least 4 such auctions in each year for which carbon per-
mits are established. 
‘‘(b) AUCTION RULES.—The Secretary shall— 
‘‘(1) limit auction participation only to covered 
entities, 
‘‘(2) establish a limit on the amount of carbon 
permits that can be purchased by a single entity at 
each auction and an aggregate limit on the total 
amount of permits that can be held by a single enti-
ty at any one time that— 
‘‘(A) reflects anticipated sector and partici-
pant demand, 
‘‘(B) prevents speculation, manipulation, 
or hoarding of permits, and 
‘‘(C) does not interfere with normal mar-
ket competition, and 
‘‘(3) have the authority to set a minimum per-
mit price at auction. 
‘‘(c) UNSOLD PERMITS.—Any carbon permit unsold 
at auction may be offered at the next quarterly auction 
in the calendar year. Any carbon permit unsold after the 
last auction for a calendar year shall be transferred to the 
reserve established under section 9908. 
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‘‘SEC. 9904. COMPLIANCE OBLIGATION. 
‘‘(a) IN GENERAL.—Not later than April 1, 2019, 
and April 1 of each year thereafter, a covered entity shall 
surrender to the Secretary a quantity of carbon permits 
at least as great as the number of metric tons of carbon 
dioxide that the Secretary, in consultation with the Ad-
ministrator, determines would be emitted by the combus-
tion of covered fuels with respect to which the covered en-
tity made the first sale in United States markets during 
the previous calendar year. 
‘‘(b) USE TREATED AS SALE.—For purposes of sub-
section (a), consumption for an emitting use by the cov-
ered entity of covered fuels produced by the covered entity 
shall be treated as a first sale. 
‘‘(c) EXEMPTION.—A covered entity shall not have to 
surrender a carbon permit for the sale of a covered fuel 
consumed for a non-emitting use, as defined and verified 
by the Secretary in consultation with the Administrator, 
unless such covered fuel is sold to a person issued carbon 
permits under section 9906. 
‘‘SEC. 9905. PENALTY FOR NONCOMPLIANCE. 
‘‘(a) IN GENERAL.—Any covered entity that fails for 
any year to surrender, by the deadline described in section 
9904, one or more of the carbon permits due pursuant 
to such section shall be liable for payment to the Secretary 
of a penalty in the amount described in subsection (b). 
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‘‘(b) AMOUNT.—The amount of a penalty required to 
be paid under subsection (a) shall be equal to the product 
obtained by multiplying— 
‘‘(1) the number of carbon permits that the cov-
ered entity failed to surrender by the deadline, by 
‘‘(2) 3 times the fair market value of carbon 
permits issued for emissions occurring in the cal-
endar year for which the carbon permits were due. 
‘‘(c) TIMING.—A penalty required under this section 
shall be immediately due and payable to the Secretary, 
without demand, in accordance with regulations promul-
gated by the Secretary, which shall be issued not later 
than 1 year after the date of enactment of this subtitle. 
‘‘(d) NO EFFECT ON LIABILITY.—A penalty due and 
payable by the covered entity under this section shall not 
diminish the liability of the covered entity for any fine, 
penalty, or assessment against the covered entity for the 
same violation under any other provision of law. 
‘‘(e) PENALTY NOT DEDUCTIBLE.—No deduction 
shall be allowed under subtitle A for a penalty paid under 
this section. 
‘‘SEC. 9906. CARBON CAPTURE AND SEQUESTRATION. 
‘‘(a) IN GENERAL.—The Secretary shall issue a car-
bon permit to any person who the Secretary, in consulta-
tion with the Administrator, determines has safely and 
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verifiably captured and sequestered carbon dioxide from 
the combustion of covered fuels in the United States. 
‘‘(b) QUANTITY.—The quantity of each permit issued 
under subsection (a) shall be in the amount equivalent to 
the number of metric tons of carbon dioxide so captured 
and sequestered. 
