859 
allowance markets), and excess speculation, and 
provide measures to limit unreasonable fluctua-
tion in the prices of regulated allowances; 
‘‘(C) facilitate compliance with title VII of 
the Clean Air Act by covered entities; 
‘‘(D) ensure market transparency and rec-
ordkeeping deemed necessary and appropriate 
by the Commission to provide for efficient price 
discovery; prevention of fraud, market manipu-
lation, and excess speculation; and compliance 
with title VII of the Clean Air Act and section 
610 of the Public Utility Regulatory Policies 
Act of 1978; 
‘‘(E) as necessary, ensure that position 
limitations for individual market participants 
are established with respect to each class of 
regulated allowances; 
‘‘(F) as necessary, ensure that margin re-
quirements are established for each class of reg-
ulated allowances; 
‘‘(G) provide for the formation and oper-
ation of a fair, orderly and liquid national mar-
ket system that allows for the best execution in 
the trading of regulated allowances; 
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‘‘(H) limit or eliminate counterparty risks, 
market power concentration risks, and other 
risks associated with over-the-counter trading; 
and 
‘‘(I) establish standards for qualification 
as, and operation of, trading facilities for regu-
lated allowances; 
‘‘(J) establish standards for qualification 
as, and operation of, clearing organizations for 
trading facilities for regulated allowances; and 
‘‘(K) include such other requirements as 
necessary to preserve market integrity and fa-
cilitate compliance with title VII of the Clean 
Air Act and section 610 of the Public Utility 
Regulatory Policies Act of 1978 and the regula-
tions promulgated under such title and such 
section. 
‘‘(3) ENFORCEMENT.— 
‘‘(A) IN GENERAL.—If the Commission de-
termines, after notice and an opportunity for a 
hearing on the record, that any entity has vio-
lated any rule or order issued by the Commis-
sion under this subsection, the Commission may 
issue an order— 
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‘‘(i) prohibiting the entity from trad-
ing on a trading facility for regulated al-
lowances registered with the Commission, 
and requiring all such facilities to refuse 
the entity all privileges for such period as 
may be specified in the order; 
‘‘(ii) if the entity is registered with 
the Commission in any capacity, sus-
pending for a period of not more than 6 
months, or revoking, the registration of the 
entity; 
‘‘(iii) assessing the entity a civil pen-
alty of not more than $1,000,000 per day 
per violation for as long as the violation 
continues (and in determining the amount 
of a civil penalty, the Commission shall 
take into account the nature and serious-
ness of the violation and the efforts to 
remedy the violation); and 
‘‘(iv) requiring disgorgement of unjust 
profits, restitution to entities harmed by 
the violation as determined by the Com-
mission, or both. 
‘‘(B) AUTHORITY TO SUSPEND OR REVOKE 
REGISTRATION.—The Commission may suspend 
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for a period of not more than 6 months, or re-
voke, the registration of a trading facility for 
regulated allowances or of a clearing organiza-
tion registered by the Commission if, after no-
tice and opportunity for a hearing on the 
record, the Commission finds that— 
‘‘(i) the entity violated any rule or 
order issued by the Commission under this 
subsection; or 
‘‘(ii) a director, officer, employee, or 
agent of the entity has violated any rule or 
order issued by the Commission under this 
subsection. 
‘‘(C) CEASE AND DESIST PROCEEDINGS.— 
‘‘(i) IN GENERAL.—If the Commission 
determines that any entity may be vio-
lating, may have violated, or may be about 
to violate any provision of this part, or any 
regulation promulgated by, or any restric-
tion, condition, or order made or imposed 
by, the Commission under this Act, and if 
the Commission finds that the alleged vio-
lation or threatened violation, or the con-
tinuation of the violation, is likely to result 
in significant harm to covered entities or 
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market participants, or significant harm to 
the public interest, the Commission may 
issue a temporary order requiring the enti-
ty— 
‘‘(I) to cease and desist from the 
violation or threatened violation; 
‘‘(II) to take such action as is 
necessary to prevent the violation or 
threatened violation; and 
‘‘(III) to prevent, as the Commis-
sion determines to be appropriate— 
‘‘(aa) significant harm to 
covered entities or market par-
ticipants; 
‘‘(bb) significant harm to 
the public interest; and 
‘‘(cc) frustration of the abil-
ity of the Commission to conduct 
the proceedings or to redress the 
violation at the conclusion of the 
proceedings. 
‘‘(ii) TIMING
OF
ENTRY.—An order 
issued under clause (i) shall be entered 
only after notice and opportunity for a 
hearing, unless the Commission determines 
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that notice and hearing before entry would 
be impracticable or contrary to the public 
interest. 
‘‘(iii) 
EFFECTIVE
DATE.—A 
tem-
porary order issued under clause (i) 
shall— 
‘‘(I) become effective upon serv-
ice upon the entity; and 
‘‘(II) unless set aside, limited, or 
suspended by the Commission or a 
court of competent jurisdiction, re-
main effective and enforceable pend-
ing the completion of the proceedings. 
‘‘(D) PROCEEDINGS REGARDING DISSIPA-
TION OR CONVERSION OF ASSETS.— 
‘‘(i) IN
GENERAL.—In a proceeding 
involving an alleged violation of a regula-
tion or order promulgated or issued by the 
Commission, if the Commission determines 
that the alleged violation or related cir-
cumstances are likely to result in signifi-
cant dissipation or conversion of assets, 
the Commission may issue a temporary 
order requiring the respondent to take 
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such action as is necessary to prevent the 
dissipation or conversion of assets. 
‘‘(ii) TIMING
OF
ENTRY.—An order 
issued under clause (i) shall be entered 
only after notice and opportunity for a 
hearing, unless the Commission determines 
that notice and hearing before entry would 
be impracticable or contrary to the public 
interest. 
‘‘(iii) 
EFFECTIVE
DATE.—A 
tem-
porary order issued under clause (i) 
shall— 
‘‘(I) become effective upon serv-
ice upon the respondent; and 
‘‘(II) unless set aside, limited, or 
suspended by the Commission or a 
court of competent jurisdiction, re-
main effective and enforceable pend-
ing the completion of the proceedings. 
‘‘(E) REVIEW OF TEMPORARY ORDERS.— 
‘‘(i) APPLICATION FOR REVIEW.—At 
any time after a respondent has been 
served with a temporary cease-and-desist 
order pursuant to subparagraph (C) or 
order regarding the dissipation or conver-
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sion of assets pursuant to subparagraph 
(D), the respondent may apply to the Com-
mission to have the order set aside, lim-
ited, or suspended. 
‘‘(ii) NO
PRIOR
HEARING.—If a re-
spondent has been served with a temporary 
order entered without a prior hearing of 
the Commission— 
‘‘(I) the respondent may, not 
later than 10 days after the date on 
which the order was served, request a 
hearing on the application; and 
‘‘(II) the Commission shall hold a 
hearing and render a decision on the 
application at the earliest practicable 
time. 
‘‘(iii) JUDICIAL REVIEW.— 
‘‘(I) IN
GENERAL.—An entity 
shall not be required to submit a re-
quest for rehearing of a temporary 
order before seeking judicial review in 
accordance with this subparagraph. 
‘‘(II) TIMING OF REVIEW.—Not 
later than 10 days after the date on 
which a respondent is served with a 
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temporary cease-and-desist order en-
tered with a prior hearing of the Com-
mission, or 10 days after the date on 
which the Commission renders a deci-
sion on an application and hearing 
under clause (i) with respect to any 
temporary order entered without such 
a prior hearing— 
‘‘(aa) the respondent may 
obtain a review of the order in a 
United States circuit court hav-
ing jurisdiction over the circuit in 
which the respondent resides or 
has a principal place of business, 
or in the United States Court of 
Appeals for the District of Co-
lumbia Circuit, for an order set-
ting aside, limiting, or sus-
pending the effectiveness or en-
forcement of the order; and 
‘‘(bb) the court shall have 
jurisdiction to enter such an 
order. 
‘‘(III) NO
PRIOR
HEARING.—A 
respondent served with a temporary 
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order entered without a prior hearing 
of the Commission may not apply to 
the applicable court described in sub-
clause (II) except after a hearing and 
decision by the Commission on the ap-
plication of the respondent under 
clauses (i) and (ii). 
‘‘(iv) PROCEDURES.—Section 222 and 
Part III shall apply to— 
‘‘(I) an application for review of 
an order under clause (i); and 
‘‘(II) an order subject to review 
under clause (iii). 
‘‘(v) NO AUTOMATIC STAY OF TEM-
PORARY
ORDER.—The commencement of 
proceedings under clause (iii) shall not, un-
less specifically ordered by the court, oper-
ate as a stay of the order of the Commis-
sion. 
‘‘(F) ACTIONS
TO
COLLECT
CIVIL
PEN-
ALTIES.—If any person fails to pay a civil pen-
alty assessed under this subsection after an 
order assessing the penalty has become final 
and unappealable, the Commission shall bring 
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an action to recover the amount of the penalty 
in any appropriate United States district court. 
‘‘(4) TRANSACTION FEES.— 
‘‘(A) 
IN
GENERAL.—The 
Commission 
shall, in accordance with this paragraph, estab-
lish and collect transaction fees designed to re-
cover the costs to the Federal Government of 
the supervision and regulation of regulated al-
lowance markets and market participants, in-
cluding related costs for enforcement activities, 
policy and rulemaking activities, administration, 
legal services, and international regulatory ac-
tivities. 
‘‘(B) INITIAL
FEE
RATE.—Each trading 
facility on or through which regulated allow-
ances are transacted shall pay to the Commis-
sion a fee at a rate of not more than $15 per 
$1,000,000 of the aggregate dollar amount of 
sales 
of 
regulated 
allowances 
transacted 
through the facility. 
