I 
110TH CONGRESS 
2D SESSION 
H. R. 6186 
To direct the Administrator of the Environmental Protection Agency to estab-
lish a program to decrease emissions of greenhouse gases, and for other 
purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 4, 2008 
Mr. MARKEY introduced the following bill; which was referred to the Com-
mittee on Energy and Commerce, and in addition to the Committees on 
Ways and Means, Science and Technology, Natural Resources, Agri-
culture, Foreign Affairs, Education and Labor, Transportation and Infra-
structure, Oversight and Government Reform, and Rules, for a period to 
be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To direct the Administrator of the Environmental Protection 
Agency to establish a program to decrease emissions 
of greenhouse gases, 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; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Investing in Climate Action and Protection Act’’. 
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(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Findings. 
Sec. 3. Purposes. 
Sec. 4. Definitions. 
TITLE I—CAPPING GREENHOUSE GAS EMISSIONS 
Sec. 101. Amendment of Clean Air Act. 
‘‘TITLE VII—GREENHOUSE GAS EMISSIONS 
‘‘Sec. 700. Definitions. 
‘‘Subtitle A—Tracking Emissions 
‘‘Sec. 701. Purpose. 
‘‘Sec. 702. Definitions. 
‘‘Sec. 703. Determination of carbon dioxide equivalent value of greenhouse 
gases. 
‘‘Sec. 704. Designation of greenhouse gases. 
‘‘Sec. 705. Reporting requirements. 
‘‘Sec. 706. Data quality and verification. 
‘‘Sec. 707. Federal greenhouse gas registry. 
‘‘Subtitle B—Reducing Emissions 
‘‘Sec. 711. Emission allowance account. 
‘‘Sec. 712. Compliance obligation. 
‘‘Sec. 713. Penalty for noncompliance. 
‘‘Subtitle C—Distribution of Allowances 
‘‘Sec. 721. Auctions. 
‘‘Sec. 722. Auction proceeds. 
‘‘Sec. 723. Transitional assistance to manufacturers of trade-exposed pri-
mary goods. 
‘‘Subtitle D—Trading, Banking, and Borrowing 
‘‘Sec. 731. Trading. 
‘‘Sec. 732. Banking. 
‘‘Sec. 733. Borrowing. 
‘‘Subtitle E—Domestic Offsets 
‘‘Sec. 741. Establishment of domestic offset program. 
‘‘Sec. 742. Eligible project types. 
‘‘Sec. 743. Protocols and accounting methods. 
‘‘Sec. 744. Project initiation. 
‘‘Sec. 745. Offset verification and issuance of credits. 
‘‘Sec. 746. Audits. 
‘‘Sec. 747. Timing and the provision of offset credits. 
‘‘Sec. 748. Environmental considerations. 
‘‘Sec. 749. Ownership and transfer of offset credits. 
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‘‘Subtitle F—International Emission Allowances and Offset Credits 
‘‘Sec. 751. International emission allowances. 
‘‘Sec. 752. International offset credits. 
‘‘Sec. 753. Retirement. 
‘‘Subtitle G—Global Effort To Reduce Greenhouse Gas Emissions 
‘‘Sec. 761. Definitions. 
‘‘Sec. 762. Purposes. 
‘‘Sec. 763. International negotiations. 
‘‘Sec. 764. Determination of comparable action. 
‘‘Sec. 765. International reserve allowance program. 
‘‘Sec. 766. Adjustment of international reserve allowance requirements. 
‘‘Subtitle H—Standards for Noncovered Facilities and Coal-Fired Power 
Plants 
‘‘Sec. 771. Performance standards for certain sources that are not covered 
entities. 
‘‘Sec. 772. Performance standards for new coal-fired power plants. 
Sec. 102. Conforming amendments. 
Sec. 103. Complementary policies for hydrofluorocarbons. 
Sec. 104. Waiver of preemption for California greenhouse gas emission stand-
ards for vehicles. 
Sec. 105. Low-carbon fuel standard. 
TITLE II—CARBON MARKET OVERSIGHT 
Sec. 201. Amendment of Federal Power Act. 
‘‘PART IV—REGULATION OF CARBON MARKETS 
‘‘Sec. 401. Purposes. 
‘‘Sec. 402. Definitions. 
‘‘Sec. 403. Office of Carbon Market Oversight; jurisdiction. 
‘‘Sec. 404. Regulation of carbon trading. 
‘‘Sec. 405. Registration of carbon trading facilities, brokers, dealers, and 
carbon clearing organizations. 
‘‘Sec. 406. Administrative enforcement. 
‘‘Sec. 407. Civil judicial enforcement. 
‘‘Sec. 408. Criminal enforcement. 
‘‘Sec. 409. Market reports. 
‘‘Sec. 410. Application of other provisions. 
TITLE III—INVESTING IN AMERICA’S LOW-CARBON FUTURE 
Subtitle A—Climate Trust Tax Credits and Rebates 
Sec. 301. Purpose. 
Sec. 302. Climate Trust tax credit for working families and senior citizens. 
Sec. 303. Climate Trust rebates for low-income households. 
Subtitle B—Low-Carbon Technology Fund 
Sec. 311. Purposes. 
Sec. 312. Funding. 
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Sec. 313. Renewable energy and energy efficiency research, development, and 
demonstration. 
Sec. 314. Renewable energy deployment incentives. 
Sec. 315. Carbon capture and sequestration demonstration and deployment. 
Sec. 316. Fiscal years 2021 through 2050. 
Subtitle C—National Energy Efficiency Fund 
Sec. 321. Purposes. 
Sec. 322. Definitions. 
Sec. 323. Funding. 
Sec. 324. Electricity consumers. 
Sec. 325. Natural gas consumers. 
Sec. 326. Building efficiency. 
Sec. 327. Smart growth and mass transit. 
Sec. 328. Weatherization Assistance Program and Low-Income Home Energy 
Assistance Program. 
Sec. 329. Recycling. 
Subtitle D—Agriculture and Forestry Carbon Fund 
Sec. 331. Purpose. 
Sec. 332. Definitions. 
Sec. 333. Funding. 
Sec. 334. Agricultural and forestry greenhouse gas management research. 
Sec. 335. Incentive program. 
Sec. 336. Outreach initiative on revenue enhancement for agricultural pro-
ducers and foresters. 
Subtitle E—Green Jobs Training and Worker Transition Assistance 
CHAPTER 1—GENERAL PROVISIONS 
Sec. 341. Purposes. 
Sec. 342. Definitions. 
Sec. 343. Funding. 
Sec. 344. Establishment of worker transition assistance program. 
Sec. 345. Petition and certification of eligibility. 
Sec. 346. Group eligibility requirements. 
Sec. 347. Benefit information for workers. 
CHAPTER 2—PROGRAM BENEFITS 
Sec. 351. Income support assistance. 
Sec. 352. Training and other adjustment assistance. 
Sec. 353. Reemployment adjustment assistance program. 
Sec. 354. Health coverage tax credits. 
Sec. 355. Administration. 
Subtitle F—National Climate Change Adaptation Program 
Sec. 361. Findings and purpose. 
Sec. 362. Definitions. 
Sec. 363. Funding. 
Sec. 364. National Climate Change Adaptation Council. 
Sec. 365. National Climate Change Adaptation Program. 
Sec. 366. National Climate Change Vulnerability Assessments. 
Sec. 367. Climate change adaptation services. 
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Sec. 368. Federal agency climate change adaptation plans. 
Sec. 369. Federal funding for State, local, and tribal adaptation projects. 
Subtitle G—Natural Resource Conservation Fund 
Sec. 371. Purposes. 
Sec. 372. Definitions. 
Sec. 373. Use of amounts in Natural Resource Conservation Fund. 
Subtitle H—Climate Change Education and Centers for Excellence 
Sec. 381. Purposes. 
Sec. 382. Funding. 
Sec. 383. National Science Foundation climate change education programs. 
Sec. 384. Environmental Protection Agency climate change education program. 
Sec. 385. Climate change centers for excellence. 
TITLE IV—ENCOURAGING GLOBAL ACTION 
Subtitle A—International Forest Protection Fund 
Sec. 401. Findings and purposes. 
Sec. 402. Definitions. 
Sec. 403. Funding. 
Sec. 404. Eligibility requirements and standards for forest carbon activities. 
Sec. 405. Assistance for forest carbon activities. 
Sec. 406. Capacity-building grants. 
Sec. 407. Annual reports. 
Subtitle B—International Clean Technology Fund 
Sec. 411. Purposes. 
Sec. 412. Definitions. 
Sec. 413. Interagency group. 
Sec. 414. Determination of eligible countries. 
Sec. 415. Funding. 
Sec. 416. Annual reports. 
Subtitle C—International Climate Change Adaptation Program 
Sec. 421. Findings and purposes. 
Sec. 422. Definitions. 
Sec. 423. Establishment. 
Sec. 424. Functions of program. 
Sec. 425. Funding. 
Sec. 426. Monitoring and evaluation of program. 
TITLE V—LEGAL FRAMEWORK FOR GEOLOGICAL 
SEQUESTRATION OF CARBON DIOXIDE 
Sec. 501. National regulations. 
Sec. 502. Liabilities for closed geological sequestration sites. 
TITLE VI—BUILDING EFFICIENCY STANDARDS 
Sec. 601. Updating State building energy efficiency codes. 
Sec. 602. Conforming amendment. 
TITLE VII—REVIEWS AND RECOMMENDATIONS 
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Sec. 701. National Academy of Sciences review and recommendations. 
Sec. 702. Government Accountability Office review and recommendations. 
Sec. 703. Presidential recommendations. 
Sec. 704. Expedited congressional action on certain Presidential recommenda-
tions. 
SEC. 2. FINDINGS. 
Congress finds that— 
(1) unchecked global warming poses a signifi-
cant threat to— 
(A) the national security and economy of 
the United States; 
(B) public health and welfare in the 
United States; 
(C) the well-being of other countries; and 
(D) the global environment; 
(2) according to the Fourth Assessment Report 
of the Intergovernmental Panel on Climate Change, 
global warming is unequivocal and attributable to 
human activities, and evidence from all continents 
and most oceans shows that impacts from climate 
change are already occurring; 
(3) under the United Nations Framework Con-
vention on Climate Change, done at New York on 
May 9, 1992, the United States is committed to sta-
bilizing greenhouse gas concentrations in the atmos-
phere at a level that will prevent dangerous anthro-
pogenic interference with with climate system; 
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(4) according to the Fourth Assessment Report 
of the Intergovernmental Panel on Climate Change, 
stabilizing greenhouse gas concentrations in the at-
mosphere at a level that will prevent dangerous in-
terference with the climate system, including pre-
venting global mean surface temperature from in-
creasing to more than 3.6 degrees Fahrenheit (2 de-
grees Celsius) above preindustrial levels, will require 
a global effort to reduce anthropogenic greenhouse 
gas emissions worldwide by 50 to 85 percent below 
2000 levels by 2050; 
(5) the costs of policies to achieve such levels of 
reduction are 5 to 20 times lower than the costs of 
unchecked global warming, according to the Stern 
Review of the Economics of Climate Change; 
(6) prompt, decisive action is critical, since 
global warming pollutants can persist in the atmos-
phere for more than a century; 
(7) the ingenuity of the people of the United 
States will allow the United States to become a lead-
er in curbing global warming; 
(8) it is possible and desirable to cap green-
house gas emissions, from sources that together ac-
count for the majority of those emissions in the 
United States, at the 2005 level in 2012, and to 
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data and steps taken, or not taken, by foreign coun-
tries; 
(10) accurate emission data and timely compli-
ance with the requirements of the greenhouse gas 
emission reduction and trading program established 
under this Act are needed to ensure that reductions 
are achieved in a fair and efficient manner; 
(11) Federal oversight of the markets for 
tradable allowances and credits subject to the pro-
gram, and for derivatives thereof, is necessary to en-
sure transparency, fairness, and stability in such 
markets; and 
(12) further policies external to a cap-and-trade 
program may be required, including with respect 
to— 
(A) the transportation sector, where reduc-
ing greenhouse gas emissions requires changes 
in vehicles, fuels, and consumer behavior; and 
(B) the built environment, where reducing 
direct and indirect greenhouse gas emissions re-
quires changes in buildings, appliances, light-
ing, heating, cooling, and consumer behavior. 
