I 
109TH CONGRESS 
2D SESSION 
H. R. 5049 
To establish a market-based system to regulate greenhouse gas emissions 
and to promote advanced energy research and technology development 
and deployment, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 29, 2006 
Mr. UDALL of New Mexico (for himself and Mr. PETRI) introduced the fol-
lowing bill; which was referred to the Committee on Energy and Com-
merce, and in addition to the Committees on Science, International Rela-
tions, and Education and the Workforce, for a period to be subsequently 
determined by the Speaker, in each case for consideration of such provi-
sions as fall within the jurisdiction of the committee concerned 
A BILL 
To establish a market-based system to regulate greenhouse 
gas emissions and to promote advanced energy research 
and technology development and deployment, and for 
other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Keep America Com-
petitive Global Warming Policy Act of 2006’’. 
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SEC. 2. DEFINITIONS. 
For purposes of this Act: 
(1) ADMINISTRATOR.—The term ‘‘Adminis-
trator’’ means the Administrator of the Environ-
mental Protection Agency. 
(2) 
ALLOWANCE.—The 
term 
‘‘allowance’’ 
means a tradeable allowance issued by the Adminis-
trator pursuant to section 3(b), 5(a), or 7(b). 
(3) CARBON
EQUIVALENT.—With respect to 
each greenhouse gas, the term ‘‘carbon equivalent’’ 
means the amount of the greenhouse gas that traps 
the same amount of heat as one metric ton of car-
bon, as determined by the Administrator. 
(4) COVERED FOSSIL FUEL.—The term ‘‘cov-
ered fossil fuel’’ means coal, crude oil, natural gas, 
natural gas liquids, refined petroleum products, and 
any other fossil fuel that the Administrator deter-
mines appropriate. 
(5) DEVELOPING COUNTRIES.—The term ‘‘de-
veloping countries’’ means the countries that are not 
listed in Annex I of the United Nations Framework 
Convention on Climate Change. 
(6) GREENHOUSE GAS.—The term ‘‘greenhouse 
gas’’ means carbon dioxide, hydrofluorocarbons, 
methane, nitrous oxide, perfluorocarbons, and sulfur 
hexafluoride. 
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(7) NATURAL GAS.—The term ‘‘natural gas’’ 
does not include natural gas liquids. 
(8) SEQUESTRATION.—The term ‘‘sequestra-
tion’’ means the capture, recapture, long-term sepa-
ration, isolation, or removal of greenhouse gases 
from the atmosphere, including through reforest-
ation, forest preservation, and geological storage. 
SEC. 3. ESTABLISHMENT OF SYSTEM OF ALLOWANCES. 
(a) REGULATIONS.—The Administrator shall issue 
regulations not later than the second January 1 after the 
date of enactment of this Act to establish a system for— 
(1) issuing, recording, and tracking allowances; 
(2) appropriately measuring for purposes of 
section 6 the relative amounts of carbon that will be 
emitted or produced by given amounts of covered 
fossil fuels; and 
(3) appropriately measuring given amounts of 
greenhouse gases in units of carbon equivalents. 
(b) ISSUANCE OF ALLOWANCES.—On the third Janu-
ary 1 after the date of enactment of this Act, and annually 
thereafter, the Administrator shall issue a number of al-
lowances equal to the number of allowances that the Ad-
ministrator estimates will be required to be transferred to 
the Administrator pursuant to section 6 during the cal-
endar year beginning with that January 1. The Adminis-
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trator shall base such estimate on the number of allow-
ances that would have been transferred pursuant to sec-
tion 6 had such transfers been required during each of 
the 3 full calendar years immediately preceding that Janu-
ary 1. The Administrator shall publish in the Federal Reg-
ister the number of allowances to be issued pursuant to 
this subsection not later than July 1 of the calendar year 
immediately preceding that January 1. 
