I 
117TH CONGRESS 
1ST SESSION H. R. 1805 
To amend the Clean Air Act to establish a tradeable performance standard 
covering emissions from the electricity generation and industrial sectors, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 11, 2021 
Mr. CASTEN (for himself and Mr. MALINOWSKI) introduced the following bill; 
which was referred to the Committee on Energy and Commerce 
A BILL 
To amend the Clean Air Act to establish a tradeable perform-
ance standard covering emissions from the electricity 
generation and industrial sectors, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Tradeable Perform-
ance Standard Act’’. 
SEC. 2. TABLE OF CONTENTS. 
The table of contents for this Act is as follows: 
Sec. 1. Short title. 
Sec. 2. Table of contents. 
Sec. 3. Combating the climate crisis. 
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‘‘TITLE VII—GREENHOUSE GAS POLLUTION REDUCTION 
PROGRAM 
‘‘PART A—GLOBAL WARMING POLLUTION REDUCTION TARGETS 
‘‘Sec. 701. Definitions. 
‘‘Sec. 702. Reduction targets for covered entities. 
‘‘PART B—DESIGNATION OF GREENHOUSE GASES AND THERMAL ENERGY 
REPORTING PROGRAM 
‘‘Sec. 711. Greenhouse gases. 
‘‘Sec. 712. Carbon dioxide equivalent value of greenhouse gases. 
‘‘Sec. 713. Thermal energy reporting program. 
‘‘Sec. 714. EIA and EPA reporting. 
‘‘PART C—PROGRAM RULES 
‘‘Sec. 721. Requirements. 
‘‘Sec. 722. Distribution of emission allowances. 
‘‘Sec. 723. Trading. 
‘‘Sec. 724. Voluntary program participation. 
‘‘Sec. 725. Penalty for noncompliance. 
‘‘Sec. 726. Emission allowance tracking system. 
‘‘Sec. 727. Other program rules. 
‘‘Sec. 728. Oversight. 
‘‘Sec. 729. Regulations. 
‘‘Sec. 730. Savings provisions. 
SEC. 3. COMBATING THE CLIMATE CRISIS. 
The Clean Air Act (42 U.S.C. et seq.) is amended 
by adding after title VI the following new title: 
‘‘TITLE VII—GREENHOUSE GAS 
POLLUTION REDUCTION PRO-
GRAM 
‘‘PART A—GLOBAL WARMING POLLUTION 
REDUCTION TARGETS 
‘‘SEC. 701. DEFINITIONS. 
‘‘In this title: 
‘‘(1) AVERAGE CARBON INTENSITY FOR QUALI-
FIED
ELECTRIC
FACILITIES.—The term ‘average 
carbon intensity for qualified electric facilities’ 
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means the number that equals the total amount of 
greenhouse gas emissions in metric tons of carbon 
dioxide equivalent emitted from qualified electric fa-
cilities in a calendar year as reported under section 
714 divided by the total quantity of megawatt hours 
of electricity produced by qualified electric facilities 
in such calendar year as reported under section 714. 
‘‘(2) AVERAGE CARBON INTENSITY FOR QUALI-
FIED THERMAL FACILITIES.—The term ‘average car-
bon intensity for qualified thermal facilities’ means 
the number that equals the total amount of green-
house gas emissions in metric tons of carbon dioxide 
equivalent emitted from qualified thermal facilities 
in a calendar year as reported under section 713 di-
vided by the total quantity of useful thermal energy 
output from qualified thermal facilities in such cal-
endar year as reported under section 713. 
‘‘(3) BOTTOMING CYCLE COGENERATION GEN-
ERATOR.—The term ‘bottoming cycle cogeneration 
generator’ means any generator that produces elec-
tricity from otherwise-wasted heat, pressure, or both, 
using any of the following technologies: 
‘‘(A) An organic Rankine cycle. 
‘‘(B) A waste-heat recovery steam gener-
ator. 
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‘‘(C) A back pressure steam turbine. 
‘‘(D) A Stirling engine. 
‘‘(4) 
CARBON
DIOXIDE
EQUIVALENT.—The 
term ‘carbon dioxide equivalent’ means the unit of 
measure, expressed in metric tons, of greenhouse 
gases, as provided under section 712. 
‘‘(5) COVERED ENTITY.—The term ‘covered en-
tity’ means each of the following: 
‘‘(A) A qualified cogeneration facility. 
‘‘(B) A qualified electric facility. 
‘‘(C) A qualified thermal facility. 
‘‘(6) 
DESIGNATED
REPRESENTATIVE.—The 
term ‘designated representative’ means, with respect 
to a covered entity, a thermal reporting entity, or 
any other entity receiving or holding emission allow-
ances under this title, an individual authorized, 
through a certificate of representation submitted to 
the Administrator by the owners and operators, to 
represent the owners and operators in all matters 
pertaining to this title (including the holding, trans-
fer, or disposition of emission allowances), and to 
make all submissions to the Administrator under 
this title. 
‘‘(7) EMISSION ALLOWANCE.—The term ‘emis-
sion allowance’ means a limited authorization to 
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emit, in an amount of, 1 metric ton of carbon diox-
ide equivalent of a greenhouse gas in accordance 
with this title. 
‘‘(8) FUEL-BASED CAPACITY.—The term ‘fuel- 
based capacity’ means— 
‘‘(A) for generators that produce useful 
thermal energy output with the combustion of 
fuel, the peak fuel combustion rate; and 
‘‘(B) for generators that produce useful 
thermal energy output without the combustion 
of fuel, the peak useful thermal energy output 
rate divided by 0.7. 
‘‘(9) GREENHOUSE GAS.—The term ‘greenhouse 
gas’ means any gas listed in section 711. 