‘‘(C) 
ANNUAL
ADJUSTMENT
OF
FEE 
RATE.—The Commission shall, on an annual 
basis— 
‘‘(i) assess the rate at which fees are 
to be collected as necessary to meet the 
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cost recovery requirement in subparagraph 
(A); and 
‘‘(ii) consistent with subparagraph 
(B), adjust the rate as necessary in order 
to meet the requirement. 
‘‘(D) REPORT ON ADEQUACY OF FEES IN 
RECOVERING
COSTS.—The Commission, shall, 
on an annual basis, report to the Committee on 
Energy and Commerce of the House of Rep-
resentatives and the Committee on Energy and 
Natural Resources of the Senate on the ade-
quacy of the transaction fees in providing fund-
ing for the Commission to regulate the regu-
lated allowance markets. 
‘‘(5) JUDICIAL REVIEW.—Judicial review of ac-
tions taken by the Commission under this subsection 
shall be pursuant to part III. 
‘‘(6) 
INFORMATION-SHARING.—Within 
months after a Federal agency with jurisdiction over 
regulated allowance derivatives is delegated author-
ity pursuant to subsection (c)(1), the agency shall 
enter into a memorandum of understanding with the 
Commission relating to information sharing, which 
shall include provisions ensuring that information re-
quests to markets within the respective jurisdiction 
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of the agency are properly coordinated to facilitate, 
among other things, effective information-sharing 
while minimizing duplicative information requests, 
and provisions regarding the treatment of propri-
etary information. 
‘‘(7) ADDITIONAL EMPLOYEES REPORT AND AP-
POINTMENT.—Within 18 months after the date of 
the enactment of this section, the Commission shall 
submit to the President, the Committee on Energy 
and Commerce of the House of Representatives, and 
the Committee on Energy and Natural Resources of 
the Senate, a report that contains recommendations 
as to how many additional employees would be nec-
essary to provide robust oversight and enforcement 
of the regulations promulgated under this sub-
section. As soon as practicable after the completion 
of the report, subject to appropriations, the Commis-
sion shall appoint the recommended number of addi-
tional employees for such purposes. 
‘‘(c) DELEGATION OF AUTHORITY BY THE PRESI-
DENT.— 
‘‘(1) DELEGATION.—The President, taking into 
consideration the recommendations of the inter-
agency working group established in subsection (d), 
shall delegate to members of the working group and 
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872 
the heads of other appropriate Federal agencies the 
authority to promulgate regulations for the estab-
lishment, operation, and oversight of all markets for 
regulated allowance derivatives. 
‘‘(2) REGULATIONS.—The regulations promul-
gated pursuant to paragraph (1) shall— 
‘‘(A) provide for effective and comprehen-
sive market oversight; 
‘‘(B) prohibit fraud, market manipulation, 
and excess speculation, and provide measures to 
limit unreasonable fluctuation in the prices of 
regulated allowance derivatives; 
‘‘(C) facilitate compliance with title VII of 
the Clean Air Act by covered entities; 
‘‘(D) ensure market transparency and rec-
ordkeeping necessary to provide for efficient 
price discovery; prevention of fraud, market ma-
nipulation, and excess speculation; and compli-
ance with title VII of the Clean Air Act and 
section 610 of the Public Utility Regulatory 
Policies Act of 1978; 
‘‘(E) ensure that position limitations for 
individual market participants are established 
with respect to each regulated allowance deriva-
tive and aggregate position limitations for indi-
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vidual market participants are established with 
respect to all regulated allowance derivative 
markets; 
‘‘(F) ensure that margin requirements are 
established for each regulated allowance deriva-
tive; 
‘‘(G) provide for the formation and oper-
ation of a market system that allows for best 
execution in the trading of regulated allowance 
derivatives; 
‘‘(H) to the extent the regulations deviate 
from the rule set forth in paragraph (4)(B), 
limit or eliminate counterparty risks, market 
power concentration risks, and other risks asso-
ciated with over-the-counter trading, and pro-
mulgate reporting and market transparency 
rules for large traders; 
‘‘(I) ensure that market participants do 
not evade position limits or otherwise under-
mine the integrity and effectiveness of the regu-
lations promulgated under subparagraph (C) 
through participation in markets not subject to 
the position limits and regulations; 
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874 
‘‘(J) establish standards, as necessary, for 
qualification as, and operation of, trading facili-
ties for regulated allowance derivatives; 
‘‘(K) establish standards, as necessary, for 
qualification as, and operation of, clearing orga-
nizations for trading facilities for regulated al-
lowance derivatives; 
‘‘(L) provide boards of trade designated as 
contract markets under the Commodity Ex-
change Act, and market participants, with an 
adequate transition period for compliance with 
any new regulatory requirements established 
under this paragraph; 
‘‘(M) determine whether and to what ex-
tent offset creation contracts, to the extent in-
corporating regulated allowance derivatives, 
should be governed by the same regulations 
that apply to other regulated allowance deriva-
tives; and 
‘‘(N) include such other requirements as 
necessary to preserve market integrity and fa-
cilitate compliance with title VII of the Clean 
Air Act and section 610 of the Public Utility 
Regulatory Policies Act of 1978 and the regula-
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tions promulgated under such title and such 
section. 
‘‘(3) DEADLINE.—The agencies authorized to 
promulgate regulations for the establishment, oper-
ation, and oversight of markets for regulated allow-
ance derivatives pursuant to paragraph (1) shall 
promulgate such regulations not later than 18 
months after the date of the enactment of this sec-
tion, and from time to time thereafter as may be ap-
propriate. 
‘‘(4) DEFAULT RULES.— 
‘‘(A) An individual market participant, di-
rectly or in concert with another participant, 
shall not control more than 10 percent of the 
open interest in any regulated allowance deriva-
tive. 
‘‘(B) All contracts for the purchase or sale 
of any regulated allowance derivative shall be 
executed on or through a board of trade des-
ignated as a contract market under the Com-
modity Exchange Act. 
‘‘(C) To the extent that regulations pro-
mulgated under this subsection provide dif-
ferent rules with respect to the matters de-
scribed in subparagraph (A) or (B), the regula-
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tions shall supersede subparagraph (A) or (B), 
as the case may be. 
‘‘(d) WORKING GROUP.— 
‘‘(1) ESTABLISHMENT.—Not later than 30 days 
after the date of the enactment of this section, the 
President shall establish an interagency working 
group on carbon market oversight, which shall in-
clude the Administrator of the Environmental Pro-
tection Agency and representatives of other relevant 
agencies, to make recommendations to the President 
regarding proposed regulations for the establish-
ment, operation, and oversight of markets for regu-
lated allowance derivatives. 
‘‘(2) REPORT.—Not later than 180 days after 
the date of the enactment of this section, and bienni-
ally thereafter, the interagency working group shall 
submit a written report to the President and Con-
gress that includes its recommendations to the 
President regarding proposed regulations for the es-
tablishment, operation, and oversight of markets for 
regulated 
allowance 
derivatives 
and 
any 
rec-
ommendations to Congress for statutory changes 
needed to ensure the establishment, operation, and 
oversight of transparent, fair, stable, and efficient 
markets for regulated allowance derivatives. 
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‘‘(e) ENFORCEMENT OF REGULATIONS.—Each Fed-
eral agency that promulgates under subsection (c) a regu-
lation of conduct with respect to a regulated allowance de-
rivative shall have the same authority to enforce compli-
ance with the regulation as the Commodity Futures Trad-
ing Commission has to enforce compliance with any regu-
lation of similar conduct with respect to a contract, agree-
ment, or transaction over which the Commodity Futures 
Trading Commission has jurisdiction, except that any en-
forcement by the Federal Energy Regulatory Commission 
shall be pursuant to section 222 and Part III. 
‘‘(f) PENALTY
FOR FRAUD
AND FALSE
OR MIS-
LEADING STATEMENTS.—A person convicted under sec-
tion 1041 of title 18, United States Code, may be prohib-
ited from holding or trading regulated allowances for a 
period of not more than 5 years pursuant to the regula-
tions promulgated under this section, except that, if the 
person is a covered entity, the person shall be allowed to 
hold sufficient regulated allowances to meet its compliance 
obligations. 
‘‘(g) RELATION TO STATE LAW.—Nothing in this 
section shall preclude, diminish or qualify any authority 
of a State or political subdivision thereof to adopt or en-
force any unfair competition, antitrust, consumer protec-
tion, securities, commodities or any other law or regula-
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tion, except that no such State law or regulation may re-
lieve any person of any requirement otherwise applicable 
under this section. 
‘‘(h) MARKET REPORTS.— 
‘‘(1) COLLECTION AND ANALYSIS OF INFORMA-
TION.—The Commission, in conjunction with the 
Federal agency with jurisdiction over regulated al-
lowance derivatives pursuant to subsection (c)(1), 
shall, on a continuous basis, collect and analyze the 
following information on the functioning of the mar-
kets for regulated instruments established under this 
part: 
‘‘(A) The status of, and trends in, the 
markets, including prices, trading volumes, 
transaction types, and trading channels and 
mechanisms. 
‘‘(B) Spikes, collapses, and volatility in 
prices of regulated instruments, and the causes 
therefor. 
‘‘(C) The relationship between the market 
for regulated allowances and allowance deriva-
tives, and the spot and futures markets for en-
ergy commodities, including electricity. 
‘‘(D) Evidence of fraud or manipulation in 
any such market, the effects on any such mar-
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879 
ket of any such fraud or manipulation (or 
threat of fraud or manipulation) that the Com-
mission, in conjunction with the Federal agen-
cy, has identified, and the effectiveness of cor-
rective measures undertaken by the Commis-
sion, in conjunction with the Federal agency, to 
address the fraud, manipulation, or threat. 
‘‘(E) The economic effects of the markets, 
including to macro- and micro-economic effects 
of unexpected significant increases and de-
creases in the price of regulated instruments. 
‘‘(F) Any changes in the roles, activities, 
or strategies of various market participants. 