‘‘(c) COORDINATION.—The quantity of permits 
issued under this section shall be in addition to the quan-
tity of permits established under section 9902(a). 
‘‘SEC. 9907. TRADING. 
‘‘(a) PERMITTED TRANSACTIONS.—The lawful holder 
of a carbon permit may— 
‘‘(1) hold the carbon permit, subject to the lim-
its established by the Secretary under section 
9903(b)(2), or 
‘‘(2) sell, exchange, or transfer the carbon per-
mit to a covered entity consistent with the limits es-
tablished by the Secretary under section 9903(b)(2). 
‘‘(b) EFFECTIVENESS OF CARBON PERMIT TRANS-
FERS.—No transfer of a carbon permit shall be effective 
until a written certification of the transfer, signed by a 
responsible official of the transferor, is received and re-
corded by the Secretary in accordance with regulations 
promulgated under section 9902(e). 
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‘‘(c) CARBON PERMIT TRACKING SYSTEM.—The reg-
ulations promulgated under section 9902(e) shall include 
a system for issuing, recording, holding, and tracking car-
bon permits that shall specify all necessary procedures and 
requirements for an orderly and competitive functioning 
of the carbon permit system. Such regulations shall pro-
vide for appropriate publication of the information in the 
system on the Internet. 
‘‘SEC. 9908. BANKING AND BORROWING. 
‘‘(a) BANKING.—A carbon permit may be used to 
meet the compliance obligation requirements of section 
9904 for emissions in— 
‘‘(1) the vintage year for the carbon permit, or 
‘‘(2) any calendar year subsequent to the vin-
tage year for the carbon permit in accordance with 
subsection (b). 
‘‘(b) RESERVE.—The Secretary shall establish a re-
serve for carbon permits. Carbon permits transferred into 
the reserve shall be available in the manner determined 
by the Secretary when the Secretary determines that price 
point for carbon permits determined under subsection (d) 
is met and additional carbon permit supply is needed to 
stabilize the auction price. Permits in the reserve shall be 
used on a first in, first out basis. 
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‘‘(c) EXPIRATION.—A carbon permit shall not expire 
unless— 
‘‘(1) it is surrendered to the Secretary under 
section 9904 or section 9907(a)(3), 
‘‘(2) it has remained in the reserve for 5 years 
after being transferred into the reserve, or 
‘‘(3) the Secretary determines by regulation 
that expiration is necessary to ensure the authen-
ticity and integrity of carbon permits or the carbon 
permit tracking system. 
‘‘(d) BORROWING FUTURE VINTAGE YEAR CARBON 
PERMITS.— 
‘‘(1) IN GENERAL.—If the auction price for car-
bon permits increases by more than 50 percent 
above the average auction price for carbon permits 
during the preceding two years (or, if before the 
third year for which auctions are conducted, the av-
erage auction price for carbon permits during the 
preceding auctions), the Secretary shall auction as 
many additional carbon permits as are necessary to 
stabilize the auction price. 
‘‘(2) SPECIAL RULES.— 
‘‘(A) COORDINATION WITH RESERVE.—Ad-
ditional permits may not be auctioned under 
paragraph (1) until after all available permits 
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in the reserve for carbon permits established 
under subsection (b) have been used. 
‘‘(B) REDUCTION IN VINTAGE YEAR PER-
MITS.—Any carbon permits made available 
under this subsection shall result in an equiva-
lent reduction in the aggregate amount of car-
bon permits made available in vintage years 
2030 through 2050 as set forth in section 
9902, and the Secretary shall reduce the num-
ber of carbon permits by an equal percentage in 
each of those vintage years. 
‘‘CHAPTER 102—HEALTHY CLIMATE 
DIVIDENDS 
‘‘Sec. 9911. Healthy Climate Trust Fund. 
‘‘Sec. 9912. Healthy Climate Dividend Payments. 
‘‘Sec. 9913. Transparency. 
‘‘SEC. 9911. HEALTHY CLIMATE TRUST FUND. 
