964 
hydrofluorocarbons shall be treated as class II substances 
for purposes of applying the provisions of this title. The 
Administrator shall establish two groups of class II sub-
stances. Class II, group I substances shall include all 
hydrochlorofluorocarbons (HCFCs) listed pursuant to sec-
tion 602(b). Class II, group II substances shall include 
each of the following: 
‘‘(1) Hydrofluorocarbon-23 (HFC–23). 
‘‘(2) Hydrofluorocarbon-32 (HFC–32). 
‘‘(3) Hydrofluorocarbon-41 (HFC–41). 
‘‘(4) Hydrofluorocarbon-125 (HFC–125). 
‘‘(5) Hydrofluorocarbon-134 (HFC–134). 
‘‘(6) Hydrofluorocarbon-134a (HFC–134a). 
‘‘(7) Hydrofluorocarbon-143 (HFC–143). 
‘‘(8) Hydrofluorocarbon-143a (HFC–143a). 
‘‘(9) Hydrofluorocarbon-152 (HFC–152). 
‘‘(10) Hydrofluorocarbon-152a (HFC–152a). 
‘‘(11) Hydrofluorocarbon-227ea (HFC–227ea). 
‘‘(12) Hydrofluorocarbon-236cb (HFC–236cb). 
‘‘(13) Hydrofluorocarbon-236ea (HFC–236ea). 
‘‘(14) Hydrofluorocarbon-236fa (HFC–236fa). 
‘‘(15) Hydrofluorocarbon-245ca (HFC–245ca). 
‘‘(16) Hydrofluorocarbon-245fa (HFC–245fa). 
‘‘(17) 
Hydrofluorocarbon-365mfc 
(HFC– 
365mfc).
965 
‘‘(18) Hydrofluorocarbon-43-10mee (HFC–43– 
10mee). 
‘‘(19) Hydrofluoroolefin-1234yf (HFO–1234yf). 
‘‘(20) Hydrofluoroolefin-1234ze (HFO–1234ze). 
Not later than 6 months after the date of enactment of 
this title, the Administrator shall publish an initial list of 
class II, group II substances, which shall include the sub-
stances listed in this subsection. The Administrator may 
add to the list of class II, group II substances any other 
substance used as a substitute for a class I or II substance 
if the Administrator determines that 1 metric ton of the 
substance makes the same or greater contribution to glob-
al warming over 100 years as 1 metric ton of carbon diox-
ide. Within 24 months after the date of enactment of this 
section, the Administrator shall amend the regulations 
under this title (including the regulations referred to in 
sections 603, 608, 609, 610, 611, 612, and 613) to apply 
to class II, group II substances. 
‘‘(b) CONSUMPTION AND PRODUCTION OF CLASS II, 
GROUP II SUBSTANCES.— 
‘‘(1) IN GENERAL.— 
‘‘(A) CONSUMPTION PHASE DOWN.—In the 
case of class II, group II substances, in lieu of 
applying section 605 and the regulations there-
under, the Administrator shall promulgate reg-
966 
ulations phasing down the consumption of class 
II, group II substances in the United States, 
and the importation of products containing any 
class II, group II substance, in accordance with 
this subsection within 18 months after the date 
of enactment of this section. Effective January 
1, 2012, it shall be unlawful for any person to 
produce any class II, group II substance, im-
port any class II, group II substance, or import 
any product containing any class II, group II 
substance without holding one consumption al-
lowance or one destruction offset credit for each 
carbon dioxide equivalent ton of the class II, 
group II substance. Any person who exports a 
class II, group II substance for which a con-
sumption allowance was retired may receive a 
refund of that allowance from the Adminis-
trator following the export. 
‘‘(B) PRODUCTION.—If the United States 
becomes a party or otherwise adheres to a mul-
tilateral agreement, including any amendment 
to the Montreal Protocol on Substances That 
Deplete the Ozone Layer, that restricts the pro-
duction of class II, group II substances, the Ad-
ministrator shall promulgate regulations estab-
967 
lishing a baseline for the production of class II, 
group II substances in the United States and 
phasing down the production of class II, group 
II substances in the United States, in accord-
ance with such multilateral agreement and sub-
ject to the same exceptions and other provisions 
as are applicable to the phase down of con-
sumption of class II, group II substances under 
this section (except that the Administrator shall 
not require a person who obtains production al-
lowances from the Administrator to make pay-
ment for such allowances if the person is mak-
ing payment for a corresponding quantity of 
consumption allowances of the same vintage 
year). Upon the effective date of such regula-
tions, it shall be unlawful for any person to 
produce any class II, group II substance with-
out holding one consumption allowance and one 
production allowance, or one destruction offset 
credit, for each carbon dioxide equivalent ton of 
the class II, group II substance. 
‘‘(C) INTEGRITY
OF
CAP.—To maintain 
the integrity of the class II, group II cap, the 
Administrator may, through rulemaking, limit 
the percentage of each person’s compliance obli-
968 
gation that may be met through the use of de-
struction offset credits or banked allowances. 
‘‘(D) COUNTING
OF
VIOLATIONS.—Each 
consumption allowance, production allowance, 
or destruction offset credit not held as required 
by this section shall be a separate violation of 
this section. 
‘‘(2) SCHEDULE.—Pursuant to the regulations 
promulgated pursuant to paragraph (1)(A), the 
number of class II, group II consumption allowances 
established by the Administrator for each calendar 
year beginning in 2012 shall be the following per-
centage of the baseline, as established by the Admin-
istrator pursuant to paragraph (3): 
‘‘Calendar Year 
Percent of Baseline 
2012 
2013 
87.5 
2014 
2015 
82.5 
2016 
2017 
77.5 
2018 
2019 
2020 
2021 
2022
969 
‘‘Calendar Year 
Percent of Baseline 
2023 
2024 
2025 
2026 
2027 
2028 
2029 
2030 
2031 
2032 
after 2032 
‘‘(3) BASELINE.—(A) Within 12 months after 
the date of enactment of this section, the Adminis-
trator shall promulgate regulations to establish the 
baseline for purposes of paragraph (2). The baseline 
shall be the sum, expressed in metric tons of carbon 
dioxide equivalents, of— 
‘‘(i) the annual average consumption of all 
class II substances in calendar years 2004, 
2005, and 2006; plus 
‘‘(ii) the annual average quantity of all 
class II substances contained in imported prod-
ucts in calendar years 2004, 2005, and 2006. 
‘‘(B) Notwithstanding subparagraph (A), if the 
Administrator determines that the baseline is higher
970 
than 370 million metric tons of carbon dioxide 
equivalents, then the Administrator shall establish 
the baseline at 370 million metric tons of carbon di-
oxide equivalents. 
‘‘(C) Notwithstanding subparagraph (A), if the 
Administrator determines that the baseline is lower 
than 280 million metric tons of carbon dioxide 
equivalents, then the Administrator shall establish 
the baseline at 280 million metric tons of carbon di-
oxide equivalents. 
‘‘(4) DISTRIBUTION OF ALLOWANCES.— 
‘‘(A) IN GENERAL.—Pursuant to the regu-
lations promulgated under paragraph (1)(A), 
for each calendar year beginning in 2012, the 
Administrator shall sell consumption allowances 
in accordance with this paragraph. 
‘‘(B) ESTABLISHMENT
OF
POOLS.—The 
Administrator shall establish two allowance 
pools. Eighty percent of the consumption allow-
ances available for a calendar year shall be 
placed in the producer-importer pool, and 20 
percent of the consumption allowances available 
for a calendar year shall be placed in the sec-
ondary pool. 
‘‘(C) PRODUCER-IMPORTER POOL.—
971 
‘‘(i) AUCTION.—(I) For each calendar 
year, the Administrator shall offer for sale 
at auction the following percentage of the 
consumption allowances in the producer- 
importer pool: 
‘‘Calendar Year 
Percent Available for Auction 
2012 
2013 
2014 
2015 
2016 
2017 
2018 
2019 
2020 and thereafter 
‘‘(II) Any person who produced or im-
ported any class II substance during cal-
endar year 2004, 2005, or 2006 may par-
ticipate in the auction. No other persons 
may participate in the auction unless per-
mitted to do so pursuant to subclause 
(III). 
‘‘(III) Not later than 3 years after the 
date of the initial auction and from time to 
time thereafter, the Administrator shall de-
termine through rulemaking whether any
972 
persons who did not produce or import a 
class II substance during calendar year 
2004, 2005, or 2006 will be permitted to 
participate in future auctions. The Admin-
istrator shall base this determination on 
the duration, consistency, and scale of such 
person’s purchases of consumption allow-
ances in the secondary pool under subpara-
graph (D)(ii)(III), as well as economic or 
technical 
hardship 
and 
other 
factors 
deemed relevant by the Administrator. 
‘‘(IV) The Administrator shall set a 
minimum bid per consumption allowance of 
the following: 
‘‘(aa) For vintage year 2012, 
$1.00. 
‘‘(bb) For vintage year 2013, 
$1.20. 
‘‘(cc) For vintage year 2014, 
$1.40. 
‘‘(dd) For vintage year 2015, 
$1.60. 
‘‘(ee) For vintage year 2016, 
$1.80.
973 
‘‘(ff) For vintage year 2017, 
$2.00. 
‘‘(gg) For vintage year 2018 and 
thereafter, $2.00 adjusted for infla-
tion after vintage year 2017 based 
upon the producer price index as pub-
lished by the Department of Com-
merce. 
‘‘(ii) NON-AUCTION
SALE.—(I) For 
each calendar year, as soon as practicable 
after auction, the Administrator shall offer 
for sale the remaining consumption allow-
ances in the producer-importer pool at the 
following prices: 
‘‘(aa) A fee of $1.00 per vintage 
year 2012 allowance. 
‘‘(bb) A fee of $1.20 per vintage 
year 2013 allowance. 
‘‘(cc) A fee of $1.40 per vintage 
year 2014 allowance. 
‘‘(dd) For each vintage year 
2015 allowance, a fee equal to the av-
erage of $1.10 and the auction clear-
ing price for vintage year 2014 allow-
ances.
974 
‘‘(ee) For each vintage year 2016 
allowance, a fee equal to the average 
of $1.30 and the auction clearing 
price for vintage year 2015 allow-
ances. 
‘‘(ff) For each vintage year 2017 
allowance, a fee equal to the average 
of $1.40 and the auction clearing 
price for vintage year 2016 allow-
ances. 
‘‘(gg) For each allowance of vin-
tage year 2018 and subsequent vin-
tage years, a fee equal to the auction 
clearing price for that vintage year. 
‘‘(II) The Administrator shall offer to 
sell the remaining consumption allowances 
in the producer-importer pool to producers 
of class II, group II substances and im-
porters of class II, group II substances in 
proportion to their relative allocation 
share. 
‘‘(III) Such allocation share for such 
sale shall be determined by the Adminis-
trator using such producer’s or importer’s 
annual average data on class II substances
975 
from calendar years 2004, 2005, and 
2006, on a carbon dioxide equivalent basis, 
and— 
‘‘(aa) shall be based on a pro-
ducer’s production, plus importation, 
plus acquisitions and purchases from 
persons who produced class II sub-
stances in the United States during 
calendar year 2004, 2005, or 2006, 
less exportation, less transfers and 
sales to persons who produced class II 
substances in the United States dur-
ing calendar year 2004, 2005, or 
2006; and 
‘‘(bb) for an importer of class II 
substances that did not produce in the 
United States any class II substance 
during calendar years 2004, 2005, 
and 2006, shall be based on the im-
porter’s importation less exportation. 
For purposes of item (aa), the Adminis-
trator shall account for 100 percent of 
class II, group II substances and 60 per-
cent of class II, group I substances. For 
purposes of item (bb), the Administrator
976 
shall account for 100 percent of class II, 
group II substances and 100 percent of 
class II, group I substances. 
‘‘(IV) Any consumption allowances 
made available for nonauction sale to a 
specific producer or importer of class II, 
group II substances but not purchased by 
the specific producer or importer shall be 
made available for sale to any producer or 
importer of class II substances during cal-
endar year 2004, 2005, or 2006. If de-
mand for such consumption allowances ex-
ceeds supply of such consumption allow-
ances, the Administrator shall develop and 
utilize criteria for the sale of such con-
sumption allowances that may include pro 
rata shares, historic production and impor-
tation, economic or technical hardship, or 
other factors deemed relevant by the Ad-
ministrator. If the supply of such con-
sumption allowances exceeds demand, the 
Administrator may offer such consumption 
allowances for sale in the secondary pool as 
set forth in subparagraph (D).
977 
‘‘(D) SECONDARY POOL.—(i) For each cal-
endar year, as soon as practicable after the auc-
tion required in subparagraph (C), the Adminis-
trator shall offer for sale the consumption al-
lowances in the secondary pool at the prices 
listed in subparagraph (C)(ii). 
‘‘(ii) The Administrator shall accept appli-
cations for purchase of secondary pool con-
sumption allowances from— 
‘‘(I) importers of products containing 
class II, group II substances; 
‘‘(II) persons who purchased any class 
II, group II substance directly from a pro-
ducer or importer of class II, group II sub-
stances for use in a product containing a 
class II, group II substance, a manufac-
turing process, or a reclamation process; 
‘‘(III) persons who did not produce or 
import a class II substance during cal-
endar year 2004, 2005, or 2006, but who 
the Administrator determines have subse-
quently taken significant steps to produce 
or import a substantial quantity of any 
class II, group II substance; and
978 
‘‘(IV) persons who produced or im-
ported any class II substance during cal-
endar year 2004, 2005, or 2006. 
‘‘(iii) If the supply of consumption allow-
ances in the secondary pool equals or exceeds 
the demand for consumption allowances in the 
secondary pool as presented in the applications 
for purchase, the Administrator shall sell the 
consumption allowances in the secondary pool 
to the applicants in the amounts requested in 
the applications for purchase. Any consumption 
allowances in the secondary pool not purchased 
in a calendar year may be rolled over and added 
to the quantity available in the secondary pool 
in the following year. 
‘‘(iv) If the demand for consumption allow-
ances in the secondary pool as presented in the 
applications for purchase exceeds the supply of 
consumption allowances in the secondary pool, 
the Administrator shall sell the consumption al-
lowances as follows: 
‘‘(I) The Administrator shall first sell 
the consumption allowances in the sec-
ondary pool to any importers of products 
containing class II, group II substances in
979 
the amounts requested in their applications 
for purchase. If the demand for such con-
sumption allowances exceeds supply of 
such consumption allowances, the Adminis-
trator shall develop and utilize criteria for 
the sale of such consumption allowances 
among importers of products containing 
class II, group II substances that may in-
clude pro rata shares, historic importation, 
economic or technical hardship, or other 
factors deemed relevant by the Adminis-
trator. 
‘‘(II) The Administrator shall next 
sell any remaining consumption allowances 
to persons identified in subclauses (II) and 
(III) of clause (ii) in the amounts re-
quested in their applications for purchase. 
If the demand for such consumption allow-
ances exceeds remaining supply of such 
consumption allowances, the Administrator 
shall develop and utilize criteria for the 
sale 
of 
such 
consumption 
allowances 
among subclauses (II) and (III) applicants 
that may include pro rata shares, historic 
use, economic or technical hardship, or
980 
other factors deemed relevant by the Ad-
ministrator. 
‘‘(III) The Administrator shall then 
sell any remaining consumption allowances 
to persons who produced or imported any 
class II substance during calendar year 
2004, 2005, or 2006 in the amounts re-
quested in their applications for purchase. 
If demand for such consumption allow-
ances exceeds remaining supply of such 
consumption allowances, the Administrator 
shall develop and utilize criteria for the 
sale of such consumption allowances that 
may include pro rata shares, historic pro-
duction and importation, economic or tech-
nical hardship, or other factors deemed rel-
evant by the Administrator. 
‘‘(IV) Each person who purchases 
consumption allowances in a non-auction 
sale under this subparagraph shall be re-
quired to disclose the person or entity 
sponsoring or benefitting from the pur-
chases if such person or entity is, in whole 
or in part, other than the purchaser or the 
purchaser’s employer.
981 
‘‘(E) DISCRETION TO WITHHOLD ALLOW-
ANCES.—Nothing in this paragraph prevents 
the Administrator from exercising discretion to 
withhold and retire consumption allowances 
that would otherwise be available for auction or 
nonauction sale. Not later than 18 months after 
the date of enactment of this section, the Ad-
ministrator shall promulgate regulations estab-
lishing criteria for withholding and retiring con-
sumption allowances. 
‘‘(5) BANKING.—A consumption allowance or 
destruction offset credit may be used to meet the 
compliance obligation requirements of paragraph (1) 
in— 
‘‘(A) the vintage year for the allowance or 
destruction offset credit; or 
‘‘(B) any calendar year subsequent to the 
vintage year for the allowance or destruction 
offset credit. 
‘‘(6) AUCTIONS.— 
‘‘(A) INITIAL
REGULATIONS.—Not later 
than 18 months after the date of enactment of 
this section, the Administrator shall promulgate 
regulations governing the auction of allowances
982 
under this section. Such regulations shall in-
clude the following requirements: 
‘‘(i) FREQUENCY; FIRST AUCTION.— 
Auctions shall be held one time per year at 
regular intervals, with the first auction to 
be held no later than October 31, 2011. 
‘‘(ii) 
AUCTION
FORMAT.—Auctions 
shall follow a single-round, sealed-bid, uni-
form price format. 
‘‘(iii) FINANCIAL
ASSURANCE.—The 
Administrator may establish financial as-
surance requirements to ensure that auc-
tion participants can and will perform on 
their bids. 
‘‘(iv) DISCLOSURE
OF
BENEFICIAL 
OWNERSHIP.—Each bidder in the auction 
shall be required to disclose the person or 
entity sponsoring or benefitting from the 
bidder’s participation in the auction if such 
person or entity is, in whole or in part, 
other than the bidder. 
‘‘(v) 
PUBLICATION
OF
INFORMA-
TION.—After the auction, the Adminis-
trator shall, in a timely fashion, publish 
the number of bidders, number of winning
983 
bidders, the quantity of allowances sold, 
and the auction clearing price. 
‘‘(vi) BIDDING
LIMITS
IN
2012.—In 
the vintage year 2012 auction, no auction 
participant may, directly or in concert with 
another participant, bid for or purchase 
more allowances offered for sale at the 
auction than the greater of— 
‘‘(I) the number of allowances 
which, when added to the number of 
allowances available for purchase by 
the participant in the producer-im-
porter pool non-auction sale, would 
equal the participant’s annual average 
consumption of class II, group II sub-
stances in calendar years 2004, 2005, 
and 2006; or 
‘‘(II) the number of allowances 
equal to the product of— 
‘‘(aa) 1.20 multiplied by the 
participant’s allocation share of 
the producer-importer pool non- 
auction sale as determined under 
paragraph (4)(C)(ii); and
984 
‘‘(bb) the number of vintage 
year 2012 allowances offered at 
auction. 
