I 
111TH CONGRESS 
1ST SESSION H. R. 1683 
To amend the Internal Revenue Code of 1986 to reduce greenhouse gas 
emissions by requiring a Federal emission permit for the sale or use 
of greenhouse gas emission substances, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 24, 2009 
Mr. MCDERMOTT (for himself, Mr. BLUMENAUER, Mr. LARSON of Con-
necticut, and Mr. STARK) introduced the following bill; which was re-
ferred to the Committee on Ways and Means, and in addition to the 
Committee on Energy and Commerce, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to reduce 
greenhouse gas emissions by requiring a Federal emis-
sion permit for the sale or use of greenhouse gas emis-
sion substances, 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 ‘‘Clean Environment 
and Stable Energy Market Act of 2009’’. 
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SEC. 2. GREENHOUSE GAS EMISSION SUBSTANCES. 
(a) IN GENERAL.—The Internal Revenue Code of 
1986 is amended by adding at the end the following: 
‘‘Subtitle L—Greenhouse Gas 
Emission Substances 
‘‘Sec. 9901. Condition precedent to sale or use of greenhouse gas emission sub-
stance. 
‘‘Sec. 9902. Federal emission permit. 
‘‘Sec. 9903. Definitions. 
‘‘Sec. 9904. Regulations. 
‘‘SEC. 9901. CONDITION PRECEDENT TO SALE OR USE OF 
GREENHOUSE GAS EMISSION SUBSTANCE. 
‘‘(a) IN GENERAL.—No covered person may sell any 
greenhouse gas emission substance except pursuant to a 
Federal emission permit for each carbon dioxide equiva-
lent that the Administrator of the Environmental Protec-
tion Agency determines would be emitted from the com-
bustion or other greenhouse gas emitting use of such sub-
stance. 
‘‘(b) COVERED PERSON.—For purposes of this sub-
title, the term ‘covered person’ means— 
‘‘(1) in the case of coal (including lignite and 
peat) produced from a mine in the United States, 
the producer of such coal, 
‘‘(2) in the case of crude oil or petroleum prod-
ucts received at a United States refinery, the oper-
ator of the United States refinery, 
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‘‘(3) in the case of any greenhouse gas emission 
substance not described in paragraph (1) or (2) pro-
duced in the United States, the producer of such 
substance, and 
‘‘(4) in the case of any greenhouse gas emission 
substance entered into the United States for con-
sumption, use, or warehousing, the person entering 
such 
substance 
for 
consumption, 
use, 
or 
warehousing. 
‘‘(c) USE TREATED AS SALE.— 
‘‘(1) IN GENERAL.—If any person uses a green-
house gas emission substance before the first retail 
sale of such substance, then such person shall be lia-
ble for the purchase of a Federal emission permit 
under section 9902 in the same manner as if such 
substance were sold at retail on the date of such use 
by such person pursuant to a Federal emission per-
mit. 
‘‘(2) EXEMPTION FOR USE IN FURTHER MANU-
FACTURE.—Paragraph (1) shall not apply to use of 
a greenhouse gas emission substance as material in 
the manufacture or production of, or as a component 
part of, another article to be manufactured or pro-
duced by such person. 
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‘‘(d) EXCEPTIONS.—Subsection (a) shall not apply 
to— 
‘‘(1) a greenhouse gas emission substance to be 
used for noncombustion agricultural purposes, or 
‘‘(2) a greenhouse gas emission substance with 
respect to which a Federal emission permit has pre-
viously been purchased. 
‘‘(e) IMPORTATION OF CARBON-INTENSIVE GOODS.— 
‘‘(1) GREENHOUSE
GAS
EMISSION
PERMIT 
EQUIVALENCY FEES.—The Secretary shall impose a 
greenhouse gas emission permit equivalency fee on 
imports of carbon intensive goods that shall be 
equivalent to the cost that domestic producers of 
comparable carbon intensive goods incur as a result 
of— 
‘‘(A) permit fees paid by covered persons 
for greenhouse gas emission substances under 
this section, and 
‘‘(B) greenhouse gas emission permit 
equivalency fees paid by importers of carbon in-
tensive goods used in the production of the 
comparable carbon intensive goods in question. 