‘‘(G) Regional, industrial, and consumer 
responses to the markets, and energy invest-
ment responses to the markets. 
‘‘(H) Any other issue related to the mar-
kets that the Commission, in conjunction with 
the entities, deems appropriate. 
‘‘(2) ANNUAL REPORTS TO THE CONGRESS.— 
Not later than 1 month after the end of each cal-
endar year, the Commission, in conjunction with the 
Federal agency, shall submit to the President, the 
Committee on Energy and Commerce of the House 
of Representatives, and the Committee on Energy 
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and Natural Resources of the Senate, and make 
available to the public, a report on the matters de-
scribed in paragraph (1) with respect to the year, in-
cluding recommendations for any administrative or 
statutory measures the Commission, in conjunction 
with the Federal agency, considers necessary to ad-
dress any threats to the transparency, fairness, or 
integrity of the markets in regulated instruments. 
‘‘SEC. 402. APPLICABILITY OF PART III PROVISIONS. 
‘‘(a) SECTIONS 301, 304, AND 306.—Sections 301, 
304, and 306 shall not apply to this part. 
‘‘(b) SECTIONS 307, 309, AND 314.—Sections 307, 
309, and 314 shall only apply to section 401(c) to the ex-
tent that the Commission is delegated authority to pro-
mulgate regulations for the establishment, operation, and 
oversight of markets for regulated allowance derivatives 
(as defined in section 401). If the Commission is not dele-
gated authority to promulgate regulations for the estab-
lishment, operation, and oversight of markets for regu-
lated allowance derivatives, sections 307, 309, and 314 
shall not apply to section 401(f) in the case of regulated 
allowance derivatives. 
‘‘(c) SECTION 315.—In applying section 315(a) to 
this part, the words ‘‘person or entity’’ shall be substituted 
for the words ‘‘licensee or public utility’’. In applying sec-
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881 
tion 315(b) to this part, the words ‘‘an entity’’ shall be 
substituted for the words ‘‘a licensee or public utility’’ and 
the words ‘‘such entity’’ shall be substituted for the words 
‘‘such licensee or public utility.’’ 
‘‘(d) SECTION 316.—Section 316(a) shall not apply 
to section 401(f).’’. 
(b) CRIMINAL PROHIBITION AGAINST FRAUD AND 
FALSE OR MISLEADING STATEMENTS.— 
(1) Chapter 47 of title 18, United States Code, 
is amended by adding at the end the following: 
‘‘§ 1041. Fraud and false statements in connection 
with regulated allowances 
‘‘Whoever in connection with a transaction involving 
a regulated allowance (as defined in section 401(a) of the 
Federal Power Act, as added by section 341 of the Amer-
ican Clean Energy and Security Act of 2009), know-
ingly— 
‘‘(1) makes or uses a materially false or mis-
leading statement, writing, representation, scheme, 
or device; or 
‘‘(2) falsifies, conceals, or covers up by any 
trick, scheme, or device any material fact, 
shall be fined not more than $5,000,000 (or $25,000,000 
in the case of an organization) or imprisoned not more 
than 20 years, or both.’’. 
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(2) The table of sections at the beginning of 
chapter 47 of title 18, United States Code, is 
amended by adding at the end the following new 
item: 
‘‘1041. Fraud and false statements in connection with regulated allowances.’’. 
Subtitle E—Additional Market 
Assurance 
SEC. 351. REGULATION OF CERTAIN TRANSACTIONS IN DE-
RIVATIVES INVOLVING ENERGY COMMOD-
ITIES. 
(a) ENERGY COMMODITY DEFINED.—Section 1a of 
the Commodity Exchange Act (7 U.S.C. 1a) is amended— 
(1) in paragraph (14), by inserting ‘‘, an energy 
commodity,’’ after ‘‘excluded commodity’’; 
(2) by redesignating paragraphs (13) through 
(21) and paragraphs (22) through (34) as para-
graphs (14) through (22) and paragraphs (24) 
through (36), respectively; 
(3) by inserting after paragraph (12) the fol-
lowing: 
‘‘(13) ENERGY COMMODITY.—The term ‘energy 
commodity’ means— 
‘‘(A) coal; 
‘‘(B) crude oil, gasoline, diesel fuel, jet 
fuel, heating oil, and propane; 
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‘‘(C) electricity (excluding financial trans-
mission rights which are subject to regulation 
and oversight by the Federal Energy Regu-
latory Commission); 
‘‘(D) natural gas; and 
‘‘(E) any other substance (other than an 
excluded commodity, a metal, or an agricultural 
commodity) that is used as a source of energy, 
as the Commission, in its discretion, deems ap-
propriate.’’; and 
(4) by inserting after paragraph (22) (as so re-
designated by paragraph (2) of this subsection) the 
following: 
‘‘(23) INCLUDED ENERGY TRANSACTION.—The 
term ‘included energy transaction’ means a contract, 
agreement, or transaction in an energy commodity 
for future delivery that provides for a delivery point 
of the energy commodity in the United States or a 
territory or possession of the United States, or that 
is offered or transacted on or through a computer 
terminal located in the United States.’’. 
(b) EXTENSION
OF REGULATORY AUTHORITY
TO 
SWAPS
INVOLVING
ENERGY
TRANSACTIONS.—Section 
2(g) of such Act (7 U.S.C. 2(g)) is amended by inserting 
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‘‘or an energy commodity’’ after ‘‘agricultural com-
modity’’. 
(c) ELIMINATION OF EXEMPTION FOR OVER-THE- 
COUNTER SWAPS INVOLVING ENERGY COMMODITIES.— 
Section 2(h)(1) of such Act (7 U.S.C. 2(h)(1)) is amended 
by inserting ‘‘(other than an energy commodity)’’ after 
‘‘exempt commodity’’. 
(d) EXTENSION OF REGULATORY AUTHORITY TO IN-
CLUDED ENERGY TRANSACTIONS ON FOREIGN BOARDS 
OF TRADE.—Section 4 of such Act (7 U.S.C. 6) is amend-
ed— 
(1) in subsection (a), by inserting ‘‘, and which 
is not an included energy transaction’’ after ‘‘terri-
tories or possessions’’ the 2nd place it appears; and 
(2) in subsection (b), by adding at the end the 
following: ‘‘The preceding sentence shall not apply 
with respect to included energy transactions.’’. 
(e) LIMITATION OF GENERAL EXEMPTIVE AUTHOR-
ITY OF THE CFTC WITH RESPECT TO INCLUDED EN-
ERGY TRANSACTIONS.— 
(1) IN GENERAL.—Section 4(c) of such Act (7 
U.S.C. 6(c)) is amended by adding at the end the 
following: 
‘‘(6) The Commission may not exempt any included 
energy transaction from the requirements of subsection 
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885 
(a), unless the Commission provides 60 days advance no-
tice to the Congress and the Position Limit Energy Advi-
sory Group and solicits public comment about the exemp-
tion request and any proposed Commission action.’’. 
(2) NULLIFICATION OF NO-ACTION LETTER EX-
EMPTIONS TO CERTAIN REQUIREMENTS APPLICABLE 
TO INCLUDED ENERGY TRANSACTIONS.—Beginning 
180 days after the date of the enactment of this Act, 
any exemption provided by the Commodity Futures 
Trading Commission that has allowed included en-
ergy transactions (as defined in section 1a(13) of 
the Commodity Exchange Act) to be conducted with-
out regard to the requirements of section 4(a) of 
such Act shall be null and void. 
(f) REQUIREMENT TO ESTABLISH UNIFORM SPECU-
LATIVE POSITION LIMITS FOR ENERGY TRANSACTIONS.— 
(1) IN GENERAL.—Section 4a(a) of such Act (7 
U.S.C. 6a(a)) is amended— 
(A) by inserting ‘‘(1)’’ after ‘‘(a)’’; 
(B) by inserting after the 2nd sentence the 
following: ‘‘With respect to energy transactions, 
the Commission shall fix limits on the aggre-
gate number of positions which may be held by 
any person for each month across all markets 
subject to the jurisdiction of the Commission.’’; 
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886 
(C) in the 4th sentence by inserting ‘‘, con-
sistent with the 3rd sentence,’’ after ‘‘Commis-
sion’’; and 
(D) by adding after and below the end the 
following: 
‘‘(2)(A) Not later than 60 days after the date of the 
enactment of this paragraph, the Commission shall con-
vene a Position Limit Energy Advisory Group consisting 
of representatives from— 
‘‘(i) 7 predominantly commercial short hedgers 
of the actual energy commodity for future delivery; 
‘‘(ii) 7 predominantly commercial long hedgers 
of the actual energy commodity for future delivery; 
‘‘(iii) 4 non-commercial participants in markets 
for energy commodities for future delivery; and 
‘‘(iv) each designated contract market or de-
rivatives transaction execution facility upon which a 
contract in the energy commodity for future delivery 
is traded, and each electronic trading facility that 
has a significant price discovery contract in the en-
ergy commodity. 
‘‘(B) Not later than 60 days after the date on which 
the advisory group is convened under subparagraph (A), 
and annually thereafter, the advisory group shall submit 
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887 
to the Commission advisory recommendations regarding 
the position limits to be established in paragraph (1). 
‘‘(C) The Commission shall have exclusive authority 
to grant exemptions for bona fide hedging transactions 
and positions from position limits imposed under this Act 
on energy transactions.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) SIGNIFICANT PRICE DISCOVERY CON-
TRACTS.—Section 2(h)(7) of such Act (7 U.S.C. 
2(h)(7)) is amended— 
(i) in subparagraph (A)— 
(I) by inserting ‘‘of this para-
graph and section 4a(a)’’ after ‘‘(B) 
through (D)’’; and 
(II) by inserting ‘‘of this para-
graph’’ before the period; and 
(ii) in subparagraph (C)(ii)(IV)— 
(I) in the heading, by striking 
‘‘LIMITATIONS OR’’; and 
(II) by striking ‘‘position limita-
tions or’’. 
