and solar light pipe technology that has the ca-
pability to provide measurable data on the 
amount of megawatt-hours displaced; 
‘‘(I) avoid double-counting of savings used 
for compliance with this section, including sav-
ings that are transferred pursuant to paragraph 
(3); 
‘‘(J) ensure that, except as provided in 
subparagraph (L), the retail electric supplier 
claiming the savings played a significant role in 
achieving the savings (including through the ac-
tivities of a designated agent of the supplier or 
through the purchase of transferred savings); 
‘‘(K) include savings from programs ad-
ministered by a retail electric supplier (or a re-
tail electricity distributor that is not a retail 
electric supplier) that are funded by State, Fed-
eral, or other sources; 
‘‘(L) in any State in which the State regu-
latory authority has designated 1 or more enti-
ties to administer electric ratepayer-funded effi-
ciency programs approved by such State regu-
latory authority, provide that electricity savings 
achieved through such programs shall be dis-
tributed equitably among retail electric sup-
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pliers in accordance with the direction of the 
relevant State regulatory authority; and 
‘‘(M) exclude savings achieved as a result 
of compliance with mandatory appliance and 
equipment efficiency standards or building 
codes. 
‘‘(2) 
STANDARDS
FOR
THIRD-PARTY 
VERIFICATION
OF
SAVINGS.—The regulations pro-
mulgated under this section shall establish proce-
dures 
and 
standards 
requiring 
third-party 
verification of all reported electricity savings, includ-
ing requirements for accreditation of third-party 
verifiers to ensure that such verifiers are profes-
sionally qualified and have no conflicts of interest. 
‘‘(3) TRANSFERS OF SAVINGS.— 
‘‘(A) BILATERAL CONTRACTS FOR SAVINGS 
TRANSFERS.—Subject to the limitations of this 
paragraph, a retail electric supplier may use 
electricity savings transferred, pursuant to a bi-
lateral contract, from another retail electric 
supplier, an owner of an electric distribution fa-
cility that is not a retail electric supplier, a 
State, or a third-party efficiency provider to 
meet the applicable compliance obligation under 
subsection (b). 
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‘‘(B) REQUIREMENTS.—Electricity savings 
transferred and used for compliance pursuant 
to this paragraph shall be— 
‘‘(i) measured and verified in accord-
ance with the procedures specified under 
this subsection; 
‘‘(ii) reported in accordance with 
paragraph (4) of this subsection; and 
‘‘(iii) achieved within the same State 
as is served by the retail electric supplier. 
‘‘(C) REGULATORY
APPROVAL.—Nothing 
in this paragraph shall limit or affect the au-
thority of a State regulatory authority to re-
quire a retail electric supplier that is regulated 
by such authority to obtain such authority’s au-
thorization or approval of a contract for trans-
fer of savings under this paragraph. 
‘‘(4) REPORTING SAVINGS.— 
‘‘(A) REQUIREMENTS.—The regulations 
promulgated under this section shall establish 
requirements governing the submission of re-
ports to demonstrate, in accordance with the 
protocols and standards for measurement and 
third-party verification established under this 
subsection, the total annual electricity savings 
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achieved by a retail electric supplier within the 
relevant year. 
‘‘(B) REVIEW AND APPROVAL.—The Com-
mission shall review each report submitted to 
the Commission by a retail electric supplier and 
shall exclude any electricity savings that have 
not been adequately demonstrated in accord-
ance with the requirements of this subsection. 
‘‘(5) STATE ADMINISTRATION.— 
‘‘(A) DELEGATION OF AUTHORITY.—Upon 
receipt of an application from the Governor of 
a State (including, for purposes of this sub-
section, the Mayor of the District of Columbia), 
the Commission may delegate to the State the 
authority to review and verify reported elec-
tricity savings for purposes of determining dem-
onstrated total annual electricity savings that 
may be counted towards a retail electric sup-
plier’s compliance obligation under subsection 
(b). The Commission shall make a substantive 
determination approving or disapproving a 
State application under this subparagraph, 
after notice and comment, within 180 days of 
receipt of a complete application. 
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‘‘(B) ALTERNATIVE
MEASUREMENT
AND 
VERIFICATION
PROCEDURES
AND
STAND-
ARDS.—As part of an application submitted 
under subparagraph (A), a State may request 
to use alternative measurement and verification 
procedures and standards to those specified in 
paragraphs (1) and (2), provided the State 
demonstrates that such alternative procedures 
and standards provide a level of accuracy of 
measurement and verification at least equiva-
lent to the Federal procedures and standards 
promulgated under paragraphs (1) and (2). 
‘‘(C) REVIEW
OF
STATE
IMPLEMENTA-
TION.—The Commission shall, not less fre-
quently than once every 4 years, review each 
State’s implementation of delegated authority 
under this paragraph to ensure conformance 
with the requirements of this section. The Com-
mission may, at any time, revoke the delegation 
of authority under this section upon a finding 
that the State is not implementing its delegated 
responsibilities in conformity with this para-
graph. As a condition of maintaining its dele-
gated authority under this paragraph, the Com-
mission may require a State to submit a revised 
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application under subparagraph (A) if the Com-
mission has— 
‘‘(i) promulgated new or substantially 
revised measurement and verification pro-
cedures and standards under this sub-
section; or 
‘‘(ii) otherwise substantially revised 
the program established under this section. 
‘‘(g) ALTERNATIVE COMPLIANCE PAYMENTS.— 
‘‘(1) IN
GENERAL.—A retail electric supplier 
may satisfy the requirements of subsection (b) in 
whole or in part by submitting in accordance with 
this subsection, in lieu of each Federal renewable 
electricity credit or megawatt hour of demonstrated 
total annual electricity savings that would otherwise 
be due, a payment equal to $25, adjusted for infla-
tion on January 1 of each year following calendar 
year 2009, in accordance with such regulations as 
the Commission may promulgate. 
‘‘(2) PAYMENT TO STATE FUNDS.—Except as 
otherwise provided in this paragraph, payments 
made under this subsection shall be made directly to 
the State or States in which the retail electric sup-
plier is located, in proportion to the portion of the 
retail electric supplier’s base amount that is sold 
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within each relevant State, provided that such pay-
ments are deposited directly into a fund in the State 
treasury established for this purpose and that the 
State uses such funds in accordance with para-
graphs (3) and (4). If the Commission determines at 
any time that a State is in substantial noncompli-
ance with paragraph (3) or (4), the Commission 
shall direct that any future alternative compliance 
payments that would otherwise be paid to such State 
under this subsection shall instead be paid to the 
Commission and deposited in the United States 
Treasury. 
‘‘(3) STATE USE OF FUNDS.—As a condition of 
continued receipt of alternative compliance payments 
pursuant to this subsection, a State shall use such 
payments exclusively for the purposes of— 
‘‘(A) deploying technologies that generate 
electricity from renewable energy resources; or 
‘‘(B) implementing cost-effective energy ef-
ficiency programs to achieve electricity savings. 
‘‘(4) REPORTING.—As a condition of continued 
receipt of alternative compliance payments pursuant 
to this subsection, a State shall, within 12 months 
of receipt of any such payments and at 12-month in-
tervals thereafter until such payments are expended, 
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provide a report to the Commission, in accordance 
with such regulations as the Commission may pre-
scribe, giving a full accounting of the use of such 
payments, including a detailed description of the ac-
tivities funded thereby. 
‘‘(h) INFORMATION COLLECTION.—The Commission 
may require any retail electric supplier, renewable elec-
tricity generator, or such other entities as the Commission 
deems appropriate, to provide any information the Com-
mission determines appropriate to carry out this section. 
Failure to submit such information or submission of false 
or misleading information under this subsection shall be 
a violation of this section. 
‘‘(i) ENFORCEMENT AND JUDICIAL REVIEW.— 
‘‘(1) FAILURE TO SUBMIT CREDITS OR DEM-
ONSTRATE SAVINGS.—If any person fails to comply 
with the requirements of subsection (b) or (g), such 
person shall be liable to pay to the Commission a 
civil penalty equal to the product of— 
‘‘(A) double the alternative compliance 
payment calculated under subsection (g)(1), 
and 
‘‘(B) the aggregate quantity of Federal re-
newable electricity credits, total annual elec-
tricity savings, or equivalent alternative compli-
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ance payments that the person failed to submit 
in violation of the requirements of subsections 
(b) and (g). 