(c) SALE OR EXCHANGE OF ALLOWANCES.—Any per-
son holding an allowance issued, sold, or exchanged under 
this Act may sell or exchange such allowance to any other 
person. The sale or exchange of such allowance shall be 
recorded in accordance with regulations issued by the Ad-
ministrator. An allowance issued pursuant to subsection 
(b), section 5(a), or section 7(b) shall not be sold, ex-
changed, or used to meet the requirements of section 6 
after the expiration of the 2-year period beginning on the 
date that the allowance is issued. The Administrator shall 
maintain a registry of all allowances issued, sold, or ex-
changed under this Act. 
(d) SERIAL NUMBERS.—The Administrator shall as-
sign a unique serial number to each allowance issued pur-
suant to subsection (b), section 5(a), and section 7(b), and 
shall take such action as may be necessary to prevent the 
counterfeiting of allowances. The Administrator shall re-
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tire the serial number assigned to an allowance pursuant 
to this subsection on the date that the allowance is used 
to meet the requirements of section 6. 
SEC. 4. ALLOCATION OF ALLOWANCES. 
(a) SECRETARY OF ENERGY.—In each year that al-
lowances are issued by the Administrator pursuant to sec-
tion 3(b), the Administrator shall allocate 25 percent of 
such allowances to the Secretary of Energy, for use in car-
rying out section 8. 
(b) SECRETARY OF STATE.—In each year that allow-
ances are issued by the Administrator pursuant to section 
3(b), the Administrator shall allocate 10 percent of such 
allowances to the Secretary of State. After consultation 
with such agencies as the Secretary of State determines, 
the Secretary of State shall use the allowances to— 
(1) invest in low-emission and emission-free 
policies, technologies, and projects in developing 
countries; and 
(2) assist developing countries in adopting the 
emission reducing policies and programs described in 
section 5(b). 
(c) ADMINISTRATOR.— 
(1) IN GENERAL.—In each year that allowances 
are issued by the Administrator pursuant to section 
3(b), the Administrator shall retain 35 percent of 
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such allowances for distribution under this sub-
section. 
(2) RULEMAKING.—The Administrator shall es-
tablish, by rule, a procedure to distribute allowances 
without charge to the industry sectors listed in para-
graph (3) in a sufficient amount to offset, but no 
more than offset, any expected loss of profits by that 
industry sector as a whole, directly attributable to 
the enactment of this Act. Within each of the indus-
try sectors listed in paragraph (3), the allowances 
shall be distributed without charge to companies 
within the respective industry sector based on their 
relative historic share of greenhouse gas emissions, 
as determined by the Administrator. 
(3) INDUSTRY.—Consistent with paragraph (2), 
the Administrator shall distribute without charge 
not more than 5 percent of the allowances issued by 
the Administrator pursuant to section 3(b) each cal-
endar year to each of— 
(A) the fossil fuel-fired electric generating 
industry; 
(B) the petroleum and natural gas indus-
try; 
(C) the coal industry; and 
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(D) energy-intensive industries, as deter-
mined by the Administrator, and industries that 
are required to transfer allowances to the Ad-
ministrator under section 6(b) or (c). 
(4) TRANSITION ASSISTANCE.— 
(A) IN GENERAL.—The Administrator, in 
consultation with the Secretary of Labor, shall 
distribute the percentage of allowances de-
scribed in subparagraph (B) each calendar year 
to the States. Each State shall receive allow-
ances under this paragraph according to the 
proportion of individuals who have lost jobs in 
that State in the previous year as a result of 
the enactment of this Act as compared to all 
the individuals who have lost jobs in all States 
the previous year as a result of the enactment 
of this Act. Each State shall use the allowances 
to make— 
(i) grants to individuals who have lost 
their jobs as a result of the enactment of 
this Act for the purpose of— 
(I) providing training, adjust-
ment assistance, and employment 
services to such individuals; and 
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(II) making income-maintenance 
and needs-related payments to such 
individuals; and 
(ii) grants to local governments that 
represent communities that demonstrate 
economic losses that are directly attrib-
utable to the enactment of this Act for the 
purpose of assisting the communities in at-
tracting new employers or providing essen-
tial local government services. 
(B) PERCENTAGE OF ALLOWANCES USED 
FOR TRANSITION ASSISTANCE.—With respect to 
allowances issued in the third full calendar year 
beginning after the date of enactment of this 
Act, the percentage referred to in subparagraph 
(A) shall be 15 percent of the allowances issued 
by the Administrator pursuant to section 3(b) 
for that year. The percentage shall be reduced 
by 1.5 percentage points each calendar year 
thereafter. 