SEC. 3. PURPOSES. 
The purposes of this Act are— 
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(1) to establish the core of a Federal program 
that will reduce United States greenhouse gas emis-
sions substantially enough between 2008 and 2050 
to avert the catastrophic impacts of global climate 
change; and 
(2) to accomplish that purpose while preserving 
robust growth in the United States economy, cre-
ating new jobs, and avoiding the imposition of undue 
hardship on United States citizens. 
SEC. 4. DEFINITIONS. 
As used in this Act: 
(1) ADDITIONAL; ADDITIONALITY.—The terms 
‘‘additional’’ and ‘‘additionality’’, except in subtitle 
E of title III, mean the extent to which reductions 
in greenhouse gas emissions or increases in seques-
tration are incremental to business-as-usual, meas-
ured as the difference between— 
(A) the baseline; and 
(B) net greenhouse gas emissions or se-
questration resulting from an offset project. 
(2) ADMINISTRATOR.—The term ‘‘Adminis-
trator’’ means the Administrator of the Environ-
mental Protection Agency. 
(3) BASELINE.—The term ‘‘baseline’’ means 
the net greenhouse gas emissions or sequestration 
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that would have occurred in the absence of an offset 
project. 
(4) BIOLOGICAL
SEQUESTRATION.—The term 
‘‘biological sequestration’’ means— 
(A) the removal of carbon dioxide from the 
atmosphere by biological means, such as by 
growing plants; and 
(B) the storage of carbon from that carbon 
dioxide in the plants or related soils. 
(5) CARBON DIOXIDE EQUIVALENT.—The term 
‘‘carbon dioxide equivalent’’ means, for each green-
house gas, the quantity of the greenhouse gas that 
the Administrator determines, pursuant to section 
703 or 704 of the Clean Air Act (as added by sec-
tion 101 of this Act), makes the same contribution 
to global warming as 1 metric ton of carbon dioxide. 
(6) DEVELOPING COUNTRY.—The term ‘‘devel-
oping country’’ means a country eligible to receive fi-
nancial assistance from the International Bank for 
Reconstruction and Development (commonly known 
as the World Bank). 
(7) EMISSION ALLOWANCE.—The term ‘‘emis-
sion allowance’’ means an authorization, established 
by the Administrator under section 711(a) of the 
Clean Air Act (as added by section 101 of this Act), 
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to emit 1 carbon dioxide equivalent of greenhouse 
gas. 
(8) GEOLOGICAL
SEQUESTRATION.—The term 
‘‘geological sequestration’’ means the isolation of 
greenhouse gases, without reversal, in geological for-
mations, in accordance with section 1421(d) of the 
Safe Drinking Water Act (42 U.S.C. 300h(d)) (as 
added by section 501 of this Act), as determined by 
the Administrator. 
(9) GREENHOUSE GAS.—The term ‘‘greenhouse 
gas’’ means any of— 
(A) carbon dioxide; 
(B) methane; 
(C) nitrous oxide; 
(D) sulfur hexafluoride; 
(E) a hydrofluorocarbon; 
(F) a perfluorocarbon; 
(G) nitrogen trifluoride; or 
(H) any other anthropogenic gas des-
ignated by the Administrator as a greenhouse 
gas under section 704 of the Clean Air Act (as 
added by section 101 of this Act). 
(10) OFFSET CREDIT.—The term ‘‘offset cred-
it’’ means a credit issued by the Administrator 
under subtitle E of title VII of the Clean Air Act (as 
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added by section 101 of this Act) which represents 
1 carbon dioxide equivalent of— 
(A) reduction in greenhouse gas emissions 
that are not covered by the requirements of sec-
tion 712(a) of the Clean Air Act (as added by 
section 101 of this Act); or 
(B) increase in biological sequestration. 
(11) OFFSET
PROJECT.—The term ‘‘offset 
project’’ means a project that reduces greenhouse 
gas emissions not covered by the requirements of 
section 712(a) of the Clean Air Act (as added by 
section 101 of this Act) or increases biological se-
questration. 
(12) REVERSAL.—The term ‘‘reversal’’ means 
an intentional or unintentional release to the atmos-
phere of a significant quantity, as determined by the 
Administrator, of greenhouse gas that was bio-
logically or geologically sequestered in order to ac-
complish the purposes of title VII of the Clean Air 
Act (as added by section 101 of this Act). 
(13) SEQUESTERED
AND
SEQUESTRATION.— 
The terms ‘‘sequestered’’ and ‘‘sequestration’’ mean 
the separation, isolation, or removal of greenhouse 
gases from the atmosphere, as determined by the 
Administrator. 
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TITLE I—CAPPING GREENHOUSE 
GAS EMISSIONS 
SEC. 101. AMENDMENT OF CLEAN AIR ACT. 
The Clean Air Act (42 U.S.C. 7401 and following) 
is amended by adding the following new title at the end 
thereof: 
‘‘TITLE VII—GREENHOUSE GAS 
EMISSIONS 
‘‘SEC. 700. DEFINITIONS. 
‘‘In this title: 
‘‘(1) ADDITIONAL; ADDITIONALITY.—The terms 
‘additional’ and ‘additionality’ mean the extent to 
which reductions in greenhouse gas emissions or in-
creases in sequestration are incremental to business- 
as-usual, measured as the difference between— 
‘‘(A) the baseline; and 
‘‘(B) net greenhouse gas emissions or se-
questration resulting from an offset project. 
‘‘(2) BASELINE.—The term ‘baseline’ means 
the net greenhouse gas emissions or sequestration 
that would have occurred in the absence of an offset 
project. 
‘‘(3) BIOLOGICAL SEQUESTRATION.—The term 
‘biological sequestration’ means— 
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‘‘(A) the removal of carbon dioxide from 
the atmosphere by biological means, such as by 
growing plants; and 
‘‘(B) the storage of carbon from that car-
bon dioxide in the plants or related soils. 
‘‘(4) 
CARBON
DIOXIDE
EQUIVALENT.—The 
term ‘carbon dioxide equivalent’ means, for each 
greenhouse gas, the quantity of the greenhouse gas 
that the Administrator determines, pursuant to sec-
tion 703 or 704, makes the same contribution to 
global warming as 1 metric ton of carbon dioxide. 
‘‘(5) COVERED ENTITY.—The term ‘covered en-
tity’ means, for each calendar year— 
‘‘(A) a facility within the electric power 
sector that contains a fossil fuel-fired electricity 
generating unit or units that together emit 
more than 10,000 carbon dioxide equivalents of 
greenhouse gas in that year; 
‘‘(B) an industrial facility that emits more 
than 10,000 carbon dioxide equivalents of 
greenhouse gas in that year; 
‘‘(C) a facility that produces, or an entity 
that imports, in that year petroleum- or coal- 
based liquid or gaseous fuel, the combustion of 
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which will emit more than 10,000 carbon diox-
ide equivalents of greenhouse gas; 
‘‘(D) a local distribution company that in 
that year delivers natural gas, the combustion 
of which will emit more than 10,000 carbon di-
oxide equivalents of greenhouse gas; 
‘‘(E) a facility that produces for sale or 
distribution, or an entity that imports, in that 
year more than 10,000 carbon dioxide equiva-
lents of hydrofluorocarbons, perfluorocarbons, 
sulfur hexafluoride, nitrogen trifluoride, or any 
other fluorinated gas that is a greenhouse gas, 
as designated by the Administrator under sec-
tion 704, or any combination thereof; and 
‘‘(F) a site at which carbon dioxide is geo-
logically sequestered on a commercial scale. 
‘‘(6) DESTRUCTION
CREDIT.—The term ‘de-
struction credit’ means a credit issued by the Ad-
ministrator under section 712(f). 
‘‘(7) DEVELOPING COUNTRY.—The term ‘devel-
oping country’ means a country eligible to receive fi-
nancial assistance from the International Bank for 
Reconstruction and Development (commonly known 
as the World Bank). 
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‘‘(8) EMISSION ALLOWANCE.—The term ‘emis-
sion allowance’ means an authorization, established 
by the Administrator under section 711(a), to emit 
1 carbon dioxide equivalent of greenhouse gas. 
‘‘(9) FACILITY.—The term ‘facility’ means 1 or 
more buildings, structures, or installations of an en-
tity on 1 or more contiguous or adjacent properties 
located in the United States. 
‘‘(10) FAIR MARKET VALUE.—The term ‘fair 
market value’ means the average market price, dur-
ing a specified time period, of an emission allowance. 
‘‘(11) GEOLOGICAL SEQUESTRATION; GEOLOGI-
CALLY
SEQUESTERED.—The terms ‘geological se-
questration’ and ‘geologically sequestered’ mean the 
isolation of greenhouse gases, without reversal, in 
geological formations, in accordance with section 
1421(d) of the Safe Drinking Water Act (42 U.S.C. 
300h(d)) (as added by section 501 of the Investing 
in Climate Action and Protection Act), as deter-
mined by the Administrator. 
‘‘(12) GREENHOUSE
GAS.—The term ‘green-
house gas’ means any of— 
‘‘(A) carbon dioxide; 
‘‘(B) methane; 
‘‘(C) nitrous oxide; 
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‘‘(D) sulfur hexafluoride; 
‘‘(E) a hydrofluorocarbon; 
‘‘(F) a perfluorocarbon; 
‘‘(G) nitrogen trifluoride; or 
‘‘(H) any other anthropogenic gas des-
ignated by the Administrator as a greenhouse 
gas under section 704. 
‘‘(13) INDUSTRIAL
FACILITY.—The term ‘in-
dustrial facility’ means— 
‘‘(A) any facility in the manufacturing sec-
tor (as defined in North American Industrial 
Classification System codes 31, 32, and 33); 
‘‘(B) any natural gas processing plant; and 
‘‘(C) any other facility that produces 
petroleum- or coal-based liquid or gaseous fuel. 
‘‘(14) 
INTERNATIONAL
EMISSION
ALLOW-
ANCE.—The term ‘international emission allowance’ 
means a tradable authorization to emit 1 carbon di-
oxide equivalent of greenhouse gas that— 
‘‘(A) is issued by a national or supra-
national foreign government pursuant to a gov-
ernmental program that imposes a mandatory 
absolute tonnage limit on greenhouse gas emis-
sions from 1 or more foreign countries, or from 
1 or more economic sectors in such country or 
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countries, pursuant to protocols adopted in ac-
cordance with the United Nations Framework 
Convention on Climate Change, done at New 
York on May 9, 1992; and 
‘‘(B) is not in the nature of an offset cred-
it or allowance awarded based on the achieve-
ment of an increase in biological sequestration 
or a reduction in greenhouse gas emissions that 
are not subject to the mandatory absolute ton-
nage limits referred to in subparagraph (A). 
‘‘(15) INTERNATIONAL OFFSET CREDIT.—The 
term ‘international offset credit’ means— 
‘‘(A) a Certified Emission Reduction credit 
that has been certified under the Clean Devel-
opment Mechanism of the Kyoto Protocol to the 
United Nations Framework Convention on Cli-
mate Change, done at Kyoto on December 11, 
1997; or 
‘‘(B) an equivalent tradable credit issued 
under a successor protocol to the United Na-
tions Framework on Climate Change, done at 
New York on May 9, 1992, provided that— 
‘‘(i) the credit represents 1 carbon di-
oxide equivalent of increase in biological 
sequestration or reduction in greenhouse 
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gas emissions not subject to a govern-
mentally mandated absolute tonnage limit; 
and 
‘‘(ii) such increase in biological se-
questration or reduction in greenhouse gas 
emissions is real, verifiable, additional, per-
manent, and enforceable. 