‘‘(2) ENFORCEMENT.—The Commission shall 
assess a civil penalty under paragraph (1) in accord-
ance with the procedures described in section 31(d) 
of the Federal Power Act (16 U.S.C. 823b(d)). 
‘‘(3) VIOLATION OF REQUIREMENT OF REGULA-
TIONS
OR
ORDERS.—Any person who violates, or 
fails or refuses to comply with, any requirement of 
a regulation promulgated or order issued under this 
section shall be subject to a civil penalty under sec-
tion 316A(b) of the Federal Power Act (16 U.S.C. 
825o–1). Such penalty shall be assessed by the Com-
mission in the same manner as in the case of a vio-
lation referred to in section 316A(b) of such Act. 
‘‘(j) JUDICIAL REVIEW.—Any person aggrieved by a 
final action taken by the Commission under this section, 
other than the assessment of a civil penalty under sub-
section (i), may use the procedures for review described 
in section 313 of the Federal Power Act (16 U.S.C. 825l). 
For purposes of this paragraph, references to an order in 
section 313 of such Act shall be deemed to refer also to 
all other final actions of the Commission under this section 
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other than the assessment of a civil penalty under sub-
section (i). 
‘‘(k) SAVINGS PROVISIONS.—Nothing in this section 
shall— 
‘‘(1) diminish or qualify any authority of a 
State, a political subdivision of a State, or an Indian 
tribe to— 
‘‘(A) adopt or enforce any law or regula-
tion respecting renewable electricity or energy 
efficiency, including any law or regulation es-
tablishing requirements more stringent than 
those established by this section, provided that 
no such law or regulation may relieve any per-
son of any requirement otherwise applicable 
under this section; or 
‘‘(B) regulate the acquisition and disposi-
tion of Federal renewable electricity credits by 
retail electric suppliers within the jurisdiction of 
such State, political subdivision, or Indian tribe, 
including the authority to require such retail 
electric supplier to acquire and submit to the 
Secretary for retirement Federal renewable 
electricity credits in excess of those submitted 
under this section; or 
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‘‘(2) affect the application of, or the responsi-
bility for compliance with, any other provision of law 
or regulation, including environmental and licensing 
requirements. 
‘‘(l) SUNSET.—This section expires on December 31, 
2040.’’. 
(b) CONFORMING AMENDMENT.—The table of con-
tents set forth in section 1(b) of the Public Utility Regu-
latory Policies Act of 1978 (16 U.S.C. 2601 and following) 
is amended by inserting after the item relating to section 
609 the following: 
‘‘Sec. 610. Combined efficiency and renewable electricity standard.’’. 
SEC. 102. CLARIFYING STATE AUTHORITY TO ADOPT RE-
NEWABLE ENERGY INCENTIVES. 
Section 210 of the Public Utility Regulatory Policies 
Act of 1978 is amended by adding at the end thereof: 
‘‘(o) CLARIFICATION
OF
STATE
AUTHORITY
TO 
ADOPT
RENEWABLE
ENERGY
INCENTIVES.—Notwith-
standing any other provision of this Act or the Federal 
Power Act, a State legislature or regulatory authority may 
set the rates for a sale of electric energy by a facility gen-
erating electric energy from renewable energy sources pur-
suant to a State-approved production incentive program 
under which the facility voluntarily sells electric energy. 
For purposes of this subsection, ‘State-approved produc-
tion incentive program’ means a requirement imposed pur-
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suant to State law, or by a State regulatory authority act-
ing within its authority under State law, that an electric 
utility purchase renewable energy (as defined in section 
609 of this Act) at a specified rate.’’. 
Subtitle B—Carbon Capture and 
Sequestration 
SEC. 111. NATIONAL STRATEGY. 
(a) IN GENERAL.—Not later than 1 year after the 
date of enactment of this Act, the Administrator, in con-
sultation with the Secretary of Energy, 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 and other 
barriers to the commercial-scale deployment of carbon 
capture and sequestration. 
(b) BARRIERS.— The report under this section 
shall— 
(1) identify those regulatory, legal, and other 
gaps and barriers that could be addressed by a Fed-
eral agency using existing statutory authority, those, 
if any, that require Federal legislation, and those 
that would be best addressed at the State, tribal, or 
regional level; 
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(2) identify regulatory implementation chal-
lenges, including those related to approval of State 
and tribal programs and delegation of authority for 
permitting; and 
(3) recommend rulemakings, Federal legisla-
tion, or other actions that should be taken to further 
evaluate and address such barriers. 
SEC. 112. REGULATIONS FOR GEOLOGIC SEQUESTRATION 
SITES. 
(a) COORDINATED CERTIFICATION AND PERMITTING 
PROCESS.—Title VIII of the Clean Air Act, as added by 
section 331 of this Act, is amended by adding after section 
812 (as added by section 116 of this Act) the following: 
‘‘SEC. 813. GEOLOGIC SEQUESTRATION SITES. 
‘‘(a) COORDINATED PROCESS.—The Administrator 
shall establish a coordinated approach to certifying and 
permitting geologic sequestration, taking into consider-
ation all relevant statutory authorities. In establishing 
such approach, the Administrator shall— 
‘‘(1) take into account, and reduce redundancy 
with, the requirements of section 1421 of the Safe 
Drinking Water Act (42 U.S.C. 300h), as amended 
by section 112(b) of the American Clean Energy and 
Security Act of 2009, including the rulemaking for 
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geologic sequestration wells described at 73 Fed. 
Reg. 43491-541 (July 25, 2008); and 
‘‘(2) to the extent practicable, reduce the bur-
den on certified entities and implementing authori-
ties. 
‘‘(b) REGULATIONS.—Not later than 2 years after 
the date of enactment of this title, the Administrator shall 
promulgate regulations to protect human health and the 
environment by minimizing the risk of escape to the at-
mosphere of carbon dioxide injected for purposes of geo-
logic sequestration. 
‘‘(c) REQUIREMENTS.—The regulations under sub-
section (b) shall include— 
‘‘(1) a process to obtain certification for geo-
logic sequestration under this section; and 
‘‘(2) requirements for— 
‘‘(A) monitoring, record keeping, and re-
porting for emissions associated with injection 
into, and escape from, geologic sequestration 
sites, taking into account any requirements or 
protocols developed under section 713; 
‘‘(B) public participation in the certifi-
cation process that maximizes transparency; 
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‘‘(C) the sharing of data between States, 
Indian tribes, and the Environmental Protec-
tion Agency; and 
‘‘(D) other elements or safeguards nec-
essary to achieve the purpose set forth in sub-
section (b). 
‘‘(d) REPORT.—Not later than 2 years after the pro-
mulgation of regulations under subsection (b), and at 3- 
year intervals thereafter, the Administrator shall deliver 
to the Committee on Energy and Commerce of the House 
of Representatives and the Committee on Environment 
and Public Works of the Senate a report on geologic se-
questration in the United States, and, to the extent rel-
evant, other countries in North America. Such report shall 
include— 
‘‘(1) data regarding injection, emissions to the 
atmosphere, if any, and performance of active and 
closed geologic sequestration sites, including those 
where enhanced hydrocarbon recovery operations 
occur; 
‘‘(2) an evaluation of the performance of rel-
evant Federal environmental regulations and pro-
grams in ensuring environmentally protective geo-
logic sequestration practices; 
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‘‘(3) recommendations on how such programs 
and regulations should be improved or made more 
effective; and 
‘‘(4) other relevant information.’’. 
(b) SAFE DRINKING WATER ACT STANDARDS.—Sec-
tion 1421 of the Safe Drinking Water Act (42 U.S.C. 
300h) is amended by inserting after subsection (d) the fol-
lowing: 
‘‘(e) CARBON DIOXIDE GEOLOGIC SEQUESTRATION 
WELLS.— 
‘‘(1) IN GENERAL.—Not later than 1 year after 
the date of enactment of this subsection, the Admin-
istrator shall promulgate regulations under sub-
section (a) for carbon dioxide geologic sequestration 
wells. 
