I 
113TH CONGRESS 
2D SESSION 
H. R. 4754 
To amend the Internal Revenue Code of 1986 to reduce greenhouse gas 
emissions by requiring a Federal emission permit for the sale or use 
of covered substances and to return funds to the American people. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 28, 2014 
Mr. MCDERMOTT introduced the following bill; which was referred to the 
Committee on Ways and Means, and in addition to the Committee on En-
ergy and Commerce, for a period to be subsequently determined by the 
Speaker, in each case for consideration of such provisions as fall within 
the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to reduce 
greenhouse gas emissions by requiring a Federal emis-
sion permit for the sale or use of covered substances 
and to return funds to the American people. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Managed Carbon Price 
Act of 2014’’. 
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SEC. 2. GREENHOUSE GAS EMISSION SUBSTANCES. 
(a) IN GENERAL.—The Internal Revenue Code of 
1986 is amended by adding at the end the following: 
‘‘Subtitle L—Greenhouse Gas 
Emission Substances 
‘‘Sec. 9901. Condition precedent to sale or use of greenhouse gas emission sub-
stance. 
‘‘Sec. 9902. Federal emission permit. 
‘‘Sec. 9903. Definitions. 
‘‘Sec. 9904. Information reporting requirements. 
‘‘Sec. 9905. Regulations. 
‘‘SEC. 9901. CONDITION PRECEDENT TO SALE OR USE OF 
GREENHOUSE GAS EMISSION SUBSTANCE. 
‘‘(a) IN GENERAL.—No covered person may sell any 
greenhouse gas emission substance except pursuant to a 
Federal emission permit for each carbon dioxide equiva-
lent that the Administrator of the Environmental Protec-
tion Agency determines would be emitted from the com-
bustion or other greenhouse gas emitting use of such sub-
stance. 
‘‘(b) COVERED PERSON.—For purposes of this sub-
title, the term ‘covered person’ means— 
‘‘(1) in the case of coal (including lignite and 
peat) produced from a mine in the United States, 
the producer of such coal, 
‘‘(2) in the case of crude oil or petroleum prod-
ucts received at a United States refinery, the oper-
ator of the United States refinery, 
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part of, another article to be manufactured or pro-
duced by such person. 
‘‘(d) EXCEPTIONS.—Subsection (a) shall not apply 
to— 
‘‘(1) a greenhouse gas emission substance to be 
used for noncombustion agricultural purposes, or 
‘‘(2) a greenhouse gas emission substance with 
respect to which a Federal emission permit has pre-
viously been purchased. 
‘‘(e) IMPORTATION OF CARBON INTENSIVE GOODS.— 
‘‘(1) GREENHOUSE
GAS
EMISSION
PERMIT 
EQUIVALENCY FEES.—The Secretary shall impose a 
greenhouse gas emission permit equivalency fee on 
imports of carbon intensive goods that shall be 
equivalent to the cost that domestic producers of 
comparable carbon intensive goods incur as a result 
of— 
‘‘(A) permit fees paid by covered persons 
for greenhouse gas emission substances under 
this section, and 
‘‘(B) greenhouse gas emission permit 
equivalency fees paid by importers of carbon in-
tensive goods used in the production of the 
comparable carbon intensive goods in question. 
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‘‘(2) EXPIRATION.—Paragraph (1) and section 
6433(b) shall cease to have effect at such time as 
and to the extent that— 
‘‘(A) an international agreement requiring 
countries that emit greenhouse gases and 
produce carbon intensive goods for international 
markets to adopt equivalent measures comes 
into effect, and 
‘‘(B) the country of export has imple-
mented equivalent measures, and the actions 
provided for by paragraph (1) and section 
6433(b) are no longer appropriate. 
‘‘SEC. 9902. FEDERAL EMISSION PERMIT. 
‘‘(a) IN GENERAL.—The Secretary shall, subject to 
subsection (d), issue Federal emission permits, as provided 
for in this subtitle. A Federal emission permit may only 
be obtained upon making payment to the Secretary. 
‘‘(b) RULES RELATING TO PERMITS.—For purposes 
of this subtitle— 
‘‘(1) Each Federal emission permit shall be de-
nominated in one-quarter carbon dioxide equivalents. 
‘‘(2) A Federal emission permit may only be 
purchased within fourteen calendar days before or 
after a greenhouse gas emission substance is pro-
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duced or entered into the United States, as the case 
may be. 
‘‘(3) Except as provided in subsection (a), a 
Federal emission permit may not be sold, exchanged, 
or otherwise transferred. 
‘‘(c) PERMIT PRICE.— 
‘‘(1) IN GENERAL.—The Secretary, after con-
sultation with the Administrator of the Environ-
mental Protection Agency and the Secretary of En-
ergy, shall establish the price of obtaining a Federal 
emission permit for a calendar year based on a de-
termination of the dollar amount necessary to meet 
the emissions reductions targets specified in sub-
section (d). 