‘‘(10) GREENHOUSE GAS EMISSION.—The term 
‘greenhouse gas emission’ means the release of a 
greenhouse gas into the ambient air. 
‘‘(11) HOLD.—The term ‘hold’ means, with re-
spect to an emission allowance, to have in the appro-
priate account created pursuant to the process under 
section 726(2). 
‘‘(12) QUALIFIED COGENERATION FACILITY.— 
The term ‘qualified cogeneration facility’ means any 
generator that simultaneously produces useful ther-
mal energy output and electricity and— 
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‘‘(B) with a rated fuel-based capacity of 
less than 50,000,000 British thermal units on 
a higher heating value basis per hour that is 
classified as a qualified thermal facility pursu-
ant to section 724(b). 
‘‘(15) THERMAL
REPORTING
ENTITY.—The 
term ‘thermal reporting entity’ means— 
‘‘(A) a qualified thermal facility; 
‘‘(B) a qualified cogeneration facility; 
‘‘(C) any generator that produces useful 
thermal energy output with a rated fuel-based 
capacity of at least 30,000,000 British thermal 
units on a higher heating value basis per hour, 
but less than 50,000,000 British thermal units 
on a higher heating value basis per hour; or 
‘‘(D) any other entity that produces or de-
livers useful thermal energy output the produc-
tion or delivery of which results or may result 
in greenhouse gas emissions if the Adminis-
trator determines that reporting under section 
713 by such entity will help achieve the targets 
specified in section 702. 
‘‘(16) USEFUL THERMAL ENERGY OUTPUT.— 
The term ‘useful thermal energy output’ means ther-
mal energy as measured in million British thermal 
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units on a higher heating value basis produced by a 
generator that produces thermal energy net of the 
energy in inlet combustion air, feedwater, or any 
other fluids not used as fuels of combustion. 
‘‘SEC. 702. REDUCTION TARGETS FOR COVERED ENTITIES. 
‘‘(a) IN GENERAL.—The regulations issued under 
section 729 shall establish enforceable targets for the 
greenhouse gas emissions of covered entities, such that— 
‘‘(1) in 2030, the aggregate quantity of green-
house gas emissions from covered entities does not 
exceed 60 percent of the aggregate quantity of 
greenhouse gas emissions from covered entities in 
2019; and 
‘‘(2) in 2040, the aggregate quantity of green-
house gas emissions from covered entities does not 
exceed zero. 
‘‘(b) DEFINITION.—For purposes of this section, the 
term ‘greenhouse gas emissions from covered entities in 
2019’ means greenhouse gas emissions to which section 
721 would have applied if the requirements of this title 
for the specified year had been in effect for 2019. 
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‘‘PART B—DESIGNATION OF GREENHOUSE GASES 
AND THERMAL ENERGY REPORTING PROGRAM 
‘‘SEC. 711. GREENHOUSE GASES. 
‘‘For purposes of this title, the following are green-
house gases: 
‘‘(1) Carbon dioxide. 
‘‘(2) Methane. 
‘‘(3) Nitrous oxide. 
‘‘(4) Sulfur hexafluoride. 
‘‘(5) Any perfluorocarbon. 
‘‘(6) Nitrogen trifluoride. 
‘‘SEC. 712. CARBON DIOXIDE EQUIVALENT VALUE OF 
GREENHOUSE GASES. 
‘‘(a) IN GENERAL.—Any provision of this title that 
refers to a quantity or percentage of a quantity of a green-
house gas shall be treated as a reference to the quantity 
or percentage of the greenhouse gas expressed in carbon 
dioxide equivalents. 
‘‘(b) VALUES.—Except as provided by the Adminis-
trator under subsection (c), for the purposes of this title, 
the carbon dioxide equivalent value of a greenhouse gas 
shall be equal to the 100-year global warming potential 
for such greenhouse gas that is provided in the Fifth As-
sessment Report of the Intergovernmental Panel on Cli-
mate Change. 
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‘‘(c) USE OF 20-YEAR GLOBAL WARMING POTEN-
TIAL.—If the Administrator determines that it is more ap-
propriate for a greenhouse gas and the 20-year global 
warming potential for such greenhouse gas that is pro-
vided in the Fifth Assessment Report of the Intergovern-
mental Panel on Climate Change exceeds the 100-year 
global warming potential for such greenhouse gas that is 
provided in the Fifth Assessment Report of the Intergov-
ernmental Panel on Climate Change, the Administrator 
may publish a determination in the Federal Register that 
such greenhouse gas has a carbon dioxide equivalent value 
equal to the 20-year global warming potential for such 
greenhouse gas that is provided in the Fifth Assessment 
Report of the Intergovernmental Panel on Climate 
Change. 
‘‘SEC. 713. THERMAL ENERGY REPORTING PROGRAM. 