‘‘(16) 
INTERNATIONAL
RESERVE
ALLOW-
ANCE.—The term ‘international reserve allowance’ 
means an allowance (denominated in carbon dioxide 
equivalents) that is established pursuant to section 
765(a)(2). 
‘‘(17) LEAKAGE.—The term ‘leakage’ means— 
‘‘(A) a significant unaccounted increase in 
greenhouse gas emissions by a facility or entity 
caused by an offset project that produces an ac-
counted reduction in greenhouse gas emissions, 
as determined by the Administrator; or 
‘‘(B) a significant unaccounted decrease in 
sequestration that is caused by an offset project 
that results in an accounted increase in seques-
tration, as determined by the Administrator. 
‘‘(18) LOCAL
DISTRIBUTION
COMPANY.—The 
term ‘local distribution company’ has the meaning 
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given that term in section 2(17) of the Natural Gas 
Policy Act of 1978 (15 U.S.C. 3301(17)). 
‘‘(19) NATURAL GAS PROCESSING PLANT.—The 
term ‘natural gas processing plant’ means a facility 
in the United States that is designed to separate 
natural gas liquids from natural gas. 
‘‘(20) OFFSET CREDIT.—The term ‘offset cred-
it’ means a credit issued by the Administrator under 
subtitle E which represents 1 carbon dioxide equiva-
lent of— 
‘‘(A) reduction in greenhouse gas emissions 
that are not covered by the requirements of sec-
tion 712(a); or 
‘‘(B) increase in biological sequestration. 
‘‘(21) OFFSET
PROJECT.—The term ‘offset 
project’ means a project that reduces greenhouse gas 
emissions not covered by the requirements of section 
712(a) or increases biological sequestration. 
‘‘(22) 
PROJECT
DEVELOPER.—The 
term 
‘project developer’ means an individual or entity im-
plementing an offset project. 
‘‘(23) REGISTRY.—The term ‘Registry’ means 
the Federal greenhouse gas registry established 
under section 707(a). 
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‘‘(24) RETIRE.—The term ‘retire’, with respect 
to an emission allowance, offset credit, destruction 
credit, international emission allowance, inter-
national offset credit, or international reserve allow-
ance, means to disqualify such allowance or credit 
for any subsequent use under this title, regardless of 
whether the use is a sale, exchange, or submission 
of the allowance or credit in satisfying a compliance 
obligation. 
‘‘(25) REVERSAL.—The term ‘reversal’ means 
an intentional or unintentional release to the atmos-
phere of a significant quantity, as determined by the 
Administrator, of greenhouse gas that was bio-
logically or geologically sequestered in order to ac-
complish the purposes of this title. 
‘‘(26) SEQUESTERED AND SEQUESTRATION.— 
The terms ‘sequestered’ and ‘sequestration’ mean 
the separation, isolation, or removal of greenhouse 
gases from the atmosphere, as determined by the 
Administrator. 
‘‘Subtitle A—Tracking Emissions 
‘‘SEC. 701. PURPOSE. 
‘‘The purpose of this subtitle is to establish a Federal 
greenhouse gas registry that— 
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‘‘(1) is complete, consistent, transparent, and 
accurate; 
‘‘(2) will collect reliable and accurate data that 
can be used by public and private entities to identify 
sources of emissions and design efficient and effec-
tive energy security initiatives and greenhouse gas 
emission reduction strategies; and 
‘‘(3) will provide appropriate high-quality data 
to be used for implementing greenhouse gas reduc-
tion policies. 
‘‘SEC. 702. DEFINITIONS. 
‘‘In this subtitle: 
‘‘(1) AFFECTED ENTITY.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘affected entity’ 
means, for any calendar year— 
‘‘(i) a covered entity; 
‘‘(ii) another entity that emits a 
greenhouse gas, as determined by the Ad-
ministrator; or 
‘‘(iii) any vehicle fleet, with emissions 
of more than 10,000 carbon dioxide 
equivalents in that year, if the Adminis-
trator determines that the inclusion of 
such fleet will help achieve the purposes of 
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the Investing in Climate Action and Pro-
tection Act. 
‘‘(B) EXCLUSIONS.—The term ‘affected 
entity’ does not include any entity that— 
‘‘(i) is not a covered entity; 
‘‘(ii) is owned or operated by a small 
business (as described in part 121 of title 
13, Code of Federal Regulations (or a suc-
cessor regulation)); and 
‘‘(iii) emits fewer than 10,000 carbon 
dioxide equivalents in the year for which 
the definition is being applied. 
‘‘(2) CARBON
CONTENT.—The term ‘carbon 
content’ means the quantity of carbon (in carbon di-
oxide equivalent) contained in a fuel. 
‘‘(3) CLIMATE REGISTRY.—The term ‘Climate 
Registry’ means the greenhouse gas emissions reg-
istry jointly established and managed by more than 
40 States and Indian tribes in 2007 to collect high- 
quality greenhouse gas emission data from facilities, 
corporations, and other organizations to support var-
ious greenhouse gas emission reporting and reduc-
tion policies for the member States and Indian 
tribes. 
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‘‘(4) FEEDSTOCK
FOSSIL
FUEL.—The term 
‘feedstock fossil fuel’ means fossil fuel used as raw 
material in a manufacturing process. 
‘‘(5) GREENHOUSE GAS EMISSIONS.—The term 
‘greenhouse gas emissions’ means emissions of a 
greenhouse gas, including— 
‘‘(A) stationary combustion source emis-
sions emitted as a result of combustion of fuels 
in stationary equipment, such as boilers, fur-
naces, burners, turbines, heaters, incinerators, 
engines, flares, and other similar sources; 
‘‘(B) process emissions consisting of emis-
sions from chemical or physical processes other 
than combustion; 
‘‘(C) fugitive emissions consisting of inten-
tional and unintentional emissions from equip-
ment leaks, such as joints, seals, packing, and 
gaskets, or from piles, pits, cooling towers, and 
other similar sources; and 
‘‘(D) biogenic emissions resulting from bio-
logical processes, such as anaerobic decomposi-
tion, nitrification, denitrification, and enteric 
fermentation. 
‘‘(6) INDIAN TRIBE.—The term ‘Indian tribe’ 
has the meaning given the term in section 4 of the 
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Indian Self-Determination and Education Assistance 
Act (25 U.S.C. 450b). 
‘‘(7) SOURCE.—The term ‘source’ means any 
building, structure, installation, unit, point, oper-
ation, vehicle, land area, or other item that emits or 
may emit a greenhouse gas. 
‘‘SEC. 703. DETERMINATION OF CARBON DIOXIDE EQUIVA-
LENT VALUE OF GREENHOUSE GASES. 
‘‘(a) INITIAL DETERMINATION.—Not later than 90 
days after the date of enactment of this title, the Adminis-
trator shall— 
‘‘(1) determine the quantity of each greenhouse 
gas that makes the same contribution to global 
warming as 1 metric ton of carbon dioxide; and 
‘‘(2) publish such determination in the Federal 
Register. 
‘‘(b) PERIODIC REVIEW.— 
‘‘(1) Not later than January 1, 2013, and (ex-
cept as provided in paragraph (3)) not less than 
every 5 years thereafter, the Administrator shall— 
‘‘(A) review and, if necessary, revise the 
determinations made under subsection (a); and 
‘‘(B) publish in the Federal Register the 
results of that review and any revisions. 
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‘‘(2) A revised determination published under 
this subsection shall take effect on January 1 of the 
calendar year immediately after the calendar year in 
which the determination was revised. 
‘‘(3) The Administrator may adjust the fre-
quency of review and revision under paragraph (1) 
if the Administrator determines that such adjust-
ment is appropriate in order to synchronize such re-
view and revision with any similar review process 
carried out pursuant to the United Nations Frame-
work Convention on Climate Change, done at New 
York on May 9, 1992, or to an agreement negotiated 
under that convention, except that in no event shall 
the Administrator carry out such review and revision 
any less frequently than every 10 years. 
‘‘(c) METHODOLOGY.—In determining the quantity 
of a greenhouse gas that makes the same contribution to 
global warming as 1 metric ton of carbon dioxide, for pur-
poses of this section or section 704, the Administrator 
shall take into account the guidelines established by the 
Intergovernmental Panel on Climate Change or a suc-
cessor organization under the United Nations. 
‘‘SEC. 704. DESIGNATION OF GREENHOUSE GASES. 
‘‘(a) DETERMINATION ON ADMINISTRATOR’S INITIA-
TIVE.—The Administrator shall— 
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‘‘(1) designate as a greenhouse gas, for pur-
poses of section 700(12) of this title and section 
4(9) of the Investing in Climate Action and Protec-
tion Act, any anthropogenic gas 1 metric ton of 
which makes the same or greater contribution to 
global warming as 1 metric ton of carbon dioxide, as 
determined by the Administrator; and 
‘‘(2) publish in the Federal Register such des-
ignation, including the quantity of the gas that the 
Administrator determines makes the same contribu-
tion to global warming as 1 metric ton of carbon di-
oxide. 
‘‘(b) PETITIONS TO DESIGNATE
A GREENHOUSE 
GAS.— 
‘‘(1) IN GENERAL.—Any person may petition 
the Administrator to designate as a greenhouse gas 
any anthropogenic gas 1 metric ton of which makes 
the same or greater contribution to global warming 
as 1 metric ton of carbon dioxide. 
‘‘(2) AVAILABILITY OF DATA.—Any such peti-
tion shall include a showing by the petitioner that 
there are data on the gas adequate to support the 
petition. 
‘‘(3) DETERMINATION.—Within one year after 
receipt of a petition, the Administrator shall deter-
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mine the quantity of the gas that makes the same 
contribution to global warming as 1 metric ton of 
carbon dioxide and shall take one of the following 
actions: 
‘‘(A) If the Administrator determines that 
1 metric ton of the gas makes a contribution to 
global warming that is equal to or greater than 
that made by 1 metric ton of carbon dioxide, 
the Administrator shall grant the petition and 
shall take the actions described in subsection 
(a). 
‘‘(B) If the Administrator determines that 
1 metric ton of the gas does not make a con-
tribution to global warming that is equal to or 
greater than that made by 1 metric ton of car-
bon dioxide, the Administrator shall deny the 
petition and shall publish in the Federal Reg-
ister a written explanation of the reasons for 
the Administrator’s decision. 
‘‘(4) GROUNDS
FOR
DENIAL.—The Adminis-
trator may not deny a petition solely on the basis of 
inadequate resources or time for review. 
‘‘(5) ACQUISITION
OF
INFORMATION.—If the 
Administrator determines that information on the 
gas is not sufficient to make a determination, the 
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Administrator shall use any authority available to 
the Administrator, under any law administered by 
the Administrator, to acquire such information. 
‘‘(c) MANUFACTURING NOTICES.— 
‘‘(1) NOTICE REQUIREMENT.—No person may 
manufacture or import into the United States a 
fluorinated gas after the date of enactment of this 
title unless— 
‘‘(A) such gas is already designated as a 
greenhouse gas for purposes of section 700(12) 
of this title and section 4(9) of the Investing in 
Climate Action and Protection Act; 
‘‘(B) the Administrator has determined 
that 1 metric ton of such gas does not make a 
contribution to global warming that is equal to 
or greater than that made by 1 metric ton of 
carbon dioxide; or 
‘‘(C) such person has submitted to the Ad-
ministrator, at least 90 days before such manu-
facture or import, a notice of such person’s in-
tent to manufacture or import such gas, includ-
ing the common or trade name, the chemical 
identity, and the molecular structure of the gas. 
‘‘(2) REVIEW AND ACTION BY THE ADMINIS-
TRATOR.—Within one year after receipt of a notice 
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under paragraph (1)(C), the Administrator shall de-
termine the quantity of the relevant gas that makes 
the same contribution to global warming as 1 metric 
ton of carbon dioxide and shall take one of the fol-
lowing actions: 
‘‘(A) If the Administrator determines that 
1 metric ton of the gas makes a contribution to 
global warming that is equal to or greater than 
that made by 1 metric ton of carbon dioxide, 
the Administrator shall take the actions de-
scribed in subsection (a). 