‘‘(2) 5-YEAR PRICE SCHEDULE.— 
‘‘(A) IN GENERAL.—Not later than Janu-
ary 1, 2016, the Secretary shall publish a 
schedule of the prices determined under para-
graph (1) for obtaining a Federal emission per-
mit during each of the five years from 2017 to 
2021. The Secretary shall publish the price for 
obtaining a Federal emission permit in each 
year after 2020 no later than five years before 
January 1 of the applicable year. 
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‘‘(B) REDUCTION IN PRICE IF TARGET RE-
DUCTIONS BEING EXCEEDED.—If the Secretary 
determines— 
‘‘(i) that greenhouse gas emissions are 
being reduced at a rate that exceeds the 
reduction expected in national greenhouse 
gas emissions for the year, and 
‘‘(ii) that the Federal permit price can 
be reduced while still attaining the national 
greenhouse gas emission target reductions 
specified in subsection (d) for the year, 
the Secretary may, at any time before the be-
ginning of the year, reduce the Federal permit 
price for that year. 
‘‘(3) INCREASE IN PRICE IF TARGET REDUC-
TIONS
NOT
BEING
MET.—If the Secretary deter-
mines that the reduction of greenhouse gas emis-
sions is failing to meet the target reductions speci-
fied in subsection (d) for a year in such period, the 
Secretary may increase the Federal permit price for 
permits no earlier than 2 years after the year for 
which the determination is made. 
‘‘(4) MAXIMUM AND MINIMUM PRICE.— 
‘‘(A) IN GENERAL.—Not later than Janu-
ary 1, 2023, and every 10 years thereafter, the 
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Secretary, after consultation with the Adminis-
trator of the Environmental Protection Agency 
and the Secretary of Energy, shall publish a 
10-year schedule of the minimum and max-
imum prices for Federal emissions permits. 
‘‘(B) PRICES SPECIFIED.—The maximum 
and minimum price for a Federal emission per-
mit issued by the Secretary in a year may not 
be below the minimum price or the maximum 
price for the corresponding year specified in the 
following table: 
‘‘Year: 
Minimum Price is: 
Maximum Price is: 
2015 ........................................
$6.25 
$18.75
2016 ........................................
$18.75 
$31.25
2017 ........................................
$31.25 
$43.75
2018 ........................................
$43.75 
$56.25
2019 ........................................
$56.25 
$68.75
2020 ........................................
$68.75 
$82.25
2021 ........................................
$81.25 
$93.75
2022 ........................................
$93.75 
$106.25
2023 ........................................
$106.25 
$118.75
2024 ........................................
$118.75 
$131.25. 
‘‘(C) ADJUSTMENT
FOR
INFLATION.—In 
the case of any calendar year beginning after 
2015, each dollar amount contained in the table 
in subparagraph (B) shall be increased by an 
amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost of living adjustment de-
termined under section 1(f)(3) for the cal-
endar year, determined by substituting 
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‘calendar year 2014’ for ‘calendar year 
1992’ in subparagraph (B) thereof. 
‘‘(d) NATIONAL LIMITATION.— 
‘‘(1) TARGETS.—For purposes of this section— 
‘‘(A) 2015 THROUGH 2019.—The average 
emissions for the period 2015 through 2019 
shall be no more than the carbon dioxide 
equivalents emitted in the United States in 
2005. 
‘‘(B) 2025 THROUGH 2029.—The average 
emissions for the period 2025 through 2029 
shall be no more than 70 percent of the carbon 
dioxide equivalents emitted in the United States 
in 2005. 
‘‘(C) 2035 THROUGH 2039.—The average 
emissions for the period 2035 through 2039 
shall be no more than 50 percent of the carbon 
dioxide equivalents emitted in the United States 
in 2005. 
‘‘(D) 2045 THROUGH 2049.—The average 
emissions for the period 2045 through 2049 
shall be no more than 30 percent of the carbon 
dioxide equivalents emitted in the United States 
in 2005. 
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‘‘(E) 2055 THROUGH 2059.—The average 
emissions for the period 2055 through 2059 
shall be no more than 20 percent of the carbon 
dioxide equivalents emitted in the United States 
in 2005. 
‘‘(2) DETERMINATION
OF
2005
LEVELS.—For 
purposes of subparagraph (A), the number of metric 
tons of carbon dioxide equivalents emitted in the 
United States in 2005 shall be the number deter-
mined under section 1605(a) of the Energy Policy 
Act of 1992 and published by the Energy Informa-
tion Administration. 
