 
out pursuant to the United Nations Framework 
Convention on Climate Change, done at New York 
on May 9, 1992, or to an agreement negotiated 
under that convention, except that in no event shall 
the Administrator carry out such review and revision 
any less frequently than every 10 years. 
‘‘(d) METHODOLOGY.—In setting carbon dioxide 
equivalent values, for purposes of this section or section 
711, the Administrator shall take into account publica-
tions by the Intergovernmental Panel on Climate Change 
or a successor organization under the auspices of the 
United Nations Environmental Programme and the World 
Meteorological Organization. 
‘‘SEC. 713. GREENHOUSE GAS REGISTRY. 
‘‘(a) DEFINITIONS.—For purposes of this section: 
‘‘(1) CLIMATE REGISTRY.—The term ‘Climate 
Registry’ means the greenhouse gas emissions reg-
istry jointly established and managed by more than 
40 States and Indian tribes in 2007 to collect high- 
quality greenhouse gas emission data from facilities, 
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corporations, and other organizations to support var-
ious greenhouse gas emission reporting and reduc-
tion policies for the member States and Indian 
tribes. 
‘‘(2) REPORTING ENTITY.—The term ‘reporting 
entity’ means— 
‘‘(A) a covered entity; 
‘‘(B) an entity that— 
‘‘(i) would be a covered entity if it had 
emitted, produced, imported, manufac-
tured, or delivered in 2008 or any subse-
quent year more than the applicable 
threshold level in the definition of covered 
entity in paragraph (14) of section 700; 
and 
‘‘(ii) has emitted, produced, imported, 
manufactured, or delivered in 2008 or any 
subsequent year more than the applicable 
threshold level in the definition of covered 
entity in paragraph (14) of section 700, 
provided that the figure of 25,000 tons of 
carbon dioxide equivalent is read instead 
as 10,000 tons of carbon dioxide equivalent 
and the figure of 460,000,000 cubic feet is 
read instead as 276,000,000 cubic feet; 
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‘‘(C) any other entity that emits a green-
house gas, or produces, imports, manufactures, 
or delivers material whose use results or may 
result in greenhouse gas emissions if the Ad-
ministrator determines that reporting under 
this section by such entity will help achieve the 
purposes of this title or title VIII; 
‘‘(D) any vehicle fleet with emissions of 
more than 25,000 tons of carbon dioxide equiv-
alent on an annual basis, if the Administrator 
determines that the inclusion of such fleet will 
help achieve the purposes of this title or title 
VIII; or 
‘‘(E) any entity that delivers electricity to 
an energy-intensive facility in an industrial sec-
tor that meets the energy or greenhouse gas in-
tensity criteria in section 764(b)(2)(A)(i). 
‘‘(b) REGULATIONS.— 
‘‘(1) IN GENERAL.—Not later than 6 months 
after the date of enactment of this title, the Admin-
istrator shall issue regulations establishing a Federal 
greenhouse gas registry. Such regulations shall— 
‘‘(A) require reporting entities to submit to 
the Administrator data on— 
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‘‘(i) greenhouse gas emissions in the 
United States; 
‘‘(ii) the production and manufacture 
in the United States, importation into the 
United States, and, at the discretion of the 
Administrator, 
exportation 
from 
the 
United States, of fuels and industrial gases 
the uses of which result or may result in 
greenhouse gas emissions; 
‘‘(iii) deliveries in the United States of 
natural gas, and any other gas meeting the 
specifications for commingling with natural 
gas for purposes of delivery, the combus-
tion of which result or may result in green-
house gas emissions; and 
‘‘(iv) the capture and sequestration of 
greenhouse gases; 
‘‘(B) require covered entities and, where 
appropriate, other reporting entities to submit 
to the Administrator data sufficient to ensure 
compliance with or implementation of the re-
quirements of this title; 
‘‘(C) require reporting of electricity deliv-
ered to industrial sources in energy-intensive in-
dustries; 
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‘‘(D) ensure the completeness, consistency, 
transparency, accuracy, precision, and reliability 
of such data; 
‘‘(E) take into account the best practices 
from the most recent Federal, State, tribal, and 
international protocols for the measurement, ac-
counting, reporting, and verification of green-
house gas emissions, including protocols from 
the Climate Registry and other mandatory 
State or multistate authorized programs; 
‘‘(F) take into account the latest scientific 
research; 
‘‘(G) require that, for covered entities with 
respect to greenhouse gases to which section 
722 applies, and, to the extent determined to be 
appropriate by the Administrator, for covered 
entities with respect to other greenhouse gases 
and for other reporting entities, submitted data 
are based on— 
‘‘(i) continuous monitoring systems 
for fuel flow or emissions, such as contin-
uous emission monitoring systems; 
‘‘(ii) alternative systems that are dem-
onstrated as providing data with the same 
precision, 
reliability, 
accessibility, 
and 
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timeliness, or, to the extent the Adminis-
trator determines is appropriate for report-
ing small amounts of emissions, the same 
precision, reliability, and accessibility and 
similar timeliness, as data provided by con-
tinuous monitoring systems for fuel flow or 
emissions; or 
‘‘(iii) alternative methodologies that 
are demonstrated to provide data with pre-
cision, reliability, accessibility, and timeli-
ness, or, to the extent the Administrator 
determines is appropriate for reporting 
small amounts of emissions, precision, reli-
ability, and accessibility, as similar as is 
technically feasible to that of data gen-
erally provided by continuous monitoring 
systems for fuel flow or emissions, if the 
Administrator determines that, with re-
spect to a reporting entity, there is no con-
tinuous monitoring system or alternative 
system described in clause (i) or (ii) that 
is technically feasible; 
‘‘(H) require that the Administrator, in de-
termining the extent to which the requirement 
to use systems or methodologies in accordance 
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with subparagraph (G) is appropriate for re-
porting entities other than covered entities or 