(B) CONTRACTS TRADED ON OR THROUGH 
DESIGNATED
CONTRACT
MARKETS.—Section 
5(d)(5) of such Act (7 U.S.C. 7(d)(5)) is 
amended— 
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888 
(i) in the heading by striking ‘‘LIMI-
TATIONS OR’’; and 
(ii) by striking ‘‘position limitations 
or’’. 
(C) CONTRACTS TRADED ON OR THROUGH 
DERIVATIVES TRANSACTION EXECUTION FACILI-
TIES.—Section 5a(d)(4) of such Act (7 U.S.C. 
7a(d)(4)) is amended— 
(i) in the heading by striking ‘‘LIMI-
TATIONS OR’’; and 
(ii) by striking ‘‘position limits or’’. 
(g) ELIMINATION OF THE SWAPS LOOPHOLE.—Sec-
tion 4a(c) of such Act (7 U.S.C. 6a(c)) is amended— 
(1) by inserting ‘‘(1)’’ after ‘‘(c)’’; and 
(2) by adding after and below the end the fol-
lowing: 
‘‘(2) For the purposes of contracts of sale for future 
delivery and options on such contracts or commodities, the 
Commission shall define what constitutes a bona fide 
hedging transaction or position as a transaction or posi-
tion that— 
‘‘(A)(i) represents a substitute for transactions 
made or to be made or positions taken or to be 
taken at a later time in a physical marketing chan-
nel; 
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889 
‘‘(ii) is economically appropriate to the reduc-
tion of risks in the conduct and management of a 
commercial enterprise; and 
‘‘(iii) arises from the potential change in the 
value of— 
‘‘(I) assets that a person owns, produces, 
manufactures, processes, or merchandises or 
anticipates owning, producing, manufacturing, 
processing, or merchandising; 
‘‘(II) liabilities that a person owns or an-
ticipates incurring; or 
‘‘(III) services that a person provides, pur-
chases, or anticipates providing or purchasing; 
or 
‘‘(B) reduces risks attendant to a position re-
sulting from a transaction that— 
‘‘(i) was executed pursuant to subsection 
(d), (g), (h)(1), or (h)(2) of section 2, or an ex-
emption issued by the Commission by rule, reg-
ulation or order; and 
‘‘(ii) was executed opposite a counterparty 
for which the transaction would qualify as a 
bona fide hedging transaction pursuant to para-
graph (2)(A) of this subsection.’’. 
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890 
(h) DETAILED REPORTING AND DISAGGREGATION OF 
MARKET DATA.—Section 4 of such Act (7 U.S.C. 6) is 
amended by adding at the end the following: 
‘‘(e) DETAILED REPORTING AND DISAGGREGATION 
OF MARKET DATA.— 
‘‘(1) INDEX TRADERS AND SWAP DEALERS RE-
PORTING.—The Commission shall issue a proposed 
rule defining and classifying index traders and swap 
dealers (as those terms are defined by the Commis-
sion) for purposes of data reporting requirements 
and setting routine detailed reporting requirements 
for any positions of such entities in contracts traded 
on designated contract markets, over-the-counter 
markets, derivatives transaction execution facilities, 
foreign boards of trade subject to section 4(f), and 
electronic trading facilities with respect to signifi-
cant price discovery contracts not later than 120 
days after the date of the enactment of this sub-
section, and issue a final rule within 180 days after 
such date of enactment. 
‘‘(2) DISAGGREGATION OF INDEX FUNDS AND 
OTHER
DATA
IN
MARKETS.—Subject to section 8 
and beginning within 60 days of the issuance of the 
final rule required by paragraph (1), the Commis-
sion shall disaggregate and make public weekly— 
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891 
‘‘(A) the number of positions and total no-
tional value of index funds and other passive, 
long-only and short-only positions (as defined 
by the Commission) in all markets to the extent 
such information is available; and 
‘‘(B) data on speculative positions relative 
to bona fide physical hedgers in those markets 
to the extent such information is available. 
‘‘(3) DISCLOSURE OF IDENTITY OF HOLDERS 
OF POSITIONS IN INDEXES IN EXCESS OF POSITION 
LIMITS.—The Commission shall include in its weekly 
Commitment of Trader reports the identity of each 
person who holds a position in an index in excess of 
a limit imposed under section 4i.’’. 
(i) AUTHORITY TO SET LIMITS TO PREVENT EXCES-
SIVE SPECULATION IN INDEXES.— 
(1) IN GENERAL.—Section 4a of such Act (7 
U.S.C. 6a) is amended by adding at the end the fol-
lowing: 
‘‘(f) The provisions of this section shall apply to the 
amounts of trading which may be done or positions which 
may be held by any person under contracts of sale of an 
index for future delivery on or subject to the rules of any 
contract market, derivatives transaction execution facility, 
or over-the-counter market, or on an electronic trading fa-
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892 
cility with respect to a significant price discovery contract, 
in the same manner in which this section applies to con-
tracts of sale of a commodity for future delivery.’’. 
(2) REGULATIONS.—The Commodity Futures 
Trading Commission shall issue regulations under 
section 4a(f) of the Commodity Exchange Act within 
180 days after the date of the enactment of this Act. 
SEC. 352. NO EFFECT ON AUTHORITY OF THE FEDERAL EN-
ERGY REGULATORY COMMISSION. 
Section 2 of the Commodity Exchange Act (7 U.S.C. 
2) is amended by adding at the end the following:. 
‘‘(j) This Act shall not be interpreted to affect the 
jurisdiction of the Federal Energy Regulatory Commission 
with respect to the authority of the Federal Energy Regu-
latory Commission under the Federal Power Act (16 
U.S.C. 791a et seq.), the Natural Gas Act (15 U.S.C. 717 
et seq.), or other law to obtain information, carry out en-
forcement actions, or otherwise carry out the responsibil-
ities of the Federal Energy Regulatory Commission.’’. 
SEC. 353. INSPECTOR GENERAL OF THE COMMODITY FU-
TURES TRADING COMMISSION. 
(a) ELEVATION OF OFFICE.— 
(1) INCLUSION OF CFTC IN DEFINITION OF ES-
TABLISHMENT.— 
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893 
(A) Section 12(1) of the Inspector General 
Act of 1978 (5 U.S.C. App.) is amended by 
striking ‘‘or the Federal Cochairpersons of the 
Commissions established under section 15301 
of title 40, United States Code;’’ and inserting 
‘‘the Federal Cochairpersons of the Commis-
sions established under section 15301 of title 
40, United States Code; or the Chairman of the 
Commodity Futures Trading Commission;’’. 
(B) Section 12(2) of the Inspector General 
Act of 1978 (5 U.S.C. App.) is amended by 
striking ‘‘or the Commissions established under 
section 15301 of title 40, United States Code,’’ 
and inserting ‘‘the Commissions established 
under section 15301 of title 40, United States 
Code, or the Commodity Futures Trading Com-
mission,’’. 
(2) EXCLUSION OF CFTC FROM DEFINITION OF 
DESIGNATED
FEDERAL
ENTITY.—Section 8G(a)(2) 
of the Inspector General Act of 1978 (5 U.S.C. 
App.) is amended by striking ‘‘the Commodity Fu-
tures Trading Commission,’’. 
(b) PROVISIONS RELATING TO PAY AND PERSONNEL 
AUTHORITY.— 
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894 
(1) PROVISION RELATING TO THE POSITION OF 
INSPECTOR GENERAL OF THE CFTC.—In the case of 
the Inspector General of the Commodities Futures 
Trading Commission, subsections (b) and (c) of sec-
tion 4 of the Inspector General Reform Act of 2008 
(Public Law 110-409) shall apply in the same man-
ner as if the Commission was a designated Federal 
entity under section 8G. The Inspector General of 
the Commodities Futures Trading Commission shall 
not be subject to section 3(e) of such Act. 
(2) PROVISION
RELATING
TO
OTHER
PER-
SONNEL.—Notwithstanding paragraphs (7) and (8) 
of section 6(a) of the Inspector General Act of 1978 
(5 U.S.C. App.), the Inspector General of the Com-
modities Futures Trading Commission may select, 
appoint, and employ such officers and employees as 
may be necessary for carrying out the functions, 
powers, and duties of the Office of Inspector General 
and to obtain the temporary or intermittent services 
of experts or consultants or an organization of ex-
perts or consultants, subject to the applicable laws 
and regulations that govern such selections, appoint-
ments, and employment, and the obtaining of such 
services, within the Commodities Futures Trading 
Commission. 
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(c) EFFECTIVE DATE; TRANSITION RULE.— 
(1) EFFECTIVE DATE.—The amendments made 
by this section shall take effect 30 days after the 
date of the enactment of this Act. 
(2) TRANSITION RULE.—An individual serving 
as Inspector General of the Commodity Futures 
Trading Commission on the effective date of this 
section pursuant to an appointment made under sec-
tion 8G of the Inspector General Act of 1978 (5 
U.S.C. App.)— 
(A) may continue so serving until the 
President makes an appointment under section 
3(a) of such Act consistent with the amend-
ments made by this section; and 
(B) shall, while serving under subpara-
graph (A), remain subject to the provisions of 
section 8G of such Act which apply with respect 
to the Commodity Futures Trading Commis-
sion. 
SEC. 354. SETTLEMENT AND CLEARING THROUGH REG-
ISTERED DERIVATIVES CLEARING ORGANIZA-
TIONS. 
(a) IN GENERAL.— 
(1) APPLICATION
TO
EXCLUDED
DERIVATIVE 
TRANSACTIONS.— 
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896 
(A) Section 2(d)(1) of the Commodity Ex-
change Act (7 U.S.C. 2(d)(1)) is amended— 
(i) by striking ‘‘and’’ at the end of 
subparagraph (A); 
(ii) by striking the period at the end 
of subparagraph (B) and inserting ‘‘; 
and’’; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(C) except as provided in section 4(f), the 
agreement, contract, or transaction is settled 
and cleared through a derivatives clearing orga-
nization registered with the Commission.’’. 