‘‘(B) If the Administrator determines that 
1 metric ton of the gas does not make a con-
tribution to global warming that is equal to or 
greater than that made by 1 metric ton of car-
bon dioxide, the Administrator shall publish in 
the Federal Register a written explanation of 
the reasons for the Administrator’s decision. 
‘‘(d) EFFECT OF AFFIRMATIVE DETERMINATION.— 
A determination published pursuant to subsection (a), 
subsection (b)(3)(A), or subsection (c)(2)(A) shall— 
‘‘(1) be deemed to constitute the initial deter-
mination for the greenhouse gas for purposes of sec-
tion 703(a); and 
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‘‘(2) take effect on January 1 of the calendar 
year immediately following the calendar year in 
which the determination is published. 
‘‘(e) REGULATIONS.—Not later than one year after 
the date of enactment of this title, the Administrator shall 
promulgate regulations to carry out this section. 
‘‘SEC. 705. REPORTING REQUIREMENTS. 
‘‘(a) IN GENERAL.—Subject to this section, each af-
fected entity shall submit to the Administrator, for inclu-
sion in the Registry, periodic reports, including annual 
and quarterly data, that— 
‘‘(1) include— 
‘‘(A) the quantity and type of fossil fuels, 
including feedstock fossil fuels, that are ex-
tracted, produced, refined, imported, exported, 
or consumed by the entity; and 
‘‘(B) in the case of a local distribution 
company, the quantity of natural gas delivered 
by the local distribution company, including a 
separate accounting of the quantity delivered to 
entities that are not covered entities; 
‘‘(2) include the quantity of greenhouse gas 
generated, produced, imported, exported, or con-
sumed by the entity; 
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‘‘(3) include the quantity of greenhouse gas 
that has been captured and sequestered by the enti-
ty; 
‘‘(4) include the quantity of electricity gen-
erated or exported by the entity, and information on 
the quantity of greenhouse gases emitted when the 
electricity was generated, as determined by the 
methodology published by the Administrator under 
section 706(a)(3); 
‘‘(5) include the quantity of electricity imported 
or consumed by the entity, and information on the 
quantity of greenhouse gases emitted when the im-
ported or consumed electricity was generated, as de-
termined by the methodology published by the Ad-
ministrator under section 706(a)(3); 
‘‘(6) include the aggregate quantity of all green-
house gas emissions from sources at the entity; 
‘‘(7) include greenhouse gas emissions ex-
pressed in metric tons of each greenhouse gas emit-
ted and in the quantity of carbon dioxide equivalents 
of each greenhouse gas emitted; 
‘‘(8) include a list and description of sources of 
greenhouse gas emissions at the entity; 
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‘‘(9) include information about the entity, as 
determined by the Administrator, which shall include 
corporate ownership of the entity; 
‘‘(10) quantify greenhouse gas emissions in ac-
cordance with the measurement standards estab-
lished under section 706; 
‘‘(11) include other data necessary for accurate 
and complete accounting of greenhouse gas emis-
sions, as determined by the Administrator; 
‘‘(12) include an appropriate certification re-
garding the accuracy and completeness of reported 
data, as determined by the Administrator; and 
‘‘(13) are submitted electronically to the Ad-
ministrator, in such form and to such extent as may 
be required by the Administrator. 
‘‘(b) DE MINIMIS EXEMPTIONS.— 
‘‘(1) IN GENERAL.—The Administrator may de-
termine— 
‘‘(A) whether certain sources at an af-
fected entity should be considered to be eligible 
for a de minimis exemption from a requirement 
for reporting under subsection (a); and 
‘‘(B) the level of greenhouse gases emitted 
from a source that would qualify for such an 
exemption. 
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‘‘(2) FACTORS.—In making a determination 
under paragraph (1), the Administrator shall con-
sider the availability and suitability of simplified 
techniques and tools for quantifying emissions and 
the cost to measure those emissions relative to the 
purposes of this title, including the goal of collecting 
complete and consistent entity-wide data. 
‘‘(c) VERIFICATION OF REPORT REQUIRED.—Before 
including the information from a report required under 
this section in the Registry, the Administrator shall verify 
the completeness and accuracy of the report using infor-
mation provided under this section, obtained under section 
114 or 307(a), or obtained under other provisions of law. 
‘‘(d) TIMING.— 
‘‘(1) CALENDAR YEARS 2007 THROUGH 2010.— 
For a base period of calendar years 2007 through 
2010, each affected entity shall submit required an-
nual data described in this section to the Adminis-
trator not later than March 31, 2011. The Adminis-
trator may waive reporting requirements for cal-
endar years 2007 through 2010 for an affected enti-
ty if the Administrator determines that the affected 
entity did not keep data or records necessary to 
meet reporting requirements. 
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‘‘(2) SUBSEQUENT CALENDAR YEARS.—For cal-
endar year 2011 and each subsequent calendar year, 
each affected entity shall submit quarterly data de-
scribed in this section to the Administrator not later 
than 60 days after the end of the applicable quarter. 
‘‘(e) NO EFFECT
ON OTHER REQUIREMENTS.— 
Nothing in this subtitle affects any requirement in effect 
as of the date of enactment of this title relating to the 
reporting of— 
‘‘(1) fossil fuel production, refining, importa-
tion, exportation, or consumption data; 
‘‘(2) greenhouse gas emission data; or 
‘‘(3) other relevant data. 
‘‘SEC. 706. DATA QUALITY AND VERIFICATION. 
‘‘(a) PROTOCOLS AND METHODS.— 
‘‘(1) IN GENERAL.—The Administrator shall es-
tablish by regulation, taking into account the work 
done by the Climate Registry, comprehensive proto-
cols and methods to ensure the accuracy, complete-
ness, consistency, and transparency of data on 
greenhouse gas emissions and fossil fuel production, 
refining, importation, exportation, and consumption 
submitted to the Registry that include— 
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‘‘(A) accounting and reporting standards 
for fossil fuel production, refining, importation, 
exportation, and consumption; 
‘‘(B) a requirement that, where technically 
and economically feasible, submitted data are 
monitored using monitoring systems for fuel 
flow or emissions, such as continuous emission 
monitoring systems or equivalent systems of 
similar rigor, accuracy, quality, and timeliness; 
‘‘(C) a requirement that, if an affected en-
tity has already been directed to monitor emis-
sions of a greenhouse gas using a continuous 
emission monitoring system under existing law, 
that system be used in complying with this title 
with respect to the greenhouse gas; 
‘‘(D) for cases in which the Administrator 
determines that monitoring emissions with the 
precision, reliability, accessibility, and timeli-
ness similar to that provided by a continuous 
emission monitoring system is not techno-
logically or economically feasible, standardized 
methods for calculating greenhouse gas emis-
sions in specific industries using other readily 
available and reliable information, such as fuel 
consumption, materials consumption, produc-
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tion, or other relevant activity data, on the con-
dition that those methods do not underreport 
emissions, as compared with the continuous 
emission monitoring system; 
‘‘(E) information on the accuracy of meas-
urement and calculation methods; 
‘‘(F) methods to avoid double-counting of 
greenhouse gas emissions; 
‘‘(G) protocols to prevent an affected enti-
ty from avoiding the reporting requirements of 
this subtitle (such as by reorganizing into mul-
tiple entities or outsourcing activities that re-
sult in greenhouse gas emissions); and 
‘‘(H) protocols for verification of data sub-
mitted by affected entities. 
‘‘(2) BEST
PRACTICES.—The protocols and 
methods developed under paragraph (1) shall incor-
porate and conform to the best practices from the 
most recent Federal, State, and international proto-
cols for the measurement, accounting, reporting, and 
verification of greenhouse gas emissions to ensure 
the accuracy, completeness, and consistency of the 
data. 
‘‘(3) ELECTRICITY GENERATION EMISSIONS.— 
The Administrator shall establish and publish in the 
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Federal Register a methodology for calculating the 
greenhouse gas emissions from the generation of 
electricity, taking into account the location of the en-
tity and any regional variations in fuels used for 
electric power generation. 
‘‘(b) VERIFICATION; INFORMATION BY REPORTING 
ENTITIES.—Each affected entity shall— 
‘‘(1) provide information sufficient for the Ad-
ministrator to verify, in accordance with the proto-
cols and methods developed under subsection (a), 
that the fossil fuel data and greenhouse gas emission 
data of the affected entity have been completely and 
accurately reported; and 
‘‘(2) ensure the submission or retention, for the 
5-year period beginning on the date of provision of 
the information, of— 
‘‘(A) data sources; 
‘‘(B) information on internal control activi-
ties; 
‘‘(C) information on assumptions used in 
reporting emissions and fuels; 
‘‘(D) uncertainty analyses; and 
‘‘(E) other relevant data and information 
to facilitate the verification of reports submitted 
to the Registry. 
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‘‘(c) WAIVER OF REPORTING REQUIREMENTS.—The 
Administrator may waive reporting requirements for spe-
cific entities if the Administrator determines that suffi-
cient and equally or more reliable data are available under 
other provisions of law. 
‘‘(d) MISSING DATA.—If information, satisfactory to 
the Administrator, is not provided for an affected entity, 
the Administrator shall— 
‘‘(1) prescribe methods to estimate emissions 
for the entity for each period for which data are 
missing, reflecting the highest emission levels that 
may reasonably have occurred during the period for 
which data are missing; and 
‘‘(2) take appropriate enforcement action pur-
suant to this section and section 113. 
‘‘SEC. 707. FEDERAL GREENHOUSE GAS REGISTRY. 
‘‘(a) ESTABLISHMENT.—The Administrator shall es-
tablish a Federal greenhouse gas registry. 
‘‘(b) ADMINISTRATION.—In establishing the Reg-
istry, the Administrator shall— 
‘‘(1) design and operate the Registry; 
‘‘(2) provide coordination and technical assist-
ance for the development of proposed protocols and 
methods, taking into account the duties carried out 
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by the Climate Registry, to be published by the Ad-
ministrator; 
‘‘(3)(A) develop an electronic format for report-
ing under guidelines established under section 
706(a)(1); and 
‘‘(B) make the electronic format available to re-
porting entities; 
‘‘(4) verify and audit the data submitted by af-
fected entities; 
‘‘(5) establish consistent policies for calculating 
carbon content and greenhouse gas emissions for 
each type of fossil fuel reported under section 705; 
‘‘(6) calculate carbon content and greenhouse 
gas emissions associated with the combustion of fos-
sil fuel data reported by affected entities; and 
‘‘(7) promptly publish on the Internet all infor-
mation contained in the Registry, except in any case 
in which publishing the information would result in 
a disclosure of— 
‘‘(A) information vital to national security, 
as determined by the President; or 
‘‘(B) confidential business information that 
cannot be derived from information that is oth-
erwise publicly available and that would cause 
significant calculable competitive harm if pub-
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lished (except that information on total green-
house gas emissions shall not be considered to 
be confidential business information). 
‘‘(c) THIRD-PARTY VERIFICATION.—The Adminis-
trator may use the services of third parties that have no 
conflicts of interest to verify reports required under sec-
tion 705. 
‘‘(d) REGULATIONS.—Not later than December 31, 
2009, the Administrator shall promulgate final regulations 
to carry out this section. 
‘‘Subtitle B—Reducing Emissions 
‘‘SEC. 711. EMISSION ALLOWANCE ACCOUNT. 
‘‘(a) IN GENERAL.—The Administrator shall estab-
lish a separate quantity of emission allowances for each 
of calendar years 2012 through 2050, in accordance with 
subsection (d). 
‘‘(b) IDENTIFICATION
NUMBERS.—The Adminis-
trator shall assign to each emission allowance established 
under subsection (a) a unique identification number that 
includes the calendar year for which that emission allow-
ance was established. 