for greenhouse gases to which section 722 does 
not apply, consider the cost of using such sys-
tems and methodologies, and of using other sys-
tems and methodologies that are available and 
suitable, for quantifying the emissions involved 
in light of the purposes of this title, including 
the goal of collecting consistent entity-wide 
data; 
‘‘(I) include methods for minimizing double 
reporting and avoiding irreconcilable double re-
porting of greenhouse gas emissions; 
‘‘(J) establish measurement protocols for 
carbon capture and sequestration systems, in-
cluding those where enhanced hydrocarbon re-
covery operations occur, taking into consider-
ation the regulations promulgated under section 
813; 
‘‘(K) require that reporting entities provide 
the data required under this paragraph in re-
ports submitted electronically to the Adminis-
trator, in such form and containing such infor-
mation as may be required by the Adminis-
trator; 
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‘‘(L) include requirements for keeping 
records supporting or related to, and protocols 
for auditing, submitted data; 
‘‘(M) establish consistent policies for calcu-
lating carbon content and greenhouse gas emis-
sions for each type of fossil fuel with respect to 
which reporting is required; 
‘‘(N) subsequent to implementation of poli-
cies developed under subparagraph (M), provide 
for immediate dissemination, to States, Indian 
tribes, and on the Internet, of all data reported 
under this section as soon as practicable after 
electronic audit by the Administrator and any 
resulting correction of data, except that data 
shall not be disseminated under this subpara-
graph if— 
‘‘(i) its nondissemination is vital to 
the national security of the United States, 
as determined by the President; or 
‘‘(ii) it is confidential business infor-
mation that cannot be derived from infor-
mation that is otherwise publicly available 
and that would cause significant calculable 
competitive harm if published, except 
that— 
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‘‘(I) data relating to greenhouse 
gas emissions, including any upstream 
or verification data from reporting en-
tities, shall not be considered to be 
confidential business information; and 
‘‘(II) data that is confidential 
business information shall be provided 
to a State or Indian tribe within 
whose jurisdiction the reporting entity 
is located, if the Administrator deter-
mines that such State or Indian tribe 
has in effect protections for confiden-
tial business information that are 
equivalent to protections applicable to 
the Federal Government; 
‘‘(O) prescribe methods by which the Ad-
ministrator shall, in cases in which satisfactory 
data are not submitted to the Administrator for 
any period of time, estimate emission, produc-
tion, importation, manufacture, or delivery lev-
els— 
‘‘(i) for covered entities with respect 
to greenhouse gas emissions, production, 
importation, manufacture, or delivery regu-
lated under this title to ensure that emis-
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sions, production, importation, manufac-
ture, or deliveries are not underreported, 
and to create a strong incentive for meet-
ing data monitoring and reporting require-
ments— 
‘‘(I) with a conservative estimate 
of the highest emission, production, 
importation, manufacture, or delivery 
levels that may have occurred during 
the period for which data are missing; 
or 
‘‘(II) to the extent the Adminis-
trator considers appropriate, with an 
estimate of such levels assuming the 
unit is emitting, producing, importing, 
manufacturing, or delivering at a 
maximum potential level during the 
period, in order to ensure that such 
levels are not underreported and to 
create a strong incentive for meeting 
data monitoring and reporting re-
quirements; and 
‘‘(ii) for covered entities with respect 
to greenhouse gas emissions to which sec-
tion 722 does not apply and for other re-
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porting entities, with a reasonable estimate 
of the emission, production, importation, 
manufacture, or delivery levels that may 
have occurred during the period for which 
data are missing; 
‘‘(P) require the designation of a des-
ignated representative for each reporting entity; 
‘‘(Q) require an appropriate certification, 
by the designated representative for the report-
ing entity, of accurate and complete accounting 
of greenhouse gas emissions, as determined by 
the Administrator; and 
‘‘(R) include requirements for other data 
necessary for accurate and complete accounting 
of greenhouse gas emissions, as determined by 
the Administrator, including data for quality 
assurance of monitoring systems, monitors and 
other measurement devices, and other data 
needed to verify reported emissions, production, 
importation, manufacture, or delivery. 
‘‘(2) TIMING.— 
‘‘(A) CALENDAR
YEARS
2007
THROUGH 
2010.—For a base period of calendar years 
2007 through 2010, each reporting entity shall 
submit annual data required under this section 
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to the Administrator not later than March 31, 
2011. The Administrator may waive or modify 
reporting requirements for calendar years 2007 
through 2010 for categories of reporting enti-
ties to the extent that the Administrator deter-
mines that the reporting entities did not keep 
data or records necessary to meet reporting re-
quirements. The Administrator may, in addition 
to or in lieu of such requirements, collect infor-
mation on energy consumption and production. 
‘‘(B) SUBSEQUENT
CALENDAR
YEARS.— 
For calendar year 2011 and each subsequent 
calendar year, each reporting entity shall sub-
mit quarterly data required under this section 
to the Administrator not later than 60 days 
after the end of the applicable quarter, except 
when the data is already being reported to the 
Administrator on an earlier timeframe for an-
other program. 
‘‘(3) WAIVER OF REPORTING REQUIREMENTS.— 
The Administrator may waive reporting require-
ments under this section for specific entities to the 
extent that the Administrator determines that suffi-
cient and equally or more reliable verified and timely 
data are available to the Administrator and the pub-
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lic on the Internet under other mandatory statutory 
requirements. 