‘‘(2) EXPIRATION.—Paragraph (1) and 6633(b) 
shall cease to have effect at such time as and to the 
extent that— 
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‘‘(A) an international agreement requiring 
countries that emit greenhouse gases and 
produce carbon-intensive goods for international 
markets to adopt equivalent measures comes 
into effect, and 
‘‘(B) the country of export has imple-
mented equivalent measures, and the actions 
provided for by paragraph (1) and 6633(b) are 
no longer appropriate. 
‘‘SEC. 9902. FEDERAL EMISSION PERMIT. 
‘‘(a) IN GENERAL.—The Secretary shall, subject to 
subsection (d), issue Federal emission permits, as provided 
for in this subtitle. A Federal emission permit may only 
be obtained upon making payment to the Secretary. 
‘‘(b) RULES RELATING TO PERMITS.—For purposes 
of this subtitle— 
‘‘(1) Each Federal emission permit shall be de-
nominated in carbon dioxide equivalents. 
‘‘(2) A Federal emission permit may only be 
purchased at the time a greenhouse gas emission 
substance is produced or entered into the United 
States, as the case may be. 
‘‘(3) A Federal emission permit may not be 
sold, exchanged, or otherwise transferred. 
‘‘(c) PERMIT PRICE.— 
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‘‘(1) IN GENERAL.—The Secretary, after con-
sultation with the Administrator of the Environ-
mental Protection Agency and the Secretary of En-
ergy, shall establish the price of obtaining a Federal 
emission permit for a calendar year based on a de-
termination of the dollar amount necessary to ensure 
that the demand for permits does not exceed the 
greenhouse gas emission allocations for such cal-
endar year. 
‘‘(2) 5-YEAR PRICE SCHEDULE.— 
‘‘(A) IN GENERAL.—Not later than Janu-
ary 1, 2010, and once every 5 years thereafter, 
the Secretary shall publish a schedule of the 
prices determined under paragraph (1) for ob-
taining a Federal emission permit during any 
calendar year in the 5-calendar-year period be-
ginning 1 year after any such date. 
‘‘(B) MODIFICATIONS.—If in a given 5- 
year period— 
‘‘(i) the Secretary reasonably expects 
to issue Federal emission permits that (in 
the aggregate) significantly exceed or fall 
short of the national limitation because of 
the price set by the Secretary (and not be-
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cause of temporary fluctuations in the en-
ergy markets or the weather), and 
‘‘(ii) sufficient time remains in such 
period, 
the Secretary shall establish a new schedule of 
prices for the remaining years in such 5-year 
period. Such schedule may not take effect until 
after 12 months after the establishment of such 
schedule. 
‘‘(C) NUMBER
OF
MODIFICATIONS
PER-
MITTED.—In the first 5-year period, the Sec-
retary may change the schedule of prices under 
subparagraph (B) a maximum to two times. In 
any ensuing 5-year period, the Secretary may 
change the schedule of prices under subpara-
graph (B) a maximum of once. 
‘‘(d) NATIONAL LIMITATION.— 
‘‘(1) IN GENERAL.—There is a national green-
house gas emission allocation limitation for any cal-
endar year. Such limitation for a calendar year shall 
be the sum of— 
‘‘(A) the greenhouse gas emission alloca-
tions specified in the table in paragraph (3) for 
such calendar year reduced pursuant to para-
graph (2) for such calendar year, plus 
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‘‘(B) the additional allocation of Federal 
emission permits issued by the Secretary for 
such calendar year to the extent that applica-
tions for Federal emission permits exceed the 
greenhouse gas emission allocations specified in 
the table in paragraph (3) for such calendar 
year. 
‘‘(2) REDUCTION REQUIRED OVER REMAINING 
YEARS.—After issuing additional allocations under 
paragraph (1)(B) during any 5-calendar-year period, 
the number of the greenhouse gas emission alloca-
tions specified in the table in paragraph (3) shall be 
reduced ratably the aggregate number of such addi-
tional allocations over the years specified in such 
table remaining after such period. 
