439 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2) or (3), the annual number of emission al-
lowances that a covered entity may purchase at the 
strategic reserve auctions in each calendar year shall 
not exceed 20 percent of the covered entity’s emis-
sions during the most recent year for which allow-
ances or credits were retired under section 722(a). 
‘‘(2) 2012 LIMIT.—For calendar year 2012, the 
maximum aggregate number of emission allowances 
that a covered entity may purchase from that year’s 
strategic reserve auctions shall be 20 percent of the 
covered entity’s greenhouse gas emissions that the 
covered entity reported to the registry established 
under section 713 for 2011 and that would be sub-
ject to section 722(a) if occurring in later calendar 
years. 
‘‘(3) 
NEW
ENTRANTS.—The 
Administrator 
shall, by regulation, establish a separate limitation 
applicable to entities that expect to become a cov-
ered entity in the year of the auction, permitting 
them to purchase emission allowances at the stra-
tegic reserve auctions in their first calendar year of 
operation in an amount of at least 20 percent of 
their expected combined emissions and attributable 
greenhouse gas emissions for that year. 
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440 
‘‘(f) DELEGATION OR CONTRACT.—Pursuant to regu-
lations under this section, the Administrator may, by dele-
gation or contract, provide for the conduct of strategic re-
serve auctions under the Administrator’s supervision by 
other departments or agencies of the Federal Government 
or by nongovernmental agencies, groups, or organizations. 
‘‘(g) USE OF AUCTION PROCEEDS.— 
‘‘(1) DEPOSIT IN STRATEGIC RESERVE FUND.— 
The proceeds from strategic reserve auctions shall be 
placed in the Strategic Reserve Fund established 
under section 782(c), and shall be available without 
further appropriation or fiscal year limitation for the 
purposes described in this subsection. 
‘‘(2) INTERNATIONAL OFFSET CREDITS FOR RE-
DUCED DEFORESTATION.—The Administrator shall 
use the proceeds from each strategic reserve auction 
to purchase international offset credits issued for re-
duced deforestation activities pursuant to section 
743(e). The Administrator shall retire those inter-
national offset credits and establish a number of 
emission allowances equal to 80 percent of the num-
ber of international offset credits so retired. Emis-
sion allowances established under this paragraph 
shall be in addition to those established under sec-
tion 721(a). 
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441 
‘‘(3) EMISSION
ALLOWANCES.—The Adminis-
trator shall deposit emission allowances established 
under paragraph (2) in the strategic reserve, except 
that, with respect to any such emission allowances in 
excess of the amount necessary to fill the strategic 
reserve to its original size, the Administrator shall— 
‘‘(A) except as provided in subparagraph 
(B), assign a vintage year to the emission al-
lowance, which shall be no earlier than the year 
in which the allowance is established under 
paragraph (2), and make the emission allow-
ances available for auction under section 791; 
and 
‘‘(B) to the extent any such allowances 
cannot be assigned a vintage year because of 
the limitation in paragraph (4), retire the allow-
ances. 
‘‘(4) LIMITATION.—In no case may the Admin-
istrator assign under paragraph (3)(A) more emis-
sion allowances to a vintage year than the number 
of emission allowances from that vintage year that 
were placed in the strategic reserve account under 
subsection (b)(1). 
‘‘(h) AVAILABILITY
OF
INTERNATIONAL
OFFSET 
CREDITS FOR AUCTION.— 
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442 
‘‘(1) IN
GENERAL.—The regulations promul-
gated under section 721(g) shall allow any entity 
holding international offset credits from reduced de-
forestation issued under section 743(e) to request 
that the Administrator include such offset credits in 
an upcoming strategic reserve auction. The regula-
tions shall provide that— 
‘‘(A) such international offset credits will 
be used to fill bid orders only after the supply 
of strategic reserve allowances available for sale 
at that auction has been depleted; 
‘‘(B) international offset credits may be 
sold at a strategic reserve auction under this 
subsection only if the Administrator determines 
that it is highly likely that covered entities will, 
to cover emissions occurring in the year the 
auction is held, use under section 722 offset 
credits in an amount equal to or greater than 
80 percent of 2 billion tons of carbon dioxide 
equivalent; 
‘‘(C) upon sale of such international offset 
credits, the Administrator shall retire those 
international offset credits, and establish and 
provide to the purchasers a number of emission 
allowances equal to 80 percent of the number of 
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443 
international offset credits so retired, which al-
lowances shall be in addition to those estab-
lished under section 721(a); and 
‘‘(D) for international offset credits sold 
pursuant to this subsection, the proceeds for 
the entity that offered the international offset 
credits for sale shall be the lesser of— 
‘‘(i) the average daily closing price for 
international offset credits sold on reg-
istered exchanges (or if such price is un-
available, the average price as determined 
by the Administrator) during the six 
months prior to the strategic reserve auc-
tion at which they were auctioned, with the 
remaining funds collected upon the sale of 
the international offset credits deposited in 
the Treasury; and 
‘‘(ii) the amount received for the 
international offset credits at the auction. 
‘‘(2) PROCEEDS.—For international offset cred-
its auctioned pursuant to this subsection, notwith-
standing section 3302 of title 31, United States 
Code, or any other provision of law, within 90 days 
of receipt, the United States shall transfer the pro-
ceeds from the auction, as defined in paragraph 
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444 
(1)(D), to the entity which possessed the inter-
national offset credits auctioned. No funds trans-
ferred from a purchaser to a seller of international 
offset credits under this paragraph shall be held by 
any officer or employee of the United States or 
treated for any purpose as public monies. 
‘‘(3) PRICING.—When the Administrator acts 
under this subsection as the agent of an entity in 
possession of international offset credits, the Admin-
istrator is not obligated to obtain the highest price 
possible for the international offset credits, and in-
stead shall auction such international offset credits 
in the same manner and pursuant to the same rules 
(except as modified in paragraph (1)) as set forth 
for auctioning strategic reserve allowances. Entities 
requesting that such international offset credits be 
offered for sale at a strategic reserve auction may 
not set a minimum reserve price for their inter-
national offset credits. 
‘‘(i) INITIAL REGULATIONS.—Not later than 24 
months after the date of enactment of this title, the Ad-
ministrator shall promulgate regulations, in consultation 
with other appropriate agencies, governing the auction of 
allowances under this section. Such regulations shall in-
clude the following requirements: 
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