‘‘(4) ALTERNATIVE THRESHOLD.—The Admin-
istrator may, by rule, establish applicability thresh-
olds for reporting under this section using alter-
native metrics and levels, provided that such metrics 
and levels are easier to administer and cover the 
same size and type of sources as the threshold de-
fined in this section. 
‘‘(c) INTERRELATIONSHIP WITH OTHER SYSTEMS.— 
In developing the regulations issued under subsection (b), 
the Administrator shall take into account the work done 
by the Climate Registry and other mandatory State or 
multistate programs. Such regulations shall include an ex-
planation of any major differences in approach between 
the system established under the regulations and such reg-
istries and programs. 
‘‘PART C—PROGRAM RULES 
‘‘SEC. 721. EMISSION ALLOWANCES. 
‘‘(a) IN GENERAL.—The Administrator shall estab-
lish a separate quantity of emission allowances for each 
calendar year starting in 2012, in the amounts prescribed 
under subsection (e). 
‘‘(b) IDENTIFICATION
NUMBERS.—The Adminis-
trator shall assign to each emission allowance established 
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under subsection (a) a unique identification number that 
includes the vintage year for that emission allowance. 
‘‘(c) LEGAL STATUS OF EMISSION ALLOWANCES.— 
‘‘(1) IN
GENERAL.—An allowance established 
by the Administrator under this title does not con-
stitute a property right. 
‘‘(2) TERMINATION OR LIMITATION.—Nothing 
in this Act or any other provision of law shall be 
construed to limit or alter the authority of the 
United States, including the Administrator acting 
pursuant to statutory authority, to terminate or 
limit allowances or offset credits. 
‘‘(3) OTHER
PROVISIONS
UNAFFECTED.—Ex-
cept as otherwise specified in this Act, nothing in 
this Act relating to allowances or offset credits es-
tablished or issued under this title shall affect the 
application of any other provision of law to a covered 
entity, or the responsibility for a covered entity to 
comply with any such provision of law. 
‘‘(d) SAVINGS PROVISION.—Nothing in this title shall 
be construed as requiring a change of any kind in any 
State law regulating electric utility rates and charges, or 
as affecting any State law regarding such State regula-
tion, or as limiting State regulation (including any 
prudency review) under such a State law. Nothing in this 
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title shall be construed as modifying the Federal Power 
Act or as affecting the authority of the Federal Energy 
Regulatory Commission under that Act. Nothing in this 
title shall be construed to interfere with or impair any pro-
gram for competitive bidding for power supply in a State 
in which such program is established. 
‘‘(e) ALLOWANCES FOR EACH CALENDAR YEAR.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the number of emission allowances estab-
lished by the Administrator under subsection (a) for 
each calendar year shall be as provided in the fol-
lowing table: 
‘‘Calendar year 
Emission allowances (in mil-
lions) 
2012 
4,627 
2013 
4,544 
2014 
5,099 
2015 
5,003 
2016 
5,482 
2017 
5,375 
2018 
5,269 
2019 
5,162 
2020 
5,056 
2021 
4,903 
2022 
4,751 
2023 
4,599 
2024 
4,446 
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‘‘Calendar year 
Emission allowances (in mil-
lions) 
2025 
4,294 
2026 
4,142 
2027 
3,990 
2028 
3,837 
2029 
3,685 
2030 
3,533 
2031 
3,408 
2032 
3,283 
2033 
3,158 
2034 
3,033 
2035 
2,908 
2036 
2,784 
2037 
2,659 
2038 
2,534 
2039 
2,409 
2040 
2,284 
2041 
2,159 
2042 
2,034 
2043 
1,910 
2044 
1,785 
2045 
1,660 
2046 
1,535 
2047 
1,410 
2048 
1,285 
2049 
1,160 
2050 and each year thereafter 
1,035 
‘‘(2) REVISION.— 
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‘‘(A) IN
GENERAL.—The Administrator 
may adjust, in accordance with subparagraph 
(B), the number of emission allowances estab-
lished pursuant to paragraph (1) if, after notice 
and an opportunity for public comment, the Ad-
ministrator determines that— 
‘‘(i) United States greenhouse gas 
emissions in 2005 were other than 7,206 
million metric tons carbon dioxide equiva-
lent; 
‘‘(ii) if the requirements of this title 
for 2012 had been in effect in 2005, sec-
tion 722 would have required emission al-
lowances to be held for other than 66.2 
percent of United States greenhouse gas 
emissions in 2005; 
‘‘(iii) if the requirements of this title 
for 2014 had been in effect in 2005, sec-
tion 722 would have required emission al-
lowances to be held for other than 75.7 
percent of United States greenhouse gas 
emissions in 2005; or 
‘‘(iv) if the requirements of this title 
for 2016 had been in effect in 2005, sec-
tion 722 would have required emission al-
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lowances to be held for other than 84.5 
percent United States greenhouse gas 
emissions in 2005. 
‘‘(B) ADJUSTMENT FORMULA.— 
‘‘(i) IN
GENERAL.—If the Adminis-
trator adjusts under this paragraph the 
number of emission allowances established 
pursuant to paragraph (1), the number of 
emission allowances the Administrator es-
tablishes for any given calendar year shall 
equal the product of— 
‘‘(I) United States greenhouse 
gas emissions in 2005, expressed in 
tons of carbon dioxide equivalent; 
‘‘(II) the percent of United 
States greenhouse gas emissions in 
2005, expressed in tons of carbon di-
oxide equivalent, that would have been 
subject to section 722 if the require-
ments of this title for the given cal-
endar year had been in effect in 2005; 
and 
‘‘(III) the percentage set forth 
for that calendar year in section 
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703(a), or determined under clause 
(ii) of this subparagraph. 