‘‘(vii) BIDDING
LIMITS
IN
2013.—In 
the vintage year 2013 auction, no auction 
participant may, directly or in concert with 
another participant, bid for or purchase 
more allowances offered for sale at the 
auction than the product of— 
‘‘(I) 1.15 multiplied by the ratio 
of the total number of vintage year 
2012 allowances purchased by the 
participant from the auction and from 
the producer-importer pool non-auc-
tion sale to the total number of vin-
tage year 2012 allowances in the pro-
ducer-importer pool; and 
‘‘(II) the number of vintage year 
2013 allowances offered at auction. 
‘‘(viii) BIDDING
LIMITS
IN
SUBSE-
QUENT YEARS.—In the auctions for vin-
tage year 2014 and subsequent vintage 
years, no auction participant may, directly 
or in concert with another participant, bid 
for or purchase more allowances offered
985 
for sale at the auction than the product 
of— 
‘‘(I) 1.15 multiplied by the ratio 
of the highest number of allowances 
required to be held by the participant 
in any of the three prior vintage years 
to meet its compliance obligation 
under paragraph (1) to the total num-
ber of allowances in the producer-im-
porter pool for such vintage year; and 
‘‘(II) the number of allowances 
offered at auction for that vintage 
year. 
‘‘(ix) OTHER
REQUIREMENTS.—The 
Administrator may include in the regula-
tions such other requirements or provisions 
as the Administrator considers necessary 
to promote effective, efficient, transparent, 
and fair administration of auctions under 
this section. 
‘‘(B) REVISION
OF
REGULATIONS.—The 
Administrator may, at any time, revise the ini-
tial regulations promulgated under subpara-
graph (A) based on the Administrator’s experi-
ence in administering allowance auctions by
986 
promulgating new regulations. Such revised reg-
ulations need not meet the requirements identi-
fied in subparagraph (A) if the Administrator 
determines that an alternative auction design 
would be more effective, taking into account 
factors including costs of administration, trans-
parency, fairness, and risks of collusion or ma-
nipulation. In determining whether and how to 
revise the initial regulations under this para-
graph, the Administrator shall not consider 
maximization of revenues to the Federal Gov-
ernment. 
‘‘(C) DELEGATION OR CONTRACT.—Pursu-
ant to regulations under this section, the Ad-
ministrator may, by delegation or contract, pro-
vide for the conduct of auctions under the Ad-
ministrator’s supervision by other departments 
or agencies of the Federal Government or by 
nongovernmental agencies, groups, or organiza-
tions. 
‘‘(7) PAYMENTS FOR ALLOWANCES.— 
‘‘(A) INITIAL
REGULATIONS.—Not later 
than 18 months after the date of enactment of 
this section, the Administrator shall promulgate 
regulations governing the payment for allow-
987 
ances purchased in auction and non-auction 
sales under this section. Such regulations shall 
include the requirement that, in the event that 
full payment for purchased allowances is not 
made on the date of purchase, equal payments 
shall be made one time per calendar quarter 
with all payments for allowances of a vintage 
year made by the end of that vintage year. 
‘‘(B) REVISION OF REGULATIONS.— The 
Administrator may, at any time, revise the ini-
tial regulations promulgated under subpara-
graph (A) based on the Administrator’s experi-
ence in administering collection of payments by 
promulgating new regulations. Such revised reg-
ulations need not meet the requirements identi-
fied in subparagraph (A) if the Administrator 
determines that an alternative payment struc-
ture or frequency would be more effective, tak-
ing into account factors including cost of ad-
ministration, transparency, and fairness. In de-
termining whether and how to revise the initial 
regulations under this paragraph, the Adminis-
trator shall not consider maximization of reve-
nues to the Federal Government.
988 
‘‘(C) PENALTIES
FOR
NON-PAYMENT.— 
Failure to pay for purchased allowances in ac-
cordance with the regulations promulgated pur-
suant to this paragraph shall be a violation of 
the requirements of subsection (b). Section 
113(c)(3) shall apply in the case of any person 
who knowingly fails to pay for purchased allow-
ances in accordance with the regulations pro-
mulgated pursuant to this paragraph. 
‘‘(8) IMPORTED
PRODUCTS.—If the United 
States becomes a party or otherwise adheres to a 
multilateral agreement, including any amendment to 
the Montreal Protocol on Substances That Deplete 
the Ozone Layer, which restricts the production or 
consumption of class II, group II substances— 
‘‘(A) as of the date on which such agree-
ment or amendment enters into force, it shall 
no longer be unlawful for any person to import 
from a party to such agreement or amendment 
any product containing any class II, group II 
substance whose production or consumption is 
regulated by such agreement or amendment 
without holding one consumption allowance or 
one destruction offset credit for each carbon di-
989 
oxide equivalent ton of the class II, group II 
substance; 
‘‘(B) the Administrator shall promulgate 
regulations within 12 months of the date the 
United States becomes a party or otherwise ad-
heres to such agreement or amendment, or the 
date on which such agreement or amendment 
enters into force, whichever is later, to establish 
a new baseline for purposes of paragraph (2), 
which new baseline shall be the original baseline 
less the carbon dioxide equivalent of the annual 
average quantity of any class II substances reg-
ulated by such agreement or amendment con-
tained in products imported from parties to 
such agreement or amendment in calendar 
years 2004, 2005, and 2006; 
‘‘(C) as of the date on which such agree-
ment or amendment enters into force, no per-
son importing any product containing any class 
II, group II substance may, directly or in con-
cert with another person, purchase any con-
sumption allowances for sale by the Adminis-
trator for the importation of products from a 
party to such agreement or amendment that
990 
contain any class II, group II substance re-
stricted by such agreement or amendment; and 
‘‘(D) the Administrator may adjust the 
two allowance pools established in paragraph 
(4) such that up to 90 percent of the consump-
tion allowances available for a calendar year are 
placed in the producer-importer pool with the 
remaining consumption allowances placed in the 
secondary pool. 
‘‘(9) OFFSETS.— 
‘‘(A) CHLOROFLUOROCARBON
DESTRUC-
TION.—Within 18 months after the date of en-
actment of this section, the Administrator shall 
promulgate regulations to provide for the 
issuance of offset credits for the destruction, in 
the 
calendar 
year 
2012 
or 
later, 
of 
chlorofluorocarbons in the United States. The 
Administrator shall establish and distribute to 
the destroying entity a quantity of destruction 
offset credits equal to 0.8 times the number of 
metric tons of carbon dioxide equivalents of re-
duction achieved through the destruction. No 
destruction offset credits shall be established 
for the destruction of a class II, group II sub-
stance.
991 
‘‘(B) DEFINITION.—For purposes of this 
paragraph, the term ‘destruction’ means the 
conversion of a substance by thermal, chemical, 
or other means to another substance with little 
or no carbon dioxide equivalent value and no 
ozone depletion potential. 
‘‘(C) REGULATIONS.—The regulations pro-
mulgated under this paragraph shall include 
standards and protocols for project eligibility, 
certification of destroyers, monitoring, tracking, 
destruction efficiency, quantification of project 
and baseline emissions and carbon dioxide 
equivalent value, and verification. The Adminis-
trator shall ensure that destruction offset cred-
its represent real and verifiable destruction of 
chlorofluorocarbons or other class I or class II, 
group I, substances authorized under subpara-
graph (D). 
‘‘(D) OTHER SUBSTANCES.—The Adminis-
trator may promulgate regulations to add to the 
list of class I and class II, group I, substances 
that may be destroyed for destruction offset 
credits, taking into account a candidate sub-
stance’s carbon dioxide equivalent value, ozone 
depletion potential, prevalence in banks in the
992 
United States, and emission rates, as well as 
the need for additional cost containment under 
the class II, group II cap and the integrity of 
the class II, group II cap. The Administrator 
shall not add a class I or class II, group I sub-
stance to the list if the consumption of the sub-
stance has not been completely phased-out 
internationally (except for essential use exemp-
tions or other similar exemptions) pursuant to 
the Montreal Protocol. 
‘‘(E) EXTENSION OF OFFSETS.—(i) At any 
time after the Administrator promulgates regu-
lations pursuant to subparagraph (A), the Ad-
ministrator may, pursuant to the requirements 
of part D of title VII and based on the carbon 
dioxide equivalent value of the substance de-
stroyed, add the types of destruction projects 
authorized to receive destruction offset credits 
under this paragraph to the list of types of 
projects eligible for offset credits under section 
733. If such projects are added to the list under 
section 733, the issuance of offset credits for 
such projects under part D of title VII shall be 
governed by the requirements of such part D, 
while the issuance of offset credits for such
993 
projects under this paragraph shall be governed 
by the requirements of this paragraph. Nothing 
in this paragraph shall affect the issuance of 
offset credits under section 740. 
‘‘(ii) The Administrator shall not make the 
addition under clause (i) unless the Adminis-
trator finds that insufficient destruction is oc-
curring or is projected to occur under this para-
graph and that the addition would increase de-
struction. 
‘‘(iii) In no event shall more than one de-
struction offset credit be issued under title VII 
and this section for the destruction of the same 
quantity of a substance. 
‘‘(10) LEGAL
STATUS
OF
ALLOWANCES
AND 
CREDITS.—None of the following constitutes a prop-
erty right: 
‘‘(A) A production or consumption allow-
ance. 
‘‘(B) A destruction offset credit. 
‘‘(c) 
DEADLINES
FOR
COMPLIANCE.—Notwith-
standing the deadlines specified for class II substances in 
sections 608, 609, 610, 612, and 613 that occur prior to 
January 1, 2009, the deadline for promulgating regula-
994 
tions under those sections for class II, group II substances 
shall be January 1, 2012. 
‘‘(d) EXCEPTIONS FOR ESSENTIAL USES.—Notwith-
standing any phase down of production and consumption 
required by this section, to the extent consistent with any 
applicable multilateral agreement to which the United 
States is a party or otherwise adheres, the Administrator 
may provide the following exceptions for essential uses: 
‘‘(1) MEDICAL
DEVICES.—The Administrator, 
after notice and opportunity for public comment, 
and in consultation with the Commissioner of the 
Food and Drug Administration, may provide an ex-
ception for the production and consumption of class 
II, group II substances solely for use in medical de-
vices. 
‘‘(2) AVIATION AND SPACE VEHICLE SAFETY.— 
The Administrator, after notice and opportunity for 
public comment, may authorize the production and 
consumption of limited quantities of class II, group 
II substances solely for the purposes of aviation or 
space vehicle safety if either the Administrator of 
the Federal Aviation Administration or the Adminis-
trator of the National Aeronautics and Space Ad-
ministration, in consultation with the Administrator, 
determines that no safe and effective substitute has
995 
been developed and that such authorization is nec-
essary for aviation or space flight safety purposes. 
‘‘(e) DEVELOPING
COUNTRIES.—Notwithstanding 
any phase down of production required by this section, the 
Administrator, after notice and opportunity for public 
comment, may authorize the production of limited quan-
tities of class II, group II substances in excess of the 
amounts otherwise allowable under this section solely for 
export to, and use in, developing countries. Any produc-
tion authorized under this subsection shall be solely for 
purposes of satisfying the basic domestic needs of such 
countries as provided in applicable international agree-
ments, if any, to which the United States is a party or 
otherwise adheres. 
‘‘(f) NATIONAL
SECURITY; FIRE
SUPPRESSION, 
ETC.—The provisions of subsection (f) and paragraphs (1) 
and (2) of subsection (g) of section 604 shall apply to any 
consumption and production phase down of class II, group 
II substances in the same manner and to the same extent, 
consistent with any applicable international agreement to 
which the United States is a party or otherwise adheres, 
as such provisions apply to the substances specified in 
such subsection. 
‘‘(g) ACCELERATED SCHEDULE.—In lieu of section 
606, the provisions of paragraphs (1), (2), and (3) of this
996 
subsection shall apply in the case of class II, group II sub-
stances. 
‘‘(1) IN
GENERAL.—The Administrator shall 
promulgate initial regulations not later than 18 
months after the date of enactment of this section, 
and revised regulations any time thereafter, which 
establish a schedule for phasing down the consump-
tion (and, if the condition in subsection (b)(1)(B) is 
met, the production) of class II, group II substances 
that is more stringent than the schedule set forth in 
this section if, based on the availability of sub-
stitutes, the Administrator determines that such 
more stringent schedule is practicable, taking into 
account technological achievability, safety, and other 
factors the Administrator deems relevant, or if the 
Montreal Protocol, or any applicable international 
agreement to which the United States is a party or 
otherwise adheres, is modified or established to in-
clude a schedule or other requirements to control or 
reduce production, consumption, or use of any class 
II, group II substance more rapidly than the appli-
cable schedule under this section. 
‘‘(2) PETITION.—Any person may submit a pe-
tition to promulgate regulations under this sub-
997 
section in the same manner and subject to the same 
procedures as are provided in section 606(b). 
‘‘(3) INCONSISTENCY.—If the Administrator de-
termines that the provisions of this section regarding 
banking, allowance rollover, or destruction offset 
credits create a significant potential for inconsist-
ency with the requirements of any applicable inter-
national agreement to which the United States is a 
party or otherwise adheres, the Administrator may 
promulgate regulations restricting the availability of 
banking, allowance rollover, or destruction offset 
credits to the extent necessary to avoid such incon-
sistency. 
‘‘(h) EXCHANGE.—Section 607 shall not apply in the 
case of class II, group II substances. Production and con-
sumption allowances for class II, group II substances may 
be freely exchanged or sold but may not be converted into 
allowances for class II, group I substances. 
‘‘(i) LABELING.—(1) In applying section 611 to prod-
ucts containing or manufactured with class II, group II 
substances, in lieu of the words ‘destroying ozone in the 
upper atmosphere’ on labels required under section 611 
there shall be substituted the words ‘contributing to global 
warming’.
998 
‘‘(2) The Administrator may, through rulemaking, 
exempt from the requirements of section 611 products 
containing or manufactured with class II, group II sub-
stances determined to have little or no carbon dioxide 
equivalent value compared to other substances used in 
similar products. 
‘‘(j) NONESSENTIAL PRODUCTS.—For the purposes 
of section 610, class II, group II substances shall be regu-
lated under section 610(b), except that in applying section 
610(b) the word ‘hydrofluorocarbon’ shall be substituted 
for the word ‘chlorofluorocarbon’ and the term ‘class II, 
group II’ shall be substituted for the term ‘class I’. Class 
II, group II substances shall not be subject to the provi-
sions of section 610(d). 
‘‘(k) INTERNATIONAL TRANSFERS.—In the case of 
class II, group II substances, in lieu of section 616, this 
subsection shall apply. To the extent consistent with any 
applicable international agreement to which the United 
States is a party or otherwise adheres, including any 
amendment to the Montreal Protocol, the United States 
may engage in transfers with other parties to such agree-
ment or amendment under the following conditions: 
‘‘(1) The United States may transfer produc-
tion allowances to another party to such agreement 
or amendment if, at the time of the transfer, the
999 
Administrator establishes revised production limits 
for the United States accounting for the transfer in 
accordance with regulations promulgated pursuant 
to this subsection. 
‘‘(2) The United States may acquire production 
allowances from another party to such agreement or 
amendment if, at the time of the transfer, the Ad-
ministrator finds that the other party has revised its 
domestic production limits in the same manner as 
provided with respect to transfers by the United 
States in the regulations promulgated pursuant to 
this subsection. 
‘‘(l) RELATIONSHIP TO OTHER LAWS.— 
‘‘(1) STATE
LAWS.—For purposes of section 
116, the requirements of this section for class II, 
group II substances shall be treated as requirements 
for the control and abatement of air pollution. 
‘‘(2) MULTILATERAL
AGREEMENTS.—Section 
614 shall apply to the provisions of this section con-
cerning class II, group II substances, except that for 
the words ‘Montreal Protocol’ there shall be sub-
stituted the words ‘Montreal Protocol, or any appli-
cable multilateral agreement to which the United 
States is a party or otherwise adheres that restricts 
the production or consumption of class II, group II
1000 
substances,’ and for the words ‘Article 4 of the Mon-
treal Protocol’ there shall be substituted ‘any provi-
sion of such multilateral agreement regarding trade 
with non-parties’. 
‘‘(3) FEDERAL
FACILITIES.—For purposes of 
section 118, the requirements of this section for 
class II, group II substances and corresponding 
State, interstate, and local requirements, administra-
tive authority, and process and sanctions shall be 
treated as requirements for the control and abate-
ment of air pollution within the meaning of section 
118. 
‘‘(m) CARBON DIOXIDE EQUIVALENT VALUE.—(1) 
In lieu of section 602(e), the provisions of this subsection 
shall apply in the case of class II, group II substances. 
Simultaneously with establishing the list of class II, group 
II substances, and simultaneously with any addition to 
that list, the Administrator shall publish the carbon diox-
ide equivalent value of each listed class II, group II sub-
stance, 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 
class II, group II substance. 
‘‘(2) Not later than February 1, 2017, and not less 
than every 5 years thereafter, the Administrator shall—
1001 
‘‘(A) review, and if appropriate, revise the car-
bon dioxide equivalent values established for class II, 
group II substances based on a determination of the 
number of metric tons of carbon dioxide that makes 
the same contributions to global warming over 100 
years as 1 metric ton of each class II, group II sub-
stance; and 
‘‘(B) publish in the Federal Register the results 
of that review and any revisions. 
‘‘(3) A revised determination published in the Federal 
Register under paragraph (2)(B) shall take effect for pro-
duction of class II, group II substances, consumption of 
class II, group II substances, and importation of products 
containing class II, group II substances starting on Janu-
ary 1 of the first calendar year starting at least 9 months 
after the date on which the revised determination was pub-
lished. 
‘‘(4) The Administrator may decrease the frequency 
of review and revision under paragraph (2) if the Adminis-
trator determines that such decrease is appropriate in 
order to synchronize such review and revisions with any 
similar review process carried out pursuant to the United 
Nations Framework Convention on Climate Change, an 
agreement negotiated under that convention, The Vienna 
Convention for the Protection of the Ozone Layer, or an
1002 
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. 
‘‘(n) REPORTING REQUIREMENTS.—In lieu of sub-
sections (b) and (c) of section 603, paragraphs (1) and 
(2) of this subsection shall apply in the case of class II, 
group II substances: 
‘‘(1) IN GENERAL.—On a quarterly basis, or 
such other basis (not less than annually) as deter-
mined by the Administrator, each person who pro-
duced, imported, or exported a class II, group II 
substance, or who imported a product containing a 
class II, group II substance, shall file a report with 
the Administrator setting forth the carbon dioxide 
equivalent amount of the substance that such person 
produced, imported, or exported, as well as the 
amount that was contained in products imported by 
that person, during the preceding reporting period. 
Each such report shall be signed and attested by a 
responsible officer. If all other reporting is complete, 
no such report shall be required from a person after 
April 1 of the calendar year after such person per-
manently ceases production, importation, and expor-
tation of the substance, as well as importation of 
products containing the substance, and so notifies
1003 
the Administrator in writing. If the United States 
becomes a party or otherwise adheres to a multilat-
eral agreement, including any amendment to the 
Montreal Protocol on Substances That Deplete the 
Ozone Layer, that restricts the production or con-
sumption of class II, group II substances, then, if all 
other reporting is complete, no such report shall be 
required from a person with respect to importation 
from parties to such agreement or amendment of 
products containing any class II, group II substance 
restricted by such agreement or amendment, after 
April 1 of the calendar year following the year dur-
ing which such agreement or amendment enters into 
force. 