‘‘(a) ESTABLISHMENT.—There is established in the 
Treasury of the United States a trust fund to be known 
as the ‘Healthy Climate Trust Fund’, consisting of such 
amounts as may be appropriated to such trust fund as 
provided for in this section. 
‘‘(b) TRANSFERS.— 
‘‘(1) PROCEED
AMOUNTS.—There are appro-
priated to the Healthy Climate Trust Fund amounts 
equivalent to funds received as proceeds under sec-
tion 9903. 
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‘‘(2) PENALTY
AMOUNTS.—There are appro-
priated to the Healthy Climate Trust Fund amounts 
equivalent to funds received as penalties under sec-
tion 9905. 
‘‘(c) EXPENDITURES.— 
‘‘(1) 
ADMINISTRATIVE
EXPENSES.—Such 
amounts as may be necessary from the Healthy Cli-
mate Trust Fund shall be available to pay the ad-
ministrative expenses necessary to carry out this sec-
tion for each month, but not exceeding the amount 
of interest credited to the trust fund under section 
9602. 
‘‘(2) 
HEALTHY
CLIMATE
DIVIDEND
PAY-
MENTS.—Amounts in the Healthy Climate Trust 
Fund not used under paragraph (1) for any month 
shall be available for making Healthy Climate Divi-
dend Payments under section 9912. 
‘‘SEC. 9912. HEALTHY CLIMATE DIVIDEND PAYMENTS. 
‘‘(a) IN GENERAL.—For purposes of this section: 
‘‘(1) 
HEALTHY
CLIMATE
DIVIDEND
PAY-
MENT.—The term ‘Healthy Climate Dividend Pay-
ment’ means the individual pro-rata share, as deter-
mined by the Secretary, of amounts available for any 
quarter in the Healthy Climate Trust Fund under 
section 9911(c)(2). For purposes of the preceding 
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sentence, the amounts available for any quarter shall 
be the fraction of the total amount made available 
from an auction conducted under section 9903— 
‘‘(A) the numerator of which is 1, and 
‘‘(B) the denominator of which is the num-
ber of quarters in the period beginning with the 
quarter in which such auction is conducted and 
ending with the quarter before the quarter in 
which the next such auction is scheduled to be 
conducted. 
‘‘(2) ELIGIBLE INDIVIDUAL.— 
‘‘(A) IN GENERAL.—The term ‘eligible in-
dividual’ means, with respect to any quarter, 
any individual with a valid social security num-
ber (other than a nonresident alien individual) 
who is lawfully present in the United States for 
such quarter, as determined and verified by the 
Secretary in consultation with any other Fed-
eral entity the Secretary determines appro-
priate. 
‘‘(B) OPT OUT.—An individual may elect 
not to be treated as an eligible individual. 
‘‘(b) PAYMENT OF HEALTHY CLIMATE DIVIDEND.— 
From amounts made available under section 9911(c)(2), 
the Secretary shall make a Healthy Climate Dividend Pay-
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ment not later than the end of the calendar quarter fol-
lowing the calendar quarter in which such amounts are 
appropriated to the Healthy Climate Trust Fund under 
section 9911 to each individual who is an eligible indi-
vidual for that quarter. Such payments shall be made by 
electronic means to the maximum extent practicable. 
‘‘(c) EXCLUSION FROM GROSS INCOME.—Gross in-
come shall not include any Healthy Climate Dividend paid 
under this section. 
‘‘(d) REGULATIONS.—The Secretary shall prescribe 
such regulations and other guidance as may be necessary 
or appropriate to carry out this section. 
‘‘SEC. 9913. TRANSPARENCY. 
‘‘(a) REPORT TO CONGRESS.—Not later than June 
30, 2019, and at least annually thereafter, the Secretary 
shall transmit to Congress a report accounting for the dis-
position of amounts in the Healthy Climate Trust Fund 
in the previous calendar year. 