‘‘(2) FINANCIAL RESPONSIBILITY.—The regula-
tions referred to in paragraph (1) shall include re-
quirements for maintaining evidence of financial re-
sponsibility, including financial responsibility for 
emergency and remedial response, well plugging, site 
closure, and post-injection site care. Financial re-
sponsibility may be established for carbon dioxide 
geologic sequestration wells in accordance with regu-
lations promulgated by the Administrator by any 
one, or any combination, of the following: insurance, 
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guarantee, trust, standby trust, surety bond, letter 
of credit, qualification as a self-insurer, or any other 
method satisfactory to the Administrator.’’. 
SEC. 113. STUDIES AND REPORTS. 
(a) STUDY OF LEGAL FRAMEWORK FOR GEOLOGIC 
SEQUESTRATION SITES.— 
(1) ESTABLISHMENT
OF
TASK
FORCE.—As 
soon as practicable, but not later than 6 months 
after the date of enactment of this Act, the Adminis-
trator shall establish a task force to be composed of 
an equal number of subject matter experts, non-
governmental organizations with expertise in envi-
ronmental policy, academic experts with expertise in 
environmental law, State and tribal officials with en-
vironmental expertise, representatives of State and 
tribal Attorneys General, representatives from the 
Environmental Protection Agency, the Department 
of the Interior, the Department of Energy, the De-
partment of Transportation, and other relevant Fed-
eral agencies, and members of the private sector, to 
conduct a study of— 
(A) existing Federal environmental stat-
utes, State environmental statutes, and State 
common law that apply to geologic sequestra-
tion sites for carbon dioxide, including the abil-
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ity of such laws to serve as risk management 
tools; 
(B) the existing statutory framework, in-
cluding Federal and State laws, that apply to 
harm and damage to the environment or public 
health at closed sites where carbon dioxide in-
jection has been used for enhanced hydrocarbon 
recovery; 
(C) the statutory framework, environ-
mental health and safety considerations, imple-
mentation issues, and financial implications of 
potential models for Federal, State, or private 
sector assumption of liabilities and financial re-
sponsibilities with respect to closed geologic se-
questration sites; 
(D) private sector mechanisms, including 
insurance and bonding, that may be available to 
manage environmental, health and safety risk 
from closed geologic sequestration sites; and 
(E) the subsurface mineral rights, water 
rights, or property rights issues associated with 
geologic sequestration of carbon dioxide, includ-
ing issues specific to Federal lands. 
(2) REPORT.—Not later than 18 months after 
the date of enactment of this Act, the task force es-
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tablished under paragraph (1) shall submit to Con-
gress a report describing the results of the study 
conducted under that paragraph including any con-
sensus recommendations of the task force. 
(b) ENVIRONMENTAL STATUTES.— 
(1) STUDY.—The Administrator shall conduct a 
study 
examining 
how, 
and 
under 
what 
cir-
cumstances, the environmental statutes for which 
the Environmental Protection Agency has responsi-
bility would apply to carbon dioxide injection and 
geologic sequestration activities. 
(2) REPORT.—Not later than 1 year after the 
date of enactment of this Act, the Administrator 
shall submit to Congress a report describing the re-
sults of the study conducted under paragraph (1). 
SEC. 114. CARBON CAPTURE AND SEQUESTRATION DEM-
ONSTRATION AND EARLY DEPLOYMENT PRO-
GRAM. 
(a) DEFINITIONS.—For purposes of this section: 
(1) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Energy. 
(2) DISTRIBUTION
UTILITY.—The term ‘‘dis-
tribution utility’’ means an entity that distributes 
electricity directly to retail consumers under a legal, 
regulatory, or contractual obligation to do so. 
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(3) ELECTRIC
UTILITY.—The term ‘‘electric 
utility’’ has the meaning provided by section 3(22) 
of the Federal Power Act (16 U.S.C. 796(22)). 
(4) FOSSIL
FUEL-BASED
ELECTRICITY.—The 
term ‘‘fossil fuel-based electricity’’ means electricity 
that is produced from the combustion of fossil fuels. 
(5) FOSSIL
FUEL.—The term ‘‘fossil fuel’’ 
means coal, petroleum, natural gas or any derivative 
of coal, petroleum, or natural gas. 
(6) CORPORATION.—The term ‘‘Corporation’’ 
means the Carbon Storage Research Corporation es-
tablished in accordance with this section. 
(7) QUALIFIED INDUSTRY ORGANIZATION.—The 
term ‘‘qualified industry organization’’ means the 
Edison Electric Institute, the American Public 
Power Association, the National Rural Electric Co-
operative Association, a successor organization of 
such organizations, or a group of owners or opera-
tors of distribution utilities delivering fossil fuel- 
based electricity who collectively represent at least 
20 percent of the volume of fossil fuel-based elec-
tricity delivered by distribution utilities to consumers 
in the United States. 
(8) RETAIL CONSUMER.—The term ‘‘retail con-
sumer’’ means an end-user of electricity. 
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(b) CARBON STORAGE RESEARCH CORPORATION.— 
(1) ESTABLISHMENT.— 
(A) REFERENDUM.—Qualified industry or-
ganizations may conduct, at their own expense, 
a referendum among the owners or operators of 
distribution utilities delivering fossil fuel-based 
electricity for the creation of a Carbon Storage 
Research Corporation. Such referendum shall 
be conducted by an independent auditing firm 
agreed to by the qualified industry organiza-
tions. Voting rights in such referendum shall be 
based on the quantity of fossil fuel-based elec-
tricity delivered to consumers in the previous 
calendar year or other representative period as 
determined by the Secretary pursuant to sub-
section (f). Upon approval of those persons rep-
resenting two-thirds of the total quantity of fos-
sil fuel-based electricity delivered to retail con-
sumers, the Corporation shall be established un-
less opposed by the State regulatory authorities 
pursuant to subparagraph (B). All distribution 
utilities voting in the referendum shall certify to 
the independent auditing firm the quantity of 
fossil fuel-based electricity represented by their 
vote. 
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(B) STATE REGULATORY AUTHORITIES.— 
Upon its own motion or the petition of a quali-
fied industry organization, each State regu-
latory authority shall consider its support or op-
position to the creation of the Corporation 
under subparagraph (A). State regulatory au-
thorities may notify the independent auditing 
firm referred to in subparagraph (A) of their 
views on the creation of the Corporation within 
180 days after the date of enactment of this 
Act. If 40 percent or more of the State regu-
latory authorities submit to the independent au-
diting firm written notices of opposition, the 
Corporation shall not be established notwith-
standing the approval of the qualified industry 
organizations as provided in subparagraph (A). 
(2) TERMINATION.—The Corporation shall be 
authorized to collect assessments and conduct oper-
ations pursuant to this section for a 10-year period 
from the date 6 months after the date of enactment 
of this Act. After such 10-year period, the Corpora-
tion is no longer authorized to collect assessments 
and shall be dissolved on the date 15 years after 
such date of enactment, unless the period is ex-
tended by an Act of Congress. 
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(3) GOVERNANCE.—The Corporation shall oper-
ate as a division or affiliate of the Electric Power 
Research Institute (referred to in this section as 
‘‘EPRI’’) and be managed by a Board of not more 
than 15 voting members responsible for its oper-
ations, including compliance with this section. EPRI, 
in consultation with the Edison Electric Institute, 
the American Public Power Association and the Na-
tional Rural Electric Cooperative Association shall 
appoint the Board members under clauses (i), (ii), 
and (iii) of subparagraph (A) from among can-
didates recommended by those organizations. At 
least a majority of the Board members appointed by 
EPRI shall be representatives of distribution utilities 
subject to assessments under subsection (d). 
(A) MEMBERS.—The Board shall include 
at least one representative of each of the fol-
lowing: 
(i) Investor-owned utilities. 
(ii) Utilities owned by a State agency, 
a municipality, and an Indian tribe. 
(iii) Rural electric cooperatives. 
(iv) Fossil fuel producers. 
(v) Nonprofit environmental organiza-
tions. 
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(vi) Independent generators or whole-
sale power providers. 
(vii) Consumer groups. 