‘‘(c) LEGAL STATUS OF EMISSION ALLOWANCES.— 
‘‘(1) IN GENERAL.—An emission allowance does 
not constitute a property right. 
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‘‘(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 an emission al-
lowance. 
‘‘(3) OTHER PROVISIONS UNAFFECTED.—Noth-
ing in this Act relating to emission allowances shall 
affect the application of, or the responsibility for 
compliance with, any other provision of law to or of 
a covered entity. 
‘‘(d) ALLOWANCES FOR EACH CALENDAR YEAR.— 
The numbers of emission allowances established by the 
Administrator under subsection (a) for each of calendar 
years 2012 through 2050 shall be as follows: 
‘‘Calendar year 
Number of emission allowances (in millions) 
2012 
6,098 
2013 
5,946 
2014 
5,794 
2015 
5,642 
2016 
5,490 
2017 
5,338 
2018 
5,186 
2019 
5,034 
2020 
4,983 
2021 
4,848 
2022 
4,713 
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‘‘Calendar year 
Number of emission allowances (in millions) 
2023 
4,578 
2024 
4,443 
2025 
4,308 
2026 
4,173 
2027 
4,038 
2028 
3,903 
2029 
3,768 
2030 
3,633 
2031 
3,498 
2032 
3,363 
2033 
3,228 
2034 
3,093 
2035 
2,958 
2036 
2,823 
2037 
2,688 
2038 
2,553 
2039 
2,418 
2040 
2,283 
2041 
2,148 
2042 
2,013 
2043 
1,878 
2044 
1,743 
2045 
1,608 
2046 
1,473 
2047 
1,338 
2048 
1,203 
2049 
1,068 
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‘‘Calendar year 
Number of emission allowances (in millions) 
2050 
930 
‘‘SEC. 712. COMPLIANCE OBLIGATION. 
‘‘(a) IN GENERAL.—Not later than 90 days after the 
end of each of calendar years 2012 through 2050, the 
owner or operator of a covered entity shall submit to the 
Administrator a quantity of emission allowances calculated 
as follows: 
‘‘(1) For a covered entity that is a facility with-
in the electric power sector, 1 emission allowance for 
each carbon dioxide equivalent of greenhouse gas 
that such facility emitted in the calendar year, ex-
cluding— 
‘‘(A) emissions resulting from the use at 
that facility of petroleum- or coal-based liquid 
or gaseous fuel (other than petroleum coke); 
and 
‘‘(B) any greenhouse gas that is captured 
and geologically sequestered. 
‘‘(2) For a covered entity that is an industrial 
facility, 1 emission allowance for each carbon dioxide 
equivalent of greenhouse gas that such facility emit-
ted in the calendar year, excluding— 
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‘‘(A) emissions resulting from the use at 
that facility of petroleum- or coal-based liquid 
or gaseous fuel (other than petroleum coke); 
‘‘(B) emissions resulting from the use of 
hydrofluorocarbons, 
perfluorocarbons, 
sulfur 
hexafluoride, nitrogen trifluoride, or any other 
fluorinated gas that is a greenhouse gas, as 
designated by the Administrator under section 
704, purchased for use at that facility; and 
‘‘(C) any greenhouse gas that is captured 
and geologically sequestered. 
‘‘(3) For a covered entity that produced or im-
ported petroleum- or coal-based liquid or gaseous 
fuel (other than petroleum coke), 1 emission allow-
ance for each carbon dioxide equivalent of green-
house gas that will be emitted from the combustion 
of any such fuel produced for use in the United 
States or imported during the calendar year, assum-
ing no capture or sequestration of any greenhouse 
gas emissions. 
‘‘(4) For a covered entity that is a local dis-
tribution company, 1 emission allowance for each 
carbon dioxide equivalent of greenhouse gas that will 
be emitted from the combustion of the natural gas 
such entity delivered during the calendar year, as-
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‘‘(d) RETIREMENT
OF ALLOWANCES
AND CRED-
ITS.—Immediately upon receipt of an emission allowance, 
offset credit, or destruction credit under subsection (a), 
the Administrator shall retire the emission allowance, off-
set credit, or destruction credit. Treatment of inter-
national emission allowances and international offset cred-
its submitted under this section shall be governed by sec-
tion 753. 
‘‘(e) DETERMINATION OF COMPLIANCE.—Not later 
than July 1 of each year, the Administrator shall deter-
mine whether the owners and operators of all covered enti-
ties are in full compliance with subsection (a) for the pre-
ceding year. 
‘‘(f) DESTRUCTION CREDIT.—If the Administrator 
determines that an entity has, during any of calendar 
years 2012 through 2050, converted a greenhouse gas 
other than methane by thermal, chemical, or other means 
to another gas with a low- or zero-global warming poten-
tial, the Administrator shall establish and distribute to 
that entity a quantity of destruction credits that is equal 
to the number of carbon dioxide equivalents of reduction 
in global warming potential achieved through such conver-
sion. 
‘‘SEC. 713. PENALTY FOR NONCOMPLIANCE. 
‘‘(a) EXCESS EMISSIONS PENALTY.— 
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‘‘(1) IN GENERAL.—The owner or operator of 
any covered entity that fails for any year to submit 
to the Administrator by the deadline described in 
section 712(a) or 733(c), 1 or more of the emission 
allowances due pursuant to either of those sections 
shall be liable for the payment to the Administrator 
of an excess emissions penalty. 
‘‘(2) AMOUNT.—The amount of an excess emis-
sions penalty required to be paid under paragraph 
(1) shall be an amount equal to the product obtained 
by multiplying— 
‘‘(A) the number of emission allowances 
that the owner or operator failed to submit; and 
‘‘(B) the greater of— 
‘‘(i) $200; or 
‘‘(ii) 3 times the fair market value of 
an emission allowance during the calendar 
year for which the emission allowances 
were due. 
‘‘(3) TIMING.—An excess emissions penalty re-
quired under this subsection shall be immediately 
due and payable to the Administrator, without de-
mand, in accordance with such regulations as shall 
be promulgated by the Administrator by the date 
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that is 1 year after the date of enactment of this 
title. 
‘‘(4) DEPOSIT.—The Administrator shall de-
posit each excess emissions penalty paid under this 
subsection in the Treasury of the United States. 
‘‘(5) NO
EFFECT
ON
LIABILITY.—An excess 
emissions penalty due and payable by the owner or 
operator of a covered entity under this subsection 
shall not diminish the liability of the owner or oper-
ator for any fine, penalty, or assessment against the 
owner or operator for the same violation under any 
other provision of this Act or any other law. 
‘‘(b) EXCESS EMISSION ALLOWANCE.—The owner or 
operator of a covered entity that fails for any year to sub-
mit to the Administrator, by the deadline described in sec-
tion 712(a) or 733(c), 1 or more of the emission allow-
ances due pursuant to either of those sections shall be lia-
ble to offset the excess emissions by an equal quantity of 
emission allowances during— 
‘‘(1) the following calendar year; or 
‘‘(2) such longer period as the Administrator 
may prescribe. 
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‘‘Subtitle C—Distribution of 
Allowances 
‘‘SEC. 721. AUCTIONS. 
‘‘(a) IN GENERAL.—The Administrator shall, pursu-
ant to regulations promulgated under this section, auction 
all emission allowances established under section 711, ex-
cept as provided in section 723. 
‘‘(b) INITIAL REGULATIONS.—Not later than 180 
days after the date of enactment of this title, the Adminis-
trator shall promulgate regulations governing the auction 
of allowances under this section. Such regulations shall in-
clude the following requirements: 
‘‘(1) FREQUENCY; FIRST
AUCTION.—Auctions 
shall be held four times per year at regular intervals, 
with the first auction to be held no later than March 
31, 2010. 
‘‘(2) AUCTION SCHEDULE; CURRENT AND FU-
TURE VINTAGES.—The Administrator shall, at each 
quarterly auction, offer for sale both a portion of the 
allowances with the same vintage as the year in 
which the auction is being conducted and a portion 
of the allowances with vintages from future years. 
The preceding sentence shall not apply to auctions 
held in 2010 and 2011, during which, by necessity, 
the Administrator shall auction only allowances with 
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a vintage year that is later than the year in which 
the auction is held. Beginning with the first auction 
and at each quarterly auction held thereafter, the 
Administrator may offer for sale allowances with 
vintages of up to four years in advance of the year 
in which the auction is being conducted. 
‘‘(3) AUCTION FORMAT.—Auctions shall follow 
a single-round, sealed-bid, uniform price format. 
‘‘(4) PARTICIPATION; FINANCIAL ASSURANCE.— 
Auctions shall be open to any person, except that 
the Administrator may establish financial assurance 
requirements to ensure that auction participants can 
and will perform on their bids. 
‘‘(5) DISCLOSURE
OF
BENEFICIAL
OWNER-
SHIP.—Each bidder in the auction shall be required 
to disclose the person or entity sponsoring or bene-
fitting from the bidder’s participation in the auction 
if such person or entity is, in whole or in part, other 
than the bidder or the bidder’s employer. 
‘‘(6) BIDDING
LIMITS.—No person may, di-
rectly or in concert with another participant, pur-
chase more than 33 percent of the allowances of-
fered for sale at any quarterly auction. 
‘‘(7) PUBLICATION
OF
INFORMATION.—After 
the auction, the Administrator shall, in a timely 
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fashion, publish the identities of winning bidders, 
the quantity of allowances obtained by each winning 
bidder, and the auction clearing price. 
‘‘(8) OTHER
REQUIREMENTS.—The Adminis-
trator may include in the regulations such other re-
quirements or provisions as the Administrator deems 
necessary to promote effective, efficient, transparent, 
and fair administration of auctions under this sec-
tion. 
‘‘(c) REVISION
OF REGULATIONS.—The Adminis-
trator may, at any time, revise the initial regulations pro-
mulgated under subsection (b) based on the Administra-
tor’s experience in administering allowance auctions. Such 
revised regulations need not meet the requirements identi-
fied in subsection (b) if the Administrator determines that 
an alternative auction design would be more effective, tak-
ing into account factors including costs of administration, 
transparency, fairness, and risks of collusion or manipula-
tion. 
‘‘SEC. 722. AUCTION PROCEEDS. 
‘‘(a) FUNDS ESTABLISHED.—There are established 
in the Treasury of the United States the following funds: 
‘‘(1) The Investing in Climate Action and Pro-
tection Act Management Fund. 
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‘‘(2) The Climate Change Education and Out-
reach Fund. 
‘‘(3) The Climate Trust Rebate Fund. 
‘‘(4) The Low-Carbon Technology Fund. 
‘‘(5) The National Energy Efficiency Fund. 
‘‘(6) The Agriculture and Forestry Carbon 
Fund. 
‘‘(7) The Climate Change Worker Transition 
Fund. 
‘‘(8) The National Climate Change Adaptation 
Fund. 
‘‘(9) The Natural Resource Conservation Fund. 
‘‘(10) The International Forest Protection 
Fund. 
‘‘(11) The International Clean Technology 
Fund. 
‘‘(12) The International Climate Change Adap-
tation Fund. 
‘‘(b) AMOUNTS IN FUNDS.—Each Fund established 
by subsection (a) shall consist of such amounts as are de-
posited into the respective Fund under this section. 
‘‘(c) INVESTING IN CLIMATE ACTION AND PROTEC-
TION ACT MANAGEMENT FUND.— 
‘‘(1) IN
GENERAL.—For each of fiscal years 
2010 through 2050, the Administrator shall deposit 
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into the Investing in Climate Action and Protection 
Act Management Fund such percentage of the pro-
ceeds of the auctions conducted by the Adminis-
trator for such fiscal year under this section, not to 
exceed 0.5 percent of the total value of the proceeds 
from auctions conducted in that fiscal year, as the 
President determines to be sufficient to efficiently 
and effectively administer this title and title II of 
the Investing in Climate Action and Protection Act. 