‘‘(a) REGULATIONS.—Not later than 18 months after 
the date of enactment of this title, the Administrator shall 
issue regulations establishing a program, to be known as 
the Federal thermal energy reporting program. Such regu-
lations shall— 
‘‘(1) require each thermal reporting entity to 
submit to the Administrator data on— 
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‘‘(A) the type, quality, and quantity of fuel 
used for onsite useful thermal energy output 
production by such thermal reporting entity; 
‘‘(B) the quantity of useful thermal energy 
output produced by such thermal reporting en-
tity as calculated pursuant to subsection (e); 
and 
‘‘(C) the quantity of greenhouse gas emis-
sions associated with such useful thermal en-
ergy output production; 
‘‘(2) require thermal reporting entities to sub-
mit to the Administrator data sufficient to ensure 
compliance with or implementation of the require-
ments of this title; 
‘‘(3) ensure the completeness, consistency, 
transparency, accuracy, precision, and reliability of 
data gathered under the Federal thermal energy re-
porting program; 
‘‘(4) include methods for avoiding double re-
porting to the maximum extent possible; 
‘‘(5) require that thermal reporting entities pro-
vide the data required in this section in reports sub-
mitted electronically to the Administrator, in such 
form and containing such information as may be re-
quired by the Administrator; 
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‘‘(6) include requirements for keeping records 
supporting or related to, and protocols for auditing, 
data submitted under the Federal thermal energy re-
porting program; 
‘‘(7) establish consistent policies for calculating 
carbon content and greenhouse gas emissions for 
any type of fuel for which data is submitted under 
the Federal thermal energy reporting program; 
‘‘(8) provide for immediate dissemination, to 
States and Indian Tribes, of all data reported under 
the Federal thermal energy reporting program as 
soon as practicable after electronic audit by the Ad-
ministrator and any resulting correction of data, ex-
cept that data shall not be disseminated under this 
paragraph if— 
‘‘(A) nondissemination of the data is vital 
to the national security of the United States, as 
determined by the President; or 
‘‘(B) the data is confidential business in-
formation that cannot be derived from informa-
tion that is otherwise publicly available and that 
would cause significant calculable competitive 
harm if published, except that data that is con-
fidential business information shall be provided 
to a State or Indian Tribe within whose juris-
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diction the thermal reporting entity is located if 
the Administrator determines that such State 
or Indian Tribe has in effect protections for 
confidential business information that are at 
least as protective as protections applicable to 
the Federal Government; 
‘‘(9) provide that the Administrator publish an 
aggregate summary of all data reported under the 
Federal thermal energy reporting program publicly 
on the internet as soon as practicable after elec-
tronic audit by the Administrator and any resulting 
correction of data, including publication of— 
‘‘(A) any confidential business data under 
paragraph (8)(B); and 
‘‘(B) at the discretion of the President, 
data the nondissemination of which was deter-
mined to be vital to the national security of the 
United States under paragraph (8)(A); 
‘‘(10) prescribe methods by which the Adminis-
trator shall, in cases in which satisfactory data are 
not submitted by a thermal reporting entity under 
the Federal thermal energy reporting program to the 
Administrator for any period of time, estimate the 
data for such thermal reporting entity required 
under paragraph (1) with— 
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‘‘(A) in the case of a thermal reporting en-
tity that is a qualified thermal facility or a 
qualified cogeneration facility, an estimate of 
the highest greenhouse gas emission levels that 
may have occurred during the period for which 
data are missing; or 
‘‘(B) in the case of any other thermal re-
porting entity, a reasonable estimate of the 
greenhouse gas emission levels that may have 
occurred during the period for which data are 
missing; 
‘‘(11) require the designation of a designated 
representative for each thermal reporting entity; 
‘‘(12) require an appropriate certification, by 
the designated representative for the thermal report-
ing entity, of accurate and complete accounting of 
the data required under paragraph (1), as deter-
mined by the Administrator; and 
‘‘(13) include requirements for the submission 
of other data necessary for accurate and complete 
accounting of the quantity of useful thermal energy 
output, and the quantity of greenhouse gas emis-
sions associated with such useful thermal energy 
output production, as determined by the Adminis-
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trator, including data for quality assurance of moni-
toring systems and other measurement devices. 
‘‘(b) TIMING.— 
‘‘(1) CALENDAR YEARS 2019 THROUGH 2022.— 
‘‘(A) IN GENERAL.—Not later than March 
21, 2023, each thermal reporting entity shall 
submit to the Administrator data required 
under the Federal thermal energy reporting 
program with respect to each of calendar years 
2019 through 2022. 
‘‘(B) WAIVER
OR
MODIFICATION.—The 
Administrator may waive or modify reporting 
requirements for calendar years 2019 through 
2022 for thermal reporting entities to the ex-
tent that the Administrator determines that the 
thermal reporting entities did not keep data or 
records necessary to meet such reporting re-
quirements. The Administrator may, in addition 
to or in lieu of such reporting requirements, col-
lect additional information on energy consump-
tion and production. 
‘‘(2) SUBSEQUENT
CALENDAR
YEARS.—With 
respect to calendar year 2023 and each subsequent 
calendar year, each thermal reporting entity shall 
submit quarterly data required under the Federal 
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thermal energy reporting program to the Adminis-
trator not later than 60 days after the end of the 
applicable quarter, except when the data is already 
being reported to the Administrator on an earlier 
timeframe for another program. 
‘‘(c) WAIVER OF REPORTING REQUIREMENTS FOR 
SPECIFIC ENTITIES.—The Administrator may waive re-
porting requirements under this section for specific enti-
ties to the extent that the Administrator determines that 
sufficient and equally or more reliable verified and timely 
data are available to the Administrator and the public 
under other statutory requirements. 
‘‘(d) INTERRELATIONSHIP WITH OTHER SYSTEMS.— 
‘‘(1) IN GENERAL.—In developing the regula-
tions issued under subsection (a), the Administrator 
shall take into account the work done by the Energy 
Information Administration and other mandatory 
Federal, State, or multistate programs to collect in-
formation that is similar to the information to be 
collected under this section. 
‘‘(2) EXPLANATION.—Regulations issued under 
subsection (a) shall include an explanation of any 
major differences in information collected between 
the Federal thermal energy reporting program and 
information available from the Energy Information 
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Administration and other mandatory Federal, State, 
or multistate programs to collect similar informa-
tion. 