‘‘(e) REPORT.— 
‘‘(1) IN GENERAL.—Not later than the second 
March 1 after the date of the enactment of the Man-
aged Carbon Price Act of 2014, and annually there-
after, the Secretary shall publish a report describ-
ing— 
‘‘(A) the extent to which the United States 
greenhouse gas emission limitations specified 
under subsection (d) are being achieved, 
‘‘(B) the United States greenhouse gas 
emission permits sold during the previous cal-
endar year and the impact of the number of 
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such permits on greenhouse gas emissions in 
the United States, and 
‘‘(C) the total greenhouse gas emissions 
worldwide for the previous calendar year in re-
lation to such emissions for 2005. 
‘‘(2) REPORT DETAILS.—Such report shall in-
clude— 
‘‘(A) an explanation of the methodology 
and assumptions the Secretary has used in es-
tablishing prices under this section, and 
‘‘(B) an estimation, or range of esti-
mations, of the price of permits for the 10-year 
period following the current prices published 
under subsection (c). 
‘‘SEC. 9903. DEFINITIONS. 
‘‘(a) IN GENERAL.—For purposes of this subtitle— 
‘‘(1) ADMINISTRATOR.—The term ‘Adminis-
trator’ means the Administrator of the Environ-
mental Protection Agency. 
‘‘(2) 
CARBON
DIOXIDE
EQUIVALENT.—The 
term ‘carbon dioxide equivalent’ means, for each 
greenhouse gas emission substance, the quantity of 
the greenhouse gas emission substance that the Ad-
ministrator determines makes the same contribution 
to global warming as 1 metric ton of carbon dioxide. 
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‘‘(3) 
GREENHOUSE
GAS
EMISSION
SUB-
STANCE.—The term ‘greenhouse gas emission sub-
stance’ means— 
‘‘(A) coal (including lignite, peat, and de-
rivatives of coal), to be used as a combustion 
fuel, 
‘‘(B) petroleum and any petroleum prod-
uct, to be used as a combustion fuel, 
‘‘(C) natural gas (including the gasses re-
leased as a result of flaring or venting such nat-
ural gas), 
‘‘(D) methane, 
‘‘(E) nitrous oxide, 
‘‘(F) sulfur hexafluoride, 
‘‘(G) a perfluorocarbon, 
‘‘(H) a hydrofluorocarbon, and 
‘‘(I) any other substance that is deter-
mined by the Administrator to contribute to 
global warming to a nonnegligible degree. 
‘‘(4) FEDERAL EMISSION PERMIT.—The term 
‘Federal emission permit’ means a permit required 
under section 9901. 
‘‘(5) CARBON
INTENSIVE
GOOD.—The term 
‘carbon intensive good’ means— 
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‘‘(A)(i) iron, steel, any steel mill product 
(including pipe and tube), aluminum, cement, 
glass (including flat, container, and specialty 
glass and fiberglass), pulp, paper, chemicals, 
and industrial ceramics, and 
‘‘(ii) any other manufactured product that 
the Secretary determines— 
‘‘(I) is sold for purposes of further 
manufacture, and 
‘‘(II) generates, in the course of the 
manufacture of the product, direct and in-
direct greenhouse gas emissions that are 
comparable (on an emissions per dollar of 
output basis) to emissions generated in the 
manufacture or production of a good iden-
tified in clause (i), and 
‘‘(B) a manufactured item in which one or 
more goods identified under subparagraph (A) 
are inputs and the cost of production of which 
in the United States the Secretary determines 
is significantly increased by this subtitle. 
‘‘(6) PETROLEUM PRODUCT.—The term ‘petro-
leum product’ has the meaning given such term in 
section 4612(a)(3). 
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‘‘(b) 
IDENTIFICATION
OF
CARBON
INTENSIVE 
GOODS.—The determinations by the Secretary required by 
subsection (a)(5) shall be by rule. 
‘‘(c) PUBLICATION OF SCHEDULE.—Not later than 
one year after the date of the enactment of the Managed 
Carbon Price Act of 2014, the Administrator, in consulta-
tion with the Secretary and the Secretary of Energy, shall 
publish a schedule listing each greenhouse gas emission 
substance and the quantity of each substance required to 
make 1 metric ton of carbon dioxide. The Administrator, 
in consultation with the Secretary and the Secretary of 
Energy, may update such schedule from time to time. 
‘‘SEC. 9904. INFORMATION REPORTING REQUIREMENTS. 
‘‘Secretary may solicit information from covered per-
sons regarding estimated future use of greenhouse gas 
emissions substances. 
‘‘SEC. 9905. REGULATIONS. 
‘‘The Secretary shall issue such regulations as may 
be necessary or appropriate to carry out this subtitle, in-
cluding regulations relating to the timely and efficient 
issuance of permits and collection of payments for such 
permits.’’. 
(b) REFUND OF FEDERAL EMISSION PERMIT FEE.— 
Subchapter B of chapter 65 of such Code is amended by 
adding at the end the following new section: 
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