‘‘(2) BASELINE REPORTS FOR CLASS II, GROUP 
II SUBSTANCES.— 
‘‘(A) IN GENERAL.—Unless such informa-
tion has been previously reported to the Admin-
istrator, on the date on which the first report 
under paragraph (1) of this subsection is re-
quired to be filed, each person who produced, 
imported, or exported a class II, group II sub-
stance, or who imported a product containing a 
class II substance, (other than a substance 
added to the list of class II, group II substances
1004 
after the publication of the initial list of such 
substances under this section), shall file a re-
port with the Administrator setting forth the 
amount of such substance that such person pro-
duced, imported, exported, or that was con-
tained in products imported by that person, 
during each of calendar years 2004, 2005, and 
2006. 
‘‘(B) PRODUCERS.—In reporting under 
subparagraph (A), each person who produced in 
the United States a class II substance during 
calendar year 2004, 2005, or 2006 shall— 
‘‘(i) report all acquisitions or pur-
chases of class II substances during each 
of calendar years 2004, 2005, and 2006 
from all other persons who produced in the 
United States a class II substance during 
calendar year 2004, 2005, or 2006, and 
supply evidence of such acquisitions and 
purchases as deemed necessary by the Ad-
ministrator; and 
‘‘(ii) report all transfers or sales of 
class II substances during each of calendar 
years 2004, 2005, and 2006 to all other 
persons who produced in the United States
1005 
a class II substance during calendar year 
2004, 2005, or 2006, and supply evidence 
of such transfers and sales as deemed nec-
essary by the Administrator. 
‘‘(C) ADDED SUBSTANCES.—In the case of 
a substance added to the list of class II, group 
II substances after publication of the initial list 
of such substances under this section, each per-
son who produced, imported, exported, or im-
ported products containing such substance in 
calendar year 2004, 2005, or 2006 shall file a 
report with the Administrator within 180 days 
after the date on which such substance is added 
to the list, setting forth the amount of the sub-
stance that such person produced, imported, 
and exported, as well as the amount that was 
contained in products imported by that person, 
in calendar years 2004, 2005, and 2006. 
‘‘(o) STRATOSPHERIC OZONE AND CLIMATE PROTEC-
TION FUND.— 
‘‘(1) IN GENERAL.—There is established in the 
Treasury of the United States a Stratospheric Ozone 
and Climate Protection Fund. 
‘‘(2) DEPOSITS.—The Administrator shall de-
posit all proceeds from the auction and non-auction
1006 
sale of allowances under this section into the Strato-
spheric Ozone and Climate Protection Fund. 
‘‘(3) USE.—Amounts deposited into the Strato-
spheric Ozone and Climate Protection Fund shall be 
available, subject to appropriations, exclusively for 
the following purposes: 
‘‘(A) RECOVERY, RECYCLING, AND
REC-
LAMATION.—The Administrator may utilize 
funds to establish a program to incentivize the 
recovery, recycling, and reclamation of any 
Class II substances in order to reduce emissions 
of such substances. 
‘‘(B) 
MULTILATERAL
FUND.—If 
the 
United States becomes a party or otherwise ad-
heres to a multilateral agreement, including any 
amendment to the Montreal Protocol on Sub-
stances That Deplete the Ozone Layer, which 
restricts the production or consumption of class 
II, group II substances, the Administrator may 
utilize funds to meet any related contribution 
obligation of the United States to the Multilat-
eral Fund for the Implementation of the Mon-
treal Protocol or similar multilateral fund es-
tablished under such multilateral agreement.
1007 
‘‘(C) BEST-IN-CLASS APPLIANCES DEPLOY-
MENT PROGRAM.—The Secretary of Energy is 
authorized to utilize funds to carry out the pur-
poses of section 214 of the American Clean En-
ergy and Security Act of 2009. 
‘‘(D) LOW
GLOBAL
WARMING
PRODUCT 
TRANSITION ASSISTANCE PROGRAM.— 
‘‘(i) IN
GENERAL.—The Adminis-
trator, in consultation with the Secretary 
of Energy, may utilize funds in fiscal years 
2012 through 2022 to establish a program 
to provide financial assistance to manufac-
turers of products containing class II, 
group II substances to facilitate the transi-
tion to products that contain or utilize al-
ternative substances with no or low carbon 
dioxide equivalent value and no ozone de-
pletion potential. 
‘‘(ii) DEFINITION.—In this subpara-
graph, the term ‘products’ means refrig-
erators, freezers, dehumidifiers, air condi-
tioners, foam insulation, technical aerosols, 
fire protection systems, and semiconduc-
tors.
1008 
‘‘(iii) FINANCIAL
ASSISTANCE.—The 
Administrator may provide financial assist-
ance to manufacturers pursuant to clause 
(i) for— 
‘‘(I) the design and configuration 
of new products that use alternative 
substances with no or low carbon di-
oxide equivalent value and no ozone 
depletion potential; and 
‘‘(II) the redesign and retooling 
of facilities for the manufacture of 
products in the United States that use 
alternative substances with no or low 
carbon dioxide equivalent value and 
no ozone depletion potential. 
‘‘(iv) REPORTS.—For any fiscal year 
during which the Administrator provides 
financial assistance pursuant to this sub-
paragraph, the Administrator shall submit 
a report to the Congress within 3 months 
of the end of such fiscal year detailing the 
amounts, recipients, specific purposes, and 
results of the financial assistance pro-
vided.’’.
1009 
(b) TABLE OF CONTENTS.—The table of contents of 
title VI of the Clean Air Act (42 U.S.C. 7671 et seq.) 
is amended by adding the following new item at the end 
thereof: 
‘‘Sec. 619. Hydrofluorocarbons (HFCs).’’. 
(c) FIRE SUPPRESSION AGENTS.—Section 605(a) of 
the Clean Air Act (42 U.S.C. 7671(a)) is amended— 
(1) by striking ‘‘or’’ at the end of paragraph 
(2); 
(2) by striking the period at the end of para-
graph (3) and inserting ‘‘; or’’; and 
(3) by adding the following new paragraph after 
paragraph (3): 
‘‘(4) is listed as acceptable for use as a fire sup-
pression agent for nonresidential applications in ac-
cordance with section 612(c).’’. 
(d) MOTOR VEHICLE AIR CONDITIONERS.— 
(1) Section 609(e) of the Clean Air Act (42 
U.S.C. 7671h(e)) is amended by inserting ‘‘, group 
I’’ after each reference to ‘‘class II’’ in the text and 
heading. 
(2) Section 609 of the Clean Air Act (42 U.S.C. 
7671h) is amended by adding the following new sub-
section after subsection (e): 
‘‘(f) CLASS II, GROUP II SUBSTANCES.—
1010 
‘‘(1) REPAIR.—The Administrator may promul-
gate regulations establishing requirements for repair 
of motor vehicle air conditioners prior to adding a 
class II, group II substance. 
‘‘(2) SMALL CONTAINERS.—(A) The Adminis-
trator may promulgate regulations establishing serv-
icing practices and procedures for recovery of class 
II, group II substances from containers which con-
tain less than 20 pounds of such class II, group II 
substances. 
‘‘(B) Not later than 18 months after enactment 
of this subsection, the Administrator shall either 
promulgate regulations requiring that containers 
which contain less than 20 pounds of a class II, 
group II substance be equipped with a device or 
technology that limits refrigerant emissions and 
leaks from the container and limits refrigerant emis-
sions and leaks during the transfer of refrigerant 
from the container to the motor vehicle air condi-
tioner or issue a determination that such require-
ments are not necessary or appropriate. 
‘‘(C) Not later than 18 months after enactment 
of this subsection, the Administrator shall promul-
gate regulations establishing requirements for con-
sumer education materials on best practices associ-
1011 
ated with the use of containers which contain less 
than 20 pounds of a class II, group II substance and 
prohibiting the sale or distribution, or offer for sale 
or distribution, of any class II, group II substance 
in any container which contains less than 20 pounds 
of such class II, group II substance, unless con-
sumer education materials consistent with such re-
quirements are displayed and available at point-of- 
sale locations, provided to the consumer, or included 
in or on the packaging of the container which con-
tain less than 20 pounds of a class II, group II sub-
stance. 
‘‘(D) The Administrator may, through rule-
making, extend the requirements established under 
this paragraph to containers which contain 30 
pounds or less of a class II, group II substance if 
the Administrator determines that such action would 
produce significant environmental benefits. 
‘‘(3) RESTRICTION OF SALES.—Effective Janu-
ary 1, 2014, no person may sell or distribute or offer 
to sell or distribute or otherwise introduce into inter-
state commerce any motor vehicle air conditioner re-
frigerant in any size container unless the substance 
has been found acceptable for use in a motor vehicle 
air conditioner under section 612.’’.
1012 
(e) SAFE ALTERNATIVES POLICY.—Section 612(e) of 
the Clean Air Act (42 U.S.C. 7671k(e)) is amended by 
inserting ‘‘or class II’’ after each reference to ‘‘class I’’. 
SEC. 333. BLACK CARBON. 
(a) DEFINITION.—As used in this section, the term 
‘‘black carbon’’ means primary light absorbing aerosols, 
as defined by the Administrator, based on the best avail-
able science. 
(b) BLACK CARBON ABATEMENT REPORT.—Not 
later than 1 year after the date of enactment of this sec-
tion, the Administrator shall, in consultation with other 
appropriate Federal agencies, submit to Congress a report 
regarding black carbon emissions. The report shall include 
the following: 
(1) A summary of the current information and 
research that identifies— 
(A) an inventory of the major sources of 
black carbon emissions in the United States 
and throughout the world, including— 
(i) an estimate of the quantity of cur-
rent and projected future emissions; and 
(ii) the net climate forcing of the 
emissions from such sources, including 
consideration of co-emissions of other pol-
lutants;
1014 
greatest potential to reduce emissions of black 
carbon and associated public health, economic, 
and environmental impacts associated with 
these emissions; and 
(C) actions, in addition to those identified 
by the Administrator under section 851 of the 
Clean Air Act (as added by subsection (c)), the 
Federal Government may take to encourage or 
require reductions in black carbon emissions. 
(c) BLACK CARBON MITIGATION.—Title VIII of the 
Clean Air Act, as added by section 331 of this Act, and 
amended by section 222 of this Act, is further amended 
by adding after part D the following new part: 
‘‘PART E—BLACK CARBON 
‘‘SEC. 851. BLACK CARBON. 
‘‘(a) DOMESTIC BLACK CARBON MITIGATION.—Not 
later than 18 months after the date of enactment of this 
section, the Administrator, taking into consideration the 
public health and environmental impacts of black carbon 
emissions, including the effects on global and regional 
warming, the Arctic, and other snow and ice-covered sur-
faces, shall propose regulations under the existing authori-
ties of this Act to reduce emissions of black carbon or pro-
pose a finding that existing regulations promulgated pur-
suant to this Act adequately regulate black carbon emis-
1015 
sions. Not later than 2 years after the date of enactment 
of this section, the Administrator shall promulgate final 
regulations under the existing authorities of this Act or 
finalize the proposed finding. Such regulations shall not 
apply to specific types, classes, categories, or other suit-
able groupings of emissions sources that the Adminis-
trator finds are subject to adequate regulation. 
‘‘(b) INTERNATIONAL
BLACK
CARBON
MITIGA-
TION.— 
‘‘(1) REPORT.—Not later than 1 year after the 
date of enactment of this section, the Administrator, 
in coordination with the Secretary of State and 
other appropriate Federal agencies, shall transmit a 
report to Congress on the amount, type, and direc-
tion of all present United States financial, technical, 
and related assistance to foreign countries to reduce, 
mitigate, and otherwise abate black carbon emis-
sions. 
‘‘(2) OTHER OPPORTUNITIES.—The report re-
quired under paragraph (1) shall also identify oppor-
tunities and recommendations, including action 
under existing authorities, to achieve significant 
black carbon emission reductions in foreign countries 
through technical assistance or other approaches 
to—
1016 
‘‘(A) promote sustainable solutions to 
bring clean, efficient, safe, and affordable 
stoves, fuels, or both stoves and fuels to resi-
dents of developing countries that are reliant on 
solid fuels such as wood, dung, charcoal, coal, 
or crop residues for home cooking and heating, 
so as to help reduce the public health, environ-
mental, and economic impacts of black carbon 
emissions from these sources by— 
‘‘(i) identifying key regions for large- 
scale demonstration efforts, and key part-
ners in each such region; and 
‘‘(ii) developing for each such region a 
large-scale implementation strategy with a 
goal of collectively reaching 20,000,000 
homes over 5 years with interventions that 
will— 
‘‘(I) increase stove efficiency by 
over 50 percent (or such other goal as 
determined by the Administrator); 
‘‘(II) reduce emissions of black 
carbon by over 60 percent (or such 
other goal as determined by the Ad-
ministrator); and
1017 
‘‘(III) reduce the incidence of se-
vere pneumonia in children under 5 
years old by over 30 percent (or such 
other goal as determined by the Ad-
ministrator); 
‘‘(B) make technological improvements to 
diesel engines and provide greater access to 
fuels that emit less or no black carbon; 
‘‘(C) reduce unnecessary agricultural or 
other biomass burning where feasible alter-
natives exist; 
‘‘(D) reduce unnecessary fossil fuel burn-
ing that produces black carbon where feasible 
alternatives exist; 
‘‘(E) reduce other sources of black carbon 
emissions; and 
‘‘(F) improve capacity to achieve greater 
compliance with existing laws to address black 
carbon emissions.’’. 
(d) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated such sums as are nec-
essary to carry out this section. 
SEC. 334. STATES. 
Section 116 of the Clean Air Act (42 U.S.C. 7416) 
is amended by adding the following at the end thereof:
1018 
‘‘For the purposes of this section, the phrases ‘standard 
or limitation respecting emissions of air pollutants’ and 
‘requirements respecting control or abatement of air pollu-
tion’ shall include any provision to: cap greenhouse gas 
emissions, require surrender to the State or a political 
subdivision thereof of emission allowances or offset credits 
established or issued under this Act, and require the use 
of such allowances or credits as a means of demonstrating 
compliance with requirements established by a State or 
political subdivision thereof.’’. 
SEC. 335. STATE PROGRAMS. 
Title VIII of the Clean Air Act, as added by section 
331 of this Act and amended by several sections of this 
Act, is further amended by adding after part E (as added 
by section 333(c) of this Act) the following new part: 
‘‘PART F—MISCELLANEOUS 
‘‘SEC. 861. STATE PROGRAMS. 
‘‘Notwithstanding section 116, no State or political 
subdivision thereof shall implement or enforce a cap and 
trade program that covers any capped emissions emitted 
during the years 2012 through 2017. For purposes of this 
section, the term ‘cap and trade program’ means a system 
of greenhouse gas regulation under which a State or polit-
ical subdivision issues a limited number of tradable instru-
ments in the nature of emission allowances and requires
1019 
that sources within its jurisdiction surrender such 
tradeable instruments for each unit of greenhouse gases 
emitted during a compliance period. For purposes of this 
section, a ‘cap-and-trade program’ does not include a tar-
get or limit on greenhouse gas emissions adopted by a 
State or political subdivision that is implemented other 
than through the issuance and surrender of a limited num-
ber of tradable instruments in the nature of emission al-
lowances, nor does it include any other standard, limit, 
regulation, or program to reduce greenhouse gas emissions 
that is not implemented through the issuance and sur-
render of a limited number of tradeable instruments in 
the nature of emission allowances. For purposes of this 
section, the term ‘cap and trade program’ does not in-
clude, among other things, fleet-wide motor vehicle emis-
sion requirements that allow greater emissions with in-
creased vehicle production, or requirements that fuels, or 
other products, meet an average pollution emission rate 
or lifecycle greenhouse gas standard. 
‘‘SEC. 862. GRANTS FOR SUPPORT OF AIR POLLUTION CON-
TROL PROGRAMS. 
‘‘The Administrator is authorized to make grants to 
air pollution control agencies pursuant to section 105 for 
purposes of assisting in the implementation of programs
1020 
to address global warming established under the Safe Cli-
mate Act.’’. 
SEC. 336. ENFORCEMENT. 
(a) REMAND.—Section 307(b) of the Clean Air Act 
(42 U.S.C. 7607(b)) is amended by adding the following 
new paragraphs at the end thereof: 
‘‘(3) If the court determines that any action of 
the Administrator is arbitrary, capricious, or other-
wise unlawful, the court may remand such action, 
without vacatur, if vacatur would impair or delay 
protection of the environment or public health or 
otherwise undermine the timely achievement of the 
purposes of this Act. 
‘‘(4) If the court determines that any action of 
the Administrator is arbitrary, capricious, or other-
wise unlawful, and remands the matter to the Ad-
ministrator, the Administrator shall complete final 
action on remand within an expeditious time period 
no longer than the time originally allowed for the ac-
tion or 1 year, whichever is less, unless the court on 
motion determines that a shorter or longer period is 
necessary, appropriate, and consistent with the pur-
poses of this Act. The court of appeals shall have ju-
risdiction to enforce a deadline for action on remand 
under this subparagraph.’’.
1021 
(b) PETITION
FOR
RECONSIDERATION.—Section 
307(d)(7)(B) of the Clean Air Act (42 U.S.C. 
7607(d)(7)(B)) is amended as follows: 
(1) By inserting after the second sentence ‘‘If 
a petition for reconsideration is filed, the Adminis-
trator shall take final action on such petition, in-
cluding promulgation of final action either revising 
or determining not to revise the action for which re-
consideration is sought, within 150 days after the 
petition is received by the Administrator or the peti-
tion shall be deemed denied for the purpose of judi-
cial review.’’. 
(2) By amending the third sentence to read as 
follows: ‘‘Such person may seek judicial review of 
such denial, or of any other final action, by the Ad-
ministrator, in response to a petition for reconsider-
ation, in the United States court of appeals for the 
appropriate circuit (as provided in subsection (b)).’’. 
SEC. 337. CONFORMING AMENDMENTS. 
(a) FEDERAL ENFORCEMENT.—Section 113 of the 
Clean Air Act (42 U.S.C. 7413) is amended as follows: 
(1) In subsection (a)(3), by striking ‘‘or title 
VI,’’ and inserting ‘‘title VI, title VII, or title VIII’’. 
(2) In subsection (b), by striking ‘‘or a major 
stationary source’’ and inserting ‘‘a major stationary
1022 
source, or a covered EGU under title VIII’’ in the 
material preceding paragraph (1). 
(3) In paragraph (2) of subsection (b), by strik-
ing ‘‘or title VI’’ and inserting ‘‘title VI, title VII, 
or title VIII’’. 
(4) In subsection (c)— 
(A) in the first sentence of paragraph (1), 
by striking ‘‘or title VI (relating to strato-
spheric ozone control),’’ and inserting ‘‘title VI, 
title VII, or title VIII,’’; and 
(B) in the first sentence of paragraph (3), 
by striking ‘‘or VI’’ and inserting ‘‘VI, VII, or 
VIII’’. 
(5) In subsection (d)(1)(B), by striking ‘‘or VI’’ 
and inserting ‘‘VI, VII, or VIII’’. 