‘‘(e) CALCULATION OF USEFUL THERMAL ENERGY 
OUTPUT.—The Administrator and thermal reporting enti-
ties shall— 
‘‘(1) in the case of thermal reporting entities 
that have revenue-grade send out meters, calculate 
useful thermal energy output by using the data pro-
vided by those meters; and 
‘‘(2) in the case of thermal reporting entities 
that do not have such meters, or that have such me-
ters but for which the Administrator determines that 
the values obtained by calculating useful thermal en-
ergy output under paragraph (1) are unreasonable, 
calculate useful thermal energy output based on the 
metered fuel use for a given quarter multiplied by 
the average conversion efficiency of fuel to useful 
thermal energy output in all other similarly situated 
facilities using the same fuel. 
‘‘SEC. 714. EIA AND EPA REPORTING. 
‘‘(a) IN GENERAL.—Beginning with calendar year 
2023, by the end of each month, the Administrator of the 
Energy Information Administration shall provide to the 
Administrator of the Environmental Protection Agency in-
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formation on the total amount of electricity produced from 
qualified electric facilities during the previous month. 
‘‘(b) NEW QUALIFIED ELECTRIC FACILITIES.—The 
Administrator of the Environmental Protection Agency 
shall notify the Administrator of the Energy Information 
Administration whenever an electric facility with a rated 
capacity of less than 2 megawatts elects to be classified 
as a qualified electric facility or a qualified cogeneration 
facility under section 724. 
‘‘PART C—PROGRAM RULES 
‘‘SEC. 721. REQUIREMENTS. 
‘‘(a) IN GENERAL.—By 12:01 a.m. on April 1 of a 
calendar year, a covered entity shall surrender to the Ad-
ministrator one emission allowance for each metric ton of 
carbon dioxide equivalent of a greenhouse gas emitted by 
the covered entity during the preceding calendar year. 
‘‘(b) ACQUISITION OF EMISSION ALLOWANCES.—A 
covered entity shall acquire emission allowances as follows: 
‘‘(1) By receiving emission allowances as pro-
vided in section 722. 
‘‘(2) By purchase, exchange, or transfer under 
section 723. 
‘‘(c) APPLICABILITY.—The requirement of this part 
applies with respect to calendar year 2024 and subsequent 
calendar years. 
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‘‘(d) PERIOD OF USE.—An emission allowance may 
be used by a covered entity to comply with subsection (a) 
only for— 
‘‘(1) the calendar year in connection with which 
it is distributed under section 722; or 
‘‘(2) the following calendar year. 
‘‘(e) ADJUSTMENT
OF DEADLINE.—The Adminis-
trator may, by rule, establish a deadline for compliance 
with subsection (a) with respect to a calendar year that 
is later than 12:01 a.m. on April 1 of the following cal-
endar year, as necessary to ensure the availability of 
greenhouse gas emissions data, but in no event shall the 
adjusted deadline be later than June 1. 
‘‘SEC. 722. DISTRIBUTION OF EMISSION ALLOWANCES. 
‘‘(a) QUALIFIED ELECTRIC FACILITIES.—During a 
calendar year, the Administrator shall distribute, on a con-
tinual basis, to a qualified electric facility for each mega-
watt hour of electricity produced by the qualified electric 
facility a number of emission allowances (or fractions 
thereof) equal to the product of one multiplied by the 
greater of— 
‘‘(1) zero; and 
‘‘(2) the lesser of— 
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‘‘(A) the value equal to the product of 0.93 
and the preceding calendar year’s average car-
bon intensity for qualified electric facilities; 
‘‘(B) the value equal to the difference of— 
‘‘(i) the preceding calendar year’s av-
erage carbon intensity for qualified electric 
facilities; minus 
‘‘(ii) the product of 0.06 multiplied by 
calendar year 2023’s average carbon inten-
sity for qualified electric facilities; or 
‘‘(C) a value set by the Administrator for 
purposes of this subsection to ensure that the 
aggregate quantity of greenhouse gas emissions 
from covered entities does not exceed the tar-
gets specified in section 702(a). 
‘‘(b) QUALIFIED THERMAL FACILITIES.—During a 
calendar year, the Administrator shall distribute, on a con-
tinual basis, to a qualified thermal facility for each million 
British thermal units of useful thermal energy output pro-
duced by the qualified thermal facility a number of emis-
sion allowances (or fractions thereof) equal to the product 
of one multiplied by the greater of— 
‘‘(1) zero; and 
‘‘(2) the lesser of— 
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‘‘(A) the value equal to the product of 0.93 
and the preceding calendar year’s average car-
bon intensity for qualified thermal facilities; 
‘‘(B) the value equal to the difference of— 
‘‘(i) the preceding calendar year’s av-
erage carbon intensity for qualified ther-
mal facilities; minus 
‘‘(ii) the product of 0.06 multiplied by 
calendar year 2023’s average carbon inten-
sity for qualified thermal facilities; or 
‘‘(C) a value set by the Administrator for 
purposes of this subsection to ensure that the 
aggregate quantity of greenhouse gas emissions 
from covered entities does not exceed the tar-
gets specified in section 702(a). 
‘‘(c) QUALIFIED COGENERATION FACILITIES.—Dur-
ing a calendar year, the Administrator shall distribute, on 
a continual basis, to a qualified cogeneration facility— 
‘‘(1) for each megawatt hour of electricity pro-
duced by the qualified cogeneration facility, a num-
ber of emission allowances (or fractions thereof) cal-
culated in accordance with subsection (a); and 
‘‘(2) for each million British thermal units of 
useful thermal energy output produced by the quali-
fied cogeneration facility, a number of emission al-
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lowances (or fractions thereof) calculated in accord-
ance with subsection (b). 