(B) Section 2(d)(2) of such Act (7 U.S.C. 
2(d)(2)) is amended— 
(i) by striking ‘‘and’’ at the end of 
subparagraph (B); 
(ii) by striking the period at the end 
of subparagraph (C) and inserting ‘‘; and’’; 
and 
(iii) by adding at the end the fol-
lowing: 
‘‘(D) except as provided in section 4(f), the 
agreement, contract, or transaction is settled 
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897 
and cleared through a derivatives clearing orga-
nization registered with the Commission.’’. 
(2) APPLICATION
TO
CERTAIN
SWAP
TRANS-
ACTIONS.—Section 2(g) of such Act (7 U.S.C. 2(g)) 
is amended— 
(A) by striking ‘‘and’’ at the end of para-
graph (2); 
(B) by striking the period at the end of 
paragraph (3) and inserting ‘‘; and’’; and 
(C) by adding at the end the following: 
‘‘(4) except as provided in section 4(f), settled 
and cleared through a derivatives clearing organiza-
tion registered with the Commission.’’. 
(3) APPLICATION TO CERTAIN TRANSACTIONS 
IN EXEMPT COMMODITIES.— 
(A) Section 2(h)(1) of such Act ( 7 U.S.C. 
2(h)(1)) is amended— 
(i) by striking ‘‘and’’ at the end of 
subparagraph (A); 
(ii) by striking the period at the end 
of subparagraph (B) and inserting ‘‘; 
and’’; and 
(iii) by adding at the end the fol-
lowing: 
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898 
‘‘(C) except as provided in section 4(f), is 
settled and cleared through a derivatives clear-
ing organization registered with the Commis-
sion.’’. 
(B) Section 2(h)(3) of such Act (7 U.S.C. 
2(h)(3)) is amended— 
(i) by striking ‘‘and’’ at the end of 
subparagraph (A); 
(ii) by striking the period at the end 
of subparagraph (B) and inserting ‘‘; 
and’’; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(C) except as provided in section 4(f), set-
tled and cleared through a derivatives clearing 
organization registered with the Commission.’’. 
(4) GENERAL
EXEMPTIVE
AUTHORITY.—Sec-
tion 4(c)(1) of such Act (7 U.S.C. 6(c)(1)) is 
amended by inserting ‘‘the agreement, contract, or 
transaction, except as provided in section 4(h), will 
be settled and cleared through a derivatives clearing 
organization registered with the Commission and’’ 
before ‘‘the Commission determines’’. 
(5) CONFORMING
AMENDMENT
RELATING
TO 
SIGNIFICANT
PRICE
DISCOVERY
CONTRACTS.—Sec-
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899 
tion 2(h)(7)(D) of such Act (7 U.S.C. 2(h)(7)(D)) is 
amended by striking the designation and heading for 
the subparagraph and all that follows through ‘‘As 
part of’’ and inserting the following: 
‘‘(D) REVIEW OF IMPLEMENTATION.—As 
part of’’. 
(b) ALTERNATIVES TO CLEARING THROUGH DES-
IGNATED CLEARING ORGANIZATIONS.—Section 4 of such 
Act (7 U.S.C. 6), as amended by section 351(h) of this 
Act, is amended by adding at the end the following: 
‘‘(f) ALTERNATIVES TO CLEARING THROUGH DES-
IGNATED CLEARING ORGANIZATIONS.— 
‘‘(1) SETTLEMENT
AND
CLEARING
THROUGH 
CERTAIN OTHER REGULATED ENTITIES.—An agree-
ment, contract, or transaction, or class thereof, re-
lating to an excluded commodity, that would other-
wise be required to be settled and cleared by section 
2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), or 
2(h)(3)(C) of this Act, or subsection (c)(1) of this 
section may be settled and cleared through an entity 
listed in subsections (a) or (b) of section 409 of the 
Federal Deposit Insurance Corporation Improvement 
Act of 1991. 
‘‘(2) WAIVER OF CLEARING REQUIREMENT.— 
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900 
‘‘(A) The Commission, in its discretion, 
may exempt an agreement, contract, or trans-
action, or class thereof, that would otherwise be 
required by section 2(d)(1)(C), 2(d)(2)(D), 
2(g)(4), 2(h)(1)(C), or 2(h)(3)(C) of this Act, 
or subsection (c)(1) of this section to be settled 
and cleared through a derivatives clearing orga-
nization registered with the Commission from 
such requirement. 
‘‘(B) In granting exemptions pursuant to 
subparagraph (A), the Commission shall consult 
with the Securities and Exchange Commission 
and the Board of Governors of the Federal Re-
serve System regarding exemptions that relate 
to excluded commodities or entities for which 
the Securities Exchange Commission or the 
Board of Governors of the Federal Reserve Sys-
tem serve as the primary regulator. 
‘‘(C) Before granting an exemption pursu-
ant to subparagraph (A), the Commission shall 
find that the agreement, contract, or trans-
action, or class thereof— 
‘‘(i) is highly customized as to its ma-
terial terms and conditions; 
‘‘(ii) is transacted infrequently; 
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901 
‘‘(iii) does not serve a significant 
price-discovery function in the market-
place; and 
‘‘(iv) is being entered into by parties 
who can demonstrate the financial integ-
rity of the agreement, contract, or trans-
action and their own financial integrity, as 
such terms and standards are determined 
by the Commission. The standards may in-
clude, with respect to any federally regu-
lated financial entity for which net capital 
requirements are imposed, a net capital re-
quirement associated with any agreement, 
contract, or transaction subject to an ex-
emption from the clearing requirement 
that is higher than the net capital require-
ment that would be associated with such a 
transaction were it cleared 
‘‘(D) Any agreement, contract, or trans-
action, or class thereof, which is exempted pur-
suant to subparagraph (A) shall be reported to 
the Commission in a manner designated by the 
Commission, or to such other entity the Com-
mission deems appropriate. 
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‘‘(E) The Commission, the Securities and 
Exchange Commission and the Board of Gov-
ernors of the Federal Reserve System shall 
enter into a memorandum of understanding by 
which the information reported to the Commis-
sion pursuant to subparagraph (D) with regard 
to excluded commodities or entities for which 
the Securities Exchange Commission or the 
Board of Governors of the Federal Reserve Sys-
tem serve as the primary regulator may be pro-
vided to the other agencies. 
‘‘(g) SPOT AND FORWARD EXCLUSION.—The settle-
ment and clearing requirements of section 2(d)(1)(C), 
2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 2(h)(3)(C), or 4(c)(1) 
shall not apply to an agreement, contract, or transaction 
of any cash commodity for immediate or deferred ship-
ment or delivery, as defined by the Commission.’’. 
(c) ADDITIONAL REQUIREMENTS APPLICABLE
TO 
APPLICANTS
FOR
REGISTRATION
AS
A
DERIVATIVE 
CLEARING ORGANIZATION.—Section 5b(c)(2) of such Act 
(7 U.S.C. 7a-1(c)(2)) is amended by adding at the end 
the following: 
‘‘(O) DISCLOSURE OF GENERAL INFORMA-
TION.—The applicant shall disclose publicly and 
to the Commission information concerning— 
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‘‘(i) the terms and conditions of con-
tracts, 
agreements, 
and 
transactions 
cleared and settled by the applicant; 
‘‘(ii) the conventions, mechanisms, 
and practices applicable to the contracts, 
agreements, and transactions; 
‘‘(iii) the margin-setting methodology 
and the size and composition of the finan-
cial resource package of the applicant; and 
‘‘(iv) other information relevant to 
participation in the settlement and clearing 
activities of the applicant. 
‘‘(P) DAILY PUBLICATION OF TRADING IN-
FORMATION.—The applicant shall make public 
daily information on settlement prices, volume, 
and open interest for contracts settled or 
cleared pursuant to the requirements of section 
2(d)(1)(C), 2(d)(2)(D), 2(g)(4), 2(h)(1)(C), 
2(h)(3)(C) or 4(c)(1) of this Act by the appli-
cant if the Commission determines that the 
contracts perform a significant price discovery 
function for transactions in the cash market for 
the commodity underlying the contracts. 
‘‘(Q) FITNESS STANDARDS.—The applicant 
shall establish and enforce appropriate fitness 
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standards for directors, members of any dis-
ciplinary committee, and members of the appli-
cant, and any other persons with direct access 
to the settlement or clearing activities of the 
applicant, including any parties affiliated with 
any of the persons described in this subpara-
graph.’’. 
(d) AMENDMENTS.— 
(1) Section 409 of the Federal Deposit Insur-
ance Corporation Improvement Act of 1991 (12 
U.S.C. 4422) is amended by adding at the end the 
following: 
‘‘(c) 
CLEARING
REQUIREMENT.—A 
multilateral 
clearing organization described in subsections (a) or (b) 
of this section shall comply with requirements similar to 
the requirements of sections 5b and 5c of the Commodity 
Exchange Act.’’. 
(2) Section 407 of the Legal Certainty for 
Bank Products Act of 2000 (7 U.S.C. 27e) is 
amended by inserting ‘‘and the settlement and clear-
ing requirements of sections 2(d)(1)(C), 2(d)(2)(D), 
2(g)(4), 2(h)(1)(C), 2(h)(3)(C), and 4(c)(1) of such 
Act’’ after ‘‘the clearing of covered swap agree-
ments’’. 
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(e) EFFECTIVE DATE.—The amendments made by 
this section shall take effect 150 days after the date of 
the enactment of this Act. 