(6) In subsection (f), in the first sentence, by 
striking ‘‘or VI’’ and inserting ‘‘VI, VII, or VIII’’. 
(b) RETENTION
OF STATE AUTHORITY.—Section 
116 of the Clean Air Act (42 U.S.C. 7416) is amended 
as follows: 
(1) By striking ‘‘and 233’’ and inserting ‘‘233’’. 
(2) By striking ‘‘of moving sources)’’ and in-
serting ‘‘of moving sources), and 861 (preempting 
certain State greenhouse gas programs for a limited 
time)’’.
1023 
(c) INSPECTIONS, MONITORING, AND ENTRY.—Sec-
tion 114(a) of the Clean Air Act (42 U.S.C. 7414(a)) is 
amended by striking ‘‘section 112,’’ and all that follows 
through ‘‘(ii)’’ and inserting the following: ‘‘section 112, 
or any regulation of greenhouse gas emissions under title 
VII or VIII, (ii)’’. 
(d) ENFORCEMENT.—Subsection (f) of section 304 of 
the Clean Air Act (42 U.S.C. 7604(f)) is amended as fol-
lows: 
(1) By striking ‘‘; or’’ at the end of paragraph 
(3) thereof and inserting a comma. 
(2) By striking the period at the end of para-
graph (4) thereof and inserting ‘‘, or’’. 
(3) By adding the following after paragraph (4) 
thereof: 
‘‘(5) any requirement of title VII or VIII.’’. 
(e) ADMINISTRATIVE PROCEEDINGS AND JUDICIAL 
REVIEW.—Section 307 of the Clean Air Act (42 U.S.C. 
7607) is amended as follows: 
(1) In subsection (a), by striking ‘‘, or section 
306’’ and inserting ‘‘section 306, or title VII or 
VIII’’. 
(2) In subsection (b)(1)— 
(A) by striking ‘‘,,’’ and inserting ‘‘,’’ in 
each place such punctuation appears; and
1024 
(B) by striking ‘‘section 120,’’ in the first 
sentence and inserting ‘‘section 120, any final 
action under title VII or VIII,’’. 
(3) In subsection (d)(1) by amending subpara-
graph (S) to read as follows: 
‘‘(S) the promulgation or revision of any 
regulation under title VII or VIII,’’. 
SEC. 338. DAVIS-BACON COMPLIANCE. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law and in a manner consistent with other provi-
sions in this Act, to receive emission allowances or funding 
under this Act, or the amendments made by this Act, the 
recipient shall provide reasonable assurances that all la-
borers and mechanics employed by contractors and sub-
contractors on projects funded directly by or assisted in 
whole or in part by and through the Federal Government 
pursuant to this Act, or the amendments made by this 
Act, or by any entity established in accordance with this 
Act, or the amendments made by this Act, including the 
Carbon Storage Research Corporation, will be paid wages 
at rates not less than those prevailing on projects of a 
character similar in the locality as determined by the Sec-
retary of Labor in accordance with subchapter IV of chap-
ter 31 of title 40, United States Code (commonly known 
as the ‘‘Davis-Bacon Act’’). With respect to the labor
1025 
standards specified in this section, the Secretary of Labor 
shall have the authority and functions set forth in Reorga-
nization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 
U.S.C. App.) and section 3145 of title 40, United States 
Code. 
(b) EXEMPTION.—Neither subsection (a) nor the re-
quirements of subchapter IV of chapter 31 of title 40, 
United States Code, shall apply to retrofitting of the fol-
lowing: 
(1) Single family homes (both attached and de-
tached) under section 202. 
(2) Owner-occupied residential units in larger 
buildings that have their own dedicated space-condi-
tioning systems under section 202. 
(3) Residential buildings (as defined in section 
202(a)(5)) if designed for residential use by less 
than 4 families. 
(4) Nonresidential buildings (as defined in sec-
tion 202(a)(1)) if the net interior space of such non-
residential building is less than 6,500 square feet. 
SEC. 339. NATIONAL STRATEGY FOR DOMESTIC BIOLOGI-
CAL CARBON SEQUESTRATION. 
Not later than 1 year after the date of enactment 
of this Act, the Administrator of the Environmental Pro-
tection Agency, in consultation with the Secretary of En-
1026 
ergy, the Secretary of Agriculture, the Secretary of the 
Interior, and the heads of such other relevant Federal 
agencies as the President may designate, shall submit to 
Congress a report setting forth a unified and comprehen-
sive strategy to address the key legal, regulatory, techno-
logical, and other barriers to maximizing the potential for 
sustainable biological sequestration of carbon within the 
United States. 
SEC. 340. REDUCING ACID RAIN AND MERCURY POLLU-
TION. 
Not later than 18 months after the date of enactment 
of this Act, the Administrator shall submit to Congress 
a report that analyzes the effects of different carbon diox-
ide reduction strategies and technologies on the emissions 
of mercury, sulfur dioxide, and nitrogen oxide, which 
cause acid rain, particulate matter, ground level ozone, 
mercury contamination, and other environmental prob-
lems. The report shall assess a variety of carbon reduction 
technologies, including the application of various carbon 
capture and sequestration technologies for both new and 
existing power plants. The report shall assess the current 
scientific and technical understanding of the interplay be-
tween the various technologies and emissions of air pollut-
ants, identify hurdles to strategies that could cost-effec-
1027 
tively reduce emissions of multiple pollutants, and make 
appropriate recommendations. 
Subtitle D—Carbon Market 
Assurance 
SEC. 341. CARBON MARKET ASSURANCE. 
(a) AMENDMENT.—The Federal Power Act (16 
U.S.C. 791a and following) is amended by adding at the 
end the following: 
‘‘PART IV—CARBON MARKET ASSURANCE 
‘‘SEC. 401. OVERSIGHT AND ASSURANCE OF CARBON MAR-
KETS. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) COVERED ENTITY.—The term ‘covered en-
tity’ shall have the meaning given in section 700 of 
the Clean Air Act. 
‘‘(2) REGULATED ALLOWANCE.—The term ‘reg-
ulated allowance’ means any emission allowance, 
compensatory allowance, offset credit, or Federal re-
newable electricity credit established or issued under 
the American Clean Energy and Security Act of 
2009. 
‘‘(3) REGULATED
INSTRUMENT.—The term 
‘regulated instrument’ means a regulated allowance 
or a regulated allowance derivative. 
‘‘(b) REGULATED ALLOWANCE MARKET.—
1028 
‘‘(1) AUTHORITY.—The Commission shall pro-
mulgate regulations for the establishment, operation, 
and oversight of markets for regulated allowances 
not later than 18 months after the date of the enact-
ment of this section, and from time to time there-
after as may be appropriate. 
‘‘(2) REGULATIONS.—The regulations promul-
gated pursuant to paragraph (1) shall— 
‘‘(A) provide for effective and comprehen-
sive market oversight; 
‘‘(B) prohibit fraud, market manipulation, 
and excess speculation, and provide measures to 
limit unreasonable fluctuation in the prices of 
regulated allowances; 
‘‘(C) facilitate compliance with title VII of 
the Clean Air Act by covered entities; 
‘‘(D) ensure market transparency and rec-
ordkeeping deemed necessary and appropriate 
by the Commission to provide for efficient price 
discovery; prevention of fraud, market manipu-
lation, and excess speculation; and compliance 
with title VII of the Clean Air Act and section 
610 of the Public Utility Regulatory Policies 
Act of 1978;
1029 
‘‘(E) as necessary, ensure that position 
limitations for individual market participants 
are established with respect to each class of 
regulated allowances; 
‘‘(F) as necessary, ensure that margin re-
quirements are established for each class of reg-
ulated allowances; 
‘‘(G) provide for the formation and oper-
ation of a fair, orderly and liquid national mar-
ket system that allows for the best execution in 
the trading of regulated allowances; 
‘‘(H) limit or eliminate counterparty risks, 
market power concentration risks, and other 
risks associated with trading regulated allow-
ances outside of trading facilities; and 
‘‘(I) establish standards for qualification 
as, and operation of, trading facilities for regu-
lated allowances; 
‘‘(J) establish standards for qualification 
as, and operation of, clearing organizations for 
trading facilities for regulated allowances; and 
‘‘(K) include such other requirements as 
necessary to preserve market integrity and fa-
cilitate compliance with title VII of the Clean 
Air Act and section 610 of the Public Utility
1030 
Regulatory Policies Act of 1978 and the regula-
tions promulgated under such title and such 
section. 
‘‘(3) ENFORCEMENT.— 
‘‘(A) IN GENERAL.—If the Commission de-
termines, after notice and an opportunity for a 
hearing on the record, that any entity has vio-
lated any rule or order issued by the Commis-
sion under this subsection, the Commission may 
issue an order— 
‘‘(i) prohibiting the entity from trad-
ing on a trading facility for regulated al-
lowances registered with the Commission, 
and requiring all such facilities to refuse 
the entity all privileges for such period as 
may be specified in the order; 
‘‘(ii) if the entity is registered with 
the Commission in any capacity, sus-
pending for a period of not more than 6 
months, or revoking, the registration of the 
entity; 
‘‘(iii) assessing the entity a civil pen-
alty of not more than $1,000,000 per day 
per violation for as long as the violation 
continues (and in determining the amount
1031 
of a civil penalty, the Commission shall 
take into account the nature and serious-
ness of the violation and the efforts to 
remedy the violation); and 
‘‘(iv) requiring disgorgement of unjust 
profits, restitution to entities harmed by 
the violation as determined by the Com-
mission, or both. 
‘‘(B) AUTHORITY TO SUSPEND OR REVOKE 
REGISTRATION.—The Commission may suspend 
for a period of not more than 6 months, or re-
voke, the registration of a trading facility for 
regulated allowances or of a clearing organiza-
tion registered by the Commission if, after no-
tice and opportunity for a hearing on the 
record, the Commission finds that— 
‘‘(i) the entity violated any rule or 
order issued by the Commission under this 
subsection; or 
‘‘(ii) a director, officer, employee, or 
agent of the entity has violated any rule or 
order issued by the Commission under this 
subsection. 
‘‘(C) CEASE AND DESIST PROCEEDINGS.—
1032 
‘‘(i) IN GENERAL.—If the Commission 
determines that any entity may be vio-
lating, may have violated, or may be about 
to violate any provision of this part, or any 
regulation promulgated by, or any restric-
tion, condition, or order made or imposed 
by, the Commission under this Act, and if 
the Commission finds that the alleged vio-
lation or threatened violation, or the con-
tinuation of the violation, is likely to result 
in significant harm to covered entities or 
market participants, or significant harm to 
the public interest, the Commission may 
issue a temporary order requiring the enti-
ty— 
‘‘(I) to cease and desist from the 
violation or threatened violation; 
‘‘(II) to take such action as is 
necessary to prevent the violation or 
threatened violation; and 
‘‘(III) to prevent, as the Commis-
sion determines to be appropriate— 
‘‘(aa) significant harm to 
covered entities or market par-
ticipants;
1033 
‘‘(bb) significant harm to 
the public interest; and 
‘‘(cc) frustration of the abil-
ity of the Commission to conduct 
the proceedings or to redress the 
violation at the conclusion of the 
proceedings. 
‘‘(ii) TIMING
OF
ENTRY.—An order 
issued under clause (i) shall be entered 
only after notice and opportunity for a 
hearing, unless the Commission determines 
that notice and hearing before entry would 
be impracticable or contrary to the public 
interest. 
‘‘(iii) 
EFFECTIVE
DATE.—A 
tem-
porary order issued under clause (i) 
shall— 
‘‘(I) become effective upon serv-
ice upon the entity; and 
‘‘(II) unless set aside, limited, or 
suspended by the Commission or a 
court of competent jurisdiction, re-
main effective and enforceable pend-
ing the completion of the proceedings.
1034 
‘‘(D) PROCEEDINGS REGARDING DISSIPA-
TION OR CONVERSION OF ASSETS.— 
‘‘(i) IN
GENERAL.—In a proceeding 
involving an alleged violation of a regula-
tion or order promulgated or issued by the 
Commission, if the Commission determines 
that the alleged violation or related cir-
cumstances are likely to result in signifi-
cant dissipation or conversion of assets, 
the Commission may issue a temporary 
order requiring the respondent to take 
such action as is necessary to prevent the 
dissipation or conversion of assets. 
‘‘(ii) TIMING
OF
ENTRY.—An order 
issued under clause (i) shall be entered 
only after notice and opportunity for a 
hearing, unless the Commission determines 
that notice and hearing before entry would 
be impracticable or contrary to the public 
interest. 
‘‘(iii) 
EFFECTIVE
DATE.—A 
tem-
porary order issued under clause (i) 
shall— 
‘‘(I) become effective upon serv-
ice upon the respondent; and
1035 
‘‘(II) unless set aside, limited, or 
suspended by the Commission or a 
court of competent jurisdiction, re-
main effective and enforceable pend-
ing the completion of the proceedings. 
‘‘(E) REVIEW OF TEMPORARY ORDERS.— 
‘‘(i) APPLICATION FOR REVIEW.—At 
any time after a respondent has been 
served with a temporary cease-and-desist 
order pursuant to subparagraph (C) or 
order regarding the dissipation or conver-
sion of assets pursuant to subparagraph 
(D), the respondent may apply to the Com-
mission to have the order set aside, lim-
ited, or suspended. 
‘‘(ii) NO
PRIOR
HEARING.—If a re-
spondent has been served with a temporary 
order entered without a prior hearing of 
the Commission— 
‘‘(I) the respondent may, not 
later than 10 days after the date on 
which the order was served, request a 
hearing on the application; and 
‘‘(II) the Commission shall hold a 
hearing and render a decision on the
1036 
application at the earliest practicable 
time. 
‘‘(iii) JUDICIAL REVIEW.— 
‘‘(I) IN
GENERAL.—An entity 
shall not be required to submit a re-
quest for rehearing of a temporary 
order before seeking judicial review in 
accordance with this subparagraph. 
‘‘(II) TIMING OF REVIEW.—Not 
later than 10 days after the date on 
which a respondent is served with a 
temporary cease-and-desist order en-
tered with a prior hearing of the Com-
mission, or 10 days after the date on 
which the Commission renders a deci-
sion on an application and hearing 
under clause (i) with respect to any 
temporary order entered without such 
a prior hearing— 
‘‘(aa) the respondent may 
obtain a review of the order in a 
United States circuit court hav-
ing jurisdiction over the circuit in 
which the respondent resides or 
has a principal place of business,
1037 
or in the United States Court of 
Appeals for the District of Co-
lumbia Circuit, for an order set-
ting aside, limiting, or sus-
pending the effectiveness or en-
forcement of the order; and 
‘‘(bb) the court shall have 
jurisdiction to enter such an 
order. 
‘‘(III) NO
PRIOR
HEARING.—A 
respondent served with a temporary 
order entered without a prior hearing 
of the Commission may not apply to 
the applicable court described in sub-
clause (II) except after a hearing and 
decision by the Commission on the ap-
plication of the respondent under 
clauses (i) and (ii). 
‘‘(iv) PROCEDURES.—Section 222 and 
Part III shall apply to— 
‘‘(I) an application for review of 
an order under clause (i); and 
‘‘(II) an order subject to review 
under clause (iii).
1038 
‘‘(v) NO AUTOMATIC STAY OF TEM-
PORARY
ORDER.—The commencement of 
proceedings under clause (iii) shall not, un-
less specifically ordered by the court, oper-
ate as a stay of the order of the Commis-
sion. 
‘‘(F) ACTIONS
TO
COLLECT
CIVIL
PEN-
ALTIES.—If any person fails to pay a civil pen-
alty assessed under this subsection after an 
order assessing the penalty has become final 
and unappealable, the Commission shall bring 
an action to recover the amount of the penalty 
in any appropriate United States district court. 
‘‘(4) TRANSACTION FEES.— 
‘‘(A) 
IN
GENERAL.—The 
Commission 
shall, in accordance with this paragraph, estab-
lish and collect transaction fees designed to re-
cover the costs to the Federal Government of 
the supervision and regulation of regulated al-
lowance markets and market participants, in-
cluding related costs for enforcement activities, 
policy and rulemaking activities, administration, 
legal services, and international regulatory ac-
tivities.
1039 
‘‘(B) INITIAL
FEE
RATE.—Each trading 
facility on or through which regulated allow-
ances are transacted shall pay to the Commis-
sion a fee at a rate of not more than $15 per 
$1,000,000 of the aggregate dollar amount of 
sales 
of 
regulated 
allowances 
transacted 
through the facility. 
‘‘(C) 
ANNUAL
ADJUSTMENT
OF
FEE 
RATE.—The Commission shall, on an annual 
basis— 
‘‘(i) assess the rate at which fees are 
to be collected as necessary to meet the 
cost recovery requirement in subparagraph 
(A); and 
‘‘(ii) consistent with subparagraph 
(B), adjust the rate as necessary in order 
to meet the requirement. 
‘‘(D) REPORT ON ADEQUACY OF FEES IN 
RECOVERING
COSTS.—The Commission, shall, 
on an annual basis, report to the Committee on 
Energy and Commerce of the House of Rep-
resentatives and the Committee on Energy and 
Natural Resources of the Senate on the ade-
quacy of the transaction fees in providing fund-
1040 
ing for the Commission to regulate the regu-
lated allowance markets. 
‘‘(5) JUDICIAL REVIEW.—Judicial review of ac-
tions taken by the Commission under this subsection 
shall be pursuant to part III. 
‘‘(6) ADDITIONAL EMPLOYEES REPORT AND AP-
POINTMENT.—Within 18 months after the date of 
the enactment of this section, the Commission shall 
submit to the President, the Committee on Energy 
and Commerce of the House of Representatives, and 
the Committee on Energy and Natural Resources of 
the Senate, a report that contains recommendations 
as to how many additional employees would be nec-
essary to provide robust oversight and enforcement 
of the regulations promulgated under this sub-
section. As soon as practicable after the completion 
of the report, subject to appropriations, the Commis-
sion shall appoint the recommended number of addi-
tional employees for such purposes. 
‘‘(c) WORKING GROUP.— 
‘‘(1) ESTABLISHMENT.—Not later than 30 days 
after the date of the enactment of this section, the 
President shall establish an interagency working 
group on carbon market oversight, which shall in-
clude the Administrator of the Environmental Pro-
1041 
tection Agency and representatives of other relevant 
agencies, to make recommendations to the Com-
modity Futures Trading Commission regarding pro-
posed regulations for the establishment, operation, 
and oversight of markets for regulated allowance de-
rivatives. 
‘‘(2) REPORT.—Not later than 180 days after 
the date of the enactment of this section, and bienni-
ally thereafter, the interagency working group shall 
submit a written report to the President and Con-
gress that includes its recommendations to the Com-
modity Futures Trading Commission regarding pro-
posed regulations for the establishment, operation, 
and oversight of markets for regulated allowance de-
rivatives and any recommendations to Congress for 
statutory changes needed to ensure the establish-
ment, operation, and oversight of transparent, fair, 
stable, and efficient markets for regulated allowance 
derivatives. 