‘‘(d) ADJUSTED DISTRIBUTION FOR ENTERING INTO 
CERTAIN AGREEMENTS.— 
‘‘(1) IN GENERAL.—If an existing facility or a 
newly constructed low-emission facility enters into 
an agreement described in paragraph (2), then over 
the period of the agreement the Administrator shall 
distribute emission allowances to such facility in ac-
cordance with this subsection in lieu of subsection 
(a), (b), or (c). 
‘‘(2) AGREEMENT.—An agreement described in 
this paragraph is a 10-year or longer bilateral agree-
ment signed after the date of enactment of this title 
between an existing qualified electric facility, an ex-
isting qualified thermal facility, or an existing quali-
fied cogeneration facility, and a newly constructed 
low-emission facility for the annual purchase of a 
specified amount of emission allowances. 
‘‘(3) DEFINITIONS.—In this subsection: 
‘‘(A) The term ‘existing’ means, with re-
spect to a facility, in operation as of the date 
of entry into an agreement described in para-
graph (2). 
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‘‘(B) The term ‘existing facility’ means an 
existing qualified electric facility, an existing 
qualified thermal facility, or an existing quali-
fied cogeneration facility that is a party to an 
agreement described in paragraph (2). 
‘‘(C) The term ‘newly constructed’ means 
that the facility involved did not produce elec-
tricity or useful thermal energy output prior to 
the date of entry into an agreement described 
in paragraph (2). 
‘‘(D) The term ‘newly constructed low- 
emission facility’ means a newly constructed 
qualified electric facility, a newly constructed 
qualified thermal facility, or a newly con-
structed qualified cogeneration facility that 
would emit a lesser quantity of greenhouse 
gases per megawatt hour of electricity or per 
million British thermal units of useful thermal 
energy output, as applicable, than the Adminis-
trator distributes to covered entities under sub-
section (a), (b), or (c), as applicable, in the first 
full calendar year during which the newly con-
structed facility operates and is a party to an 
agreement described in paragraph (2). 
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‘‘(4) DISTRIBUTION
OF
ALLOWANCES
TO
AN 
EXISTING FACILITY.— 
‘‘(A) IN
GENERAL.—For calendar years 
that are covered by an agreement described in 
paragraph (2), beginning with the first full cal-
endar year during which the newly constructed 
low-emission facility operates, the Adminis-
trator shall distribute, on a continual basis, to 
the existing facility— 
‘‘(i) for megawatt hours of electricity 
or million British thermal units of useful 
thermal energy output, as applicable, pro-
duced by the existing facility that are cov-
ered by the agreement, a number of emis-
sion allowances that is equal to— 
‘‘(I) such number of megawatt 
hours or million British thermal units, 
as applicable; multiplied by 
‘‘(II) the average carbon inten-
sity for qualified electric facilities or 
the average carbon intensity for quali-
fied thermal facilities, as applicable, 
for such first full calendar year; and 
‘‘(ii) for megawatt hours of electricity 
or million British thermal units of useful 
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thermal energy output, as applicable, pro-
duced by the existing facility exceeding 
those that are covered by the agreement, 
the number of emission allowances cal-
culated under subsection (a), (b), or (c), as 
applicable. 
‘‘(B) CALCULATION OF MEGAWATT HOURS 
OR MILLION BRITISH THERMAL UNITS COVERED 
BY
AGREEMENT.—For purposes of subpara-
graph (A), the number of megawatt hours of 
electricity or million British thermal units of 
useful thermal energy output, as applicable, 
produced by an existing facility that are covered 
by the agreement described in paragraph (2) 
shall be equal to— 
‘‘(i) the number of emission allow-
ances sold to the existing facility pursuant 
to the agreement for the first full calendar 
year described in subparagraph (A), di-
vided by the difference of— 
‘‘(I) the number of emission al-
lowances surrendered by the existing 
facility to the Administrator for such 
first full calendar year; minus 
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‘‘(II) the number of emission al-
lowances distributed to the existing 
facility by the Administrator for such 
first full calendar year; multiplied by 
‘‘(ii) the total number of megawatt 
hours of electricity or million British ther-
mal units of useful thermal energy output, 
as applicable, produced by the existing fa-
cility in such first full calendar year. 
‘‘(5) DISTRIBUTION
OF
ALLOWANCES
TO
A 
NEWLY CONSTRUCTED LOW-EMISSION FACILITY.— 
‘‘(A) IN
GENERAL.—For calendar years 
that are covered by an agreement described in 
paragraph (2), beginning with the first full cal-
endar year during which the newly constructed 
low-emission facility operates, the Adminis-
trator shall distribute, on a continual basis, to 
the newly constructed low-emission facility— 
‘‘(i) for megawatt hours of electricity 
or million British thermal units of useful 
thermal energy output, as applicable, pro-
duced by the newly constructed low-emis-
sion facility that are covered by the agree-
ment, a number of emission allowances 
that is equal to— 
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‘‘(I) such number of megawatt 
hours or million British thermal units 
of useful thermal energy output; mul-
tiplied by 
‘‘(II) the average carbon inten-
sity for qualified electric facilities or 
the average carbon intensity for quali-
fied thermal facilities, as applicable, in 
such first full calendar year; and 
‘‘(ii) for megawatt hours of electricity 
or million British thermal units of useful 
thermal energy output, as applicable, pro-
duced by the newly constructed low-emis-
sion facility exceeding those that are cov-
ered by the agreement, the number of 
emission allowances calculated under sub-
section (a), (b), or (c), as applicable. 