(f) TRANSITION RULE.—Any agreement, contract, or 
transaction entered into before the date of the enactment 
of this Act or within 150 days after such date of enact-
ment, in reliance on subsection (d), (g), (h)(1), or (h)(3) 
of section 2 of the Commodity Exchange Act or any other 
exemption issued by the Commission Futures Trading 
Commission by rule, regulation, or order shall, within 90 
days after such date of enactment, unless settled and 
cleared through an entity registered with the Commission 
as a derivatives clearing organization or another clearing 
entity pursuant to section 4(f) of such Act, be reported 
to the Commission in a manner designated by the Com-
mission, or to such other entity as the Commission deems 
appropriate. 
SEC. 355. LIMITATION ON ELIGIBILITY TO PURCHASE A 
CREDIT DEFAULT SWAP. 
(a) IN GENERAL.—Section 4c of the Commodity Ex-
change Act (7 U.S.C. 6c) is amended by adding at the 
end the following: 
‘‘(h) LIMITATION ON ELIGIBILITY TO PURCHASE A 
CREDIT DEFAULT SWAP.—It shall be unlawful for any 
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person to enter into a credit default swap unless the per-
son— 
‘‘(1) owns a credit instrument which is insured 
by the credit default swap; 
‘‘(2) would experience financial loss if an event 
that is the subject of the credit default swap occurs 
with respect to the credit instrument; and 
‘‘(3) meets such minimum capital adequacy 
standards as may be established by the Commission, 
in consultation with the Board of Governors of the 
Federal Reserve System, or such more stringent 
minimum capital adequacy standards as may be es-
tablished by or under the law of any State in which 
the swap is originated or entered into, or in which 
possession of the contract involved takes place.’’. 
(b) ELIMINATION
OF
PREEMPTION
OF
STATE 
BUCKETING LAWS REGARDING NAKED CREDIT DEFAULT 
SWAPS.—Section 12(e)(2)(B) of such Act (7 U.S.C. 
16(e)(2)(B)) is amended by inserting ‘‘(other than a credit 
default swap in which the purchaser of the swap would 
not experience financial loss if an event that is the subject 
of the swap occurred)’’ before ‘‘that is excluded’’. 
(c) DEFINITION OF CREDIT DEFAULT SWAP.—Sec-
tion 1a of such Act (7 U.S.C. 1a), as amended by section 
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351(a) of this Act, is amended by adding at the end the 
following: 
‘‘(37) CREDIT
DEFAULT
SWAP.—The term 
‘credit default swap’ means a contract which insures 
a party to the contract against the risk that an enti-
ty may experience a loss of value as a result of an 
event specified in the contract, such as a default or 
credit downgrade. A credit default swap that is trad-
ed on or cleared by a registered entity shall be ex-
cluded from the definition of a security as defined in 
this Act and in section 2(a)(1) of the Securities Act 
of 1933 or section 3(a)(10) of the Securities Ex-
change Act of 1934, except it shall be deemed a se-
curity solely for purpose of enforcing prohibitions 
against insider trading in sections 10 and 16 of the 
Securities Exchange Act of 1934.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall be effective for credit default swaps (as 
defined in section 1a(37) of the Commodity Exchange Act) 
entered into after 60 days after the date of the enactment 
of this section. 
SEC. 356. TRANSACTION FEES. 
(a) IN GENERAL.—Section 12 of the Commodity Ex-
change Act (7 U.S.C. 16) is amended by redesignating 
subsections (e), (f), and (g) as subsections (f), (g), and 
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(h), respectively, and inserting after subsection (d) the fol-
lowing: 
‘‘(e) CLEARING FEES.— 
‘‘(1) IN GENERAL.—The Commission shall, in 
accordance with this subsection, charge and collect 
from each registered clearing organization, and each 
such organization shall pay to the Commission, 
transaction fees at a rate calculated to recover the 
costs to the Federal Government of the supervision 
and regulation of futures markets, except those di-
rectly related to enforcement. 
‘‘(2) FEES ASSESSED PER SIDE OF CLEARED 
CONTRACTS.— 
‘‘(A) IN GENERAL.—The Commission shall 
determine the fee rate referred to in paragraph 
(1), and shall apply the fee rate per side of any 
transaction cleared. 
‘‘(B) AUTHORITY
TO
DELEGATE.— The 
Commission may determine the procedures by 
which the fee rate is to be applied on the trans-
actions subject to the fee, or delegate the au-
thority to make the determination to any appro-
priate derivatives clearing organization. 
‘‘(3) EXEMPTIONS.—The Commission may not 
impose a fee under paragraph (1) on— 
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‘‘(A) a class of contracts or transactions if 
the Commission finds that it is in the public in-
terest to exempt the class from the fee; or 
‘‘(B) a contract or transaction cleared by 
a registered derivatives clearing organization 
that is— 
‘‘(i) subject to fees under section 31 
of the Securities Exchange Act of 1934; or 
‘‘(ii) a security as defined in the Secu-
rities Act of 1933 or the Securities Ex-
change Act of 1934. 
‘‘(4) DATES FOR PAYMENT OF FEES.—The fees 
imposed under paragraph (1) shall be paid on or be-
fore— 
‘‘(A) March 15 of each year, with respect 
to transactions occurring on or after the pre-
ceding September 1 and on or before the pre-
ceding December 31; and 
‘‘(B) September 15 of each year, with re-
spect to transactions occurring on or after the 
preceding January 1 and on or before the pre-
ceding August 31. 
‘‘(5) ANNUAL ADJUSTMENT OF FEE RATES.— 
‘‘(A) IN GENERAL.—Not later than April 
30 of each fiscal year , the Commission shall, 
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by order, adjust each fee rate determined under 
paragraph (2) for the fiscal year to a uniform 
adjusted rate that, when applied to the esti-
mated aggregate number of cleared sides of 
transactions for the fiscal year, is reasonably 
likely to produce aggregate fee receipts under 
this subsection for the fiscal year equal to the 
target offsetting receipt amount for the fiscal 
year. 
‘‘(B) DEFINITIONS.—In subparagraph (A): 
‘‘(i) ESTIMATED AGGREGATE NUMBER 
OF CLEARED SIDES OF TRANSACTIONS.— 
The term ‘estimated aggregate number of 
cleared sides of transactions’ means, with 
respect to a fiscal year, the aggregate 
number of cleared sides of transactions to 
be cleared by registered derivatives clear-
ing organizations during the fiscal year, as 
estimated by the Commission, after con-
sultation with the Office of Management 
and Budget, using the methodology re-
quired for making projections pursuant to 
section 257 of the Balanced Budget and 
Emergency Deficit Control Act of 1985. 
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‘‘(ii) TARGET
OFFSETTING
RECEIPT 
AMOUNT.—The term ‘target offsetting re-
ceipt amount’ means, with respect to a fis-
cal year, the total level of Commission 
budget authority for all non-enforcement 
activities of the Commission, as contained 
in the regular appropriations Acts for the 
fiscal year. 
‘‘(C) NO JUDICIAL REVIEW.—An adjusted 
fee rate prescribed under subparagraph (A) 
shall not be subject to judicial review. 
‘‘(6) PUBLICATION.—Not later than April 30 of 
each fiscal year, the Commission shall cause to be 
published in the Federal Register notices of the fee 
rates applicable under this subsection for the suc-
ceeding fiscal year, and any estimate or projection 
on which the fee rates are based. 
‘‘(7) ESTABLISHMENT
OF
FUTURES
AND
OP-
TIONS
TRANSACTION
FEE
ACCOUNT; DEPOSIT
OF 
FEES.—There is established in the Treasury of the 
United States an account which shall be known as 
the ‘Futures and Options Transaction Fee Account’. 
All fees collected under this subsection for a fiscal 
year shall be deposited in the account. Amounts in 
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the account are authorized to be appropriated to 
fund the expenditures of the Commission.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to fiscal years beginning 30 or 
more days after the date of the enactment of this Act. 
(c) TRANSITION RULE.—If this section becomes law 
after March 31 and before September 1 of a fiscal year, 
then paragraphs (5)(A) and (6) of section 12(e) of the 
Commodity Exchange Act shall be applied, in the case of 
the 1st fiscal year beginning after the date of the enact-
ment of this Act, by substituting ‘‘August 31’’ for ‘‘April 
30’’. 
SEC. 357. NO EFFECT ON ANTITRUST LAW OR AUTHORITY 
OF THE FEDERAL TRADE COMMISSION. 
(a) Nothing in this subtitle shall be construed to mod-
ify, impair, or supersede the operation of any of the anti-
trust laws. For purposes of this subsection, the term 
‘‘antitrust laws’’ has the meaning given it in subsection 
(a) of the 1st section of the Clayton Act (15 U.S.C. 12(a)), 
except that such term includes section 5 of the Federal 
Trade Commission Act (15 U.S.C. 45) to the extent that 
such term applies to unfair methods of competition. 
(b) Nothing in this subtitle shall be construed to af-
fect or diminish the jurisdiction or authority of the Fed-
eral Trade Commission with respect to its authorities 
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under the Federal Trade Commission Act (15 U.S.C. 41 
et seq.) or the Energy Independence and Security Act of 
2007 (Public Law 110–140) to obtain information, to 
carry out enforcement activities, or otherwise to carry out 
the responsibilities of the Federal Trade Commission. 
SEC. 358. REGULATION OF CARBON DERIVATIVES MAR-
KETS. 
(a) DEFAULT RULE.—Section 2 of the Commodity 
Exchange Act (7 U.S.C. 2), as amended by section 352 
of this Act, is amended by adding at the end the following: 
‘‘(k) The Commission shall have jurisdiction over the 
establishment, operations, and oversight of markets for 
regulated allowance derivatives (as defined in section 401 
of the Federal Power Act (16 U.S.C. 791a and following)), 
and shall provide for the establishment, operation, and 
oversight of the markets in accordance with the same reg-
ulations that apply under this Act to included energy 
transactions.’’. 