‘‘(ii) TARGETS.—In applying the for-
mula under clause (i)(III) of this subpara-
graph, for calendar years for which a per-
centage is not listed in section 703(a), the 
Administrator shall use a uniform annual 
decline in the amount of emissions between 
the years that are specified. 
‘‘(iii) LIMITATION
ON
ADJUSTMENT 
TIMING.—Once a calendar year has start-
ed, the Administrator may not adjust the 
number of emission allowances to be estab-
lished for that calendar year. 
‘‘(C) LIMITATION
ON
ADJUSTMENT
AU-
THORITY.—The 
Administrator 
may 
adjust 
under this paragraph the number of emission 
allowances to be established pursuant to para-
graph (1) only once. 
‘‘(f) COMPENSATORY ALLOWANCE.— 
‘‘(1) IN
GENERAL.—The regulations promul-
gated under subsection (g) shall provide for the es-
tablishment and distribution of compensatory allow-
ances for— 
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‘‘(A) the destruction, in 2012 or later, of 
fluorinated gases that are greenhouse gases if— 
‘‘(i) allowances or offset credits were 
retired for their production or importation; 
and 
‘‘(ii) such gases are not required to be 
destroyed under any other provision of law; 
‘‘(B) the nonemissive use, in 2012 or later, 
of petroleum-based or coal-based liquid or gas-
eous fuel, petroleum coke, natural gas liquid, or 
natural gas as a feedstock, if allowances or off-
set credits were retired for the greenhouse 
gases that would have been emitted from their 
combustion; and 
‘‘(C) the conversionary use, in 2012 or 
later, of fluorinated gases in a manufacturing 
process, including semiconductor research or 
manufacturing, if allowances or offset credits 
were retired for the production or importation 
of such gas. 
‘‘(2) ESTABLISHMENT AND DISTRIBUTION.— 
‘‘(A) IN
GENERAL.—Not later than 90 
days after the end of each calendar year, the 
Administrator shall establish and distribute to 
the entity taking the actions described in sub-
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paragraph (A), (B), or (C) of paragraph (1) a 
quantity of compensatory allowances equivalent 
to the number of tons of carbon dioxide equiva-
lent of avoided emissions achieved through such 
actions. In establishing the quantity of compen-
satory allowances, the Administrator shall take 
into account the carbon dioxide equivalent value 
of any greenhouse gas resulting from such ac-
tion. 
‘‘(B) SOURCE OF ALLOWANCES.—Compen-
satory allowances established under this sub-
section shall not be emission allowances estab-
lished under subsection (a). 
‘‘(C) 
IDENTIFICATION
NUMBERS.—The 
Administrator shall assign to each compen-
satory allowance established under subpara-
graph (A) a unique identification number. 
‘‘(3) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) the term ‘destruction’ means the con-
version of a greenhouse gas by thermal, chem-
ical, or other means to another gas or set of 
gases with little or no carbon dioxide equivalent 
value; 
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‘‘(B) the term ‘nonemissive use’ means the 
use of fossil fuel as a feedstock in an industrial 
or manufacturing process to the extent that 
greenhouse gases are not emitted from such 
process, and to the extent that the products of 
such process are not intended for use as a fuel 
or are otherwise intended to be contained in a 
fuel; and 
‘‘(C) the term ‘conversionary use’ means 
the conversion during research or manufac-
turing of a fluorinated gas into another green-
house gas or set of gases with a lower carbon 
dioxide equivalent value. 
‘‘(g) REGULATIONS.—Not later than 24 months after 
the date of enactment of this title, the Administrator shall 
promulgate regulations to carry out the provisions of this 
title. 
‘‘(h) FEEDSTOCK EMISSIONS STUDY.— 
‘‘(1) The Administrator may conduct a study to 
determine the extent to which petroleum-based or 
coal-based liquid or gaseous fuel, petroleum coke, 
natural gas liquid, or natural gas are used as feed-
stocks in manufacturing processes to produce prod-
ucts and the greenhouse gas emissions resulting 
from such uses. 
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‘‘(2) If as a result of such a study, the Admin-
istrator determines that the use of such products by 
noncoverd sources results in substantial emissions of 
greenhouse gases or their precursors and that such 
emissions have not been adequately addressed under 
other requirements of this Act, the Administrator 
may, after notice and comment rulemaking, promul-
gate a regulation reducing compensatory allowances 
commensurately if doing so will not result in leak-
age. 
‘‘SEC. 722. PROHIBITION OF EXCESS EMISSIONS. 
‘‘(a) PROHIBITION.—Except as provided in sub-
section (c), effective January 1, 2012, each covered entity 
is prohibited from emitting greenhouse gases, and having 
attributable greenhouse gas emissions, in combination, in 
excess of its allowable emissions level. A covered entity’s 
allowable emissions level for each calendar year is the 
number of emission allowances (or credits or other allow-
ances as provided in subsection (d)) it holds as of 12:01 
a.m. on April 1 (or a later date established by the Admin-
istrator under subsection (j)) of the following calendar 
year. 