‘‘(d) PENALTY FOR FRAUD AND FALSE OR MIS-
LEADING STATEMENTS.—A person convicted under sec-
tion 1041 of title 18, United States Code, may be prohib-
ited from holding or trading regulated allowances for a 
period of not more than 5 years pursuant to the regula-
tions promulgated under this section, except that, if the
1042 
person is a covered entity, the person shall be allowed to 
hold sufficient regulated allowances to meet its compliance 
obligations. 
‘‘(e) RELATION TO STATE LAW.—Nothing in this 
section shall preclude, diminish or qualify any authority 
of a State or political subdivision thereof to adopt or en-
force any unfair competition, antitrust, consumer protec-
tion, securities, commodities or any other law or regula-
tion, except that no such State law or regulation may re-
lieve any person of any requirement otherwise applicable 
under this section. 
‘‘(f) MARKET REPORTS.— 
‘‘(1) COLLECTION AND ANALYSIS OF INFORMA-
TION.—The Commission, in conjunction with the 
Commodity Futures Trading Commission, shall, on 
a continuous basis, analyze the following information 
on the functioning of the markets for regulated in-
struments established under this part: 
‘‘(A) The status of, and trends in, the 
markets, including prices, trading volumes, 
transaction types, and trading channels and 
mechanisms. 
‘‘(B) Spikes, collapses, and volatility in 
prices of regulated instruments, and the causes 
therefor.
1043 
‘‘(C) The relationship between the market 
for regulated allowances and allowance deriva-
tives, and the spot and futures markets for en-
ergy commodities, including electricity. 
‘‘(D) The economic effects of the markets, 
including to macro- and micro-economic effects 
of unexpected significant increases and de-
creases in the price of regulated instruments. 
‘‘(E) Any changes in the roles, activities, 
or strategies of various market participants. 
‘‘(F) Regional, industrial, and consumer 
responses to the markets, and energy invest-
ment responses to the markets. 
‘‘(G) Any other issue related to the mar-
kets that the Commission, and the Commodity 
Futures Trading Commission deem appropriate. 
‘‘(2) ANNUAL REPORTS TO THE CONGRESS.— 
Not later than 1 month after the end of each cal-
endar year, the Commission, in conjunction with the 
Commodity Futures Trading Commission, shall sub-
mit to the President, the Committee on Agriculture 
and Committee on Energy and Commerce of the 
House of Representatives, and the Committee on 
Agriculture, Nutrition, and Forestry and Committee 
on Energy and Natural Resources of the Senate,
1044 
and make available to the public, a report on the 
matters described in paragraph (1) with respect to 
the year, including recommendations for any admin-
istrative or statutory measures the Commission and 
the Commodity Futures Trading Commission con-
sider necessary to address any threats to the trans-
parency, fairness, or integrity of the markets in reg-
ulated instruments. 
‘‘SEC. 402. APPLICABILITY OF PART III PROVISIONS. 
‘‘(a) SECTIONS 301, 304, AND 306.—Sections 301, 
304, and 306 shall not apply to this part. 
‘‘(b) SECTION 315.—In applying section 315(a) to 
this part, the words ‘person or entity’ shall be substituted 
for the words ‘licensee or public utility’. In applying sec-
tion 315(b) to this part, the words ‘an entity’ shall be sub-
stituted for the words ‘a licensee or public utility’ and the 
words ‘such entity’ shall be substituted for the words ‘such 
licensee or public utility’. 
‘‘(c) SECTION 316.—Section 316(a) shall not apply 
to section 401(d).’’. 
(b) CRIMINAL PROHIBITION AGAINST FRAUD AND 
FALSE OR MISLEADING STATEMENTS.— 
(1) Chapter 47 of title 18, United States Code, 
is amended by adding at the end the following:
1045 
‘‘§ 1041. Fraud and false statements in connection 
with regulated allowances 
‘‘Whoever in connection with a transaction involving 
a regulated allowance (as defined in section 401(a) of the 
Federal Power Act, as added by section 341 of the Amer-
ican Clean Energy and Security Act of 2009), know-
ingly— 
‘‘(1) makes or uses a materially false or mis-
leading statement, writing, representation, scheme, 
or device; or 
‘‘(2) falsifies, conceals, or covers up by any 
trick, scheme, or device any material fact, 
shall be fined not more than $5,000,000 (or $25,000,000 
in the case of an organization) or imprisoned not more 
than 20 years, or both.’’. 
(2) The table of sections at the beginning of 
chapter 47 of title 18, United States Code, is 
amended by adding at the end the following new 
item: 
‘‘1041. Fraud and false statements in connection with regulated allowances.’’. 
SEC. 342. CARBON DERIVATIVE MARKETS. 
(a) Section 1a(14) of the Commodity Exchange Act 
(7 U.S.C. 1a(14)) is amended by striking ‘‘or an agricul-
tural commodity’’ and inserting ‘‘, an agricultural com-
modity, or any emission allowance, compensatory allow-
ance, offset credit, or Federal renewable electricity credit
1046 
established or issued under the American Clean Energy 
and Security Act of 2009’’. 
(b) Section 4(c) of such Act (7 U.S.C. 6(c)) is amend-
ed by adding at the end the following: 
‘‘(6) This subsection does not apply to any 
agreement, contract, or transaction for any emission 
allowance, compensatory allowance, offset credit, or 
Federal renewable electricity credit established or 
issued under the American Clean Energy and Secu-
rity Act of 2009.’’. 
Subtitle E—Additional Market 
Assurance 
SEC. 351. REGULATION OF CERTAIN TRANSACTIONS IN DE-
RIVATIVES INVOLVING ENERGY COMMOD-
ITIES. 
(a) ENERGY COMMODITY DEFINED.—Section 1a of 
the Commodity Exchange Act (7 U.S.C. 1a) is amended— 
(1) in paragraph (14), by inserting ‘‘, an energy 
commodity,’’ after ‘‘excluded commodity’’; 
(2) by redesignating paragraphs (13) through 
(21) and paragraphs (22) through (34) as para-
graphs (14) through (22) and paragraphs (24) 
through (36), respectively; 
(3) by inserting after paragraph (12) the fol-
lowing:
1047 
‘‘(13) ENERGY COMMODITY.—The term ‘energy 
commodity’ means— 
‘‘(A) coal; 
‘‘(B) crude oil, gasoline, diesel fuel, jet 
fuel, heating oil, and propane; 
‘‘(C) electricity (excluding financial trans-
mission rights which are subject to regulation 
and oversight by the Federal Energy Regu-
latory Commission); 
‘‘(D) natural gas; and 
‘‘(E) any other substance (other than an 
excluded commodity, a metal, or an agricultural 
commodity) that is used as a source of energy, 
as the Commission, in its discretion, deems ap-
propriate.’’; and 
(4) by inserting after paragraph (22) (as so re-
designated by paragraph (2) of this subsection) the 
following: 
‘‘(23) INCLUDED ENERGY TRANSACTION.—The 
term ‘included energy transaction’ means a contract, 
agreement, or transaction in an energy commodity 
for future delivery that provides for a delivery point 
of the energy commodity in the United States or a 
territory or possession of the United States, or that
1048 
is offered or transacted on or through a computer 
terminal located in the United States.’’. 
(b) EXTENSION
OF REGULATORY AUTHORITY
TO 
SWAPS
INVOLVING
ENERGY
TRANSACTIONS.—Section 
2(g) of such Act (7 U.S.C. 2(g)) is amended by inserting 
‘‘or an energy commodity’’ after ‘‘agricultural com-
modity’’. 
(c) ELIMINATION OF EXEMPTION FOR OVER-THE- 
COUNTER SWAPS INVOLVING ENERGY COMMODITIES.— 
Section 2(h)(1) of such Act (7 U.S.C. 2(h)(1)) is amended 
by inserting ‘‘(other than an energy commodity)’’ after 
‘‘exempt commodity’’. 
(d) EXTENSION OF REGULATORY AUTHORITY TO IN-
CLUDED ENERGY TRANSACTIONS ON FOREIGN BOARDS 
OF TRADE.—Section 4 of such Act (7 U.S.C. 6) is amend-
ed— 
(1) in subsection (a), by inserting ‘‘, and which 
is not an included energy transaction’’ after ‘‘terri-
tories or possessions’’ the 2nd place it appears; and 
(2) in subsection (b), by adding at the end the 
following: ‘‘The preceding sentence shall not apply 
with respect to included energy transactions.’’. 
(e) LIMITATION OF GENERAL EXEMPTIVE AUTHOR-
ITY OF THE CFTC WITH RESPECT TO INCLUDED EN-
ERGY TRANSACTIONS.—
1049 
(1) IN GENERAL.—Section 4(c) of such Act (7 
U.S.C. 6(c)) is amended by adding at the end the 
following: 
‘‘(6) The Commission may not exempt any included 
energy transaction from the requirements of subsection 
(a), unless the Commission provides 60 days advance no-
tice to the Congress and the Position Limit Energy Advi-
sory Group and solicits public comment about the exemp-
tion request and any proposed Commission action.’’. 
(2) NULLIFICATION OF NO-ACTION LETTER EX-
EMPTIONS TO CERTAIN REQUIREMENTS APPLICABLE 
TO INCLUDED ENERGY TRANSACTIONS.—Beginning 
180 days after the date of the enactment of this Act, 
any exemption provided by the Commodity Futures 
Trading Commission that has allowed included en-
ergy transactions (as defined in section 1a(13) of 
the Commodity Exchange Act) to be conducted with-
out regard to the requirements of section 4(a) of 
such Act shall be null and void. 
(f) REQUIREMENT TO ESTABLISH UNIFORM SPECU-
LATIVE POSITION LIMITS FOR ENERGY TRANSACTIONS.— 
(1) IN GENERAL.—Section 4a(a) of such Act (7 
U.S.C. 6a(a)) is amended— 
(A) by inserting ‘‘(1)’’ after ‘‘(a)’’;
1050 
(B) by inserting after the 2nd sentence the 
following: ‘‘With respect to energy transactions, 
the Commission shall fix limits on the aggre-
gate number of positions which may be held by 
any person for each month across all markets 
subject to the jurisdiction of the Commission.’’; 
(C) in the 4th sentence by inserting ‘‘, con-
sistent with the 3rd sentence,’’ after ‘‘Commis-
sion’’; and 
(D) by adding after and below the end the 
following: 
‘‘(2)(A) Not later than 60 days after the date of the 
enactment of this paragraph, the Commission shall con-
vene a Position Limit Energy Advisory Group consisting 
of representatives from— 
‘‘(i) 7 predominantly commercial short hedgers 
of the actual energy commodity for future delivery; 
‘‘(ii) 7 predominantly commercial long hedgers 
of the actual energy commodity for future delivery; 
‘‘(iii) 4 non-commercial participants in markets 
for energy commodities for future delivery; and 
‘‘(iv) each designated contract market or de-
rivatives transaction execution facility upon which a 
contract in the energy commodity for future delivery 
is traded, and each electronic trading facility that
1051 
has a significant price discovery contract in the en-
ergy commodity. 
‘‘(B) Not later than 60 days after the date on which 
the advisory group is convened under subparagraph (A), 
and annually thereafter, the advisory group shall submit 
to the Commission advisory recommendations regarding 
the position limits to be established in paragraph (1). 
‘‘(C) The Commission shall have exclusive authority 
to grant exemptions for bona fide hedging transactions 
and positions from position limits imposed under this Act 
on energy transactions.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) SIGNIFICANT PRICE DISCOVERY CON-
TRACTS.—Section 2(h)(7) of such Act (7 U.S.C. 
2(h)(7)) is amended— 
(i) in subparagraph (A)— 
(I) by inserting ‘‘of this para-
graph and section 4a(a)’’ after ‘‘(B) 
through (D)’’; and 
(II) by inserting ‘‘of this para-
graph’’ before the period; and 
(ii) in subparagraph (C)(ii)(IV)— 
(I) in the heading, by striking 
‘‘LIMITATIONS OR’’; and
1052 
(II) by striking ‘‘position limita-
tions or’’. 
(B) CONTRACTS TRADED ON OR THROUGH 
DESIGNATED
CONTRACT
MARKETS.—Section 
5(d)(5) of such Act (7 U.S.C. 7(d)(5)) is 
amended— 
(i) in the heading by striking ‘‘LIMI-
TATIONS OR’’; and 
(ii) by striking ‘‘position limitations 
or’’. 
(C) CONTRACTS TRADED ON OR THROUGH 
DERIVATIVES TRANSACTION EXECUTION FACILI-
TIES.—Section 5a(d)(4) of such Act (7 U.S.C. 
7a(d)(4)) is amended— 
(i) in the heading by striking ‘‘LIMI-
TATIONS OR’’; and 
(ii) by striking ‘‘position limits or’’. 
(g) ELIMINATION OF THE SWAPS LOOPHOLE.—Sec-
tion 4a(c) of such Act (7 U.S.C. 6a(c)) is amended— 
(1) by inserting ‘‘(1)’’ after ‘‘(c)’’; and 
(2) by adding after and below the end the fol-
lowing: 
‘‘(2) For the purposes of contracts of sale for future 
delivery and options on such contracts or commodities, the 
Commission shall define what constitutes a bona fide
1053 
hedging transaction or position as a transaction or posi-
tion that— 
‘‘(A)(i) represents a substitute for transactions 
made or to be made or positions taken or to be 
taken at a later time in a physical marketing chan-
nel; 
‘‘(ii) is economically appropriate to the reduc-
tion of risks in the conduct and management of a 
commercial enterprise; and 
‘‘(iii) arises from the potential change in the 
value of— 
‘‘(I) assets that a person owns, produces, 
manufactures, processes, or merchandises or 
anticipates owning, producing, manufacturing, 
processing, or merchandising; 
‘‘(II) liabilities that a person owns or an-
ticipates incurring; or 
‘‘(III) services that a person provides, pur-
chases, or anticipates providing or purchasing; 
or 
‘‘(B) reduces risks attendant to a position re-
sulting from a transaction that— 
‘‘(i) was executed pursuant to subsection 
(d), (g), (h)(1), or (h)(2) of section 2, or an ex-
1054 
emption issued by the Commission by rule, reg-
ulation or order; and 
‘‘(ii) was executed opposite a counterparty 
for which the transaction would qualify as a 
bona fide hedging transaction pursuant to para-
graph (2)(A) of this subsection.’’. 
(h) DETAILED REPORTING AND DISAGGREGATION OF 
MARKET DATA.—Section 4 of such Act (7 U.S.C. 6) is 
amended by adding at the end the following: 
‘‘(e) DETAILED REPORTING AND DISAGGREGATION 
OF MARKET DATA.— 
‘‘(1) INDEX TRADERS AND SWAP DEALERS RE-
PORTING.—The Commission shall issue a proposed 
rule defining and classifying index traders and swap 
dealers (as those terms are defined by the Commis-
sion) for purposes of data reporting requirements 
and setting routine detailed reporting requirements 
for any positions of such entities in contracts traded 
on designated contract markets, over-the-counter 
markets, derivatives transaction execution facilities, 
foreign boards of trade subject to section 4(f), and 
electronic trading facilities with respect to signifi-
cant price discovery contracts not later than 120 
days after the date of the enactment of this sub-
1055 
section, and issue a final rule within 180 days after 
such date of enactment. 
‘‘(2) DISAGGREGATION OF INDEX FUNDS AND 
OTHER
DATA
IN
MARKETS.—Subject to section 8 
and beginning within 60 days of the issuance of the 
final rule required by paragraph (1), the Commis-
sion shall disaggregate and make public weekly— 
‘‘(A) the number of positions and total no-
tional value of index funds and other passive, 
long-only and short-only positions (as defined 
by the Commission) in all markets to the extent 
such information is available; and 
‘‘(B) data on speculative positions relative 
to bona fide physical hedgers in those markets 
to the extent such information is available. 
‘‘(3) DISCLOSURE OF IDENTITY OF HOLDERS 
OF POSITIONS IN INDEXES IN EXCESS OF POSITION 
LIMITS.—The Commission shall include in its weekly 
Commitment of Trader reports the identity of each 
person who holds a position in an index in excess of 
a limit imposed under section 4i.’’. 
(i) AUTHORITY TO SET LIMITS TO PREVENT EXCES-
SIVE SPECULATION IN INDEXES.—
1056 
(1) IN GENERAL.—Section 4a of such Act (7 
U.S.C. 6a) is amended by adding at the end the fol-
lowing: 
‘‘(f) The provisions of this section shall apply to the 
amounts of trading which may be done or positions which 
may be held by any person under contracts of sale of an 
index for future delivery on or subject to the rules of any 
contract market, derivatives transaction execution facility, 
or over-the-counter market, or on an electronic trading fa-
cility with respect to a significant price discovery contract, 
in the same manner in which this section applies to con-
tracts of sale of a commodity for future delivery.’’. 
(2) REGULATIONS.—The Commodity Futures 
Trading Commission shall issue regulations under 
section 4a(f) of the Commodity Exchange Act within 
180 days after the date of the enactment of this Act. 
SEC. 352. NO EFFECT ON AUTHORITY OF THE FEDERAL EN-
ERGY REGULATORY COMMISSION. 
Section 2 of the Commodity Exchange Act (7 U.S.C. 
2) is amended by adding at the end the following: 
‘‘(j) This Act shall not be interpreted to affect the 
jurisdiction of the Federal Energy Regulatory Commission 
with respect to the authority of the Federal Energy Regu-
latory Commission under the Federal Power Act (16 
U.S.C. 791a et seq.), the Natural Gas Act (15 U.S.C. 717
1057 
et seq.), or other law to obtain information, carry out en-
forcement actions, or otherwise carry out the responsibil-
ities of the Federal Energy Regulatory Commission.’’. 
SEC. 353. INSPECTOR GENERAL OF THE COMMODITY FU-
TURES TRADING COMMISSION. 
(a) ELEVATION OF OFFICE.— 
(1) INCLUSION OF CFTC IN DEFINITION OF ES-
TABLISHMENT.— 
(A) Section 12(1) of the Inspector General 
Act of 1978 (5 U.S.C. App.) is amended by 
striking ‘‘or the Federal Cochairpersons of the 
Commissions established under section 15301 
of title 40, United States Code;’’ and inserting 
‘‘the Federal Cochairpersons of the Commis-
sions established under section 15301 of title 
40, United States Code; or the Chairman of the 
Commodity Futures Trading Commission;’’. 
(B) Section 12(2) of the Inspector General 
Act of 1978 (5 U.S.C. App.) is amended by 
striking ‘‘or the Commissions established under 
section 15301 of title 40, United States Code,’’ 
and inserting ‘‘the Commissions established 
under section 15301 of title 40, United States 
Code, or the Commodity Futures Trading Com-
mission,’’.
1058 
(2) EXCLUSION OF CFTC FROM DEFINITION OF 
DESIGNATED
FEDERAL
ENTITY.—Section 8G(a)(2) 
of the Inspector General Act of 1978 (5 U.S.C. 
App.) is amended by striking ‘‘the Commodity Fu-
tures Trading Commission,’’. 
(b) PROVISIONS RELATING TO PAY AND PERSONNEL 
AUTHORITY.— 
(1) PROVISION RELATING TO THE POSITION OF 
INSPECTOR GENERAL OF THE CFTC.—In the case of 
the Inspector General of the Commodities Futures 
Trading Commission, subsections (b) and (c) of sec-
tion 4 of the Inspector General Reform Act of 2008 
(Public Law 110–409) shall apply in the same man-
ner as if the Commission was a designated Federal 
entity under section 8G. The Inspector General of 
the Commodities Futures Trading Commission shall 
not be subject to section 3(e) of such Act. 