‘‘(2) USE OF FUNDS.—Funds from the Invest-
ing in Climate Action and Protection Act Manage-
ment Fund may be used by— 
‘‘(A) the Administrator for— 
‘‘(i) the costs of carrying out this 
title, including the costs of promulgation of 
regulations, development of policy guid-
ance, development and operation of infor-
mation systems, certification of monitoring 
equipment, conducting facilities audits and 
inspections, 
monitoring 
and 
modeling, 
quality assurance and verification func-
tions, enforcement, administration, out-
reach, training, field audits, and financial 
management; and 
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‘‘(ii) contracting with the National 
Academy of Sciences for periodic review 
under the Investing in Climate Action and 
Protection Act; and 
‘‘(B) the Federal Energy Regulatory Com-
mission for the costs of carrying out title II of 
the Investing in Climate Action and Protection 
Act. 
‘‘(3) TREATMENT.—Amounts in the Investing 
in Climate Action and Protection Act Management 
Fund— 
‘‘(A) shall be used only to advance the pur-
poses described in section 3 of the Investing in 
Climate Action and Protection Act; 
‘‘(B) are subject to the availability of ap-
propriations; and 
‘‘(C) shall remain available until expended. 
‘‘(d) CLIMATE CHANGE EDUCATION AND OUTREACH 
FUND.—For each of the fiscal years 2010 through 2050, 
the Administrator shall deposit $50,000,000 from the auc-
tion proceeds for such fiscal year in the Climate Change 
Education and Outreach Fund. 
‘‘(e) USE OF REMAINING PROCEEDS.— 
‘‘(1) FISCAL YEARS 2010 THROUGH 2019.—For 
each of fiscal years 2010 through 2019, the Admin-
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istrator shall allocate the remaining proceeds of the 
auctions conducted by the Administrator during the 
fiscal year as follows: 
‘‘Fund 
Percentage 
General Fund of the Treasury 
Climate Trust Rebate Fund 
7.5 
Low-Carbon Technology Fund 
12.5 
National Energy Efficiency Fund 
12.5 
Agriculture and Forestry Carbon Fund 
4.5 
Climate Change Worker Transition Fund 
1.5 
National Climate Change Adaptation Fund 
Natural Resource Conservation Fund 
1.5 
International Forest Protection Fund 
1.5 
International Clean Technology Fund 
3.5 
International Climate Change Adaptation Fund 
‘‘(2) FISCAL YEARS 2020 THROUGH 2050.—For 
each of fiscal years 2020 through 2050, the Admin-
istrator shall allocate the remaining proceeds of the 
auctions conducted by the Administrator during the 
fiscal year as follows: 
‘‘Fund 
Percentage 
General Fund of the Treasury 
Climate Trust Rebate Fund 
Low-Carbon Technology Fund 
12.5 
National Energy Efficiency Fund 
12.5 
Agriculture and Forestry Carbon Fund 
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‘‘Fund 
Percentage 
Climate Change Worker Transition Fund 
National Climate Change Adaptation Fund 
2.5 
Natural Resource Conservation Fund 
International Forest Protection Fund 
International Clean Technology Fund 
International Climate Change Adaptation Fund 
2.5 
‘‘SEC. 723. TRANSITIONAL ASSISTANCE TO MANUFACTUR-
ERS OF TRADE-EXPOSED PRIMARY GOODS. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) CURRENTLY OPERATING MANUFACTURING 
FACILITY.—The term ‘currently operating manufac-
turing facility’ means an eligible manufacturing fa-
cility that had significant operations during the cal-
endar year preceding the calendar year for which 
emission allowances are being distributed under this 
section. 
‘‘(2) ELIGIBLE
MANUFACTURING
FACILITY.— 
The term ‘eligible manufacturing facility’ means an 
industrial facility described in section 700(13)(A) 
that is located in the United States and that prin-
cipally manufactures trade-exposed primary goods. 
‘‘(3) NEW
ENTRANT
MANUFACTURING
FACIL-
ITY.—The term ‘new entrant manufacturing facility’ 
means an eligible manufacturing facility that will 
begin operation during the calendar year for which 
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emission allowances are being distributed under this 
section. 
‘‘(4) PRIMARY GOOD.—The term ‘primary good’ 
means— 
‘‘(A) a manufactured product (other than 
fuel) that is sold in bulk for purposes of further 
manufacture, such as aluminum, cement, iron 
and steel, and bulk glass; and 
‘‘(B) paper. 
‘‘(5) PRODUCTION
AMOUNT.—The term ‘pro-
duction amount’ means— 
‘‘(A) for a currently operating manufac-
turing facility, the quantity of the trade-exposed 
primary good the facility produced, on average, 
during the most recent 3 calendar years for 
which data is available, or such shorter histor-
ical period as the facility has been in operation; 
and 
‘‘(B) for a new entrant manufacturing fa-
cility, the expected production capacity for the 
trade-exposed primary good by the facility for 
the calendar year. 
‘‘(6) TRADE-EXPOSED
PRIMARY
GOOD.—The 
term ‘trade-exposed primary good’ means a primary 
good that the Administrator determines is likely to 
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be significantly disadvantaged in internationally 
competitive markets as a result of direct and indi-
rect costs of compliance with this title. 
‘‘(b) CATEGORIES
OF TRADE-EXPOSED PRIMARY 
GOODS.—Not later than 180 days after the date of enact-
ment of this title, the Administrator shall publish in the 
Federal Register a list of categories and subcategories of 
trade-exposed primary goods for the purposes of this sec-
tion and subtitle G. 
‘‘(c) ELIGIBLE MANUFACTURING FACILITIES.— 
‘‘(1) LIST.—Not later than 120 days prior to 
the start of each of calendar years 2012 through 
2019, the Administrator shall publish in the Federal 
Register a list of eligible manufacturing facilities for 
each category and subcategory of trade-exposed pri-
mary goods listed under subsection (b). The list pub-
lished under this paragraph shall include informa-
tion on the production amount for each listed cat-
egory and subcategory of goods. 
‘‘(2) ALLOWANCE ALLOCATION.—In addition to 
the list under paragraph (1), the publication under 
this subsection shall specify the quantity of emission 
allowances to be allocated to each eligible manufac-
turing facility pursuant to subsections (d) through 
(i). 
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‘‘(3) OBTAINING INFORMATION.—The Adminis-
trator shall issue regulations to provide the Adminis-
trator access to the information necessary to publish 
the list required under paragraph (1). Such regula-
tions shall not require manufacturing facilities to 
submit information available to the Administrator 
from other Federal agencies or public sources of in-
formation. 
‘‘(d) TOTAL ALLOCATION.—For each of calendar 
years 2012 through 2019, the Administrator shall allocate 
6 percent of the quantity of emission allowances estab-
lished under section 711 for the relevant year to eligible 
manufacturing facilities in accordance with this section. 
‘‘(e) DISTRIBUTION SYSTEM.—Not later than 1 year 
after the date of enactment of this title, the Administrator 
shall promulgate a regulation establishing a system for 
distributing to the owners or operators of eligible manu-
facturing facilities the emission allowances described in 
subsection (d). Such distribution shall occur by January 
1 of the year for which the allowances are being distrib-
uted. 
‘‘(f) TOTAL ALLOCATION FOR EACH CATEGORY AND 
SUBCATEGORY OF ELIGIBLE MANUFACTURING FACILI-
TIES.—The proportion of total emission allowances dis-
tributed by the Administrator for each calendar year to 
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each category and subcategory of eligible manufacturing 
facilities shall be determined by the Administrator based 
upon the relative predicted adverse impact of direct and 
indirect costs of compliance with this title on each cat-
egory or subcategory. The Administrator shall establish 
such proportion not later than January 1, 2011, and shall 
revise such proportion by January 1 of each year there-
after only to reflect the predicted changes in production 
levels of each category or subcategory. 
‘‘(g) INDIVIDUAL ALLOCATIONS TO ELIGIBLE MANU-
FACTURING FACILITIES.—The quantity of emission allow-
ances distributed by the Administrator for a calendar year 
to an eligible manufacturing facility shall be a quantity 
equal to the product obtained by multiplying— 
‘‘(1) the total quantity of emission allowances 
available for distribution to all eligible manufac-
turing facilities in the appropriate category or sub-
category for the calendar year as determined under 
subsection (f); and 
‘‘(2) the ratio that the production amount of 
the facility bears to the sum of— 
‘‘(A) the total quantity of the trade-ex-
posed primary good produced, on average, over 
the 3 preceding calendar years, by currently op-
erating manufacturing facilities; and 
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‘‘(B) the expected production capacity for 
the trade-exposed primary good of all new en-
trant manufacturing facilities for the calendar 
year. 
‘‘(h) NEW
ENTRANT
MANUFACTURING
FACILI-
TIES.—The system established pursuant to subsection (e) 
shall authorize the Administrator to require the return to 
the Administrator of an appropriate portion of the emis-
sion allowances distributed to a new entrant manufac-
turing facility if actual production by such facility is lower 
than the production amount used to calculate the distribu-
tion to the facility. 
‘‘(i) FACILITIES THAT SHUT DOWN.—The system es-
tablished pursuant to subsection (e) shall ensure that— 
‘‘(1) emission allowances are not distributed to 
an owner or operator for any facility that has been 
permanently shut down at the time of the distribu-
tion; 
‘‘(2) if a facility receives a distribution of emis-
sion allowances under this section for a calendar 
year and subsequently permanently shuts down dur-
ing that calendar year, the owner or operator of 
such facility promptly returns to the Administrator 
a quantity of emission allowances equal to the quan-
tity that the Administrator determines is the portion 
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that the owner or operator will no longer need to 
meet its submission obligations for such facility 
under section 712; and 
‘‘(3) the owner or operator of any facility that 
permanently shuts down in a calendar year promptly 
returns to the Administrator any emission allow-
ances that the Administrator has distributed for that 
facility for any subsequent calendar year. 
‘‘Subtitle D—Trading, Banking, and 
Borrowing 
‘‘SEC. 731. TRADING. 
‘‘(a) SALE, EXCHANGE, AND RETIREMENT OF EMIS-
SION ALLOWANCES.—Except as otherwise provided in this 
title, the lawful holder of an emission allowance may, with-
out restriction, sell, exchange, transfer, submit for compli-
ance in accordance with section 712, or request that the 
Administrator retire the emission allowance. 
‘‘(b) NO RESTRICTION
ON TRANSACTIONS.—The 
privilege of purchasing, holding, selling, exchanging, and 
requesting retirement of emission allowances shall not be 
restricted to the owners and operators of covered entities. 
‘‘(c) ALLOWANCE TRANSFER SYSTEM.—Not later 
than 18 months after the date of enactment of this title, 
the Administrator shall promulgate regulations to carry 
out the provisions of this title relating to emission allow-
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ances, including regulations providing that the transfer of 
emission allowances shall not be effective until such date 
as a written certification of the transfer, signed by a re-
sponsible official of each party to the transfer, is received 
and recorded by the Administrator in accordance with 
those regulations. 
‘‘(d) ALLOWANCE TRACKING SYSTEM.—The regula-
tions promulgated under subsection (c) shall include a sys-
tem for issuing, recording, and tracking emission allow-
ances that shall specify all necessary procedures and re-
quirements for an orderly and competitive functioning of 
the emission allowance system. 
‘‘SEC. 732. BANKING. 
‘‘(a) IN GENERAL.—An emission allowance may be 
used to meet the requirements of section 712 in the cal-
endar year for which the allowance is issued, as indicated 
in the identification number of the emission allowance, or 
any subsequent calendar year. 
‘‘(b) EFFECT OF TIME.—The passage of time shall 
not, by itself, cause an emission allowance to be retired 
or otherwise diminish the compliance value of the emission 
allowance. 
‘‘SEC. 733. BORROWING. 