‘‘(b) HEALTHY CLIMATE TRUST FUND WEBSITE.— 
Not later than 90 days after the date of the enactment 
of this subtitle, the Secretary shall establish and maintain 
a website to provide the public with information on the 
disposition of any amounts in the Healthy Climate Trust 
Fund. 
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‘‘CHAPTER 103—BORDER ADJUSTMENTS 
‘‘Sec. 9921. Carbon equivalency fee. 
‘‘Sec. 9922. Definitions. 
‘‘Sec. 9923. Sense of Congress. 
‘‘SEC. 9921. CARBON EQUIVALENCY FEE. 
‘‘(a) IMPORTS.—The Secretary shall impose carbon 
equivalency fees to be collected by the Commissioner re-
sponsible for U.S. Customs and Border Control on imports 
of carbon-intensive goods. The amount of the carbon 
equivalency fee shall be equal to the cost that domestic 
producers of a comparable carbon-intensive good incur as 
a result of— 
‘‘(1) prices paid in the acquisition of carbon 
permits by covered entities under this subtitle, and 
‘‘(2) carbon equivalency fees paid by importers 
of carbon-intensive goods used in the production of 
the comparable carbon-intensive good. 
‘‘(b) PAYMENTS
TO EXPORTERS.—The Secretary 
shall pay without interest to persons exporting from the 
United States carbon-intensive goods produced in the 
United States. The amount of the payment shall be equal 
to the cost that domestic producers of the carbon-intensive 
good incur as a result of— 
‘‘(1) prices paid in the acquisition of carbon 
permits by covered entities under this subtitle, and 
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‘‘(2) carbon equivalency fees paid by importers 
of carbon-intensive goods used in the production of 
the comparable carbon-intensive good. 
‘‘(c) EXPIRATION.—This section shall cease to have 
effect at such time as and to the extent that— 
‘‘(1) an international agreement requiring coun-
tries that emit greenhouse gases and produce car-
bon-intensive goods for export markets to adopt 
equivalent measures comes into effect, or 
‘‘(2) the country of export has implemented 
equivalent measures, as determined by the Sec-
retary, in consultation with the Secretary of State. 
‘‘SEC. 9922. DEFINITIONS. 
‘‘In this chapter: 
‘‘(1) CARBON-INTENSIVE
GOOD.—The term 
‘carbon-intensive good’ means a good that, as identi-
fied by the Secretary, in consultation with the Ad-
ministrator, by rule— 
‘‘(A) is a primary product, or 
‘‘(B) is a manufactured item in which one 
or more primary products are inputs and the 
cost of production of which in the United States 
is significantly increased by reason of the re-
quirements under this subtitle. 
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‘‘(2) PRIMARY PRODUCT.—The term ‘primary 
product’ means— 
‘‘(A) iron, steel, steel mill products (includ-
ing pipe and tube), aluminum, cement, glass 
(including flat, container, and specialty glass 
and fiberglass), pulp, paper, chemicals, or in-
dustrial ceramics, and 
‘‘(B) any other manufactured product that 
the Secretary, in consultation with the Adminis-
trator, 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 primary 
product identified in subparagraph (A). 
‘‘(3) EQUIVALENT MEASURE.—The term ‘equiv-
alent measure’ means a tax, or other regulatory re-
quirement that imposes a cost, on manufacturers of 
carbon-intensive goods located outside the United 
States, by reason of greenhouse gas emissions in the 
production of such goods by such manufacturers, ap-
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proximately equal to the cost imposed by this sub-
title on manufacturers of comparable carbon-inten-
sive goods located in the United States. 
‘‘SEC. 9923. SENSE OF CONGRESS. 
‘‘It is the sense of Congress that the United States 
should work proactively under the United Nations Frame-
work Convention on Climate Change and in other appro-
priate fora, to establish binding agreements committing all 
major greenhouse gas emitting countries and countries 
with globally competitive producers of carbon-intensive 
goods to contribute equitably to the reduction of global 
greenhouse gas emissions on a schedule and order of mag-
nitude necessary to stabilize the climate.’’. 