(5) LOW-INCOME HOME ENERGY ASSISTANCE.— 
The Administrator shall distribute 5 percent of the 
allowances issued by the Administrator pursuant to 
section 3(b) each calendar year to the States. Each 
State shall receive allowances under this paragraph 
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equal to its share of the total of all individuals re-
ceiving home energy assistance pursuant to the Low- 
Income Home Energy Assistance Act of 1981 (42 
U.S.C. 8621 et seq.) in the previous year. Each 
State shall use the allowances to provide home en-
ergy assistance to such individuals. 
(d) SECRETARY OF THE TREASURY.—In each year 
that allowances are issued by the Administrator pursuant 
to section 3(b), the Administrator shall allocate 25 percent 
of such allowances to the Secretary of the Treasury, plus 
the percentage not distributed under subparagraph (B) of 
subsection (c)(4) pursuant to the percentage reduction de-
scribed in the last sentence of that subparagraph. The 
Secretary of the Treasury shall deposit the cash proceeds 
from selling the allowances pursuant to section 3(c) in the 
Treasury. Allowances that have been allocated or retained 
under subsection (a), (b), or (c) but have not been distrib-
uted pursuant to such subsections at the end of the cal-
endar year in which they were issued by the Administrator 
shall be transferred, without charge, to the Secretary of 
the Treasury for sale pursuant to section 3(c). 
SEC. 5. SAFETY VALVE ALLOWANCES. 
(a) SAFETY VALVE PRICE.—Beginning on the third 
January 1 after the date of enactment of this Act, the 
Secretary of the Treasury shall offer for sale an unlimited 
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number of allowances at the safety valve price. The allow-
ances sold under this subsection shall be in addition to 
the allowances issued pursuant to section 3(b). In the 
third full calendar year beginning after the date of enact-
ment of this Act, the safety valve price shall be $25 per 
allowance. On January 1 of each calendar year thereafter, 
the Secretary of the Treasury shall adjust the safety valve 
price by the percentage increase in the Consumer Price 
Index for All Urban Consumers (United States city aver-
age) during the 1-year period ending 2 months before the 
date of the adjustment plus one percent. 
(b) POLICY COMPARABILITY CERTIFICATION.—Be-
ginning in the sixth full calendar year beginning after the 
date of enactment of this Act and in subsequent years 
thereafter, the Secretary of State shall evaluate whether 
the 5 developing countries with the most greenhouse gas 
emissions, as determined by the Secretary of State in con-
sultation with the Administrator, have adopted and are 
enforcing policies and programs to reduce greenhouse gas 
emissions that are comparable to the policies and pro-
grams established pursuant to this Act. Based on the eval-
uation completed during the previous calendar year, the 
Secretary of State shall provide certification to the Presi-
dent on the seventh January 1 after the date of enactment 
of this Act and annually thereafter if the Secretary finds 
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that the 5 developing countries with the most greenhouse 
gas emissions have adopted and are enforcing comparable 
policies and programs. Not later than 30 days after the 
Secretary of State provides such certification, the Presi-
dent shall transmit to Congress an acceptance or rejection 
of the Secretary of State’s certification along with a report 
documenting substantial evidence that supports the Presi-
dent’s decision. If the Secretary of State provides certifi-
cation pursuant to this subsection and the President ac-
cepts such certification, the Secretary of the Treasury 
shall adjust the safety valve price, in addition to the per-
centage increase due to the Consumer Price Index under 
subsection (a), by 2 percent, not later than 30 days after 
the President accepts such certification. The Secretary of 
the Treasury shall not increase the safety valve price 
under this subsection during any calendar year in which 
the Secretary of State has not provided certification pur-
suant to this subsection or the President has not accepted 
such certification. 
SEC. 6. ALLOWANCES REQUIRED. 