‘‘(a) REGULATIONS.—Not later than 3 years after 
the date of enactment of this title, the Administrator shall 
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promulgate regulations under which, subject to the re-
quirements of this section, the owner or operator of a cov-
ered entity may— 
‘‘(1) borrow emission allowances from the Ad-
ministrator; and 
‘‘(2) for a calendar year, submit borrowed emis-
sion allowances to the Administrator in satisfaction 
of up to 15 percent of the compliance obligation 
under section 712(a). 
‘‘(b) LIMITATIONS.—An emission allowance borrowed 
pursuant to this section shall be an emission allowance es-
tablished by the Administrator for a specific future cal-
endar year under section 711(a). The Administrator shall 
not lend an emission allowance drawn from a calendar 
year (as indicated in the identification number of the emis-
sion allowance) that is more than 5 years later than the 
calendar year in which such loan is made. 
‘‘(c) REPAYMENT WITH INTEREST.—For each emis-
sion allowance that an owner or operator of a covered enti-
ty borrows pursuant to this section, such owner or oper-
ator shall, not later than December 31 of the calendar 
year from which the borrowed emission allowance was 
drawn (as indicated in the identification number of the 
borrowed emission allowance), submit to the Adminis-
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trator a quantity of emission allowances that is equal to 
the sum of— 
‘‘(1) 1; and 
‘‘(2) the product obtained by multiplying— 
‘‘(A) 0.1; and 
‘‘(B) the number of years, including pro-
rated portions of years, between the date on 
which the emission allowance was borrowed and 
the date on which the loan is repaid. 
‘‘Subtitle E—Domestic Offsets 
‘‘SEC. 741. ESTABLISHMENT OF DOMESTIC OFFSET PRO-
GRAM. 
‘‘(a) REGULATIONS.—Not later than 18 months after 
the date of enactment of this title, the Administrator shall 
promulgate regulations establishing a program for the 
issuance of offset credits in accordance with the require-
ments of this subtitle. 
‘‘(b) REQUIREMENTS.—The regulations described in 
subsection (a) shall, at minimum— 
‘‘(1) authorize the issuance of offset credits 
generated through qualifying offset projects within 
the United States that achieve greenhouse gas emis-
sion reductions below, or increases in biological se-
questration above, the project baseline; 
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‘‘(2) ensure that such offset credits represent 
real, verifiable, additional, permanent, and enforce-
able reductions in greenhouse gas emissions or in-
creases in biological sequestration; and 
‘‘(3) provide for the implementation of the re-
quirements of this subtitle. 
‘‘(c) PERIODIC REVIEW.—Not later than 5 years 
after the date of enactment of this title, and periodically 
thereafter, the Administrator shall review and revise, as 
necessary, the regulations promulgated under this subtitle. 
‘‘SEC. 742. ELIGIBLE PROJECT TYPES. 
‘‘(a) ELIGIBLE PROJECT TYPES.—The types of 
projects eligible to generate offset credits under this sub-
title shall be limited to projects that— 
‘‘(1) reduce greenhouse gas emissions, from ag-
ricultural facilities in the United States that are not 
subject to performance standards issued under sec-
tion 771, resulting from enteric fermentation or ma-
nure management and disposal; 
‘‘(2) increase biological sequestration of carbon 
through afforestation or reforestation of acreage in 
the United States that was not forested as of June 
3, 2008; 
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‘‘(3) reduce fugitive greenhouse gas emissions 
from petroleum and natural gas systems in the 
United States; or 
‘‘(4) reduce greenhouse gas emissions from coal 
mines in the United States that are not subject to 
performance standards issued under section 771. 
‘‘(b) EXCLUSIONS.—The Administrator shall ensure 
that no offset credits shall be generated under this subtitle 
by— 
‘‘(1) any reduction of greenhouse gas emissions 
that are covered by the compliance obligations set 
forth in section 712(a); or 
‘‘(2) any activity receiving support under sub-
title D of title III of the Investing in Climate Action 
and Protection Act. 
‘‘SEC. 743. PROTOCOLS AND ACCOUNTING METHODS. 
‘‘(a) DEVELOPMENT OF MONITORING AND QUAN-
TIFICATION TOOLS FOR OFFSET PROJECTS.— 
‘‘(1) IN
GENERAL.—The Administrator shall 
develop standardized tools for use in the monitoring 
and quantification of net reductions in greenhouse 
gas emissions or net increases in biological seques-
tration for each eligible offset project type. 
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‘‘(2) TOOL
DEVELOPMENT.—The tools de-
scribed in paragraph (1) shall, for each eligible off-
set project type, include applicable— 
‘‘(A) statistically sound field and remote 
sensing sampling methods, procedures, tech-
niques, protocols, or programs; 
‘‘(B) models, factors, equations, or look-up 
tables; and 
‘‘(C) any other process or tool considered 
to be acceptable by the Administrator. 
‘‘(b) DEVELOPMENT
OF ACCOUNTING
AND DIS-
COUNTING METHODS.— 
‘‘(1) IN GENERAL.—The Administrator shall— 
‘‘(A) develop standardized methods for use 
in estimating the baseline, accounting for 
additionality and uncertainty, and discounting 
for leakage for each eligible offset project type; 
and 
‘‘(B) require that leakage be subtracted 
from reductions in greenhouse gas emissions or 
increases in biological sequestration attributable 
to a project. 
‘‘(2) 
BASELINE
ESTIMATION
AND 
ADDITIONALITY
DETERMINATION.—The standard-
ized methods used to establish baselines and deter-
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mine additionality shall, for each project type, at a 
minimum— 
‘‘(A) in the case of an afforestation or re-
forestation project, determine the greenhouse 
gas flux and carbon stock on comparable land 
identified on the basis of— 
‘‘(i) similarity in current management 
practices; 
‘‘(ii) similarity of regional, State, or 
local policies or programs; and 
‘‘(iii) similarity in geographical and 
biophysical characteristics; 
‘‘(B) in the case of an emission reduction 
project, use as a basis emissions from com-
parable facilities; and 
‘‘(C) specify a selected time period and 
provide for regular updating of baselines and 
additionality standards to take account of 
changes in business-as-usual practices; and 
‘‘(D) ensure that emission reductions or 
increases in biological sequestration are not 
considered additional that are the result of ac-
tivities that— 
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‘‘(i) are required by or undertaken to 
comply with any law, including any regula-
tion; or 
‘‘(ii) were commenced prior to the ini-
tiation of the offset project. 
‘‘(3) LEAKAGE.—The standardized methods 
used to determine and discount for leakage shall, at 
a minimum, take into consideration— 
‘‘(A) the scope of the offset project in 
terms of activities and geography covered; 
‘‘(B) the markets relevant to the offset 
project; 
‘‘(C) emission intensity per unit of produc-
tion, both inside and outside of the offset 
project; and 
‘‘(D) a time period sufficient in length to 
yield a stable leakage rate. 
‘‘(c) STANDARDS
ADDRESSING
PERMANENCE
IN 
AFFORESTATION AND REFORESTATION PROJECTS.—The 
Administrator shall prescribe specific standards ensuring 
that each offset allowance generated through an 
afforestation or reforestation project represents a perma-
nent net increase in biological sequestration, and that full 
account is taken of any actual or potential reversal of such 
sequestration, with an adequate margin of safety. In pre-
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scribing such standards, the Administrator shall seek to 
maximize the certainty that the overall cap on greenhouse 
gas emissions established by this title is not compromised. 
‘‘(d) UNCERTAINTY.— 
‘‘(1) IN
GENERAL.—The Administrator shall 
develop standardized methods for use in determining 
and discounting for uncertainty for each offset 
project type. 
‘‘(2) BASIS.—The standardized methods used 
to determine and discount for uncertainty shall be 
based on— 
‘‘(A) the robustness and rigor of the meth-
ods used by a project developer to monitor and 
quantify reductions in greenhouse gas emissions 
or net biological sequestration; 
‘‘(B) the robustness and rigor of methods 
used to determine additionality, leakage, and 
permanence; and 
‘‘(C) a proportional discount that increases 
relative to uncertainty, as determined by the 
Administrator to encourage better measurement 
and accounting. 
‘‘(e) ACQUISITION OF NEW DATA AND REVIEW OF 
METHODS.—The Administrator shall— 
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‘‘(1) establish a comprehensive field sampling 
program to improve the scientific bases on which the 
standardized tools and methods developed under this 
section are based; and 
‘‘(2) not less frequently than every five years, 
review and, as appropriate, revise the standardized 
tools and methods developed under this section, 
based on— 
‘‘(A) validation of existing methods, proto-
cols, procedures, techniques, factors, equations, 
or models; 
‘‘(B) development of new methods, proto-
cols, procedures, techniques, factors, equations, 
or models; 
‘‘(C) increased availability of field data or 
other datasets; and 
‘‘(D) any other information identified by 
the Administrator that is necessary to meet the 
objectives of this subtitle. 
‘‘SEC. 744. PROJECT INITIATION. 
‘‘(a) IN GENERAL.—The Administrator may pre-
scribe rules requiring project developers for such project 
types as the Administrator considers appropriate, prior to 
initiation of an offset project, to— 
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‘‘(1) submit a petition for project initiation, in-
cluding— 
‘‘(A) a plan for monitoring and quantifying 
reductions in emissions or net increases in bio-
logical sequestration resulting from the project; 
‘‘(B) a certification that the project will 
not have significant adverse effects on the envi-
ronment; and 
‘‘(C) such other information as the Admin-
istrator considers necessary to meet the objec-
tives of this subtitle; and 
‘‘(2) obtain the Administrator’s approval of the 
offset project, pursuant to subsection (b). 
‘‘(b) APPROVAL AND NOTIFICATION.— 
‘‘(1) IN GENERAL.—If the Administrator estab-
lishes project initiation requirements under sub-
section (a), the Administrator shall, not later than 
60 days after the submission of a complete petition 
under subsection (a)(1)— 
‘‘(A) determine whether the petition satis-
fies the applicable requirements of this subtitle; 
and 
‘‘(B) notify the project developer of such 
determination. 
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‘‘(2) APPEAL.—The Administrator shall estab-
lish mechanisms for appeal and review of negative 
determinations made under this subsection. 
‘‘SEC. 745. OFFSET VERIFICATION AND ISSUANCE OF CRED-
ITS. 
‘‘(a) IN GENERAL.—Offset credits may be claimed 
for net emission reductions or increases in biological se-
questration annually, after accounting for any necessary 
discounts in accordance with section 743, by submitting 
a verification report for an offset project to the Adminis-
trator. 
‘‘(b) OFFSET VERIFICATION.— 
‘‘(1) SCOPE OF VERIFICATION.—A verification 
report for an offset project— 
‘‘(A) shall be completed by a verifier ac-
credited in accordance with paragraph (3); and 
‘‘(B) shall be developed taking into consid-
eration— 
‘‘(i) the information and methodology 
contained within any monitoring and quan-
tification plan submitted under section 
744(a)(1)(A); 
‘‘(ii) data and subsequent analysis of 
the offset project, including— 
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‘‘(I) quantification of net emis-
sion reductions or increases in biologi-
cal sequestration; 
‘‘(II) 
determination 
of 
additionality; 
‘‘(III) calculation of leakage; 
‘‘(IV) assessment of permanence; 
‘‘(V) discounting for uncertainty; 
and 
‘‘(VI) the adjustment of net 
emission reductions or increases in bi-
ological sequestration by the discounts 
determined under clauses (II) through 
(V); and 
‘‘(iii) subject to the requirements of 
this subtitle, any other information identi-
fied by the Administrator as being nec-
essary to achieve the purposes of this sub-
title. 
‘‘(2) VERIFICATION REPORT REQUIREMENTS.— 
The Administrator shall specify the required compo-
nents of a verification report, including— 
‘‘(A) the quantity of offsets generated; 
‘‘(B) the amount of discounts applied; 
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‘‘(C) an assessment of methods (and the 
appropriateness of those methods); 
‘‘(D) an assessment of quantitative errors 
or omissions (and the effect of the errors or 
omissions on offsets); 
‘‘(E) any potential conflicts of interest be-
tween a verifier and project developer; and 
‘‘(F) any other provision that the Adminis-
trator considers to be necessary to achieve the 
purposes of this subtitle. 
