I 
114TH CONGRESS 
1ST SESSION 
H. R. 972 
To amend the Internal Revenue Code of 1986 to reduce greenhouse gas 
emissions by requiring a Federal emission permit for the sale or use 
of covered substances and to return funds to the American people. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 13, 2015 
Mr. MCDERMOTT introduced the following bill; which was referred to the 
Committee on Ways and Means, and in addition to the Committee on En-
ergy and Commerce, for a period to be subsequently determined by the 
Speaker, in each case for consideration of such provisions as fall within 
the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to reduce 
greenhouse gas emissions by requiring a Federal emis-
sion permit for the sale or use of covered substances 
and to return funds to the American people. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Managed Carbon Price 
Act of 2015’’. 
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SEC. 2. GREENHOUSE GAS EMISSION SUBSTANCES. 
(a) IN GENERAL.—The Internal Revenue Code of 
1986 is amended by adding at the end the following: 
‘‘Subtitle L—Greenhouse Gas 
Emission Substances 
‘‘Sec. 9901. Condition precedent to sale or use of greenhouse gas emission sub-
stance. 
‘‘Sec. 9902. Federal emission permit. 
‘‘Sec. 9903. Definitions. 
‘‘Sec. 9904. Information reporting requirements. 
‘‘Sec. 9905. Regulations. 
‘‘SEC. 9901. CONDITION PRECEDENT TO SALE OR USE OF 
GREENHOUSE GAS EMISSION SUBSTANCE. 
‘‘(a) IN GENERAL.—No covered person may sell any 
greenhouse gas emission substance except pursuant to a 
Federal emission permit for each carbon dioxide equiva-
lent that the Administrator of the Environmental Protec-
tion Agency determines would be emitted from the com-
bustion or other greenhouse gas emitting use of such sub-
stance. 
‘‘(b) COVERED PERSON.—For purposes of this sub-
title, the term ‘covered person’ means— 
‘‘(1) in the case of coal (including lignite and 
peat) produced from a mine in the United States, 
the producer of such coal, 
‘‘(2) in the case of crude oil or petroleum prod-
ucts received at a United States refinery, the oper-
ator of the United States refinery, 
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‘‘(3) in the case of natural gas, the first seller 
of such natural gas, 
‘‘(4) in the case of any greenhouse gas emission 
substance not described in paragraph (1), (2), or (3) 
produced in the United States, the producer of such 
substance, and 
‘‘(5) in the case of any greenhouse gas emission 
substance entered into the United States for con-
sumption, use, or warehousing, the person entering 
such substance for consumption, use, or warehous-
ing. 
‘‘(c) USE TREATED AS SALE.— 
‘‘(1) IN GENERAL.—If any person uses a green-
house gas emission substance before the first retail 
sale of such substance, then such person shall be lia-
ble for the purchase of a Federal emission permit 
under section 9902 in the same manner as if such 
substance were sold at retail on the date of such use 
by such person pursuant to a Federal emission per-
mit. 
‘‘(2) EXEMPTION FOR USE IN FURTHER MANU-
FACTURE.—Paragraph (1) shall not apply to use of 
a greenhouse gas emission substance as material in 
the manufacture or production of, or as a component 
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part of, another article to be manufactured or pro-
duced by such person. 
‘‘(d) EXCEPTIONS.—Subsection (a) shall not apply 
to— 
‘‘(1) a greenhouse gas emission substance to be 
used for noncombustion agricultural purposes, or 
‘‘(2) a greenhouse gas emission substance with 
respect to which a Federal emission permit has pre-
viously been purchased. 
‘‘(e) IMPORTATION OF CARBON INTENSIVE GOODS.— 
‘‘(1) GREENHOUSE
GAS
EMISSION
PERMIT 
EQUIVALENCY FEES.—The Secretary shall impose a 
greenhouse gas emission permit equivalency fee on 
imports of carbon intensive goods that shall be 
equivalent to the cost that domestic producers of 
comparable carbon intensive goods incur as a result 
of— 
‘‘(A) permit fees paid by covered persons 
for greenhouse gas emission substances under 
this section, and 
‘‘(B) greenhouse gas emission permit 
equivalency fees paid by importers of carbon in-
tensive goods used in the production of the 
comparable carbon intensive goods in question. 
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‘‘(2) EXPIRATION.—Paragraph (1) and section 
6433(b) shall cease to have effect at such time as 
and to the extent that— 
‘‘(A) an international agreement requiring 
countries that emit greenhouse gases and 
produce carbon intensive goods for international 
markets to adopt equivalent measures comes 
into effect, and 
‘‘(B) the country of export has imple-
mented equivalent measures, and the actions 
provided for by paragraph (1) and section 
6433(b) are no longer appropriate. 