‘‘(b) METHODS OF DEMONSTRATING COMPLIANCE.— 
Except as otherwise provided in this section, the owner 
or operator of a covered entity shall not be considered to 
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be in compliance with the prohibition in subsection (a) un-
less, as of 12:01 a.m. on April 1 (or a later date estab-
lished by the Administrator under subsection (j)) of each 
calendar year starting in 2013, the owner or operator 
holds a quantity of emission allowances (or credits or other 
allowances as provided in subsection (d)) at least as great 
as the quantity calculated as follows: 
‘‘(1) ELECTRICITY
SOURCES.—For a covered 
entity described in section 700(14)(A), 1 emission 
allowance for each ton of carbon dioxide equivalent 
of greenhouse gas that such covered entity emitted 
in the previous calendar year, excluding emissions 
resulting from the combustion of— 
‘‘(A) petroleum-based or coal-based liquid 
fuel; 
‘‘(B) natural gas liquid; 
‘‘(C) renewable biomass; 
‘‘(D) petroleum coke; or 
‘‘(E) any fluorinated gas that is a green-
house gas purchased for use at that covered en-
tity, except for nitrogen trifluoride. 
‘‘(2) FUEL PRODUCERS AND IMPORTERS.—For 
a covered entity described in section 700(14)(B), 1 
emission allowance for each ton of carbon dioxide 
equivalent of greenhouse gas that would be emitted 
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from the combustion of any petroleum-based or coal- 
based liquid fuel, petroleum coke, or natural gas liq-
uid, produced or imported by such covered entity 
during the previous calendar year for sale or dis-
tribution in interstate commerce, assuming no cap-
ture and sequestration of any greenhouse gas emis-
sions. 
‘‘(3) INDUSTRIAL
GAS
PRODUCERS
AND
IM-
PORTERS.—For a covered entity described in section 
700(14)(C), 1 emission allowance for each ton of 
carbon dioxide equivalent of fossil fuel-based carbon 
dioxide, nitrous oxide, or any other fluorinated gas 
that is a greenhouse gas (except for nitrogen 
trifluoride), or any combination thereof, produced or 
imported by such covered entity during the previous 
calendar year for sale or distribution in interstate 
commerce or released as fugitive emissions in the 
production of fluorinated gas. 
‘‘(4) GEOLOGICAL SEQUESTRATION SITES.—For 
a covered entity described in section 700(14)(D), 1 
emission allowance for each ton of carbon dioxide 
equivalent of greenhouse gas that such covered enti-
ty emitted in the previous calendar year. 
‘‘(5) INDUSTRIAL STATIONARY SOURCES.—For 
a covered entity described in section 700(14)(E), 
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(8) apply shall not include fugitive emissions of 
greenhouse gas, except to the extent the Adminis-
trator determines that data on the carbon dioxide 
equivalent value of greenhouse gas in the fugitive 
emissions can be provided with sufficient precision, 
reliability, accessibility, and timeliness to ensure the 
integrity of emission allowances, the allowance track-
ing system, and the cap on emissions. 
‘‘(11) EXPORT EXEMPTION.—This section shall 
not apply to any petroleum-based or coal-based liq-
uid fuel, petroleum coke, natural gas liquid, or 
fluorinated gas that is exported for any calendar 
year. 
‘‘(12) 
NATURAL
GAS
LIQUIDS.—Notwith-
standing subsection (a), in the case where the owner 
or operator of a covered entity described in section 
700(14)(B) that produces natural gas liquids does 
not take ownership of the liquids, nor is responsible 
for the distribution or use of the liquids in com-
merce, the owner of the liquids shall be responsible 
for compliance under this section. In such a case, 
the owner of the covered entity shall provide the Ad-
ministrator, in a manner to be determined by the 
Administrator, information regarding the quantity 
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and ownership of liquids produced at the covered en-
tity. 
‘‘(13) 
APPLICATION
OF
MULTIPLE
PARA-
GRAPHS.—For a covered entity to which more than 
1 of paragraphs (1) through (8) apply, all applicable 
paragraphs shall apply, except that not more than 1 
emission allowance shall be required for the same 
emission. 
‘‘(c) PHASE-IN OF PROHIBITION.— 
‘‘(1) INDUSTRIAL STATIONARY SOURCES.—The 
prohibition under subsection (a) shall first apply to 
a covered entity described in section 700(14)(E), 
(F), (G), or (H) with respect to emissions occurring 
during calendar year 2014. 
‘‘(2) NATURAL GAS LOCAL DISTRIBUTION COM-
PANIES.—The prohibition under subsection (a) shall 
first apply to a covered entity described in section 
700(14)(I) with respect to deliveries occurring dur-
ing calendar year 2016. 
‘‘(d) ADDITIONAL METHODS.—In addition to using 
the method of compliance described in subsection (b), a 
covered entity may do the following: 
‘‘(1) OFFSET CREDITS.— 
‘‘(A) IN GENERAL.—Covered entities col-
lectively may, in accordance with this para-
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graph, use offset credits to demonstrate compli-
ance for up to a maximum of 2 billion tons of 
greenhouse gas emissions annually. The ability 
to demonstrate compliance with offset credits 
shall be divided pro rata among covered entities 
by allowing each covered entity to satisfy a per-
centage of the number of allowances required to 
be held under subsection (b) to demonstrate 
compliance by holding 1 domestic offset credit 
or 1.25 international offset credits in lieu of an 
emission allowance, except as provided in sub-
paragraph (D). 
‘‘(B) 
APPLICABLE
PERCENTAGE.—The 
percentage referred to in subparagraph (A) for 
a given calendar year shall be determined by di-
viding 2 billion by the sum of 2 billion plus the 
number of emission allowances established 
under section 721(a) for the previous year, and 
multiplying that number by 100. Not more than 
one half of the applicable percentage under this 
paragraph may be used for a year by holding 
domestic offset credits, and not more than one 
half of the applicable percentage under this 
paragraph may be used for a year by holding 
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international offset credits, except as provided 
in subparagraph (C). 