(B) NONVOTING
MEMBERS.—The Board 
shall also include as additional nonvoting Mem-
bers the Secretary of Energy or his designee 
and 2 representatives of State regulatory au-
thorities as defined in section 3(17) of the Pub-
lic Utility Regulatory Policies Act of 1978 (16 
U.S.C. 2602(17)), each designated by the Na-
tional Association of State Regulatory Utility 
Commissioners from States that are not within 
the same transmission interconnection. 
(4) COMPENSATION.—Corporation Board mem-
bers shall receive no compensation for their services, 
nor shall Corporation Board members be reimbursed 
for expenses relating to their service. 
(5) TERMS.—Corporation Board members shall 
serve terms of 4 years and may serve not more than 
2 full consecutive terms. Members filling unexpired 
terms may serve not more than a total of 8 consecu-
tive years. Former members of the Corporation 
Board may be reappointed to the Corporation Board 
if they have not been members for a period of 2 
years. Initial appointments to the Corporation Board 
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shall be for terms of 1, 2, 3, and 4 years, staggered 
to provide for the selection of 3 members each year. 
(6) STATUS OF CORPORATION.—The Corpora-
tion shall not be considered to be an agency, depart-
ment, or instrumentality of the United States, and 
no officer or director or employee of the Corporation 
shall be considered to be an officer or employee of 
the United States Government, for purposes of title 
5 or title 31 of the United States Code, or for any 
other purpose, and no funds of the Corporation shall 
be treated as public money for purposes of chapter 
33 of title 31, United States Code, or for any other 
purpose. 
(c) FUNCTIONS AND ADMINISTRATION OF THE COR-
PORATION.— 
(1) IN GENERAL.—The Corporation shall estab-
lish and administer a program to accelerate the com-
mercial availability of carbon dioxide capture and 
storage technologies and methods, including tech-
nologies which capture and store, or capture and 
convert, carbon dioxide. Under such program com-
petitively awarded grants, contracts, and financial 
assistance shall be provided and entered into with el-
igible entities. Except as provided in paragraph (8), 
the Corporation shall use all funds derived from as-
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sessments under subsection (d) to issue grants and 
contracts to eligible entities. 
(2) PURPOSE.—The purposes of the grants, 
contracts, and assistance under this subsection shall 
be to support commercial-scale demonstrations of 
carbon capture or storage technology projects capa-
ble of advancing the technologies to commercial 
readiness. Such projects should encompass a range 
of different coal and other fossil fuel varieties, be 
geographically diverse, involve diverse storage media, 
and employ capture or storage, or capture and con-
version, technologies potentially suitable either for 
new or for retrofit applications. The Corporation 
shall seek, to the extent feasible, to support at least 
5 commercial-scale demonstration projects inte-
grating carbon capture and sequestration or conver-
sion technologies. 
(3) ELIGIBLE ENTITIES.—Entities eligible for 
grants, contracts or assistance under this subsection 
may include distribution utilities, electric utilities 
and other private entities, academic institutions, na-
tional laboratories, Federal research agencies, State 
and tribal research agencies, nonprofit organizations, 
or consortiums of 2 or more entities. Pilot-scale and 
similar small-scale projects are not eligible for sup-
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port by the Corporation. Owners or developers of 
projects supported by the Corporation shall, where 
appropriate, share in the costs of such projects. 
(4) GRANTS FOR EARLY MOVERS.—Fifty per-
cent of the funds raised under this section shall be 
provided in the form of grants to electric utilities 
that had, prior to the award of any grant under this 
section, committed resources to deploy a large scale 
electricity generation unit with integrated carbon 
capture and sequestration or conversion applied to a 
substantial portion of the unit’s carbon dioxide emis-
sions.
Grant funds shall be provided to defray costs 
incurred by such electricity utilities for at least 5 
such electricity generation units. 
(5) ADMINISTRATION.—The members of the 
Board of Directors of the Corporation shall elect a 
Chairman and other officers as necessary, may es-
tablish committees and subcommittees of the Cor-
poration, and shall adopt rules and bylaws for the 
conduct of business and the implementation of this 
section. The Board shall appoint an Executive Di-
rector and professional support staff who may be 
employees of the Electric Power Research Institute 
(EPRI). After consultation with the Technical Advi-
sory Committee established under subsection (j), the 
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Secretary, and the Director of the National Energy 
Technology Laboratory to obtain advice and rec-
ommendations on plans, programs, and project selec-
tion criteria, the Board shall establish priorities for 
grants, contracts, and assistance; publish requests 
for proposals for grants, contracts, and assistance; 
and award grants, contracts, and assistance competi-
tively, on the basis of merit, after the establishment 
of procedures that provide for scientific peer review 
by the Technical Advisory Committee. The Board 
shall give preference to applications that reflect the 
best overall value and prospect for achieving the 
purposes of the section, such as those which dem-
onstrate an integrated approach for capture and 
storage or capture and conversion technologies. The 
Board members shall not participate in making 
grants or awards to entities with whom they are af-
filiated. 
(6) USES OF GRANTS, CONTRACTS, AND ASSIST-
ANCE.—A grant, contract, or other assistance pro-
vided under this subsection may be used to purchase 
carbon dioxide when needed to conduct tests of car-
bon dioxide storage sites, in the case of established 
projects that are storing carbon dioxide emissions, or 
for other purposes consistent with the purposes of 
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this section. The Corporation shall make publicly 
available at no cost information learned as a result 
of projects which it supports financially. 
(7) INTELLECTUAL
PROPERTY.—The Board 
shall establish policies regarding the ownership of in-
tellectual property developed as a result of Corpora-
tion grants and other forms of technology support. 
Such policies shall encourage individual ingenuity 
and invention. 
(8) ADMINISTRATIVE EXPENSES.—Up to 5 per-
cent of the funds collected in any fiscal year under 
subsection (d) may be used for the administrative 
expenses of operating the Corporation (not including 
costs incurred in the determination and collection of 
the assessments pursuant to subsection (d)). 
(9) PROGRAMS AND BUDGET.—Before August 1 
each year, the Corporation, after consulting with the 
Technical Advisory Committee and the Secretary 
and the Director of the Department’s National En-
ergy Technology Laboratory and other interested 
parties to obtain advice and recommendations, shall 
publish for public review and comment its proposed 
plans, programs, project selection criteria, and 
projects to be funded by the Corporation for the 
next calendar year. The Corporation shall also pub-
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lish for public review and comment a budget plan for 
the next calendar year, including the probable costs 
of all programs, projects, and contracts and a rec-
ommended rate of assessment sufficient to cover 
such costs. The Secretary may recommend programs 
and activities the Secretary considers appropriate. 
The Corporation shall include in the first publication 
it issues under this paragraph a strategic plan or 
roadmap for the achievement of the purposes of the 
Corporation, as set forth in paragraph (2). 
(10) RECORDS; AUDITS.—The Corporation shall 
keep minutes, books, and records that clearly reflect 
all of the acts and transactions of the Corporation 
and make public such information. The books of the 
Corporation shall be audited by a certified public ac-
countant at least once each fiscal year and at such 
other times as the Corporation may designate. Cop-
ies of each audit shall be provided to the Congress, 
all Corporation board members, all qualified indus-
try organizations, each State regulatory authority 
and, upon request, to other members of the industry. 
If the audit determines that the Corporation’s prac-
tices fail to meet generally accepted accounting prin-
ciples the assessment collection authority of the Cor-
poration under subsection (d) shall be suspended 
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until a certified public accountant renders a subse-
quent opinion that the failure has been corrected. 
The Corporation shall make its books and records 
available for review by the Secretary or the Comp-
troller General of the United States. 
(11) 
PUBLIC
ACCESS.—The 
Corporation 
Board’s meetings shall be open to the public and 
shall occur after at least 30 days advance public no-
tice. Meetings of the Board of Directors may be 
closed to the public where the agenda of such meet-
ings includes only confidential matters pertaining to 
project selection, the award of grants or contracts, 
personnel matters, or the receipt of legal advice. The 
minutes of all meetings of the Corporation shall be 
made available to and readily accessible by the pub-
lic. 