(b) PRESIDENTIAL DETERMINATIONS.—To the ex-
tent that the President delegates the authority to promul-
gate regulations for the establishment, operation, and 
oversight of all markets for regulated allowance derivatives 
to a Federal agency other than the Commodity Futures 
Trading Commission pursuant to section 401 of the Fed-
eral Power Act, such determination shall supersede sub-
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section (a). To the extent that the President determines 
that 
regulations 
promulgated 
pursuant 
to 
section 
401(c)(2) of the Federal Power Act would provide for 
more stringent and effective market oversight, such regu-
lations shall supersede subsection (a). Nothing in this sec-
tion shall be construed to affect the operation of the de-
fault rules established in section 401(c)(4) of the Federal 
Power Act. 
SEC. 359. CEASE-AND-DESIST AUTHORITY. 
(a) NATURAL GAS ACT.—Section 20 of the Natural 
Gas Act (15 U.S.C. 717s) is amended by adding the fol-
lowing at the end: 
‘‘(e) CEASE-AND-DESIST PROCEEDINGS; TEMPORARY 
ORDERS; AUTHORITY OF THE COMMISSION.— 
‘‘(1) IN GENERAL.—If the Commission finds, 
after notice and opportunity for hearing, that any 
entity may be violating, may have violated, or may 
be about to violate any provision of this Act, or any 
rule, regulation, restriction, condition, or order made 
or imposed by the Commission under the authority 
of this Act, the Commission may publish its findings 
and issue an order requiring such entity, and any 
other entity that is, was, or would be a cause of the 
violation, due to an act or omission the entity knew 
or should have known would contribute to such vio-
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lation, to cease and desist from committing or caus-
ing such violation and any future violation of the 
same provision, rule, or regulation. Such order may, 
in addition to requiring an entity to cease and desist 
from committing or causing a violation, require such 
entity to comply, to provide an accounting and 
disgorgement, or to take steps to effect compliance, 
with such provision, rule, or regulation, upon such 
terms and conditions and within such time as the 
Commission may specify in such order. Any such 
order may, as the Commission deems appropriate, 
require future compliance or steps to effect future 
compliance, either permanently or for such period of 
time as the Commission may specify. 
‘‘(2) TIMING
OF
ENTRY.—An order issued 
under this subsection shall be entered only after no-
tice and opportunity for a hearing, unless the Com-
mission determines that notice and hearing prior to 
entry would be impracticable or contrary to the pub-
lic interest. 
‘‘(f) HEARING.—The notice instituting proceedings 
pursuant to subsection (e) shall fix a hearing date not ear-
lier than 30 days nor later than 60 days after service of 
the notice unless an earlier or a later date is set by the 
Commission with the consent of any respondent so served. 
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‘‘(g) TEMPORARY ORDER.—Whenever the Commis-
sion determines that-— 
‘‘(1) a respondent may take actions to dissipate 
or convert assets prior to the completion of the pro-
ceedings referred to in subsection (e), and such as-
sets would be necessary to comply with or otherwise 
satisfy a final enforcement order of the Commission 
pursuant to alleged violations or threatened viola-
tions specified in the notice instituting proceedings; 
or 
‘‘(2) a respondent is engaged in actual or 
threatened violations of this Act or a Commission 
rule, regulation, restriction or order referred to in 
subsection (e), 
the Commission may issue a temporary order requiring 
the respondent to take such action to prevent dissipation 
or conversion of assets, significant harm to energy con-
sumers, or substantial harm to the public interest, frustra-
tion of the Commission’s ability to conduct the pro-
ceedings, or frustration of the Commission’s ability to re-
dress said violation at the conclusion of the proceedings, 
as the Commission deems appropriate pending completion 
of such proceedings. 
‘‘(h) REVIEW OF TEMPORARY ORDERS.— 
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‘‘(1) COMMISSION REVIEW.—At any time after 
the respondent has been served with a temporary 
cease-and-desist order pursuant to subsection (g), 
the respondent may apply to the Commission to have 
the order set aside, limited, or suspended. If the re-
spondent has been served with a temporary cease- 
and-desist order entered without a prior Commission 
hearing, the respondent may, within 10 days after 
the date on which the order was served, request a 
hearing on such application and the Commission 
shall hold a hearing and render a decision on such 
application at the earliest possible time. 
‘‘(2) JUDICIAL REVIEW.—Within— 
‘‘(A) 10 days after the date the respondent 
was served with a temporary cease-and-desist 
order entered with a prior Commission hearing; 
or 
‘‘(B) 10 days after the Commission ren-
ders a decision on an application and hearing 
under paragraph (1), 
with respect to any temporary cease-and-desist order 
entered without a prior Commission hearing, the re-
spondent may apply to the United States circuit 
court having jurisdiction over the circuit in which 
the respondent resides or has its principal place of 
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business, or to the United States Court of Appeals 
for the District of Columbia Circuit, for an order 
setting aside, limiting, or suspending the effective-
ness or enforcement of the order, and the court shall 
have jurisdiction to enter such an order. A respond-
ent served with a temporary cease-and-desist order 
entered without a prior Commission hearing may not 
apply to the court except after hearing and decision 
by the Commission on the respondent’s application 
under paragraph (1) of this subsection. 
‘‘(3) NO
AUTOMATIC
STAY
OF
TEMPORARY 
ORDER.—The commencement of proceedings under 
paragraph (2) of this subsection shall not, unless 
specifically ordered by the court, operate as a stay 
of the Commission’s order. 
‘‘(4) EXCLUSIVE REVIEW.—Sections 19(d) and 
24 shall not apply to a temporary order entered pur-
suant to this section. 
‘‘(i) IMPLEMENTATION.—The Commission is author-
ized to adopt rules, regulations, and orders as it deems 
appropriate to implement this section.’’. 
(c) NATURAL GAS POLICY ACT OF 1978.—Section 
504 of the Natural Gas Policy Act of 1978 (15 U.S.C. 
3414) is amended by adding the following at the end: 
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‘‘(d) CEASE-AND-DESIST PROCEEDINGS; TEMPORARY 
ORDERS; AUTHORITY OF THE COMMISSION.— 
‘‘(1) IN GENERAL.—If the Commission finds, 
after notice and opportunity for hearing, that any 
entity may be violating, may have violated, or may 
be about to violate any provision of this Act, or any 
rule, regulation, restriction, condition, or order made 
or imposed by the Commission under the authority 
of this Act, the Commission may publish its findings 
and issue an order requiring such entity, and any 
other entity that is, was, or would be a cause of the 
violation, due to an act or omission the entity knew 
or should have known would contribute to such vio-
lation, to cease and desist from committing or caus-
ing such violation and any future violation of the 
same provision, rule, or regulation. Such order may, 
in addition to requiring an entity to cease and desist 
from committing or causing a violation, require such 
entity to comply, to provide an accounting and 
disgorgement, or to take steps to effect compliance, 
with such provision, rule, or regulation, upon such 
terms and conditions and within such time as the 
Commission may specify in such order. Any such 
order may, as the Commission deems appropriate, 
require future compliance or steps to effect future 
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compliance, either permanently or for such period of 
time as the Commission may specify. 
‘‘(2) TIMING
OF
ENTRY.—An order issued 
under this subsection shall be entered only after no-
tice and opportunity for a hearing, unless the Com-
mission determines that notice and hearing prior to 
entry would be impracticable or contrary to the pub-
lic interest. 
‘‘(3) HEARING.—The notice instituting pro-
ceedings pursuant to paragraph (1) shall fix a hear-
ing date not earlier than 30 days nor later than 60 
days after service of the notice unless an earlier or 
a later date is set by the Commission with the con-
sent of any respondent so served. 
‘‘(4) TEMPORARY ORDER.—Whenever the Com-
mission determines that— 
‘‘(A) a respondent may take actions to dis-
sipate or convert assets prior to the completion 
of the proceedings referred to in paragraph (1) 
and such assets would be necessary to comply 
with or otherwise satisfy a final enforcement 
order of the Commission pursuant to alleged 
violations or threatened violations specified in 
the notice instituting proceedings; or 
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‘‘(B) a respondent is engaged in actual or 
threatened violations of this Act or a Commis-
sion rule, regulation, restriction or order re-
ferred to in paragraph (1), 
the Commission may issue a temporary order requir-
ing the respondent to take such action to prevent 
dissipation or conversion of assets, significant harm 
to energy consumers, or substantial harm to the 
public interest, frustration of the Commission’s abil-
ity to conduct the proceedings, or frustration of the 
Commission’s ability to redress said violation at the 
conclusion of the proceedings, as the Commission 
deems appropriate pending completion of such pro-
ceedings. 
‘‘(5) REVIEW OF TEMPORARY ORDERS.— 
‘‘(A) COMMISSION REVIEW.—At any time 
after the respondent has been served with a 
temporary cease-and-desist order pursuant to 
paragraph (4), the respondent may apply to the 
Commission to have the order set aside, limited, 
or suspended. If the respondent has been served 
with a temporary cease-and-desist order entered 
without a prior Commission hearing, the re-
spondent may, within 10 days after the date on 
which the order was served, request a hearing 
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922 
on such application and the Commission shall 
hold a hearing and render a decision on such 
application at the earliest possible time. 
‘‘(B) JUDICIAL REVIEW.—Within— 
‘‘(i) 10 days after the date the re-
spondent was served with a temporary 
cease-and-desist order entered with a prior 
Commission hearing; or 
‘‘(ii) 10 days after the Commission 
renders a decision on an application and 
hearing under subparagraph (A), with re-
spect to any temporary cease-and-desist 
order entered without a prior Commission 
hearing, the respondent may apply to the 
United States circuit court having jurisdic-
tion over the circuit in which the respond-
ent resides or has its principal place of 
business, or to the United States Court of 
Appeals for the District of Columbia Cir-
cuit, for an order setting aside, limiting, or 
suspending the effectiveness or enforce-
ment of the order, and the court shall have 
jurisdiction to enter such an order. A re-
spondent served with a temporary cease- 
and-desist order entered without a prior 
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Commission hearing may not apply to the 
court except after hearing and decision by 
the Commission on the respondent’s appli-
cation under paragraph (1) of this sub-
section. 