‘‘(C) MODIFIED
PERCENTAGES.—If the 
Administrator determines that domestic offset 
credits available for use in any calendar year at 
domestic offset prices generally equal to or less 
than allowance prices, are likely to offset less 
than 0.9 billion tons of greenhouse gas emis-
sions measured in tons of carbon dioxide 
equivalents, the Administrator shall increase 
the percent of emissions that can be offset 
through the use of international offset credits 
(and decrease the percent of emissions that can 
be allowed through the use of domestic offset 
credits by the same amount) to reflect the 
amount that 1.0 billion exceeds the number of 
domestic offset credits the Administrator deter-
mines is available for that year, up to a max-
imum of 0.5 billion emissions. 
‘‘(D) INTERNATIONAL OFFSET CREDITS.— 
Notwithstanding subparagraph (A), to dem-
onstrate compliance prior to calendar year 
2018, a covered entity may use 1 international 
offset credit in lieu of an emission allowance up 
to the amount permitted under this paragraph. 
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‘‘(E) PRESIDENT’S
RECOMMENDATION.— 
The President may make a recommendation to 
Congress as to whether the number 2 billion 
specified in subparagraphs (A) and (B) should 
be increased or decreased. 
‘‘(2) 
INTERNATIONAL
EMISSION
ALLOW-
ANCES.—To demonstrate compliance, a covered enti-
ty may hold an international emission allowance in 
lieu of an emission allowance, except as modified 
under section 728(d). 
‘‘(3) COMPENSATORY ALLOWANCES.—To dem-
onstrate compliance, a covered entity may hold a 
compensatory allowance obtained under section 
721(f) in lieu of an emission allowance. 
‘‘(d) RETIREMENT
OF ALLOWANCES
AND CRED-
ITS.—As soon as practicable after a deadline established 
for covered entities to demonstrate compliance with this 
title, the Administrator shall retire the quantity of allow-
ances or credits required to be held under this title. 
‘‘(e) ALTERNATIVE METRICS.—For categories of cov-
ered entities described in subparagraph (B), (C), (F), (G), 
or (H) of section 700(14), the Administrator may, by rule, 
establish an applicability threshold for inclusion under 
those subparagraphs using an alternative metric and level, 
provided that such metric and level are easier to admin-
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ister and cover the same size and type of sources as the 
threshold defined in such subparagraphs. 
‘‘(f) THRESHOLD REVIEW.—For each category of 
covered entities described in subparagraph (B), (C), (F), 
(G), or (H) of section 700(14), the Administrator shall, 
in 2020 and once every 8 years thereafter, review the car-
bon dioxide equivalent emission thresholds that are used 
to define covered entities. After consideration of— 
‘‘(1) emissions from covered entities in each 
such category, and from other entities of the same 
type that emit less than the threshold amount for 
the category (including emission sources that com-
mence operation after the date of enactment of this 
title that are not covered entities); and 
‘‘(2) whether greater greenhouse gas emission 
reductions can be cost-effectively achieved by low-
ering the applicable threshold, 
the Administrator may by rule lower such threshold to not 
less than 10,000 tons of carbon dioxide equivalent emis-
sions. In determining the cost effectiveness of potential re-
ductions from lowering the threshold for covered entities, 
the Administrator shall consider alternative regulatory 
greenhouse gas programs, including setting standards 
under other titles of this Act. 
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‘‘(g) DESIGNATED REPRESENTATIVES.—The regula-
tions promulgated under section 721(g) shall require that 
each covered entity, and each entity holding allowances or 
credits or receiving allowances or credits from the Admin-
istrator under this title, select a designated representative. 
‘‘(h) EDUCATION AND OUTREACH.— 
‘‘(1) IN GENERAL.—The Administrator shall es-
tablish and carry out a program of education and 
outreach to assist covered entities, especially entities 
having little experience with environmental regu-
latory requirements similar or comparable to those 
under this title, in preparing to meet the compliance 
obligations of this title. Such program shall include 
education with respect to using markets to effec-
tively achieve such compliance. 
‘‘(2) FAILURE TO RECEIVE INFORMATION.—A 
failure to receive information or assistance under 
this subsection may not be used as a defense against 
an allegation of any violation of this title. 
‘‘(i) ADJUSTMENT
OF DEADLINE.—The Adminis-
trator may, by rule, establish a deadline for demonstrating 
compliance, for a calendar year, later than the date pro-
vided in subsection (a), as necessary to ensure the avail-
ability of emissions data, but in no event shall the deadline 
be later than June 1. 
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‘‘(j) NOTICE REQUIREMENT FOR COVERED ENTITIES 
RECEIVING NATURAL GAS FROM NATURAL GAS LOCAL 
DISTRIBUTION COMPANIES.—The owner or operator of a 
covered entity that takes delivery of natural gas from a 
natural gas local distribution company shall, not later 
than September 1 of each calendar year, notify such nat-
ural gas local distribution company in writing that such 
entity will qualify as a covered entity under this title for 
that calendar year. 
‘‘(k) COMPLIANCE OBLIGATION.—For purposes of 
this title, the year of a compliance obligation is the year 
in which compliance is determined, not the year in which 
the greenhouse gas emissions occur or the covered entity 
has attributable greenhouse gas emissions. 
‘‘SEC. 723. PENALTY FOR NONCOMPLIANCE. 
‘‘(a) ENFORCEMENT.—A violation of any prohibition 
of, requirement of, or regulation promulgated pursuant to 
this title shall be a violation of this Act. It shall be a viola-
tion of this Act for a covered entity to emit greenhouse 
gases, and have attributable greenhouse gas emissions, in 
combination, in excess of its allowable emissions level as 
provided in section 722(a). Each ton of carbon dioxide 
equivalent for which a covered entity fails to demonstrate 
compliance under section 722(b) shall be a separate viola-
tion. 