‘‘SEC. 9902. FEDERAL EMISSION PERMIT. 
‘‘(a) IN GENERAL.—The Secretary shall, subject to 
subsection (d), issue Federal emission permits, as provided 
for in this subtitle. A Federal emission permit may only 
be obtained upon making payment to the Secretary. 
‘‘(b) RULES RELATING TO PERMITS.—For purposes 
of this subtitle— 
‘‘(1) Each Federal emission permit shall be de-
nominated in one-quarter carbon dioxide equivalents. 
‘‘(2) A Federal emission permit may only be 
purchased within fourteen calendar days before or 
after a greenhouse gas emission substance is pro-
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duced or entered into the United States, as the case 
may be. 
‘‘(3) Except as provided in subsection (a), a 
Federal emission permit may not be sold, exchanged, 
or otherwise transferred. 
‘‘(c) PERMIT PRICE.— 
‘‘(1) INITIAL PRICE.—The price for obtaining a 
Federal emission permit for emissions in 2016 is 
$12.50. 
‘‘(2) SUBSEQUENT
PRICES.—The Secretary, 
after consultation with the Administrator of the En-
vironmental Protection Agency and the Secretary of 
Energy, shall establish the price of obtaining a Fed-
eral emission permit for a calendar year based on a 
determination of the dollar amount necessary to 
meet the emissions reductions targets specified in 
subsection (d). 
‘‘(3) 5-YEAR PRICE SCHEDULE.— 
‘‘(A) IN GENERAL.—Not later than Janu-
ary 1, 2016, the Secretary shall publish a 
schedule of the prices determined under para-
graph (2) for obtaining a Federal emission per-
mit during each of the five years from 2017 to 
2021. The Secretary shall publish the price for 
obtaining a Federal emission permit in each 
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dioxide equivalents emitted in the United States 
in 2005. 
‘‘(E) 2056 THROUGH 2060.—The average 
emissions for the period 2056 through 2060 
shall be no more than 20 percent of the carbon 
dioxide equivalents emitted in the United States 
in 2005. 
‘‘(2) DETERMINATION
OF
2005
LEVELS.—For 
purposes of subparagraph (A), the number of metric 
tons of carbon dioxide equivalents emitted in the 
United States in 2005 shall be the number deter-
mined under section 1605(a) of the Energy Policy 
Act of 1992 and published by the Energy Informa-
tion Administration. 
‘‘(e) REPORT.— 
‘‘(1) IN GENERAL.—Not later than the second 
March 1 after the date of the enactment of the Man-
aged Carbon Price Act of 2015, and annually there-
after, the Secretary shall publish a report describ-
ing— 
‘‘(A) the extent to which the United States 
greenhouse gas emission limitations specified 
under subsection (d) are being achieved, 
‘‘(B) the United States greenhouse gas 
emission permits sold during the previous cal-
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endar year and the impact of the number of 
such permits on greenhouse gas emissions in 
the United States, and 
‘‘(C) the total greenhouse gas emissions 
worldwide for the previous calendar year in re-
lation to such emissions for 2005. 
‘‘(2) REPORT DETAILS.—Such report shall in-
clude— 
‘‘(A) an explanation of the methodology 
and assumptions the Secretary has used in es-
tablishing prices under this section, and 
‘‘(B) an estimation, or range of esti-
mations, of the price of permits for the 10-year 
period following the current prices published 
under subsection (c). 
‘‘SEC. 9903. DEFINITIONS. 
‘‘(a) IN GENERAL.—For purposes of this subtitle— 
‘‘(1) ADMINISTRATOR.—The term ‘Adminis-
trator’ means the Administrator of the Environ-
mental Protection Agency. 
‘‘(2) 
CARBON
DIOXIDE
EQUIVALENT.—The 
term ‘carbon dioxide equivalent’ means, for each 
greenhouse gas emission substance, the quantity of 
the greenhouse gas emission substance that the Ad-
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ministrator determines makes the same contribution 
to global warming as 1 metric ton of carbon dioxide. 
‘‘(3) 
GREENHOUSE
GAS
EMISSION
SUB-
STANCE.—The term ‘greenhouse gas emission sub-
stance’ means— 
‘‘(A) coal (including lignite, peat, and de-
rivatives of coal), to be used as a combustion 
fuel, 
‘‘(B) petroleum and any petroleum prod-
uct, to be used as a combustion fuel, 
‘‘(C) natural gas (including the gasses re-
leased as a result of flaring or venting such nat-
ural gas), 
‘‘(D) methane, 
‘‘(E) nitrous oxide, 
‘‘(F) sulfur hexafluoride, 
‘‘(G) a perfluorocarbon, 
‘‘(H) a hydrofluorocarbon, and 
‘‘(I) any other substance that is deter-
mined by the Administrator to contribute to 
global warming to a nonnegligible degree. 