‘‘(3) ANNUAL
ECONOMY-WIDE
GREENHOUSE 
GAS EMISSION ALLOCATIONS.—The greenhouse gas 
emission allocations for a calendar year are those 
specified in the following table: 
‘‘Calendar Year 
United States Economy-Wide Green-
house Gas Emission Allocations (in 
Millions of Carbon Dioxide Equiva-
lents) 
2011 
6835.29
2012 
6670.58
2013 
6505.87
2014 
6341.16
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‘‘Calendar Year 
United States Economy-Wide Green-
house Gas Emission Allocations (in 
Millions of Carbon Dioxide Equiva-
lents) 
2015 
6176.45
2016 
6011.74
2017 
5847.03
2018 
5682.32
2019 
5517.61
2020 
5352.9
2021 
5110.99
2022 
4880
2023 
4659.5
2024 
4448.93
2025 
4247.89
2026 
4055.93
2027 
3872.64
2028 
3697.63
2029 
3530.54
2030 
3370.99
2031 
3218.66
2032 
3073.2
2033 
2934.33
2034 
2801.72
2035 
2675.11
2036 
2554.23
2037 
2438.8
2038 
2328.59
2039 
2223.36
2040 
2122.89
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‘‘Calendar Year 
United States Economy-Wide Green-
house Gas Emission Allocations (in 
Millions of Carbon Dioxide Equiva-
lents) 
2041 
2026.95
2042 
1935.36
2043 
1847.9
2044 
1764.39
2045 
1684.66
2046 
1608.53
2047 
1535.84
2048 
1466.43
2049 
1400.16
2050 
1336.89. 
‘‘(e) REPORT.—Not later than January 1, 2012, and 
annually thereafter, the Secretary shall publish a report 
describing the extent to which the United States green-
house gas emission allocations specified under subsection 
(d) are being achieved. Such report shall include— 
‘‘(1) an explanation of the methodology and as-
sumptions the Secretary has used in establishing 
prices under this section, and 
‘‘(2) an estimation, or range of estimations, of 
the price of permits for the 10-year period following 
the current 5-year period. 
‘‘SEC. 9903. DEFINITIONS. 
‘‘(a) IN GENERAL.—For purposes of this subtitle— 
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‘‘(1) ADMINISTRATOR.—The term ‘Adminis-
trator’ means the Administrator of the Environ-
mental Protection Agency. 
‘‘(2) 
CARBON
DIOXIDE
EQUIVALENT.—The 
term ‘carbon dioxide equivalent’ means, for each 
greenhouse gas emission substance, the quantity of 
the greenhouse gas emission substance that the Ad-
ministrator determines makes the same contribution 
to global warming as 1 metric ton of carbon dioxide. 
‘‘(3) 
GREENHOUSE
GAS
EMISSION
SUB-
STANCE.—The term ‘greenhouse gas emission sub-
stance’ means— 
‘‘(A) coal (including lignite, peat, and de-
rivatives of coal), to be used as a combustion 
fuel, 
‘‘(B) petroleum and any petroleum prod-
uct, to be used as a combustion fuel, 
‘‘(C) natural gas, 
‘‘(D) methane, 
‘‘(E) nitrous oxide, 
‘‘(F) sulfur hexafluoride, 
‘‘(G) a perfluorocarbon, 
‘‘(H) a hydrofluorocarbon, and 
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‘‘(I) any other substance that is deter-
mined by the Administrator to contribute to 
global warming to a nonnegligible degree. 
‘‘(4) FEDERAL EMISSION PERMIT.—The term 
‘Federal emission permit’ means a permit required 
under section 9901. 