(12) ANNUAL
REPORT.—Each year the Cor-
poration shall prepare and make publicly available a 
report which includes an identification and descrip-
tion of all programs and projects undertaken by the 
Corporation during the previous year. The report 
shall also detail the allocation or planned allocation 
of Corporation resources for each such program and 
project. The Corporation shall provide its annual re-
port to the Congress, the Secretary, each State regu-
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latory authority, and upon request to the public. The 
Secretary shall, not less than 60 days after receiving 
such report, provide to the President and Congress 
a report assessing the progress of the Corporation in 
meeting the objectives of this section. 
(d) ASSESSMENTS.— 
(1) AMOUNT.—(A) In all calendar years fol-
lowing its establishment, the Corporation shall col-
lect an assessment on distribution utilities for all 
fossil fuel-based electricity delivered directly to retail 
consumers (as determined under subsection (f)). The 
assessments shall reflect the relative carbon dioxide 
emission rates of different fossil fuel-based elec-
tricity, and initially shall be not less than the fol-
lowing amounts for coal, natural gas, and oil: 
Fuel type 
Rate of assessment 
per kilowatt hour 
Coal ...................................................................
$0.00043 
Natural Gas ......................................................
$0.00022 
Oil .....................................................................
$0.00032. 
(B) The Corporation is authorized to adjust the 
assessments on fossil fuel-based electricity to reflect 
changes in the expected quantities of such electricity 
from different fuel types, such that the assessments 
generate not less than $1.0 billion and not more 
than $1.1 billion annually. The Corporation is au-
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thorized to supplement assessments through addi-
tional financial commitments. 
(2) INVESTMENT
OF
FUNDS.—Pending dis-
bursement pursuant to a program, plan, or project, 
the Corporation may invest funds collected through 
assessments under this subsection, and any other 
funds received by the Corporation, only in obliga-
tions of the United States or any agency thereof, in 
general obligations of any State or any political sub-
division thereof, in any interest-bearing account or 
certificate of deposit of a bank that is a member of 
the Federal Reserve System, or in obligations fully 
guaranteed as to principal and interest by the 
United States. 
(3) REVERSION
OF
UNUSED
FUNDS.—If the 
Corporation does not disburse, dedicate or assign 75 
percent or more of the available proceeds of the as-
sessed fees in any calendar year 7 or more years fol-
lowing its establishment, due to an absence of quali-
fied projects or similar circumstances, it shall reim-
burse the remaining undedicated or unassigned bal-
ance of such fees, less administrative and other ex-
penses authorized by this section, to the distribution 
utilities upon which such fees were assessed, in pro-
portion to their collected assessments. 
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(e) ERCOT.— 
(1) ASSESSMENT, COLLECTION, AND
REMIT-
TANCE.—(A) Notwithstanding any other provision of 
this section, within ERCOT, the assessment pro-
vided for in subsection (d) shall be— 
(i) levied directly on qualified scheduling 
entities, or their successor entities; 
(ii) charged consistent with other charges 
imposed on qualified scheduling entities as a fee 
on energy used by the load-serving entities; and 
(iii) collected and remitted by ERCOT to 
the Corporation in the amounts and in the 
same manner as set forth in subsection (d). 
(B) The assessment amounts referred to in sub-
paragraph (A) shall be— 
(i) determined by the amount and types of 
fossil fuel-based electricity delivered directly to 
all retail customers in the prior calendar year 
beginning with the year ending immediately 
prior to the period described in subsection 
(b)(2); and 
(ii) take into account the number of renew-
able energy credits retired by the load-serving 
entities represented by a qualified scheduling 
entity within the prior calendar year. 
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(2) ADMINISTRATION EXPENSES.—Up to 1 per-
cent of the funds collected in any fiscal year by 
ERCOT under the provisions of this subsection may 
be used for the administrative expenses incurred in 
the determination, collection and remittance of the 
assessments to the Corporation. 
(3) AUDIT.—ERCOT shall provide a copy of its 
annual audit pertaining to the administration of the 
provisions of this subsection to the Corporation. 
(4) DEFINITIONS.—For the purposes of this 
subsection: 
(A) The term ‘‘ERCOT’’ means the Elec-
tric Reliability Council of Texas. 
(B) The term ‘‘load-serving entities’’ has 
the meaning adopted by ERCOT Protocols and 
in effect on the date of enactment of this Act. 
(C) The term ‘‘qualified scheduling enti-
ties’’ has the meaning adopted by ERCOT Pro-
tocols and in effect on the date of enactment of 
this Act. 
(D) The term ‘‘renewable energy credit’’ 
has the meaning as promulgated and adopted 
by the Public Utility Commission of Texas pur-
suant to section 39.904(b) of the Public Utility 
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Regulatory Act of 1999, and in effect on the 
date of enactment of this Act. 
(f) DETERMINATION OF FOSSIL FUEL-BASED ELEC-
TRICITY DELIVERIES.— 
(1) FINDINGS.—The Congress finds that: 
(A) The assessments under subsection (d) 
are to be collected based on the amount of fossil 
fuel-based electricity delivered by each distribu-
tion utility. 
(B) Since many distribution utilities pur-
chase all or part of their retail consumer’s elec-
tricity needs from other entities, it may not be 
practical to determine the precise fuel mix for 
the power sold by each individual distribution 
utility. 
(C) It may be necessary to use average 
data, often on a regional basis with reference to 
Regional Transmission Organization (‘‘RTO’’) 
or NERC regions, to make the determinations 
necessary for making assessments. 
(2) DOE PROPOSED
RULE.—The Secretary, 
acting in close consultation with the Energy Infor-
mation Administration, shall issue for notice and 
comment a proposed rule to determine the level of 
fossil fuel electricity delivered to retail customers by 
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each distribution utility in the United States during 
the most recent calendar year or other period deter-
mined to be most appropriate. Such proposed rule 
shall balance the need to be efficient, reasonably pre-
cise, and timely, taking into account the nature and 
cost of data currently available and the nature of 
markets and regulation in effect in various regions 
of the country. Different methodologies may be ap-
plied in different regions if appropriate to obtain the 
best balance of such factors. 
(3) FINAL RULE.—Within 6 months after the 
date of enactment of this Act, and after opportunity 
for comment, the Secretary shall issue a final rule 
under this subsection for determining the level and 
type of fossil fuel-based electricity delivered to retail 
customers by each distribution utility in the United 
States during the appropriate period. In issuing 
such rule, the Secretary may consider opportunities 
and costs to develop new data sources in the future 
and issue recommendations for the Energy Informa-
tion Administration or other entities to collect such 
data. After notice and opportunity for comment the 
Secretary may, by rule, subsequently update and 
modify the methodology for making such determina-
tions. 
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(4) ANNUAL
DETERMINATIONS.—Pursuant to 
the final rule issued under paragraph (3), the Sec-
retary shall make annual determinations of the 
amounts and types for each such utility and publish 
such determinations in the Federal Register. Such 
determinations shall be used to conduct the ref-
erendum under subsection (b) and by the Corpora-
tion in applying any assessment under this sub-
section. 
(5) REHEARING AND JUDICIAL REVIEW.—The 
owner or operator of any distribution utility that be-
lieves that the Secretary has misapplied the method-
ology in the final rule in determining the amount 
and types of fossil fuel electricity delivered by such 
distribution utility may seek rehearing of such deter-
mination within 30 days of publication of the deter-
mination in the Federal Register. The Secretary 
shall decide such rehearing petitions within 30 days. 
The Secretary’s determinations following rehearing 
shall be final and subject to judicial review in the 
United States Court of Appeals for the District of 
Columbia. 
(g) COMPLIANCE
WITH
CORPORATION
ASSESS-
MENTS.—The Corporation may bring an action in the ap-
propriate court of the United States to compel compliance 
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with an assessment levied by the Corporation under this 
section. A successful action for compliance under this sub-
section may also require payment by the defendant of the 
costs incurred by the Corporation in bringing such action. 
(h) MIDCOURSE REVIEW.—Not later than 5 years 
following establishment of the Corporation, the Comp-
troller General of the United States shall prepare an anal-
ysis, and report to Congress, assessing the Corporation’s 
activities, including project selection and methods of dis-
bursement of assessed fees, impacts on the prospects for 
commercialization of carbon capture and storage tech-
nologies, adequacy of funding, and administration of 
funds. The report shall also make such recommendations 
as may be appropriate in each of these areas. The Cor-
poration shall reimburse the Government Accountability 
Office for the costs associated with performing this mid-
course review. 