‘‘(4) FEDERAL EMISSION PERMIT.—The term 
‘Federal emission permit’ means a permit required 
under section 9901. 
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‘‘(5) CARBON
INTENSIVE
GOOD.—The term 
‘carbon intensive good’ means— 
‘‘(A)(i) iron, steel, any steel mill product 
(including pipe and tube), aluminum, cement, 
glass (including flat, container, and specialty 
glass and fiberglass), pulp, paper, chemicals, 
and industrial ceramics, and 
‘‘(ii) any other manufactured product that 
the Secretary determines— 
‘‘(I) is sold for purposes of further 
manufacture, and 
‘‘(II) generates, in the course of the 
manufacture of the product, direct and in-
direct greenhouse gas emissions that are 
comparable (on an emissions per dollar of 
output basis) to emissions generated in the 
manufacture or production of a good iden-
tified in clause (i), and 
‘‘(B) a manufactured item in which one or 
more goods identified under subparagraph (A) 
are inputs and the cost of production of which 
in the United States the Secretary determines 
is significantly increased by this subtitle. 
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‘‘(6) PETROLEUM PRODUCT.—The term ‘petro-
leum product’ has the meaning given such term in 
section 4612(a)(3). 
‘‘(b) 
IDENTIFICATION
OF
CARBON
INTENSIVE 
GOODS.—The determinations by the Secretary required by 
subsection (a)(5) shall be by rule. 
‘‘(c) PUBLICATION OF SCHEDULE.—Not later than 
one year after the date of the enactment of the Managed 
Carbon Price Act of 2015, the Administrator, in consulta-
tion with the Secretary and the Secretary of Energy, shall 
publish a schedule listing each greenhouse gas emission 
substance and the quantity of each substance required to 
make 1 metric ton of carbon dioxide. The Administrator, 
in consultation with the Secretary and the Secretary of 
Energy, may update such schedule from time to time. 
‘‘SEC. 9904. INFORMATION REPORTING REQUIREMENTS. 
‘‘Secretary may solicit information from covered per-
sons regarding estimated future use of greenhouse gas 
emissions substances. 
‘‘SEC. 9905. REGULATIONS. 
‘‘The Secretary shall issue such regulations as may 
be necessary or appropriate to carry out this subtitle, in-
cluding regulations relating to the timely and efficient 
issuance of permits and collection of payments for such 
permits.’’. 
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(b) REFUND OF FEDERAL EMISSION PERMIT FEE.— 
Subchapter B of chapter 65 of such Code is amended by 
adding at the end the following new section: 
‘‘SEC. 6433. REFUNDS OF FEDERAL EMISSION PERMIT FEE 
FOR CERTAIN USES. 
‘‘(a) IN GENERAL.—If a Federal emission permit has 
been acquired with respect to a greenhouse gas emission 
substance pursuant to section 9902 and the acquirer of 
such permit uses such substance in a manner that will 
make a negligible or no contribution to global warming, 
as determined by the Secretary in consultation with the 
Administrator of the Environmental Protection Agency, 
the Secretary shall pay (without interest) to the acquirer 
of such substance pursuant to such permit an amount 
equal to the amount paid for the applicable Federal emis-
sion permit. 
‘‘(b) PAYMENTS
TO EXPORTERS.—The Secretary 
shall pay (without interest) to the exporter of a carbon 
intensive good (as defined in section 9903(5)) produced 
in the United States an amount equal to the cost that 
domestic producers of such carbon intensive goods incur 
as a result of— 
‘‘(1) the dollar amount paid by covered persons 
for Federal emission permits for greenhouse gas 
emission substances under this section 9902, and 
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‘‘(2) greenhouse gas emission permit equiva-
lency fees paid under section 9901(e) by importers 
of carbon intensive goods used in the production of 
the comparable carbon intensive goods in question.’’. 
(c) FAILURE TO OBTAIN PERMIT.—Chapter 38 of 
the Internal Revenue Code of 1986 is amended by adding 
at the end the following new subchapter: 
‘‘Subchapter E—Greenhouse Gas Emission 
Substances 
‘‘Sec. 4691. Greenhouse gas emission substances. 
‘‘SEC. 4691. GREENHOUSE GAS EMISSION SUBSTANCES. 
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 
on any covered person who fails to obtain a Federal emis-
sion permit pursuant to subtitle L a tax equal to 100 per-
cent of the dollar amount of the fee that would have been 
charged for such permit but for such failure. 