‘‘(5) CARBON-INTENSIVE
GOOD.—The term 
‘carbon-intensive good’ means— 
‘‘(A)(i) iron, steel, any steel mill product 
(including pipe and tube), aluminum, cement, 
glass (including flat, container, and specialty 
glass and fiberglass), pulp, paper, chemicals, 
and industrial ceramics, and 
‘‘(ii) any other manufactured product that 
the Secretary determines— 
‘‘(I) is sold for purposes of further 
manufacture, and 
‘‘(II) generates, in the course of the 
manufacture of the product, direct and in-
direct greenhouse gas emissions that are 
comparable (on an emissions per dollar of 
output basis) to emissions generated in the 
manufacture or production of a good iden-
tified in clause (i), and 
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‘‘(B) a manufactured item in which one or 
more goods identified under subparagraph (A) 
are inputs and the cost of production of which 
in the United States the Secretary determines 
is significantly increased by this subtitle. 
‘‘(6) PETROLEUM PRODUCT.—The term ‘petro-
leum product’ has the meaning given such term in 
section 4612(a)(3). 
‘‘(b) 
IDENTIFICATION
OF
CARBON-INTENSIVE 
GOODS.—The determinations by the Secretary required by 
subsection (a)(5) shall be by rule. 
‘‘SEC. 9904. REGULATIONS. 
‘‘The Secretary shall issue such regulations as may 
be necessary or appropriate to carry out this subtitle, in-
cluding regulations relating to the timely and efficient 
issuance of permits and collection of payments for such 
permits.’’. 
(b) REFUND OF FEDERAL EMISSION PERMIT FEE.— 
Subchapter B of chapter 65 of such Code is amended by 
adding at the end the following new section: 
‘‘SEC. 6633. REFUNDS OF FEDERAL EMISSION PERMIT FEE 
FOR CERTAIN USES. 
‘‘(a) IN GENERAL.—If a Federal emission permit has 
been acquired with respect to a greenhouse gas emission 
substance pursuant to section 9902 and the acquirer of 
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such permit uses such substance in a manner that will 
make a negligible or no contribution to global warming, 
as determined by the Secretary in consultation with the 
Administrator of the Environmental Protection Agency, 
the Secretary shall pay (without interest) to the acquirer 
of such substance pursuant to such permit an amount 
equal to the amount paid for the applicable Federal emis-
sion permit. 
‘‘(b) PAYMENTS
TO EXPORTERS.—The Secretary 
shall pay (without interest) to the exporter of a carbon- 
intensive good (as defined in section 9903(5)) produced 
in the United States an amount equal to the cost that 
domestic producers of such carbon-intensive goods incur 
as a result of— 
‘‘(1) the dollar amount paid by covered persons 
for Federal emission permits for greenhouse gas 
emission substances under this section 9902, and 
‘‘(2) greenhouse gas emission permit equiva-
lency fees paid under section 9901(e) by importers 
of carbon-intensive goods used in the production of 
the comparable carbon-intensive goods in question.’’. 
(c) FAILURE TO OBTAIN PERMIT.—Subtitle D of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new chapter: 
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‘‘CHAPTER 48—GREENHOUSE GAS 
EMISSION SUBSTANCES 
‘‘Sec. 5000A. Greenhouse gas emission substances. 
‘‘SEC. 5000A. GREENHOUSE GAS EMISSION SUBSTANCES. 
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 
on any covered person who fails to obtain a Federal emis-
sion permit pursuant to subtitle L a tax equal to 300 per-
cent of the dollar amount of the fee that would have been 
charged for such permit but for such failure. 
‘‘(b) COVERED PERSON.—The term ‘covered person’ 
has the meaning given such term by section 9901(b). 
‘‘(c) FEDERAL EMISSION PERMIT.—The term ‘Fed-
eral emission permit’ means a permit required under sec-
tion 9901.’’. 
(d) ESTABLISHMENT OF CLIMATE PROTECTION AND 
ECONOMIC SECURITY TRUST FUND.— 
(1) FINDING.—The Congress finds that revenue 
generated from the sale of Federal emission permits 
must be recycled into the American economy— 
(A) to facilitate economic growth and clean 
energy production, and 
(B) to protect the economic security of vul-
nerable families and communities. 
(2) ESTABLISHMENT OF TRUST FUND.—Sub-
chapter A of chapter 98 of such Code (relating to 
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