ference with the climate system and the progress made 
to date. Such report shall— 
‘‘(1) evaluate whether the emission reduction 
targets promulgated pursuant to section 701 are 
likely to be sufficient to avoid dangerous climate 
change, taking into account the actions of other na-
tions; 
‘‘(2) include an assessment of whether each of 
the following events, and any other indicator of sig-
nificant global warming determined by the National 
Academies, has occurred or is likely to occur— 
‘‘(A) atmospheric greenhouse gas con-
centrations of greater than 450 carbon dioxide- 
equivalent ppm; 
‘‘(B) global mean surface temperature in-
crease of greater than 2°C (3.6°F) from pre-in-
dustrial levels; 
‘‘(C) substantial slowing of the Atlantic 
thermohaline circulation; 
‘‘(D) sea level rise of more than 8 inches; 
‘‘(E) ice-free Arctic Ocean in the summer; 
‘‘(F) decrease in the area of permafrost to 
below 50 percent of such area in 2000; and 
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‘‘(G) loss of over 40 percent of the world’s 
coverage of coral reefs, due to increased ocean 
temperature or acidity; and 
‘‘(3) if the National Academies concludes that 
emission reduction targets promulgated pursuant to 
section 701 are not likely to be sufficient to avoid 
dangerous climate change, or that any of the events 
specified in paragraph (2) has occurred or is likely 
to occur— 
‘‘(A) identify the needed amount of further 
reductions in atmospheric greenhouse gas con-
centrations; and 
‘‘(B) recommend additional United States 
and international actions to further reduce at-
mospheric greenhouse gas concentrations. 
‘‘SEC. 703. REGULATIONS. 
‘‘(a) IN GENERAL.—The Administrator shall promul-
gate not later than 2 years after the date of the enactment 
of this section, and may periodically revise, regulations re-
quiring the reduction of United States greenhouse gas 
emissions to meet the emission reduction targets promul-
gated pursuant to section 701. 
‘‘(b) RULEMAKING ON RECOMMENDATIONS OF NA-
TIONAL ACADEMIES.—If the National Academies submits 
a recommendation under section 702(3)(B) for a regu-
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latory action by a Federal department or agency, and such 
regulatory action is within the authority of such depart-
ment or agency (under law other than this subsection), 
the head of such department or agency shall, not later 
than 2 years after the submission of such recommenda-
tion, finalize a rulemaking— 
‘‘(1) to carry out such regulatory action; or 
‘‘(2) to explain the reasons for declining to act. 
‘‘SEC. 704. MARKET-BASED CAP ON EMISSIONS. 
‘‘(a) IN GENERAL.—The regulations promulgated 
under section 703(a) shall— 
‘‘(1) impose a cap on the greenhouse gas emis-
sions of sources and sectors described in subsection 
(b)(1); and 
‘‘(2) allow emissions trading among covered en-
tities. 
‘‘(b) SCOPE.—The regulations promulgated under 
section 703(a) shall— 
‘‘(1) apply the cap required by subsection (a)(1) 
to the sources or sectors of the United States econ-
omy with— 
‘‘(A) the largest emissions; 
‘‘(B) the most cost-effective opportunities 
to reduce emissions; or 
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‘‘(C) other characteristics that the Admin-
istrator determines make the source or sector 
appropriate to include; and 
‘‘(2) cover a sufficient proportion of total 
United States greenhouse gas emissions, such that, 
in combination with other measures adopted under 
this title and under the Safe Climate Act of 2006 
and the amendments made by such Act, such regula-
tions will ensure that total United States greenhouse 
gas emissions will not exceed the emission reduction 
targets promulgated pursuant to section 701. 
‘‘(c) ALLOWANCES.— 
‘‘(1) IN
GENERAL.—The regulations promul-
gated under section 703(a) shall provide for the Ad-
ministrator to issue each year a quantity of green-
house gas emissions allowances equivalent to the 
emissions allowed under the cap required by sub-
section (a)(1) for such year. Each such allowance 
shall authorize the emission of one carbon dioxide 
equivalent. Such an allowance does not constitute a 
property right, and nothing in any provision of law 
shall be construed to limit the authority of the 
United States to terminate or limit such an allow-
ance. 
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‘‘(2) TRADING.—Allowances issued under this 
section may be held and traded by any person. 
‘‘(3) FLEXIBILITY.—Allowances issued under 
this section may be used in the year of issuance or 
may be banked for use in a year subsequent to the 
year of issuance. 
‘‘(d) DISTRIBUTION OF ALLOWANCES.— 
‘‘(1) SUBMISSION OF PLAN BY PRESIDENT.— 
‘‘(A) IN GENERAL.—Within one year of the 
enactment of this title, the President, in con-
sultation with the Administrator and other ap-
propriate department and agency heads, shall 
develop and submit to the Congress a plan— 
‘‘(i) to distribute the allowances issued 
under this section through auctions, and, 
at the discretion of the President and sub-
ject to subparagraph (B)(iii), through allo-
cations without charge to entities not cov-
ered by the cap or covered entities; 
‘‘(ii) to deposit the proceeds of such 
auctions in the Climate Reinvestment 
Fund established by subsection (h); and 
‘‘(iii) to ensure that such allowances 
are distributed, and such proceeds are 
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