(a) FOSSIL FUELS.— 
(1) IMPORTED PETROLEUM FUEL PRODUCTS.— 
Except as provided in paragraph (6) and consistent 
with regulations issued by the Administrator pursu-
ant to section 3(a), a person shall not import into 
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the United States any refined petroleum product 
without transferring to the Administrator a number 
of allowances equal to the number of metric tons of 
carbon that will be emitted or produced from the 
amount of refined petroleum product that is im-
ported into the United States by such person. 
(2) NATURAL GAS.— 
(A) PIPELINES.— 
(i) PROHIBITION.—Except as provided 
in paragraph (6) and consistent with regu-
lations issued by the Administrator pursu-
ant to section 3(a), an owner or operator 
of a natural gas pipeline shall not accept 
for transportation in such pipeline any nat-
ural gas without transferring to the Ad-
ministrator a number of allowances equal 
to the number of metric tons of carbon 
that will be emitted or produced from the 
amount of natural gas accepted for trans-
portation by the owner or operator. 
(ii) EXCEPTION.—With respect to an 
amount of natural gas for which an owner 
or operator of a natural gas pipeline or a 
natural gas processing plant has trans-
ferred allowances to the Administrator 
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pursuant to this paragraph before a subse-
quent owner or operator of a natural gas 
pipeline accepts the natural gas for trans-
portation, the subsequent owner or oper-
ator shall not be required to transfer addi-
tional allowances to the Administrator. 
(B) PROCESSING PLANTS.— 
(i) PROHIBITION.—Except as provided 
in paragraph (6) and consistent with regu-
lations issued by the Administrator pursu-
ant to section 3(a), an owner or operator 
of a natural gas processing plant shall not 
sell or dispose of natural gas or natural 
gas liquids without transferring to the Ad-
ministrator a number of allowances equal 
to the number of metric tons of carbon 
that will be emitted or produced from the 
amount of natural gas or natural gas liq-
uids sold or disposed of by the owner or 
operator. 
(ii) EXCEPTIONS.—With respect to an 
amount of natural gas or natural gas liq-
uids for which an owner or operator of a 
natural gas processing plant has trans-
ferred allowances to the Administrator 
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pursuant to clause (i) before a subsequent 
owner or operator of a natural gas proc-
essing plant sells or disposes of the natural 
gas or natural gas liquids, the subsequent 
owner or operator shall not be required to 
transfer additional allowances to the Ad-
ministrator. With respect to an amount of 
natural gas for which an owner or operator 
of a natural gas pipeline has transferred 
allowances to the Administrator pursuant 
to subparagraph (A)(i) before an owner of 
a natural gas processing plant sells or dis-
poses of the natural gas (including in liq-
uid form), the owner or operator of the 
natural gas processing plant shall not be 
required to transfer additional allowances 
to the Administrator pursuant to this sub-
paragraph. 
(3) CRUDE OIL.— 
(A) PROHIBITION.—Except as provided in 
paragraph (6) and consistent with regulations 
issued by the Administrator pursuant to section 
3(a), an owner or operator of a refinery shall 
not receive crude oil without transferring to the 
Administrator a number of allowances equal to 
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the number of metric tons of carbon that will 
be emitted or produced from the amount of 
crude oil that is received by the owner or oper-
ator. 
(B) EXCEPTION.—With respect to an 
amount of crude oil for which an owner or oper-
ator of a refinery has transferred allowances to 
the Administrator pursuant to subparagraph 
(A) before a subsequent owner or operator of a 
refinery receives the crude oil, the subsequent 
owner or operator shall not be required to 
transfer additional allowances to the Adminis-
trator. 
(4) COAL.— 
(A) PREPARATION PLANTS.— 
(i) PROHIBITION.—Except as provided 
in paragraph (6) and consistent with regu-
lations issued by the Administrator pursu-
ant to section 3(a), an owner or operator 
of a coal preparation plant shall not sell or 
dispose of coal prepared at such plant 
without transferring to the Administrator 
a number of allowances equal to the num-
ber of metric tons of carbon that will be 
emitted or produced from the amount of 
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coal sold or disposed of by the owner or 
operator. 