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‘‘(b) EXCESS EMISSIONS PENALTY.— 
‘‘(1) IN GENERAL.—The owner or operator of 
any covered entity that fails for any year to comply, 
on the deadline described in section 722(a) or (i), 
shall be liable for payment to the Administrator of 
an excess emissions penalty in the amount described 
in paragraph (2). 
‘‘(2) AMOUNT.—The amount of an excess emis-
sions penalty required to be paid under paragraph 
(1) shall be equal to the product obtained by multi-
plying— 
‘‘(A) the tons of carbon dioxide equivalent 
for which the owner or operator of a covered 
entity failed to comply under section 722(b) on 
the deadline; by 
‘‘(B) twice the fair market value of emis-
sion allowances established for emissions occur-
ring in the calendar year for which the emission 
allowances were due. 
‘‘(3) TIMING.—An excess emissions penalty re-
quired under this subsection shall be immediately 
due and payable to the Administrator, without de-
mand, in accordance with regulations promulgated 
by the Administrator, which shall be issued not later 
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than 2 years after the date of enactment of this 
title. 
‘‘(4) NO
EFFECT
ON
LIABILITY.—An excess 
emissions penalty due and payable by the owners or 
operators of a covered entity under this subsection 
shall not diminish the liability of the owners or oper-
ators for any fine, penalty, or assessment against 
the owners or operators for the same violation under 
any other provision of this Act or any other law. 
‘‘(c) EXCESS EMISSIONS ALLOWANCES.—The owner 
or operator of a covered entity that fails for any year to 
comply on the deadline described in section 722(a) or (i) 
shall be liable to offset the covered entity’s excess com-
bination of greenhouse gases emitted and attributable 
greenhouse gas emissions by an equal quantity of emission 
allowances during the following calendar year, or such 
longer period as the Administrator may prescribe. During 
the year in which the covered entity failed to comply, or 
any year thereafter, the Administrator may deduct the 
emission allowances required under this subsection to off-
set the covered entity’s excess actual or attributable emis-
sions. 
‘‘SEC. 724. TRADING. 
‘‘(a) PERMITTED TRANSACTIONS.—Except as other-
wise provided in this title, the lawful holder of an emission 
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allowance, compensatory allowance, or offset credit may, 
without restriction, sell, exchange, transfer, hold for com-
pliance in accordance with section 722, or request that the 
Administrator retire the emission allowance or offset cred-
it. 
‘‘(b) NO RESTRICTION
ON TRANSACTIONS.—The 
privilege of purchasing, holding, selling, exchanging, 
transferring, and requesting retirement of emission allow-
ances, compensatory allowances, or offset credits shall not 
be restricted to the owners and operators of covered enti-
ties, except as otherwise provided in this title. 
‘‘(c) EFFECTIVENESS
OF
ALLOWANCE
TRANS-
FERS.—No transfer of an emission allowance, compen-
satory allowance, or offset credit shall be effective for pur-
poses of this title until a certification of the transfer, 
signed by the designated representative of the transferor, 
is received and recorded by the Administrator in accord-
ance with regulations promulgated under section 721(g). 
‘‘(d) ALLOWANCE TRACKING SYSTEM.—The regula-
tions promulgated under section 721(g) shall include a 
system for issuing, recording, holding, and tracking allow-
ances and offset credits that shall specify all necessary 
procedures and requirements for an orderly and competi-
tive functioning of the allowance and offset credit market. 
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Such regulations shall provide for appropriate publication 
of the information in the system on the Internet. 
‘‘SEC. 725. BANKING AND BORROWING. 
‘‘(a) BANKING.—An emission allowance may be used 
to comply with section 722 or section 723 for emissions 
in— 
‘‘(1) the vintage year for the allowance; or 
‘‘(2) any calendar year subsequent to the vin-
tage year for the allowance. 
‘‘(b) EXPIRATION.— 
‘‘(1) REGULATIONS.—The Administrator may 
establish by regulation criteria and procedures for 
determining whether, and for implementing a deter-
mination that, the expiration of an allowance or 
credit established or issued by the Administrator 
under this title, or expiration of the ability to use an 
international emission allowance to comply with sec-
tion 722, is necessary to ensure the authenticity and 
integrity of allowances or credits or the allowance 
tracking system. 
‘‘(2) GENERAL RULE.—An allowance or credit 
established or issued by the Administrator under 
this title shall not expire unless— 
‘‘(A) it is retired by the Administrator as 
required under this title; or 
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‘‘(2) BORROWING WITH INTEREST.— 
‘‘(A) IN GENERAL.—A covered entity may 
satisfy up to 15 percent of its compliance obli-
gations under section 722(a) in a specific cal-
endar year by holding emission allowances with 
a vintage year 1 to 5 years later than that cal-
endar year. 
‘‘(B) LIMITATIONS.—An emission allow-
ance borrowed pursuant to this paragraph shall 
be an emission allowance established by the Ad-
ministrator for a specific future calendar year 
under section 721(a) and that is held by the 
borrower. 
‘‘(C) REPAYMENT
WITH
INTEREST.—For 
each emission allowance that an owner or oper-
ator of a covered entity borrows pursuant to 
this paragraph, such owner or operator shall, at 
the time it borrows the allowance, hold for re-
tirement by the Administrator a quantity of 
emission allowances that is equal to the product 
obtained by multiplying— 
‘‘(i) 0.08; by 
‘‘(ii) the number of years between the 
calendar year in which the allowance is 
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being used to satisfy a compliance obliga-
tion and the vintage year of the allowance. 