‘‘(b) COVERED PERSON.—The term ‘covered person’ 
has the meaning given such term by section 9901(b). 
‘‘(c) FEDERAL EMISSION PERMIT.—The term ‘Fed-
eral emission permit’ means a permit required under sec-
tion 9901. 
‘‘(d) COORDINATION.—The tax imposed under this 
section is in addition to the fee imposed under subtitle 
L.’’. 
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(d) ESTABLISHMENT OF ENERGY AND ECONOMIC 
SECURITY TRUST FUND.— 
(1) FINDING.—The Congress finds that revenue 
generated from the sale of Federal emission permits 
must be recycled into the American economy— 
(A) to facilitate economic growth and clean 
energy production, and 
(B) to protect the economic security of 
American families and communities. 
(2) ESTABLISHMENT OF TRUST FUND.—Sub-
chapter A of chapter 98 of such Code (relating to 
trust fund code) is amended by adding at the end 
the following: 
‘‘SEC. 9512. ENERGY AND ECONOMIC SECURITY TRUST 
FUND. 
‘‘(a) CREATION OF TRUST FUND.—There is estab-
lished in the Treasury of the United States a trust fund 
to be known as the ‘Energy and Economic Security Trust 
Fund’ (referred to in this section as the ‘Trust Fund’), 
consisting of such amounts as may be appropriated or 
credited to the Trust Fund as provided in this section or 
section 9602(b). 
‘‘(b) TRANSFERS TO TRUST FUND.—There is hereby 
appropriated to the Trust Fund an amount equivalent to 
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the amounts received in the Treasury pursuant to subtitle 
L. 
‘‘(c) EXPENDITURES FROM TRUST FUND.— 
‘‘(1) IN
GENERAL.—The Secretary shall pay 
monthly from the Trust Fund the dividend amount 
to each taxpayer. 
‘‘(2) DIVIDEND
AMOUNT.—For purposes of 
paragraph (1), the term ‘dividend amount’ means 
the sum of— 
‘‘(A)(i) in the case of the taxpayer filing a 
joint return, the individual share for the hus-
band and the individual share for the wife, and 
‘‘(ii) in the case of a taxpayer other than 
a taxpayer described in subparagraph (A), the 
individual share, and 
‘‘(B) in the case of an individual who is a 
dependent (as defined in section 152) of the 
taxpayer, 1⁄2 of the individual share. 
For purposes of subparagraph (B), not more than 2 
dependents may be taken into account for each tax-
payer. 
‘‘(3) INDIVIDUAL SHARE.—For purposes of this 
subsection, the term ‘individual share’ means the 
amount determined by the Secretary by dividing the 
total amount deposited in the Trust Fund for the 
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month by the total number of individual shares pay-
able at the end of such month. 
‘‘(4) LIMITATION.—For purposes of this sub-
section— 
‘‘(A) IN GENERAL.—No amount is payable 
under this subsection with respect to an indi-
vidual unless the individual is a qualified indi-
vidual. 
‘‘(B) QUALIFIED INDIVIDUAL.—The term 
‘qualified individual’ means an individual who is 
a lawful resident of the United States on the 
date of such payment. For purposes of ensuring 
that payments are made under this subsection 
to all qualified individuals, the Secretary shall 
consult with such other Federal and State offi-
cials as the Secretary determines necessary or 
appropriate. 
‘‘(C) UNITED
STATES.—For purposes of 
subparagraph (B), the United States includes 
the District of Columbia, the Commonwealth of 
Puerto Rico, the Virgin Islands, Guam, Amer-
ican Samoa, and the Commonwealth of the 
Northern Mariana Islands.’’. 
(e) CONFORMING AND CLERICAL AMENDMENTS.— 
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(1) The table of subchapters for chapter 38 of 
such Code is amended by adding at the end the fol-
lowing new item: 
‘‘SUBCHAPTER E. GREENHOUSE GAS EMISSION SUBSTANCES’’. 
(2) The table of subtitles for the Internal Rev-
enue Code of 1986 is amended by adding at the end 
the following new item: 
‘‘Subtitle L. Greenhouse Gas Emission Substances’’. 
(3) The table of sections for subchapter B of 
chapter 65 of such Code is amended by adding at 
the end the following new item: 
‘‘Sec. 6433. Refunds of Federal emission permit fee for certain uses.’’. 
(4) The table of sections for subchapter A of 
chapter 98 of such Code is amended by adding at 
the end the following: 
‘‘Sec. 9512. Energy and Economic Security Trust Fund.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to the sale of any 
greenhouse gas emission substance after December 31, 
2014. 
Æ 
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