(ii) EXCEPTION.—With respect to an 
amount of coal for which a person has 
transferred allowances to the Adminis-
trator pursuant to this paragraph before a 
subsequent owner or operator of a coal 
preparation plant sells or disposes of the 
coal, the subsequent owner or operator 
shall not be required to transfer additional 
allowances to the Administrator. 
(B) COAL PRODUCERS.— 
(i) PROHIBITION.—Except as provided 
in paragraph (6) and consistent with regu-
lations issued by the Administrator pursu-
ant to section 3(a), an owner or operator 
of a coal mine shall not sell or dispose of 
coal without transferring to the Adminis-
trator a number of allowances equal to the 
number of metric tons of carbon that will 
be emitted or produced from the amount of 
coal sold or disposed of by the owner or 
operator. 
(ii) EXCEPTIONS.—With respect to 
coal that is being sold to an owner or oper-
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ator of a coal preparation plant who is 
subject to the allowance requirement de-
scribed in subparagraph (A)(i), the owner 
or operator of a coal mine shall not be re-
quired to transfer allowances to the Ad-
ministrator. With respect to an amount of 
coal for which an owner or operator of a 
coal mine has transferred allowances to the 
Administrator pursuant to this paragraph 
before a subsequent owner or operator of 
the coal mine sells or disposes of the coal, 
the subsequent owner or operator shall not 
be required to transfer additional allow-
ances to the Administrator. 
(C) IMPORTED COAL.—Except as provided 
in paragraph (6) and consistent with regula-
tions issued by the Administrator pursuant to 
section 3(a), a person shall not import into the 
United States any coal without transferring to 
the Administrator a number of allowances equal 
to the number of metric tons of carbon that will 
be emitted or produced from the amount of coal 
that is imported into the United States by such 
person. 
(5) OTHER FOSSIL FUELS.— 
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(A) PROHIBITION.—Except as provided in 
paragraph (6) and consistent with regulations 
issued by the Administrator pursuant to section 
3(a), a person shall not sell or dispose of a cov-
ered fossil fuel that is not referred to in para-
graph (1), (2), (3), or (4) without transferring 
to the Administrator a number of allowances 
equal to the number of metric tons of carbon 
that will be emitted or produced from the 
amount of covered fossil fuel sold or disposed of 
by such person. 
(B) EXCEPTION.—With respect to an 
amount of covered fossil fuel for which a person 
has transferred allowances to the Administrator 
pursuant to subparagraph (A) before a subse-
quent person sells or disposes of the covered 
fossil fuel, the subsequent person shall not be 
required to transfer additional allowances to the 
Administrator. 
(6) EXPORT AND NONFUEL USE.—Pursuant to 
regulations issued by the Administrator, a person 
who— 
(A) exports an amount of covered fossil 
fuel; or 
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(B) sells, disposes of, or otherwise handles 
an amount of covered fossil fuel for a nonfuel 
purpose that does not result in the emission of 
more than a trace amount of a greenhouse gas, 
shall not be required to transfer allowances to the 
Administrator pursuant to this subsection with re-
spect to that amount of covered fossil fuel. 
(b) GREENHOUSE GASES.— 
(1) PROHIBITION.—Pursuant to regulations 
issued by the Administrator, a person shall not sell 
or dispose of an amount of greenhouse gas other 
than carbon dioxide in a manner that may result in 
the release of such greenhouse gas in the atmos-
phere without transferring to the Administrator a 
number of allowances equal to the amount of green-
house gas sold or disposed of by such person, meas-
ured in units of carbon equivalents. 
(2) EXCEPTION.—With respect to an amount of 
greenhouse gas for which a person has transferred 
allowances to the Administrator pursuant to para-
graph (1) before a subsequent person sells or dis-
poses of the greenhouse gas, the subsequent person 
shall not be required to transfer additional allow-
ances to the Administrator. 
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(c) AGRICULTURAL, INDUSTRIAL, AND MANUFAC-
TURING PROCESSES.— 
(1) PROHIBITION.—A person shall not sell or 
dispose of any product processed through an agricul-
tural, industrial, or manufacturing process that 
emits a greenhouse gas without transferring to the 
Administrator a number of allowances equal to the 
amount of greenhouse gas emitted in the processing 
of the amount of such product sold or disposed of 
by such person, measured in units of carbon equiva-
lents. 