‘‘(3) VERIFIER ACCREDITATION.— 
‘‘(A) IN
GENERAL.—Not later than 18 
months after the date of enactment of this title, 
the Administrator shall promulgate regulations 
establishing a process and requirements for ac-
creditation of third-party verifiers to ensure 
that such verifiers are professionally qualified 
and have no conflicts of interest. 
‘‘(B) 
PUBLIC
ACCESSIBILITY.—Each 
verifier meeting the requirements for accredita-
tion in accordance with this paragraph shall be 
listed in a publicly accessible database, which 
shall be maintained and updated by the Admin-
istrator. 
‘‘(c) REGISTRATION AND AWARDING OF OFFSETS.— 
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‘‘(1) IN
GENERAL.—Not later than 90 days 
after the date on which the Administrator receives a 
verification report required under subsection (b), the 
Administrator shall— 
‘‘(A) determine whether the offsets satisfy 
the applicable requirements of this subtitle; and 
‘‘(B) notify the project developer of that 
determination. 
‘‘(2) AFFIRMATIVE
DETERMINATION.—In the 
case of an affirmative determination under para-
graph (1), the Administrator shall— 
‘‘(A) assign a unique serial number to each 
offset credit to be issued; 
‘‘(B) register the offset credits, together 
with— 
‘‘(i) a verification report issued pursu-
ant to this section; and 
‘‘(ii) any other information identified 
by the Administrator as being necessary to 
achieve the purposes of this subtitle; and 
‘‘(C) issue the offset credits. 
‘‘(3) APPEAL AND REVIEW.—The Administrator 
shall establish mechanisms for the appeal and review 
of determinations made under this subsection. 
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‘‘SEC. 746. AUDITS. 
‘‘(a) REGULATIONS.—Not later than 2 years after 
the date of enactment of this title, the Administrator shall 
promulgate regulations governing the auditing of offset 
projects and credits. 
‘‘(b) REQUIREMENTS.—The regulations promulgated 
under this section shall specifically consider— 
‘‘(1) principles for initiating and conducting au-
dits; 
‘‘(2) the type or scope of audits, including— 
‘‘(A) reporting and recordkeeping; and 
‘‘(B) site review or visitation; 
‘‘(3) the rights and privileges of an audited 
party; and 
‘‘(4) the establishment of an appeal process. 
‘‘SEC. 747. TIMING AND THE PROVISION OF OFFSET CRED-
ITS. 
‘‘(a) INITIATION OF OFFSET PROJECTS.—An offset 
project that commences operation on or after the effective 
date of regulations promulgated under section 741(a) shall 
be eligible to generate offset credits under this subtitle 
only if the offset project meets the other applicable re-
quirements of this subtitle. 
‘‘(b) PRE-EXISTING PROJECTS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the Administrator may issue offset credits under this 
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subtitle for offset projects that, as of the effective 
date of regulations promulgated under section 
741(a), are registered under or meet the standards 
of the Climate Registry, the California Action Reg-
istry, the GHG Registry, the Chicago Climate Ex-
change, the GHG CleanProjects Registry, or any 
other Federal, State, or private reporting programs 
or registries if the Administrator determines that 
such offset projects satisfy the applicable require-
ments of this subtitle. 
‘‘(2) LIMITATION.—Offset credits shall be 
issued under this subtitle only for reductions in 
emissions or increases in biological sequestration 
that occur after the date of promulgation of regula-
tions under section 741(a). 
‘‘SEC. 748. ENVIRONMENTAL CONSIDERATIONS. 
‘‘(a) COORDINATION TO MINIMIZE NEGATIVE EF-
FECTS.—In promulgating and implementing regulations 
under this subtitle, the Administrator shall act (including 
by rejecting projects, if necessary) to avoid or minimize, 
to the maximum extent practicable, adverse effects on 
human health or the environment resulting from the im-
plementation of offset projects under this subtitle. 
‘‘(b) 
USE
OF
NATIVE
TREE
SPECIES
IN 
AFFORESTATION AND REFORESTATION PROJECTS.—Not 
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later than 18 months after the date of enactment of this 
title, the Administrator shall promulgate regulations for 
the selection and use of tree species in afforestation and 
reforestation offset projects— 
‘‘(1) to ensure native species are given primary 
consideration in such projects; 
‘‘(2) to prohibit the use of federally-designated 
or State-designated noxious weeds; and 
‘‘(3) to prohibit the use of a species listed by 
a regional or State invasive plant council within the 
applicable region or State. 
‘‘SEC. 749. OWNERSHIP AND TRANSFER OF OFFSET CRED-
ITS. 
‘‘(a) OWNERSHIP.—Initial ownership of an offset 
credit shall lie with a project developer, unless otherwise 
specified in a legally-binding contract or agreement. 
‘‘(b) TRANSFERABILITY.—An offset credit generated 
pursuant to this subtitle may be sold, traded, or trans-
ferred, on the conditions that— 
‘‘(1) the offset credit has not expired or been 
retired or canceled; and 
‘‘(2) liability and responsibility for mitigating 
and compensating for reversals of registered offset 
credits is specified in accordance with such rules as 
the Administrator may prescribe. 
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‘‘Subtitle 
F—International 
Emis-
sion 
Allowances 
and 
Offset 
Credits 
‘‘SEC. 751. INTERNATIONAL EMISSION ALLOWANCES. 
‘‘(a) REGULATIONS.—Not later than 2 years after 
the date of enactment of this title, the Administrator shall 
promulgate regulations providing for the approval of quali-
fying international emission allowances for submission 
under section 712 or section 765. 
‘‘(b) REQUIREMENTS.—The regulations promulgated 
under subsection (a) shall require that, in order to be ap-
proved for use under this title, an international emission 
allowance must be issued by a governmental program that 
is at least as stringent as the program established by this 
title, including comparable monitoring, compliance, and 
enforcement. 
‘‘SEC. 752. INTERNATIONAL OFFSET CREDITS. 
‘‘(a) REGULATIONS.—The Administrator shall, fol-
lowing the promulgation of regulations governing domestic 
offset allowances under subtitle E of this title, promulgate 
regulations providing for the approval of categories or sub-
categories of qualifying international offset credits for sub-
mission under section 712 or section 765. 
‘‘(b) REQUIREMENTS.—The regulations promulgated 
under subsection (a) shall require that, in order for a cat-
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able, for less than 0.5 percent of total global 
greenhouse gas emissions; or 
‘‘(C) is identified by the United Nations as 
among the least developed of developing coun-
tries. 
‘‘SEC. 753. RETIREMENT. 
‘‘(a) ENTITY CERTIFICATION.—The owner or oper-
ator of an entity that submits an international emission 
allowance or international offset credit under section 712 
or section 765 shall certify to the Administrator that such 
international emission allowance or international offset 
credit has not previously been used to comply with any 
foreign or international greenhouse gas regulatory pro-
gram. 
‘‘(b) RETIREMENT.— 
‘‘(1) FOREIGN
AND
INTERNATIONAL
REGU-
LATORY ENTITIES.—The Administrator shall seek, 
by whatever means appropriate, to ensure that any 
relevant foreign and international regulatory enti-
ties— 
‘‘(A) are notified of the submission, for 
purposes of compliance with this title, of any 
international emission allowance or inter-
national offset credit; and 
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‘‘(B) provide for the disqualification of 
such international emission allowance or inter-
national offset credit for any subsequent use 
under the relevant foreign or international 
greenhouse gas regulatory program, regardless 
of whether such use is a sale, exchange, or sub-
mission to satisfy a compliance obligation. 
‘‘(2) 
DISQUALIFICATION
FROM
FURTHER 
USE.—The Administrator shall ensure that, once an 
international emission allowance or international off-
set credit has been submitted for purposes of compli-
ance with this title, such allowance or credit shall be 
disqualified from any further use under this title. 
‘‘Subtitle G—Global Effort To 
Reduce Greenhouse Gas Emissions 
‘‘SEC. 761. DEFINITIONS. 
‘‘In this subtitle: 
‘‘(1) COMPARABLE
ACTION.—The term ‘com-
parable action’ means any greenhouse gas regulatory 
programs, requirements, and other measures adopt-
ed by a foreign country that, in combination, are at 
least comparable in effect to actions carried out by 
the United States to limit greenhouse gas emissions 
pursuant to this Act, as determined by the Presi-
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dent, taking into consideration the level of economic 
development of the foreign country. 
‘‘(2) COMPLIANCE
YEAR.—The term ‘compli-
ance year’ means each calendar year for which the 
requirements of this title apply to a category or sub-
category of trade-exposed primary goods produced in 
a covered foreign country that is imported into the 
United States. 
‘‘(3) COVERED FOREIGN COUNTRY.—The term 
‘covered foreign country’ means a foreign country 
that is included on the covered list prepared under 
section 765(b)(3). 
‘‘(4) FOREIGN
COUNTRY.—The term ‘foreign 
country’ means a member of, or observer govern-
ment to, the World Trade Organization, other than 
the United States. 
‘‘(5) INDIRECT GREENHOUSE GAS EMISSIONS.— 
The term ‘indirect greenhouse gas emissions’ means 
any emissions of a greenhouse gas resulting from 
the generation of electricity that is consumed during 
the manufacture of a good. 
‘‘(6) INTERNATIONAL AGREEMENT.—The term 
‘international agreement’ means any international 
agreement to which the United States is a party, in-
cluding the Marrakesh agreement establishing the 
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World Trade Organization, done at Marrakesh on 
April 15, 1994. 
‘‘(7) TRADE-EXPOSED
PRIMARY
GOOD.—The 
term ‘trade-exposed primary good’ has the meaning 
given that term in section 723(a)(6). 
‘‘(8) UNITED
STATES
IMPORTER.—The term 
‘United States importer’ means an entity that im-
ports into the United States a trade-exposed primary 
good produced in a covered foreign country. 
‘‘SEC. 762. PURPOSES. 
‘‘The purposes of this subtitle are— 
‘‘(1) to promote a strong global effort to signifi-
cantly reduce greenhouse gas emissions; 
‘‘(2) to ensure, to the maximum extent prac-
ticable, that greenhouse gas emissions occurring out-
side the United States do not undermine the envi-
ronmental objectives of the United States in ad-
dressing global climate change; and 
‘‘(3) to encourage effective international action 
to achieve those objectives through— 
‘‘(A) agreements negotiated between the 
United States and foreign countries; and 
‘‘(B) measures carried out by the United 
States that comply with applicable international 
agreements. 
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‘‘SEC. 763. INTERNATIONAL NEGOTIATIONS. 
‘‘(a) FINDING.—Congress finds that the purposes de-
scribed in section 762 can be most effectively addressed 
and achieved through agreements negotiated between the 
United States and foreign countries. 
‘‘(b) NEGOTIATING OBJECTIVE.— 
‘‘(1) STATEMENT OF POLICY.—It is the policy 
of the United States to work proactively under the 
United Nations Framework Convention on Climate 
Change and in other appropriate forums to establish 
binding agreements committing all major greenhouse 
gas-emitting nations to contribute equitably to the 
reduction of global greenhouse gas emissions. 
‘‘(2) INTENT OF CONGRESS REGARDING OBJEC-
TIVE.—To the extent that the agreements described 
in subsection (a) involve measures that will affect 
international trade in any good or service, it is the 
intent of Congress that the negotiating objective of 
the United States shall be to focus multilateral and 
bilateral international agreements on the reduction 
of greenhouse gas emissions to advance achievement 
of the purposes described in section 762. 
‘‘(c) NOTIFICATION TO FOREIGN COUNTRIES.— 
‘‘(1) REQUIREMENT.—Immediately upon enact-
ment of this Act, the President shall notify each for-
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