(2) PROVISION
RELATING
TO
OTHER
PER-
SONNEL.—Notwithstanding paragraphs (7) and (8) 
of section 6(a) of the Inspector General Act of 1978 
(5 U.S.C. App.), the Inspector General of the Com-
modities Futures Trading Commission may select, 
appoint, and employ such officers and employees as 
may be necessary for carrying out the functions, 
powers, and duties of the Office of Inspector General
1059 
and to obtain the temporary or intermittent services 
of experts or consultants or an organization of ex-
perts or consultants, subject to the applicable laws 
and regulations that govern such selections, appoint-
ments, and employment, and the obtaining of such 
services, within the Commodities Futures Trading 
Commission. 
(c) EFFECTIVE DATE; TRANSITION RULE.— 
(1) EFFECTIVE DATE.—The amendments made 
by this section shall take effect 30 days after the 
date of the enactment of this Act. 
(2) TRANSITION RULE.—An individual serving 
as Inspector General of the Commodity Futures 
Trading Commission on the effective date of this 
section pursuant to an appointment made under sec-
tion 8G of the Inspector General Act of 1978 (5 
U.S.C. App.)— 
(A) may continue so serving until the 
President makes an appointment under section 
3(a) of such Act consistent with the amend-
ments made by this section; and 
(B) shall, while serving under subpara-
graph (A), remain subject to the provisions of 
section 8G of such Act which apply with respect
1060 
to the Commodity Futures Trading Commis-
sion. 
SEC. 354. SETTLEMENT AND CLEARING THROUGH REG-
ISTERED DERIVATIVES CLEARING ORGANIZA-
TIONS. 
(a) IN GENERAL.— 
(1) APPLICATION
TO
EXCLUDED
DERIVATIVE 
TRANSACTIONS.— 
(A) Section 2(d)(1) of the Commodity Ex-
change Act (7 U.S.C. 2(d)(1)) is amended— 
(i) by striking ‘‘and’’ at the end of 
subparagraph (A); 
(ii) by striking the period at the end 
of subparagraph (B) and inserting ‘‘; 
and’’; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(C) except as provided in section 4(f), the 
agreement, contract, or transaction is settled 
and cleared through a derivatives clearing orga-
nization registered with the Commission.’’. 
(B) Section 2(d)(2) of such Act (7 U.S.C. 
2(d)(2)) is amended— 
(i) by striking ‘‘and’’ at the end of 
subparagraph (B);
1061 
(ii) by striking the period at the end 
of subparagraph (C) and inserting ‘‘; and’’; 
and 
(iii) by adding at the end the fol-
lowing: 
‘‘(D) except as provided in section 4(f), the 
agreement, contract, or transaction is settled 
and cleared through a derivatives clearing orga-
nization registered with the Commission.’’. 
(2) APPLICATION
TO
CERTAIN
SWAP
TRANS-
ACTIONS.—Section 2(g) of such Act (7 U.S.C. 2(g)) 
is amended— 
(A) by striking ‘‘and’’ at the end of para-
graph (2); 
(B) by striking the period at the end of 
paragraph (3) and inserting ‘‘; and’’; and 
(C) by adding at the end the following: 
‘‘(4) except as provided in section 4(f), settled 
and cleared through a derivatives clearing organiza-
tion registered with the Commission.’’. 
(3) APPLICATION TO CERTAIN TRANSACTIONS 
IN EXEMPT COMMODITIES.— 
(A) Section 2(h)(1) of such Act ( 7 U.S.C. 
2(h)(1)) is amended—
1062 
(i) by striking ‘‘and’’ at the end of 
subparagraph (A); 
(ii) by striking the period at the end 
of subparagraph (B) and inserting ‘‘; 
and’’; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(C) except as provided in section 4(f), is 
settled and cleared through a derivatives clear-
ing organization registered with the Commis-
sion.’’. 
(B) Section 2(h)(3) of such Act (7 U.S.C. 
2(h)(3)) is amended— 
(i) by striking ‘‘and’’ at the end of 
subparagraph (A); 
(ii) by striking the period at the end 
of subparagraph (B) and inserting ‘‘; 
and’’; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(C) except as provided in section 4(f), set-
tled and cleared through a derivatives clearing 
organization registered with the Commission.’’. 
(4) GENERAL
EXEMPTIVE
AUTHORITY.—Sec-
tion 4(c)(1) of such Act (7 U.S.C. 6(c)(1)) is
1063 
amended by inserting ‘‘the agreement, contract, or 
transaction, except as provided in section 4(h), will 
be settled and cleared through a derivatives clearing 
organization registered with the Commission and’’ 
before ‘‘the Commission determines’’. 
(5) CONFORMING
AMENDMENT
RELATING
TO 
SIGNIFICANT
PRICE
DISCOVERY
CONTRACTS.—Sec-
tion 2(h)(7)(D) of such Act (7 U.S.C. 2(h)(7)(D)) is 
amended by striking the designation and heading for 
the subparagraph and all that follows through ‘‘As 
part of’’ and inserting the following: 
‘‘(D) REVIEW OF IMPLEMENTATION.—As 
part of’’. 
(b) ALTERNATIVES TO CLEARING THROUGH DES-
IGNATED CLEARING ORGANIZATIONS.—Section 4 of such 
Act (7 U.S.C. 6), as amended by section 351(h) of this 
Act, is amended by adding at the end the following: 
‘‘(f) ALTERNATIVES TO CLEARING THROUGH DES-
IGNATED CLEARING ORGANIZATIONS.— 
‘‘(1) SETTLEMENT
AND
CLEARING
THROUGH 
CERTAIN OTHER REGULATED ENTITIES.—An agree-
ment, contract, or transaction, or class thereof, re-
lating to an excluded commodity, that would other-
wise be required to be settled and cleared by section 
2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), or
1064 
2(h)(3)(C) of this Act, or subsection (c)(1) of this 
section may be settled and cleared through an entity 
listed in subsections (a) or (b) of section 409 of the 
Federal Deposit Insurance Corporation Improvement 
Act of 1991. 
‘‘(2) WAIVER OF CLEARING REQUIREMENT.— 
‘‘(A) The Commission, in its discretion, 
may exempt an agreement, contract, or trans-
action, or class thereof, that would otherwise be 
required by section 2(d)(1)(C), 2(d)(2)(D), 
2(g)(4), 2(h)(1)(C), or 2(h)(3)(C) of this Act, 
or subsection (c)(1) of this section to be settled 
and cleared through a derivatives clearing orga-
nization registered with the Commission from 
such requirement. 
‘‘(B) In granting exemptions pursuant to 
subparagraph (A), the Commission shall consult 
with the Securities and Exchange Commission 
and the Board of Governors of the Federal Re-
serve System regarding exemptions that relate 
to excluded commodities or entities for which 
the Securities Exchange Commission or the 
Board of Governors of the Federal Reserve Sys-
tem serve as the primary regulator.
1065 
‘‘(C) Before granting an exemption pursu-
ant to subparagraph (A), the Commission shall 
find that the agreement, contract, or trans-
action, or class thereof— 
‘‘(i) is highly customized as to its ma-
terial terms and conditions; 
‘‘(ii) is transacted infrequently; 
‘‘(iii) does not serve a significant 
price-discovery function in the market-
place; and 
‘‘(iv) is being entered into by parties 
who can demonstrate the financial integ-
rity of the agreement, contract, or trans-
action and their own financial integrity, as 
such terms and standards are determined 
by the Commission. The standards may in-
clude, with respect to any federally regu-
lated financial entity for which net capital 
requirements are imposed, a net capital re-
quirement associated with any agreement, 
contract, or transaction subject to an ex-
emption from the clearing requirement 
that is higher than the net capital require-
ment that would be associated with such a 
transaction were it cleared.
1066 
‘‘(D) Any agreement, contract, or trans-
action, or class thereof, which is exempted pur-
suant to subparagraph (A) shall be reported to 
the Commission in a manner designated by the 
Commission, or to such other entity the Com-
mission deems appropriate. 
‘‘(E) The Commission, the Securities and 
Exchange Commission and the Board of Gov-
ernors of the Federal Reserve System shall 
enter into a memorandum of understanding by 
which the information reported to the Commis-
sion pursuant to subparagraph (D) with regard 
to excluded commodities or entities for which 
the Securities Exchange Commission or the 
Board of Governors of the Federal Reserve Sys-
tem serve as the primary regulator may be pro-
vided to the other agencies. 
‘‘(g) SPOT AND FORWARD EXCLUSION.—The settle-
ment and clearing requirements of section 2(d)(1)(C), 
2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 2(h)(3)(C), or 4(c)(1) 
shall not apply to an agreement, contract, or transaction 
of any cash commodity for immediate or deferred ship-
ment or delivery, as defined by the Commission.’’. 
(c) ADDITIONAL REQUIREMENTS APPLICABLE
TO 
APPLICANTS
FOR
REGISTRATION
AS
A
DERIVATIVE
1067 
CLEARING ORGANIZATION.—Section 5b(c)(2) of such Act 
(7 U.S.C. 7a–1(c)(2)) is amended by adding at the end 
the following: 
‘‘(O) DISCLOSURE OF GENERAL INFORMA-
TION.—The applicant shall disclose publicly and 
to the Commission information concerning— 
‘‘(i) the terms and conditions of con-
tracts, 
agreements, 
and 
transactions 
cleared and settled by the applicant; 
‘‘(ii) the conventions, mechanisms, 
and practices applicable to the contracts, 
agreements, and transactions; 
‘‘(iii) the margin-setting methodology 
and the size and composition of the finan-
cial resource package of the applicant; and 
‘‘(iv) other information relevant to 
participation in the settlement and clearing 
activities of the applicant. 
‘‘(P) DAILY PUBLICATION OF TRADING IN-
FORMATION.—The applicant shall make public 
daily information on settlement prices, volume, 
and open interest for contracts settled or 
cleared pursuant to the requirements of section 
2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 
2(h)(3)(C) or 4(c)(1) of this Act by the appli-
1068 
cant if the Commission determines that the 
contracts perform a significant price discovery 
function for transactions in the cash market for 
the commodity underlying the contracts. 
‘‘(Q) FITNESS STANDARDS.—The applicant 
shall establish and enforce appropriate fitness 
standards for directors, members of any dis-
ciplinary committee, and members of the appli-
cant, and any other persons with direct access 
to the settlement or clearing activities of the 
applicant, including any parties affiliated with 
any of the persons described in this subpara-
graph.’’. 
(d) AMENDMENTS.— 
(1) Section 409 of the Federal Deposit Insur-
ance Corporation Improvement Act of 1991 (12 
U.S.C. 4422) is amended by adding at the end the 
following: 
‘‘(c) 
CLEARING
REQUIREMENT.—A 
multilateral 
clearing organization described in subsections (a) or (b) 
of this section shall comply with requirements similar to 
the requirements of sections 5b and 5c of the Commodity 
Exchange Act.’’. 
(2) Section 407 of the Legal Certainty for 
Bank Products Act of 2000 (7 U.S.C. 27e) is
1069 
amended by inserting ‘‘and the settlement and clear-
ing requirements of sections 2(d)(1)(C), 2(d)(2)(D), 
2(g)(4), 2(h)(1)(C), 2(h)(3)(C), and 4(c)(1) of such 
Act’’ after ‘‘the clearing of covered swap agree-
ments’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall take effect 150 days after the date of 
the enactment of this Act. 
(f) TRANSITION RULE.—Any agreement, contract, or 
transaction entered into before the date of the enactment 
of this Act or within 150 days after such date of enact-
ment, in reliance on subsection (d), (g), (h)(1), or (h)(3) 
of section 2 of the Commodity Exchange Act or any other 
exemption issued by the Commission Futures Trading 
Commission by rule, regulation, or order shall, within 90 
days after such date of enactment, unless settled and 
cleared through an entity registered with the Commission 
as a derivatives clearing organization or another clearing 
entity pursuant to section 4(f) of such Act, be reported 
to the Commission in a manner designated by the Com-
mission, or to such other entity as the Commission deems 
appropriate.
1070 
SEC. 355. LIMITATION ON ELIGIBILITY TO PURCHASE A 
CREDIT DEFAULT SWAP. 
(a) IN GENERAL.—Section 4c of the Commodity Ex-
change Act (7 U.S.C. 6c) is amended by adding at the 
end the following: 
‘‘(h) LIMITATION ON ELIGIBILITY TO PURCHASE A 
CREDIT DEFAULT SWAP.—It shall be unlawful for any 
person to enter into a credit default swap unless the per-
son— 
‘‘(1) owns a credit instrument which is insured 
by the credit default swap; 
‘‘(2) would experience financial loss if an event 
that is the subject of the credit default swap occurs 
with respect to the credit instrument; and 
‘‘(3) meets such minimum capital adequacy 
standards as may be established by the Commission, 
in consultation with the Board of Governors of the 
Federal Reserve System, or such more stringent 
minimum capital adequacy standards as may be es-
tablished by or under the law of any State in which 
the swap is originated or entered into, or in which 
possession of the contract involved takes place.’’. 
(b) ELIMINATION
OF
PREEMPTION
OF
STATE 
BUCKETING LAWS REGARDING NAKED CREDIT DEFAULT 
SWAPS.—Section 12(e)(2)(B) of such Act (7 U.S.C. 
16(e)(2)(B)) is amended by inserting ‘‘(other than a credit
1071 
default swap in which the purchaser of the swap would 
not experience financial loss if an event that is the subject 
of the swap occurred)’’ before ‘‘that is excluded’’. 
(c) DEFINITION OF CREDIT DEFAULT SWAP.—Sec-
tion 1a of such Act (7 U.S.C. 1a), as amended by section 
351(a) of this Act, is amended by adding at the end the 
following: 
‘‘(37) CREDIT
DEFAULT
SWAP.—The term 
‘credit default swap’ means a contract which insures 
a party to the contract against the risk that an enti-
ty may experience a loss of value as a result of an 
event specified in the contract, such as a default or 
credit downgrade. A credit default swap that is trad-
ed on or cleared by a registered entity shall be ex-
cluded from the definition of a security as defined in 
this Act and in section 2(a)(1) of the Securities Act 
of 1933 or section 3(a)(10) of the Securities Ex-
change Act of 1934, except it shall be deemed a se-
curity solely for purpose of enforcing prohibitions 
against insider trading in sections 10 and 16 of the 
Securities Exchange Act of 1934.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall be effective for credit default swaps (as 
defined in section 1a(37) of the Commodity Exchange Act)
1072 
entered into after 60 days after the date of the enactment 
of this section. 
SEC. 356. TRANSACTION FEES. 
(a) IN GENERAL.—Section 12 of the Commodity Ex-
change Act (7 U.S.C. 16) is amended by redesignating 
subsections (e), (f), and (g) as subsections (f), (g), and 
(h), respectively, and inserting after subsection (d) the fol-
lowing: 
‘‘(e) CLEARING FEES.— 
‘‘(1) IN GENERAL.—The Commission shall, in 
accordance with this subsection, charge and collect 
from each registered clearing organization, and each 
such organization shall pay to the Commission, 
transaction fees at a rate calculated to recover the 
costs to the Federal Government of the supervision 
and regulation of futures markets, except those di-
rectly related to enforcement. 
‘‘(2) FEES ASSESSED PER SIDE OF CLEARED 
CONTRACTS.— 
‘‘(A) IN GENERAL.—The Commission shall 
determine the fee rate referred to in paragraph 
(1), and shall apply the fee rate per side of any 
transaction cleared. 
‘‘(B) AUTHORITY
TO
DELEGATE.— The 
Commission may determine the procedures by
1073 
which the fee rate is to be applied on the trans-
actions subject to the fee, or delegate the au-
thority to make the determination to any appro-
priate derivatives clearing organization. 
‘‘(3) EXEMPTIONS.—The Commission may not 
impose a fee under paragraph (1) on— 
‘‘(A) a class of contracts or transactions if 
the Commission finds that it is in the public in-
terest to exempt the class from the fee; or 
‘‘(B) a contract or transaction cleared by 
a registered derivatives clearing organization 
that is— 
‘‘(i) subject to fees under section 31 
of the Securities Exchange Act of 1934; or 
‘‘(ii) a security as defined in the Secu-
rities Act of 1933 or the Securities Ex-
change Act of 1934. 
‘‘(4) DATES FOR PAYMENT OF FEES.—The fees 
imposed under paragraph (1) shall be paid on or be-
fore— 
‘‘(A) March 15 of each year, with respect 
to transactions occurring on or after the pre-
ceding September 1 and on or before the pre-
ceding December 31; and
1074 
‘‘(B) September 15 of each year, with re-
spect to transactions occurring on or after the 
preceding January 1 and on or before the pre-
ceding August 31. 
‘‘(5) ANNUAL ADJUSTMENT OF FEE RATES.— 
‘‘(A) IN GENERAL.—Not later than April 
30 of each fiscal year , the Commission shall, 
by order, adjust each fee rate determined under 
paragraph (2) for the fiscal year to a uniform 
adjusted rate that, when applied to the esti-
mated aggregate number of cleared sides of 
transactions for the fiscal year, is reasonably 
likely to produce aggregate fee receipts under 
this subsection for the fiscal year equal to the 
target offsetting receipt amount for the fiscal 
year. 
‘‘(B) DEFINITIONS.—In subparagraph (A): 
‘‘(i) ESTIMATED AGGREGATE NUMBER 
OF CLEARED SIDES OF TRANSACTIONS.— 
The term ‘estimated aggregate number of 
cleared sides of transactions’ means, with 
respect to a fiscal year, the aggregate 
number of cleared sides of transactions to 
be cleared by registered derivatives clear-
ing organizations during the fiscal year, as
1075 
estimated by the Commission, after con-
sultation with the Office of Management 
and Budget, using the methodology re-
quired for making projections pursuant to 
section 257 of the Balanced Budget and 
Emergency Deficit Control Act of 1985. 
‘‘(ii) TARGET
OFFSETTING
RECEIPT 
AMOUNT.—The term ‘target offsetting re-
ceipt amount’ means, with respect to a fis-
cal year, the total level of Commission 
budget authority for all non-enforcement 
activities of the Commission, as contained 
in the regular appropriations Acts for the 
fiscal year. 
‘‘(C) NO JUDICIAL REVIEW.—An adjusted 
fee rate prescribed under subparagraph (A) 
shall not be subject to judicial review. 
‘‘(6) PUBLICATION.—Not later than April 30 of 
each fiscal year, the Commission shall cause to be 
published in the Federal Register notices of the fee 
rates applicable under this subsection for the suc-
ceeding fiscal year, and any estimate or projection 
on which the fee rates are based. 
‘‘(7) ESTABLISHMENT
OF
FUTURES
AND
OP-
TIONS
TRANSACTION
FEE
ACCOUNT; DEPOSIT
OF
1076 
FEES.—There is established in the Treasury of the 
United States an account which shall be known as 
the ‘Futures and Options Transaction Fee Account’. 
