gases, consistent with the principle of common but 
differentiated responsibilities; 
(2) achieve reductions in global greenhouse gas 
emissions at a pace and levels sufficient to avoid 
dangerous interference with the earth’s climate; and 
(3) advance and protect the economic and na-
tional security interests of the United States. 
SEC. 3. AMENDMENTS TO THE CLEAN AIR ACT. 
The Clean Air Act (42 U.S.C. 7401 et seq.) is amend-
ed by adding at the end the following: 
‘‘TITLE VII—GREENHOUSE GAS 
EMISSIONS 
‘‘SEC. 701. EMISSION REDUCTION TARGETS. 
‘‘Not later than 2 years after the date of enactment 
of this section, the Administrator shall promulgate annual 
emission reduction targets for each calendar year begin-
ning in 2010 and ending in 2050, as follows: 
‘‘(1) In 2010, the quantity of United States 
greenhouse gas emissions shall not exceed the quan-
tity of United States greenhouse gases projected to 
be emitted in 2009. 
‘‘(2) Beginning in 2011, the quantity of United 
States greenhouse gas emissions shall be reduced by 
approximately 2 percent each year, such that the 
quantity of such emissions in 2020 does not exceed 
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the quantity of United States greenhouse gases 
emitted in 1990. 
‘‘(3) Beginning in 2021, the quantity of United 
States greenhouse gas emissions shall be reduced by 
approximately 5 percent each year, such that the 
quantity of such emissions in 2050 does not exceed 
20 percent of the quantity of United States green-
house gases emitted in 1990. 
‘‘SEC. 702. NATIONAL ACADEMIES REVIEW. 
‘‘Not later than 5 years after the date of the enact-
ment of this section, and every 5 years thereafter, the Na-
tional Academies, acting through the National Academy 
of Sciences and the National Research Council, shall sub-
mit a report to the Administrator and the Congress on 
the prospects for avoiding dangerous anthropogenic inter-
ference with the climate system and the progress made 
to date. Such report shall— 
‘‘(1) evaluate whether the emission reduction 
targets promulgated pursuant to section 701 are 
likely to be sufficient to avoid dangerous climate 
change, taking into account the actions of other na-
tions; 
‘‘(2) include an assessment of whether each of 
the following events, and any other indicator of sig-
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nificant global warming determined by the National 
Academies, has occurred or is likely to occur— 
‘‘(A) atmospheric greenhouse gas con-
centrations of greater than 450 carbon dioxide- 
equivalent ppm; 
‘‘(B) global mean surface temperature in-
crease of greater than 2°C (3.6°F) from pre-in-
dustrial levels; 
‘‘(C) substantial slowing of the Atlantic 
thermohaline circulation; 
‘‘(D) sea level rise of more than 8 inches; 
‘‘(E) ice-free Arctic Ocean in the summer; 
‘‘(F) decrease in the area of permafrost to 
below 50 percent of such area in 2000; and 
‘‘(G) loss of over 40 percent of the world’s 
coverage of coral reefs, due to increased ocean 
temperature or acidity; and 
‘‘(3) if the National Academies concludes that 
emission reduction targets promulgated pursuant to 
section 701 are not likely to be sufficient to avoid 
dangerous climate change, or that any of the events 
specified in paragraph (2) has occurred or is likely 
to occur— 
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‘‘(A) identify the needed amount of further 
reductions in atmospheric greenhouse gas con-
centrations; and 
‘‘(B) recommend additional United States 
and international actions to further reduce at-
mospheric greenhouse gas concentrations. 
‘‘SEC. 703. REGULATIONS. 
‘‘(a) IN GENERAL.—The Administrator shall promul-
gate not later than 2 years after the date of the enactment 
of this section, and may periodically revise, regulations re-
quiring the reduction of United States greenhouse gas 
emissions to meet the emission reduction targets promul-
gated pursuant to section 701. 