(b) CLERICAL AMENDMENT.—The table of subtitles 
for the Internal Revenue Code of 1986 is amended by add-
ing at the end the following new item: 
‘‘Subtitle L. Auction of Carbon Permits and Distribution of Healthy Climate 
Dividends’’. 
SEC. 4. NON-AUCTION GREENHOUSE GASES. 
(a) DEFINITIONS.—In this section: 
(1) The term ‘‘Administrator’’ means the Ad-
ministrator of the Environmental Protection Agency. 
(2) The term ‘‘non-auction greenhouse gas’’ re-
fers to the gases included on the list in effect under 
subsection (b). 
(b) LIST OF NON-AUCTION GREENHOUSE GASES.— 
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(1) INITIAL LIST.—Not later than 2 years after 
the date of the enactment of this Act, the Adminis-
trator, by rule, shall finalize and publish a list 
that— 
(A) consists of the anthropogenically emit-
ted gases that are determined by the Adminis-
trator to contribute to global warming; and 
(B) excludes gases to the extent they are— 
(i) carbon dioxide emitted by the com-
bustion of a covered fuel (as such term is 
defined in section 9901 of the Internal 
Revenue Code of 1986, as added by section 
3(a) of this Act); or 
(ii) directly attributable to the produc-
tion of animals for food or food products. 
(2) UPDATES.—The Administrator shall peri-
odically review and, as appropriate, update the list 
under paragraph (1). 
(c) REGULATIONS.— 
(1) IN GENERAL.—Under the authorities vested 
in the Administrator by the Clean Air Act (42 
U.S.C. 7401 et seq.) and any other applicable law 
(other than this section), the Administrator shall 
promulgate regulations addressing the contribution 
of non-auction greenhouse gases to global warming. 
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(2) 
INTERNATIONAL
COMPETITIVENESS.—In 
promulgating regulations under this subsection, the 
Administrator shall take into consideration the effect 
of such regulations on the international competitive-
ness of businesses and industries of the United 
States. 
(d) SCHEDULE.— 
(1) IN GENERAL.—The regulations under sub-
section (c) shall ensure that— 
(A) not later than 4 years after the date 
of enactment of this Act, requirements take ef-
fect to regulate sources which, collectively, emit 
not less than 25 percent of non-auction green-
house gases emitted in the United States; 
(B) not later than 6 years after the date 
of enactment of this Act, requirements take ef-
fect to regulate sources which, collectively, emit 
not less than 50 percent of non-auction green-
house gases emitted in the United States; 
(C) not later than 8 years after the date 
of enactment of this Act, requirements take ef-
fect to regulate sources which, collectively, emit 
not less than 75 percent of non-auction green-
house gases emitted in the United States; and 
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(D) not later than 10 years after the date 
of enactment of this Act, requirements take ef-
fect to regulate sources which, collectively, emit 
100 percent of non-auction greenhouse gases 
emitted in the United States. 
(2) BASELINE.—The percentages specified in 
paragraph (1) shall be applied relative to the aggre-
gate quantity of non-auction greenhouse gases emit-
ted in the United States during the calendar year in 
which the initial list under subsection (b)(1) is re-
quired to be finalized by such subsection. 
(e) PRIORITIES.—In determining priorities for regu-
lating the emissions of non-auction greenhouse gases 
under subsection (c), the Administrator shall consider— 
(1) the degree to which the gases involved con-
tribute to global warming; and 
(2) the speed with which a given reduction 
would contribute to stabilizing the climate. 
(f) CITIZEN SUITS.—The provisions of section 304 
of the Clean Air Act (42 U.S.C. 7604) shall apply with 
respect to a violation of a requirement under this section, 
or the failure of the Administrator to perform a non-dis-
cretionary act or duty under this section, to the same ex-
tent and in the same manner as such provisions apply with 
respect to a violation described in subsection (a) of such 
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