I 
112TH CONGRESS 
2D SESSION 
H. R. 6338 
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, reduce the deficit, and return funds to the Amer-
ican people. 
IN THE HOUSE OF REPRESENTATIVES 
AUGUST 2, 2012 
Mr. MCDERMOTT (for himself, Mr. BLUMENAUER, Mr. STARK, Mr. LARSON 
of Connecticut, and Mr. RANGEL) introduced the following bill; which was 
referred to the Committee on Ways and Means, and in addition to the 
Committee on Energy and Commerce, for a period to be subsequently de-
termined 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, 
reduce the deficit, and 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 2012’’. 
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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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‘‘(3) in the case of natural gas, the first seller 
of such natural gas, 
‘‘(4) in the case of any greenhouse gas emission 
substance not described in paragraph (1), (2), or (3) 
produced in the United States, the producer of such 
substance, and 
‘‘(5) in the case of any greenhouse gas emission 
substance entered into the United States for con-
sumption, use, or warehousing, the person entering 
such substance for consumption, use, or warehous-
ing. 
‘‘(c) USE TREATED AS SALE.— 
‘‘(1) IN GENERAL.—If any person uses a green-
house gas emission substance before the first retail 
sale of such substance, then such person shall be lia-
ble for the purchase of a Federal emission permit 
under section 9902 in the same manner as if such 
substance were sold at retail on the date of such use 
by such person pursuant to a Federal emission per-
mit. 
‘‘(2) EXEMPTION FOR USE IN FURTHER MANU-
FACTURE.—Paragraph (1) shall not apply to use of 
a greenhouse gas emission substance as material in 
the manufacture or production of, or as a component 
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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 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 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, 2014, 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 2015 to 
2019. The Secretary shall publish the price for 
obtaining a Federal emission permit in each 
year after 2018 no later than five years before 
January 1 of the applicable year. 
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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 2012, 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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