‘‘(b) RULEMAKING ON RECOMMENDATIONS OF NA-
TIONAL ACADEMIES.—If the National Academies submits 
a recommendation under section 702(3)(B) for a regu-
latory action by a Federal department or agency, and such 
regulatory action is within the authority of such depart-
ment or agency (under law other than this subsection), 
the head of such department or agency shall, not later 
than 2 years after the submission of such recommenda-
tion, finalize a rulemaking— 
‘‘(1) to carry out such regulatory action; or 
‘‘(2) to explain the reasons for declining to act. 
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‘‘SEC. 704. MARKET-BASED CAP ON EMISSIONS. 
‘‘(a) IN GENERAL.—The regulations promulgated 
under section 703(a) shall— 
‘‘(1) impose a cap on the greenhouse gas emis-
sions of sources and sectors described in subsection 
(b)(1); and 
‘‘(2) allow emissions trading among covered en-
tities. 
‘‘(b) SCOPE.—The regulations promulgated under 
section 703(a) shall— 
‘‘(1) apply the cap required by subsection (a)(1) 
to the sources or sectors of the United States econ-
omy with— 
‘‘(A) the largest emissions; 
‘‘(B) the most cost-effective opportunities 
to reduce emissions; or 
‘‘(C) other characteristics that the Admin-
istrator determines make the source or sector 
appropriate to include; and 
‘‘(2) cover a sufficient proportion of total 
United States greenhouse gas emissions, such that, 
in combination with other measures adopted under 
this title and under the Safe Climate Act of 2007 
and the amendments made by such Act, such regula-
tions will ensure that total United States greenhouse 
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gas emissions will not exceed the emission reduction 
targets promulgated pursuant to section 701. 
‘‘(c) ALLOWANCES.— 
‘‘(1) IN
GENERAL.—The regulations promul-
gated under section 703(a) shall provide for the Ad-
ministrator to issue each year a quantity of green-
house gas emissions allowances equivalent to the 
emissions allowed under the cap required by sub-
section (a)(1) for such year. Each such allowance 
shall authorize the emission of one carbon dioxide 
equivalent. Such an allowance does not constitute a 
property right, and nothing in any provision of law 
shall be construed to limit the authority of the 
United States to terminate or limit such an allow-
ance. 
‘‘(2) TRADING.—Allowances issued under this 
section may be held and traded by any person. 
‘‘(3) FLEXIBILITY.—Allowances issued under 
this section may be used in the year of issuance or 
may be banked for use in a year subsequent to the 
year of issuance. 
‘‘(d) DISTRIBUTION OF ALLOWANCES.— 
‘‘(1) SUBMISSION OF PLAN BY PRESIDENT.— 
‘‘(A) IN GENERAL.—Within one year of the 
enactment of this title, the President, in con-
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sultation with the Administrator and other ap-
propriate department and agency heads, shall 
develop and submit to the Congress a plan— 
‘‘(i) to distribute the allowances issued 
under this section through auctions, and, 
at the discretion of the President and sub-
ject to subparagraph (B)(iii), through allo-
cations without charge to entities not cov-
ered by the cap or covered entities; 
‘‘(ii) to deposit the proceeds of such 
auctions in the Climate Reinvestment 
Fund established by subsection (h); and 
‘‘(iii) to ensure that such allowances 
are distributed, and such proceeds are 
used, in a manner consistent with the goals 
described in subsection (e). 
‘‘(B) CONTENTS.—The plan submitted 
under subparagraph (A) shall— 
‘‘(i) identify the department or agency 
responsible for implementing each action 
required; 
‘‘(ii) ensure that allowances are dis-
tributed not later than January 1, 2010, 
for calendar year 2010; and 
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‘‘(iii) in no case allow any distribution 
of allowances without charge to result in 
the creation of windfall profits for covered 
entities. 
‘‘(2) PLAN
IMPLEMENTATION.—The Adminis-
trator and the head of each department or agency 
identified in paragraph (1)(B)(i) shall give the Con-
gress a period of one year to review and act upon 
the plan submitted under paragraph (1). If during 
such period no statute is enacted for the express 
purpose of codifying such plan or an alternative to 
such plan, the Administrator and the head of each 
such department or agency shall implement the ac-
tions identified in the plan. 