All fees collected under this subsection for a fiscal 
year shall be deposited in the account. Amounts in 
the account are authorized to be appropriated to 
fund the expenditures of the Commission.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to fiscal years beginning 30 or 
more days after the date of the enactment of this Act. 
(c) TRANSITION RULE.—If this section becomes law 
after March 31 and before September 1 of a fiscal year, 
then paragraphs (5)(A) and (6) of section 12(e) of the 
Commodity Exchange Act shall be applied, in the case of 
the 1st fiscal year beginning after the date of the enact-
ment of this Act, by substituting ‘‘August 31’’ for ‘‘April 
30’’. 
SEC. 357. NO EFFECT ON ANTITRUST LAW OR AUTHORITY 
OF THE FEDERAL TRADE COMMISSION. 
(a) Nothing in this subtitle shall be construed to mod-
ify, impair, or supersede the operation of any of the anti-
trust laws. For purposes of this subsection, the term 
‘‘antitrust laws’’ has the meaning given it in subsection 
(a) of the 1st section of the Clayton Act (15 U.S.C. 12(a)), 
except that such term includes section 5 of the Federal
1077 
Trade Commission Act (15 U.S.C. 45) to the extent that 
such term applies to unfair methods of competition. 
(b) Nothing in this subtitle shall be construed to af-
fect or diminish the jurisdiction or authority of the Fed-
eral Trade Commission with respect to its authorities 
under the Federal Trade Commission Act (15 U.S.C. 41 
et seq.) or the Energy Independence and Security Act of 
2007 (Public Law 110–140) to obtain information, to 
carry out enforcement activities, or otherwise to carry out 
the responsibilities of the Federal Trade Commission. 
SEC. 358. EFFECT OF DERIVATIVES REGULATORY REFORM 
LEGISLATION. 
(a) STATUTES.—Upon the passage of legislation that 
includes derivatives regulatory reform, sections 351, 352, 
354, 355, 356, and 357 shall be repealed. 
(b) REGULATIONS.—Upon the passage of legislation 
that includes derivatives regulatory reform, any regula-
tions promulgated under section 351, 352, 354, 355, 356, 
or 357 shall be considered null and void. 
SEC. 359. CEASE-AND-DESIST AUTHORITY. 
(a) NATURAL GAS ACT.—Section 20 of the Natural 
Gas Act (15 U.S.C. 717s) is amended by adding the fol-
lowing at the end: 
‘‘(e) CEASE-AND-DESIST PROCEEDINGS; TEMPORARY 
ORDERS; AUTHORITY OF THE COMMISSION.—
1078 
‘‘(1) IN GENERAL.—If the Commission finds, 
after notice and opportunity for hearing, that any 
entity may be violating, may have violated, or may 
be about to violate any provision of this Act, or any 
rule, regulation, restriction, condition, or order made 
or imposed by the Commission under the authority 
of this Act, the Commission may publish its findings 
and issue an order requiring such entity, and any 
other entity that is, was, or would be a cause of the 
violation, due to an act or omission the entity knew 
or should have known would contribute to such vio-
lation, to cease and desist from committing or caus-
ing such violation and any future violation of the 
same provision, rule, or regulation. Such order may, 
in addition to requiring an entity to cease and desist 
from committing or causing a violation, require such 
entity to comply, to provide an accounting and 
disgorgement, or to take steps to effect compliance, 
with such provision, rule, or regulation, upon such 
terms and conditions and within such time as the 
Commission may specify in such order. Any such 
order may, as the Commission deems appropriate, 
require future compliance or steps to effect future 
compliance, either permanently or for such period of 
time as the Commission may specify.
1079 
‘‘(2) TIMING
OF
ENTRY.—An order issued 
under this subsection shall be entered only after no-
tice and opportunity for a hearing, unless the Com-
mission determines that notice and hearing prior to 
entry would be impracticable or contrary to the pub-
lic interest. 
‘‘(f) HEARING.—The notice instituting proceedings 
pursuant to subsection (e) shall fix a hearing date not ear-
lier than 30 days nor later than 60 days after service of 
the notice unless an earlier or a later date is set by the 
Commission with the consent of any respondent so served. 
‘‘(g) TEMPORARY ORDER.—Whenever the Commis-
sion determines that— 
‘‘(1) a respondent may take actions to dissipate 
or convert assets prior to the completion of the pro-
ceedings referred to in subsection (e), and such as-
sets would be necessary to comply with or otherwise 
satisfy a final enforcement order of the Commission 
pursuant to alleged violations or threatened viola-
tions specified in the notice instituting proceedings; 
or 
‘‘(2) a respondent is engaged in actual or 
threatened violations of this Act or a Commission 
rule, regulation, restriction or order referred to in 
subsection (e),
1080 
the Commission may issue a temporary order requiring 
the respondent to take such action to prevent dissipation 
or conversion of assets, significant harm to energy con-
sumers, or substantial harm to the public interest, frustra-
tion of the Commission’s ability to conduct the pro-
ceedings, or frustration of the Commission’s ability to re-
dress said violation at the conclusion of the proceedings, 
as the Commission deems appropriate pending completion 
of such proceedings. 
‘‘(h) REVIEW OF TEMPORARY ORDERS.— 
‘‘(1) COMMISSION REVIEW.—At any time after 
the respondent has been served with a temporary 
cease-and-desist order pursuant to subsection (g), 
the respondent may apply to the Commission to have 
the order set aside, limited, or suspended. If the re-
spondent has been served with a temporary cease- 
and-desist order entered without a prior Commission 
hearing, the respondent may, within 10 days after 
the date on which the order was served, request a 
hearing on such application and the Commission 
shall hold a hearing and render a decision on such 
application at the earliest possible time. 
‘‘(2) JUDICIAL REVIEW.—Within— 
‘‘(A) 10 days after the date the respondent 
was served with a temporary cease-and-desist
1081 
order entered with a prior Commission hearing; 
or 
‘‘(B) 10 days after the Commission ren-
ders a decision on an application and hearing 
under paragraph (1), 
with respect to any temporary cease-and-desist order 
entered without a prior Commission hearing, the re-
spondent may apply to the United States circuit 
court having jurisdiction over the circuit in which 
the respondent resides or has its principal place of 
business, or to the United States Court of Appeals 
for the District of Columbia Circuit, for an order 
setting aside, limiting, or suspending the effective-
ness or enforcement of the order, and the court shall 
have jurisdiction to enter such an order. A respond-
ent served with a temporary cease-and-desist order 
entered without a prior Commission hearing may not 
apply to the court except after hearing and decision 
by the Commission on the respondent’s application 
under paragraph (1) of this subsection. 
‘‘(3) NO
AUTOMATIC
STAY
OF
TEMPORARY 
ORDER.—The commencement of proceedings under 
paragraph (2) of this subsection shall not, unless 
specifically ordered by the court, operate as a stay 
of the Commission’s order.
1082 
‘‘(4) EXCLUSIVE REVIEW.—Sections 19(d) and 
24 shall not apply to a temporary order entered pur-
suant to this section. 
‘‘(i) IMPLEMENTATION.—The Commission is author-
ized to adopt rules, regulations, and orders as it deems 
appropriate to implement this section.’’. 
(c) NATURAL GAS POLICY ACT OF 1978.—Section 
504 of the Natural Gas Policy Act of 1978 (15 U.S.C. 
3414) is amended by adding the following at the end: 
‘‘(d) CEASE-AND-DESIST PROCEEDINGS; TEMPORARY 
ORDERS; AUTHORITY OF THE COMMISSION.— 
‘‘(1) IN GENERAL.—If the Commission finds, 
after notice and opportunity for hearing, that any 
entity may be violating, may have violated, or may 
be about to violate any provision of this Act, or any 
rule, regulation, restriction, condition, or order made 
or imposed by the Commission under the authority 
of this Act, the Commission may publish its findings 
and issue an order requiring such entity, and any 
other entity that is, was, or would be a cause of the 
violation, due to an act or omission the entity knew 
or should have known would contribute to such vio-
lation, to cease and desist from committing or caus-
ing such violation and any future violation of the 
same provision, rule, or regulation. Such order may,
1083 
in addition to requiring an entity to cease and desist 
from committing or causing a violation, require such 
entity to comply, to provide an accounting and 
disgorgement, or to take steps to effect compliance, 
with such provision, rule, or regulation, upon such 
terms and conditions and within such time as the 
Commission may specify in such order. Any such 
order may, as the Commission deems appropriate, 
require future compliance or steps to effect future 
compliance, either permanently or for such period of 
time as the Commission may specify. 
‘‘(2) TIMING
OF
ENTRY.—An order issued 
under this subsection shall be entered only after no-
tice and opportunity for a hearing, unless the Com-
mission determines that notice and hearing prior to 
entry would be impracticable or contrary to the pub-
lic interest. 
‘‘(3) HEARING.—The notice instituting pro-
ceedings pursuant to paragraph (1) shall fix a hear-
ing date not earlier than 30 days nor later than 60 
days after service of the notice unless an earlier or 
a later date is set by the Commission with the con-
sent of any respondent so served. 
‘‘(4) TEMPORARY ORDER.—Whenever the Com-
mission determines that—
1084 
‘‘(A) a respondent may take actions to dis-
sipate or convert assets prior to the completion 
of the proceedings referred to in paragraph (1) 
and such assets would be necessary to comply 
with or otherwise satisfy a final enforcement 
order of the Commission pursuant to alleged 
violations or threatened violations specified in 
the notice instituting proceedings; or 
‘‘(B) a respondent is engaged in actual or 
threatened violations of this Act or a Commis-
sion rule, regulation, restriction or order re-
ferred to in paragraph (1), 
the Commission may issue a temporary order requir-
ing the respondent to take such action to prevent 
dissipation or conversion of assets, significant harm 
to energy consumers, or substantial harm to the 
public interest, frustration of the Commission’s abil-
ity to conduct the proceedings, or frustration of the 
Commission’s ability to redress said violation at the 
conclusion of the proceedings, as the Commission 
deems appropriate pending completion of such pro-
ceedings. 
‘‘(5) REVIEW OF TEMPORARY ORDERS.— 
‘‘(A) COMMISSION REVIEW.—At any time 
after the respondent has been served with a
1085 
temporary cease-and-desist order pursuant to 
paragraph (4), the respondent may apply to the 
Commission to have the order set aside, limited, 
or suspended. If the respondent has been served 
with a temporary cease-and-desist order entered 
without a prior Commission hearing, the re-
spondent may, within 10 days after the date on 
which the order was served, request a hearing 
on such application and the Commission shall 
hold a hearing and render a decision on such 
application at the earliest possible time. 
‘‘(B) JUDICIAL REVIEW.—Within— 
‘‘(i) 10 days after the date the re-
spondent was served with a temporary 
cease-and-desist order entered with a prior 
Commission hearing; or 
‘‘(ii) 10 days after the Commission 
renders a decision on an application and 
hearing under subparagraph (A), with re-
spect to any temporary cease-and-desist 
order entered without a prior Commission 
hearing, the respondent may apply to the 
United States circuit court having jurisdic-
tion over the circuit in which the respond-
ent resides or has its principal place of
1086 
business, or to the United States Court of 
Appeals for the District of Columbia Cir-
cuit, for an order setting aside, limiting, or 
suspending the effectiveness or enforce-
ment of the order, and the court shall have 
jurisdiction to enter such an order. A re-
spondent served with a temporary cease- 
and-desist order entered without a prior 
Commission hearing may not apply to the 
court except after hearing and decision by 
the Commission on the respondent’s appli-
cation under paragraph (1) of this sub-
section. 
‘‘(C) NO AUTOMATIC STAY OF TEMPORARY 
ORDER.—The commencement of proceedings 
under subparagraph (B) of this paragraph shall 
not, unless specifically ordered by the court, op-
erate as a stay of the Commission’s order. 
‘‘(6) IMPLEMENTATION.—The Commission is 
authorized to adopt rules, regulations, and orders as 
it deems appropriate to implement this subsection.’’. 
SEC. 360. PRESIDENTIAL REVIEW OF REGULATIONS. 
Not later than 24 months after the date of enactment 
of this Act, the President shall review the offset regula-
tions and derivatives regulations promulgated pursuant to
1087 
the American Clean Energy and Security Act of 2009. The 
President shall determine whether such regulations ade-
quately protect the United States financial system from 
systemic risk. 
TITLE IV—TRANSITIONING TO A 
CLEAN ENERGY ECONOMY 
Subtitle A—Ensuring Real 
Reductions in Industrial Emissions 
SEC. 401. ENSURING REAL REDUCTIONS IN INDUSTRIAL 
EMISSIONS. 
Title VII of the Clean Air Act is amended by insert-
ing after part E the following new part: 
‘‘PART F—ENSURING REAL REDUCTIONS IN 
INDUSTRIAL EMISSIONS 
‘‘SEC. 761. PURPOSES. 
‘‘(a) PURPOSES OF PART.—The purposes of this part 
are— 
‘‘(1) to promote a strong global effort to signifi-
cantly reduce greenhouse gas emissions, and, 
through this global effort, stabilize greenhouse gas 
concentrations in the atmosphere at a level that will 
prevent dangerous anthropogenic interference with 
the climate system; and 
‘‘(2) to prevent an increase in greenhouse gas 
emissions in countries other than the United States
1088 
as a result of direct and indirect compliance costs in-
curred under this title. 
‘‘(b) PURPOSES OF SUBPART 1.—The purposes of 
subpart 1 are additionally— 
‘‘(1) to provide a rebate to the owners and op-
erators of entities in domestic eligible industrial sec-
tors for their greenhouse gas emission costs incurred 
under this title, but not for costs associated with 
other related or unrelated market dynamics; 
‘‘(2) to design such rebates in a way that will 
prevent carbon leakage while also rewarding innova-
tion and facility-level investments in energy effi-
ciency performance improvements; and 
‘‘(3) to eliminate or reduce distribution of emis-
sion allowances under subpart 1 when such distribu-
tion is no longer necessary to prevent carbon leakage 
from eligible industrial sectors. 
‘‘(c) PURPOSES OF SUBPART 2.—The purposes of 
subpart 2 are additionally— 
‘‘(1) to induce foreign countries, and, in par-
ticular, fast-growing developing countries, to take 
substantial action with respect to their greenhouse 
gas emissions consistent with the Bali Action Plan 
developed under the United Nations Framework 
Convention on Climate Change; and
1089 
‘‘(2) to ensure that the measures described in 
subpart 2 are designed and implemented in a man-
ner consistent with applicable international agree-
ments to which the United States is a party. 
‘‘SEC. 762. DEFINITIONS. 
‘‘In this part: 
‘‘(1) CARBON
LEAKAGE.—The term ‘carbon 
leakage’ means any substantial increase (as deter-
mined by the Administrator) in greenhouse gas 
emissions by industrial entities located in other 
countries if such increase is caused by an incre-
mental cost of production increase in the United 
States resulting from the implementation of this 
title. 
‘‘(2) COVERED GOOD.—The term ‘covered good’ 
means a good that, as identified by the Adminis-
trator by regulation, is either— 
‘‘(A) entered under a heading or sub-
heading of the Harmonized Tariff Schedule of 
the United States that corresponds to the 
NAICS code for an eligible industrial sector, as 
established in the concordance between NAICS 
codes and the Harmonized Tariff Schedule of 
the United States prepared by the United 
States Census Bureau; or
1090 
‘‘(B) a manufactured item for consump-
tion. 
‘‘(3) ELIGIBLE
INDUSTRIAL
SECTOR.—The 
term ‘eligible industrial sector’ means an industrial 
sector determined by the Administrator under sec-
tion 763(b) to be eligible to receive emission allow-
ance rebates under subpart 1. 
‘‘(4) INDUSTRIAL SECTOR.—The term ‘indus-
trial sector’ means any sector that is in the manu-
facturing sector (as defined in NAICS codes 31, 32, 
and 33) or that beneficiates or otherwise processes 
(including agglomeration) metal ores, including iron 
and copper ores, soda ash, or phosphate. The extrac-
tion of metal ores, soda ash, or phosphate shall not 
be considered to be an industrial sector. 
‘‘(5) MANUFACTURED
ITEM
FOR
CONSUMP-
TION.— 
‘‘(A) IN GENERAL.—The term ‘manufac-
tured item for consumption’ means any good— 
‘‘(i) 
that 
includes 
in 
substantial 
amounts one or more goods like the goods 
produced by an eligible industrial sector; 
‘‘(ii) with respect to which an inter-
national reserve allowance program pursu-
ant to subpart 2 is in effect with regard to
1091 
the eligible industrial sector and the quan-
tity of international reserve allowances is 
not zero pursuant to section 768(b); 
‘‘(iii) with respect to which the trade 
intensity of the industrial sector that pro-
duces the good, as measured consistent 
with section 763(b)(2)(A)(iii), is at least 
15 percent; and 
‘‘(iv) for which the domestic producers 
of the good have demonstrated, and the 
Administrator has determined, that the ap-
plication of the international reserve allow-
ance program pursuant to subpart 2 is 
technically and administratively feasible 
and appropriate to achieve the purposes of 
this part, taking into account the energy 
and greenhouse gas intensity of the indus-
trial sector that produces the good, as 
measured 
consistent 
with 
section 
763(b)(2)(A)(ii), and the ability of such 
producers to pass on cost increases and 
other appropriate factors. 
‘‘(B) RULE OF CONSTRUCTION.—A deter-
mination of the Administrator under subpara-
graph (A)(iv) shall not be considered to be a de-
1092 
termination of the President under section 
767(b). 
‘‘(6) NAICS.—The term ‘NAICS’ means the 
North American Industrial Classification System of 
2002. 
‘‘(7) OUTPUT.—The term ‘output’ means the 
total tonnage or other standard unit of production 
(as determined by the Administrator) produced by 
an entity in an industrial sector. The output of the 
cement sector is hydraulic cement, and not clinker. 
‘‘Subpart 1—Emission Allowance Rebate Program 
‘‘SEC. 763. ELIGIBLE INDUSTRIAL SECTORS. 
‘‘(a) LIST.— 
‘‘(1) INITIAL LIST.—Not later than June 30, 
2011, the Administrator shall publish in the Federal 
Register a list of eligible industrial sectors pursuant 
to subsection (b). Such list shall include the amount 
of the emission allowance rebate per unit of produc-
tion that shall be provided to entities in each eligible 
industrial sector in the following two calendar years 
pursuant to section 764. 
‘‘(2) SUBSEQUENT LISTS.—Not later than Feb-
ruary 1, 2013, and every 4 years thereafter, the Ad-
ministrator shall publish in the Federal Register an
1093 
updated version of the list published under para-
graph (1). 
‘‘(b) ELIGIBLE INDUSTRIAL SECTORS.— 
‘‘(1) IN GENERAL.—Not later than June 30, 
2011, the Administrator shall promulgate a rule des-
ignating, based on the criteria under paragraph (2), 
the industrial sectors eligible for emission allowance 
rebates under this subpart. 
‘‘(2) PRESUMPTIVELY
ELIGIBLE
INDUSTRIAL 
SECTORS.— 
‘‘(A) ELIGIBILITY CRITERIA.— 
‘‘(i) IN GENERAL.—An owner or oper-
ator of an entity shall be eligible to receive 
emission allowance rebates under this sub-
part if such entity is in an industrial sector 
that is included in a six-digit classification 
of the NAICS that meets the criteria in 
both clauses (ii) and (iii), or the criteria in 
clause (iv). 