(i) RECOVERY OF COSTS.— 
(1) IN GENERAL.—A distribution utility whose 
transmission, delivery, or sales of electric energy are 
subject to any form of rate regulation shall not be 
denied the opportunity to recover the full amount of 
the prudently incurred costs associated with com-
plying with this section, consistent with applicable 
State or Federal law. 
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(2) RATEPAYER REBATES.—Regulatory authori-
ties that approve cost recovery pursuant to para-
graph (1) may order rebates to ratepayers to the ex-
tent that distribution utilities are reimbursed 
undedicated or unassigned balances pursuant to sub-
section (d)(3). 
(j) TECHNICAL ADVISORY COMMITTEE.— 
(1) ESTABLISHMENT.—There is established an 
advisory committee, to be known as the ‘‘Technical 
Advisory Committee’’. 
(2) MEMBERSHIP.—The Technical Advisory 
Committee shall be comprised of not less than 7 
members appointed by the Board from among aca-
demic institutions, national laboratories, independent 
research institutions, and other qualified institu-
tions. No member of the Committee shall be affili-
ated with EPRI or with any organization having 
members serving on the Board. At least one member 
of the Committee shall be appointed from among of-
ficers or employees of the Department of Energy 
recommended to the Board by the Secretary of En-
ergy. 
(3) CHAIRPERSON AND VICE CHAIRPERSON.— 
The Board shall designate one member of the Tech-
nical Advisory Committee to serve as Chairperson of 
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the Committee and one to serve as Vice Chairperson 
of the Committee. 
(4) COMPENSATION.—The Board shall provide 
compensation to members of the Technical Advisory 
Committee for travel and other incidental expenses 
and such other compensation as the Board deter-
mines to be necessary. 
(5) PURPOSE.—The Technical Advisory Com-
mittee shall provide independent assessments and 
technical evaluations, as well as make non-binding 
recommendations to the Board, concerning Corpora-
tion activities, including but not limited to the fol-
lowing: 
(A) Reviewing and evaluating the Corpora-
tion’s plans and budgets described in subsection 
(c)(9), as well as any other appropriate areas, 
which could include approaches to prioritizing 
technologies, appropriateness of engineering 
techniques, monitoring and verification tech-
nologies for storage, geological site selection, 
and cost control measures. 
(B) 
Making 
annual 
non-binding 
rec-
ommendations to the Board concerning any of 
the matters referred to in subparagraph (A), as 
well as what types of investments, scientific re-
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search, or engineering practices would best fur-
ther the goals of the Corporation. 
(6) PUBLIC AVAILABILITY.—All reports, evalua-
tions, and other materials of the Technical Advisory 
Committee shall be made available to the public by 
the Board, without charge, at time of receipt by the 
Board. 
(k) LOBBYING RESTRICTIONS.—No funds collected 
by the Corporation shall be used in any manner for influ-
encing legislation or elections, except that the Corporation 
may recommend to the Secretary and the Congress 
changes in this section or other statutes that would fur-
ther the purposes of this section. 
(l) DAVIS-BACON COMPLIANCE.—The Corporation 
shall ensure that entities receiving grants, contracts, or 
other financial support from the Corporation for the 
project activities authorized by this section are in compli-
ance with the Davis-Bacon Act (40 U.S.C. 276a–276a– 
5). 
SEC. 115. COMMERCIAL DEPLOYMENT OF CARBON CAP-
TURE AND SEQUESTRATION TECHNOLOGIES. 
Part H of title VII of the Clean Air Act (as added 
by section 321 of this Act) is amended by adding the fol-
lowing new section after section 785: 
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‘‘SEC. 786. COMMERCIAL DEPLOYMENT OF CARBON CAP-
TURE AND SEQUESTRATION TECHNOLOGIES. 
‘‘(a) REGULATIONS.—Not later than 2 years after 
the date of enactment of this title, the Administrator shall 
promulgate regulations providing for the distribution of 
emission allowances allocated pursuant to section 782(f), 
pursuant to the requirements of this section, to support 
the commercial deployment of carbon capture and seques-
tration technologies in both electric power generation and 
industrial operations. 
‘‘(b) ELIGIBILITY CRITERIA.—For an owner or oper-
ator of a project to be eligible to receive emission allow-
ances under this section, the project must— 
‘‘(1) implement carbon capture and sequestra-
tion technology— 
‘‘(A) at an electric generating unit that— 
‘‘(i) has a nameplate capacity of 200 
megawatts or more; 
‘‘(ii) in the case of a retrofit applica-
tion, applies the carbon capture and se-
questration technology to the flue gas from 
at least 200 megawatts of the total name-
plate generating capacity of the unit, pro-
vided that clause (i) shall apply without ex-
ception; 
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‘‘(iii) derives at least 50 percent of its 
annual fuel input from coal, petroleum 
coke, or any combination of these 2 fuels; 
and 
‘‘(iv) upon implementation of capture 
and sequestration technology, will achieve 
an emission limit that is at least a 50 per-
cent reduction in emissions of the carbon 
dioxide produced by— 
‘‘(I) the unit, measured on an 
annual basis, determined in accord-
ance with section 812(b)(2); or 
‘‘(II) in the case of retrofit appli-
cations under clause (ii), the treated 
portion of flue gas from the unit, 
measured on an annual basis, deter-
mined in accordance with section 
812(b)(2); or 
‘‘(B) at an industrial source that— 
‘‘(i) absent carbon capture and se-
questration, would emit greater than 
50,000 tons per year of carbon dioxide; 
‘‘(ii) 
upon 
implementation, 
will 
achieve an emission limit that is at least a 
50 percent reduction in emissions of the 
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carbon dioxide produced by the emission 
point, measured on an annual basis, deter-
mined 
in 
accordance 
with 
section 
812(b)(2); and 
‘‘(iii) does not produce a liquid trans-
portation fuel from a solid fossil-based 
feedstock; 
‘‘(2) geologically sequester carbon dioxide at a 
site that meets all applicable permitting and certifi-
cation requirements for geologic sequestration, or, 
pursuant to such requirements as the Administrator 
may prescribe by regulation, convert captured car-
bon dioxide to a stable form that will safely and per-
manently sequester such carbon dioxide; 
‘‘(3) meet all other applicable State, tribal, and 
Federal permitting requirements; and 
‘‘(4) be located in the United States. 
‘‘(c) PHASE I DISTRIBUTION TO ELECTRIC GENER-
ATING UNITS.— 
‘‘(1) 
APPLICATION.—This 
subsection 
shall 
apply only to projects at the first 6 gigawatts of 
electric generating units, measured in cumulative 
generating capacity of such units, that receive allow-
ances under this section. 
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‘‘(2) DISTRIBUTION.—The Administrator shall 
distribute emission allowances allocated under sec-
tion 782(f) to the owner or operator of each eligible 
project at an electric generating unit in a quantity 
equal to the quotient obtained by dividing— 
‘‘(A) the product obtained by multi-
plying— 
‘‘(i) the number of metric tons of car-
bon dioxide emissions avoided through cap-
ture and sequestration of emissions by the 
project, as determined pursuant to such 
methodology as the Administrator shall 
prescribe by regulation; and 
‘‘(ii) a bonus allowance value, pursu-
ant to paragraph (3); by 
‘‘(B) the average fair market value of an 
emission allowance during the preceding year. 
‘‘(3) BONUS ALLOWANCE VALUES.— 
‘‘(A) For a generating unit achieving the 
capture and sequestration of 85 percent or 
more of the carbon dioxide that otherwise would 
be emitted by such unit, the bonus allowance 
value shall be $90 per ton. 
‘‘(B) The Administrator shall by regulation 
establish a bonus allowance value for each rate 
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of lower capture and sequestration achieved by 
a generating unit, from a minimum of $50 per 
ton for a 50 percent rate and varying directly 
with increasing rates of capture and sequestra-
tion up to $90 per ton for an 85 percent rate. 