‘‘(B) CALCULATION OF MEGAWATT HOURS 
OR MILLION BRITISH THERMAL UNITS COVERED 
BY
AGREEMENT.—For purposes of subpara-
graph (A), the number of megawatt hours of 
electricity or million British thermal units of 
useful thermal energy output, as applicable, 
produced by a newly constructed low-emission 
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facility that are covered by the agreement de-
scribed in paragraph (2) shall be equal to— 
‘‘(i) the number of emission allow-
ances sold to the existing facility pursuant 
to the agreement for the first full calendar 
year described in subparagraph (A), di-
vided by the difference of— 
‘‘(I) the number of emission al-
lowances surrendered by the newly 
constructed low-emission facility to 
the Administrator for such first full 
calendar year; minus 
‘‘(II) the number of emission al-
lowances distributed to the newly con-
structed low-emission facility by the 
Administrator for such first full cal-
endar year; multiplied by 
‘‘(ii) the total number of megawatt 
hours of electricity or million British ther-
mal units of useful thermal energy output, 
as applicable, produced by the existing fa-
cility in such first full calendar year. 
‘‘(6) CONDITIONS.—An existing facility or 
newly constructed low-emission facility may receive 
emission allowances under this subsection only if— 
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‘‘(A) such facility provides the Adminis-
trator a copy of— 
‘‘(i) the applicable bilateral agree-
ment; and 
‘‘(ii) any amendment to such bilateral 
agreement within 30 days of the amend-
ment being made; and 
‘‘(B) the Administrator certifies that allow-
ing the facility to maintain the bilateral agree-
ment is not impacting the ability to achieve the 
targets specified in section 702(a)— 
‘‘(i) upon receiving the applicable bi-
lateral agreement, and at least once every 
5 years thereafter; and 
‘‘(ii) upon receiving any amendment 
thereto. 
‘‘SEC. 723. TRADING. 
‘‘(a) PERMITTED TRANSACTIONS.—Except as other-
wise provided in this title, the lawful holder of an emission 
allowance may, without restriction, sell, exchange, trans-
fer, hold, or surrender to the Administrator, the emission 
allowance. 
‘‘(b) IDENTIFICATION
NUMBERS.—The Adminis-
trator shall assign to each emission allowance a unique 
identification number. 
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‘‘(c) LEGAL STATUS OF EMISSION ALLOWANCES.— 
‘‘(1) IN GENERAL.—An emission allowance dis-
tributed by the Administrator under this title does 
not constitute a property right. 
‘‘(2) TERMINATION OR LIMITATION.—Nothing 
in this Act or any other provision of law shall be 
construed to limit or alter the authority of the 
United States to terminate or limit emission allow-
ances. 
‘‘(3) OTHER PROVISIONS.—Except as otherwise 
specified in this Act, nothing in this Act relating to 
emission allowances distributed under this title shall 
affect the application of any other provision of law 
to a covered entity, or the responsibility for a cov-
ered entity to comply with any such provision of law. 
‘‘(d) EFFECTIVENESS
OF EMISSION ALLOWANCE 
TRANSFERS.—No transfer of an emission allowance shall 
be effective for purposes of this title until a certification 
of the transfer, signed by the designated representative of 
the transferor, is received and recorded by the Adminis-
trator in accordance with regulations promulgated under 
section 729. 
‘‘SEC. 724. VOLUNTARY PROGRAM PARTICIPATION. 
‘‘(a) VOLUNTARY
PROGRAM
PARTICIPATION
AS 
QUALIFIED ELECTRIC FACILITY.— 
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‘‘(1) IN GENERAL.—A generator that produces 
electricity with a rated capacity of less than 2 
megawatts may, in accordance with this subsection, 
elect to be classified as a qualified electric facility for 
purposes of this title. 
‘‘(2) QUALIFICATION.—In order for a generator 
with a rated capacity of less than 2 megawatts to be 
classified as a qualified electric facility, the gener-
ator shall— 
‘‘(A) submit a notification to the Adminis-
trator of the intention of the generator to elect 
to be classified as a qualified electric facility; 
‘‘(B) receive approval of such classification 
from the Administrator; and 
‘‘(C) designate a representative as required 
under section 727(b). 
‘‘(3) APPROVAL.—Not later than 90 after re-
ceipt of a notification under paragraph (2)(A), the 
Administrator shall notify the applicable generator 
whether the Administrator approves or disapproves 
the classification of such generator as a qualified 
electric facility. 
‘‘(4) CLASSIFICATION.—If a generator elects to 
be classified as a qualified electric facility pursuant 
to this subsection, such classification shall remain in 
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effect unless the facility produces no electricity over 
the previous calendar year. 
‘‘(b) VOLUNTARY PROGRAM PARTICIPATION
AS
A 
QUALIFIED THERMAL FACILITY.— 
‘‘(1) IN GENERAL.—A generator that produces 
thermal energy with a rated fuel-based capacity of 
less than 50,000,000 British thermal units on a 
higher heating value basis per hour may, in accord-
ance with this subsection, elect to be classified as a 
qualified thermal facility for purposes of this title. 
‘‘(2) QUALIFICATION.—In order for a generator 
that produces thermal energy with a rated fuel-based 
capacity of less than 50,000,000 British thermal 
units on a higher heating value basis per hour to be 
classified as a qualified thermal facility, the facility 
shall— 
‘‘(A) have a rated fuel-based capacity of no 
less than 2,000,000 British thermal units on a 
higher heating value basis per hour; 
‘‘(B) submit a notification to the Adminis-
trator of the intention of the generator to elect 
to be classified as a qualified thermal facility; 
‘‘(C) receive approval of such classification 
from the Administrator; 
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‘‘(D) report annually to the Administrator 
relevant information collected on type, quality, 
and quantity of fuel used for onsite useful ther-
mal energy output production, the quantity of 
useful thermal energy output, and the quantity 
of associated greenhouse gas emissions under 
section 713; and 
‘‘(E) designate a representative as required 
under section 727(b). 