‘‘(C) NO AUTOMATIC STAY OF TEMPORARY 
ORDER.—The commencement of proceedings 
under subparagraph (B) of this paragraph shall 
not, unless specifically ordered by the court, op-
erate as a stay of the Commission’s order. 
‘‘(6) IMPLEMENTATION.—The Commission is 
authorized to adopt rules, regulations, and orders as 
it deems appropriate to implement this subsection.’’. 
TITLE IV—TRANSITIONING TO A 
CLEAN ENERGY ECONOMY 
Subtitle A—Ensuring Real 
Reductions in Industrial Emissions 
SEC. 401. ENSURING REAL REDUCTIONS IN INDUSTRIAL 
EMISSIONS. 
Title VII of the Clean Air Act is amended by insert-
ing after part E the following new part: 
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‘‘PART F—ENSURING REAL REDUCTIONS IN 
INDUSTRIAL EMISSIONS 
‘‘SEC. 761. PURPOSES. 
‘‘(a) PURPOSE OF PART.—The purposes of this part 
are— 
‘‘(1) to promote a strong global effort to signifi-
cantly reduce greenhouse gas emissions, and, 
through this global effort, stabilize greenhouse gas 
concentrations in the atmosphere at a level that will 
prevent dangerous anthropogenic interference with 
the climate system; and 
‘‘(2) to prevent an increase in greenhouse gas 
emissions in countries other than the United States 
as a result of direct and indirect compliance costs in-
curred under this title. 
‘‘(b) PURPOSES OF SUBPART 1.—The purposes of 
subpart 1 are additionally— 
‘‘(1) to rebate the owners and operators of enti-
ties in domestic eligible industrial sectors for their 
greenhouse gas emission costs incurred under this 
title, but not for costs associated with other related 
or unrelated market dynamics; 
‘‘(2) to design such rebates in a way that will 
prevent carbon leakage while also rewarding innova-
tion and facility-level investments in energy effi-
ciency performance improvements; and 
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‘‘(3) to eliminate or reduce distribution of emis-
sion allowances under this part when such distribu-
tion is no longer necessary to prevent carbon leakage 
from eligible industrial sectors. 
‘‘SEC. 762. INTERNATIONAL NEGOTIATIONS. 
‘‘(a) FINDING.—Congress finds that the purposes of 
this part, as set forth in section 761, can be most effec-
tively addressed and achieved through agreements nego-
tiated between the United States and foreign countries. 
‘‘(b) STATEMENT OF POLICY.—It is the policy of the 
United States to work proactively under the United Na-
tions Framework Convention on Climate Change, and in 
other appropriate forums, to establish binding agreements, 
including sectoral agreements, committing all major 
greenhouse gas-emitting nations to contribute equitably to 
the reduction of global greenhouse gas emissions. 
‘‘(c) NOTIFICATION OF FOREIGN COUNTRIES.—Not 
later than January 1, 2020, the President shall notify for-
eign countries that an International Reserve Allowance 
Program, as described in subpart 2, may apply to primary 
products produced in a foreign country by a sector with 
respect to which the President has made a determination 
under section 767(b) that 70 percent or less of the global 
output for the sector is produced or manufactured in coun-
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tries that have met one or more of the criteria in that 
subsection. 
‘‘SEC. 763. DEFINITIONS. 
‘‘In this part: 
‘‘(1) CARBON
LEAKAGE.—The term ‘carbon 
leakage’ means any substantial increase (as deter-
mined by the Administrator) in greenhouse gas 
emissions by industrial entities located in other 
countries if such increase is caused by an incre-
mental cost of production increase in the United 
States resulting from the implementation of this 
title. 
‘‘(2) ELIGIBLE
INDUSTRIAL
SECTOR.—The 
term ‘eligible industrial sector’ means an industrial 
sector determined by the Administrator under sec-
tion 764(b) to be eligible to receive emission allow-
ance rebates under subpart 1. 
‘‘(3) INDUSTRIAL SECTOR.—The term ‘indus-
trial sector’ means any sector that is in the manu-
facturing sector (as defined in NAICS codes 31, 32, 
and 33). 
‘‘(4) NAICS.—The term ‘NAICS’ means the 
North American Industrial Classification System of 
2002. 
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‘‘(5) OUTPUT.—The term ‘output’ means the 
total tonnage or other standard unit of production 
(as determined by the Administrator) produced by 
an entity in an industrial sector. The output of the 
cement sector is hydraulic cement, and not clinker. 
‘‘(6) PRIMARY PRODUCT.—The term ‘primary 
product’ means a product manufactured by an eligi-
ble industrial sector that is— 
‘‘(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; or 
‘‘(B) any other manufactured product that 
is sold in bulk for purposes of further manufac-
ture or inclusion in a finished product. 
‘‘Subpart 1—Emission Allowance Rebate Program 
‘‘SEC. 764. ELIGIBLE INDUSTRIAL SECTORS. 
‘‘(a) LIST.— 
‘‘(1) INITIAL LIST.—Not later than June 30, 
2011, the Administrator shall publish in the Federal 
Register a list of eligible industrial sectors pursuant 
to subsection (b). Such list shall include the amount 
of the emission allowance rebate per unit of produc-
tion that shall be provided to entities in each eligible 
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industrial sector in the following two calendar years 
pursuant to section 765. 
‘‘(2) SUBSEQUENT LISTS.—Not later than Feb-
ruary 1, 2013, and every four years thereafter, the 
Administrator shall publish in the Federal Register 
an updated version of the list published under para-
graph (1). 
‘‘(b) ELIGIBLE INDUSTRIAL SECTORS.— 
‘‘(1) IN GENERAL.—Not later than June 30, 
2011, the Administrator shall promulgate a rule des-
ignating, based on the criteria under paragraph (2), 
the industrial sectors eligible for emission allowance 
rebates under this subpart. 
‘‘(2) PRESUMPTIVELY
ELIGIBLE
INDUSTRIAL 
SECTORS.— 
‘‘(A) ELIGIBILITY CRITERIA.—An owner or 
operator of an entity shall be eligible to receive 
emission allowance rebates under this subpart if 
such entity is in an industrial sector that is in-
cluded in a six-digit classification of the NAICS 
that meets the criteria in both clauses (i) and 
(ii), or the criteria in clause (iii). 
‘‘(i) ENERGY
OR
GREENHOUSE
GAS 
INTENSITY.—As determined by the Admin-
istrator, the industrial sector had— 
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‘‘(I) an energy intensity of at 
least 5 percent, calculated by dividing 
the cost of purchased electricity and 
fuel costs of the sector by the value of 
the shipments of the sector, based on 
data described in subparagraph (E); 
or 
‘‘(II) a greenhouse gas intensity 
of at least 5 percent, calculated by di-
viding— 
‘‘(aa) the number 20 multi-
plied by the number of tons of 
carbon dioxide equivalent green-
house gas emissions (including 
direct emissions from fuel com-
bustion, process emissions, and 
indirect emissions from the gen-
eration of electricity used to 
produce the output of the sector) 
of the sector based on data de-
scribed in subparagraph (E); by 
‘‘(bb) the value of the ship-
ments of the sector, based on 
data described in subparagraph 
(E). 
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‘‘(ii) TRADE
INTENSITY.—As deter-
mined by the Administrator, the industrial 
sector had a trade intensity of at least 15 
percent, calculated by dividing the value of 
the total imports and exports of such sec-
tor by the value of the shipments plus the 
value of imports of such sector, based on 
data described in subparagraph (E). 
‘‘(iii) VERY HIGH ENERGY OR GREEN-
HOUSE GAS INTENSITY.—As determined by 
the Administrator, the industrial sector 
had an energy or greenhouse gas intensity, 
as calculated under clause (i)(I) or (II), of 
at least 20 percent. 
‘‘(B) IRON AND STEEL SECTOR.—For pur-
poses of this subpart, in carrying out this sec-
tion and section 765, the Administrator shall 
consider as in different industrial sectors— 
‘‘(i) entities using integrated iron and 
steelmaking technologies (including coke 
ovens, blast furnaces, and other iron-mak-
ing technologies); and 
‘‘(ii) entities using electric arc furnace 
technologies. 
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‘‘(C) NEW
ENTITIES.—Not later than 2 
years after the date of enactment of this title, 
the Administrator shall issue regulations gov-
erning the distribution of emission allowance re-
bates for the first and second years of operation 
of a new entity in an eligible industrial sector. 
These regulations shall provide for— 
‘‘(i) the distribution of emission allow-
ance rebates to such entities based on com-
parable entities in the same sector; and 
‘‘(ii) an adjustment in the third and 
fourth years of operation to reconcile the 
total amount of emission allowance rebates 
received during the first and second years 
of operation to the amount the entity 
would have received during the first and 
second years of operation had the appro-
priate data been available. 
‘‘(2) DIRECT CARBON FACTOR.—The direct car-
bon factor for a covered entity for a vintage year is 
the product of— 
‘‘(A) the average output of the covered en-
tity for the two years preceding the year of the 
distribution; and 
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partner, and a demonstration of each partner’s ca-
pacity to support the program; 
(2) a description of the career area or areas 
within the fields as described in subsection (a) to be 
developed, the reason for the choice, and evidence of 
the labor market need to prepare students in that 
area; 
(3) a description of the new or existing program 
of study and both secondary and postsecondary com-
ponents; 
(4) a description of the students to be served by 
the new program of study; 
(5) a description of how the program of study 
funded by the grant will be replicable and dissemi-
nated to schools outside of the partnership, including 
urban and rural areas; 
(6) a description of applied learning that will be 
incorporated into the program of study and how it 
will incorporate or reinforce academic learning; 
(7) a description of how the program of study 
will be delivered; 
(8) a description of how the program will pro-
vide accessibility to students, especially economically 
disadvantaged, low performing, and urban and rural 
students; 
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