‘‘(C) For a generating unit that achieves 
the capture and sequestration of at least 50 
percent of the carbon dioxide that otherwise 
would be emitted by such unit by not later than 
January 1, 2017, the otherwise applicable 
bonus allowance value under this paragraph 
shall be increased by $10, provided that the 
owner of such unit notifies the Administrator 
by not later than January 1, 2012, of its intent 
to achieve such rate of capture and sequestra-
tion. 
‘‘(D) For a carbon capture and sequestra-
tion project sequestering in a geological forma-
tion for purposes of enhanced hydrocarbon re-
covery, the Administrator shall, by regulation, 
reduce the applicable bonus allowance value 
under this paragraph to reflect the lower net 
cost of the project when compared to sequestra-
tion into geological formations solely for pur-
poses of sequestration. 
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‘‘(E) The Administrator shall annually ad-
just for inflation the bonus allowance values es-
tablished under this paragraph. 
‘‘(d) PHASE II DISTRIBUTION TO ELECTRIC GENER-
ATING UNITS.— 
‘‘(1) 
APPLICATION.—This 
subsection 
shall 
apply only to the distribution of emission allowances 
for carbon capture and sequestration projects at 
electric generating units after the capacity threshold 
identified in subsection (c)(1) is reached. 
‘‘(2) REGULATIONS.—Not later than 2 years 
prior to the date on which the capacity threshold 
identified in subsection (c)(1) is projected to be 
reached, the Administrator shall promulgate regula-
tions to govern the distribution of emission allow-
ances to the owners or operators of eligible projects 
under this subsection. 
‘‘(3) REVERSE AUCTIONS.— 
‘‘(A) IN GENERAL.—Except as provided in 
paragraph (4), the regulations promulgated 
under paragraph (2) shall provide for the dis-
tribution of emission allowances to the owners 
or operators of eligible projects under this sub-
section through reverse auctions, which shall be 
held no less frequently than once each calendar 
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year. The Administrator may establish a sepa-
rate auction for each of no more than 5 dif-
ferent project categories, defined on the basis of 
coal type, capture technology, geological forma-
tion type, new unit versus retrofit application, 
such other factors as the Administrator may 
prescribe, or any combination thereof. The Ad-
ministrator may establish appropriate minimum 
rates of capture and sequestration in imple-
menting this paragraph. 
‘‘(B) AUCTION PROCESS.—At each reverse 
auction— 
‘‘(i) the Administrator shall solicit 
bids from eligible projects; 
‘‘(ii) eligible projects participating in 
the auction shall submit a bid including 
the desired level of carbon dioxide seques-
tration incentive per ton and the estimated 
quantity of carbon dioxide that the project 
will permanently sequester over 10 years; 
and 
‘‘(iii) the Administrator shall select 
bids, within each auction, for the seques-
tration amount submitted, beginning with 
the eligible project submitting the bid for 
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the lowest level of sequestration incentive 
on a per ton basis and meeting such other 
requirements as the Administrator may 
specify, until the amount of funds available 
for the reverse auction is committed. 
‘‘(C) FORM OF DISTRIBUTION.—The Ad-
ministrator shall distribute emission allowances 
to the owners or operators of eligible projects 
selected through a reverse auction under this 
paragraph pursuant to a formula equivalent to 
that described in subsection (c)(2), except that 
the bonus allowance value that is bid by the en-
tity shall be substituted for the bonus allowance 
values set forth in subsection (c)(3). 
‘‘(4) ALTERNATIVE DISTRIBUTION METHOD.— 
‘‘(A) IN GENERAL.—If the Administrator 
determines that reverse auctions would not pro-
vide for efficient and cost-effective commercial 
deployment of carbon capture and sequestration 
technologies, the Administrator may instead, 
through regulations promulgated under para-
graph (2) or (5), prescribe a schedule for the 
award of bonus allowances to the owners or op-
erators of eligible projects under this sub-
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section, in accordance with the requirements of 
this paragraph. 
‘‘(B) MULTIPLE TRANCHES.—The Admin-
istrator shall divide emission allowances avail-
able for distribution to the owners or operators 
of eligible projects into a series of tranches, 
each supporting the deployment of a specified 
quantity of cumulative electric generating ca-
pacity utilizing carbon capture and sequestra-
tion technology, each of which shall not be 
greater than 6 gigawatts. 
‘‘(C) METHOD
OF
DISTRIBUTION.—The 
Administrator shall distribute emission allow-
ances within each tranche, on a first-come, 
first-served basis— 
‘‘(i) based on the date of full-scale op-
eration of capture and sequestration tech-
nology; and 
‘‘(ii) pursuant to a formula, similar to 
that set forth in subsection (c)(2) (except 
that the Administrator shall prescribe 
bonus allowance values different than those 
set forth in subsection (c)(3)), establishing 
the number of allowances to be distributed 
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per ton of carbon dioxide sequestered by 
the project. 
‘‘(D) REQUIREMENTS.—For each tranche 
established pursuant to subparagraph (B), the 
Administrator shall establish a schedule for dis-
tributing emission allowances that— 
‘‘(i) is based on a sliding scale that 
provides higher bonus allowance values for 
projects achieving higher rates of capture 
and sequestration; 
‘‘(ii) for each capture and sequestra-
tion rate, establishes a bonus allowance 
value that is lower than that established 
for such rate in the previous tranche (or, 
in the case of the first tranche, than that 
established for such rate under subsection 
(c)(3)); and 
‘‘(iii) may establish different bonus al-
lowance levels for no more than 5 different 
project categories, defined by coal type, 
capture technology, geological formation 
type, new unit versus retrofit application, 
such other factors as the Administrator 
may prescribe, or any combination thereof. 
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‘‘(E) CRITERIA FOR ESTABLISHING BONUS 
ALLOWANCE VALUES.—In setting bonus allow-
ance values under this paragraph, the Adminis-
trator shall seek to cover no more than the rea-
sonable incremental capital and operating costs 
of a project that are attributable to implemen-
tation of carbon capture, transportation, and 
sequestration technologies, taking into ac-
count— 
‘‘(i) the reduced cost of compliance 
with section 722 of this Act; 
‘‘(ii) the reduced cost associated with 
sequestering in a geological formation for 
purposes of enhanced hydrocarbon recovery 
when compared to sequestration into geo-
logical formations solely for purposes of se-
questration; 
‘‘(iii) the relevant factors defining the 
project category; and 
‘‘(iv) such other factors as the Admin-
istrator determines are appropriate. 
‘‘(5) REVISION OF REGULATIONS.—The Admin-
istrator shall review, and as appropriate revise, the 
applicable regulations under this subsection no less 
frequently than every 8 years. 
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‘‘(e) LIMITS FOR CERTAIN ELECTRIC GENERATING 
UNITS.— 
‘‘(1) DEFINITIONS.—For purposes of this sub-
section, the terms ‘covered EGU’ and ‘initially per-
mitted’ shall have the meaning given those terms in 
section 812 of this Act. 
‘‘(2) COVERED
EGUS
INITIALLY
PERMITTED 
FROM
2009
THROUGH
2014.—For a covered EGU 
that is initially permitted on or after January 1, 
2009, and before January 1, 2015, the Adminis-
trator shall reduce the quantity of emission allow-
ances that the owner or operator of such covered 
EGU would otherwise be eligible to receive under 
this section as follows: 
‘‘(A) In the case of a unit commencing op-
eration on or before January 1, 2019, if the 
date in clause (ii)(I) is earlier than the date in 
clause (ii)(II), by the product of— 
‘‘(i) 20 percent; and 
‘‘(ii) the number of years, if any, that 
have elapsed between— 
‘‘(I) the earlier of January 1, 
2020, or the date that is 5 years after 
the commencement of operation of 
such covered EGU; and 
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‘‘(II) the first year that such cov-
ered EGU achieves (and thereafter 
maintains) an emission limit that is at 
least a 50 percent reduction in emis-
sions of the carbon dioxide produced 
by the unit, measured on an annual 
basis, as determined in accordance 
with section 812(b)(2). 