‘‘(ii) ENERGY OR GREENHOUSE GAS 
INTENSITY.—As determined by the Admin-
istrator, the industrial sector had— 
‘‘(I) an energy intensity of at 
least 5 percent, calculated by dividing 
the cost of purchased electricity and
1094 
fuel costs of the sector by the value of 
the shipments of the sector, based on 
data described in subparagraph (D); 
or 
‘‘(II) a greenhouse gas intensity 
of at least 5 percent, calculated by di-
viding— 
‘‘(aa) the number 20 multi-
plied by the number of tons of 
carbon dioxide equivalent green-
house gas emissions (including 
direct emissions from fuel com-
bustion, process emissions, and 
indirect emissions from the gen-
eration of electricity used to 
produce the output of the sector) 
of the sector based on data de-
scribed in subparagraph (D); by 
‘‘(bb) the value of the ship-
ments of the sector, based on 
data described in subparagraph 
(D). 
‘‘(iii) TRADE
INTENSITY.—As deter-
mined by the Administrator, the industrial 
sector had a trade intensity of at least 15
1095 
percent, calculated by dividing the value of 
the total imports and exports of such sec-
tor by the value of the shipments plus the 
value of imports of such sector, based on 
data described in subparagraph (D). 
‘‘(iv) VERY HIGH ENERGY OR GREEN-
HOUSE GAS INTENSITY.—As determined by 
the Administrator, the industrial sector 
had an energy or greenhouse gas intensity, 
as calculated under clause (ii)(I) or (II), of 
at least 20 percent. 
‘‘(B) METAL
AND
PHOSPHATE
PRODUC-
TION
CLASSIFIED
UNDER
MORE
THAN
ONE 
NAICS CODE.—For purposes of this section, the 
Administrator shall— 
‘‘(i) 
aggregate 
data 
for 
the 
beneficiation or other processing (including 
agglomeration) of metal ores, including 
iron and copper ores, soda ash, or phos-
phate with subsequent steps in the process 
of metal and phosphate manufacturing, re-
gardless of the NAICS code under which 
such activity is classified; and 
‘‘(ii) aggregate data for the manufac-
turing of steel with the manufacturing of
1096 
steel pipe and tube made from purchased 
steel in a nonintegrated process. 
‘‘(C) EXCLUSION.—The petroleum refining 
sector shall not be an eligible industrial sector. 
‘‘(D) DATA SOURCES.— 
‘‘(i) ELECTRICITY AND FUEL COSTS, 
VALUE
OF
SHIPMENTS.—The Adminis-
trator shall determine electricity and fuel 
costs and the value of shipments under 
this subsection from data from the United 
States Census Annual Survey of Manufac-
turers. The Administrator shall take the 
average of data from as many of the years 
of 2004, 2005, and 2006 for which such 
data are available. If such data are un-
available, the Administrator shall make a 
determination based upon 2002 or 2006 
data from the most detailed industrial clas-
sification level of Energy Information 
Agency’s Manufacturing Energy Consump-
tion Survey (using 2006 data if it is avail-
able) and the 2002 or 2007 Economic Cen-
sus of the United States (using 2007 data 
if it is available). If data from the Manu-
facturing Energy Consumption Survey or
1097 
Economic Census are unavailable for any 
sector at the six-digit classification level in 
the NAICS, then the Administrator may 
extrapolate the information necessary to 
determine the eligibility of a sector under 
this paragraph from available Manufac-
turing Energy Consumption Survey or 
Economic Census data pertaining to a 
broader industrial category classified in the 
NAICS. 
If 
data 
relating 
to 
the 
beneficiation or other processing (including 
agglomeration) of metal ores, including 
iron and copper ores, soda ash, or phos-
phate are not available from the specified 
data sources, the Administrator shall use 
the best available Federal or State govern-
ment data and may use, to the extent nec-
essary, representative data submitted by 
entities that perform such beneficiation or 
other processing (including agglomeration), 
in making a determination. Fuel cost data 
shall not include the cost of fuel used as 
feedstock by an industrial sector. 
‘‘(ii) IMPORTS
AND
EXPORTS.—The 
Administrator shall base the value of im-
1098 
ports and exports under this subsection on 
United States International Trade Com-
mission data. The Administrator shall take 
the average of data from as many of the 
years of 2004, 2005, and 2006 for which 
such data are available. If data from the 
United States International Trade Com-
mission are unavailable for any sector at 
the six-digit classification level in the 
NAICS, then the Administrator may ex-
trapolate the information necessary to de-
termine the eligibility of a sector under 
this paragraph from available United 
States International Trade Commission 
data pertaining to a broader industrial cat-
egory classified in the NAICS. 
‘‘(iii) PERCENTAGES.—The Adminis-
trator shall round the energy intensity, 
greenhouse gas intensity, and trade inten-
sity percentages under subparagraph (A) 
to the nearest whole number. 
‘‘(iv) GREENHOUSE
GAS
EMISSION 
CALCULATIONS.—When 
calculating 
the 
tons of carbon dioxide equivalent green-
house gas emissions for each sector under
1099 
subparagraph (A)(ii)(II)(aa), the Adminis-
trator— 
‘‘(I) shall use the best available 
data from as many of the years 2004, 
2005, and 2006 for which such data 
is available; and 
‘‘(II) may, to the extent nec-
essary with respect to a sector, use 
economic and engineering models and 
the best available information on tech-
nology performance levels for such 
sector. 
‘‘(3) ADMINISTRATIVE DETERMINATION OF AD-
DITIONAL ELIGIBLE INDUSTRIAL SECTORS.— 
‘‘(A) UPDATED TRADE INTENSITY DATA.— 
The Administrator shall designate as eligible to 
receive emission allowance rebates under this 
subpart an industrial sector that— 
‘‘(i) met the energy or greenhouse gas 
intensity criteria in paragraph (2)(A)(ii) as 
of the date of promulgation of the rule 
under paragraph (1); and 
‘‘(ii) meets the trade intensity criteria 
in paragraph (2)(A)(iii), using data from 
any year after 2006.
1100 
‘‘(B) INDIVIDUAL SHOWING PETITION.— 
‘‘(i) PETITION.—In addition to des-
ignation under paragraph (2) or subpara-
graph (A) of this paragraph, the owner or 
operator of an entity in an industrial sec-
tor may petition the Administrator to des-
ignate as eligible industrial sectors under 
this subpart an entity or a group of enti-
ties that— 
‘‘(I) represent a subsector of a 
six-digit section of the NAICS code; 
and 
‘‘(II) meet the eligibility criteria 
in both clauses (ii) and (iii) of para-
graph (2)(A), or the eligibility criteria 
in clause (iv) of paragraph (2)(A). 
‘‘(ii) DATA.—In making a determina-
tion under this subparagraph, the Admin-
istrator shall consider data submitted by 
the petitioner that is specific to the entity, 
data solicited by the Administrator from 
other entities in the subsector, if such 
other entities exist, and data specified in 
paragraph (2)(D).
1101 
‘‘(iii) BASIS
OF
SUBSECTOR
DETER-
MINATION.—The Administrator shall de-
termine an entity or group of entities to be 
a subsector of a six-digit section of the 
NAICS code based only upon the products 
manufactured and not the industrial proc-
ess by which the products are manufac-
tured, except that the Administrator may 
determine an entity or group of entities 
that manufacture a product from primarily 
virgin material to be a separate subsector 
from another entity or group of entities 
that manufacture the same product pri-
marily from recycled material. 
‘‘(iv) USE OF MOST RECENT DATA.— 
In determining whether to designate a sec-
tor or subsector as an eligible industrial 
sector under this subparagraph, the Ad-
ministrator shall use the most recent data 
available from the sources described in 
paragraph (2)(D), rather than the data 
from the years specified in paragraph 
(2)(D), to determine the trade intensity of 
such sector or subsector, but only for de-
termining such trade intensity.
1102 
‘‘(v) FINAL
ACTION.—The Adminis-
trator shall take final action on such peti-
tion no later than 6 months after the peti-
tion is received by the Administrator. 
‘‘SEC. 764. DISTRIBUTION OF EMISSION ALLOWANCE RE-
BATES. 
‘‘(a) DISTRIBUTION SCHEDULE.— 
‘‘(1) IN GENERAL.—For each vintage year, the 
Administrator shall distribute pursuant to this sec-
tion emission allowances made available under sec-
tion 782(e), no later than October 31 of the pre-
ceding calendar year. The Administrator shall make 
such annual distributions to the owners and opera-
tors of each entity in an eligible industrial sector in 
the amount of emission allowances calculated under 
subsection (b), except that— 
‘‘(A) for vintage years 2012 and 2013, the 
distribution for a covered entity shall be pursu-
ant to the entity’s indirect carbon factor as cal-
culated under subsection (b)(3); 
‘‘(B) for vintage year 2026 and thereafter, 
the distribution shall be pursuant to the 
amount calculated under subsection (b) multi-
plied by, except as modified by the President 
pursuant to section 767(d)(1)(C) for a sector—
1103 
‘‘(i) 90 percent for vintage year 2026; 
‘‘(ii) 80 percent for vintage year 
2027; 
‘‘(iii) 70 percent for vintage year 
2028; 
‘‘(iv) 60 percent for vintage year 
2029; 
‘‘(v) 50 percent for vintage year 2030; 
‘‘(vi) 40 percent for vintage year 
2031; 
‘‘(vii) 30 percent for vintage year 
2032; 
‘‘(viii) 20 percent for vintage year 
2033; 
‘‘(ix) 10 percent for vintage year 
2034; and 
‘‘(x) 0 percent for vintage year 2035 
and thereafter. 
‘‘(2) RESUMPTION
OF
REDUCTION.—If the 
President has modified the percentage stated in 
paragraph (1)(B) under section 767(d)(1)(C), and 
the President subsequently makes a determination 
under section 767(c) for an eligible industrial sector 
that more than 85 percent of United States imports 
for that sector are produced or manufactured in
1104 
countries that have met at least one of the criteria 
in that section, then the 10-year reduction schedule 
set forth in paragraph (1)(B) of this subsection shall 
begin in the next vintage year, with the percentage 
reduction based on the amount of the distribution of 
emission allowances under this section in the pre-
vious year. 
‘‘(3) NEWLY ELIGIBLE SECTORS.—In addition 
to receiving a distribution of emission allowances 
under this section in the first distribution occurring 
after an industrial sector is designated as eligible 
under section 763(b)(3), the owner or operator of an 
entity in that eligible industrial sector may receive a 
prorated share of any emission allowances made 
available for distribution under this section that 
were not distributed for the year in which the peti-
tion for eligibility was granted under section 
763(b)(3)(A). 
‘‘(4) CESSATION OF QUALIFYING ACTIVITIES.— 
If, as determined by the Administrator, a facility is 
no longer in an eligible industrial sector designated 
under section 763— 
‘‘(A) the Administrator shall not distribute 
emission allowances to the owner or operator of 
such facility under this section; and
1105 
‘‘(B) the owner or operator of such facility 
shall return to the Administrator all allowances 
that have been distributed to it for future vin-
tage years and a pro-rated amount of allow-
ances distributed to the facility under this sec-
tion for the vintage year in which the facility 
ceases to be in an eligible industrial sector des-
ignated under section 763. 
‘‘(b) CALCULATION OF DIRECT AND INDIRECT CAR-
BON FACTORS.— 
‘‘(1) IN GENERAL.— 
‘‘(A) COVERED ENTITIES.—Except as pro-
vided in subsection (a), for covered entities that 
are in eligible industrial sectors, the amount of 
emission allowance rebates shall be based on 
the sum of the covered entity’s direct and indi-
rect carbon factors. 
‘‘(B) OTHER
ELIGIBLE
ENTITIES.—For 
entities that are in eligible industrial sectors 
but are not covered entities, the amount of 
emission allowance rebates shall be based on 
the entity’s indirect carbon factor. 
‘‘(C) NEW
ENTITIES.—Not later than 2 
years after the date of enactment of this title, 
the Administrator shall issue regulations gov-
1106 
erning the distribution of emission allowance re-
bates for the first and second years of operation 
of a new entity in an eligible industrial sector. 
These regulations shall provide for— 
‘‘(i) the distribution of emission allow-
ance rebates to such entities based on com-
parable entities in the same sector; and 
‘‘(ii) an adjustment in the third and 
fourth years of operation to reconcile the 
total amount of emission allowance rebates 
received during the first and second years 
of operation to the amount the entity 
would have received during the first and 
second years of operation had the appro-
priate data been available. 
‘‘(2) DIRECT CARBON FACTOR.—The direct car-
bon factor for a covered entity for a vintage year is 
the product of— 
‘‘(A) the average annual output of the cov-
ered entity for the 2 years preceding the year 
of the distribution; and 
‘‘(B) the most recent calculation of the av-
erage direct greenhouse gas emissions (ex-
pressed in tons of carbon dioxide equivalent) 
per unit of output for all covered entities in the
1107 
sector, as determined by the Administrator 
under paragraph (4). 
‘‘(3) INDIRECT CARBON FACTOR.— 
‘‘(A) IN
GENERAL.—The indirect carbon 
factor for an entity for a vintage year is the 
product obtained by multiplying the average an-
nual output of the entity for the 2 years pre-
ceding the year of the distribution by both the 
electricity emissions intensity factor determined 
pursuant to subparagraph (B) and the elec-
tricity efficiency factor determined pursuant to 
subparagraph (C) for the year concerned. 
‘‘(B) ELECTRICITY EMISSIONS INTENSITY 
FACTOR.— 
‘‘(i) IN GENERAL.—Each person sell-
ing electricity to the owner or operator of 
an entity in any sector designated as an el-
igible 
industrial 
sector 
under 
section 
763(b) shall provide the owner or operator 
of the entity and the Administrator, on an 
annual basis, the electricity emissions in-
tensity factor for the entity. The electricity 
emissions intensity factor for the entity, 
expressed in tons of carbon dioxide equiva-
1108 
lents per kilowatt hour, is determined by 
dividing— 
‘‘(I) the annual sum of the hour-
ly product of— 
‘‘(aa) the electricity pur-
chased by the entity from that 
person in each hour (expressed in 
kilowatt hours); multiplied by 
‘‘(bb) 
the 
marginal 
or 
weighted average tons of carbon 
dioxide equivalent per kilowatt 
hour that are reflected in the 
electricity charges to the entity, 
as determined by the entity’s re-
tail rate arrangements; by 
‘‘(II) the total kilowatt hours of 
electricity purchased by the entity 
from that person during that year. 
‘‘(ii) USE OF OTHER DATA TO DETER-
MINE FACTOR.—Where it is not possible to 
determine the precise electricity emissions 
intensity factor for an entity using the 
methodology in clause (i), the person sell-
ing electricity shall use the monthly aver-
age data reported by the Energy Informa-
1109 
tion Administration or collected and re-
ported by the Administrator for the utility 
serving the entity to determine the elec-
tricity emissions intensity factor. 
‘‘(C) ELECTRICITY EFFICIENCY FACTOR.— 
The electricity efficiency factor is the average 
amount of electricity (in kilowatt hours) used 
per unit of output for all entities in the relevant 
sector, as determined by the Administrator 
based on the best available data, including data 
provided under paragraph (6). 
‘‘(D) INDIRECT CARBON FACTOR REDUC-
TION.—If an electricity provider received a free 
allocation of emission allowances pursuant to 
section 782(a), the Administrator shall adjust 
the indirect carbon factor to avoid rebates to 
the eligible entity for costs that the Adminis-
trator determines were not incurred by the eli-
gible entity because the allowances were freely 
allocated to the eligible entity’s electricity pro-
vider and used for the benefit of industrial con-
sumers. 
‘‘(4) GREENHOUSE
GAS
INTENSITY
CALCULA-
TIONS.—The Administrator shall calculate the aver-
age direct greenhouse gas emissions (expressed in
1110 
tons of carbon dioxide equivalent) per unit of output 
and the electricity efficiency factor for all covered 
entities in each eligible industrial sector every 4 
years, using an average of the four most recent 
years of the best available data. For purposes of the 
lists required to be published no later than February 
1, 2013, the Administrator shall use the best avail-
able data for the maximum number of years, up to 
4 years, for which data are available. 
‘‘(5) ENSURING EFFICIENCY IMPROVEMENTS.— 
When making greenhouse gas calculations, the Ad-
ministrator shall— 
‘‘(A) limit the average direct greenhouse 
gas emissions per unit of output, calculated 
under paragraph (4), for any eligible industrial 
sector to an amount that is not greater than it 
was in any previous calculation under this sub-
section; 
‘‘(B) limit the electricity emissions inten-
sity factor, calculated under paragraph (3)(B) 
and resulting from a change in electricity sup-
ply, for any entity to an amount that is not 
greater than it was during any previous year; 
and
1111 
‘‘(C) limit the electricity efficiency factor, 
calculated under paragraph (3)(C), for any eli-
gible industrial sector to an amount that is not 
greater than it was in any previous calculation 
under this subsection. 
‘‘(6) DATA SOURCES.—For the purposes of this 
subsection— 
‘‘(A) the Administrator shall use data from 
the greenhouse gas registry established under 
section 713, where it is available; and 
‘‘(B) each owner or operator of an entity 
in an eligible industrial sector and each depart-
ment, agency, and instrumentality of the 
United States shall provide the Administrator 
with such information as the Administrator 
finds necessary to determine the direct carbon 
factor and the indirect carbon factor for each 
entity subject to this section. 
‘‘(c) TOTAL
MAXIMUM
DISTRIBUTION.—Notwith-
standing subsections (a) and (b), the Administrator shall 
not distribute more allowances for any vintage year pursu-
ant to this section than are allocated for use under this 
subpart pursuant to section 782(e) for that vintage year. 
For any vintage year for which the total emission allow-
ance rebates calculated pursuant to this section exceed the
1112 
number of allowances allocated pursuant to section 782(e), 
the Administrator shall reduce each entity’s distribution 
on a pro rata basis so that the total distribution under 
this section equals the number of allowances allocated 
under section 782(e). 
‘‘(d) IRON AND STEEL SECTOR.—For purposes of 
this section, the Administrator shall consider as in dif-
ferent industrial sectors— 
‘‘(1) 
entities 
using 
integrated 
iron 
and 
steelmaking technologies (including coke ovens, blast 
furnaces, and other iron-making technologies); and 
‘‘(2) entities using electric arc furnace tech-
nologies. 
‘‘(e) METAL, SODA ASH, OR PHOSPHATE PRODUC-
TION CLASSIFIED UNDER MORE THAN ONE NAICS 
CODE.—For purposes of this section, the Administrator 
shall not aggregate data for the beneficiation or other 
processing (including agglomeration) of metal ores, soda 
ash, or phosphate with subsequent steps in the process 
of metal, soda ash, or phosphate manufacturing. The Ad-
ministrator shall consider the beneficiation or other proc-
essing (including agglomeration) of metal ores, soda ash, 
or phosphate to be in separate industrial sectors from the 
metal, soda ash, or phosphate manufacturing sectors. In-
dustrial sectors that beneficiate or otherwise process (in-