‘‘(e) GOALS.—The goals described in this subsection 
are the following: 
‘‘(1) Maximizing public benefit and promoting 
economic growth. 
‘‘(2) Mitigating the effect of any energy cost in-
creases to consumers, particularly low-income con-
sumers. 
‘‘(3) Providing equitable transition assistance to 
any workers and regions affected by a transition 
away from high carbon-emitting energy sources. 
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‘‘(4) Encouraging research, development, and 
commercial deployment of innovative technologies for 
avoiding, reducing, or sequestering greenhouse gas 
emissions. 
‘‘(5) Encouraging reduced carbon emissions 
from, and enhanced sequestration of, carbon in the 
forest and agricultural sectors. 
‘‘(6) Recognizing and rewarding early reduc-
tions of greenhouse gases. 
‘‘(7) Supporting activities, including providing 
support for State activities, to protect against and 
mitigate the impacts of climate change, including de-
pletion of snowpack and water supplies, droughts, 
wildfires, enhanced coastal erosion, sea level rise, 
higher storm surges, more intense precipitation 
events and hurricanes, spread of disease, damage to 
fish and wildlife habitat, commercial harms (such as 
damage to the maple syrup and fishing industries), 
and agricultural and forestry losses due to drought, 
disease, and insect infestations. 
‘‘(f) MONITORING.—The Administrator shall ensure 
that greenhouse gas emissions and the use of allowances 
issued under this section are accurately tracked, reported, 
and verified, to ensure that the cap-and-trade system es-
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tablished pursuant to this section is robust and enforce-
able. 
‘‘(g) ENFORCEMENT.— 
‘‘(1) IN GENERAL.—In the case of excess green-
house gas emissions under this section by an entity 
during any calendar year, the regulations promul-
gated under section 703(a) shall require the entity— 
‘‘(A) to submit allowances for such emis-
sions during the following calendar year; and 
‘‘(B) to pay a civil penalty in an amount 
determined under paragraph (2). 
‘‘(2) AMOUNT OF CIVIL PENALTY.—For each 
quantity of excess greenhouse gas emissions consti-
tuting one carbon dioxide equivalent, the amount of 
a civil penalty under this subsection shall be twice 
the market price for an allowance at the end of the 
calendar year in which the excess emissions oc-
curred. The Administrator shall establish the meth-
od of determining such market price. 
‘‘(3) NO DEMAND REQUIRED.—A civil penalty 
under this subsection shall be due and payable to 
the Administrator without demand. 
‘‘(h) CLIMATE REINVESTMENT FUND.— 
‘‘(1) ESTABLISHMENT.—There is established in 
the Treasury of the United States a fund to be 
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known as the ‘Climate Reinvestment Fund’ (in this 
subsection referred to as the ‘Fund’). The Fund 
shall consist of such amounts as may be appro-
priated pursuant to paragraph (2) to the Fund. 
Such amounts shall remain available until expended. 
‘‘(2) AUTHORIZATION
OF
APPROPRIATIONS.— 
For each fiscal year, there is authorized to be appro-
priated to the Fund an amount equal to the sum 
of— 
‘‘(A) the amount collected through auc-
tions of allowances issued under this section; 
and 
‘‘(B) the amount of civil penalties assessed 
under subsection (g). 
‘‘(3) USE OF FUNDS.—Amounts in the Fund 
and available pursuant to an appropriations Act 
shall be expended by the President to further the 
goals described in subsection (e). 
‘‘(4) INVESTMENT.—The Secretary of the 
Treasury shall invest such amounts of the Fund as 
such Secretary determines are not required to meet 
current withdrawals from the Fund. 
‘‘(i) ADDITIONAL LEAD TIME.—If the Administrator 
finds that providing one or two years of additional lead-
time for emissions reductions beyond the 2009, 2010, and 
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