‘‘SEC. 726. STRATEGIC RESERVE. 
‘‘(a) STRATEGIC RESERVE AUCTIONS.— 
‘‘(1) IN GENERAL.—Once each quarter of each 
calendar year for which allowances are established 
under section 721(a), the Administrator shall auc-
tion strategic reserve allowances. 
‘‘(2) RESTRICTION TO COVERED ENTITIES.—In 
each auction conducted under paragraph (1), only 
covered entities that the Administrator expects will 
be required to comply with section 722(a) in the fol-
lowing calendar year shall be eligible to make pur-
chases. 
‘‘(b) POOL OF EMISSION ALLOWANCES FOR STRA-
TEGIC RESERVE AUCTIONS.— 
‘‘(1) FILLING
THE
STRATEGIC
RESERVE
INI-
TIALLY.— 
‘‘(A) IN
GENERAL.—The Administrator 
shall, not later than 2 years after the date of 
enactment of this title, establish a strategic re-
serve account, and shall place in that account 
an amount of emission allowances established 
under section 721(a) for each calendar year 
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from 2012 through 2050 in the amounts speci-
fied in subparagraph (B) of this paragraph. 
‘‘(B) AMOUNT.—The amount referred to in 
subparagraph (A) shall be— 
‘‘(i) for each of calendar years 2012 
through 2019, 1 percent of the quantity of 
emission allowances established for that 
year pursuant to section 721(e)(1); 
‘‘(ii) for each of calendar years 2020 
through 2029, 2 percent of the quantity of 
emission allowances established for that 
year pursuant to section 721(e)(1); and 
‘‘(iii) for each of calendar years 2030 
through 2050, 3 percent of the quantity of 
emission allowances established for that 
year pursuant to section 721(e)(1). 
‘‘(C) EFFECT
ON
OTHER
PROVISIONS.— 
Any provision in this title (except for subpara-
graph (B) of this paragraph) that refers to a 
quantity or percentage of the emission allow-
ances established for a calendar year under sec-
tion 721(a) shall be considered to refer to the 
amount of emission allowances as determined 
pursuant to section 721(e), less any emission 
allowances established for that year that are 
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placed in the strategic reserve account under 
this paragraph. 
‘‘(2) SUPPLEMENTING
THE
STRATEGIC
RE-
SERVE.—The Administrator shall also— 
‘‘(A) at the end of each calendar year, 
transfer to the strategic reserve account each 
emission allowance that was offered for sale but 
not sold at any auction conducted under part 
H; and 
‘‘(B) transfer emission allowances estab-
lished under subsection (g) from auction pro-
ceeds, and deposit them into the strategic re-
serve, to the extent necessary to maintain the 
reserve at its original size. 
‘‘(c) MINIMUM
STRATEGIC
RESERVE
AUCTION 
PRICE.— 
‘‘(1) IN GENERAL.—At each strategic reserve 
auction, the Administrator shall offer emission al-
lowances for sale beginning at a minimum price per 
emission allowance, which shall be known as the 
‘minimum strategic reserve auction price’. 
‘‘(2) INITIAL
MINIMUM
STRATEGIC
RESERVE 
AUCTION PRICES.—The minimum strategic reserve 
auction price shall be øinsert amount twice the 
EPA-modeled 2012 allowance price EPA provides to 
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the Committee¿ for the strategic reserve auctions 
held in 2012. For the strategic reserve auctions held 
in 2013 and 2014, the minimum strategic reserve 
auction price shall be the strategic reserve auction 
price for the previous year increased by 5 percent 
plus the rate of inflation (as measured by the Con-
sumer Price Index for All Urban Consumers). 
‘‘(3) MINIMUM STRATEGIC RESERVE AUCTION 
PRICE IN SUBSEQUENT YEARS.—For each strategic 
reserve auction held in 2015 and each year there-
after, the minimum strategic reserve auction price 
shall be 60 percent above a rolling 36-month average 
of the daily closing price for that year’s emission al-
lowance vintage as reported on registered carbon 
trading facilities, calculated using constant dollars. 
‘‘(d) QUANTITY
OF EMISSION ALLOWANCES RE-
LEASED FROM THE STRATEGIC RESERVE.— 
‘‘(1) INITIAL
LIMITS.—For each of calendar 
years 2012 through 2016, the annual limit on the 
number of emission allowances from the strategic re-
serve account that may be auctioned is an amount 
equal to 5 percent of the emission allowances estab-
lished for that calendar year under section 721(a). 
This limit does not apply to international offset 
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credits sold on consignment pursuant to subsection 
(h). 
‘‘(2) LIMITS IN SUBSEQUENT YEARS.—For cal-
endar year 2017 and each year thereafter, the an-
nual limit on the number of emission allowances 
from the strategic reserve account that may be auc-
tioned is an amount equal to 10 percent of the emis-
sion allowances established for that calendar year 
under section 721(a). This limit does not apply to 
international offset credits sold on consignment pur-
suant to subsection (h). 
‘‘(3) ALLOCATION OF LIMITATION.—One-fourth 
of each year’s annual strategic reserve auction limit 
under this subsection shall be made available for 
auction in each quarter. Any allowances from the 
strategic reserve account that are made available for 
sale in a quarterly auction and not sold shall be 
rolled over and added to the quantity available for 
sale in the following quarter, except that allowances 
not sold at auction in the fourth quarter of a year 
shall not be rolled over to the following calendar 
year’s auctions, but shall be returned to the stra-
tegic reserve account. 
‘‘(e) PURCHASE LIMIT.— 
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