‘‘(3) CLASSIFICATION.—If a generator that pro-
duces useful thermal energy output elects to be clas-
sified as a qualified thermal facility pursuant to this 
subsection, such classification shall remain in effect 
unless the facility— 
‘‘(A) falls below a rated fuel-based capacity 
of 2,000,000 British thermal units on a higher 
heating value basis per hour; or 
‘‘(B) produces no useful thermal energy 
output over the previous calendar year. 
‘‘(c) VOLUNTARY
PROGRAM
PARTICIPATION
AS 
QUALIFIED COGENERATION FACILITY.— 
‘‘(1) IN GENERAL.—A generator that simulta-
neously produces useful thermal energy output and 
electricity with a rated capacity of less than 2 
megawatts may, in accordance with this subsection, 
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elect to be classified as a qualified cogeneration fa-
cility for purposes of this title. 
‘‘(2) QUALIFICATION.—In order for a generator 
that simultaneously produces useful thermal energy 
output and electricity with a rated capacity of less 
than 2 megawatts to be classified as a qualified co-
generation facility, the facility shall— 
‘‘(A) submit a notification to the Adminis-
trator of the intention of the generator to elect 
to be classified as a qualified cogeneration facil-
ity; 
‘‘(B) receive approval of the classification 
from the Administrator; 
‘‘(C) report annually to the Administrator 
relevant information collected on type, quality, 
and quantity of fuel used for onsite useful ther-
mal energy output production, the quantity of 
useful thermal energy output, and the quantity 
of associated greenhouse gas emissions under 
section 713; and 
‘‘(D) designate a representative as required 
under section 727(b). 
‘‘(3) CLASSIFICATION.—If a generator elects to 
be classified as a qualified cogeneration facility pur-
suant to this subsection, such classification shall re-
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main in effect unless the facility produces no elec-
tricity over the previous calendar year. 
‘‘SEC. 725. PENALTY FOR NONCOMPLIANCE. 
‘‘(a) CIVIL PENALTY.— 
‘‘(1) IN GENERAL.—The owner or operator of a 
covered entity that fails to surrender an emission al-
lowance as required by section 721(a) shall be liable 
for payment to the Administrator of a penalty in the 
amount described in paragraph (2). 
‘‘(2) AMOUNT.—The amount of a penalty under 
paragraph (1) shall be equal to the product of— 
‘‘(A) twice the highest monetary value (as 
indicated by the emission allowance tracking 
system established pursuant to section 726 over 
the previous calendar year) for the sale or 
transfer of an emission allowance; multiplied by 
‘‘(B) the number of emission allowances 
which the owner or operator of the covered enti-
ty failed to surrender as described in paragraph 
(1). 
‘‘(3) TIMING.—A penalty required under this 
subsection shall be immediately due and payable to 
the Administrator, without demand, in accordance 
with regulations promulgated under section 729. 
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‘‘(4) NO EFFECT ON LIABILITY.—A penalty due 
and payable by the owners or operators of a covered 
entity under this subsection shall not diminish the li-
ability of the owners or operators for any fine, pen-
alty, or assessment against the owners or operators 
for the same violation under any other provision of 
this Act or any other law. 
‘‘(b) REPLACEMENT EMISSION ALLOWANCES.—The 
owner or operator of a covered entity that fails to sur-
render one or more emission allowances as required by sec-
tion 721(a) for a calendar year shall surrender a quantity 
of emission allowances that is equal to the quantity the 
covered entity failed to surrender (in addition to the emis-
sion allowances otherwise required to be surrendered) by 
the April 1st deadline of the second succeeding calendar 
year. 
‘‘SEC. 726. EMISSION ALLOWANCE TRACKING SYSTEM. 
‘‘The regulations promulgated under section 729 
shall provide for— 
‘‘(1) the establishment of a system to distribute 
emission allowances to covered entities; 
‘‘(2) a process to create accounts in which cov-
ered entities and any other entities that buy or sell 
emission allowances may hold emission allowances; 
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‘‘(3) the establishment of an emission allowance 
tracking system to track— 
‘‘(A) the number of emission allowances 
transferred; 
‘‘(B) the price or monetary value for which 
emission allowances are transferred; 
‘‘(C) the date of each such transfer; 
‘‘(D) the parties involved in the transfer; 
and 
‘‘(E) any additional information the Ad-
ministrator determines necessary for each such 
transfer; and 
‘‘(4) the publication by the Administrator on 
the internet of— 
‘‘(A) a weekly summary of average prices 
of emission allowances weighted by transaction 
size, the total number of emission allowances 
traded, and any other additional information 
determined by the Administrator as necessary 
for the orderly and competitive functioning of 
any emission allowance market; 
‘‘(B) the number of emission allowances 
distributed by the Administrator under section 
722 each month to qualified electric facilities; 
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‘‘(C) the number of emission allowances 
distributed by the Administrator under section 
722 each month to qualified thermal facilities; 
‘‘(D) the number of emission allowances 
distributed by the Administrator under section 
722 each month to qualified cogeneration facili-
ties; 
‘‘(E) the number of emission allowances 
distributed by the Administrator under section 
722 during a calendar year that are held by 
qualified electric facilities at the end of each 
month; 
‘‘(F) the number of emission allowances 
distributed by the Administrator under section 
722 during a calendar year that are held by 
qualified thermal facilities at the end of each 
month; 
‘‘(G) the number of emission allowances 
distributed by the Administrator under section 
722 during a calendar year that are held by 
qualified cogeneration facilities at the end of 
each month; 
‘‘(H) the number of emission allowances 
distributed by the Administrator under section 
722 during a calendar year that are held by en-
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tities other than covered entities at the end of 
each month; 
‘‘(I) the number of emission allowances 
surrendered to the Administrator each year by 
qualified electric facilities; 
‘‘(J) the number of emission allowances 
surrendered to the Administrator each year by 
qualified thermal facilities; and 
‘‘(K) the number of emission allowances 
surrendered to the Administrator each year by 
qualified cogeneration facilities. 