(2) EXCEPTIONS.—With respect to an amount 
of greenhouse gas emitted in the agricultural, indus-
trial, or manufacturing processing of a product for 
which a person has transferred allowances to the 
Administrator pursuant to paragraph (1) or sub-
section (b)(1) before a subsequent person sells or 
disposes of the product processed through the agri-
cultural, industrial, or manufacturing process, the 
subsequent person shall not be required to transfer 
additional allowances to the Administrator. With re-
spect to an amount of greenhouse gas emitted for 
which a person has transferred allowances to the 
Administrator pursuant to subsection (a) before a 
subsequent person sells or disposes of a product 
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processed through the agricultural, industrial, or 
manufacturing process that emitted such amount of 
greenhouse gas, the subsequent person shall not be 
required to transfer additional allowances to the Ad-
ministrator. 
(d) EXEMPTION.— 
(1) IN GENERAL.—If the Administrator deter-
mines, after public notice and comment, that it is 
not feasible to measure or estimate the number of 
allowances that a person is required to transfer to 
the Administrator pursuant to subsection (b) or (c), 
the Administrator may grant an exemption only with 
respect to the greenhouse gas or product processed 
through an agricultural, industrial, or manufac-
turing process that emits greenhouse gases for which 
it is not feasible to measure or estimate the number 
of allowances required. The Administrator shall re-
voke such exemption at any time if the Adminis-
trator determines that it is feasible to measure or 
estimate the number of allowances required. 
(2) METHANE FROM ANIMALS.—The Adminis-
trator shall grant an exemption under this sub-
section for the sale or disposal of methane from ani-
mals until such time that the Administrator deter-
mines, after notice and opportunity to be heard, that 
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it is feasible to measure or estimate the number of 
allowances that a person is required to transfer to 
the Administrator pursuant to subsection (b) with 
respect to the amount of methane from animals sold 
or disposed of by such person. 
(3) REDUCTION
IN
NUMBER
OF
ALLOW-
ANCES.—In accordance with regulations issued by 
the Administrator, the Administrator shall reduce 
the total number of allowances issued pursuant to 
section 3(b) by an amount that is proportional to 
the number of exemptions granted under paragraphs 
(1) and (2) of this subsection. If the Administrator 
revokes an exemption granted under paragraph (1) 
or (2), the Administrator shall readjust the total 
number of allowances issued pursuant to section 
3(b) for the calendar year following the year that 
the exemption is revoked. 
(4) REDUCTION
OF
GREENHOUSE
GAS
EMIS-
SIONS.—If the Administrator grants an exemption 
under paragraph (1) to a person otherwise required 
to transfer allowances to the Administrator pursuant 
to subsection (c), the Administrator shall encourage 
the reduction of greenhouse gas emissions from the 
agricultural, industrial, or manufacturing process for 
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which the exemption was granted on a best practices 
basis until the exemption is revoked. 
(e) PENALTIES.— A person who does not transfer the 
required number of allowances to the Administrator pur-
suant to this Act shall be liable to the Administrator a 
civil penalty. The civil penalty assessed by the Adminis-
trator shall be equal to three times the market value of 
the number of allowances that the person failed to transfer 
to the Administrator for each day the person has so failed 
to transfer. 
(f) PASS THROUGH OF COSTS.—Any Federal, State, 
or local authority with ratemaking regulatory authority 
over any entity required to submit an allowance under this 
Act, or any entity that the cost of that allowance is passed 
on to, shall allow such entity to recover the full market 
value of such allowances for ratemaking purposes. 
(g) EFFECTIVE DATE.—This section shall take effect 
on the third January 1 after the date of enactment of this 
Act. 
SEC. 7. SEQUESTRATION. 
(a) SEQUESTRATION
PROJECTS.—The Adminis-
trator, in coordination with the Secretary of Agriculture 
and the Secretary of Energy, shall review proposals for 
domestic sequestration projects and provide approval, for 
purposes of subsection (b), to projects that— 
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(1) will result in greenhouse gas emission re-
ductions that would not occur in the absence of the 
project; and 
(2) provide for the sequestration of greenhouse 
gases in a manner that can be accurately and peri-
odically measured, monitored, and reported in a 
cost-effective manner. 