‘‘(B) In the case of a unit commencing op-
eration after January 1, 2019, by the product 
of— 
‘‘(i) 20 percent; and 
‘‘(ii) the number of years between— 
‘‘(I) the commencement of oper-
ation of such covered EGU; and 
‘‘(II) the first year that such cov-
ered EGU achieves (and thereafter 
maintains) an emission limit that is at 
least a 50 percent reduction in emis-
sions of the carbon dioxide produced 
by the unit, measured on an annual 
basis, as determined in accordance 
with section 812(b)(2). 
‘‘(3) COVERED
EGUS
INITIALLY
PERMITTED 
FROM 2015 THROUGH 2019.—The owner or operator 
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of a covered EGU that is initially permitted on or 
after January 1, 2015, and before January 1, 2020, 
shall be ineligible to receive emission allowances pur-
suant to this section if such unit, upon commence-
ment of operations (and thereafter), does not achieve 
and maintain an emission limit that is at least a 50 
percent reduction in emissions of the carbon dioxide 
produced by the unit, measured on an annual basis, 
as determined in accordance with section 812(b)(2). 
‘‘(f) INDUSTRIAL SOURCES.— 
‘‘(1) ALLOWANCES.—The Administrator may 
distribute not more than 15 percent of the allow-
ances allocated under section 782(f) for any vintage 
year to the owners or operators of eligible industrial 
sources to support the commercial-scale deployment 
of carbon capture and sequestration technologies at 
such sources. 
‘‘(2) DISTRIBUTION.—The Administrator shall, 
by regulation, prescribe requirements for the dis-
tribution of emission allowances to the owners or op-
erators of industrial sources under this subsection, 
based on a bonus allowance formula that awards al-
lowances to qualifying projects on the basis of tons 
of carbon dioxide captured and permanently seques-
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tered. The Administrator may provide for the dis-
tribution of emission allowances pursuant to— 
‘‘(A) a reverse auction method, similar to 
that described under subsection (d)(3), includ-
ing the use of separate auctions for different 
project categories; or 
‘‘(B) an incentive schedule, similar to that 
described under subsection (d)(4), which shall 
ensure that incentives are set so as to satisfy 
the 
requirement 
described 
in 
subsection 
(d)(4)(E). 
‘‘(3) REVISION OF REGULATIONS.—The Admin-
istrator shall review, and as appropriate revise, the 
applicable regulations under this subsection no less 
frequently than every 8 years. 
‘‘(g) LIMITATIONS.—Allowances may be distributed 
under this section only for tons of carbon dioxide emis-
sions that have already been captured and sequestered. A 
qualifying project may receive annual emission allowances 
under this section only for the first 10 years of operation. 
No greater than 72 gigawatts of total cumulative gener-
ating capacity (including industrial applications, measured 
by such equivalent metric as the Administrator may des-
ignate) may receive emission allowances under this sec-
tion. Upon reaching the limit described in the preceding 
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sentence, any emission allowances that are allocated for 
carbon capture and sequestration deployment under sec-
tion 782(f) and are not yet obligated under this section 
shall be treated as allowances not designated for distribu-
tion for purposes of section 782(r). 
‘‘(h) EXHAUSTION OF ACCOUNT AND ANNUAL ROLL- 
OVER OF SURPLUS ALLOWANCES.— 
‘‘(1) In distributing emission allowances under 
this section, the Administrator shall ensure that 
qualifying projects receiving allowances receive dis-
tributions for 10 years. 
‘‘(2) If the Administrator determines that the 
emission allowances allocated under section 782(f) 
with a vintage year that matches the year of dis-
tribution will be exhausted once the estimated full 
10-year distributions will be provided to current eli-
gible participants, the Administrator shall provide to 
new eligible projects allowances from vintage years 
after the year of the distribution. 
‘‘(i) RETROFIT APPLICATIONS.—(1) In calculating 
bonus allowance values for retrofit applications eligible 
under subsection (b)(1)(A)(ii) and (iv)(II), the Adminis-
trator shall apply the required capture rates with respect 
to the treated portion of flue gas from the unit. 
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‘‘(2) No additional projects shall be eligible for allow-
ances under subsection (b)(1)(A)(ii) and (iv)(II) as of such 
time as the Administrator reports, pursuant to section 
812(d), that carbon capture and sequestration retrofit 
projects at electric generating units that are eligible for 
allowances under this section have been applied, in the ag-
gregate, to the flue gas generated by 1 gigawatt of total 
cumulative generating capacity. 
‘‘(j) DAVIS-BACON COMPLIANCE.—All laborers and 
mechanics employed on projects funded directly by or as-
sisted in whole or in part by this section through the use 
of emission allowances shall be paid wages at rates not 
less than those prevailing on projects of a character simi-
lar in the locality as determined by the Secretary of Labor 
in accordance with subchapter IV, chapter 31, part A of 
subtitle II of title 40, United States Code. With respect 
to the labor standards specified in this subsection, the Sec-
retary of Labor shall have the authority and functions set 
forth in Reorganization Plan Numbered 14 of 1950 (64 
Stat. 1267; 5 U.S.C. App.) and section 3145 of title 40, 
United States Code.’’. 
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SEC. 116. PERFORMANCE STANDARDS FOR COAL-FUELED 
POWER PLANTS. 
(a) IN GENERAL.—Title VIII of the Clean Air Act 
(as added by section 331 of this Act) is amended by add-
ing the following new section after section 811: 
‘‘SEC. 812. PERFORMANCE STANDARDS FOR NEW COAL- 
FIRED POWER PLANTS. 
‘‘(a) DEFINITIONS.—For purposes of this section: 
‘‘(1) COVERED EGU.—The term ‘covered EGU’ 
means a utility unit that is required to have a per-
mit under section 503(a) and is authorized under 
state or federal law to derive at least 30 percent of 
its annual heat input from coal, petroleum coke, or 
any combination of these fuels. 
‘‘(2) INITIALLY
PERMITTED.—The term ‘ini-
tially permitted’ means that the owner or operator 
has received a Clean Air Act preconstruction ap-
proval or permit, for the covered EGU as a new (not 
a modified) source, but administrative review or ap-
peal of such approval or permit has not been ex-
hausted. A subsequent modification of any such ap-
proval or permits, ongoing administrative or court 
review, appeals, or challenges, or the existence or 
tolling of any time to pursue further review, appeals, 
or challenges shall not affect the date on which a 
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covered EGU is considered to be initially permitted 
under this paragraph. 
‘‘(b) STANDARDS.—(1) A covered EGU that is ini-
tially permitted on or after January 1, 2020, shall achieve 
an emission limit that is a 65 percent reduction in emis-
sions of the carbon dioxide
produced by the
unit, as 
measured on an annual basis, or meet such more stringent 
standard as the Administrator may establish pursuant to 
subsection (c). 
‘‘(2) A covered EGU that is initially permitted after 
January 1, 2009, and before January 1, 2020, shall, by 
the applicable compliance date established under this 
paragraph, achieve an emission limit that is a 50 percent 
reduction in emissions of the carbon dioxide produced by 
the
unit, as measured on an annual basis. Compliance 
with the requirement set forth in this paragraph shall be 
required by the earliest of the following: 
‘‘(A) Four years after the date the Adminis-
trator has published pursuant to subsection (d) a re-
port that there are in commercial operation in the 
United States electric generating units or other sta-
tionary sources equipped with carbon capture and 
sequestration technology that, in the aggregate— 
‘‘(i) have a total of at least 4 gigawatts of 
nameplate generating capacity of which— 
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766 
by the relevant State regulatory authority or other 
entity charged with regulating or setting the retail 
natural gas rates of such company, describing the 
disposition of the value of any emission allowances 
received by such company in the prior calendar year 
pursuant to this section, including— 
‘‘(A) a description of sales, transfer, ex-
change, or use by the company for compliance 
with obligations under this title, of any such 
emission allowances; 
‘‘(B) the monetary value received by the 
company, whether in money or in some other 
form, from the sale, transfer, or exchange of 
emission allowances received by the company 
under this section; 
‘‘(C) the manner in which the company’s 
disposition of emission allowances received 
under this section complies with the require-
ments of this section, including each of the re-
quirements of subsection (c); 
‘‘(D) the cost-effectiveness of, and energy 
savings achieved by, energy efficiency programs 
supported through such emission allowances; 
and 
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