‘‘SEC. 727. OTHER PROGRAM RULES. 
‘‘(a) THRESHOLD REVIEW.—For each category of 
covered entities listed in section 701(5), the Adminis-
trator— 
‘‘(1) in 2025, and once every 5 years thereafter, 
shall review the threshold for electricity or useful 
thermal energy output production that is used to de-
fine covered entities in such category; and 
‘‘(2) may by rule lower such threshold after 
consideration of— 
‘‘(A) greenhouse gas emissions from cov-
ered entities in such category, and from other 
entities of the same type that produce less elec-
tricity or useful thermal energy output (includ-
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ing greenhouse gas emission sources that com-
mence operation after the date of enactment of 
this title that are not covered entities); and 
‘‘(B) whether greater greenhouse gas emis-
sion reductions can be cost-effectively achieved 
by lowering the applicable threshold. 
‘‘(b) DESIGNATED REPRESENTATIVES.—The regula-
tions promulgated under section 729 shall require that 
each covered entity, and each entity holding an emission 
allowance or receiving an emission allowance from the Ad-
ministrator under this title, submit to the Administrator 
a certificate of representation designating a designated 
representative. 
‘‘(c) SAVINGS PROVISION.—Nothing in this title shall 
be construed— 
‘‘(1) as requiring a change of any kind in any 
State law regulating electric utility rates and 
charges, or as affecting any State law regarding 
such State regulation, or as limiting State regulation 
(including any prudency review) under such a State 
law; 
‘‘(2) as modifying the Federal Power Act or as 
affecting the authority of the Federal Energy Regu-
latory Commission under that Act; or 
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‘‘(3) as interfering with or impairing any pro-
gram for competitive bidding for power supply in a 
State in which such a program is established. 
‘‘(d) POSITION LIMITS.— 
‘‘(1) IN
GENERAL.—The regulations promul-
gated under section 729 shall limit the number of 
emission allowances that an entity may hold at any 
time in a calendar year. 
‘‘(2) LIMITS.—The Administrator, in consulta-
tion with the Commodity Futures Trading Commis-
sion, shall set limits under paragraph (1)— 
‘‘(A) on the number of emission allowances 
distributed in a calendar year that an entity 
may hold in such calendar year; 
‘‘(B) on the total number of emission al-
lowances that an entity may hold in a calendar 
year; 
‘‘(C) so that no entity may at any time 
hold a number of emission allowances that may 
influence the price of emission allowances; and 
‘‘(D) in a manner that will ensure ade-
quate liquidity for buyers and sellers of emis-
sion allowances. 
‘‘(e) STATUS OF SURRENDERED EMISSION ALLOW-
ANCES.—Once an emission allowance is surrendered to the 
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Administrator under this title, the emission allowance 
shall be disqualified from subsequent use under this title, 
including subsequent sale, exchange, or submission. 
‘‘(f) ORDERLY
AND COMPETITIVE MARKET.—The 
regulations promulgated under section 729 shall specify 
all procedures and requirements necessary for the orderly 
and competitive functioning of any emission allowance 
market. 
‘‘SEC. 728. OVERSIGHT. 
‘‘(a) IN GENERAL.—Not later than January 1, 2023, 
and every 2 years thereafter, the Comptroller General of 
the United States shall submit to Congress a report on— 
‘‘(1) the results of implementation of this title; 
and 
‘‘(2) the progress in meeting the targets speci-
fied in section 702(a). 
‘‘(b) CONTENTS.—Each report under subsection (a) 
shall include— 
‘‘(1) a comprehensive evaluation of— 
‘‘(A) the efficiency, transparency, and 
soundness of the distribution of emission allow-
ances under this title, and the Federal thermal 
energy reporting program; 
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‘‘(B) the cost-effectiveness of this title in 
achieving the targets specified in section 
702(a); and 
‘‘(C) the effectiveness of this title in facili-
tating the deployment of additional zero-carbon 
electricity capacity and useful thermal energy 
output capacity; and 
‘‘(2) recommendations, if any, for legislative, 
regulatory, or administrative changes with respect to 
this title to improve its effectiveness and to reduce 
or eliminate any identified waste, fraud, or abuse. 
‘‘(c) ADDITIONAL CONTENTS.—Each report under 
subsection (a) shall address the effectiveness of this title 
in— 
‘‘(1) creating and preserving jobs; 
‘‘(2) ensuring a manageable transition to a 
zero-emission economy for working families and 
workers; 
‘‘(3) reducing, or enhancing sequestration of, 
greenhouse gases; 
‘‘(4) developing clean technologies; and 
‘‘(5) maintaining a liquid market for emission 
allowances. 
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‘‘SEC. 729. REGULATIONS. 
‘‘Except as otherwise specified in this title, the Ad-
ministrator shall promulgate final regulations to carry out 
this title not later than 24 months after the date of enact-
ment of this title. 
‘‘SEC. 730. SAVINGS PROVISIONS. 
‘‘Nothing in this title shall be interpreted to relieve 
any person from complying with any requirement of an-
other title of this Act.’’. 
Æ 
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