(b) ALLOWANCES.—The Administrator shall issue to 
the person responsible for submitting a proposal that is 
approved by the Administrator under subsection (a) a 
number of allowances equal to the amount of greenhouse 
gas, measured in units of carbon equivalents, that the per-
son has sequestered. The allowances issued pursuant to 
this subsection shall be in addition to the allowances 
issued by the Administrator pursuant to section 3(b). 
SEC. 8. ADVANCED RESEARCH PROJECTS AGENCY-ENERGY. 
(a) ESTABLISHMENT.— 
(1) IN
GENERAL.—The Secretary of Energy 
shall establish in the Department of Energy the Ad-
vanced Research Projects Agency-Energy (referred 
to in this section as ‘‘ARPA–E’’), to be headed by 
a Director who shall be appointed by, and report to, 
the Secretary. 
(2) QUALIFICATIONS.—The Director shall be an 
individual with— 
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(A) an advanced education degree in en-
ergy technology; and 
(B) substantial commercial research and 
technology development and deployment experi-
ence. 
(b) MISSION.—The mission of ARPA–E is to imple-
ment a radically innovative advanced basic and applied en-
ergy research and technology development and deployment 
program in order to increase national security, improve 
homeland security, reduce greenhouse gas emissions, im-
prove our balance of payments, and develop alternative en-
ergy sources and improve the efficiency of existing energy 
sources, by sponsoring a diverse portfolio of cutting-edge, 
high-risk, high-payoff research and development and de-
ployment projects. 
(c) PERSONNEL.—In hiring personnel for ARPA–E, 
the Secretary shall have the hiring and management au-
thorities described in section 1101 of the Strom Thur-
mond National Defense Authorization Act for Fiscal Year 
1999 (Public Law 105–261; 5 U.S.C. 3104 note). 
(d) TRANSACTIONS OTHER THAN CONTRACTS AND 
GRANTS.—To carry out projects under this section, the 
Director shall have the authority to enter into transactions 
provided under section 646(g) of the Department of En-
ergy Organization Act (42 U.S.C. 7256(g)). 
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(e) PRIZES FOR ADVANCED TECHNOLOGY ACHIEVE-
MENTS.— 
(1) IN GENERAL.—The Director may carry out 
a program to award cash prizes in recognition of 
outstanding achievements to advance the mission de-
scribed in subsection (b). 
(2) COMPETITION
REQUIREMENTS.—In car-
rying out this subsection, the Director shall— 
(A) use a competitive process for the selec-
tion of recipients of cash prizes; and 
(B) conduct widely-advertised solicitation 
of submissions. 
(3) 
MAXIMUM
AMOUNT
FOR
ALL
CASH 
PRIZES.—The total amount of all cash prizes award-
ed for a fiscal year under this subsection may not 
exceed $50,000,000. 
(4) MAXIMUM AMOUNT OF INDIVIDUAL CASH 
PRIZES.—The amount of an individual cash prize 
awarded under this subsection may not exceed 
$10,000,000 unless the amount of the award is ap-
proved by the Secretary of Energy. 
(f) ANNUAL REPORTS.—As soon as practicable after 
the end of each fiscal year, the Director shall submit to 
the Committee on Energy and Natural Resources of the 
Senate and the Committee on Energy and Commerce and 
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the Committee on Science of the House of Representatives 
a report on the progress, challenges, future milestones, 
and strategic plan of ARPA–E, including— 
(1) a description of, and rationale for, any 
changes in the strategic plan; 
(2) the adequacy of human and financial re-
sources necessary to achieve the mission described in 
subsection (b); and 
(3) in the case of cash prizes awarded under 
subsection (e), a description of— 
(A) the applications of the research, tech-
nology, or prototypes for which prizes were 
awarded; 
(B) the total amount of the prizes that 
were awarded; 
(C) the methods used for solicitation and 
evaluation of submissions and an assessment of 
the effectiveness of those methods; and 
(D) recommendations to improve the prize 
program. 
Æ 
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